It is getting easier for shareholders to obtain judgments against directors for breaching their fiduciary duties to Korean companies. We recommend all director to obtain director liability insurance and for all shareholders to consider suing directors when disputes arise because of the lack of oversight or malfeasance by directors.
|Director’s Fiduciary Duties to Korean Companies|
Under Article 382-3 of the Korean Commercial Act and, also, 681 of the Korean Civil Act imposes fiduciary duties on directors of Korean companies. These clauses impose a duty to affirmatively act “faithfully,” with reasonable prudence and to comply with law. Article 399 of the Commercial Act allows courts to award damages to shareholder for breaches of these duties.
Korea courts have been very lenient in imposing liability on directors, but recent cases may be an indication that Korean courts are becoming more willing to protect minority shareholders rights in Korea.
I will be writing more on this issue next week. The update will appear within this post.
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.
Sean Hayes is co-chair of the Korea Practice 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. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.
Sean’s profile may be found at: Sean C. Hayes
- Fiduciary Duties of Directors/Representative & Controlling Shareholders of Korean Companies
- Limiting Director Liability in Korea under new KCC
- Involuntary Dissolution of a Company in Korea: Shareholder Disputes in Korean Companies
- Piercing the Corporate Veil in Korea: Suing Shareholders of a Corporation
- Tax Liability of Controlling Shareholders in a Korean Company: Tax Law Updates
- Civil Liability of Companies for Actions of Employees Off the Company Property and After Work Hours