Lee & Ko > Seoul, South Korea > Firm Profile

Lee & Ko > Firm Profile

• Premier full-service law firm in Korea
• Founded in 1977, and comprising more than 860 professionals, organized into 8 practice groups with 40 specialty teams
• One-stop service for all legal needs, based on efficient collaboration among highly specialized team
• Emphasis on responsiveness and practical solutions
• 8 major practice groups: (i) corporate and M&A, (ii) banking, finance and securities, (iii) litigation (both civil and criminal) and international arbitration (iv) tax and customs, (v) antitrust and competition, (vi) labour and employment, (vii) intellectual property and (viii) white-collar crime
• 40 specialised teams: Within the firm’s 8 major practice groups there are approximately 40 highly specialised teams of legal professionals including the following: anti-corruption and FCPA; antitrust and competition; aviation; banking; bankruptcy, insolvency and corporate restructuring; capital markets and securities; class actions and consumer claims; construction; consumer goods and services; corporate and M&A; corporate governance; derivatives; dispute resolution; energy; entertainment; environment; finance (acquisition finance, asset finance, project finance, structured finance); foreign direct investment; healthcare; industry and manufacturing; infrastructure; insurance; intellectual property; internal investigations; international practice (Chinese, European, Japanese practice); international trade; investment funds; labour and employment; maritime and shipping; overseas investment; private equity and venture capital; privatisation; product liability; real estate; regulatory compliance; tax and customs (tax consulting, audits, dispute resolution, transfer pricing); technology, media and telecommunications; and white-collar crime.

Recognition and Awards

• ALB Korea Law Awards 2023
  – Litigation Law Firm of the Year
  – Regulatory and Compliance Law Firm of the Year
  – Equity Market Deal of the Year
  – M&A Deal of the Year
  – Technology, Media and Telecommunications Deal of the Year
• Asialaw Awards 2023
  – Asia Firm of the Year
  – South Korea Firm of the Year
  – Banking and Finance Firm of the Year
  – Aviation and Shipping Firm of the Year
  – Energy Firm of the Year, Impact Deal of the Year
  – Impact Deal of the Year
• MIP Asia-Pacific Awards 2023
  – South Korea Copyright & Design Firm of the Year
• Benchmark Litigation Asia-Pacific Awards 2023
  – South Korea Firm of the Year
  – Construction Firm of the Year
  – Impact Case Winners
• Chambers Asia Pacific and Greater China Region Awards 2023
  – South Korea National Law Firm of the Year
• Asia Legal Awards 2023
  – Cross-border M&A Deal of the Year ($2 billion+)
  – Transport Firm of the Year
• ALB Korea Law Awards 2022
  – Overseas Practice Law Firm of the Year
  – Project Finance Deal of the Year
  – Technology, Media and Telecommunications Deal of the Year
• Asialaw Awards 2022
  – South Korea Firm of the Year
  – Dispute Resolution Firm of the Year
  – Regulatory Firm of the Year
  – Impact Deal/ Case of the Year
• Asia Legal Awards 2022 – Best Crisis Management Initiative of the Year
• Benchmark Litigation Asia-Pacific Awards 2022
  – South Korea Firm of the Year: Runner up
  – Construction Firm of the Year: Second runner up
  – Tax Firm of the Year: Runner up
• MIP Asia-Pacific Awards 2022
  – Korea Trademark Firm of the Year
  – Korea IP Transactions firm of the Year

Spotlights

SOUTH KOREA

Lee & Ko is a premier full-service law firm with more than 800 professionals dedicated to providing expertise across all legal sectors. Since its inception in 1977, Lee & Ko has represented a wide range of clients, from leading Korean conglomerates and multinational corporations to financial institutions and private equity firms, in the most complex and high-profile domestic and cross-border matters involving Korea.

 

Press Releases

Lee & Ko wins Specialist Award – Pro Bono at the 2024 IFLR Asia Pacific Awards

4th April 2024 Lee & Ko has been selected as the winner of the Specialist award – Pro Bono at the 2024 IFLR Asia Pacific Awards.

Tong Keun Seol and Jin Young Jung Awarded “ESG Lawyer of the Year” and “Transport Lawyer of the Year” at The Asia Legal Awards 2024

26th March 2024 Lee & Ko attorneys Tong Keun Seol and Jin Young Jung won the “ESG Lawyer of the Year” and “Transport Lawyer of the Year” respectively at the awards ceremony of The Asia Legal Awards 2024.

Lee & Ko Wins the Most Awards by Category and “Law Firm of the Year” at ABLJ Korea Law Awards 2023

1st March 2024 Lee & Ko was selected as the only “Law Firm of the Year” in Korea at the Korea Law Awards 2023 hosted by the Asia Business Law Journal (ABLJ).

Band 1 in 7 Practice Areas by “Chambers Global 2024”

20th February 2024 Lee & Ko has been recognized once again for its exceptional capabilities in legal service in 2024 by Chambers Global.

‘Legal 500 Asia Pacific 2024’ ranks Lee & Ko in the top tier in 15 practice areas

23rd January 2024 Lee & Ko was selected as Tier 1 law firm in Korea across 15 fields according to ‘The Legal 500 Asia Pacific 2024’.

Sanggon Kim, Ho Joon Moon, Sung Min Kim, Jaewoo Kwak selected as ‘ALB Korea Super 30 Lawyers’

4th January 2024 Lee & Ko lawyers Sanggon Kim, Ho Joon Moon, Sung Min Kim, Jaewoo Kwak have been selected as ‘Korea Super 30 Lawyers 2023’ presented by ALB(Asian Legal Business) Magazine.

Most Lawyers Selected in ‘2023 Korea’s Top 100 Lawyers’ by Asia Business Law Journal

3rd January 2024 In the '2023 Korea’s Top 100 Lawyers' researched by Asia Business Law Journal, 23 lawyers from Lee & Ko have been selected, marking the largest number among domestic law firms.

‘Chambers Asia-Pacific 2024’ Band 1 in 13 practice areas

20th December 2023 Lee & Ko was ranked Band 1 by 'Chambers Asia-Pacific Guide 2024’ in 13 practice areas. For the individual rankings, 65 attorneys were recognized as ‘Leading Individuals’ throughout all practice areas.

Band 1 in Chambers FinTech Guide 2024

18th December 2023 Lee & Ko was ranked Band 1 in the Legal sector of the Chambers FinTech Guide 2024.

2023 Asia IP Awards Selected Lee & Ko as the South Korea Copyright Firm of the Year

15th November 2023 At the 2023 Asia IP Awards, Lee & Ko has been selected as the Best Law Firm in Korea in the copyright practice.

Lee & Ko awarded in 7 categories by ALB Korea Law Awards 2023

15th November 2023 Lee & Ko won in seven categories in the ALB Korea Law Awards 2023, listed below, and stood out as Korea’s leading law firm. 

Lee & Ko earned honors in six categories, including “Asia Firm of the Year” and “South Korea Firm of the Year,” at Asialaw Awards 2023

6th October 2023 Lee & Ko has achieved significant recognition at “Asialaw Awards 2023,” receiving honors in a total of six categories, including “Asia Firm of the Year” and “South Korea Firm of the Year”.

Steve Minhoo Kim Named ‘Transfer Pricing Practice Leader of the Year’ at ITR APAC Tax Awards

6th October 2023 Mr. Steve Minhoo Kim, a senior foreign attorney (admitted to the District of Columbia) at Lee & Ko, has been honored with the ‘Transfer Pricing Practice Leader of the Year’ at the ITR APAC Tax Awards 2023, standing out as the sole recipient in this individual category among the members of Korean law firms. 

Attorney Ji Hyeong Park, selected as ‘ALB Asia Top 15 Female Lawyers’

20th September 2023 Ji Hyeong Park, an attorney at Lee & Ko Attorney was selected as ‘2023 Asia Top 15 Female Lawyer’ by Asian Legal Business (ALB) Magazine. Since joining Lee & Ko in 2012, Ji Hyeong Park has been a partner in the General Corporate Practice Group at Lee & Ko. Her practice has focused on the areas of mergers & acquisitions, corporate governance and hostile takeover & defense. ALB Magazine is a legal magazine in the Asia-Pacific region published by Thomson Reuters, a prestigious legal business media. In this August issue, ALB Magazine has recognized top 15 female lawyers who have displayed outstanding achievements throughout their careers from 11 different Asian countries, including India, Hong Kong, Singapore, Korea and Japan.

Attorney Ji Hyeong Park, selected as ‘ALB Asia Top 15 Female Lawyers’

18th August 2023 Ji Hyeong Park, an attorney at Lee & Ko Attorney was selected as ‘2023 Asia Top 15 Female Lawyer’ by Asian Legal Business (ALB) Magazine. 

The best law firm by MIP’s IP Stars 2023

1st August 2023 Lee & Ko received the highest level of recognition as the best law firm in the area of trademark, patent and copyright in the 2023 IP Stars Law Firm Ranking announced by Managing IP.

Tier1 in All Practice Areas of IFLR1000

27th July 2023 Lee & Ko has been selected as a Tier 1 firm in all 8 categories under the IFLR(International Financial Law Review) 1000 2023 edition.

“Chambers High Net Worth 2023” ranks Lee & Ko in the top band

26th July 2023 Lee & Ko was consecutively selected as a top law firm in the private wealth law category according to “Chambers High Net Worth (HNW) 2023” as published by Chambers & Partners, a world renown legal media.

“Law Firm of the Year” at the 2023 MIP Asia Pacific Awards

19th July 2023 In recognition of its remarkable achievements in the areas of Copyright and Design, Lee & Ko was awarded “Law Firm of the Year” at the Managing IP Asia Pacific Awards 2023 hosted by the Managing IP (MIP).

Top Tier Law Firm by IAM Patent 1000 2023

7th July 2023

#1 Top Tier Law Firm in ALB M&A Rankings 2022

3rd October 2022 ALB selected Lee & Ko as a top tier(Tier 1) law firm in ‘ALB M&A Rankings 2022’.

Lee & Ko Selected as “Asia IP Firm of the Year”

20th January 2022 On 05.06.2021 Legal Times reports, “The Asian Lawyer, a sister online media outlet of the American Lawyer, has selected Lee & Ko as Intellectual Property Firm of the Year in all of Asia, based on 2021 Asia Legal Awards, an online survey conducted on May 5.

Lee & Ko awarded the Litigation and Arbitration Award and the Advisory Award at the ‘4th Korea Legal Awards’

20th January 2022 Lee & Ko received the Litigation and Arbitration Award (Nullification of Korea Exchange’s Delisting) and the Advisory Award (Advising Korean Air’s acquisition of Asiana Air) at the ‘4th Korea Legal Awards 2021’.

‘Chambers Asia-Pacific 2022’ ranks Lee & Ko in the top band in 11 practice areas

20th January 2022 Lee & Ko received Band 1 rankings by 'Chambers Asia-Pacific 2022’ in 12 practice areas.

