'One man, one job' risk... Thebon Korea gets a 'failing grade' on governance

Mr. Hae Soo Kim, Counsel at Tong & Kim, serves as an Independent Director of Theborn Korea. Mr. Kim is described as an expert in criminal investigations, having served as a deputy prosecutor in the Supreme Prosecutors' Office, and has limited experience in corporate governance and ESG. The board of directors is composed of legal and accounting professionals, which is considered to be more of a legal advisory function than a substantive check. In particular, the structure of the CEO and chairman of the board and the unity of the composition of the outside directors weaken the oversight function. The accounting audit pointed to sales of goods supplied to franchisees as a key audit issue, warning of possible revenue adjustments due to internal transactions and the risk of revenue recognition errors. Governance weaknesses such as the absence of internal audit, lack of investor disclosure, and lack of a shareholder engagement system contribute to legal and accounting risks, and it will be important to see how the legal advice of outside director Kim Hae-soo of law firm Tong & Tong and his role on the board will play a role in improving internal controls and strengthening oversight.