Case of Legal Review on the Appointment and Reappointment Procedures of Executive Recommendation Committee Members

1. The Client's Situation

The client company needed to review the legal procedures related to the appointment of members of its Executive Recommendation Committee (hereinafter the "Committee"). In particular, legal issues were raised as to whether an existing non-standing director belonging to the board of directors could be appointed as a member of the Committee, and whether non-reappointment after the expiration of an executive's term could be notified in writing without a general meeting of shareholders.

Your Legal Team closely analyzed the client's internal rules and the relevant laws and conducted the following legal review.

(1) As a result of reviewing the KOICA invested-company win-win cooperation regulations and related laws, the team confirmed that there is no legal restriction on appointing a non-standing director as a member of the Committee. However, it advised that, under the Committee's operating regulations, if a specific interested party participates as a member, there is a restriction barring that person from subsequently participating in the executive-recruitment process.

(2) The team explained that, while expiration of the term constitutes grounds for automatic retirement without a resolution of the general meeting of shareholders, reappointment is regarded as a procedure for appointment to a new term and therefore must go through a resolution of the general meeting of shareholders under the articles of incorporation. However, it clarified that, in the case of a one-shareholder company with total capital of less than KRW 1 billion, the general meeting of shareholders may be replaced by a written resolution, thereby presenting a way to streamline the notification of non-reappointment in practice.

Through Your Legal Team's advice, the client was able to clearly organize a direction for proceeding with the appointment of Committee members and the executive-reappointment procedure without any legal problems. In addition, by utilizing the method of streamlining the general meeting of shareholders, the client was able to minimize unnecessary procedures while maintaining legal stability.