Lee & Ko Ranks First in Legal Advisory Service, M&A Legal Advisory Ranking for the First Half of 2021

20th January 2022 On July 1, 2021, Lee & Ko was ranked No. 1 in the M&A legal advisory ranking for the first half of 2021 as hosted by Invest Chosun.

Lee & Ko Ranked in 15 Practice areas in The Legal 500’s 2022 Asia Pacific guide.

20th January 2022 On 12^th January 2022, leading Korean law firm Lee & Ko was recognised in 15 practice areas by The Legal 500, ranking tier one in 12 areas.

South Korea

23rd January 2017 KFTC Enhances the Predictability and Clarity of Decisions but Potentially Increase the Overall Administrative Fine Levels Facing continued criticisms that the existing rules allowed overly broad discretion to the Korea Fair Trade Commission (the “KFTC”) in setting the amount of administrative fine, the KFTC amended the Notification on Detailed Standards for Imposition of Administrative Fine (the “Notification”). The amendments (the “Amendments”) were passed by the KFTC’s full Committee of Commissioners on December 21, 2016, and came into effect on December 30, 2016.

Legal Developments

Amendment to Subcontracting Act (Maximum 5 Times Punitive Damages for Misappropriation of Technology)

13th March 2024 The Korea Fair Trade Commission’s (KFTC) proposed amendment to the Fair Transactions in Subcontracting Act (Subcontracting Act) was approved by the National Assembly during its plenary session on February 1, 2024 and will take effect on August 28, 2024.

Punitive Damages May Now Be Awarded up to Five Times – Patent Act, Utility Model Act, and Unfair Competition Prevention and Trade Secret Protection Act –

1st March 2024 On January 25, 2024, National Assembly passed an amendment bill that increases the limit of punitive damages compensation from treble to quintuple under the Patent Act and the Unfair Competition Prevention and Trade Secret Protection Act (the UCPA).

PIPC Announces Policy Direction for the Protection of Online Behavioral Data Used in Targeted Advertising

23rd February 2024 On January 31, 2024, the Personal Information Protection Commission (PIPC) announced ‘Policy Direction for the Protection of Online Behavioral Data Used in Targeted Advertising’ (Policy Direction).

Compliance Checklist for Small-sized Businesses Following Expansion of SAPA Regulations

9th February 2024

1. SAPA Regulations to Apply against Small-sized Businesses

Effective January 27, 2024, the Serious Accident Punishment Act (SAPA) entered into force against small-sized businesses (businesses with 5~49 regular employees) after a 2-year grace period.

MRFTA Amendments on Expansion of Merger Notification Exemptions and Introduction of Commitment Procedures for Merger Control

6th February 2024 On January 25, 2024, the Korea Fair Trade Commission (KFTC) proposed amendments (Amendments) to the Monopoly Regulation and Fair Trade Act (MRFTA) were approved by the National Assembly of Korea.

Korea-Taiwan Double Taxation Avoidance Arrangement Comes into Force

30th January 2024 The Implementation Act of the Arrangement between Korea and Taiwan for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with Respect to Taxes on Income (the Korea-Taiwan Tax Arrangement) officially took effect on December 26, 2023, following endorsement by the National Assembly.

Enactment of the Carbon Dioxide Capture, Utilization and Storage Act (CCUS Act)

30th January 2024   The “Carbon Dioxide Capture, Usage and Storage Act” (the “CCUS Act”) proposal has been passed at a plenary session of the National Assembly on January 9, 2024 and is scheduled to come into effect one year after its promulgation.

Strategic Considerations for Korean Investors: Leveraging the Special Tax Provision for Foreign Pass-Through Entities

30th January 2024 It has been a year since the introduction of the special tax provision that enables taxpayers to treat foreign pass-through entities,

KFTC proposes ex-ante regulation of platforms under the “Platform Competition Promotion Act”

4th January 2024 On December 19, 2023, the Korea Fair Trade Commission (“KFTC”) announced its proposal to enact the “Platform Competition Promotion Act” (“PCPA”) for ex-ante regulation of platforms by designating “dominant platform operators.”

Global Minimum Tax in Korea: Implementation Upcoming

3rd January 2024 Korea recently published new regulations containing detailed implementation guidance in regard to Global Minimum Tax (OECD Pillar Two). The new regulations are published in the Presidential Decrees to the International Tax Coordination Law and are effective January 1^st, 2024. In this newsletter, Lee & Ko’s International Tax Team provides an update on the status of the latest domestic implementation guidance and differences from the OECD Pillar Two, implications for multinationals in Korea, and timetable for implementation of IIR, UTPR and the Transitional Safe Harbours, among others.

KFTC Issues Advance Notice on Amendment of Merger Review Guidelines – Improvement of merger review process focusing on reflecting characteristics of the digital sector

27th November 2023 To keep pace with the current trend of increasing business combinations involving digital service suppliers, including online platforms, the Korea Fair Trade Commission (KFTC) seeks to amend the Merger Review Guidelines (Review Guidelines) to account for the specific characteristics of the digital sector when conducting merger reviews.

Guidelines on Foreign Exchange Business of Foreign Financial Institutions

9th November 2023

On October 18, 2023, the Guidelines on Foreign Exchange Business of Foreign Financial Institutions (the Guidelines) were established and implemented to open the domestic foreign exchange market to the outside world. We will touch on the background behind the establishment of the Guidelines and main contents thereof below.

Amended Enforcement Decree of the Personal Information Protection Act of Korea

29th September 2023 The amended Personal Information Protection Act of Korea (PIPA), Korea’s main legal framework for personal data protection, came into effect on September 15, 2023.

Highlights of the FY2023 Tax Law Amendment Proposals

1st September 2023 The Korean Ministry of Economy and Finance (MOEF) confirmed and announced the FY2023 tax law amendment proposals on July 27, 2023 (Proposals).

The Future of the Food Industry: Food Tech

27th July 2023 With significant development in dietary supplements and alternative food industry in recent years, Korean government announced alternative food (e.g., plant-based meet, cultured meat,

Strengthening Regulation of Unfair Trading through Amendment of FISCMA

25th July 2023 A proposal for partial amendment (Amendment) to the Financial Investment Services and Capital Markets Act (FISCMA) for the purpose of strengthening the regulation of unfair trading passed the plenary session of the National Assembly of Korea on June 30, 2023 and was promulgated on July 18, 2023.

Korea – Passage of the Act on the Protection of the Virtual Asset Users at the Plenary Session of the National Assembly

24th July 2023 The Act on the Protection of the Virtual Asset Users (the Virtual Asset Act) which is designed to facilitate and strengthen the protection of the virtual asset users and set in place certain restrictions on unfair trade practices in the virtual asset market,

Review on Enactment of the Special Act on the Promotion of Dispersed Energy & Amendment to Electric Utility Act

7th July 2023 The Special Act on the Promotion of Dispersed Energy (the Dispersed Energy Act) was recently enacted as of June 13, 2023 and,

HOW TO CORRECTLY SET UP AN E-COMMERCE WEBSITE FOR SALE IN ACCORDANCE WITH VIETNAM LAW?

8th June 2023 The recent pandemic has prompted consumers all over the world, and particularly in Vietnam, to adopt a new shopping habit: online shopping, particularly after a period of social isolation.

Partial Amendment Bill to the Electronic Financial Transactions Act passed by the National Assembly’s National Policy Committee

8th June 2023 On May 11, 2023, the “Amendment Bill to the Electronic Financial Transactions Act” (the Amendment) passed the plenary session of the National Assembly’s National Policy Committee.

Latest Update to 「Guidelines for Workplace Risk Assessment」 to Impact Businesses in Korea

5th June 2023 On 22 May 2023, the Ministry of Employment and Labor (MOEL) announced a significant update to its 「Guidelines for Workplace Risk Assessment」 (Guidelines), effective immediately. The latest changes to the Guidelines aim to improve and reform the existing workplace risk assessment system, a key means to self-diagnose and mitigate risks of employer liability for workplace safety. The key elements of MOEL's latest development and the associated implications are summarized below.

Supreme Court of Korea Affirms Abuse of Dominance for Tying Patent Licenses and Engineering Services in the Shipbuilding Industry

5th June 2023 Lee & Ko’s Antitrust & Competition Group successfully represented three major Korean shipbuilding companies in the court action involving Gaztransport & Technigaz SA (GTT), the exclusive holder of key patents in technology for manufacturing/constructing membrane storage tanks used on liquefied natural gas carriers (LNG Carrier).

IP Issues and Implications Relating to ChatGPT

5th June 2023 ChatGPT is a conversational artificial intelligence (AI) service based on Generative Pre-trained Transformer (GPT),[1] a language model grounded in artificial neural networks, developed by OpenAI. Launched in 2022, ChatGPT is trained with voluminous text-based data sets of garden-variety nature.

Electricity Business License Approval Criteria – Stricter Standards to Apply

27th April 2023 On March 8, 2023 the South Korean Ministry of Trade, Industry, and Energy (MOTIE) issued a legislative notice regarding proposed amendments to the “Detailed Evaluation Standards for Development Projects” (the Amended Evaluation Standards). The intent of the amendments is to enhance the effectiveness of project construction and operations, as well as to minimize disputes between the developers. We expect the Amended Evaluation Standards will affect a large majority of potential investors and developers in the South Korean renewable energy market. Given the importance and potential impact of the changes, Lee & Ko has prepared a brief summary of the proposed amendments as follows.

KFTC Proposes to Enhance Investigation and Deliberation Procedures

4th April 2023 KFTC issues advance administrative notice on amendments to Investigation and Case Handling Procedures and on enactment of Guidelines for Filing Objections

Proposed Amendment of the Monopoly Regulation and Fair Trade Act

28th March 2023 The Korea Fair Trade Commission (KFTC) issued an advance notice with respect to proposed revisions to the Monopoly Regulation and Fair Trade Act (MRFTA) which includes inter alia (i) expansion of merger notification exemptions and (ii) introduction of commitment procedures for merger control (the Proposed Revisions). There will be a public notice period until March 27, 2023 for the KFTC to obtain and gather comments on the Proposed Revisions.

Second Major Amendment to the Personal Information Protection Act Passed by National Assembly (III)

28th March 2023 On February 27, 2023, the National Assembly passed a bill containing a number of amendments to the Personal Information Protection Act (the Amended PIPA), Korea’s general data protection law.  The Amended PIPA, which represents the second step of the Korean government’s multi-step amendment process for the PIPA following the passage of the first amendment in 2020, is scheduled to go into effect from September 15, 2023, except certain provisions therein, including those relating to automated decision-making and the right to data portability.

Major Amendment to the Personal Information Protection Act Passed by National Assembly (II)

14th March 2023 On February 27, 2023, the National Assembly passed a bill containing a number of amendments to the Personal Information Protection Act (the Amended PIPA), Korea’s general data protection law.  The Amended PIPA, which represents the second step of the Korean government’s multi-step amendment process for the PIPA following the passage of the first amendment in 2020, is scheduled to go into effect 6 months from its promulgation date (which must take place within the next 15 days). However, certain provisions therein, including those relating to automated decision-making and the right to data portability, are scheduled to go into effect 12 months thereafter. 

