Prof. Jung Sunseop

Corporate governance and financial regulation: The Korean case

In principle, legal structure of financial institutions in Korea is a joint stock company. As a result, most financial companies are subject to the corporate governance rules of the Commercial Code (company law). After the 2008 global financial crisis, it became an issue of hot debate whether corporate governance failures of banks and other financial institutions were one of the major causes of the crisis. In Korea, there have been several scandals involving the corporate governance of banks. In response, Korea enacted the Act on Corporate Governance of Financial Companies in 2015 which took effect on 1 August 2016. The main purpose of this Act is to regulate corporate governance of banks and other financial institutions including the structure of board of directors, compensation, major shareholders, internal control and risk management. This paper will examine the limits of company law regulation supported by a soft law approach and the relationship between company law and financial regulation in the context of the corporate governance of banks and other financial institutions.