This study analysed the related laws and current status of the dual outside director system that general holding companies follow in the regulations of 「Commerce Law」 and holding companies of financial institutions follow in 「Law of Holding Company of Financial Institutions」 in order to discover current organizational problems and future directions.
As a number of Korean companies ended up bankrupt through the financial crisis of 1997, the management control structure of the companies was considered one of the problems. In order to establish transparent and healthy business management through improving the management control structure, our country has introduced an Anglo-American management control structure where the representative systems are a board of directors centering on an independent board and a holding company.
The holding companies are classified into general holding companies and holding companies of financial institutions, and with respect to the election of their independent boards, the composition ratio of independent directors in a council, independent director candidate recommendation committee, and disqualification conditions vary according to the types of holding companies.
That is, general holding companies follows the Law of Commerce, and holding companies of financial institutions follow the law of holding companies for financial institutions. Therefore, when conflicts occur between the two laws, in the election of outside directors for a holding company of a financial institution with assets of 2 trillion KW, the problem is whether exceptional clauses for listed companies should be applied or the law of holding companies for financial institutions.
In this case, as Article 62 of the law of holding companies of financial institutions regulates that it is in accordance with Commerce Law and the Law of Capital Markets and Business Investment except that there are special clauses in the law, there may be opinions that the law of holding companies of financial institutions shall be applied in the first place and the Commerce Law which has special clauses for listed companies shall be applied in the first place as it is a special law.
Also, there may be the opinion that both of them should be applied or the stricter conditions should be applied in this case. In my opinion, when the introduction intent for the holding company system and having an outside director system are considered, it is suggested that both systems should be applied to enhance transparency, a healthy management environment, and the competitive power of companies, and in this case, stricter clauses should be applied. However, what is most fundamental is that as the number of large companies which have holding companies or are changed into holding companies increases every year, a unified law for holding companies should be enacted to solve these fundamental problems.