You must act within the powers imposed by the KCC and the company’s Articles of Association (“Articles”). The Articles govern how the company is to be run, including the powers and responsibilities of directors.
Duties – Skill and Care
In exercising directors’ powers, you are required to exhibit a degree of care, loyalty and confidentiality towards the company.
You are generally not liable for the actions of your fellow directors if you knew nothing about them despite your diligent performance of your duty, and took no part in them. However, you have a duty to make sure that you are informed about the company’s affairs – turning a blind eye is not an option, and please note that if the board meeting minutes does not specifically and clearly record your objection to a board resolution, you will be deemed to have consented to such board resolution and have the same liabilities as other directors who consented to the board resolution.
Duties – General
As a director, you must act in a way which you think is most likely to promote the success of the company. You need to consider a number of statutory factors relating to corporate requirements, including the long term consequences of your decisions, the company’s reputation and the interests of other stakeholders such as employees, customers and the community.
- Duty of Care – The relationship between a director and the company as a mandate is detailed under Articles 382(2) and 567 of the KCC. It is considered equivalent to delegation under the Korean Civil Code (“Civil Code”). Accordingly, directors are deemed to be fiduciaries and are considered to owe a duty of due care to their company, the applicable standard of care being that of a good manager.
- Duty of Loyalty – Directors are required to perform their duties faithfully, as described in Article 382-3 of the KCC, for the good of the company and in accordance with applicable laws and regulations and the company’s AOI. In that regard, the Korean Supreme Court has held that such duty requires directors to act in the best interest of the company as opposed to the shareholder(s) of the company.
- Duty of Confidentiality – Directors are required to fulfil an obligation not to disclose any confidential information regarding the company’s business during and after his/ her term of service with the company. This is examined under Article 382-4 of the KCC
Duties – Other
There are many other areas of law that impose duties on directors and senior managers.
- you owe a fiduciary duty towards the company, and therefore your duties must be performed in good faith and in the best interests of the company, in accordance with the KCC and the Articles
- under the Occupational Safety and Health Act several obligations are imposed on you, including:
- implementation of measures to prevent dangers arising from equipment, substances and work methods
- implementation of health and safety education
- implementation of measures to prevent health hazards, such as health disorders arising from: materials worked with, noise, repetitive tasks and similar
Failure to meet such obligations can result in criminal penalties.
- You have a duty to prepare the following documents each year:
- balance sheet
- profit and loss statement
- statement of appropriationof retained earnings or statement of disposal of deficit
- a business report
- you must keep these documents on file along with the auditor’s report as part of the maintenance of the corporate records
- you have an obligation to prepare documents such as the balance sheet, profit and loss statement, etc., receive board approval, and submit to the statutory auditor within a certain period
Latest version updated
10th April 2018