Corporate Legal Attorney | Securing Management Transparency Through Advisory on Corporate Governance Reorganization

First, the attorney closely analyzed the actual composition of the board of directors, the distribution of each director's roles and authority, the decision-making process, and the operating level of the internal control system.

Through this, the attorney identified structural vulnerabilities such as the absence of outside directors on the board, insufficient audit functions, and the absence of subcommittees.

In addition, the attorney reviewed the possibility of inter-affiliate internal transactions and internal conflicts of interest and reached the conclusion that additional control mechanisms were needed.

Afterward, the firm analyzed domestic and international model guidelines on governance (KCGS, the OECD G20 Principles, and the like) and benchmarked best practices in governance of companies of similar size and industry to set the direction of the improvement proposal.

In particular, to strengthen independence within the board of directors, the firm explained the need to introduce outside directors and reviewed a proposal to establish a committee to replace the internal audit function in lieu of an audit committee.

In addition, the firm recommended raising the expertise and transparency of the board of directors through the establishment of subcommittees such as a compensation committee.

The final stage was the amendment of regulations and the implementation plan. The client company needed support in amending core internal regulations, such as the board of directors regulations and the audit body operating rules.

The corporate legal affairs attorney provided an effective operational roadmap, including specific implementation plans such as separating the representative director and the chair of the board, or establishing criteria for appointing outside directors.

In addition, the attorney recommended strengthening the management of minutes, making attendance rates and resolution records transparent, and considering whether to link executive compensation to performance criteria.

Together with this, the attorney supported the establishment of an annual board operating plan and the systematization of information disclosure procedures for shareholders' meetings and investors, thereby enhancing transparency and reliability.

The client company was also preparing to draft a corporate governance report in order to enhance investor confidence going forward.

As of 2024, companies with assets of 500 billion won or more became subject to mandatory disclosure of a corporate governance report, and with the disclosure obligation set to expand to all KOSPI-listed companies from 2026, the client company wished to have a report prepared in accordance with the guidelines reviewed in advance for its future voluntary report submission.

Based on the latest guidelines and the Korea Exchange’s review items, the corporate legal affairs attorney conveyed drafting guidance for key disclosure items (dividend policy, internal control policy, audit function, and the like), and provided staff training and a self-assessment checklist form.

In particular, the attorney examined matters such as the predictability of dividend amounts through improvements to the dividend procedure, the establishment of active communication channels with minority shareholders and foreign investors, and securing diversity within the board and determining director compensation in proportion to directors’ efforts, and conducted the review with a focus on matters of high importance for disclosure.

On June 2, the deadline for submitting corporate governance reports passed.

This year, 541 companies subject to the disclosure obligation and 8 companies that submitted voluntarily filed reports.

The Korea Exchange reviews whether listed corporations have prepared their corporate governance reports faithfully, based on the following review items.

• Provision of predictability regarding cash dividends
• Establishment of shareholder protection policies for changes in ownership structure and business structure
• Establishment of internal control policies, including risk management
• Establishment of an independent internal audit department
• Holding of quarterly meetings between the internal audit body and the external auditor
• Plans to enhance corporate value, among others

Going forward, this firm's corporate legal affairs attorneys will continue to provide tailored legal services covering the establishment of governance systems suited to each company's circumstances, the preparation of reports, and operational practice.

If you need specialized corporate governance advisory in this regard, please seek assistance at any time through our legal services, including video consultation.

Based on a high level of understanding of legal principles such as the Commercial Act and corporate law, as well as the principles of corporate organization, this firm has formed a corporate legal affairs attorney TF specialized in corporate legal affairs and provides timely advisory.

If you need consultation on improving corporate governance closely tied to the business environment, or advance responses to key issues, please use the 🔗legal consultation appointment link.