Exercise your responsibilities carefully as the penalties for failure to do so can be severe.
Under the KCC, if you breach the law, government regulations, the Articles, or if you neglect to perform your duties, you may be jointly and severally liable for damages incurred by the company as a result.
In this regard, you could also be exposed to certain criminal liabilities where you have breached your duties, which may constitute a breach of trust under the Korean Criminal Code.
In order to protect third parties, the KCC provides that a director will be liable to a third party for any damages incurred by the third party as a result of the director’s neglect of his/her duties to the company if such neglect results from wrongful intent or gross negligence.
Either the breach of duty itself, or the imposition of one of the sanctions described above, may lead to disciplinary action being taken against you and/ or limitations upon you being able to continue in your role.
The civil liabilities of a director may be extinguished in those circumstances identified in the KCC. For example, a director may be relieved of his/her liabilities to provide compensation for damages incurred by the company if all shareholders/members unanimously agree to discharge the directors from such liabilities. Furthermore, if a contrary resolution has not been adopted within two years after approval of the financial statements of the company at the ordinary general meeting of the shareholders/ members, the company will be deemed to have released the directors from the related liabilities except in the case of fraud.
Under the KCC, there is no limitation on the directors ability to delegate daily operations to a local agent (JiBaeIn in Korean). However, theoretically, the liabilities or duties of directors cannot be delegated to the local agent. In other words, the directors shall be responsible for the performance of the duties (e.g. supervise the local agent) and bear the liabilities.
Liability insurance is available in Korea and the risk insured by liability insurance is the liability of directors and officers of a company for their breach of fiduciary duty to the company’s shareholders and to the company itself. However, – regularly consider at board meetings items of key importance to your entity e.g. HS&E, export controls, employee issues, compliance and ethics considerations and key contracts. Maintain minutes of directors’ meetings