Director appointments and term management are central to corporate governance in Korea. The Korean Commercial Act requires directors of a stock company to be appointed by the general meeting of shareholders and limits their term of office, so that shareholders periodically confirm whether to reappoint or replace them.

Legal basis under the Korean Commercial Act

  • Directors must be appointed by the general meeting of shareholders.

    Article 382 (Appointment of Directors, Relationship with Company and Outside Directors) (1) Directors shall be appointed at a general shareholders’ meeting. (2) The provisions of the Civil Act regarding delegation apply mutatis mutandis to the relationship between the company and the directors.

  • Directors must be at least three in number in principle, and their term of office may not exceed three years.

    Article 383 (Number, Term of Office) (1) Directors shall be at least three in number; provided, in case of a company of which the total capital is below a prescribed threshold, the number of directors may be one or two. (2) The terms of office of directors may not exceed three years. (3) The terms of office under paragraph (2) may be extended by the articles of incorporation up to the closing of the ordinary general shareholders’ meeting convened in respect of the last settlement period within their term of office.

  • Directors can be removed by shareholders’ resolution, but early removal without just cause may give rise to a claim for damages.

    Article 385 (Removal) provides that directors may be removed at any time by a resolution of the general meeting of shareholders, but if they are removed without just cause before the expiration of their term, they may claim damages.

  • Failure to appoint directors so that the number falls below the statutory minimum can trigger administrative fines.

    Article 635 (Acts Subject to Administrative Fines) (1) 8. provides that neglecting to take procedures for the appointment of directors and auditors, if the remaining directors or auditors in office become fewer than the minimum number prescribed in Acts or in the articles of incorporation, is subject to an administrative fine of up to five million won for responsible officers.

Is director (re-)appointment mandatory every three years?

Yes. Under Article 383, the term of office of directors may not exceed three years (subject to extension only until the closing of the ordinary general meeting for the last settlement period within that term). In practice, this means that at least once every three business years, the ordinary general meeting must decide whether to reappoint each director or to appoint a replacement. Simply allowing directors to continue indefinitely without formal reappointment is inconsistent with the Commercial Act framework and may undermine the validity of their mandate.

Furthermore, if resignations or term expirations reduce the number of directors below the statutory minimum, the company must initiate appointment procedures. Neglecting this obligation may expose the remaining directors to administrative fines under Article 635(1) 8 and create governance risks.

Scope of application

These rules apply in particular to stock companies (주식회사). Companies with small capital that lawfully have only one or two directors are still subject to the term limits in Article 383; however, certain provisions on the board of directors do not apply when the company has only one director, and the general meeting effectively takes over some board functions.

Practical timeline for director term management

In most Korean companies, director terms are aligned with fiscal years. A typical pattern is:

  • Directors are appointed or reappointed at an ordinary general meeting of shareholders.
  • The term is set so that it expires at the close of the third ordinary general meeting after the appointment (subject to the specific wording of the Articles of Incorporation).
  • Before the end of the term, the nomination process is prepared (including checks for independence and eligibility, if applicable) and resolutions for reappointment or replacement are placed on the AGM agenda.
  • The commercial registry is updated promptly to reflect newly appointed or reappointed directors and any changes in representative directors.

Common issues for foreign-owned companies

  • Overlooking the formal expiration of director terms and continuing with “de facto” directors whose term has technically ended.
  • Failure to update the commercial registry promptly after reappointment or changes in representative directors.
  • Insufficient documentation in AGM minutes regarding reappointment, making later confirmation difficult in audits, due diligence or bank KYC reviews.
  • Unclear allocation of roles between foreign parent representatives and local resident directors, especially where independence or residency requirements apply.

How KOISRA UP can help

KOISRA UP helps clients map out director terms, design a forward-looking reappointment calendar and prepare bilingual AGM resolutions for director appointments, reappointments and removals. We coordinate with Korean lawyers and judicial scriveners to ensure that all changes are properly registered and that your director structure remains compliant with the Commercial Act, your Articles of Incorporation and any industry-specific requirements.

This article is part of KOISRA UP’s Corporate Secretarial & Governance Services series. To learn more about our support for director appointments, reappointments and term management in Korea, please visit our Corporate Secretarial & Governance Services in Korea page.