Directors’ Third Party Liability: The Peculiar Case of Korea

Abstract

In the context of Anglo-American corporate law, a board of directors shall manage the business and affairs of a corporation. The directors of a company owe their duties to the company as a whole and are not considered trustees for any third party, including individual shareholders. The Republic of Korea is one of the few jurisdictions that provides for directors’ personal third party liability under a codified corporate statute. The purpose of this article to survey and analyse the Korean directors’ liability regime. The article will scrutinise the legal basis and constitutive elements of directors’ personal, third party liability in Korea. In light of the fact that the Korean judiciary only recognises direct damages for aggrieved third parties, the article will argue that, despite its codified nature, the director’s third party liability regime of Korea embodies a stringent form of tort liability in need of change. The article concludes that, despite these shortcomings, the director’s third party liability regime in Korea represents a balanced approach when it comes to the competing values of torts law and corporate law on the subject of director’s personal liability.