Seminar on the Proposed Amendment of the Korean Commercial Code: 'Introduction of Directors' Duty of Loyalty to Shareholders'

Lee & Ko hosted a seminar on the proposed amendment of the Korean Commercial Code on June 12, 2025 (Thursday) in collaboration with the Seoul Economic Daily.
 
This seminar was organized to analyze the impact of the recently proposed amendments to the Korean Commercial Code on domestic companies and to explore possible countermeasures.
 
During the first session, Chun Kim, Head of Policy 1 Division of the Korea Listed Companies Association, explained the contents of the proposed amendments to the Korean Commercial Code relating to the directors’ duty of loyalty, under the topic of "Expanding the Scope of the Directors’ Duty of Loyalty and Corporate Management," and presented the potential impact of the proposed amendments to the Korean Commercial Code by major issues and possible corporate countermeasures.
 
In the second session, Kyung Gyoon Park and Hyesoo Won, partners of Lee & Ko, introduced, under the topic of "Legal Perspective on Expansion of the Directors' Duty of Loyalty: Impact on Corporate Management," the pros and cons of introducing the directors’ duty of loyalty to shareholders, and analyzed, from a legal perspective, the potential impact of the directors’ duty of loyalty on management in individual cases, such as △ the issuance of new shares to controlling shareholders, △ mergers and spin-offs, △ dual listing after vertical spin-off, △ management rights defense measures, and △ share transfers involving management rights among controlling shareholders, which are seen as representative scenarios where shareholders' interests could be infringed.
 
In the third session, Young Jung Kim, partner of Lee & Ko, provided practical suggestions, under the topic of “Appropriate Measures for Companies in Preparation for Increased Management Risks,” on the necessity and direction of establishing an internal control system for companies in response to the proposed amendments to the Korean Commercial Code, as well as key items for preliminary review in specific cases.
 
In the question-and-answer session that followed after the presentations, there were active questions and exchanges of opinions on various topics, such as △ the potential applicability of criminal charge of occupational breach of trust in cases of violation of directors’ duty of loyalty to shareholders, △ the extent of protection by directors and officers (D&O) insurance, and △ the potential impact on companies of other proposed amendments to the Korean Commercial Code and the Financial Investment Services and Capital Markets Act in addition to those on directors’ duty of loyalty, such as the mandatory adoption of cumulative voting system, and mandatory retirement or disposal of treasury stocks.