Civil damages, collective lawsuits and discovery rules to replace criminal law once used to prosecute chaebol chiefs

South Korea’s government and ruling Democratic Party (DP) on Tuesday said they will abolish the “breach of trust” (배임죄) provision in the Criminal Act — a statute that makes it a crime for corporate executives or directors to cause financial losses to their company through negligent or self-serving decisions. The decades-old law has been used in high-profile prosecutions involving disputed mergers, real-estate projects and financing deals.

The DP said the law has excessively restricted normal business decisions and discouraged investment. In its place, the government plans to strengthen civil remedies by expanding punitive damages, collective lawsuits and discovery rules, giving victims more avenues to claim compensation while removing criminal liability from corporate decision-making.

South Korea’s government and ruling Democratic Party (DP) on Tuesday said they will abolish the “breach of trust” (배임죄) provision in the Criminal Act — a statute that makes it a crime for corporate executives or directors to cause financial losses to their company through negligent or self-serving decisions. The decades-old law has been used in high-profile prosecutions involving disputed mergers, real-estate projects and financing deals.

The DP said the law has excessively restricted normal business decisions and discouraged investment. In its place, the government plans to strengthen civil remedies by expanding punitive damages, collective lawsuits and discovery rules, giving victims more avenues to claim compensation while removing criminal liability from corporate decision-making.

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