Kim, Hwa-Jin; Park, Sung-Joon --- "Directors’ Duties and Liabilities in Korean Companies" [2012] ELECD 867; in Kim, Hwa-Jin (ed), "Korean Business Law" (Edward Elgar Publishing, 2012)

Book Title: Korean Business Law

Editor(s): Kim, Hwa-Jin

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781781003398

Section: Chapter 1

Section Title: Directors’ Duties and Liabilities in Korean Companies

Author(s): Kim, Hwa-Jin; Park, Sung-Joon

Number of pages: 26

Extract:

1. Directors' duties and liabilities in
Korean companies
Hwa-Jin Kim and Sung-Joon Park

I. INTRODUCTION1

In order for the directors of a company to effectively carry out their duties,
they need clear guidance on the scope of their fiduciary duties and liabili-
ties. This is particularly true for contests and shifts in corporate control,
where conflict of interests is most likely to occur. Duties imposed on direc-
tors also tend to be stricter in corporate control and restructuring transac-
tions because greater shareholder value is at stake. However, laws on the
rules of the board room, either at peace or "at war," in particular, and
corporate governance, in general, are only in the early stage of develop-
ment in Korea because no strong need was felt for legal norms governing
the conduct of corporate directors and managers before the financial crisis
of 1997, prior to which no single derivative suit had been filed in Korea.
It could be said that the Korean history of a market for corporate control
started only in April 1997, when a previous ceiling of 10 percent share
ownership for public companies was abolished. This chapter describes
the most important recent court cases in Korea, with special reference to
corporate control and restructuring cases, in which the directors' liabilities
and business judgment rule were discussed.
In a country where civil law-based, sophisticated mandatory rules are
interpreted by conservative judges, can we expect the business judgment
rule to shape and develop the liability of ...