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South Korea > Legal market overview

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Editorial

The main subject dominating South Korea’s legal future relates to the third-stage liberalisation of the Korean legal market permitting the establishment of joint venture law firms between local and foreign law firms. Joint ventures between Korean and European firms will be possible from July 2016, and those between Korean and US firms from March 2017.

However, in its current form, the Foreign Legal Consultants Act (as revised by the Korean Ministry of Justice) is looking distinctly unpalatable for foreign firms. Burdened with the risk, but not the control, of the joint venture – foreign firms are allowed only a minority stake – and shackled with the imposition that the union must be between a domestic firm and the head office of the international entity, most foreign firms consider this something of a ‘sham’ opening.

FIRMS IN THE SPOTLIGHT

Yulchon

Yulchon is a full-service international law firm headquartered in Seoul, Korea. It employs over 360 professionals, including more than 60 licensed in jurisdictions outside of Korea. The firm’s perspective is international and its reach is global. It has represented clients from six continents and has helped companies expand around the globe. Yulchon strives to provide the most innovative solutions to the complex legal challenges confronting its clients.

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FIRMS IN THE SPOTLIGHT

Cho & Partners

Cho & Partners was established in 2002 by two senior attorneys who decided to leave a large firm environment to create a more focused, efficient and responsive practice. Based on the reputation and capabilities of the founding members, as well as the established trust and loyalty of their clients, Cho & Partners was immediately active in representing multinational clients. The firm’s clients are among the most recognised names and leaders in various business sectors, such as software and technology, retail, luxury goods and fashion, and energy.

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Nonetheless, South Korea remains a tempting market for global players, with White & Case LLP (Foreign Legal Consultant Office) and Kobre & Kim the latest to open an office in Seoul. This is partly a result of the international success of Korean building contractors, and partly due to the head office residence of some of the world’s most progressive businesses, including Samsung Electronics, Hyundai Motor and POSCO.

With regards to domestic legal work, corporate and employment practices fared particularly well following a move by the corporate giants that dominate the business landscape to streamline lagging parts of their businesses, in a bid to focus on core sectors. In one significant deal, Samsung Electronics, the nation’s biggest conglomerate, agreed to sell four of its chemicals and defence sector affiliates to Hanwha Group for $1.82bn, as part of its business reorganisation.

Kim & Chang remains the largest and probably best-known law firm in the region, and leads the so-called ‘Big Six’; the others are Bae, Kim & Lee LLC; Lee & Ko; Shin & Kim;Yoon & Yang LLC; and Yulchon. Though market liberalisation may not break the stranglehold these firms have over domestic work, a shake-up of the order remains a possibility. Rapidly growing firms like the ‘up-and-comingJipyong threaten the status quo.

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Legal Developments in South Korea

Legal Developments and updates from the leading lawyers in each jurisdiction. To contribute, send an email request to
  • Brief Introduction to Issuing QIB Securities in Korea

    To date, most issuance of bonds in the Korean capital markets has been focused on the public market, but in regard to issuance of bonds in the public market, there is an obligation to file a securities registration statement for investor protection purposes and there are broad disclosure obligations even during the period of secondary distribution and trading of such securities.
  • [South Korea] 2016 Proposed Tax Law Amendments

    On July 28, 2016, the Ministry of Strategy and Finance announced its proposed tax law amendments for 2016. According to the proposal, the revisions are aimed at increasing the engines for growth and promoting fairness in taxation in accordance with the mid- to long-term tax policy initiatives of the government. The proposed amendments are expected to come into effect on January 1, 2017 pending approval by the National Assembly.
  • Substantial Developments in Korean Bankruptcy Laws

    Substantial Developments in Korean Bankruptcy Laws Reflecting Practical Needs of the Parties Involved: CRPA and DRBA
  • Breaking Down the Just-Cause Barrier

    A Systematic Approach of Securing Greater Flexibility in Managing Poor Performing Employees
  • Court Regards Tax Avoidance Purpose as a Primary Consideration in Determining Beneficial Ownership

    The Seoul Administrative Court recently ruled that a Hungary-based subsidiary ("HungarianCo") - set up in 2010 by a Dutch Motion Picture Licensing Entity ("Dutchco") to hold exclusive rights in distributing motion pictures produced by the group company in Korea, Japan, Israel and Hungary - was not the beneficial owner of royalty payments made by a Korean entertainment and motion pictures distributor ("KoreaCo") for rights to distribute motion pictures in the Korean market. Although HungarianCo had substantive physical presence in Hungary, the court held that based on an overall consideration of the purpose for setting up the entity in a certain jurisdiction, the nature of the activities performed by the employees, scope of transactions undertaken and actual flow of payments, DutchCo was the beneficial owner to the royalty payments and applied the royalty withholding tax rate of 15% pursuant to the Korea-Dutch tax treaty.
  • Korean Regulator, Encouraging Financial Institutions by Relaxing the Chinese Wall Regulations

    On 28 June 2016, the Korean government enacted an amendment (the "2016 Amendment") to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (the "FSCMA") which, among others, expands the exception (the “Wall-Cross exception”) to the Chinese wall regulations, i.e., restriction on the communication and exchange of information between business sectors within financial institutions (The term “financial institutions” as used in this article refers to dealers, brokers, fund managers, investment advisors, discretionary investment companies and trust companies (all of which are regulated under the FSCMA) to the exclusion of all other types of financial business entities such as merchant banks.) The 2016 Amendment seeks to enhance the competitiveness of financial institutions by allowing them to integrate activities which do not - or are unlikely to - conflict with one another, and further simplifies the regulatory scheme by removing the exceptions to the Chinese wall regulations from the Regulation on Financial Investment Business and incorporating the same in the Enforcement Decree.
  • [South Korea] Ministry of Strategy and Finance Issues Notice of a New Filing Requirement, and ...

    [Ministry of Strategy and Finance Issues Notice of a New Filing Requirement, and Those Companies Subject to the Comprehensive Report on International Transactions]
  • [South Korea] KFTC Issues Amended Guidelines on the Review of Unfair Trade Practices

    On December 31, 2015, the Amendment to the Guidelines on the Review of Unfair Trade Practices (“Amendment” and “Guidelines,” respectively) came into effect. The Guidelines are intended to provide guidance to companies about when their unilateral conduct may be considered an “unfair trade practice.”
  • [South Korea] Government to Strengthen Investigation of Environmental Crimes through a Newly ...

    [Government to Strengthen Investigation of Environmental Crimes through a Newly Established Task Force]
  • Court Holds Royalties for Foreign-Registered Patents are Not Subject to Withholding Tax in Korea

    Court adhered to the existing position on the determination of royalty payment

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