Under the current law, the business sector has frequently identified the vague standard of interpreting the elements of breach of fiduciary duty as an issue. This undermines the predictability of what constitutes a breach of fiduciary duty, and as a result may discourage entrepreneurship. According to the Justice Yearbook, between 2005 and 2008, the acquittal rate for all crimes at the trial level was at average 1.2 percent while the acquittal rate for breach of fiduciary duty under the Act on the Aggravated Punishment, Etc. of Specific Economic Crimes was ten times higher at a rate of 11.6 percent.
Consequently, scholars have been voicing the need to strictly construe the elements of breach of fiduciary duty, and courts also have rendered a director making a sound business judgment meeting certain requirements not to be in breach of his/her fiduciary duty (see Supreme Court 2002Doh4229, rendered July 22, 2004). Regarding this, although some commentators say that the Korean courts have introduced the business judgment rule to the criminal law system, courts are cautious of applying the business judgment rule without actual supporting statutory language, and according to the business sector, not much protection has been felt to be provided.
On March 25, 2013, ten congressmen, including congressman Myung-Soo Lee, submitted a bill to Congress proposing amending the Commercial Code so that it explicitly includes the business judgment rule. The proposed bill provides that the Commercial Code include a statute stipulating that “a director is not in breach of his/her fiduciary duty regardless of the damages caused to the company, if the director on a disinterested and informed basis, after exercising reasonable care, made a good faith business judgment in the belief that it was in the best interest of the company.”
Whether the above introduced bill will be passed should be further monitored, but it seems clear that implementing legislative measures encompassing both the protection of creative entrepreneurship and prevention of directors deriving personal interests in conflict with the interest of the company are necessary.