Financial Company Executives to be Subject to Enhanced Internal Control Management Responsibilities

The FSC announced that „a revision bill of the Act on Corporate Governance of Financial Companies was passed by the National Assembly on 8 December 2023. The revision requires financial companies to assign a responsibilities map for each executive officer in his or her line of work and revamps the ways in which executive members’ internal control management duties are examined“.
The revision aims to resolve the problem that the current legal framework, which came into force in 2016, has often been treated as „a perfunctory and procedural matter, without the effect of bringing about real change from the employees or management“.
The revision „introduces a responsibilities map for all executive officers. This is not a uniform regulatory requirement imposed by the financial authorities. By having financial companies to set up and operate an internal control system on their own according to their own needs and circumstances and by having the responsibility of each executive officer clearly assigned, this measure aims to raise awareness and responsibility of executive officers about their internal control system“.
„Second, company executives subject to the internal control management duty will need to regularly examine the appropriateness of their internal control standards and compliance from employees. As the top overseer of internal control, CEOs of financial companies will be responsible for establishing a company-wide internal control system and supervising each executive officer’s internal control activities.
Third, the board’s oversight role over internal control matters will also be made clearer and its internal control responsibilities made more specific. This will help to improve the function of checks and balance in corporate governance.
Lastly, executive officers who fail to comply with their internal control management duties will be subject to sanctions. For executive officers who have been practicing due diligence regarding their internal control and management duties, a mitigation of responsibility or an exemption from sanction may be granted even if a financial accident takes place, as a way to ensure protections against unforeseeable or uncontrollable accidents.“