Like directors in the US and elsewhere, directors in Korean companies have fiduciary-related duties. Such duties are set forth in the Korean Commercial Code and include:
In Korea, if a director violates the duty of care as a good manager (including the duty to faithfully perform in the company’s best interest) he or she may be held liable to the company or even to third parties and could be required to pay damages. Under Article 382-3 of the Korean Commercial Code, a director’s duty of care and good faith encompasses a number of duties including the:
A director may even be subject to criminal liability as well as civil liability upon the negligent failure of fulfilling the obligation of care. In Korea, directors have usually been prosecuted for negligence involving financial issues of the company. A failure to protect a company’s assets by refusing to obtain the requisite insurance or agreeing to contracts that put the company in jeopardy (without seeking legal advice, etc) can definitely lead to prosecution. Liability may be found in other instances when the director fails to fulfill the duty of care and loyalty by:
A director needs to proceed with caution and acknowledge the fiduciary duties that he or she has agreed to by becoming a director in the first place.
