Under the Korean Commercial Code (“KCC”), there are 5 types of entities available for formation: general partnership (Hapmyung Hoesa in Korean), limited partnership (Hapja Hoesa), limited liability company (Yuhan Chaekim Hoesa), joint-stock company (Chusik Hoesa), and limited company (Yuhan Hoesa).  In actual practice, however, the two most common forms of corporate entities established in Korea are the joint-stock company (Chusik Hoesa) and the limited company (Yuhan Hoesa).

Between the joint-stock company (Chusik Hoesa) and the limited company (Yuhan Hoesa), the Chusik Hoesa is the most common form of legal entity in Korea.  This form of legal entity is typically appropriate for a large enterprise that will need substantial capital.  The Chusik Hoesa is the only type of legal entity eligible to list its shares on the Korea Stock Exchange, or that may issue corporate bonds.

The Yuhan Hoesa is a form of legal entity (in comparison to a Chusik Hoesa) that allows for greater flexibility in terms of corporate governance due to less prescriptive corporate governance requirements under the KCC. For instance, public disclosure of financial information apply in a narrower range of circumstances for Yuhan Hoesas than in the case of Chusik Hoesas. (e.g., unlike a Chusik Hoesa, there is no requirement for a Yuhan Hoesa to provide public notice of its balance sheet).

In case of a Chusik Hoesa, the company’s Articles of Incorporation (“AOI”) must specify the authorized capital. In other words, the AOI must state the aggregate number of shares that the board of directors (“BOD”) is authorized to issue by resolution. On the other hand, in case of a Yuhan Hoesa, there is no concept of authorized capital. Accordingly, authorized capital and issued capital are the same as the amount of equity is fixed and specified in its AOI. There is no minimum paid-in capital requirements in both forms.

Unless otherwise specified, any reference to a company in this guide refers to a Chusik Hoesa.

Stricter Requirements Regarding Directors’ Duty to Supervise Corporate Operations and Compliance Systems

The Korean Supreme Court has recently issued a series of rulings emphasizing directors’ duty to generally supervise corporate operations and ensure that adequate compliance systems are in place. We expect that this trend towards a heightened duty-to-supervise will continue in the future.

• In 2021, the Korean Supreme Court found that in a case where a company was fined for price-fixing, the representative director (akin to a CEO in Korea) is liable to the company for resulting losses, even if such director did not know the price-fixing in detail or was not actively implicated, if he or she failed to establish a compliance system in place to prevent such illegal activities.
• In 2022, in a similar case, the Korean Supreme Court found that in a case where a company was fined for price-fixing, non-representative directors and outside directors are also liable to the company for resulting losses, even if they did not know the price-fixing in detail or were not actively implicated, if they failed to establish a compliance system in place to prevent such illegal activities.

Restriction on Separate Listing of Spun-off Subsidiaries

Recently, the practice of major listed companies in Korea whereby they spun off a profitable part of their business as wholly-owned subsidiaries, and then listing such subsidiaries became hotly debated, as harming shareholder value, especially for retail shareholders.

In response to such criticism, the FSC has announced in September 2022 three regulatory steps to restrict such practice, which were all implemented in 2022:

• Effective as of September 28, 2022, if spun-off companies seek listing at the Korea Exchange (“KRX”) within five years from the spin-off, KRX shall consider how such a company acted to protect minority shareholders, and shall deny listing if such actions are inadequate.
• Effective as of October 18, 2022, listed companies seeking to spin off subsidiaries must disclose specific grounds for pursuing the spin-off.
• Effective as of December 27, 2022, the Financial Services and Capital Markets Act (“FSCMA”) Enforcement Decree was amended so that shareholders who object to spin-off of listed companies will have appraisal rights.

KCC Amendment Relating to Improvement of Corporate Governance and Minority Shareholders’ Rights

Became effective on December 29, 2020, which increased minority shareholders’ rights by:

