The Commercial Law of Korea recently adopted the systems of outside directors, committee in the board of directors including audit committee. So a corporation may have an audit committee in accordance with the articles of incorporation in place of au...
The Commercial Law of Korea recently adopted the systems of outside directors, committee in the board of directors including audit committee. So a corporation may have an audit committee in accordance with the articles of incorporation in place of auditors. In that case the corporation shall not appoint any auditors. Under the Securities and Exchange Act of Korea, large publicly held corporations should have an audit committee. The audit committee is the one under the board of directors.
The change of auditing system following that of the United States of America is an important reform of the corporate goverance. The indepence of the audit committee from both executives and directors is a verry important premise for the success of the audit committee system. In order that an audit committee may work effectively, we need some more improvements.
First, members of the audit committee have to be elected by the general meeting of shareholders.
Second, the audit committee should operate in the way of supervisory meeting system.
Third, the resolution of the audit committee must not be reversed by the board of directors.
Finally, we have to arrange the responsibility of outside directors within reasonable extent