We have advised all of our clients to promptly revise their articles of incorporation of their Korean companies to take advantage of changes to the Korean Commercial Code. One revision that should be, immediately, done is limiting the liability of your Korean inside and outside directors.
Article 400(2) of the Korean Commercial Code allows a company to limit the liability of an inside director to six times the amount of compensation given to a inside director by the Korean company in the previous three years and three times the amount of compensation given to an outside director in the previous three years.
Again, the company’s articles of incorporation must be revised to take advantage of this liability limitation. A court may disallow the limitation if an action or inaction is deemed by the court to be perpetrated with intent or in a grossly negligent manner.
Other articles that may be of interest relating to the revised Korean Commercial Code:
- 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 may be contacted at: SeanHayes@ipglegal.com.
Sean Hayes is co-chair of the Korea Practice Team for an international law firm. He is the only non-Korean to have worked as an attorney 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.
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