• Allowing multi-level derivative lawsuits by creating a cause of action for qualifying shareholders of the parent company against a director of a subsidiary when the director breaches a fiduciary duty. The shareholding thresholds for bringing a multi-level derivative lawsuit are: for both unlisted and listed companies, any shareholder holding more than 1% of the total number of issued shares regardless of any holding period; and for listed companies, any shareholder who has continuously held 0.5% of the total number of issued shares during the preceding six-month period
• Establishing a separate election system where at least one director, also a member of the audit committee, is to be elected separately from other directors at the general elections for BOD, and expanding the “3% cap rule” applied to election of audit committee members who are not outside directors (i.e., all individual shareholders, as opposed to only the largest shareholder and its related parties, may not exercise their voting rights above the 3% threshold)
• Reaffirming established court precedent by explicitly allowing minority shareholders of listed companies to choose between either (i) the general ownership requirements pertaining to minority shareholders’ rights; or (ii) the requirements pertaining to minority shareholder rights under special provisions relating to listed companies under the KCC (i.e., relaxed percentage ownership requirement and a minimum six-month holding period) in order to exercise their minority shareholder rights

Amended Enforcement Decree of the KCC

Became effective on February 1, 2021, and the KCC Enforcement Decree was amended to introduce certain fine-tuning revisions to accommodate the KCC amendment of expanding the aforementioned “3% cap rule.”

A joint-stock company (Chusik Hoesa) with paid-in capital of KRW 1 billion (approx. USD 865,000) or more must have at least three directors and one statutory auditor. The statutory auditor is an independent, BOD-level position. The statutory auditor’s role is to monitor the company’s financial affairs and the directors’ performance of their duties, and to review the proposed annual financial statements. This should not be confused with accounting audit requirements; the statutory auditor is an internal corporate governance organ of the company, separate from the independent external accountants who perform an annual audit, if any.

The establishment of a formal BOD is required for a Chusik Hoesa (except where the company’s paid-in capital is less than KRW 1 billion). Other than certain matters stipulated by law or in the AOI that must be determined by a GMS, the BOD may determine any and all important corporate policies and management matters except for regular day-to-day business matters which are decided by the representative director (which is akin to a CEO) or by separately-appointed executive officers if an executive officer system is adopted in the AOI. Unless otherwise provided in the AOI, all actions and resolutions of the BOD may be adopted by the affirmative vote of a majority of the directors attending a properly convened BOD meeting.

In sum, the overall management of a Chusik Hoesa consists of four executive units:

The GMS

The BOD, which decides operations of the company not specifically reserved for the GMS

• A company with paid-in capital of less than KRW 1 billion can elect to have one or two directors with no BOD.

The representative director(s) or executive officers with binding authority responsible for implementing the decisions of the GMS and BOD

• The statutory auditor(s) or the audit committee, which supervises the management of the company’s business and audits the company’s accounts
  • A non-listed company with paid-in capital of less than KRW 1 billion does not require a statutory auditor or audit committee.
  • A listed company with paid-in capital of KRW 100 billion or more must have at least one full-time statutory auditor or an audit committee.
  • A listed company with total assets of KRW 2 trillion or more must establish an audit committee in lieu of having statutory auditor(s), consisting of three or more directors with at least two-thirds of the committee members composed of outside directors, of which the committee representative should be elected, and at least one committee member be an accounting or financial expert.

The limited liability company (Yuhan Hoesa) is required to have only one director (who can act as representative director) regardless of its size, and the establishment of a BOD and appointment of a statutory auditor are both optional.

Shareholders’ Ordinary Resolution

Certain matters, which include the following, must be authorized by an ordinary resolution of the shareholders, adopted by a majority of the votes of the shareholders present representing at least one-fourth of the total number of issued and outstanding shares:

• Election of a director (representative director if the AOI so requires), statutory auditor, or liquidator
• Determination of compensation limits for directors, statutory auditors, and liquidators
• Authorization for a company to purchase its own shares
• Approval of annual financial statements and declaration of dividends

Shareholders’ Special Resolution

Matters requiring a special resolution, which include the following, must be adopted by at least two-thirds of the votes of the shareholders present representing at least one-third of the total number of the issued and outstanding shares:

• Amendment of the AOI
• Dismissal of a director or a statutory auditor
• Issuance of shares at a price less than par value
• Reduction of paid‑in capital
• Dissolution and liquidation
• Approval of a merger or spin-off
• Granting of stock options
• BOD Resolution

A BOD resolution is required for matters concerning business management, including, but not limited to:

• Disposition of material assets
• Borrowings of substantial amounts
• Establishment and the closing of a branch office
• Appointment and dismissal of a representative director or executive officers

Some important corporate decisions such as corporate merger, split, business transfer or dissolution require both GMS and BOD resolutions. Decisions made by the BOD are carried out by the representative director or executive officers.

