The Legal 500

[Ministry of Strategy and Finance Issues Notice of a New Filing Requirement, and Those Companies Subject to the Comprehensive Report on International Transactions]

On July 28, 2016, the Ministry of Strategy and Finance (“MOSF”) announced the annual proposal to amend the tax law for 2017 (the “Proposal”). The Proposal was submitted to the National Assembly on 2 September 2016.

- Enforcement Decree to the Fair Retail Agency Transactions Act

Proposed Amendment to the Enforcement Decree of PIPA

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.

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 Reflecting Practical Needs of the Parties Involved: CRPA and DRBA

A Systematic Approach of Securing Greater Flexibility in Managing Poor Performing Employees

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.

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.

[Ministry of Strategy and Finance Issues Notice of a New Filing Requirement, and Those Companies Subject to the Comprehensive Report on International Transactions]