What Takes Effect on September 10, 2026
The second of the two Commercial Act amendments passed in 2025 takes effect on September 10, 2026. Three changes stand out: wider application of cumulative voting, an increased number of separately elected audit committee members, and tighter rules on the disposal and cancellation of treasury shares. Cumulative voting applies from the first shareholders' meeting convened after the effective date, which means the March 2027 annual meeting will be the first real test for companies with a December fiscal year end.
This amendment builds on the first round, which expanded the scope of directors' fiduciary duty from 'the company' to 'the company and its shareholders.' On paper it is a handful of added words, but it extends the range of interests a director must weigh beyond the corporate entity to individual shareholders — and that reaches directly into everyday board decisions. Together with the treasury share rules, the market has taken to calling these changes a package of three.
Why Unlisted SMEs Cannot Ignore This
Cumulative voting and separate audit committee elections target listed companies above a certain size, so it is tempting to conclude that an unlisted company is unaffected. In practice, the impact arrives through three channels.
The Practical Risks Created by Expanded Fiduciary Duty
The most sensitive area is any decision where the interests of controlling and minority shareholders diverge: third-party share allocations, transactions with affiliates and related parties, business transfers, and merger ratio calculations. The old reasoning that no harm to the company means no problem no longer settles the question; whether minority shareholders' value was diluted now has to be examined alongside it.
If the owner also serves as CEO, the following situations deserve a close look.
Article 399 of the Commercial Act imposes liability on directors toward the company for neglect of duty, and Article 401 addresses liability toward third parties. When a dispute arises, the decisive question becomes what was actually reviewed at the time of the decision. A company whose minutes record only 'approved as proposed' stands in a very different position from one that documented external valuations, alternatives considered, and dissenting views.
Three Realistic Steps for Resource-Constrained SMEs
Step 1 — Documentation (1 to 2 months): Put board regulations, conflict-of-interest procedures, and approval standards for related-party transactions in writing. Ten pages is usually enough.
Step 2 — A routine for external verification (ongoing): Set a threshold — 5% of equity or KRW 1 billion, for example — above which a transaction requires an outside valuation or legal opinion, and write it into internal rules. A few million won per case prevents disputes worth hundreds of millions.
Step 3 — Annual D&O insurance review: Do not stop at confirming that directors and officers liability coverage exists. Check the limit, whether shareholder derivative suits are covered, the deductible, and the exclusions. Since fiduciary duty was expanded, many policies no longer match the actual exposure.
Managing It Through an ISO 37301 Compliance Framework
Treating governance risk as a standalone project means it stalls the moment the responsible person changes. An ISO 37301 compliance management framework lets you handle it within a repeating cycle: identify obligations, assess risk, design controls, monitor, and review at management level. Borrowing the structure delivers value even without pursuing certification.
This matters even more for companies planning a succession. Family business inheritance tax relief carries post-transfer requirements that run for years, so preserving the decision records from the succession process is what allows tax and legal risk to be managed together.
How KITIM Can Help
KITIM supports board operation diagnostics, conflict-of-interest procedure design, and the build-out of ISO 37301-based compliance management systems. If you would like to assess where your board currently stands ahead of the amended Act taking effect, please get in touch. We review your company's size alongside your succession and fundraising plans, and start with the steps you can realistically execute.