• Key Changes and Response Strategies

The Korean National Assembly recently passed an amendment to the Commercial Act on March 13, 2025, introducing significant changes that will impact corporate governance and shareholder rights. Businesses and corporate executives must carefully review these amendments and take necessary measures to ensure compliance. This article highlights the key changes and strategic responses.

1. Expansion of Directors’ Duty of Loyalty

O Key Changes

• Previously, directors’ duty of loyalty was limited to the company itself.
• Under the amendment, directors are now required to consider both the company and its shareholders when fulfilling their fiduciary duties.
• This change reinforces directors’ responsibility to act in the best interests of shareholders.

O  Response Strategies

• Corporate Governance: Companies should adapt board policies to ensure shareholder interests are reflected in decision-making.
• Directors’ Responsibilities: Board members must carefully assess shareholder impact when making key business decisions.
• Legal Compliance: Companies should review internal governance structures and seek legal guidance to mitigate potential risks arising from expanded fiduciary duties.

2. Mandatory Implementation of Virtual Shareholder Meetings for Listed Companies

O Key Changes

• All publicly listed companies are now required to implement a virtual shareholder meeting system.
• Shareholders must be able to attend and exercise their voting rights remotely.
• This aims to enhance shareholder participation and accessibility.

O Response Strategies

• IT Infrastructure: Companies should develop and test a secure virtual shareholder meeting platform to ensure a seamless experience.
• Compliance Measures: Businesses must establish clear protocols to meet regulatory requirements for electronic meetings.
• Shareholder Engagement: Companies should educate shareholders on the new system and encourage active participation in virtual meetings.

Conclusion

These amendments mark a significant shift in corporate governance, strengthening shareholder rights and modernizing shareholder engagement. Companies must proactively adapt to these changes by updating governance policies, enhancing IT systems, and ensuring legal compliance. As regulatory frameworks evolve, staying ahead of these developments will be crucial for businesses operating in Korea.

For tailored legal guidance on how these amendments may affect your business, feel free to reach out to our firm.