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The Analysis on the Independency and Role of A Compliance Officer in its Company

  • DONG-A LAW REVIEW
  • 2011, (52), pp.681-712
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law

Jungjoon Ka 1

1한국외국어대학교

Accredited

ABSTRACT

All of companies and people are supposed to abide by laws, rules and social policies. On the other hand, laws, rules and policies are supposed to be seriously implemented and observed. The government's main job is to ensure that laws, rules and policies are implemented while the compliance officer’s main job is to do that they are observed. Hiring a compliance officer by American companies is common practice and voluntary. The larger the size of companies, the more likely they are to hire a compliance officer. They are the most likely to establish the system for legal compliance process to more actively abiding by laws. In a particular, a compliance officer may perform inspections of a business to make sure that all legal standards required in a related field are being met. The compliance officer may direct a business to make changes and give the business a timeline for implementing changes that will better protect its workers and company. Since civil and criminal penalties for violations of statutes are quite harsh to companies and their directors and officers, abiding by statutes is a fundamental matter by each company. In Korea, the National Assembly amended the commercial law requiring listed companies to appoint legal professionals, including lawyers and law professors, as compliance officers to improve transparency in corporate governance. The revised law requires listed firms to hire at least one “compliance support officer” starting in 2012. I believe that the mandatory system for compliance officers is necessary for Korean companies to fit into global economic environment focusing on legal compliance. This may conform to the demand of the times for strengthening law-abiding corporate management. On the other hand, public opinion has not been positive for law community. Some suspect this amendment is a scheme to create more jobs for new lawyers coming out of law schools in 2012. I have noticed that this may not overlap with regulations of similar systems and not unnecessarily burden small and medium sized enterprises. The qualifications set for the new corporate post support the suspicions of listed companies. Eligible candidates must be lawyers, law professors with more than five years of teaching experience and people with sufficient legal knowledge and experience. This expertise is just one of the most important elements in effectively working the system of legal compliance. I believe the independency of compliance officer from board of directors and the social control of his or her status are more significant than expertise. The independency of a compliance officer refers to the relationship between his or her public role and his or her private role and to the balance of two roles. It is not difficult for a compliance officer to independently work for the board of directors hiring himself or herself. However, a lawyer is more likely and relatively to independently work for the board of directors than any other person who has other kinds of job because he or she is more likely and easily to find out other jobs than other people do. A lawyer is more likely and relatively to subject to social control than other people do. Social control refers to social mechanisms that regulate individual and group behavior, leading to conformity and compliances to the rules of a given society or social group. When a compliance officer becomes civilly or criminally liable for his or her illegal activities, he or she is also supposed to become socially liable for his or her noncompliance. If a lawyer becomes civilly or criminally liable for his or her illegal activities, his or her license is subject to revoke or suspend in law community. This is social control how to work for a lawyer when he or she works as a compliance officer. In this sense, a compliance officer is supposed to satisfy above three requirements to effectively work for the system of compliance officer under Korean society not providing sufficient civil and criminal liability to companies to abide by law.

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