Reasons for Proposal
Since social welfare foundations are corporations established to carry out social welfare businesses, they are required to have a very high level of transparency and public interest in their operations; thus, the board of directors, which is in charge of its operation, needs to be composed of and operated by members who comply with the highest standards compared to corporations established under the Civil Act.
However, the current Act does not stipulate any provisions related to the composition and operation of the board of directors of social welfare foundations, but specifies that the Act on the Establishment and Operation of Public Interest Corporations shall apply mutatis mutandis to the foundations, and thus confusion has occurred regarding their operation and some regulatory weaknesses concerning executives, which is undermining the enhancement of transparency and publicity of the foundations.
It is necessary to take corrective measures against unacceptable cases of the composition and operation of the board of directors which are constantly occurring, particularly, such as not complying with the criteria such as the composition ratio of directors or filling vacancies under the current Act and an executive whose term has expired continuing to participate in the board of directors and exercising his/her voting right without appointing a succeeding executive for an executive whose term has expired.
Therefore, this Amendment aims to prevent confusion caused by the application of other Act mutatis mutandis by directly prescribing the provisions relating to the composition and operation of the board of directors of social welfare foundations in this Social Welfare Services Act, and to make social welfare foundations organized and operated in a more transparent manner by setting forth the reasons for invalid resolutions by the Board of Directors.
Details
A. Stipulate that the articles of incorporation of social welfare foundations shall include the matters of the location of the branch office, the voting rights and representation of the board of directors (Article 17 (1) 6-2 newly inserted)
B. Prevent confusion by directly prescribing the matters, which the relevant provisions of the Act on the Establishment and Operation of Public Interest Corporations applied mutatis mutandis to, in this Act (Articles 18-3 to 18-7 newly inserted)
C. Stipulate that if the number of directors is less than the statutory minimum requirement or the criteria of the composition ratio of directors is violated, or if a director whose term expired or a director who has been dismissed by an order of the Mayor/Do Governor participates in the resolution, the resolution of the board of directors shall be invalid (Article 18-8 newly inserted)
D. Add to the disqualifications of executives of social welfare foundations the cases such as unfairly receiving local subsidies under the Local Finance Act or being punished by using the subsidies in violation of its purpose; violating the provisions on executives or the term of an executive being terminated; an executive being elected in an invalid manner by the Board of Directors; or an executive being dismissed by an order of the Mayor/Do Governor, etc.(Article 19 (1) 1-7 and Article 19 (2))
E. Stipulate that if the board of directors is found to be invalid, the appointment of temporary director(s) shall be requested without delay (Article 20)
