South Korea

On January 29, 2026, the National Assembly passed a landmark amendment to the Attorney-at-Law Act, formally establishing statutory protection for confidential communications between legal counsel and their clients (attorney-client privilege). Attorney-client privilege is a well-established right in common-law jurisdictions, shielding confidential communications made for the purpose of seeking legal advice from compelled disclosure. In Korea, like in most civil law countries, this right was not fully acknowledged because of the lack of statutory basis, but the passage of this amendment now officially codifies attorney-client privilege as a protected right within the Korean legal framework. The introduction of attorney-client privilege further strengthens the right of companies to receive assistance from their counsel and to defend themselves in criminal procedures (e.g., search and seizures) and administrative investigations, which is expected to bring various changes in the investigation procedures and practices of investigative agencies. In particular, attorney-client privilege will enable companies to better resolve issues arising from on-site investigations by the Korea Fair Trade Commission (the “KFTC”) or search and seizures by investigative agencies on charges of violating fair trade-related laws and regulations, including the Monopoly Regulation and Fair Trade Act (the “MRFTA”). Key Details of Amended Attorney-at-Law Act Prior to the amendment, the lack of statutory basis for attorney-client privilege had made it practically very difficult for attorneys to defend clients (companies or individuals) when an investigative agency requested access to or seized the details of correspondence with counsel regarding legal advice. In April 2023, the KFTC amended the Rules on KFTC Investigation Procedures (KFTC Notice No. 2023-11) to add Article 11 (2), which provides that compliance departments should generally be excluded from the scope of investigations, subject to certain exceptions. However, as these rules are merely internal procedures, they were insufficient to fully safeguard attorney-client privilege and the defense rights of investigated parties. The amendment adds new provisions to expressly codify attorney-client privilege, notably: (i) Article 26-2 (1), allowing non-disclosure of confidential communications exchanged between an attorney and his/her client for the purpose of seeking or providing legal assistance, and (ii) Article 26-2 (2), allowing non-disclosure of documents or materials that were prepared by an attorney for litigation, investigation or inquiry. Implications of Attorney-Client Privilege for Future Investigations by KFTC and Other Agencies The precise scope of attorney-client privilege under the recent amendment will likely be a subject of ongoing discussion. Below, we summarize what we currently expect to be its implications for administrative investigations by the KFTC and similar authorities. During onsite investigations, companies are expected to be able to more proactively request the protection of materials held by their legal and compliance departments and other attorney-client privilege-covered documents. In the past, regulators have at times requested and gathered legal review materials prepared by legal and compliance teams during administrative investigations, and documents drafted solely for legal assessment for compliance purposes have sometimes been misinterpreted or used as evidence of violations or awareness of such violations. The introduction of attorney-client privilege should now help protect many of these materials from disclosure. The codification of attorney-client privilege is expected to transform how companies manage internal risk. Previously, many firms were hesitant to conduct thorough compliance audits or pre-inspections, fearing that the resulting documentation and legal advice could be seized and used against them in future investigations. With attorney-client privilege now protecting attorney communications, legal advice and compliance outcomes, companies can now proactively monitor their compliance status and prevent violations with greater confidence. This legal foundation encourages a more rigorous and active review of pending legal risks by counsel. Effective Utilization of Attorney-Client Privilege Formalize attorney-client privilege labeling: Although the amended law does not take effect until one year after its promulgation, its supplementary provisions extend protection to counsel communications, documents and materials created before that effective date. Accordingly, even in KFTC investigations that take place before the law’s effective date, if privileged materials become subject to investigation/disclosure in the interim, companies may have grounds to request protection based on the amendment’s legislative intent and relevant KFTC procedural rules. To this end, companies should promptly implement formal attorney-client privilege labeling for all attorney communications and ensure to meet attorney-client privilege requirements. Prepare internal guidelines for in-house communications: Currently no concrete standards or court precedents involving attorney-client privilege exist under the amended Attorney-at-Law Act, and it is unclear whether attorney-client privilege will extend to in-house communications. Nevertheless, the Anglo-American interpretive approaches referenced in the amendment suggest that attorney-client privilege may extend to communications with in-house counsel regarding legal advice. Therefore, companies should prepare internal guidelines covering the content and methods of such communications. Keep track of legislative developments: In practice, there still remain a number of outstanding