One of the biggest issues with the corporation today may be on how to improve the problems of the corporate governance structure. In particular, a search for numerous measures to prevent the tyranny of the corporate executives while pursuing objective and transparent company management is essential,...
One of the biggest issues with the corporation today may be on how to improve the problems of the corporate governance structure. In particular, a search for numerous measures to prevent the tyranny of the corporate executives while pursuing objective and transparent company management is essential, with one of them being the internal control system of the company. The compliance control system in this paper is one of the internal control systems of the company implemented in most countries recently. While the internal control system of the company in other countries has been adopted in an orderly manner through much studies and review over extensive period of time, various institutions that compose the internal control system have been impetuously established in different laws and regulations, separately, with a time difference. Therefore, this resulted in the lack of consistency and unity of the system, and display much difference in its contents according to the legislation.
Some of the major issues in the adoption of the compliance officer system by the Commercial Act were whether to limit the qualification of the compliance officer to the person(s) with a license to practice law and the scope of listed companies with the application of the compliance officer system. Moreover, such issues as the binding force of the compliance officer system, the independence of the compliance officer and the permission for such officer to hold multiple positions, the limitations on the status and career of the compliance officer, the size of the company with the application of the compliance officer system as well as the penalty for the violation of relevant laws and regulations, the incentives for the company that adopts the compliance control system, the duty of the compliance officer to make timely reports and his/her liabilities, the maintenance of disclosure system related to the compliance control system, and the organization within
the company with the compliance control system, have been brought up, in relation to the contents of the compliance officer system or their interpretation. In comparison to the internal control system of the company in
many other countries, the biggest characteristic found in the Korean internal control system of the company is the fact various norms on the internal control system are scattered throughout different laws and regulations including the Commercial Act, and hence, not unified in
their contents. This clearly distinguishes from the internal control system in other countries including the US and the UK, where the operation involves an integrated internal control system. The Korean system is also different from the Japanese system where general provisions on the system is covered by the Corporation Law, while the Special Law contains provisions on the internal control with limited scopes. Furthermore, while the internal control is, in general, implemented principle-based and voluntarily in other countries, the system is operated control-based and forcibly. In the UK, the internal control system is implemented in the form of model criterion or guidelines at the stock exchange rather than through regulations under
the legislation. On the other hand, the US has also stipulated mandatory establishment of internal control system in various legislation, yet gives a leeway in the appointment of compliance officer. In comparison, the internal control system in Korea is not only stipulated as mandatory under the laws and regulations, but the related contents are also stipulated in details and individually. Along with the characteristics mentioned above, some of the points discussed in this paper may be summarized as follows: First of all, the internal control system is currently regulated by many different laws and regulations besides the Commercial Act, yet it would be more resonable to regulate under one law. Also, it would be necessary to set up certain restrictions on the appointment and dismissal of the compliance officer to ensure the independence of such officer, while setting up restrictions on holding multiple positions to prevent directors, auditors or the members of the audit committee of the company from being appointed as the compliance officers would also be needed. In relation to the qualifications for the compliance officer, the applicant should not be only holding a license to practice law, but work experience in the relevant field for more than 5 years would be necessary. At the same time, the grounds for disqualification in case of compliance officer should be stipulated. The companies for the application of the compliance officer system should not be picked uniformly, but the system should be applied accordingly with a distinction between large-scale businesses and small- and medium-sized businesses. Meanwhile, it would be necessary to have provisions on penalty in case the companies with the duty to appoint the compliance officer evades such duty. On the other hand, an expansion of various incentive systems to promote the listed companies to voluntarily implement the compliance control system would be necessary.
Regarding the duty of the compliance officer to make reports, the recipient(s) of the said report should be extended to the CEO or the general meeting of shareholders other than the board of directors only. Hence, it would be necessary to adopt the mandatory disclosure system in relation to the compliance control system. And last but not least, it would be reasonable for the organization within the company with the compliance control system to be under the direct control of the CEO or the president of the company.
There were many disputes over the adoption of the compliance officer system at the time of revising the Commercial Act in 2011.
