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Government and the Ruling Party Draft Replacement Legislation for Breach of Trust Crime; Special Act Debate Expected After June 3 Local Elections
The government and the Democratic Party of Korea have agreed to pursue, after the June 3 local elections, the repeal of the current breach of trust provisions and the introduction of a special act titled the “Property Management Crime Punishment Act” as a replacement. The Presidential Office also reaffirmed its commitment to this replacement legislation, stating that President Jae Myung LEE remains firm in his stance on abolishing the breach of trust provisions.
Under the current Criminal Act, “a person who administers another’s business” may be subject to criminal liability if that person obtains pecuniary benefits or causes losses in violation of its duties. The proposed special act, however, limits the scope of its application to “a person entrusted with property management duties under relevant laws and regulations,” while specifying seven categories of punishable offenses, including property misappropriation and asset outflows.
The Ministry of Justice is reported to have recently prepared and submitted a draft of the special act on the punishment of property management crimes, which would replace the abolished breach of trust provisions, to the Presidential Office and the ruling party. The proposed legislation would penalize actions involving another person’s property in which a person acts beyond the scope of entrusted duties to seek personal gain or cause financial harm.
In particular, the draft legislation reportedly includes multiple options for handling cases currently under investigation or trial following the repeal of the breach of trust offense. One proposal would allow cases already underway prior to the repeal to remain subject to the existing breach of trust provisions, regardless of the enactment of the new Property Management Crime Punishment Act. Under this approach, currently ongoing cases would proceed through investigations and trials without dismissal of prosecution.
Another proposal would permit limited continued application of the existing breach of trust provisions after repeal, but only in cases where punishment is still deemed necessary under the new Property Management Crime Punishment Act. If a case is not considered punishable under the new law, it would be closed through dismissal of prosecution.
Following the local elections, the Democratic Party of Korea is expected to introduce the special act as a member-sponsored bill after gathering public opinions via hearings and revising the draft legislation.
Meanwhile, Dong Hyeok JANG, the representative of the People Power Party, acknowledged that “revisions to the breach of trust offense are necessary to expand corporate management freedom,” but argued that “abolishing the breach of trust offense itself is clearly intended to erase the ongoing trials involving President Jae Myung LEE.” His remarks suggest that the bill is likely to face political battle before passage.
As the first-ever Korean law firm to issue specialized legislative journals, D&A Public Sector Relations Group has been publishing the monthly Policy & Business Report since August 2019. The May 2026 issue of the P&B Report conducted a full inspection of legislation proposed to the National Assembly Subcommittee, Standing Committee, and Plenary Session from the opening of the 22nd National Assembly on April 15, 2026, to May 14, 2026, and selected and analyzed legislation with significant impact on corporate activities. In the case of major legislation, key mentions of legislators, members of the Standing Committee, and government officials are included.
*D&A Public Sector Relations Group provides P&B Report subscription services. Please contact us at lc@draju.com for further inquiries.
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