In February 2017, an independent third party was commissioned to undertake a study of AMCHAM’s current operations and make recommendations on how best to structure the organization to ensure fiscal stability, proper controls and full transparency, while maintaining compliance with Korean laws and regulations. The study examined the current governance and operational structure and explored ways to eliminate potential risks. The study resulted in a recommendation that AMCHAM formally register itself as a legal not for profit entity approved by the Ministry of Trade, Industry & Energy (MOTIE). After careful deliberation by the EXCOM and the Board of Governors, it was unanimously agreed to seek a formal registration that would reorganize AMCHAM as a legal association in Korea known as a sadan beobin (사단 법인).
In March 2018, AMCHAM submitted the required documents for legal entity registration to MOTIE. To align with Korean laws and regulations, the previous Constitution of AMCHAM was modified into two separate documents known as the Articles of Incorporation and Articles of Governance. The core substance and intent of the Constitution was preserved. Limited modifications were made to improve clarity and reflect harmonization with the applicable regulations. The registration will enhance the transparency of AMCHAM Korea and ensure that AMCHAM can continue to fulfill its mission long into the future. Members are encouraged to read the FAQ in the following pages for additional details.
Formal registration as a legal entity will establish rigorous governance and compliance mechanisms that will ensure AMCHAM’s transparency and independence. It will enable AMCHAM to compliantly diversify funding that will support the Chamber operations and strengthen internal governance. In fact, AMCHAM organizations across Asia are undergoing similar reformation. Most recently the Asia-Pacific Council of American Chamber of Commerce (APCAC), an umbrella organization for AMCHAMs operating in Asia with a 50-year history, decided to legally incorporate in Singapore for similar purposes.
In early 2017, the Executive Committee recommended that AMCHAM undertake a complete review of the operation of AMCHAM to examine processes, procedures and control mechanisms and ensure compliance with Korean laws and regulations and the Board of Governors commissioned an independent third party to undertake such a study. After reviewing the results of the examination, the Board of Governors approved the conclusion that registration as a legal entity is the optimal path for AMCHAM’s future.
AMCHAM will be an ‘incorporated association’ or 사단법인 in Korean.
When forming a non-profit entity, Korean law requires an approval from a government ministry that is relevant to and/or supervises the main business purposes of the organization. Since AMCHAM is an organization with the purpose of promoting business, industries, and commerce, MOTIE is the supervising authority.
As part of the registration process, AMCHAM is required to modify the existing Constitution to align with Korean laws and regulations. The modified Constitution will contain two parts, Articles of Incorporation and Articles of Governance. With the core substance intact, the Articles will contain clearer language and compliance obligations.
The legal entity registration will not affect members of AMCHAM, other than a handful of members who will be registered as “Officers” of the entity.
Member companies and individual members do not need to take any action.
The existing membership fees and dues structure remain the same.
The existing membership eligibility structure remains the same.
There are no changes in the rights and privileges of members.
The existing Constitution was modified into two documents, now known as the Articles of Incorporation and Articles of Governance. The modification was necessary to apply clearer language and comply with the requirements of the legal entity regulations. A thorough review was conducted by outside counsel to ensure that all the essential provisions remain intact, with additional clarity that further enhances transparency in governance. You can find the Articles of Incorporation (here) and Articles of Governance (here) and the through the links.
AMCHAM continues to remain a non-profit organization. However, as the dues and donations from members are insufficient to fund the operational needs of the Chamber, it will conduct revenue generating activities to supplement its budget. The legal entity registration will ensure that revenue from such activities is fully compliant with all regulations.
The governance structure remains it was, but new labels are required by the Korean Civil Code. The existing Executive Committee will assume the role of Board of Directors with the same responsibilities. The Board of Directors will function as the body that orchestrates Chamber activities and have responsibility for matters important to the operation of the Chamber. Members of the Board of Directors, also known as Officers, will convene on a regularly scheduled basis to conduct Chamber business. In addition, the existing Treasurer will assume the role of Chief Compliance Officer as a non-voting member of the Board of Directors.
The Board of Directors will be the registered Directors of the Chamber and bear the legal responsibility for the Chamber. The existing Board of Governors will continue their respective roles as Governors, without change in title. The Board of Governors will vote on and approve policies proposed by the Board of Directors while directing and regulating the affairs of the Chamber and acting in its name.
The Chairman/CEO of the Chamber is the legal representative of AMCHAM and will be registered as the 이사장 on the corporate registry of AMCHAM. The Executive Committee members will become the registered directors of the entity and this group and the CEO bear the legal responsibility for AMCHAM and undertake the legal fiduciary duty to properly maintain and operate AMCHAM.
The Chairman and CEO will remain a full-time paid leader of the organization while the Chairman of the Board of Governors will continue to serve on a voluntary basis and preside over matters of the Chamber.