issues, including: (i) the scope of communications protected by attorney-client privilege (e.g., in-house counsels, foreign counsels), (ii) whether attorney-client privilege can apply to communications with attorneys without attorney-client privilege labeling, (iii) the scope of “attorney work-products” that may be withheld, and (iv) the authority, timing and procedure for determining exceptions under Article 26-2 (3) of the amendment. These questions will likely be resolved over time through future interpretations or guidelines issued by the relevant authorities. Accordingly, it will be essential to closely follow legislative developments and official interpretive guidance. Please click on the following link to view the full version of this newsletter (Link) Authors Youngjin JUNG (View Profile) Gene-Oh (Gene) KIM (View Profile) Kyung Min KOH (View Profile) Kee Hong CHUN (View Profile)

With the enactment of the third amendment to the Korean Commercial Code (the “KCC”), which generally mandates the cancellation of treasury shares, it is necessary to establish a specific roadmap for the holding, disposal and cancellation of treasury shares. Following (i) the first amendment to the KCC in 2025 introducing, among other things, a fiduciary duty of directors to protect the interests of shareholders, and (ii) the second amendment to the KCC mandating cumulative voting for director elections and increasing the number of audit committee members subject to separate election, on November 25, 2025, the Democratic Party of Korea proposed to the National Assembly a bill to partially amend the KCC, which consolidated various previously proposed bills concerning the mandatory cancellation of treasury shares (Link). Around that time, there had been considerable transactions aiming to dispose of treasury shares, including the issuance of convertible bonds backed by treasury shares, off-hours block trades, over-the-counter transactions and on-exchange disposals. In this context, disclosure regulations concerning listed companies’ holdings of treasury shares and their disposal plans have also been continuously strengthened (Link). On February 23, 2026, the Legislation and Judiciary Committee of the National Assembly consolidated and amended 14 existing bills, including the above-mentioned bill, and then proposed/approved the committee’s alternative bill. The National Assembly passed the bill at its plenary session on February 25, 2026, which was promulgated and became effective on March 6, 2026. The key details of the third amendment to the KCC promulgated on March 6, 2026 (the “Amendment”) are as follows: Definition of Treasury Shares as Unissued Shares and Application of Corresponding Restrictions The Amendment defines treasury shares as unissued shares without any rights, thereby legislatively resolving the longstanding debate between the “asset theory” and the “unissued shares theory” regarding the nature of treasury shares. Accordingly, the bill specifies that treasury shares exclude voting rights, preemptive rights and rights to cash dividends and share dividends. It also prohibits (i) issuing bonds convertible into or redeemable with treasury shares, (ii) creating a pledge over treasury shares held by the company, and (iii) allocating split shares to treasury shares in the context of a merger or corporate division. Mandatory Cancellation of Treasury Shares and Exceptions In principle, where a company acquires treasury shares, it must cancel them within one year from the date of acquisition. However, with respect to treasury shares held by the company prior to the Amendment, the company is granted an additional six-month grace period to cancel the treasury shares, allowing the company a total of one year and six months from the effective date to cancel such treasury shares. However, the company may hold or dispose of treasury shares if the articles of incorporation allow it. This is permitted where necessary to achieve business objectives—such as introducing new technology or improving financial structure—or to provide compensation to employees and executives. Any such action must follow a disposal plan approved by the shareholders and signed or sealed by all directors. Such treasury shareholding/disposal plan must be approved by the general meeting of shareholders each year. In Case of Disposal of Treasury Shares, Application by Analogy of Regulations for Issuance of New Shares When a company is exceptionally permitted to dispose of treasury shares upon satisfying the relevant requirements notwithstanding the general cancellation obligation, the Amendment requires disposal on equal terms to each shareholder in proportion to the number of shares held. However, in the case of the exceptions, such as employee/executive compensation and business objectives as outlined in items (2) through (5) of Article 341-4 (2), a company may dispose of treasury shares to other persons who are not shareholders. In addition, when a company disposes of treasury shares, the Amendment generally applies by analogy the procedures for issuance of new shares to the extent consistent with the nature thereof. The Amendment may make it difficult to issue convertible bonds backed by treasury shares or to engage in other financial transactions, such as loans or derivatives, secured by such bonds. In addition, the exceptions to the holding and disposal of treasury shares will be limited as described above. As a result, the Amendment may have a significant impact on companies’ capital structures, shareholder return policies, value-up disclosures and investor relations policies. It may also materially affect strategic investment and financing decisions that have historically assumed the availability of treasury shares. In addition, companies that will be holding their 2026 annual general meetings of shareholders after the promulgation of the Amendment and plan to dispose of treasury shares (e.g., through executive compensation arrangements or sales to third parties) may need to promptly submit to their shareholders agenda the items relating to treasury share holdings, disposal plans and related amendments to their articles of incorporation (with respect to the reasons for third-party allocation to achieve business purposes). Please click on the following link to view the full version of this newsletter (Link). Authors Ji Pyoung KIM (View Profile) Jeremiah N. PHILLIPS (View Profile) Jae Hong JUNG (View Profile) Min Young HAHN (View Profile)

