Can minority shareholders in Korea force a special audit if the board hides related-party deals?

Yes, potentially. In Korea, the practical route is usually to treat this first as a records-access issue, and then, if the refusal itself points to concealment or illegality, escalate to a court-appointed inspector. If the suspected deal involved directors or affiliates, Article 398 requires advance board approval for transactions between directors and the company, and listed companies are also subject to an additional related-party transaction regime under Article 542-9 and its Enforcement Decree.

The first step is to make a written demand for the board minutes and the accounting records tied to the affiliate transaction. Under Article 391-3, shareholders may request inspection or copying of board minutes during business hours, and if the company refuses, the shareholder may seek court permission to inspect or copy them. Separately, Article 466 allows a written request, stating the grounds, to inspect and copy books of account and related documents. For an unlisted company, the default threshold is 3 percent of issued shares. For a listed company, Article 542-6(4) lowers the threshold for Article 466 to 0.1 percent held for more than six months, or 0.05 percent for certain listed companies under Presidential Decree.

The company does not have unlimited discretion to refuse. Under Article 466(2), it may reject the request only if it proves the request is improper. Korean Supreme Court guidance has treated the stated grounds and purpose as important, and Korean practice materials identify provisional injunctions and court applications as the standard enforcement tools when management blocks inspection of accounting books or similar records.

If there are concrete grounds to suspect an irregularity or a material violation of law or the articles of incorporation, Article 467 allows a shareholder holding 3 percent or more to ask the court to appoint an inspector to investigate the company’s affairs and asset status. That is the Korean mechanism closest to a special audit. Under the Non-Contentious Case Procedure Act, the court hears the directors and auditor before deciding, an immediate appeal is available, the court may order the company to bear the inspector’s remuneration, and it may also order a shareholders’ meeting if needed for the inspection.

On timing, Korean law does not give one universal 10-day or 30-day deadline for these court routes. The written demand can go out immediately. The fastest escalation is usually the records-access route, because board-minute access and books inspection can be pursued by court permission or preliminary injunction. The inspector route is usually slower because the court must hear management and appoint an outside inspector. In practice, the normal sequence is: written demand now, court access application if refused, then an Article 467 inspector petition if the facts support suspected concealment or self-dealing. That sequencing is an inference from the statutory procedure and current Korean practice materials.

One practical point matters a lot: whether the company is listed. If it is listed and your stake is below 3 percent, the books-and-records route may still be available even when the Article 467 inspector route is not, because Article 542-6 lowers the threshold for Article 466, but Article 467 itself still uses the 3 percent threshold. So the answer is yes, but the best entry point depends on your exact shareholding, holding period, and whether the company is listed.

Yes, potentially. In Korea, the practical route is usually to treat this first as a records-access issue, and then, if the refusal itself points to concealment or illegality, escalate to a court-appointed inspector. If the suspected deal involved directors or affiliates, Article 398 requires advance board approval for transactions between directors and the company, and listed companies are also subject to an additional related-party transaction regime under Article 542-9 and its Enforcement Decree.

The first step is to make a written demand for the board minutes and the accounting records tied to the affiliate transaction. Under Article 391-3, shareholders may request inspection or copying of board minutes during business hours, and if the company refuses, the shareholder may seek court permission to inspect or copy them. Separately, Article 466 allows a written request, stating the grounds, to inspect and copy books of account and related documents. For an unlisted company, the default threshold is 3 percent of issued shares. For a listed company, Article 542-6(4) lowers the threshold for Article 466 to 0.1 percent held for more than six months, or 0.05 percent for certain listed companies under Presidential Decree.

The company does not have unlimited discretion to refuse. Under Article 466(2), it may reject the request only if it proves the request is improper. Korean Supreme Court guidance has treated the stated grounds and purpose as important, and Korean practice materials identify provisional injunctions and court applications as the standard enforcement tools when management blocks inspection of accounting books or similar records.

If there are concrete grounds to suspect an irregularity or a material violation of law or the articles of incorporation, Article 467 allows a shareholder holding 3 percent or more to ask the court to appoint an inspector to investigate the company’s affairs and asset status. That is the Korean mechanism closest to a special audit. Under the Non-Contentious Case Procedure Act, the court hears the directors and auditor before deciding, an immediate appeal is available, the court may order the company to bear the inspector’s remuneration, and it may also order a shareholders’ meeting if needed for the inspection.

On timing, Korean law does not give one universal 10-day or 30-day deadline for these court routes. The written demand can go out immediately. The fastest escalation is usually the records-access route, because board-minute access and books inspection can be pursued by court permission or preliminary injunction. The inspector route is usually slower because the court must hear management and appoint an outside inspector. In practice, the normal sequence is: written demand now, court access application if refused, then an Article 467 inspector petition if the facts support suspected concealment or self-dealing. That sequencing is an inference from the statutory procedure and current Korean practice materials.

One practical point matters a lot: whether the company is listed. If it is listed and your stake is below 3 percent, the books-and-records route may still be available even when the Article 467 inspector route is not, because Article 542-6 lowers the threshold for Article 466, but Article 467 itself still uses the 3 percent threshold. So the answer is yes, but the best entry point depends on your exact shareholding, holding period, and whether the company is listed.