A proxy battle between the management of KT&G Corporation and a group of dissident shareholders has culminated in the first election of a foreigner nominated by a foreign shareholder to the board of directors of a Korean listed company without the support of the company's management.
The government recently published the revised Enforcement Decree to the Foreign Investment Promotion Act, which implements new measures to attract greater foreign investment into Korea. Such measures include more specific regulations concerning the so-called 'cash grant' and 'project manager' policies.
The Seoul High Court's recent decision in Eun Sub Jung v Pyong Sub Jung 2002 represents a significant landmark with respect to the issue of standing in shareholder derivative actions. However, the case is not yet final and is being appealed to the Supreme Court.
A joint task force from financial and other government agencies has submitted its final plan for the reform of accounting practice to Congress. The final plan includes heightened responsibilities for listed companies, as well as restrictions on auditors and the non-audit services they may provide. It also outlines the applicable penalties.
In light of a recent Supreme Court ruling, any party to a joint venture agreement or shareholder agreement with respect to a Korean joint venture company should consider carefully the advantages and disadvantages of having two statutory auditors, and may wish to insist on the company having only one.
The Korean National Assembly has passed the Act on the Designation and Operation of Free Economic Zones, with a view to promoting Korea as a key business hub of Northeast Asia. The act establishes a framework offering incentives for the purpose of attracting foreign investors.
The Korean courts have increasingly emphasized the fiduciary duties of directors since the Korean financial crisis of 1997. On March 15 2002 the Supreme Court held four former directors of the Korea First Bank jointly and severally liable for W1 billion (approximately $800,000) for breaching their duties as directors.
The Suwon District Court has held nine former and current directors of Samsung Electronics Co Ltd jointly and severally liable for W90.28 billion (approximately $70 million) for neglecting their duties. The court rejected the business judgement rule defence.
The Supreme Court has stipulated the circumstances in which a dominant shareholder and representative director will be liable for the acts of a corporation.
The amended Securities Exchange Act aims to strengthen minority shareholders' rights and improve transparency of corporate governance in companies where shares are publicly traded. Amendments relate to stock options, stock redemption by profits and minority shareholders' rights concerning minimum shareholding percentages.
The Ministry of Commerce, Industry & Energy has drafted amendments to the law on venture companies that aim to reduce the minimum exercise price of stock options granted to employees, officers and other eligible persons of venture companies.