Reduction of the Minimum Quorum for the 감사인선임위원회 from 7 to 5 Members

[Asia Economy Reporter Minji Lee] The minimum quorum for the auditor appointment committee required for appointing auditors of listed companies will be relaxed from 7 members to 5 members. Additionally, the qualification for committee members from creditor financial institutions will be expanded to include employees beyond executives.

According to the Financial Services Commission on the 5th, at the Cabinet meeting held that morning, the amendment to the Enforcement Decree of the Act on External Audit of Stock Companies, which includes reducing the minimum quorum of the auditor appointment committee, was approved. The amendment will take effect from the date of promulgation of the revised enforcement decree.

Previously, after announcing support for the market settlement of accounting reform through the 'Accounting Reform Meeting' in June last year, the Financial Services Commission completed amendments to the enforcement decree of the External Audit Act last year, including deleting the grounds for the Financial Supervisory Service's discretionary designation of auditors based on financial criteria and establishing quorum regulations for the Standard Audit Time Deliberation Committee.

With this amendment to the enforcement decree, the minimum quorum for the auditor appointment committee of listed companies will be reduced from 7 to 5 members. Furthermore, the qualification for committee members from creditor financial institutions will be expanded to include employees beyond executives. Previously, the committee was composed of at least 7 members including 1 auditor, up to 2 outside directors, 1 institutional investor executive or employee, 2 shareholders, and 2 executives from creditor financial institutions. Going forward, the committee can be composed of 5 members including 1 auditor, up to 2 outside directors, 1 institutional investor executive or employee, 1 shareholder, and 1 executive or employee from creditor financial institutions.

The Financial Services Commission stated, "This reflects the practical difficulty in forming the committee due to the previous restriction limiting creditor financial institution members to executives and the passive attitude of external members such as shareholders." They added, "We expect that the amendment will alleviate the burden on companies and help resolve difficulties related to auditor appointments."

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