Companies struggle to secure female board members

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By Anna J. Park

The country's capital market act revision that requires the mandatory appointment of a female member on corporate boards came into effect on Friday.

The revision was first enforced as a law in August 2020, but it had a two-year grace period before going into effect. The statute prohibits the single-gendered formation of a company's board, when the company's entire asset size exceeds two trillion won ($1.5 billion). As many large-sized companies' board members are mostly male-dominated, corporations are now in urgent need of searching for competent female board members.

According to data by Korea ESG Research Institute, some 81 percent of companies are subject to the revision as of the end of April this year. Yet, 31 companies out of the subjected 167 firms have yet to secure a spot for female board members, including container transportation firm Hyundai Merchant Marine (HMM), energy generating and solution firm Doosan Enerbility, construction and engineering firm Doosan Bobcat and leading aviation firm Korea Aerospace Industries (KAI).

As seen in the aforementioned cases, companies involved in the heavy industries, machinery or energy sectors tend to have a harder time finding appropriate female executives, as the proportion of female personnel is slimmer than other industries.

Thus, some firms complain that it is not easy to find competent female executives, because of the uniqueness of their industries. Some even say the compulsory implementation of such gender-based board formation rules could impede on the rights of shareholders.

Regarding such complaints, the Financial Services Commission (FSC), the country's top regulator, said that it is fully aware of some companies' burden due to the revision, saying it will later examine whether to add penalty clauses in the law. Currently, the law does not contain any penalty obligations.

Yet, the Korean Women Lawyers' Association once again urged companies to abide by the law. The association said it is unfortunate that the law is not even kept among large-sized conglomerates.

"Reflecting diverse values, including genders, is an obligatory global standard, not only in the area of the public but also in the private industries," the association stressed.

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