Samjong KPMG Publishes Report on Commercial Act Amendments and Board Preparation

Analysis of Key Amendments to the Commercial Act
Response Tasks for Boards of Directors and Audit Committees

Samjong KPMG announced on July 31 that it has published the "ACI Issue Report: Amendments to the Commercial Act and Board of Directors' Preparation," which addresses the key contents of the revised Commercial Act and the response tasks for boards of directors and audit committees.

The report consists of two main sections: the significance and impact of the Commercial Act amendments, and the implications and considerations of the amendments. It analyzes the major changes and effects of the revised law and presents the core issues that boards of directors and audit committees need to prepare for.

In particular, Professor Kim Kiyoung of Myongji University, in his contributed article "The Significance and Impact of the Commercial Act Amendments," provided an in-depth analysis of the following topics: the expansion of directors' duty of loyalty; the 3% voting rights cap for the largest shareholder when appointing audit committee members; the change in terminology from "outside director" to "independent director" and the increase in the required proportion of independent directors; and the purpose and impact of introducing electronic general meetings of shareholders.

Professor Kim emphasized, "In the future, companies must completely reorganize the operation of their boards of directors and general meetings of shareholders, their internal decision-making processes, and their legal and financial verification systems. Directors must also thoroughly prepare documents and procedures to minimize legal liability."

The section "Pending Commercial Act Amendments and Their Impact" reviews the key points of the amendments currently under discussion, such as the expansion of cumulative voting and the separate election of audit committee members, and analyzes the expected changes in corporate governance.

The section "Considerations for Boards of Directors and Audit Committees" proposes specific response strategies for boards of directors and audit committees, focusing on major issues such as strengthening the supervision of board independence and expanding the burden of proof.

Kim Minkyu, Deputy CEO and leader of the Samjong KPMG Audit Committee Institute (ACI), stated, "It is essential to embed procedures for reviewing whether the board's strategic management decisions and independent oversight activities are faithfully and fairly conducted in the interests of all shareholders into the corporate governance system." He added, "To achieve this, it is necessary to verify the independent judgment of directors and the transparency of the operating system."

Samjong KPMG established the Audit Committee Institute (ACI) in 2015, the first in the industry, to promote the activation of audit committees and enhance the effectiveness of audit functions. In the same year, it published the nation's first "Audit Committee Handbook." The ACI regularly revises the handbook in line with legal and institutional changes, publishes various issue reports necessary for audit committee activities, and holds annual audit committee seminars, continuing its active engagement in the field.