Korea Listed Companies Association Issues Guidelines for Directors' Decision-Making in Response to Revised Commercial Act

The Korea Listed Companies Association announced on January 12 that it has prepared and distributed the "Guidelines on Major Decision-Making by Directors of Listed Companies" to its member companies.

These guidelines were established to provide practical criteria that directors of listed companies can refer to when making major decisions under the revised Commercial Act, helping them to make reasonable judgments. Previously, in response to the expansion of directors’ fiduciary duties to both the company and its shareholders under the amended Commercial Act, the association launched an expert working group in September last year to discuss ways to support board operations in line with the intent of the revised law.

Accordingly, major decision-making matters by directors have been categorized into four types from the perspective of fair treatment of all shareholders and protection of total shareholder interests. The guidelines also outline the considerations for directors at each procedural stage, including board meeting minutes, disclosures, external expert consultations, and special committees.

In addition, the guidelines detail the necessary review items for directors, such as the necessity and legitimacy of transactions, conflicts of interest among shareholders, fairness of transaction terms, and the impact on the company. The document also includes appendices with case studies from major countries that have adopted similar legal frameworks.

Kim Choon, Head of Policy Division 1 at the association, stated, "We hope that directors of listed companies will refer to the standards and direction presented in these guidelines to enhance procedural fairness in their decision-making processes." The association plans to continuously monitor the application of the guidelines in practice and to improve and supplement them based on the results of future operations.