Starting from July, full-time directors of local Saemaul Geumgo with an asset scale of over 200 billion won will undergo annual performance evaluations. Full-time directors are responsible for major management tasks of the geumgo, but they are criticized for not properly checking the board of directors or the chairman. Additionally, concerns have been consistently raised about chairmen who are limited by a three-term restriction taking on the role of full-time directors, thus exercising significant authority over the geumgo.
According to the financial sector on the 13th, the government plans to submit a revision of the ‘Saemaul Geumgo Implementation Decree’ to the State Council soon, which mandates performance evaluations for full-time directors and the appointment of full-time auditors for geumgos with a certain asset scale.
According to the revised bill, geumgos with a total asset amount of over 200 billion won that have received approval from the regular general meeting for the settlement of accounts prior to the chairman's term start date must introduce a performance evaluation system for full-time directors.
Full-time directors are appointed at the general meeting based on board recommendations. This position emphasizes expertise, different from elected directorships, and is filled by those with over 10 years of experience working at central federations, the Bank of Korea, or financial institutions. However, it is being misused as a tool for the long-term rule of former and current chairpersons.
According to the Saemaul Geumgo Act, the chairman's term is four years, and upon re-election twice (for a total of three terms), they can serve for 12 years. Chairpersons limited by the three-term restriction may appoint their close associates as chairpersons and serve as full-time directors, thereby continuing their long-term rule. As of 2021, one out of four full-time directors of Saemaul Geumgo was a former chairman. The purpose is to strengthen the board's oversight function over chairpersons and full-time directors by introducing performance evaluation systems.
Geumgos with an asset scale of over 800 billion won must mandatorily appoint full-time auditors. This is aimed at establishing a constant monitoring system for large-scale regional geumgos, which can have significant ripple effects in the event of a financial incident, thus enhancing the financial soundness of the geumgo. Geumgos with a total asset amount of over 300 billion won are required to undergo external audits for greater accounting transparency.
The government explained that the revision of this implementation decree is expected to strengthen the protection of members and customer assets and enhance the external trustworthiness of geumgos.