The prior law, only, required the total compensation for all directors to be disclosed to shareholders. The new rule, which comes into effect on November 29, 2013, requires that all registered directors of companies annual compensation be disclosed if the amount of the individual's annual compensation exceeds KRW 500 million Korean won.
The amended Korean Commercial Code, also, requires that companies disclose the criteria for choosing the compensation. We suspect to see cases filed related to the payment criteria and differentials in payment between certain directors.
Some family-controlled companies will, likely, drop some family members from boards. These family members will, likely, be paid as mere company employees and, not, as board members. Thus, circumventing the purpose of the law.
We will update the reader on developments with regard to this issues.
Other articles that may be of interest:
- Legal Compliance Checklist for Companies Doing Business in Korea
- Compliance Control Standards in Korea
- 7 Musts to Succeeding in Business in Korea
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.
Sean Hayes is co-chair of the Korea Practice Team and Entertainment, Media and New Tech Law Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. He assists clients in their contentious, non-contentious and business developments needs in Korea and China.