Hankyung Association & Gwangjang Joint Seminar: "Companies Need Proactive Response to Legal and Institutional Risks"

Corporate Management Legal and Institutional Risk Assessment
Need to Establish Supply Chain Due Diligence System
"Prepare Sophisticated and Multidimensional Responses"

A forum was held to examine the legal and institutional risks that domestic companies may face this year and to explore countermeasures.

The Korea Economic Association (KEA) held the "2024 Corporate Management Legal and Institutional Risk Review Seminar" on the 30th at the FKI Tower in Yeouido, Seoul, together with the law firm Bae, Kim & Lee LLC.

Kim Chang-beom, Vice Chairman of the Korea Economic Association, is delivering a greeting at the "2024 Corporate Management Legal and Institutional Risk Assessment Seminar" held on the 30th at the FKI Tower Conference Center in Yeouido. Photo by Korea Economic Association

Kim Chang-beom, KEA's full-time vice chairman, emphasized, "Domestically, regulatory legislation is expected to increase due to the general election phase this year, and externally, environmental regulations such as the European Union (EU) Supply Chain Due Diligence Directive and the Carbon Border Adjustment Mechanism are expected to be strengthened. Companies need to proactively respond to these risks."

At the seminar, Bae, Kim & Lee LLC introduced trends and proposed countermeasures in various fields including company law, capital markets law, fair trade law, industrial safety and labor, supply chain management, and shareholder rights exercise. Regarding company law and capital markets law, attorney Kim Kyung-chun mentioned mandatory tender offers, insider block deal pre-disclosure systems, and stock purchase rights for dissenting shareholders in unlisted company spin-offs, emphasizing continuous monitoring. Attorney Kim said, "The mandatory tender offer system, which forces acquirers to make public offers to minority shareholders when acquiring listed companies, increases the burden on acquirers, potentially delaying corporate restructuring and shrinking the mergers and acquisitions market. It is necessary to continuously monitor the legislative process going forward."

Attorney Seon Jeong-ho introduced fair trade law, stating, "As concerns over monopolies and oligopolies by large platforms grow, the Fair Trade Commission is increasingly likely to establish related regulations. Legislative movements are also emerging for the so-called 'Platform Competition Promotion Act,' which mainly includes regulations designating dominant platform operators."

Attorney Kim Sang-min noted that the final agreement on the 'EU Supply Chain Due Diligence Directive' is imminent, advising, "In countries where supply chain due diligence is already implemented, such as Germany and France, lawsuits against companies are actively being filed. Since supply chain due diligence legislation is pending in the National Assembly domestically, companies need to establish supply chain due diligence systems before legislation."

The EU Council, representing the 27 EU member states, effectively finalized the "Corporate Sustainable Supply Chain Due Diligence Directive" last December, which mandates due diligence on human rights and environmental issues throughout companies' production processes. Attorney Song Hyun-seok referenced a Supreme Court precedent that requires majority union consent and assessment of union consent abuse when changing employment rules disadvantageously, suggesting, "Companies need to prevent future disputes or conflicts." Regarding the failure to postpone the expansion of the Serious Accident Punishment Act to workplaces with 5 to fewer than 50 employees, Attorney Song also stated, "The full application of this law raises concerns about the closure of small and micro businesses and worker unemployment."

Researcher Kim Soo-yeon said, "The biggest issue in shareholder rights exercise this year is resolving the 'Korea Discount.' Since activist fund attacks may accelerate, more sophisticated and multidimensional response strategies need to be prepared."

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