Commercial Act of South Korea facts for kids
The Commercial Act of South Korea (Korean: 대한민국 상법) is an important law in South Korea. It helps control how businesses and trade work in the country. This law was first created on January 1, 1963. It has five main parts: general rules, business deals, companies, insurance, and shipping business.
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Why Laws Change: The Commercial Act's Updates
Laws often need to change to keep up with the world. The Commercial Act of South Korea has been updated many times since it was first made. Some of the biggest changes happened in 1998. This was during a time when South Korea was facing a big financial challenge, known as the foreign currency crisis.
How the IMF Crisis Changed Business Rules
During the 1998 crisis, the International Monetary Fund (IMF) helped South Korea. As part of this help, South Korea made big changes to its Commercial Act. These changes were made to help companies become stronger and more honest. They aimed to make sure that company leaders were responsible for their actions and that everything was clear and open.
Making Company Leaders Accountable
One important change was making sure that company directors had a "fiduciary duty of loyalty." This means directors must always act in the best interest of the company and its owners. The law also started holding "de facto" directors responsible. These are people who act like directors and control a company, even if they don't have an official title. This helped make sure that everyone in charge was responsible for how the company was run.
Another big change helped regular shareholders, especially those who owned only a small part of a company. New rules allowed these minority shareholders to suggest ideas or issues to the company's board of directors and at meetings where all shareholders gather. This gave more power to individual investors and helped them have a say in how companies operate.
