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Compliance and Corporate Risk Management

Introduction

According to Article 542-13 of the Commercial Act, listed companies with total assets of 500 billion KRW or more are required to establish standards and procedures for compliance. This compliance system is not only a component of a company's internal control, but also a key tool for ethics and compliance management, which is becoming a global standard. For reference, the United States, a developed capitalist economy, has incorporated ethics and compliance into its legal framework by implementing the Sarbanes-Oxley Act and the Federal Organizational Sentencing Guideline. In addition, since our courts have recognized liability for breach of fiduciary duty for independent directors as well as full-time directors of a corporation, a compliance system can be a safeguard for directors' active management activities.

Establishing a compliance system is an investment, not just an expense. A compliance system can enhance a company's competitiveness and increase its value, giving stakeholders such as investors, consumers, and employees greater confidence in the company. It also provides an opportunity to formalize what has long been an internal business practice into a formal manual. Of course, it can be implemented in stages, starting with sensitive areas such as sales, investment, and strategy, to reduce the shock of a full-scale compliance system. And by integrating the compliance system with the existing ERP, the control systems for management, strategy, accounting, etc. can be organized in a single IT system.

Since 2011, ClassHankyul has been consulting on the implementation and operation of compliance systems for large companies such as oil refineries, construction companies, and global gaming companies. 
 

Major Business

Establishing Compliance

- On-site interviews and legal due diligence
- Preparing parent and child compliance manuals
- Preparing practice checklists for each applicable law and targeted practice
- Organizing algorithms for hands-on checklists (for IT deployments)
- Preparing field manuals for key control areas
- Preparing criteria for evaluating the effectiveness of compliance
- Presenting ways to improve administrative legitimacy and efficiency

Establishing a governance structure for large business groups

- Business group legal due diligence
- Corporate group governance and related party scope checks
- Preparing a checklist for disclosures such as internal transactions and material matters
- Preparing internal management manuals for the affiliates of business group
- Training on internal management of the affiliates of business group
- Presenting ways to improve administrative legitimacy and efficiency
 

Major Performance

Establishing Compliance

- Established enterprise-wide compliance for an oil refinery (2011 - 2015)
- Established internal transaction compliance for a construction company affiliated with a business group subject to cross-shareholding restrictions (2014)
- Established an occupational health verification system for a semiconductor company (2014 - 2016)
- Advised on compliance for Korea National Railway (2016) 

Establishing a governance structure for large business groups

- Established a management system for S business group subject to disclosure requirements (2017)
- Established a management system for C business group subject to disclosure requirements (2021)
 

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