Six out of 10 law professors oppose expanding directors’ fiduciary duties

(Yonhap)

More than 60 percent of commercial law professors in South Korea oppose proposed amendments to the Commercial Act aimed at expanding the fiduciary duties of corporate directors, a survey showed on Wednesday.

The Federation of Korean Industries (FKI) conducted a survey, polling 131 professors from law schools and university law departments across the country.

Of the 99 respondents, 62.6 percent expressed opposition to the amendments. The primary reason cited by 40.3 percent of respondents was that the current corporate law already contains provisions protecting minority shareholders.

Other concerns included the potential disruption of the legal foundation of corporate law (27.4 percent) and the lack of necessary clauses to prevent adverse effects from expanding the fiduciary duties to shareholders (24.2 percent).

The survey reflects the views of legal experts who argue that existing laws sufficiently protect minority shareholders and that amending the act could pose risks to the current legal framework.

Moreover, 65.7 percent of respondents believed that expanding directors’ fiduciary duties would negatively impact corporate management.

This sentiment far outweighed the 34.3 percent who viewed the potential changes positively. Notably, 25.3 percent of the surveyed professors responded that they were “very negative” about the proposed amendments.

Among the reasons cited for this negative outlook, 49.2 percent pointed to concerns that an increase in lawsuits against directors could stifle business activities, such as investment decisions.