South Korea extends directors' duty of loyalty to shareholders
South Korea's National Assembly passed an amendment to the Commercial Act on 3 July 2025. Directors now owe their duty of loyalty to shareholders as well as to the company, and must treat all shareholders fairly, from promulgation. After a one-year grace period, listed companies must have independent directors on at least one-third of the board and the 3% voting cap widens. Large listed companies must offer electronic shareholder meetings from 1 January 2027.
The amendment passed by 220 votes to 29. It revived a bill vetoed earlier in 2025.
What changed
- Duty of loyalty (new article 382-3): directors must act for the company and its shareholders, protect the interests of shareholders as a whole and treat all shareholders fairly. In force on promulgation.
- Independent directors: listed companies' "outside directors" become "independent directors", and the minimum share of the board rises from a quarter to a third.
- 3% rule: the cap on the combined votes of a controlling shareholder and its related parties now also applies when electing or removing audit committee members who are independent directors.
- Electronic meetings: large listed companies must hold hybrid meetings where remote shareholders can take part and vote in real time, from 1 January 2027.
- The board and 3% changes apply after a one-year grace period.
Who is affected
Korean companies, especially listed groups, their boards and company secretaries.
Later developments
Mandatory cumulative voting and wider separate election of audit committee members were left out in July. A second amendment, passed on 25 August 2025, added them for listed companies with assets of KRW 2 trillion or more, from 10 September 2026. See our coverage.