The Controversial 'Sangjo Gongjejoap' Undergoes Complete Overhaul... Chairman Becomes Unpaid, General Assembly Powers Strengthened

Fair Trade Commission Approves Amendment of Association Bylaws and Mutual Aid Regulations

[Sejong=Asia Economy Reporter Joo Sang-don] The fixed salary of the chairman of the Korea Funeral Mutual Aid Association (Hansanggong) will be abolished, and the authority of the general meeting will be strengthened to prevent the chairman's unilateral decisions. This is part of a reform following controversies such as the former chairman's private misuse of education expenses.

The Fair Trade Commission announced on the 13th that it approved the "Articles of Incorporation Amendment for Structural Innovation of the Funeral Mutual Aid Association" containing these details.

Hansanggong was launched as a consumer damage compensation organization for the funeral service industry with the approval of the Fair Trade Commission, along with the Funeral Guarantee Mutual Aid Association, in accordance with the revised Installment Transactions Act in 2010. However, at the end of 2018, controversies arose over the chairman's private misuse of budget (such as education expenses), excessive high salary, and overestimated retirement pay, leading to the chairman's mid-term resignation. Since then, the organization has been operating under an acting chairman system. Considering that transparent and fair association management is difficult under the current operational structure, this structural innovation plan was prepared.

First, under this amendment, the fixed salary of the Hansanggong chairman will be abolished. Previously, the chairman's annual salary was around 200 million KRW, which continuously sparked controversy over the high salary. Among the four former chairmen, except for the inaugural one, all three were former Fair Trade Commission officials. However, the Fair Trade Commission plans to request Hansanggong to establish practical and systematic service regulations (including activity expenses and performance bonuses) in advance, considering that abolishing the fixed salary might make it difficult to recruit excellent talent.

To dispel controversies over the chairman's expertise, qualification requirements will also be strengthened. Until now, the articles of incorporation did not specify qualification requirements when appointing the chairman, only broadly announcing requirements during the appointment notice. Going forward, specific qualification requirements will be stipulated in the articles of incorporation.

To check the chairman's unilateral decision-making, the authority of the general meeting will also be strengthened. In the future, membership admission and performance bonuses for executives must be approved by the general meeting.

Additionally, the screening of new member companies will become more stringent. Previously, after deliberation by the board of directors and approval by the chairman, companies could join the association. However, going forward, approval must be obtained through the general meeting, not the chairman. The Fair Trade Commission expects this to prevent the admission of insolvent companies in advance and protect the association's financial soundness.

A Fair Trade Commission official said, "To establish this structural innovation as a model case for fair and transparent mutual aid association management, we have requested Hansanggong to establish thorough detailed plans and will monitor them closely. We will also proactively manage and supervise mutual aid associations by preemptively reviewing regulations related to consumer rights protection and recommending amendments to the mutual aid associations."

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