Signal Korea's 2025 Commercial Act amendment extends directors' duty of loyalty to all shareholders

Summary

The 2025 amendment to Korea's Commercial Act broadened directors' duty of loyalty from the company alone to the company and all its shareholders. It was accompanied by a higher share of independent directors, mandatory cumulative voting, stricter requirements for board committees and wider duties to record board decisions. The essay argues that board transparency and independence have therefore become central to corporate competitiveness. Boards should function as the core engine handling strategy, risk, AI, data and climate issues rather than as formal compliance bodies. Firms are urged to realign board composition with business strategy, strengthen documentation of decision-making, and lift risk management from operational level to board level.