Introduction of Directors’ Duty to Protect Shareholders’ Interests and Other Changes to Regulatory F

The National Assembly passed the first amendment to the Korean Commercial Code (the “KCC”), expanding the fiduciary duties of directors to include the protection of shareholders’ interests (the “First KCC Amendment”) on July 3, 2025. The First KCC Amendment was thereafter promulgated and came into effect on July 22, 2025, following deliberation by the State Council and receipt of presidential approval. Subsequently, the National Assembly passed the second proposed amendment to the KCC, which mandates cumulative voting and expands the separate election of audit committee members of large listed companies (the “Second KCC Amendment”), on August 25, 2025, and it was approved by the State Council on September 2, 2025 and promulgated on September 9, 2025.

Since the new government came into power, the market has shown considerable interest in the new administration’s policies aimed at enhancing corporate governance and systems related to corporate law, as well as amendments to the KCC, including the introduction of directors’ duties to protect shareholders’ interests as a starting point to implement such policies. The Democratic Party of Korea (the “DPK”) engaged in extensive discussions regarding its plans to (i) expand the fiduciary duties of directors to include the protection of shareholders’ interests, (ii) obligate listed companies to hold general meetings of shareholders virtually, (iii) adopt a system of independent directors, (iv) expand the separate election of audit committee members, and (v) mandate cumulative voting. Shortly after the start of the new administration, the DPK submitted the First KCC Amendment to address points (i), (ii) and (iii) mentioned above. Following the submission of the agenda by the ruling party, the Second KCC Amendment, which mandates cumulative voting and expands the separate election of audit committee members of large listed companies, underwent considerable deliberation in the plenary session of the National Assembly, including a filibuster by the opposition party, before it was finally passed on August 25, 2025. It was approved by the State Council on September 2, 2025 and promulgated on September 9, 2025.

Please click on the following link to view the main provisions of the Second KCC Amendment and their enforcement dates (Link).

Authors

Ji Pyoung KIM (View Profile)

Jeremiah N. PHILLIPS (View Profile)

Min Young HAHN (View Profile)