Dongjin Lee, The Legal Framework of Public Interest Corporations Act - Critique and Reform Agenda - (2025)
<Abstract>
The Act on the Establishment and Operation of Public Interest Corporations constitutes a regulatory framework that imposes numerous mandatory provisions governing the structure and oversight of public interest corporations. Notably, the Act applies exclusively to specific categories of institutions—such as scholarship foundations, academic societies, research institutes, and similar entities—rather than to all organizations that pursue the public good.
Incorporation under this Act does not, in and of itself, confer substantial advantages, particularly in terms of tax benefits, which remain limited in scope. From a comparative legal perspective, this approach is notably uncommon. In many jurisdictions, the recognition of an organization as a public-interest entity or charitable organization is typically accompanied by both enhanced governance obligations and a package of incentives, including tax benefits and institutional support. Alternatively, certain legal systems afford greater autonomy to nonprofit organizations while requiring the demonstration of public benefit as a precondition for receiving tax benefits.
Where the justification for such specialized regulatory regimes lies in supporting entities that undertake quasi-governmental functions or in addressing the so-called agency problem, internal governance constraints should be applied proportionately—only where the risk of agency conflicts is substantiated. At a minimum, enhanced regulatory oversight of public interest corporations ought to be accompanied by corresponding benefits, particularly in the form of tax incentives.
Moreover, there is a pressing need to restructure the current fragmented legal framework. A comprehensive reform should involve not only the Act on the Establishment and Operation of Public Interest Corporations, but also the relevant provisions of theCivil Codegoverning nonprofit organizations and the various tax statutes that relate to public-interest entities, with the aim of achieving systematic and coherent harmonization.
<Key Words>
The Act on the Establishment and Operation of Public Interest Corporations, public interest corporation, non-profit organization, governance, tax benefits
Dongjin Lee, The Legal Framework of Public Interest Corporations Act - Critique and Reform Agenda - (2025)
<Abstract>
The Act on the Establishment and Operation of Public Interest Corporations constitutes a regulatory framework that imposes numerous mandatory provisions governing the structure and oversight of public interest corporations. Notably, the Act applies exclusively to specific categories of institutions—such as scholarship foundations, academic societies, research institutes, and similar entities—rather than to all organizations that pursue the public good.
Incorporation under this Act does not, in and of itself, confer substantial advantages, particularly in terms of tax benefits, which remain limited in scope. From a comparative legal perspective, this approach is notably uncommon. In many jurisdictions, the recognition of an organization as a public-interest entity or charitable organization is typically accompanied by both enhanced governance obligations and a package of incentives, including tax benefits and institutional support. Alternatively, certain legal systems afford greater autonomy to nonprofit organizations while requiring the demonstration of public benefit as a precondition for receiving tax benefits.
Where the justification for such specialized regulatory regimes lies in supporting entities that undertake quasi-governmental functions or in addressing the so-called agency problem, internal governance constraints should be applied proportionately—only where the risk of agency conflicts is substantiated. At a minimum, enhanced regulatory oversight of public interest corporations ought to be accompanied by corresponding benefits, particularly in the form of tax incentives.
Moreover, there is a pressing need to restructure the current fragmented legal framework. A comprehensive reform should involve not only the Act on the Establishment and Operation of Public Interest Corporations, but also the relevant provisions of theCivil Codegoverning nonprofit organizations and the various tax statutes that relate to public-interest entities, with the aim of achieving systematic and coherent harmonization.
<Key Words>
The Act on the Establishment and Operation of Public Interest Corporations, public interest corporation, non-profit organization, governance, tax benefits