Second Major Amendment to the Personal Information Protection Act Passed by National Assembly (I)

7th March 2023 On February 27, 2023, the National Assembly passed a bill containing a number of amendments to the Personal Information Protection Act (the Amended PIPA), Korea’s general data protection law.  The Amended PIPA, which represents the second step of the Korean government’s multi-step amendment process for the PIPA following the passage of the first amendment in 2020, is scheduled to go into effect 6 months from its promulgation date (which must take place within the next 15 days). However, certain provisions therein, including those relating to automated decision-making and the right to data portability, are scheduled to go into effect 12 months thereafter.

Lee & Ko Tax Group Newsletter: Korean Tax Law and Regulation Updates for 2023

21st February 2023

1. Korea’s current position and direction/trends within the global taxation context

Korea’s latest tax reforms package was approved by the National Assembly in December 2022, with further details made clear by the Presidential Enforcement Decree which was published in January 2023. Before going into the details of the Korean tax reforms for 2023, it is important to consider the wider global context and domestic political context in which these reforms have been made, in order to understand some of the rationale underlying the reforms.

2023 Capital Markets Regulation Trends and its Impacts on Corporations

24th January 2023 Much of what was discussed in the new administration's capital market policy prospects in early 2022 was carried over from election pledges. That may be why the general market protection policy was widely deployed. Regulatory authority’s intention to regulate unfair trade has been announced several times and is reflected in regulation and supervision in a variety of ways. Robust financial supervisory authorities, a revived joint investigation team for securities crimes at the prosecutor’s office, and special provisions regarding listed companies in the Financial Service and Capital Markets Act of Korea (“FSCMA”) are actively working together. Let's take a look at the impact this regulatory trend will have on listed companies in 2023.

Korea’s Draft Amendment to the Civil Act May Mean Statutory Protection for ‘Right of Publicity’

24th January 2023 As the use of content platforms continues to grow around the world, Korea is revisiting the debate on who should be allowed to benefit from a person’s name, likeness, or other indicia of personal identity. In a global environment where almost anyone can obtain public notoriety, Korea is seeking to foster a balanced approach to unfair competition and IP enforcement by bolstering statutory protections during a time when avenues to profit from individual rights of publicity have expanded.

KFTC Proposes Revisions to Merger Review Guidelines and Merger Filing Guidelines

24th January 2023 The Korea Fair Trade Commission (“KFTC”) proposed revisions to the Merger Review Guidelines and the Merger Filing Guidelines to facilitate merger reviews of certain investments and to expedite their review process.  With the number of filings increasing from 701 in 2018 to 1,113 in 2021, the KFTC is seeking to enhance efficiency in the merger review process and to minimize burden on the reporting party.  These revisions resulted from input by a task force created by the KFTC (composed of experts on merger filings such as practitioners and academic scholars) and consideration of comments received from the general public which concluded on November 7.  These revisions will be subject to further approval before their adoption and implementation.

Recent Capital Markets Regulatory Trend

4th January 2023 In addition to the stagnation of Korea’s capital markets, as concerns about losses and damages arising from financial transactions are increasing, financial authorities are continuing to increase the level of supervision on capital markets. Recently, ‘Unfair Trading Investigation/Inspection Council’, comprised of the Financial Services Commission (the “FSC”), the Financial Supervisory Service (the “FSS”), the Korea Exchange (the “KRX”) and Seoul Southern District Prosecutors’ Office, has conducted an oversight review of the current state of inspections conducted by the KRX and investigations conducted by the FSC and FSS in relation to unfair trading, thereby increasing tension in the market.

2022 Proposed Korean Tax Law Amendments – International Taxation

5th October 2022 The Ministry of Economy and Finance (MOEF) released “2022 proposed tax law amendments” (the Proposed Amendments) on July 21, 2022 which would generally be effective from 2023.

Korea Implements New Act on Special Measures for Strengthening and Protecting Competitiveness of National High-Tech Strategic Industries

5th October 2022 Korea’s Act on Special Measures for Strengthening and Protecting Competitiveness of National High-Tech Strategic Industries (the Special Act) has been implemented with its accompanying Enforcement Decrees and Enforcement Rules. The Special Act aims to: (1) maintain national and economic security; (2) protect and foster strategic technologies; and (3) enhance the competitiveness of Korea’s high-tech industry.

PIPC Imposes Record Fines on Google and Meta for Privacy Violations

3rd October 2022 On September 14, 2022, the Personal Information Protection Commission (PIPC) announced that it had imposed record fines totaling KRW 100 billion on Google LLC (Google) and Meta Platforms, Inc. (Meta), the service provider of Facebook and Instagram, for collecting and using the behavioral data of users without consent for targeted advertisements in violation of the Personal Information Protection Act (PIPA).  The respective violations committed by each company, as well as the fines and other administrative sanctions imposed thereon, are summarized in greater detail below.

1. Details of violations and administrative sanctions

The PIPC imposed an administrative penalty surcharge of KRW 69.2 billion on Google for its failure, spanning a period of 6 years, to clearly inform users during the sign-up process for its services that it would be collecting and using behavioral data (regarding their use of other companies’ websites/services) for targeted advertisements.  Similarly, the PIPC imposed an administrative penalty surcharge of KRW 30.8 billion on Meta for its failure, spanning a period of 4 years, to display mandatory notification information when obtaining consent in a manner that was easily viewable to users and for omitting to obtain their actual consent for the collection/use of behavioral data during the sign-up process for Facebook and Instagram.  According to the PIPC, such behavioral data was used by Google and Meta to analyze the interests/preferences of their users and to create individually customized advertisements for each user. The PIPC also ordered both companies to implement an “easy and clear” process for obtaining consent that would give users more control over whether to share behavioral data regarding their online activities and decided to publicly disclose its decision to issue the corrective orders.

2. Implications

This latest decision by the PIPC is notable for (i) representing the first instance in Korea where administrative sanctions were imposed on online platform operators for the unlawful collection/use of users’ behavioral data for targeted advertisements and (ii) addressing long-standing issues of controversy such as what the legal requirements should be for the collection/use of behavioral data for targeted advertisements and, where consent is required, who (online platform operators or their enterprise users) should be responsible for obtaining such consent.  Further, the fines imposed on Google and Meta are the largest ever amounts imposed for violations of the PIPA and has thereby elevated the potential risk associated with non-compliance to even higher levels. In addition, because this decision also took issue with failures to adhere to methods prescribed by the PIPA for obtaining consent, it is expected to serve as important precedent when the PIPC is determining whether the methods for obtaining consent by other online platform operators, or by online businesses in general, can be viewed as compliant with the PIPA. Lastly, the PIPC made it clear that it would continue to investigate Meta for other possible PIPA violations relating to its previous attempt (and subsequent withdrawal) to restrict the provision of its services to users who refused their consent for the collection/use of behavioral data.  As such, there is a possibility that Meta may be facing more administrative sanctions relating to, among other things, failures to differentiate between consent for the processing of personal information essentially necessary for the provision of services (i.e., required consent) and consent which is not (i.e., optional consent) as required by the PIPA. Accordingly, foreign companies that are processing the data of Korean users should be mindful of the apparent increase in potential risk associated with violations of the PIPA (including those relating to notice/consent requirements) in light of these latest developments and take precautions accordingly.

---

If you have any questions regarding this article, please contact below: Kwang Bae PARK (kwangbae.park@leeko.com) Hwan Kyoung KO (hwankyoung.ko@leeko.com) Sunghee CHAE (sunghee.chae@leeko.com) Kyung Min SON (kyungmin.son@leeko.com) For more information, please visit our website: www.leeko.com

New Administration Displays Its Strong Will to Promote Digital Health

15th August 2022 Further to the 110 national initiatives for the new administration announced on May 3, 2022 (see our newsletter dated May 10, 2022), the government released a more detailed plan to promote digital health on July 27, 2022 (the Plan). The Plan was jointly prepared by the Ministry of Health and Welfare, the Ministry of Economy and Finance, the Ministry of Science and ICT, the Ministry of Trade, Industry and Energy, and the Ministry of Food and Safety.

Recent Supreme Court Decision Discusses the Income Characterization of Consideration for Software under the Korea-US Tax Treaty

5th July 2022 Lee & Ko Tax Group is pleased to distribute this Tax Alert to our Clients and Friends of an important tax case recently decided by the Supreme Court of Korea (2022du36155, decided on June 16, 2022) involving certain payments for the purchase of software by a Korean subsidiary from its US parent.

Amendments to Korea’s Unfair Competition Prevention and Trade Secret Protection Act Provide More Protection for Data and Famous People

11th May 2022 Korea’s recent amendments to the Unfair Competition Prevention and Trade Secret Protection Act (the UCPA) strengthened the statutory framework for:

Revised Korean Patent Act going into effect from April 20, 2022

11th May 2022 A number of important changes to the Korean Patent Act (KPA) are scheduled to go into effect from April 20, 2022. Read on to learn more about how these changes have been made to protect an applicant’s interests, provide further opportunities to obtain patent rights, and simplify a variety of procedures.

The New Administration’s Policy Outlook for Healthcare/Life Sciences

11th May 2022 With the inauguration of Yoon Seok-yeol as the 20^th president of Korea scheduled to take place on May 10, 2022, the Presidential Transition Committee (the Committee) announced 110 national initiatives for the new administration (the Initiatives) on May 3, 2022. In connection with national healthcare, (1) improvement and sophistication of countermeasure against pandemics, (2) stimulation of digital health and bio industries, (3) expansion of essential medical services and alleviation of medical cost burdens, and (4) strengthening of preventive health management are included in the Initiatives.   

Deregulation of the Financial Sector’s Cloud Computing and Network Separation

4th May 2022

Improvements to Cloud Computing and Network Separation Rules in Financial Sector

On April 14, 2022, the Financial Services Commission unveiled its plans to improve regulations on cloud computing and network separation in the financial sector. This improvement plan aims to support the financial sector’s efforts for digital transformation in a stable manner, in response to the financial industry’s concerns about the difficulties in adopting and using new digital technologies because of excessive regulations on cloud computing and network separation.

New President-Elect’s Labor Policy Outlook

23rd March 2022 On 9 March 2022, Suk-Yeol Yoon was elected as the 20^th president of the Republic of Korea. As one of the central components of his campaign platform, the president-elect advocated various policy changes and reforms that could have significant impacts on the employment and labor laws in Korea.

