'Preventing "Sahak Jokbeol Management" ... Disclosure of Family Relations and Prohibition of Founder and Relatives as Outside Directors'

Notice of Legislative Amendment to the Enforcement Decree of the Private School Act
Dismissal Without Correction Request for Embezzlement or Breach of Trust Over 10 Million Won

[Asia Economy Reporter Jo In-kyung] From now on, any kinship relationships among executives of private school foundations will be fully disclosed. Directors or auditors of corporations who commit accounting fraud exceeding 10 million won will be dismissed immediately without a correction request.

On the 27th, the Ministry of Education announced that it will give public notice and administrative notice of the "Partial Amendment to the Enforcement Decree of the Private School Act" containing these provisions.

Last December, the Ministry of Education announced the "Private School Innovation Promotion Plan" to strengthen regulation and supervision of family-run private schools. At that time, the Ministry stated that if there is a kinship relationship among school foundation executives, it will be disclosed, and whether only the kinship status or the specific relationship such as children will be disclosed will be determined later during the legislative amendment process.

The newly amended "Notice on Disclosure of Personal Information of School Foundation Executives" includes provisions requiring disclosure on the school website if there is a kinship relationship within the 8th degree of blood relatives, 4th degree of relatives by marriage, or spouses among executives.

The amendment to the Enforcement Decree of the Private School Act includes provisions to cancel the approval of appointment of executives who have embezzled or misappropriated more than 10 million won without a correction request.

For example, if a private university president purchases and uses a golf club membership costing more than 10 million won with school funds, previously a correction request and warning would be issued, but from now on, the approval of the executive's appointment will be canceled immediately.

The threshold for accounting fraud that allows cancellation of executive appointment approval without correction request will be strengthened from 30% to 10% of the university's basic property for profit use. For elementary, middle, and high schools, it will be strengthened from 50% to 20%.

New provisions have been added to prevent founders, their relatives, executives with experience in the corporation, and principals with experience in the corporation's schools from becoming open directors of the school foundation.

The disclosure period for board meeting minutes will be extended from 3 months to 1 year. Donations without designated purposes, which could previously be recorded as income in the corporate account, will now only be allowed to be recorded in the school fund account.

The Ministry of Education plans to finalize and promulgate these provisions in the first half of this year after a 40-day legislative and administrative notice period.