SOUTH KOREA Law and Practice Contributed by: Ho Joon Moon, Tae Jung Kim, Do Kyeom Kim and Ji Geon Park, Lee & Ko
KCC. Listed companies and large Korean companies are increasingly adopting such policies into their corporate governance framework. It is common practice for Korean companies to bear the cost of the premiums of such policies. 4.10 Approvals and Restrictions Concerning Payments to Directors/ Officers Unless provided otherwise in the articles of incorporation, director remuneration is deter - mined by the shareholders at the shareholders’ general meeting. In practice, shareholders typi - cally set the aggregate amount of funds available for remunerating the board of directors and then authorise the board of directors to determine between themselves the individual remuneration payable to each director. Companies that are required to submit annual reports (as described in 6.1 Financial Reporting ) must include in such reports the amount of remuneration approved at the general meeting of the shareholders and the amount of remuneration paid to all directors and statutory auditors. Failure to comply with the requirements may result in (i) legal challenges by the shareholders, which may result in potential liabilities for direc - tors; (ii) restitution by the member of the board of directors having received such remuneration; and/or (iii) unfavourable tax implications (ie, treatment of the company’s expenses as non- deductible expenses). 4.11 Disclosure of Payments to Directors/Officers According to the FISCMA, publicly traded com - panies must disclose payment to registered directors and officers with an annual salary of KRW500 million or more, as well as specific cri -
teria and methodology for calculating such pay - ment. Apart from the requirement for publicly traded companies to disclose the remuneration of exec - utive officers exceeding KRW500 million, there is no specific disclosure obligation required, and private companies are not obliged to disclose the remuneration of directors and officers. 5. Shareholders 5.1 Relationship Between Companies and Shareholders The board of directors is empowered to execute the business of the company in accordance with the KCC. Accordingly, apart from their ability to appoint or remove directors and their voting rights in shareholders’ meetings, shareholders do not otherwise possess any power to require the board of directors to pursue a particular course of action. With that said, please refer to 3.2 Decisions Made by Particular Bodies for matters that are subject to shareholder approval. Furthermore, please note that controlling share - holders do not owe duties to the company or to non-controlling shareholders under the KCC. It is provided, however, that any person, including a controlling shareholder, who instructs a direc - tor to conduct business by using their influence over the company, conduct business under the name of a director, or conduct business by using a title that may give the impression that they are authorised to conduct the business of the com - pany will, in each instance, be seen as a director for the purposes of the KCC, thereby attracting liability and responsibility as a de facto direc -
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