Digital Finance: Current Issues and Laws

7th February 2022 Financial Metaverse Platform and Legal Considerations

Changes to KFTC Merger Guidelines Took Effect on December 30, 2021

7th January 2022

Expanding Scope of Business Combinations Eligible for Simplified Review

The Korea Fair Trade Commission (the “KFTC”) amended the KFTC Guidelines on Merger Review (the “Amended Merger Review Guidelines”) to expand the scope of business combinations eligible for a simplified review, and the Amended Merger Review Guidelines took effect on December 30, 2021.  A simplified review is an expedited merger review process undertaken by the KFTC when the business combination transaction at issue is not likely to raise anti-competitive concerns in the relevant market.  The review period for a simplified review is 15 calendar days instead of the review period of 30 calendar days (which may be extended up to 90 calendar days) for a standard merger review. Prior to the Amended Merger Review Guidelines, the establishment of an overseas joint venture company with no effect on the Korean market was subject to a simplified review among other types of transactions.  With the Amended Merger Review Guidelines, the KFTC has expanded the scope to include extraterritorial mergers as eligible for a simplified review.  Four other types of transactions (share acquisition, merger, interlocking directorate and business transfer) may now qualify for a simplified review as long as the target company is a foreign company and the transaction does not have an effect on the Korean market. Also, the Amended Merger Review Guidelines has made it clear that not only those transactions to establish a new joint venture outside of Korea but also to form a joint venture through the acquisition of shares in a company established outside of Korea may now be eligible for a simplified review.  Moreover, under the Amended Merger Review Guidelines, acquisition of real property pursuant to a Real Estate Investment Trust (REIT) may be eligible for a simplified review.

Changes in Merger Filing Requirements

The KFTC amended the Guidelines on Merger Filing (the “Amended Merger Filing Guidelines”) to reflect the amended merger filing requirements set forth in the amended Monopoly Regulation and Fair Trade Act which took effect on December 30, 2021 (the “Amended MRFTA”), and the Amended Merger Filing Guidelines took effect on December 30, 2021 as well. Under the pre-Amended MRFTA, regulating mergers involving start-ups (e.g., online platform operators) with high growth potential (based on a large number of users) but with assets or turnover below such thresholds was not possible. Under the Amended MRFTA and its enforcement decree, a merger filing may now be triggered if the transaction value is at least KRW600 billion and a local nexus has been established to enable the KFTC to monitor mergers involving high growth potential start-ups.  To determine local nexus, the test is whether the target entity has performed a "substantial level" of activities in the Korean market based on any one of the following factors within the three fiscal years immediately preceding the notification date:

• Target company sold or provided products or services in the Korean market to at least 1 million persons per month in any month during the above period; or
• Annual budget of target company for leasing R&D facilities or using R&D personnel in Korea is KRW30 billion or more in any year during the above period.

The new thresholds are applied to any transaction consummated (for a post-merger filing) or signed (for a pre-merger filing) after the effective date of the Amended MRFTA. In line with the Amended MRFTA, the Amended Merger Filing Guidelines outline the details on calculating the transaction value depending on the various types of business combinations (e.g., share acquisition, merger, business transfer or establishment of a new company).  The prescribed calculation methods are as follows: (i) Share Acquisition: The sum of the total transaction amount (the acquisition price for the shares) and the book value of the relevant shares (if the acquirer holds shares of the target before the contemplated transaction) plus the assumed liabilities in the case of a share acquisition transaction

Example: In case Company A, which holds 5% of Company B’s stock, acquires an additional 50% shares at KRW590 billion (5% of Company B’s stock is valued at KRW4.5 billion and the liabilities of Company B is KRW10 billion). à Transaction amount is KRW600 billion [(KRW590 billion + KRW4.5 billion + (KRW10 billion x 55%))]

(ii) Mergers: The sum of the value of the issued shares (merger price per share multiplied by the number of issued shares) and cash consideration (if applicable), plus the assumed liabilities for the merger

Example: In case when Company C while merging with Company D issues 59,000,000 shares to Company D’s shareholders (merger price per share KRW10,000 and Company D’s liabilities is KRW10 billion). à Transaction amount is KRW600 billion [(KRW10,000 x 59,000,000 shares) + KRW10 billion]

(iii) Business Transfer: Business transfer price plus assumed liabilities for a business transfer

Example: In case when Company E while taking over Company F’s business pays consideration of KRW590 billion and takes over related liabilities in the amount of KRW10 billion. à Transaction amount is KRW600 billion (KRW590 billion + KRW10 billion)

(iv) Establishment of a New Company: Investment amount of the investor which will be the largest shareholder for a new joint venture

Example: In case Company G and Company H while establishing a new joint venture sign an agreement to each invest an amount of KRW600 billion and KRW20 billion, respectively. à Transaction amount is KRW600 billion

Also, the Amended Merger Filing Guidelines clarify the new local nexus test introduced in the Amended MRFTA.  In the case of internet-based services such as social network services, if monthly active users or monthly visitors of the target's internet services are at least 1 million, a local nexus has been established.  The Amended Merger Filing Guidelines further clarify that a user’s visit or use of the target's internet services multiple times during a single month counts as one visit.  Additionally, the Amended Merger Filing Guidelines clarify that the threshold amount of KRW30 billion should be calculated by adding up the annual ordinary R&D costs and development costs (intangible assets) of the target.

---

If you have any questions regarding this article, please contact below: Hwan JEONG (hwan.jeong@leeko.com) Suruyn KIM (Suruyn.kim@leeko.com) Frank S. SHYN (frank.shyn@leeko.com) For more information, please visit our website: www.leeko.com

Digital Finance: Current Issues and Laws NFTs: Key Korean Legal Considerations

6th January 2022 NFTs, or non-fungible tokens, have exploded in popularity recently in line with the surge in interest in the metaverse among companies like Meta (former Facebook) as well as investors and consumers. We discuss the characteristics of NFTs and the legal and regulatory issues relating to them.

Court Allows Lessee to Terminate Commercial Lease as COVID-19 Force Majeure

6th January 2022 Court Allows Lessee to Terminate Commercial Lease as COVID-19 Force Majeure.¹

Amendments to Korea’s Unfair Competition Prevention and Trade Secret Protection Act Provide More Protection for Data and Famous People.

9th December 2021 Korea’s recent amendments to the Unfair Competition Prevention and Trade Secret Protection Act (the UCPA) strengthened the statutory framework for:

Arbitration Agreement Survives Franchise Law Challenge

16th November 2021 The Supreme Court recently issued a judgment upholding the validity of an arbitration agreement in an international franchise agreement,(1) notwithstanding the franchisee's objection that the arbitration agreement violated mandatory provisions of Korean law intended to protect franchisees.

Tax Alert – the Korean Ministry of Economy and Finance Announces 2022 Tax Amendment Proposals

13th September 2021 On July 26, 2021, the Ministry of Economy and Finance announced the government’s tax amendment proposals for 2022 (the Proposals). The Proposals are intended to (i) encourage economic recovery from the COVID-19 pandemic, facilitate job creation and drive the growth of industry sectors that will boom in the post-COVID era; (ii) reduce the economic inequality that has worsened during the COVID-19 pandemic by giving tax benefits to small and medium sized enterprises and low-income households; and (iii) improve the tax system and strengthen taxpayer protection.

PIPC Sanctions Facebook and Netflix for Privacy Violations

8th September 2021 On August 25, 2021, the Personal Information Protection Commission (PIPC) announced that it had imposed various administrative sanctions (i.e., administrative penalty surcharges totaling KRW 6.66 billion, administrative fines totaling KRW 29 million, corrective orders, improvement recommendations, and publications) on Facebook[1]and Netflix for violations of the Personal Information Protection Act (PIPA).  Google was also investigated but was only recommended to improve its data processing practices after the PIPC determined that it had not committed any violations of the PIPA.  The respective administrative sanctions and measures imposed on each company are summarized in greater detail below.

Digital Finance: Current Issues and Laws – Guidelines for AI issued for financial sector

19th August 2021 We introduce the key points and implications of the newly issued Financial Sector Artificial Intelligence Guidelines as below.

Pharmaceutical Affairs Act Amended to Limit ‘Joint Use of Bioequivalence Test’

19th July 2021 The amendment to the Pharmaceutical Affairs Act (PAA) passed the National Assembly on June 29, 2021, and is expected to be promulgated sometime in July.

Changes to CISO Designation Rules and Public Disclosure Requirement for Information Security

22nd June 2021 Certain amendments to the Act on Promotion of Information and Communications Network Utilization and Information Protection (“Network Act”) and the Act on the Promotion of Information Security Industry (“Information Security Industry Act”) were promulgated on June 8, 2021 and are scheduled to go into effect on December 9, 2021.  These amendments contain several major changes to the chief information security officer (“CISO”) designation rules under the Network Act, and the public disclosure requirements for information security matters under the Information Security Industry Act.  Below, we provide an overview of the changes made by the promulgated amendments.

Amendment to the Design Protection Act seeking to protect GI designs is approved by the National Assembly

23rd April 2021

On March 24, 2021, amendment to the Design Protection Act seeking to protect graphic image (GI) designs (the Amendment) was passed during a plenary session of the National Assembly of Korea, meaning that the Amendment will go into effect six months after promulgation. The Amendment is expected to offer strengthened protection for emerging technologies such as projections, holographs, virtual/augmented reality and graphic user interface, and companies planning to use such technologies would want to check if there are related design registrations or applications. 

Successful Conclusion of Adequacy Talks between the Republic of Korea and the European Union

19th April 2021

On March 30, 2021, the Personal Information Protection Commission (PIPC) and the European Commission jointly announced the successful conclusion of adequacy talks between the Republic of Korea (Korea) and the European Union (EU).  

Korean Supreme Court Details Standard for Establishing Doctrine of Equivalents Infringement

19th April 2021

In Korea, as in the United States and Japan, the recognition of patent infringement claims under the Doctrine of Equivalents (“DoE”) has been established by several key precedents.  Recently, the Korean Supreme Court provided key guidance through detailed ruling standards for two of the three factors to establish DoE infringement, namely (1) the “Substantially Identical Solution Principle” and (2) the “Substantially Identical Effect Principle.”[1]

Recent Decision Involving Business Profits vs. Royalties Characterization under the US-Korea Tax Tree

6th April 2021

Lee & Ko Tax Group is pleased to distribute this Tax Alert Newsletter to our clients and friends of an important tax case recently decided by the Seoul Administrative Court (2019Guhap70643, February 5, 2021) involving certain payment for the purchase of software by a Korean subsidiary to its US parent.  This case appears to disagree with the approach taken by another court in a similar matter involving the Korean subsidiary of PTC, the US computer software and services company (PTC Korea Case). 

Recent Decision Involving Business Profits vs. Royalties Characterization under the US-Korea Tax Treaty: PTC Korea Case Not Followed

29th March 2021 Lee & Ko Tax Group is pleased to distribute this Tax Alert Newsletter to our clients and friends of an important tax case recently decided by the Seoul Administrative Court (2019Guhap70643, February 5, 2021) involving certain payment for the purchase of software by a Korean subsidiary to its US parent.  This case appears to disagree with the approach taken by another court in a similar matter involving the Korean subsidiary of PTC, the US computer software and services company (PTC Korea Case). 

Proposed Amendments to the Personal Information Protection Act

5th March 2021

Introduction

On January 6, 2021, the Personal Information Protection Committee (PIPC) proposed and announced for public comment significant amendments to the Personal Information Protection Act (PIPA) (the Proposed Amendments). We discuss some of the key aspects of the Proposed Amendments in greater detail below.

