Economic Reform Institute: "Samsung Must Formalize Compliance Committee Functions as Board Authority"

[Asia Economy Reporter Dongwoo Lee] The Economic Reform Solidarity announced on the 11th that it sent official letters to Samsung Electronics and six other Samsung affiliates, requesting amendments to the articles of incorporation to improve governance by explicitly designating the monitoring functions handled by the Samsung Compliance Committee as the authority of the board of directors.

The Samsung Compliance Committee was launched in February last year following the retrial court's order for Vice Chairman Lee Jae-yong to establish an internal compliance monitoring system amid the 'state affairs manipulation case.'

The Compliance Committee is an independent organization that is ostensibly not subject to Samsung's instructions. Seven major affiliates, including Samsung Electronics, Samsung C&T, Samsung SDI, Samsung Electro-Mechanics, Samsung SDS, Samsung Life Insurance, and Samsung Fire & Marine Insurance, participate as contracting parties and are monitored by the Compliance Committee.

The Economic Reform Solidarity emphasized that entrusting matters that should be decided and executed under the authority and responsibility of the board of directors to an external body (the Compliance Committee) does not align with the principle of board-centered responsible management.

The Solidarity stated that it proposed to Samsung affiliates, "Through amendments to the articles of incorporation, to clearly establish that the compliance monitoring functions currently handled by the Samsung Compliance Committee fall under the authority of the board of directors, making the board the main entity responsible for establishing and operating internal control and compliance monitoring systems."

It added, "To become a company with sound and transparent corporate governance, a reorganization of the board of directors is necessary," and argued, "There should be a provision in the articles of incorporation that prohibits individuals who have been convicted in cases involving embezzlement or breach of trust related to the company from being appointed as executives (including unregistered executives)."

They also proposed the introduction of a 'recommendatory shareholder proposal system' and a 'shareholders' meeting remuneration review system' to facilitate communication between the company and shareholders and to allow shareholders to express opinions on executive compensation calculations. Additionally, they requested amendments to the articles of incorporation to establish regulations for appointing a majority of audit committee members through separate elections and for holding shareholders' meetings in a hybrid online format.

The Solidarity demanded that each affiliate respond by the 15th of next month on whether they will reflect the proposed amendments in their articles of incorporation, and if it is difficult to do so, to explain the reasons.

This content was produced with the assistance of AI translation services.