- Elgar Korean Law series
Edited by Hwa-Jin Kim
Hwa-Jin Kim and Sung-Joon Park INTRODUCTION1 I. In order for the directors of a company to effectively carry out their duties, they need clear guidance on the scope of their fiduciary duties and liabilities. This is particularly true for contests and shifts in corporate control, where conflict of interests is most likely to occur. Duties imposed on directors also tend to be stricter in corporate control and restructuring transactions because greater shareholder value is at stake. However, laws on the rules of the board room, either at peace or “at war,” in particular, and corporate governance, in general, are only in the early stage of development in Korea because no strong need was felt for legal norms governing the conduct of corporate directors and managers before the financial crisis of 1997, prior to which no single derivative suit had been filed in Korea. It could be said that the Korean history of a market for corporate control started only in April 1997, when a previous ceiling of 10 percent share ownership for public companies was abolished. This chapter describes the most important recent court cases in Korea, with special reference to corporate control and restructuring cases, in which the directors’ liabilities and business judgment rule were discussed. In a country where civil law-based, sophisticated mandatory rules are interpreted by conservative judges, can we expect the business judgment rule to shape and develop the liability of corporate directors?2 The answer may be a surprising “yes” as far as Korea is...
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