KCGS 한국ESG기준원

- Under the Commercial Act, companies over a certain threshold in asset size are required to establish an outside director nomination committee (ODNC) and fill a majority of the seats with outside directors so that the boards are composed of outside directors well-suited for the company. 



- The ESG Codes of Best Practices published by KCGS and KCGS Proxy Voting Guidelines recommend that an ODNC comprise outside directors entirely and manage an outside director candidate pool on a regular basis. 



- According to an analysis of ODNCs in all KOSPI-listed firms and KOSDAQ 150 companies as of FY2020 through FY2022, ODNCs had room for improvement in many aspects for them to secure independence. 



- If an ODNC operates limitedly, it subsequently weakens the board’s role in overseeing management. Institutional investors are advised to ensure that the ODNC of the company they invest in functions properly and considers the competency and diversity factors of the board members adequately when recommending potential outside director candidates.