New regulations to prevent conflicts of interest in corporate governance
From August 1, members of the board of directors, supervisors, director or director general, and other managers of a public company will be required to make public their related interests as prescribed by law.
Such is provided in Government Decree No. 71 signed on June 6, providing corporate governance regulations applicable to public companies.
The Decree goes on to stipulate that such corporate executives and managers as well as their related persons may not use the information they acquire thanks to their positions for self-seeking purposes or for the interests of other organizations or individuals. They are also prohibited from using information not yet allowed to be disclosed or revealing such information to other persons for the latter to make related transactions.
Additionally, members of the board of directors, supervisors, director or director general, and other managers of a public company will be obliged to notify the board of directors and supervisory board of any transactions between them or their related persons and the company, a subsidiary of the company or a business in which the company holds more than 50 percent of charter capital.
In case these transactions are subject to approval by the board of directors or general meeting of shareholders, resolutions approving such transactions must be disclosed by the public company in accordance with the law on disclosure of information in the securities market. However, members of public companies’ boards of directors may not vote on transactions which will bring about benefits for them or their related persons.
The Decree also specifies that when making transactions with related persons, public companies will sign written contracts on the principle of equality and voluntariness. They will also have to take necessary measures to prevent related persons from interfering into their operations, causing damage to their interests or losses of capital, assets or other resources.– (VLLF)