Shareholder Approval

The KCC requires shareholders’ approval for certain matters, but a company may further restrict directors’ powers to require shareholders’ approval via the AOI. Shareholders or the authorized proxies exercise their voting rights by attending the GMS. Voting may be done in writing in lieu of actual attendance if the AOI so provides. Electronic voting may be possible pursuant to a BOD resolution, with the requirement that shareholders voting electronically must obtain shareholder certification and vote using a digital signature as set forth in the Digital Signature Act.

The KCC is the main corporate governance statute in Korea, applicable to both listed and unlisted companies. The FSCMA governs certain corporate governance matters for listed companies, such as disclosure and BOD composition, and the Monopoly Regulations and Fair Trade Law (“MRFTL”) bans cross-shareholding, circular-shareholding, and debt guarantees for affiliates, among others. A number of civil and criminal case precedents are used to interpret and apply the relevant statutory provisions.

On constitution of the BOD, please see our responses to Item 3. The BOD, of which there can be only one, acts as both the decision-making authority and supervisor of the company’s day-to-day management and oversight.  However, the BOD may establish committee(s), consisting of two or more directors, and delegate certain BOD authorities to enhance efficiency or to grant independent decision-making process with respect to certain specific issues.

Appointment

During incorporation of a company, directors are elected by the promoters, whereas after incorporation, a shareholders’ ordinary resolution (a resolution adopted by a majority of the votes of the shareholders present representing at least one-fourth of the total number of the issued and outstanding shares) is required for appointment. The GMS has exclusive authority in electing directors, which cannot be delegated. Unless the AOI authorizes a cumulative voting system, directors are voted on a one-share, one-vote principle.

A shareholder or group of shareholders holding more than 3% of the total outstanding shares of the company, excluding non-voting shares (more than 1% for listed companies and more than 0.5% for listed companies with capital in excess of KRW 100 billion, held for the preceding six months period) can propose candidates for directors no later than six weeks prior to the GMS. A listed company whose assets are KRW 2 trillion or more must establish a committee to recommend candidates for outside directors.

Dismissal

Directors can be dismissed at any time via a special GMS resolution (a resolution adopted by at least two-thirds of the votes of the shareholders present representing at least one-third of the total number of the issued and outstanding shares). If a director is removed during term of office without justifiable cause, the director may demand compensation for damages arising from the dismissal.

General BOD Composition Requirements

• A FSCMA amendment that bans a single gender BOD composition in a listed company with total assets of KRW 2 trillion or more became effective on August 5, 2020. A company in violation must change its BOD composition in compliance with the amendment within the two-year grace period from the effective date of the amendment.
• Statutory auditors may not serve as directors of the company or the company’s subsidiaries.
• At least three directors must be appointed except for a company with paid-in capital of less than KRW 1 billion.
• No independence requirement except for outside directors
• No age, nationality, or residence qualification
• Only natural person(s) allowed
• Directors’ term of office cannot exceed three years, with exceptions that the term may be extended by the AOI until the closing of an ordinary general meeting, and reappointment after three years.
• Directors may hold shares of the company, but if so, a listed company must disclose this fact in its corporate disclosure information under FISCMA.

Outside Director Restriction

Due to independence issues, the following persons cannot become outside directors:

• Directors, executive officers or employees who are engaged in the regular business of the company; or directors, statutory auditors, executive officers or employees who were engaged in the regular business of the company within the last two years
• When the largest shareholder of the company is a natural person, the principal, his spouse and lineal ascendants and descendants
• When the largest shareholder of the company is a corporation, directors, auditors and employees of the corporation
• Spouses, lineal ascendants and descendants of directors, auditors and executive officers
• Directors, auditors, executive officers and employees of a parent or subsidiary company of the relevant company
• Directors, auditors, executive officers and employees of a corporation that has a significant interest in the relevant company
• Directors, auditors, executive officers and employees of another corporation for which a director, executive officer or employee of the relevant company work as director or executive officer
• For listed companies, additional restrictions include the following:
  • Minors or incompetent persons
  • A person who is engaged in the regular business of an affiliated company as an executive or employee thereof, or who was engaged in such capacity within the past three years
  • A person subject to bankruptcy adjudication without his/her rights having been reinstated
  • A person subject to imprisonment or heavier punishment during the past two years
  • A person dismissed or removed from office during the past two years due to violation of financial regulations as determined by a Presidential Decree
  • A shareholder owning more than 10% of the total issued and outstanding shares, other than non-voting shares or exerting de facto influence on important matters of listed companies and his spouse and lineal ascendants and descendants

