Compliance Control Standards in Korea: Amended Korean Commercial Code

I just realized that I have written an article on the new Compliance Officer System in the Korean language, but have not written about the matter in the English language.  Sorry to the handful of readers of this blog who may be interested in this article. The Korean langauge article appeared in the Korean Language Legal Times. The new system will come into effect when the amended KCC comes into effect in April of 2012.

Compliance Control Standards under Article 542-13 of the amended Korean Commercial Code (KCC) will only be applied to listed companies with capital holdings above a threshold amount.

The determination of the threshold amount and the qualification to become a “Compliance Officer,” along with other key aspects of the amended KCC, have been delegated to the President through his power to issue presidential decrees. Thus, this post will be updated when the presidential decree is issued next year.

Key Aspects of the Compliance Control Standards System in Korea

1. The Compliance Officer must have a three-year term;
2. The Compliance Officer must be a full-time member of the company;
3. The Compliance Officer must (a) have a license to practice law in Korea; OR (b) have taught law for five years as at least an assistant professor. A presidential decree may prescribe other requirements. Wow- even I qualify.
4. The Compliance Officer may develop Compliance Control Standards that must be followed by all company employees and officers; and
5. The Compliance Officer may be held personally liable based on fiduciary duties to the company.

I advise all foreign companies with a sizable footprint in Korea to implement this system. In-house counsel at foreign companies in Korea have nothing to fear, and the company will benefit when the ubiquitous audit and government investigations occur.

A few other posts I have made on the amended KCC:

• Limited Liability Companies under The Amended Commercial Code of Korea
• Korean Commercial Code Revisions Make Capital Reductions in Korea Easier
• Classification of Directors in Korea under The Korean Commercial Code: Inside, Outside and Other Directors in Korea
• Establishing a Company in Korea: New Corporate Forms Available under Revised Korean Code
• Squeezing-out Minority Shareholders under Korean Corporate Law
• Limiting Director Liability under Korean Law: Don’t drop the Insurance Policy Yet
• Compliance Control in Korea: Amended KCC

Sean Hayes 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 with their contentious, non-contentious, and business development needs, and is regularly quoted by leading media sources on Asia’s legal and business issues. Sean is rated a Top 100 attorney, and his firm was rated a top dispute resolution law firm in Korea. 

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