Corporate Governance from a Comparative Perspective: Specific Applications of the Duty of Loyalty in Korea

Abstract

ARTICLES CORPORATE GOVERNANCE FROM A COMPARATIVE PERSPECTIVE: SPECIFIC APPLICATIONS OF THE DUTY OF LOYALTY IN KOREA Jae Yeol Kwon* I. INTRODUCTION A major concern in contemporary corporate law in the United States is the fiduciary obligations of corporate directors. 1 In the United States, corporate directors are fiduciaries who stand in a distinct legal relationship ' 2 with and thus owe cer- tain legally enforceable duties ' 3 to the corporation and its share- holders. 4 Although the concept of fiduciary duties is difficult to * Associate Professor of Law, College of Law, Soongsil University, Seoul, Ko- rea. LL.B. 1988, College of Law, Yonsei University; LL.M. 1990, The Graduate School, Yonsei University; LL.M. 1991, School of Law (Boalt Hall), University of California at Berkeley; S.J.D. 1995, Georgetown University Law Center. Korean words have been romanized according to the McCune-Reischauer system. The ex- ceptions to this romanization system are found somewhere in this Article, because the few Koreans prefer their own romanization and thus their own English spellings are respected. All errors or other shortcomings are, of course, my own. 1. John C. Coffee, Jr., The Mandatory/Enabling Balance in Corporate Law: An Essay on the Judicial Role, 89 COLUM. L. REV. 1618, 1621 (1989) (stating that fiduci- ary duties are corporate law's most mandatory inner core in the United States). In the United States, for example, almost all textbooks on corporate law discuss the issues of fiduciary duties of corporate directors. See, e.g., WILLIAM L. CARY & MEL- VIN ARON- EISENBERG, CASES AND MATERIALS ON CORPORATIONS 647-809 (7th ed. 2. 2 ARTHUR W. MACHEN, A TREATISE ON THE MODERN LAW OF CORPORA- TIONS, WITH REFERENCE TO FORMATION AND OPERATION UNDER GENERAL LAWS 1162 (1908). See also Note, Liability of Directors for Negligent Mismanagement, 82 U. PA. L. REV. 364, 366 (1934); Rudolph E. Uhlman, The Legal Status of Corporate Directors, 19 B.U. L. REV. 12, 16 (1939). 3. Kenneth E. Scott, Corporation Law and the American Law Institute Corpo- rate Governance Project, 35 STAN. L. REV. 927, 927 (1983). 4. Justice Frankfurter stated that to say that a man is a fiduciary only begins analysis; it gives direction to further inquiry. To whom is he a fiduciary? SEC v.