The following disqualification criteria for listed companies were added by the amended Enforcement Decree of the KCC in January 2020:

• A person who worked as an outside director of such company for more than six years
• A person who worked as an outside director of the company or any of its affiliates for more than nine years in total

The BOD is in charge of setting and changing business strategy in the best interest of the company. Business strategies include, but are not limited to, establishing goals, finding resources, allocating funds, and monitoring the execution of business plans. In case where the shareholders disagree with the BOD’s strategic decisions, they may call for a shareholders’ meeting or file a derivative suit. However, the Court may protect the BOD’s decision based on the business judgement rule, factoring in whether the decision was made in good faith, with ordinary due care, in a manner the directors reasonably believed was in the best interest of the company at the time of decision.

Director remuneration must be determined by the AOI or an ordinary resolution of the GMS. Generally, the GMS provides the aggregate ceiling of the amount of director remuneration and the BOD allocates to individual directors. Recently, Korean companies have become more cautious not to excessively compensate directors, which could lead to challenges to the decision of the BOD approving such payment. Under the FSCMA, listed and non-listed companies which are required to submit a business report to the Financial Services Commission (“FSC”) and the KRX, must disclose in their regular reports the amount and calculation method of compensation made to each director, officer, and statutory auditor who received KRW 500 million or more and the top five compensated personnel in the relevant business year.

Under the KCC, directors owe certain duties to the company, which when intentionally or negligently breached, may result in directors being liable to the company. In Korea, it is noteworthy that duties are owed in principle only to the company and not to its shareholders.

These duties include a duty of care as a prudent manager, duty to monitor other directors’ management, duty of confidentiality, duty not to self-deal, duty not to misappropriate corporate opportunities, and duty to not compete. If a director violates a duty intentionally or with gross negligence, the director will be jointly and severally liable to third parties, but precedents indicate that shareholders are rarely considered third parties in such cases. When a BOD resolution results in violating a duty negligently, directors who voted in favor of the resolution will be held liable to the company and third parties. Dissenting votes must have been stated during the BOD meeting to avoid liability.

Directors may also be subject to criminal liabilities if they breach their fiduciary duties.

A director may be indemnified for personal civil liabilities by the company with the unanimous consent of its shareholders. The company may also provide in the AOI certain limitations to the amount directors need to pay for damages suffered by the company. Specifically, a director may be indemnified for any amount of damages exceeding six times the amount of his/her remuneration for the past one year prior to the wrongdoing (for outside directors, three times). However, in cases where a director intentionally or grossly negligently committed a wrongdoing, engaged in competitive business, misappropriated business opportunity, or engaged in self-dealing without BOD approval, such limitation cannot be applied. Although directors may obtain a certain level of coverage from liability insurance, which is common practice in Korea, such insurance will not cover fraudulent, criminal or dishonest acts, or wilful breach of duty.

Korean courts have also held that directors may not be held liable under the business judgment rule in certain cases where the director/officer’s conduct was performed on behalf of the relevant corporate body and not in an individual capacity, was legitimate, and was determined to be in the company’s best interest at the time of decision making.

The KCC does not provide rules regarding BOD member evaluation and oversight. Instead, a company internally regulates directors’ conduct (e.g., dismissal of director via a special resolution at the GMS).

Communication between the BOD and shareholders are generally done via disclosures and the GMS. Mostly, companies have limited engagement with shareholders, but listed companies often have investor relations departments in charge of responding to shareholders’ inquiries and requests. Recently, certain companies such as Samsung Electronics and Samsung C&T established governance committees within their respective BOD to gather shareholders’ opinions.

In Korea, class shares (e.g., shares entitled to preferred dividends or distribution of residual assets, exercise of voting rights, redeemable rights and/or conversion rights) are widely used, but they must comply with the ‘one voting right per share’ principle and certain legal restrictions such as that the total number of class shares having no or limited voting rights cannot exceed 25% (for listed companies, 50%) of the total number of issued shares. Issuance of class shares must be permitted under the company’s AOI, recorded on share subscription forms, shareholder registry and share certificate, and registered and thereby publicly disclosed.

The KCC requires a business report and financial statements prepared by the director(s) and an internal audit report prepared by the statutory auditor (or the audit committee) to be made available for the shareholders’ and creditors’ inspection at least one week before the ordinary GMS. Joint-stock companies must provide public notice of their balance sheet.

