Cabinet OKs bill on compliance counsel

Listed firms of certain size obligated to hire legal professionals


Listed companies of a certain size will be required by law from next year to hire lawyers or law professors to monitor potential legal problems in addition to the counsels they already have to deal with legal disputes post factum.

The Cabinet approved a revised commercial bill that includes the article on legal compliance in a weekly meeting presided over by President Lee Myung-bak on Tuesday.

The new law obliges stock-market listed businesses to draw up a set of internal rules on legal governance and hire at least one lawyer or law professor with at least five years’ experience to supervise its legal compliance.

As the requirement could be excessive or redundant for small firms, the government plans to rewrite an enforcement ordinance to only apply the article to listed companies with assets above a certain limit.

“There are positive views that (the new law) meets today’s needs to reinforce legal governance and compliance in (business) management, but there are also concerns that it could impose too much burden on companies,” Lee was quoted as saying during the Cabinet meeting by his spokesperson Kim Hee-jung.

Lee said he chose to revise the enforcement ordinance to exempt small firms from the requirement because if he vetoed the whole package, other articles of the revised commercial bill would be deferred as well, according to Kim.

Cheong Wa Dae had deferred the deliberation of the bill by a week “to collect the views of various circles including companies” amid criticism that the bill was catering to lawyers’ lobbying to provide them with more jobs. Nearly half of the assemblymen who proposed the legislation in 2009 were former attorneys or judges.

The revised commercial bill also includes a corporate opportunity doctrine that bans board directors from taking for themselves their companies’ business opportunities and a tightened rule against self-dealing. Self-dealing refers to a corporate trustee, an attorney or other fiduciary taking advantage of his position in a transaction and acting for his own interests rather than for the interests of the corporate shareholders or clients.

The Cabinet on Tuesday also approved a bill that introduces company greenhouse gas emission trading from 2015, in which a limit or cap is allocated or sold to firms in the form of emissions permits which represent the right to emit or discharge a specific volume of greenhouse gas.

Under the new bill, if a company discharges greenhouse gas exceeding its emissions permit, it will have to pay triple the market price of the excess emission in fines.

By Kim So-hyun (sophie@heraldcorp.com)