In November 2025, the Korean government announced the “AI Regulatory Rationalization Roadmap” (the “AI Roadmap”) to lay out the foundation for enhancing national competitiveness in the AI industry. In January 2026, the Framework Act on the Development of Artificial Intelligence and Establishment of Trust (the “AI Basic Act”) and its Enforcement Decree officially took effect, and key guidelines were finalized and published. These developments are driving rapid changes in Korea’s AI regulatory environment. AI Roadmap The AI Roadmap announced by the Korean government on November 27, 2025 is the government’s first roadmap for rationalizing regulations in emerging industries. Corporations are encouraged to carefully review each initiative of the AI Roadmap, as doing so will help business operators gauge the direction and focus of the Korean government’s core AI policies. The AI Roadmap identifies four major segments of the AI industry, which are (i) technology development, (ii) service utilization, (iii) infrastructure, and (iv) reliability and security. It also specifies key issues for each segment and provides regulatory rationalization measures for each issue as follows: Technology Development Securing and utilizing AI training data: (i) Establish the “Guidelines on Fair Use for AI Training,” specifying criteria and providing examples for determining fair use under the Copyright Act and consider amendments to relevant statutes after soliciting feedback from stakeholders, and (ii) support transactions regarding AI training data by providing a negotiation framework, etc. Protecting and utilizing AI-generated outputs: Develop examination criteria and application guidelines for industrial property rights (including patent and design rights) relating to AI-generated outputs, and review amendments to the relevant regulations. Infrastructure for various data utilization: Revise various laws/regulations and publish guidelines to promote the utilization of industrial and manufacturing data, synthetic data and pseudonymized data. Expansion of the use of public data: Expand the scope of disclosure of public data by designating and promoting high-value public datasets based on business demand. Service Utilization Mobility and intelligent robot development: Expand the scope of demonstrations of autonomous driving, permit the use of original video data in autonomous-driving development, and ease regulations for the use of outdoor mobile robots. Improvement of administrative efficiency: Improve administrative efficiency by deploying AI in public services. Infrastructure Data centers: Improve uniform regulatory requirements, such as mandatory installation of artwork and elevators in data centers. Reliability and Security Revision of the AI Basic Act: Establish subordinate statutes, notifications and guidelines related to the criteria for identifying high-impact AI under the AI Basic Act and detailed implementation measures. As the regulatory issues and initiatives outlined above are likely to take shape in the future through legal and regulatory reforms and the establishment of guidelines, AI-related companies and investors should carefully analyze how these changes will potentially affect their businesses and services and prepare accordingly. Enforcement of AI Basic Act and Publication of Subordinate Guidelines The AI Basic Act took effect on January 22, 2026, and its Enforcement Decree—together with five guidelines (available in Korean, Link) outlining the key obligations of AI deployers under the AI Basic Act—was also finalized and published. Enforcement Decree of AI Basic Act The revised Enforcement Decree of the AI Basic Act, which took effect concurrently with the AI Basic Act, provides more detailed guidance compared to the initial draft bill for the Enforcement Decree that was pre-announced in November 2025. Notably, the revised Enforcement Decree clarifies the category of AI business operators required to designate a domestic agent as “AI deployers who have been subject to administrative fines for failing to comply with suspension and/or corrective orders issued by the Ministry of Science and ICT (“MSIT”).” Subordinate Guidelines of AI Basic Act Meanwhile, the AI Basic Act guidelines, initially released in September 2025, have been finalized after collecting feedback from stakeholders for approximately four months. Among them, the AI Transparency Guidelines relating to Article 31 of the AI Basic Act underwent the most substantial revisions, as follows: Scope of the obligation to ensure transparency: Clearly provide that the obligation to ensure transparency applies strictly to “AI deployers” and not “users.” Differentiation of labeling obligations by service type: Distinguish between (i) AI-generated outputs provided only within a service environment, and (ii) AI-generated outputs exported outside a service environment through downloading or sharing, while allowing for more flexible labeling in the former case. In addition, the MSIT announced its plan to launch a system improvement