The Act on External Audit of Stock Companies further requires any listed company and any joint-stock company or limited company of a certain size (e.g., with assets or sales equal to or greater than KRW 50 billion) to have its financial statements audited by its external auditor and the audit report provided to the shareholders.

The following are a few additional disclosure regulations for listed companies provided for by the FSCMA:

• Submit to the KRX annual reports within 90 days of the end of each fiscal year and semi-annual and quarterly reports within 45 days of the end of the applicable quarter
• Report to the FSC certain events or BOD resolutions provided in the FSCMA that may affect an investor’s decision, which will then be made available to the public by the FSC and the KRX via their websites
• Attach the AOI to its annual report, which will be made publicly available on the Data Analysis, Retrieval and Transfer System (“Dart”) website managed by the Financial Supervisory Service.

In addition, the MRFTL provides additional disclosure requirements for certain designated corporate groups, including the requirement to publicly disclose large-scale affiliate transactions (i.e., transactions equal to or greater than 5% of the relevant company’s total capital or paid-in capital amount, or KRW 5 billion).

The KRX recently introduced a mandatory corporate governance disclosure system whereby companies listed on the KOSPI market with KRW 2 trillion in assets or more are required to submit an annual corporate governance report to the KRX. FSC announced that this requirement will be expanded to all KOSPI-listed companies by 2026.

Shareholders may request a GMS to be held or propose certain items for the agenda by submitting a document stating the agenda for the meeting and reasons for the meeting to the BOD according to the following shareholding thresholds.

• For an unlisted company, the shareholders who hold at least 3% of the total issued and outstanding shares
• For a listed company, the shareholders who hold (i) at least 3% of the total issued and outstanding shares or (ii) at least 1.5% of the total issued and outstanding shares consecutively for at least the preceding six months for demanding the convening of a GMS
• For a listed company with a total capital of KRW 100 billion or more at the end of the preceding fiscal year, shareholders who hold (i) at least 3% of the total issued and outstanding shares or (ii) at least 0.5% of the total issued and outstanding shares with voting rights consecutively for at least the preceding six months

When such requests are made, the company must convene the meeting as long as they do not violate the law or AOI. If the BOD fails to promptly respond, shareholders may convene the meeting after obtaining court permission.

A shareholder who holds more than 1% of the total outstanding shares of the company (or, for listed companies, 0.01% held for the preceding six-month period) may demand the company to sue the directors who intentionally or negligently violated the AOI or applicable laws, or failed to perform their duties. If a company fails to take proper action to seek damages from the directors within 30 days following the request, shareholders holding more than 1% of the total outstanding shares of a company (or, for listed companies, 0.01% held for the preceding six-month period) can initiate a derivative action. However, shareholder class actions are permitted for only certain claims listed in the Securities-Related Class Action Act.

Shareholders also hold the right to request an injunction against the company or its directors. For instance, shareholders may file for a preliminary injunction under the KCC to prevent the closing of a merger or spin off, and then seek a permanent injunction in subsequent legal proceedings. Dismissal of the directors in violation is another available action by the shareholders, which must be approved by an extraordinary GMS, requiring a quorum of two-thirds of the shareholders present and representing at least one-third of the total issued and outstanding shares. Shareholders with 3% or more of the total outstanding shares may instead demand the court to remove a director. For a listed company, such right can be exercised by a shareholder holding 0.5% or more of the total outstanding shares (0.25% for a company with paid-in capital of KRW 100 billion or more) if the shares were held for at least six months.

After the financial crisis in the late 1990s, lack of corporate transparency and competency led to several cases of shareholder activism in South Korea. The People’s Solidarity for Participatory Democracy (“PSPD”) was first to file a lawsuit to revoke shareholder resolution against Cheil Bank in 1997, and a shareholder derivative suit against Samsung Electronics in 1998. Recently, the trend moved toward correcting chaebol family-oriented corporate governance and engaging in corporate mergers and splits.

The four main players of shareholder activism in South Korea are (i) NGOs (e.g., PSPD), (ii) foreign activist hedge funds (e.g., the Tiger Fund, Sovereign Asset Management, Hermes, Carl Icahn and Elliott), (iii) emerging domestic activist funds (e.g., the KCGI, Platform Partners Asset Management, KB Asset Management, and Korea Investment Value Asset Management), and (iv) institutional investors, who became more active with the introduction of the Stewardship Code. The Korea Corporate Governance Service (“CGS”) is responsible for enacting and amending the Stewardship Code. The KCC Amendment passed in December 2020 is expected to further increase shareholder activism through the expansion of the 3% cap rule, among others (please refer to Item 2 for details on the KCC Amendment).