National Assembly Announces Major Accident Punishment Act

25th January 2021 On January 8, 2021, the National Assembly passed new legislation titled the Major Accident Punishment Act (MAPA) as part of its initiative to demand greater accountability from corporate actors in the event of a large-scale accident. The MAPA’s legislative objective is to set forth more specific parameters on the management’s responsibility to ensure occupational health and safety and impose greater sanctions to ensure compliance with the law.

Sweeping Changes to the Korean Criminal Procedures Starting in the New Year

5th January 2021 A series of legislations affecting the criminal law landscape in Korea have been enacted since the end of 2019 e.g., ‘Corruption Investigation Office for High-Ranking Officials Act’, ‘Prosecutor’s Office Act’ and ‘Criminal Procedure Act’, followed by the establishment of subsidiary laws and regulations. In addition, with the passage of the amendment bill of ‘High-Ranking Official’s Crime Investigation Agency Act’ in December 10_th, sweeping changes to the overall law enforcement system are expected.

The KFTC rules that the Practice of Tying Patented LNG Technology with Engineering Assistance Services is Illegal

22nd December 2020 On November 25, 2020, the Korea Fair Trade Commission (the “KFTC”) imposed a fine of USD 11 million on Gaztransport & Technigaz (“GTT”), a multinational engineering company headquartered in France, for abusing its market dominance in liquefied natural gas (LNG) container tank technologies (the “LNG Technology”). Although GTT argued that the tying of its patented LNG Technology together with its container tank engineering assistance services (the “Engineering Services”) is inseparable, the KFTC determined that this tying is illegal. The KFTC decision reaffirms the principle that there are limits to the activities of a market dominant patent holder. This case is summarized in greater detail below.

Bill to Amend the Monopoly Regulation and Fair Trade Act Passed by the National Assembly

22nd December 2020 In August 2018, the Korea Fair Trade Commission (the KFTC) drafted a bill to substantially amend the Monopoly Regulation and Fair Trade Act (the MRFTA) and submitted the amendment bill to the National Assembly in November 2018. However, only certain portions of the amendment bill which dealt with procedural regulations were passed by the National Assembly on April 29, 2020, and the remaining portions of the amendment bill automatically expired without further action at the end of the term of the 20^th National Assembly in May 2020.

Korea introduces new law strengthening protection against intentional infringement of IP rights

27th October 2020 Following the July 2019 amendment to the Patent Act introducing punitive damages for patent infringement, the Korean National Assembly has since passed additional legislation to strengthen the protection of IP rights. The new legislation includes amendments to the Trademark Act, the Design Protection Act and the UCPA (Unfair Competition Prevention and Trade Secret Protection Act), introducing punitive damages for trademark and design infringement and idea theft, as well as an amendment to the Patent Act, removing the requirement of a complaint from the injured party to initiate a criminal case for patent infringement. The amendments to the Trademark Act, Patent Act and Design Protection Act will become effective October 20, 2020, and the UCPA amendments April 21, 2021. All of the amendments will be applicable to infringing acts or thefts arising after the amendments go into effect. A brief summary of the amendments follows:

KFTC Announces the Proposal for the “Fair Intermediation Transactions on Online Platform Act”

27th October 2020 One of the most significant changes brought upon by COVID-19 is the increase in contact-free transactions, which triggered rapid increases in the market concentration of the online platform industry. In response to such changes, the Korea Fair Trade Commission (the KFTC) proposed the “Fair Intermediation Transactions on Online Platform Act” (the Online Platform Act) to enhance the transparency and fairness in online platform transactions.

Proposed Pharmaceutical Affairs Act Amendment Regarding Patent-Approval Linkage System

2nd September 2020 On August 20, 2020, the Ministry of Food and Drug Safety (“MFDS”) announced a proposed amendment to the Pharmaceutical Affairs Act (“PPA”) aimed to address certain deficiencies in the Patent-Approval Linkage System that went into effect in 2015.  Key features of the proposed amendment may be summarized as follows.

Key Tax Law Amendments in the Draft 2020 Tax Revision Bill

24th August 2020 On July 22, 2020, the Ministry of Economy and Finance publicly released the 2020 draft Tax Revision Bill (the ‘Draft Bill’).

Amendments to the Personal Information Protection Act and Credit Information Use and Protection Act

17th August 2020 Amendments to the Personal Information Protection Act (‘PIPA’) and Credit Information Use and Protection Act (‘Credit Information Act’) that were promulgated on February 4, 2020 took effect on August 5, 2020, along with their respective implementing regulations that were also amended to reflect the changes in the two laws. By balancing the need for the protection of personal information against the need for its wider use, the amended laws aim to pave the way for a data-driven economy. In practice, the sweeping nature of the amendments are expected to bring about significant changes in the way personal information is processed in Korea. I.  Amendments to the PIPA and the Enforcement Decree of the PIPA The amendments to the PIPA include, among others:

1. the introduction of pseudonymized information and the legal basis for using pseudonymized information for research and statistical purposes without the data subject’s consent;
2. the introduction of the compatibility concept;
3. the transfer of the Act on the Promotion of Information and Communications Network Utilization and Information Protection’s (‘Network Act’s’) personal information-related provisions to the PIPA; and
4. the elevation of the Personal Information Protection Commission’s (‘PIPC’s’) status to the sole supervisory authority responsible for the enforcement of the PIPA (accordingly, personal information protection matters that are currently handled by multiple agencies (i.e., the Ministry of the Interior and Safety and the Korea Communications Commission) will all be handled by the PIPC instead).Meanwhile, the amendments to the Enforcement Decree of the PIPA that have been adopted include, among others:

1. the specification of rules regarding the use and management of pseudonymized information such as the security measures which must be implemented and the specification of the procedures for combining pseudonymized information among different entities;
2. the specification of the standards used to determine compatibility;
3. the transfer of the personal information-related provisions in the Enforcement Decree of the Network Act to the Enforcement Decree of the PIPA; and
4. the addition of certain types of information to the scope of ‘sensitive information.’Further details on the above changes are provided below. (1) Use of Pseudonymized Information (A) Security Measures for Pseudonymized Information Under the amended PIPA, the stringent consent-oriented regulations on processing have been relaxed, allowing data handlers to process pseudonymized information without the consent of the data subject for purposes including statistical compiling, scientific research, and record preservation for the public interest. However, in order to minimize the risk of re-identification and any other harm that may be caused to data subjects in relation to the processing of pseudonymized information, the PIPA requires that anyone who processes pseudonymized information must implement certain statutorily-prescribed security measures. The amended Enforcement Decree of the PIPA specifies these security measures as follows:

1. The same security measures that are required with respect to general personal information must be implemented for pseudonymized information as well. In other words, the security measures stipulated under the ‘Standards of Personal Information Security Measures’ must be taken. (The ‘Standards of Personal Information Security Measures,’ which is an implementing regulation of the PIPA, sets forth the detailed security measures that must be applied to general personal information under the PIPA.)
2. Pseudonymized information and additional information (i.e., information which can be used to identify a specific individual by restoring the pseudonymized information to its original state) must be stored separately, and access rights to each of these two types of information must also be segregated in order to prevent the re-identification of the pseudonymized information through the use of the additional information.(B) Restriction on Combining Pseudonymized Information Although the amended PIPA promotes the use of pseudonymized information, combining pseudonymized information between different entities is restricted in that the process may be conducted only by professional institutions designated by the PIPC (‘Specialized Agencies’) or by the head of a pertinent central administrative agency, which currently is a requirement unique to Korea. Also, the combined information may only be transferred out of the Specialized Agency after obtaining the approval of the head of the said institution. The detailed process and method of combining pseudonymized information is stipulated in the amended Enforcement Decree of the PIPA. Under the amended Enforcement Decree of the PIPA, an entity that wishes to combine pseudonymized information (‘Applying Entity’) must first submit its request/application to the Specialized Agency. After the Specialized Agency combines pseudonymized information in a way that makes the specific data subject unidentifiable, the Applying Entity must pseudonymize or anonymize such combined information in a space where technical, organizational and physical measures necessary for the secure processing of personal information have been implemented, installed at the Specialized Agency. The Applying Entity must obtain the approval of the Specialized Agency in order to be able to export the combined information, in which case the Specialized Agency applies the following criteria in determining whether to grant the request:

1. the purpose for which the pseudonymized information has been combined is related to the information to be exported;
2. there is no likelihood that an individual might be identified due to such export of information; and
3. measures are taken to ensure the security of the information to be exported.Once the Specialized Agency approves the export request, they may bill the Applying Entity for the costs associated with the combination and export of the pseudonymized information. More details on the combining and removal of pseudonymized information will be provided in the ‘Public Notice on the Combination and Removal of Pseudonymized Information’ to be issued by the PIPC.   (2) Compatibility Provision - Standards for the Further Use and Provision of Personal Information within the Scope Reasonably Related to the Original Purpose of Collection The amended PIPA allows data handlers to use or provide personal information to a third party without the consent of the data subject if the scope of such further use or provision is within the scope reasonably related to the original purpose of the collection. As such, the amended Enforcement Decree of the PIPA provides detailed standards on what qualifies as ‘reasonably related to’ (i.e., compatible with) the original purpose of collection. In making this determination, the following factors are to be considered:

1. the processing is related to the original purpose for which the personal information was collected;
2. the processing was foreseeable in light of the circumstances surrounding the collection of such personal information or the customary practice of processing such personal information;
3. the processing does not unfairly infringe the rights and interests of the data subject; and
4. whether pseudonymization, encryption, or other necessary safeguards to ensure the security of the personal information have been implemented.The amended Enforcement Decree of the PIPA also requires that (i) the data handler disclose the standards which form the basis on which the above factors are assessed in its privacy policy and (ii) the Chief Privacy Officer check whether the further use and provision of personal information occurs in accordance with these standards.   (3) Others (A) Transfer of Network Act’s Personal Information-related Provisions to the PIPA Prior to the PIPA’s amendment, regulations on the processing of personal information by information and communications service providers and recipients of personal information provided by such information and communications service providers were set forth in the Network Act. However, in line with the transfer of such provisions to the PIPA, the personal information-related provisions under the Enforcement Decree of the Network Act have also been transferred to the Enforcement Decree of the PIPA. Examples of such provisions include those on the implementation of security measures, method for confirming the legal guardian’s consent, method of notification and report of personal information leakages, destruction of personal information of inactive users (i.e., users who have not shown any account activity for at least 1 year), notification of personal information usage details/records, and criteria for calculating penalty surcharges. (B) Expanded Scope of Sensitive Information Under the amended Enforcement Decree of the PIPA, (i) biometric data such as fingerprint, iris, and face and (ii) race and ethnicity data are newly added to the scope of sensitive information, which was previously defined to just include information on an individual’s ideology, creed, membership of a labor union or political party, political view, health, sexual preferences, genetic information, and criminal records. (C) Additional Developments Following the enforcement of the amended PIPA and its Enforcement Decree, the PIPC is expected to issue more practical guidance on the standards for pseudonymization and combining pseudonymized information through the ‘Pseudonymization Guidelines’ and ‘Guidelines on the Combination and Export of Pseudonymized Information,’ respectively. The current ‘Manual on Personal Information Protection Laws, Guidelines, and Public Notices’ will also be updated to reflect the recent amendments to the PIPA and its Enforcement Decree.   II.  Amendments to the Credit Information Act and the Enforcement Decree of the Credit Information Act   The amendments to the Credit Information Act are broader and more diverse than the amendments to the PIPA as they include provisions on data protection as well as the regulatory system for the use and management of credit information (please see our previous newsletter for more information). This newsletter will discuss the provisions in the amended Credit Information Act and the amended Enforcement Decree of the Credit Information Act relating to data protection which may be enforced by the Financial Services Commission (‘FSC’)/Financial Supervisory Service (‘FSS’) (if provisions apply to financial companies) or the PIPC (if provisions apply to non-financial companies which process personal credit information). Thus, the Credit Information Act will apply ahead of the PIPA where an entity processes personal credit information regardless of whether such entity is in the financial sector or not. As in the case of the amended PIPA, the amended Credit Information Act also provides legal grounds for the processing of pseudonymized information without consent and introduces the compatibility concept. However, the amended Acts may differ, in terms of the permitted scope of data processing without consent and other details in application, so companies are advised to review closely these differences when processing pseudonymized information. Also, unlike the amended PIPA, the amended Credit Information Act contains provisions (taking effect from February 4, 2021) which (i) grants data subjects the right to request financial companies and public institutions to transmit their personal credit information to other financial companies (i.e., the right to data portability) and (ii) streamlines (simplify and visualize) the consent process so that data subjects may provide their informed consent more easily. Accordingly, the amended Enforcement Decree of the Credit Information Act contains detailed provisions related to the processing pseudonymized information, the right to data portability, and streamlining of the consent process. For this newsletter, we summarize in greater detail below the provisions related to the processing of pseudonymized information as follows:   (1) Security Measures for Pseudonymized Information Similar to the amended PIPA, the amended Credit Information Act requires the implementation of certain security measures to ensure the safety of pseudonymized information. Accordingly, the amended Enforcement Decree of the Credit Information Act sets forth detailed standards of such security measures and measures necessary to prevent pseudonymized information from being combined with additional information. However, there are certain important differences between the measures required under the respective Acts. For example, with respect to the specific security measures which must be taken for pseudonymized information, if the Credit Information Act applies then security measures prescribed by the ‘Regulations on the Supervision of Credit Information Businesses’ (issued under the Credit Information Act) will need to be implemented as opposed to the security measures prescribed by the ‘Standards of Personal Information Security Measures’ (issued under the PIPA). As such, it would be advisable for companies to review closely these differences when processing pseudonymized information.   (2) Restriction on Combining Pseudonymized Information Similar to the amended PIPA, the amended Credit Information Act provides that the combination of pseudonymized information managed by different data handlers may be performed only by a Specialized Agency. However, because the details on the combination process and the Specialized Agencies permitted to combine pseudonymized information are different under the amended PIPA and the amended Credit Information Act, it will be important to confirm which law applies to the situation at hand to ensure the request for the combination of pseudonymized information is made to the appropriate Specialized Agency.   (3) Retention Periods for Pseudonymized Information The amended PIPA and the amended Enforcement Decree of the PIPA do not impose any particular restrictions on the retention of pseudonymized information. Thus, unlike in the case of ordinary personal information, there is no requirement to retain pseudonymized information only for the minimum duration necessary to achieve the purposes of processing. On the other hand, the amended Enforcement Decree of the Credit Information Act provides that pseudonymized information may be retained past the retention period of ordinary personal credit information only when retention is within a pre-determined retention period set after considering the following:

1. 1. level of administrative, physical, and technical protection needed to protect the pseudonymized information and additional information;
   2.  effect on the credit information subject in the event re-identification takes place through the pseudonymized information;
   3.  possibility of re-identification from the pseudonymized information; and
   4.  the purpose for the processing of the pseudonymized information and the minimum duration necessary to achieve such purpose.The FSC published additional guidance on the safe processing of anonymized data and pseudonymized information through its ‘Guide to the Processing of Anonymized and Pseudonymized Information in the Financial Sector’ on August 6. Meanwhile, the ‘Regulations on the Supervision of Credit Information Businesses,’ which further specify certain matters prescribed by the amended Enforcement Decree of the Credit Information Act, are also expected to be soon published by the FSC.  

If you have any questions regarding this article, please contact below:   Kwang Bae PARK (kwangbae.park@leeko.com) Hwan Kyoung KO (hwankyoung.ko@leeko.com) Sung Hee CHAE (sunghee.chae@leeko.com) Kyung Min SON (kyungmin.son@leeko.com)   For more information, please visit our website: www.leeko.com  

Key Tax Law Amendments in the Draft 2020 Tax Revision Bill

17th August 2020 On July 22, 2020, the Ministry of Economy and Finance publicly released the 2020 draft Tax Revision Bill (the ‘Draft Bill’). Amidst the increasing risk of a global recession caused by the COVID 19 pandemic, the Draft Bill aims to: (i) promote investment and spending; (ii) enhance tax benefits to low-income earners and mid-sized and small-sized enterprises; and (iii) provide tax incentives for job creation in order to minimize the negative economic impact of COVID 19. The Draft Bill is also seeking to harmonize the Korean tax system to changes occurring in the global economy, to ease compliance burdens, and to avoid double taxation. A summary of some key tax law proposals in the Draft Bill is provided below.

Important Upcoming Changes to the Korean Electricity Business Act regarding Solar Farm Developments

5th August 2020

There have been recent amendments to the Electricity Business Act (‘EB Act’) (the main Act governing the granting of permits required to develop and operate renewable energy projects in Korea) that are likely to affect a large majority of potential investors in Korean solar farm projects. As is discussed below, the legislative amendments are due to take effect in October of this year and there is currently scope for interested parties to make submissions in respect to some of the more important potential exceptions to be enacted. There are a number of changes, however, the most significant change includes a prohibition on the sale or acquisition of a solar farm business prior to the relevant business reaching commercial operation. Although the changes were introduced in March 31, 2020 the relevant exceptions to the most important rule change have only recently been published for public comment. Given the importance and potential impact of the changes, Lee & Ko has prepared a brief summary of the anticipated changes and draft exceptions. Further, and for convenience, we have also included the relevant details on how to make submissions (below).

Important Upcoming Changes to the Korean Electricity Business Act regarding Solar Farm Developments

16th July 2020

There have been recent amendments to the Electricity Business Act (‘EB Act’) (the main Act governing the granting of permits required to develop and operate renewable energy projects in Korea) that are likely to affect a large majority of potential investors in Korean solar farm projects. As is discussed below, the legislative amendments are due to take effect in October of this year and there is currently scope for interested parties to make submissions in respect to some of the more important potential exceptions to be enacted. There are a number of changes, however, the most significant change includes a prohibition on the sale or acquisition of a solar farm business prior to the relevant business reaching commercial operation. Although the changes were introduced in March 31, 2020 the relevant exceptions to the most important rule change have only recently been published for public comment. Given the importance and potential impact of the changes, Lee & Ko has prepared a brief summary of the anticipated changes and draft exceptions. Further, and for convenience, we have also included the relevant details on how to make submissions (below).

News Alert – Recent Amendment to Korean Patent

16th July 2020

New hybrid approach covering full scope of infringing sales (lost profits + reasonable royalty)

 On May 20, 2020, the Korea National Assembly approved a bill to amend the Patent Act, adopting a so-called hybrid damages approach – where a patentee will be entitled to seek a royalty, as additional damages, for sales that exceed the patentee’s production capacity.  Lost profits for infringing sales up to the patentee’s production capacity will remain in place.  

COVID-19 Outbreak: Managing Legal Issues from the Korean Law Perspective

16th July 2020 While Korea has had considerable success in containing and curtailing the first wave of the novel coronavirus outbreak (‘COVID-19’), the ongoing spread of the pandemic continues to disrupt the global economy, significantly impacting businesses and companies in all industries worldwide.  As a result, businesses and companies both within Korea and throughout the world are increasingly confronting a wide range of legal issues – including, for example, whether the concept of force majeure, the doctrine of frustration of contract or hardship may be invoked upon as an excuse under a contractual relationship.  In addition, discussions on whether recent governmental regulations and restrictions intended to contain the COVID-19 outbreak may in and of itself be qualified as a force majeure event (or an event that gives rise to the application of the doctrine of frustration of contract or hardship) is also being considered as a separate but important related topic as well.

Latest Supreme Court Decision Sets New Standards for Inventiveness

17th June 2020

Benefit of invention now a more important factor for inventiveness

On May 14, 2020, the Supreme Court held, for the first time, that even if there are no facially apparent difficulties in combining certain prior art technologies to arrive at a particular patented invention, such combination would not be easy and thus inventiveness of the claim at issue should not be denied where the benefit of the claimed invention is hard to predict.

Amendments to the Pharmaceutical Affairs Act to Strengthen Administrative & Criminal Sanctions for Data Manipulation Related to Applications for Regulatory Approvals

19th May 2020 On April 7, 2020, an amendment to the Pharmaceutical Affairs Act (the ‘PAA’) came into effect to provide a statutory basis for administrative and criminal sanctions to be enforced against companies that have obtained regulatory approval for a drug product through deceitful or otherwise improper means.

Amended Act on Reporting and Using Specified Financial Transaction Information Now Governs Virtual Assets

13th March 2020 The amendment to the Act on Reporting and Using Specified Financial Transaction Information (hereinafter, the “Specified Financial Information Act”), which defines cryptocurrency as a “virtual asset” and focuses on a reporting system for cryptocurrency exchanges, was ratified in the National Assembly’s plenary session on March 5, 2020.

Recent Decision by the Tax Tribunal Regarding Application of the Flat Tax Rate to Foreign Employees

11th March 2020 Application of the flat tax rate to “a foreign employee who worked in Korea for a period which ended before January 1, 2014, and recommenced working in Korea after January 1, 2014”

Implementation of Pre-approval System for Cross-border M&A for Companies with National Core Technology

24th February 2020 The Act on Prevention of Divulgence and Protection of Industrial Technology (the “Act”) provides for the protection of national core technologies held by Korean companies, research institutes, professional institutions and universities (each a “Protected Entity”) and prevention of their leakage. The Act was revised as of February 21, 2020 and the revised Act was went into effect on the same day. The revised Act introduces hurdles for any foreign investor seeking to obtain control over a Protected Entity (whether through a direct investment, merger or joint venture) (“Triggering Transaction”) by introducing new pre-approval and pre-notification requirements. For a Protected Entity that holds any national core technology developed with national R&D funding, the pre-approval requirement applies, which in principle prohibits any Triggering Transaction and provides for limited exceptions. For a Protected Entity that holds any national core technology developed without national R&D funding, the pre-notification requirement applies, which in principle allows any Triggering Transaction with exceptional cases for blocking it. Any foreign investor or company seeking to obtain control over a Korean company with a strong technology portfolio would need to diligence on whether any such technology is classified as a national core technology and, if so, whether it was developed with national R&D funding and assess whether any exception may be applicable.

