Raising the Bar: South Korea Expands Fiduciary Duties and AI Accountability

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By Gen Just Law, July 3 2025

South Korea’s National Assembly has approved a sweeping revision to the Commercial Act that significantly expands corporate board members’ fiduciary duties to better protect minority shareholders. The new legislation, passed on July 3, responds to long-standing criticism of the “Korea Discount”—where family-owned chaebols release in transparent behavior—and signals a new era in corporate governance aimed at increasing transparency and institutional trust.

Under the revised law, directors must now proactively consider minority shareholder interests when making strategic decisions, and may face legal liability for failing to do so. The amendment also grants shareholders clearer rights to request corporate information and pursue derivative lawsuits. President Lee Jae Myung, a key advocate of the bill, said the reforms would support the “KOSPI 5000” initiative by boosting foreign investment confidence and improving market valuation.

JESSISPRUDENS: This reform marks a legal shift in Korean corporate law, reinforcing the Business Judgment Rule by adding a fiduciary layer: directors are no longer immune simply because decisions are made in good faith. The law introduces enforceable standards for board conduct and offers minority shareholders pathways to hold directors accountable. This brings Korea closer to Western corporate governance models. As enforcement and litigation begin, how courts interpret directors’ duty will be decisive for future chaebol ethics and investor protections.

This comes even as South Korea readies its sweeping AI Basic Act, set to take effect in January 2026. Companies operating AI—high-impact or generative—must now implement risk assessments, ensure transparency to users, and appoint local compliance officers. These parallel reforms signal a broader trend: the nation is bolstering obligations on business actors across governance and tech sectors, aligning with global standards from the EU and U.S.