The most commonly used tools are agenda proposals and proxy fighting. Shareholders may also exert influence over management through their rights established by the KCC (e.g., inspect and copy accounting books; request the court to appoint inspectors to obtain information; call a temporary shareholders’ meeting; propose agendas for the shareholders’ meeting to adopt certain policies; request cumulative voting; file injunction suits to stop director misconduct; file a derivative lawsuit; request the court to remove managing directors; and request the return of profits by shareholders who illegally profited from the company.)

In 2022, activist investors have been active, and the below instances have been most noteworthy:

• Alliance Partners, which owned 1.1% in SM Entertainment (a KOSDAQ-listed company) has forced an appointment of a statutory auditor not appointed by the controlling shareholder, as well as forcing the company to terminate a contract with another company owned by the controlling shareholder.
• Anda Asset Management, which owned 0.53% in SK Chemical (a KOSPI-listed company) has made an attempt, albeit unsuccessful, to force the company to increase dividends, sell affiliate shares, and increase shareholder value.

A company must hold an ordinary GMS at least once a year, usually held within three months from the end of the previous fiscal year. At least one week in advance of the ordinary GMS, a business report, financial statements, and an internal audit report must be provided for inspection by shareholders. A written notice stating the date, time and agenda of GMS must be provided to each shareholder at least two weeks prior to the date of the meeting, unless otherwise extended by the AOI.

The KCC provides which matters must be authorized by a shareholders’ resolution at a GMS. Otherwise, many shareholders typically receive advice from major foreign proxy advisories like the Institutional Shareholders Services and Glass Lewis; and local advisories like CGS, Sustinvest and Daishin Economic Research Institute.

Korean law does not establish ways in which stakeholders including employees can participate in corporate governance except for exercising voting rights via employee stock ownership associations. Employees may indirectly influence corporate management through labor unions, collective bargaining, and collective action (such as strikes). Creditors can impose certain restrictions on corporate decisions based on loan agreements. Customers and government entities normally do not have control over corporate governance.

As stated in Item 22, Korean law does not have a guideline regarding how non-shareholder stakeholders’ interests should be factored into the corporate governance decisions. Stakeholders may rely on collective bargaining, unions, strikes, introduction of bills, or financial restrictions to appeal their positions.

Many Korean companies have begun taking environmental, social, and governance (“ESG”) issues seriously as they are establishing themselves alongside global companies and markets, and as ESG metrics become more important to investors in making decisions on investment and exercising shareholder rights. As stated in Item 16, disclosure of corporate governance reports has been made mandatory for certain KOSPI-listed companies, the scope of which is only expected to expand.

On environment, the Framework Act on Low Carbon and Green Growth requires business reports providing data on designation and cancellation of companies that manage facilities, greenhouse gas emission and energy usage quantities, and green technology/green industry certification issues.  Lawmakers have recently proposed a bill for a new Framework Act on Implementing Carbon Free Society to Respond to Climate Change, which is expected to take effect on March 25, 2022 and replace the foregoing Framework Act on Low Carbon and Green Growth, and aims to achieve a carbon-neutral society by 2050.

If an investor in a listed company ultimately holds 5% or more of the voting shares or certain other equity securities issued by such company, the investor must file a report regarding such acquisition with the FSC within five business days. For purposes of this report, the investor is deemed to hold the shares upon entering into a share purchase agreement. When the shareholding of the investor reaches 10% or more of the issued and outstanding voting shares of the listed company, a separate report must be filed with the Securities and Futures Commission (“SFC”) within five business days, and any change in shareholding must be reported to the SFC within five business days of such change.

As stated in Item 24 above, there has been increasing interest in promotion of sustainable longer-term value creation in the context of ESG issues.  Regulatory authorities such as the FSC and KRX have been active in implementing and expanding ESG-related disclosures, while in 2022, the NPS has increased its ESG-related investment to KRW 130.2 trillion (a 28.7% increase from 2021).  Accordingly, both domestic companies and investors have increased their interest in longer-term value creation, in addition to shorter-term financial factors such as revenue or operating income, and are closely monitoring changes in ESG-related policies and regulations.