New Supreme Court Decision Constrains Patentee’s Strategic Use of Correction Petition in Pending Patent Case

6th February 2020 On January 22, 2020, the Supreme Court ruled, en banc, that if a petition to correct a patent specification or drawings is granted after the conclusion of the appellate phase of a patent invalidation action, the decision granting such petition cannot be a ground for retrial under Article 451, Paragraph 1, Subparagraph 8 of the Civil Procedure Act.  In doing so, the Court reversed all prior Supreme Court decisions that remanded the case for a retrial based on the same ground (Supreme Court En Banc Decision No. 2016Hu2522).

Major Amendments to the Credit Information Act Passed by National Assembly

23rd January 2020 On January 9, 2020, amendments to the Credit Information Use and Protection Act (“Credit Information Act”) were passed during a plenary session of the National Assembly. These amendments to the Credit Information Act (“Amendments”) were passed in tandem with respective amendments to the Personal Information Protection Act ("PIPA”) and the Act on Promotion of Information and Communications Network Utilization and Information (“Network Act”). The PIPA, the Network Act, and the Credit Information Act are collectively referred to as Korea’s 3 major data privacy laws (“Three Data Laws”). The main objectives behind the Amendments are (1) promotion of the data economy in the financial sector by, inter alia, establishing the statutory basis for the analysis and utilization of big data, (2) reform of the legal framework for the regulation of industries related to credit information by, inter alia, introducing the concept of credit information self-management (“MyData”) and revamping the existing system for regulating credit bureaus (“CBs”) that carry out credit evaluations of individuals, and (3) reinforcement of data protection in the financial sector by, inter alia, introducing the right to request transmission of personal credit information and the right to challenge decisions based on profiling. The Amendments are expected to serve as a catalyst for the increased utilization of big data and convergence of data in the financial sector, and lead to the emergence of innovative services (e.g., customized financial services catering to the needs of individual customers) and new industries related to data (e.g., MyData services, non-financial CBs). In addition, the Amendments have been designed to enhance interoperability with the European Union’s General Data Protection Regulation (“GDPR”) as well as the data protection regulations of other countries and thus, are expected to facilitate the processing of data by Korean companies when they conduct business abroad. The Amendments are expected to go into effect in late July or early August of this year (which will be 6 months from their promulgation date). Key provisions of the Amendments are summarized below. 1. Key Provisions of the Amendments

• In line with the aforementioned amendments to the PIPA, the Amendments also introduce the concepts of “pseudonymized information”, “pseudonymization”, and “anonymization”. Please refer to our newsletter dated January 14, 2020 (“Major Amendment to the Personal Information Protection Act Passed by National Assembly”) for more information on these concepts.
• The Amendments permit credit information handlers to provide personal credit information to third parties without the consent of personal credit information subjects to the extent such provision is not inconsistent with the original purpose of collection after considering factors such as the circumstances surrounding the collection of personal credit information, the potential impact to personal credit information subjects, and whether necessary safeguards have been implemented to ensure the security of personal credit information.
• The Amendments breakdown CBs into subcategories (whereas under the current Credit Information Act, CBs are defined rather broadly without such distinction) such as “CBs for individuals,” “CBs for sole proprietorships,” and “CBs for corporations” while relaxing regulatory entry barriers for each subcategory. In addition, CBs are no longer prohibited from engaging in other types of commercial enterprise so long as there is no risk of harming credit information subjects or undermining the soundness of credit transactions due to such commercial endeavors.
• The concept of MyData services will be introduced which will allow individuals to, among other things, conduct integrated searches of their own credit information as well as carry out credit and asset self-management.
• The consent system will be streamlined (simplified and visualized) to enable credit information subjects to provide their “informed consent” and a rating system will be introduced for the use of information, such that different ratings will be assigned to the use of information depending on the risk(s) and benefit(s) associated with such use so that credit information subjects can make informed decisions when providing their consent (taking effect within 1 year from the promulgation date of the Amendments).
• Credit information subjects will be granted the right to challenge (i.e., request explanations and raise objections) decisions based on profiling (i.e., automated processing of data to evaluate certain things about an individual).
• Credit information subjects will be granted the right to request financial companies and public institutions to transmit their personal credit information (i.e., right to data portability of personal credit information) to other financial companies (taking effect within 1 year from the promulgation date of the Amendments).
• The maximum amount of punitive damages that may be imposed on financial companies and other credit information handlers in connection with the leakage of personal credit information has been increased to 5 times (from the current 3 times) the amount of proven damages.

2. Implications for companies likely to be affected by the Amendments

• With the introduction of the concepts of pseudonymized information and anonymized information, companies are advised to review the scope of data processing that will be permitted under the amended Credit Information Act without the need to obtain consent as well as the methods to utilize pseudonymized information, safeguards to prevent the combination of data, and ex post facto control measures.
• In light of the expected changes in the legal framework for the regulation of CBs, companies planning to expand into the CB business are advised to carefully consider the conditions for entry into this business segment, potential synergies with their existing business, and growth opportunities as well as constraining factors.
• With the introduction of MyData services, the Amendments will serve to minimize entry barriers for Fintech companies. Accordingly, companies planning to provide MyData services are advised to begin preparations in advance to obtain necessary licenses and approvals.
• Companies are advised to pay special attention to the changes to the legal provisions governing consent and the newly created rights that will be granted to credit information subjects under the amended Credit Information Act. In particular, financial regulatory authorities are expected to establish and announce corresponding amendments to consent forms and other detailed measures prior to the effective date of the amended Credit Information Act and thus, companies are advised to continue monitoring related developments on this front.
• Given that the Financial Services Commission has announced its intention to hold future discussions to canvass public opinion for corresponding amendments to the implementing rules (e.g., the Enforcement Decree of the Credit Information Act) of the Credit Information Act, companies are advised to closely monitor the amendment process and to provide their input as necessary to promote their business interests.
• Companies are also advised to closely review the amendments to the PIPA and the Network Act that were passed by the National Assembly along with the Amendments, and make the necessary preparations to their practices in light of the changes that are expected to occur once these amendments take effect.

If you have any questions regarding this article, please contact below: Kwang Bae PARK (kwangbae.park@leeko.com) Jongsoo (Jay) YOON (jay.yoon@leeko.com) Hyun Koo KANG (hyunkoo.kang@leeko.com) Hwan Kyoung KO (hwankyoung.ko@leeko.com) For more information, please visit our website: www.leeko.com

Korean Tax Law Adopts New Simplified Transfer Pricing Rules relating to Low Value-adding Intra-group Services

20th January 2020 With the recent pre-announcement of a draft amendment to the Enforcement Decree of the International Tax Coordination Law (“EDITCL”), Korean tax law is expected to adopt simplified transfer pricing requirements relating to “low value-adding intra-group services”, as laid out in Action 10 of the OECD BEPS Report.

Major Amendment to the Personal Information Protection Act Passed by National Assembly

15th January 2020 On January 9, 2020, amendments to Korea’s 3 major data privacy laws (“Three Data Laws”), i.e., Personal Information Protection Act (“PIPA”), Act on the Promotion of Information and Communications Network Utilization and Information Protection (“Network Act”), and Credit Information Use and Protection Act (“Credit Information Act”), were passed at a plenary session of the National Assembly of Korea.

Greater Reforms for Promoting Work-Life Balance – Changes to the Gender Equal Employment….

18th October 2019

Greater Reforms for Promoting Work-Life Balance – Changes to the Gender Equal Employment and Work-Life Balance Support Act

Starting 1 October 2019, employees would benefit from significant changes to the Gender Equal Employment and Work-Life Balance Support Act (“GEEA”), particularly concerning paternity leave and workhours reduction for childcare and family care. These changes are also expected to have material implications for employers with regard to general compliance obligations and require employers to review their practices in engaging employees and other workforce flexibility measures to adapt to the legislative changes. We have summarized the notable changes as follows.

Korea strengthens protection of national core technology and industrial technology (Amendment of the Prevention of Divulgence and Protection of Industrial Technology Act)

2nd October 2019 On August 20, 2019, an amendment of the Prevention of Divulgence and Protection of Industrial Technology Act (hereinafter “PITA”) was passed and shall come into effect on February 21, 2020. The new amendment is likely to affect technology companies as the scope of national core technology and industrial technology under PITA is broadly defined by the Ministry of Trade, Industry and Energy (MOTIE).

Lee & Ko successfully represents Big Hit Entertainment against unauthorized use of BTS’ photos

20th August 2019 Lee & Ko, on behalf of Big Hit Entertainment (“Big Hit”), obtained the first-ever decision in Korea to recognize the entertainment companies’ right to independently request for injunction against those who free-ride on the customer attractiveness that is based off of popularity and fame of the artists managed by the companies. This landmark decision is expected to serve as an important pedestal in protecting the legitimate interest of entertainment companies (domestic as well as international) that manage famous artists and entertainers and remain vulnerable to unfair competition of free-riders.

First- Ever Decision by the Supreme Court of Korea …

15th August 2019

First- Ever Decision by the Supreme Court of Korea to Find Copyright Infringement in the Selection, Arrangement or Combination of Game Elements

Key International Tax Law Amendments in the Draft 2019 Tax Revision Bill

14th August 2019 On July 25, 2019, the Ministry of Economy and Finance publicly released the 2019 draft Tax Revision Bill (the “Draft Bill”). The Draft Bill is expected to be sent to the National Assembly on September 3, 2019 for deliberation and adoption.

Russian Court’s Judgment Recognized for Enforcement in Korea

15th May 2019 Recently, based on the premise that requirements for “mutual guarantee” or “reciprocity” in relation to the recognition and enforcement of foreign judgments can be allowed between Russia and Korea, a District Court of Korea rendered its decision which allowed a judgment concluded by a Russian court to be enforceable in Korea (see Changwon District Court, Decision 2018Gahap51099 held on January 17, 2019).

Korean Financial Supervisory Service Mandating Disclosure of Transaction Documents When Filing Repor

13th May 2019

Korean Financial Supervisory Service Mandating Disclosure of Transaction Documents When Filing Report on Material Facts

In light of the recent amendment to the internal policies of the Financial Supervisory Service of Korea (FSS), companies that file a “Report on Material Facts” on or after April 29, 2019, will also be required, as a matter of principle, to disclose the underlying transaction documents in full.

Korean National Assembly Passes “Blind Hiring” Bill to Reform Hiring Culture

13th May 2019 Recently, the National Assembly of Korea passed legislative amendments to the Fair Recruitment Procedure Act (“FRPA”) as part of the reform efforts to address the country’s recruitment culture. The latest amendment – dubbed the “blind hiring” bill – expands the FRPA to prohibit any type of recruitment irregularities (e.g., improper solicitation, coercion, pressure) and, more importantly, bars employers from asking jobseekers to provide any information unrelated to the position and the applicant’s merit. The amended FRPA will go into effect starting July 17, 2019.

