[Shareholders' Meeting Hot Issue] "Must Prevent Punishment of the Head"…Companies Face Urgent Threat from the Jungcheo Act

Separate Appointment of Chief Safety Officer
Transition to Dual CEO System with Independent Representatives for 'Risk Diversification'

[Asia Economy reporters Donghoon Jeong and Chaeseok Moon] One of the ‘hot potatoes’ at this year’s corporate shareholder meetings is the Serious Accidents Punishment Act. Since the law came into effect in January, allowing business owners and management officials to be punished when safety accidents occur, major companies have been under intense pressure. Companies are actively ‘spreading risk’ by appointing Chief Safety Officers (CSOs) and converting from a sole representative system to a co-representative system to prevent the punishment of the group head.

According to the business community on the 14th, companies are focusing on establishing safety and health management systems to avoid CEO punishment. Although they have been steadily preparing organizations and personnel since last year amid political pressure and government enforcement ordinance legislative notices, it is expected that investors’ demands for risk management will intensify during the shareholder meeting season, creating an atmosphere that ‘the shareholder meeting season must be handled well.’ Even if safety and health issues are not formally registered as agenda items, pressure can be applied through various channels such as shareholder letters. In fact, major credit rating agencies also cite industrial accident risk management as a key monitoring factor.

In particular, the Serious Accidents Punishment Act specifies that simply appointing a ‘safety and health officer’ responsible for safety and health tasks does not exempt the CEO and business owner from their obligations. Therefore, safety and health officers are expected to be appointed as internal or registered directors through this shareholder meeting season while handling their duties.

POSCO, a leading company in the steel industry, appointed Kim Jiyong, Head of the Safety and Environment Division (Vice President), as an internal director at POSCO’s founding general meeting on the 2nd of this month after transitioning to a holding company system. Kim is expected to serve as the CSO. Ahead of its shareholder meeting, Hyundai Heavy Industries Group promoted Vice President Noh Jinyul to President and appointed him as the head of the Safety Planning Office, responsible for the company-wide CSO role, in January. Hyundai Heavy Industries is strengthening its safety organization and expanding infrastructure and education at the group level, including ▲ a 20% increase in safety personnel ▲ establishment of a new risk assessment system to identify and improve hazardous factors on-site ▲ experiential training for workers in high-risk processes ▲ and enhanced practical safety education. GS Caltex, which already held its shareholder meeting on the 25th of last month, promoted Lee Doohee, Chief Safety Officer and co-CEO as well as Head of Production, from Vice President to President at the end of last year.

However, regardless of the industry, the government is actively pursuing CEO indictments for companies where industrial accident fatalities have occurred, and the ambiguity regarding punishment and responsibility subjects remains, causing heightened concern. A source from the refining industry said, "Due to vague and comprehensive legal standards, it is difficult to identify the obligated parties, obligation fulfillment, and scope of targets," adding, "The temporary nationwide increase in demand for safety personnel has made it difficult to secure experts."

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