Samsung Electronics appointed its outside director and former Strategy and Finance Minister Park Jae-wan as the chairman of the board on Feb. 21. Those in the business community have expressed mixed opinions on the issue. Some have welcomed the decision in that the independence of the board of directors can be enhanced while the others are expressing concerns over the decision’s impact on the company’s drive.
The chairman of the board of the company can do a lot of very important things. According to Article 393 of the Commercial Code, the board can make a decision on disposal and transfer of important assets, large-scale borrowing of properties, manager appointment and dismissal, branch establishment, relocation and closure, etc.
According to Samsung Electronics’ business reports, the board made 25 important decisions from January to September last year. The examples include 2019 business plan approval and incentive provision for selected partner companies. In addition, its articles of association stipulate that the board of directors is convened by the chairman and a director can convene the board only with the consent of the chairman. In short, the chairman can control the board.
It is pointed out that such a drastic change in the structure of the board of directors will affect the company’s global business strategy, pace of decision making and large-scale investments with the inside voice weakened after vice chairman Lee Jae-yong resigned as an inside director in October last year.