However, the preparation of institutional internal control system has become universal around the world, in order to secure the efficiency and transparency in the business management, as well a
One of the biggest issues with the corporation today may be on how to improve the problems of the corporate governance structure. In particular, a search for numerous measures to prevent the tyranny of the corporate executives while pursuing objective and transparent company management is essential, with one of them being the internal control system of the company. The compliance control system in this paper is one of the internal control systems of the company implemented in most countries recently. While the internal control system of the company in other countries has been adopted in an orderly manner through much studies and review over extensive period of time, various institutions that compose the internal control system have been impetuously established in different laws and regulations, separately, with a time difference. Therefore, this resulted in the lack of consistency and unity of the system, and display much difference in its contents according to the legislation.
Some of the major issues in the adoption of the compliance officer system by the Commercial Act were whether to limit the qualification of the compliance officer to the person(s) with a license to practice law and the scope of listed companies with the application of the compliance officer system. Moreover, such issues as the binding force of the compliance officer system, the independence of the compliance officer and the permission for such officer to hold multiple positions, the limitations on the status and career of the compliance officer, the size of the company with the application of the compliance officer system as well as the penalty for the violation of relevant laws and regulations, the incentives for the company that adopts the compliance control system, the duty of the compliance officer to make timely reports and his/her liabilities, the maintenance of disclosure system related to the compliance control system, and the organization within
the company with the compliance control system, have been brought up, in relation to the contents of the compliance officer system or their interpretation. In comparison to the internal control system of the company in
many other countries, the biggest characteristic found in the Korean internal control system of the company is the fact various norms on the internal control system are scattered throughout different laws and regulations including the Commercial Act, and hence, not unified in
their contents. This clearly distinguishes from the internal control system in other countries including the US and the UK, where the operation involves an integrated internal control system. The Korean system is also different from the Japanese system where general provisions on the system is covered by the Corporation Law, while the Special Law contains provisions on the internal control with limited scopes. Furthermore, while the internal control is, in general, implemented principle-based and voluntarily in other countries, the system is operated control-based and forcibly. In the UK, the internal control system is implemented in the form of model criterion or guidelines at the stock exchange rather than through regulations under
the legislation. On the other hand, the US has also stipulated mandatory establishment of internal control system in various legislation, yet gives a leeway in the appointment of compliance officer. In comparison, the internal control system in Korea is not only stipulated as mandatory under the laws and regulations, but the related contents are also stipulated in details and individually. Along with the characteristics mentioned above, some of the points discussed in this paper may be summarized as follows: First of all, the internal control system is currently regulated by many different laws and regulations besides the Commercial Act, yet it would be more resonable to regulate under one law. Also, it would be necessary to set up certain restrictions on the appointment and dismissal of the compliance officer to ensure the independence of such officer, while setting up restrictions on holding multiple positions to prevent directors, auditors or the members of the audit committee of the company from being appointed as the compliance officers would also be needed. In relation to the qualifications for the compliance officer, the applicant should not be only holding a license to practice law, but work experience in the relevant field for more than 5 years would be necessary. At the same time, the grounds for disqualification in case of compliance officer should be stipulated. The companies for the application of the compliance officer system should not be picked uniformly, but the system should be applied accordingly with a distinction between large-scale businesses and small- and medium-sized businesses. Meanwhile, it would be necessary to have provisions on penalty in case the companies with the duty to appoint the compliance officer evades such duty. On the other hand, an expansion of various incentive systems to promote the listed companies to voluntarily implement the compliance control system would be necessary.
Regarding the duty of the compliance officer to make reports, the recipient(s) of the said report should be extended to the CEO or the general meeting of shareholders other than the board of directors only. Hence, it would be necessary to adopt the mandatory disclosure system in relation to the compliance control system. And last but not least, it would be reasonable for the organization within the company with the compliance control system to be under the direct control of the CEO or the president of the company.
There were many disputes over the adoption of the compliance officer system at the time of revising the Commercial Act in 2011.
However, the preparation of institutional internal control system has become universal around the world, in order to secure the efficiency and transparency in the business management, as well a
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