Successful Challenges to Korean Health Insurance Regulator’s 13-Year Old System…

5th April 2019

Successful Challenges to Korean Health Insurance Regulator’s 13-Year Old System of Automatic Reduction of Original Drug Price

The Seoul Administrative Court and the Seoul High Court issued orders suspending the automatic reduction of the price of the original drug “A” upon generic entry claiming patent non-infringement and the automatic reduction of the price of the original drug “B” upon generic entry claiming patent invalidity, respectively. The automatic price reduction of the original drug B has been continuously suspended since the Administrative Commission’s suspension order issued in April 2018.

Korean Supreme Court Confirms Licensee’s Standing to Challenge Patent Validity

12th March 2019

On February 21, 2019, the Supreme Court of Korea issued an en banc decision overruling its prior precedents on the issue of whether a licensee who is continuing to make royalty payments under an existing license agreement nevertheless has standing to challenge the validity of the licensed patent. In short, the Korean Supreme Court held that absent special circumstance, a patent licensee is an “interested party” eligible for challenging the validity of a licensed patent, despite the lack of any threat or potential threat posed by the patent holder against the licensee’s right to use the patented invention. (Supreme Court En Banc Decision No. 2017Hu2819).

Amendments to the KFTC Merger Review Guidelines

12th March 2019

The Korea Fair Trade Commission (the “KFTC”) recently amended its Guidelines for Merger Review (the ”Guidelines”), which took effect from February 27, 2019. The Guidelines now provide for particular issues relating to “innovation markets” and “big data” that will be considered during the KFTC’s review of mergers within R&D-intensive (i.e. innovative) industries.

Korea strengthens protection against IP infringement and unfair competition (Amendment of the Patent

20th February 2019

Korea strengthens protection against IP infringement and unfair competition (Amendment of the Patent Act and the Unfair Competition Prevention Act)

On December 7, 2018 the Korea National Assembly approved a bill to amend the Patent Act and the Unfair Competition Prevention and Trade Secret Protection Act (“UCPA”). Highlights of the proposed amendments include stronger penalties for patent infringements and further relaxation of the burden of proof for patent holders. The amendments are to be effective on July 9, 2019.

Key Changes to Korean Labor Standards Act in 2019

19th February 2019

Key Changes to Korean Labor Standards Act in 2019

In 2018, Korea experienced major reforms to the employment laws including, but not limited to, the Labor Standards Act. For example, many employers scrambled – many are still struggling – to adjust their work hour structures to comply with the new 52-hour work hour limit. In 2019, legislative reforms and amendments proposed in 2018 have taken effect. For your information, we have highlighted two major changes in the employment law landscape for 2019.

Korean TR, Finally and Officially Coming Soon

19th February 2019

Korean TR, Finally and Officially Coming Soon

Korea is finally adopting a trade repository (“TR”), which is an infrastructure that collects and stores data related to over-the-counter (“OTC”) derivatives transactions. The Financial Services Commission (“FSC”) has decided to implement the TR system by making amendments to the Regulations on Financial Investment Business (which is aligned with Article 166-2(2) of the FSCMA), instead of making amendments to the Financial Investment Services and Capital Markets Act (“FSCMA”) or its Enforcement Decree, and has approved the amendment as of January 31, 2019. As a result, the TR is expected to be activated in July, 2020 as scheduled. Korea is introducing the TR system in order to improve transparency and systematic risk management in its OTC derivatives market as part of its effort to adhere to the G20 accord.

Direction of Financial Regulatory Environment of Korea in 2019: Legislation Supporting Financial Inn

13th February 2019

Direction of Financial Regulatory Environment of Korea in 2019: Legislation Supporting Financial Innovation and Reform of Supervisory System

For 2019, it is expected that the financial regulatory/legislative environment will see further developments along two key tracks, with one track consisting of the enactment of special laws favoring new business initiatives aimed at promoting innovation in the financial business sector, and the other track consisting of legislative activity aimed at reforming and improving the existing financial supervisory system to promote greater efficiency and integration.  The following specific examples of legislation are representative of the overall direction planned for the financial regulatory environment in the year ahead.

Korean Financial Regulators Advance Legislation to Introduce Regulatory Sandbox to Spark FinTech

17th January 2019

Korean Financial Regulators Advance Legislation to Introduce Regulatory Sandbox to Spark FinTech

The 2018 year in review in Korea was notable for the sluggish overall economy, uncertainty surrounding the geo-politics and impact on Korea due to the global trade wars, on-going concerns related to the lack of jobs and unemployment, increased taxes and burdens for businesses and families, and no meaningful improvement or clarity in the current situation for 2019. In response, the Korean National Assembly passed a legislation called the Financial Innovation Support Act (the “FinISA”) on December 7, 2018 to spark the financial services industry in conjunction with FinTech products and services. The FinISA, which will soon take effect in March 2019, is intended to lay the legal foundation to introduce a regulatory sandbox for innovative financial services, where FinTech firms test their new products and services without certain regulatory oversight pursuant to exemptions for a limited period of time (“Sandbox”). As the FinISA exempts or defers application of existing finance-related regulations for new financial technology, products or services with the purpose of fostering the creation of innovative and new financial products and services, it will also support the stabilization of such services in the financial services market at the end of the testing period and is expected that the FinISA will support a revitalization of the FinTech industry which experienced sluggish growth in recent times. In particular, as companies and investors become more interested in security tokens and Security Token Offerings (“STO”) which are regulated by the Financial Investment Services and Capital Markets Act (the “FSCMA”), there have been on-going discussions and debates as to whether the FinISA could lead to a breakthrough in the crypto-asset industry based on blockchain technology. Crypto assets encompasses those assets which utilize blockchain technology where the asset is digitalized by utilization of cryptography, peer-to-peer networks and a public ledger of verified transactions resulting in a ‘units’ of such a crypto asset without any involvement by middle-persons or brokers (e.g., cryptocurrency.

New Legislation: Amendment to the Enforcement Decree of the Act on External Audit of Stock Companies

9th January 2019 New Legislation: Amendment to the Enforcement Decree of the Act on External Audit of Stock Companies The amendment to the Act on External Audit of Stock Companies (the “Act”) and the enforcement decree thereof (the “Enforcement Decree”), whose key feature pertains to the external audit and disclosure requirements for limited liability companies, became effective as of November 1, 2018. Certain provisions relating to the category of targets of external audits will become effective with respect to the fiscal years that commence on or after November 1, 2019. Therefore, for the majority of companies whose fiscal years begin on January 1 and ends on December 31 of each year, the revised category will become effective with respect to the fiscal year that begins on January 1, 2020.

Flying Under the Radar

9th January 2019

Flying Under the Radar: Companies Must Increase Awareness of the Potentially Dormant and Disruptive Changes to the Minimum Wage in Korea

Korea has experienced unprecedented yearly increases to the statutory minimum wage since 2017 in addition to changes in the applicable legislation. While companies are aware of the more patent impacts of the recent major changes to the Labor Standards Act and have initiated proactive measures to ensure legal compliance, companies often overlook the impacts of the significant changes to the statutory minimum wages and associated legislation until it is too late. And as an employer may face criminal sanctions (i.e., imprisonment up to 2 years or criminal fine not exceeding KRW 20 million) for unpaid wages, companies must be aware of the changing legislation related to the statutory minimum wage and – as with changes to the Labor Standards Act – take proactive measures to ensure continued legal compliance.

New Proposed Tax Law Amendments Provide Clarification on the Taxation of Foreign Funds

26th November 2018

On July 30, 2018, the Korean Ministry of Economy and Finance (“MOEF”) announced the proposed tax law changes/amendments for 2019 and beyond (“Proposals”). The Proposals are expected to be reviewed and finalized by the Korean National Assembly in December 2018.

Some key Proposals that should be of great interest to private equity funds and other investors relate to the Korean taxation of a foreign collective investment vehicle, referred to as an Overseas Investment Vehicle (“OIV”) in the Korean tax law. An OIV is broadly defined as an overseas vehicle that raises funds through an investment offering, manages investment assets, derives value from the acquisition and disposition of such assets, and distributes such derived value to its investors. Consequently, partnerships, limited liability companies and other types of collective investment vehicles (e.g., trusts) would likely be included in the definition of OIV.

The key provisions of the Proposals in relation to an OIV that will impact tax planning for foreign funds are summarized below.

KFTC to Expand Scope and Penalties of Korea’s Antitrust Enforcement Regime

22nd November 2018

Korea’s competition authority, the Korea Fair Trade Commission (the “KFTC, has announced a proposal to expand its existing enforcement authority to the courts and prosecutors through a full-scale reform of the Monopoly Regulation and Fair Trade  Act, Korea’s primary competition statute. If all proposed reforms are passed by the National Assembly as currently drafted, the impact on the Korean economy and antitrust enforcement will require companies doing business in Korea to tighten their risk management and compliance measures, as the scope and penalties of Korean antitrust enforcement would be broadened.

The Use of Dispatch Workers: Ironing Out Yet Another Wrinkle for its Successful Implementation

27th February 2017

From a purely employer’s perspective, foreign companies operating in Korea are often frustrated (or at times, even amazed) at some of the protections provided to employees under the Korean employment laws. A few of the most difficult legal requirements include the strict just-cause requirement for termination, the durational limits on the use of fixed-term (contract) employees, the statutory severance obligation, and the statutory allowances for overtime, night-time, and holiday works. In light of such requirements and to minimize the burden of potential employer liabilities, many foreign companies may naturally wonder: How can we structure our workforce so that we can preserve an increased degree of flexibility when managing our personnel?

Korea’s New Supreme Court Case Excludes Mileage From Vat Taxation:

27th February 2017

Used mileage points interpreted as sales allowance deductible from tax base

If a business operates a customer loyalty program together with other business, in which the amount of mileage points granted for the customers’ primary transaction is deducted from the purchase price of the customers’ secondary transaction and those customers only have to pay the remaining price, the amount deducted from the purchase price during the secondary transaction should not be additionally included as the value of supply(i.e. should not be subject to VAT) of the secondary transaction(Summary of Supreme Court 2015 du 58959, 2016. 08. 26.).

Comparative Guides

• South Korea: Tax Disputes

  Published: October 2023

  Authors: Sunghwan Kim Tom KwonJunghong Kim Sunghyun Ryu

  This country-specific Q&A provides an overview of Tax Disputes laws and regulations applicable in South Korea.

• South Korea: International Trade

  Published: December 2023

  Authors: Kichang Chung, EsqHyun Soo Joo, Esq. Jung Hyun Park, Esq. Jae Wung Cho, Esq.

  This country-specific Q&A provides an overview of International Trade laws and regulations applicable in South Korea.

• South Korea: Private Equity

  Published: January 2024

  Authors: Daehoon KooKyu Seok ParkKyung Gyoon ParkHyungmin Joo

  This country-specific Q&A provides an overview of Private Equity laws and regulations applicable in South Korea.

• South Korea: Employment and Labour Law

  Published: March 2024

  Authors: Sanghoon LeeWilliam Kim

  This country-specific Q&A provides an overview of Employment and Labour laws and regulations applicable in South Korea.