Navigating Corporate Governance in 2025
Corporate governance in Korea stands at a critical juncture. Government and regulatory bodies are laying the groundwork to overhaul corporate accountability and investors’ confidence by enhancing market discipline, board responsibility and shareholder rights. The Korea Legal Insight 2025 features newsletters on these legislative and policy developments. As major changes are expected in areas such as governance frameworks, directors’ fiduciary duties, minority shareholder rights and general meetings of shareholders, companies doing business in Korea are advised to stay informed on the changing regulatory landscape.
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Recent Regulatory
Trends in Corporate Governance Restructuring TransactionsIn 2024, the financial authorities amended the Enforcement Decree of the Financial Investment Services and Capital Markets Act (the “FSCMA”) and the Regulation on Securities Issuance and Disclosure (the “RSID”). These amendments aim to (i) protect the rights and interests of ordinary shareholders during corporate governance restructuring transactions, such as mergers and spin-offs, and (ii) better align domestic practices with global standards. The authorities plan to pursue similar regulatory reforms in 2025.
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Discussions on Introduction of Directors’ Duty to Protect All Shareholders’ Interests and Acting President’s Veto of Proposed Amendment to KCC
The legislative developments regarding the proposed amendment to the Korean Commercial Code (the “KCC”), introducing directors’ duty to protect all shareholders’ interests, have sparked significant interest from the market and companies. This newsletter provides a comprehensive overview of the recent legislative developments.
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Process for Determination of Record Date for Quarterly Dividend Payment Enhanced
As outlined in our previous newsletters, regulations regarding dividend distribution procedures continue to get amended to promote capital market efficiency, information transparency, and corporate governance of listed companies. A key focus of the updates has been to push the record date for dividend payment to after the determination of the dividend amount, for greater transparency and reduced investor uncertainty around the ex-dividend process.
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Implementation of Improvements to the Treasury Stock System of Listed Companies
As we noted in a previous legal update, the Financial Services Commission of Korea (the “FSC”) had announced on January 30, 2024 plans to improve the treasury stock system for listed companies. In furtherance of such plans, the FSC pre-announced on June 4, 2024 proposed amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (the “FSCMA,” and the “Enforcement Decree”) and the Regulation on Securities Issuance and Disclosure (the “Regulation”)
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Amended FSCMA and RIDS Decree to Enhance M&A Regulations for Listed Companies
As covered in our previous newsletter dated May 9, 2023, the Financial Services Commission (the “FSC”) unveiled a set of policies on May 8, 2023 dubbed the “Corporate M&A Support Plan” (the “Support Plan”) with the aim to improve the M&A regulatory system with respect to listed companies by increasing fairness of M&A transactions and procedures including mergers, business transfers, spin-offs and spin-off mergers. Following this announcement, the FSC held a meeting on February 6, 2024 to further discuss improvements to M&A regulations.
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KRX 2025 Notice: Key Inspection Items for Corporate Governance Reports
The mandatory disclosure system for corporate governance reports (“Corporate Governance Reports”) was introduced in 2019 for companies listed on the KOSPI market with total consolidated assets of KRW 2 trillion or more and expanded in 2022 to include companies listed on the KOSPI market with total consolidated assets of KRW 1 trillion or more. The system will be further expanded this year to include companies listed on the KOSPI market with total consolidated assets of KRW 500 billion or more.