A joint stock company, or a jusik hoesa, shall have at least three directors if the registered capital is KRW 1 billion or more appointed and there are no specific requirements on board composition. A Limited company, or a yuhan hoesa, shall have at least one director regardless of the amount of the registered capital.
In general, there are no restrictions on who can be appointed as a director under the KCC.
There are multiple duties relating to conflicts of interest that must be adhered to. Below are a list of some of the duties that should be observed;
No director may, without the approval of the board of directors (excluding the interested director), be involved in a transaction falling under the scope of the business of the company for (i) his/her own account or (ii) the account of a third party where the interest of the company and the director may conflict (e.g., usurping
a corporate opportunity from the company) (Articles 397 and 567 of the KCC). In addition, a director may not become a member with unlimited liability in a partnership or a director of a company which engages in the same kind of business activities without the approval of the board of directors (excluding the interested director).
The approval of more than two-thirds of all directors (excluding the interested director) is required for any transaction between a director and the company for the account of such director or a third party that may harm the interest of the company (e.g., self-dealing) (Article 398 of the KCC).
Further, Article 398 requires disclosure of material facts of the transactions to the board of directors as well as fairness of ‘substance’ and ‘procedure’ of the transaction. Please note that a director who seeks to enter into a self-dealing with the company must be prevented from exercising his/ her voting right at the board meeting where the approval of the transaction is determined.
A director is restricted from utilizing or causing third parties to utilize business opportunities by taking advantage of information that he/she has obtained during his/her employment. The same applies for a business opportunity that is closely connected to business of the company, unless approved by more than two-thirds of the members of the board of directors of the company (Article 397-2 of the KCC).