Under the amended Act on Corporate Governance of Financial Companies, effective as of July 3, 2024, the representative director (or an equivalent officer) and officers of a financial company (collectively, the “Officer(s)”) should be included in the financial company’s responsibilities map to be submitted to the Financial Authorities (defined below) within the statutory deadline for each type of financial company and bear managerial responsibility for the company’s internal control and risk management obligations (“Internal Control Obligations”) upon preparation and submission of the responsibilities map. Violation of the Internal Control Obligations may subject the implicated Officer(s) and the company to personal sanctions, although sanctions may be reduced or exempted in consideration of the background, degree and results of the violation as well as whether the Officer(s) exercised reasonable care.
On July 12, 2024, the Financial Services Commission (the “FSC”) and the Financial Supervisory Service (the “FSS”) (collectively, the “Financial Authorities”) (i) announced a plan to conduct a pilot program to facilitate the smooth operation of new regimes including the responsibilities map, and (ii) prepared and announced the “(proposed) operation guidelines on sanctions for violation of the obligation to manage internal control” to enhance the predictability and transparency of sanctions issued for breaches of the Internal Control Obligations.
Please refer to our memo (attached below) discussing the key contents.
