Removing a Director in Korea: A Step-by-Step Case Example
If you’re a foreign investor or corporate officer, working with a Korean lawyer for foreigners helps ensure director removal complies with the Korean Commercial Act. This practical case example shows the required resolutions, notices, vote thresholds, and 14-day registry filing. (For the full legal framework, see: Removing a Company Director in Korea | Guide by Korean Business Lawyers for Foreigners).
Background Information
- Stock Company: ABC
- Capital: KRW 100 million (i.e., a small-scaled company)
- BOD Members: Representative Director: Alfred; Director: Beth and Charles
- Shareholders: Alfred: 50%; Beth: 20%; Charles: 30%
- Objective: A and B want to remove C as a Director.
Step-by-Step Removal Procedure
Step 1: Convening a Board Meeting
Any director may convene a board meeting. Since director Charles is the subject of removal and likely to oppose it, either Alfred or Beth should take the lead in calling the meeting. Beth, for instance, may notify Alfred and Charles at least one week in advance. The notice, unlike the notice for the shareholders’ meeting, does not need to specify the meeting agenda and may be delivered by phone, email, or text. However, to minimize the risk of disputes, it is advisable to retain proof of the notice (e.g., recorded phone call, text message, or email).
If all directors and the auditor agree, the notice requirement can be waived. This is unlikely here, however, due to Charles’ opposition.
Step 2: Board Resolution to Convene a Shareholders’ Meeting
The board of director (BOD) meeting is held with Alfred and Beth present (2 out of 3 directors, which is a majority of directors in office). Both approve the resolution to convene a shareholders’ meeting to vote on Director Charles’ removal (2 out of 2 directors, which is a majority of directors present). This satisfies the legal requirement of majority of directors in office and majority of directors present at the meeting.
Step 3: Executing the Shareholders’ Meeting Notice
Alfred, as the representative director, must send a written notice of the shareholders’ meeting to all shareholders (Alfred, Beth, and Charles) at least 10 days in advance since the company qualifies as a “small-scaled company,” i.e., a company with capital under KRW 1 billion. The notice must clearly state the agenda: “Resolution on the removal of Director Charles.” If all shareholders (Alfred, Beth, and Charles) had previously given consent, the notice could be sent via email.
Note, with respect to small-scaled companies, the entire notice procedure may be skipped with unanimous shareholder consent. However, given Charles’ opposition, this would not be a possibility in this case.
Step 4: Shareholders’ Meeting & Special Resolution
At the meeting, shareholders Alfred (50%) and Beth (20%) attend and vote in favor of the removal. Together, they hold 70% of the total issued and outstanding shares of the company. This satisfies the legal threshold for a special resolution under Korean Commercial Act: (1) at least two-thirds of the voting rights of shareholders present at the meeting; and (2) at least one-third of the total issued and outstanding shares of the company.
Therefore, upon the adoption of the special resolution, Charles is lawfully removed from his position as director.
Step 5: Corporate Registry Update
Once the shareholders’ resolution to remove the Charles has been adopted, the change in directorship must be registered within 14 days of the shareholders’ resolution. Failure to do so in time, shall result in an administrative fine of up to KRW 5 million.
Summary with a Timeline
Date Action
D-19 Board meeting notice issued
D-11 Board meeting held, resolution to convene shareholders’ meeting passed
D-11 Shareholders’ meeting notice sent
D-day Shareholders’ meeting and adoption of special resolution to remove Director C
D+14 Deadline for registration of director change
As demonstrated in the case of ABC corporation, removing a director from a Korean corporation, particularly in the context of a closely held or small-scaled company, requires careful adherence to procedural rules under the Korean Commercial Act. From convening the board meeting to adopting a special resolution and updating the corporate registry, each step plays a critical role in ensuring the removal is legally valid and enforceable. Understanding these legal procedures in advance can help mitigate internal conflict and regulatory risk.
When to Involve a Korean Lawyer for Foreigners
Contact a Korean lawyer for foreigners if you expect opposition, need to shorten notice/use electronic consent, or must coordinate a tight board + shareholders timetable. A English speaking lawyer in Korea will communicate with you clearly and QA notices/minutes, validate Article 434 vote thresholds, plan for Article 385 damages exposure, and file the registry change on time.
Kang & Shin advises foreign investors and multinational stakeholders on director removals across Korea.