task force beginning in February 2026 to continuously review potential improvements and revisions to the AI Basic Act and the applicable guidelines. Therefore, it will be necessary to take into account future amendments and changes to the guidelines. Grace Period for Enforcement under AI Basic Act The MSIT has announced its plans to implement a grace period of at least one year under which enforcement of the AI Basic Act would be suspended, to allow companies to adapt and minimize disruption. During this grace period, fact-finding investigations and the imposition of administrative fines are expected to occur only in exceptional circumstances, such as where serious social issues arise (e.g., fatal accidents or human rights violations). Further, as the MSIT has indicated its plan to collect feedback from stakeholders during the grace period to ensure the reasonable operation of the regulatory system, AI business operators should closely follow related developments. Various legal frameworks in the AI sector will continue to be revised in line with the publicly announced AI Roadmap, and the guidelines and enforcement direction of the AI Basic Act are also expected to change following broad consultation with the public during the grace period. To maintain flexibility, business operators in the relevant sectors should assess the potential risks of their services based on the currently available legal frameworks and keep track of regulatory developments and updates to the AI Basic Act, which will be specified according to the AI Roadmap. Please click on the following link to view the full version of this newsletter (Link). Authors Min Chul PARK (View Profile) Jung-Chull LEE (View Profile) Seong-Hyeon BANG (View Profile) Yu Seok JUNG (View Profile) Han Kyul NAM (View Profile) Eun Do LEE (View Profile) Hyokyung KIM (View Profile)  

Yulchon celebrates a year of transformative transactions across technology, mobility, energy transition, financial services and consumer sectors. This highlight showcases a selection of representative matters that demonstrate Yulchon's ability to lead complex, cross-border deals and support clients through regulatory and strategic challenges in Korea and beyond. Key themes observed across our 2024–2025 Corporate/M&A matters: Growing interest in outbound M&A by Korean conglomerates and local/regional financial sponsors in such sectors as technology, consumer and financial services, but tempered by Korean Won depreciation Increased intercompany restructuring transactions and sale of non-core assets by large business groups Continued global interest in K-beauty and K-content companies Growing emphasis on ESG and energy transition investments, including platform assets in infrastructure-related services A representative selection of M&A transactions advised by Yulchon. 1. Naver Financial - Acquisition of Dunamu / USD 11.15B Incorporating Korea’s leading digital asset platform into a fintech ecosystem QUICK TAKE A landmark fintech transaction combining Naver Financial—Naver's core fintech subsidiary—with Dunamu, operator of Upbit, Korea's leading digital asset exchange, through a comprehensive stock exchange resulting in Dunamu becoming the wholly-owned subsidiary of Naver Financial. WHY IT MATTERS This transaction is expected to position Naver Corp, Naver Financial and Dunamu as a pioneer in Korea's stablecoin and digital asset proliferation, creating expansion opportunities across payment innovation, asset tokenization and global markets. It also supports long-term growth in the Web3 era by combining data, AI and blockchain to unlock new digital finance capabilities and business opportunities. FULL DEAL SUMMARY Yulchon advised Naver Financial on a comprehensive stock exchange transaction pursuant to which Dunamu became a 100% wholly owned subsidiary, including key corporate law considerations for a high-profile platform consolidation. 2. Shinsegae × Alibaba Joint Venture / USD 4.15B Creating a new e-commerce powerhouse: Gmarket and AliExpress Korea QUICK TAKE Large-scale JV combining two major e-commerce platforms under a KRW 6 trillion valuation in Korea. WHY IT MATTERS Consolidates two major online retail ecosystems and accelerates Korea’s digital commerce competitiveness. FULL DEAL SUMMARY Yulchon advised Shinsegae Group on its joint venture agreement with Alibaba Group, combining the e-commerce platforms Gmarket and AliExpress Korea in a transaction valued at approximately KRW 6 trillion. The joint venture agreement was signed in December 2024, and Shinsegae Group obtained court approval for in-kind contributions and Korean Fair Trade Commission merger clearance in 2025, with Yulchon the lead counsel in both regulatory steps. Upon completion in November 2025, Shinsegae and Alibaba each held a 50% shareholding interest in the joint venture. 3. IMM PE & IMM Investment –Acquisition of Ecorbit / USD 1.7B One of the largest Korean M&A transactions in the environmental sector QUICK TAKE Competitive process involving major global PE funds for a leading waste-management platform. WHY IT MATTERS A landmark ESG-aligned acquisition strengthening Korea’s sustainability infrastructure. FULL DEAL SUMMARY Yulchon advised IMM PE and IMM Investment Consortium on their successful acquisition of Ecorbit Corp., one of Korea's leading environment and waste management companies. Yulchon supported consortium formation, due diligence, SPA structuring and negotiations, securing the deal against competition from major global private equity firms including Gaw Capital, Keppel and Carlyle. 4. DB Insurance – Acquisition of U.S. Specialty Insurance Company, Fortegra / USD 1.65B Strategic expansion into the U.S. specialty insurance market QUICK TAKE Yulchon is advising DB Insurance on its acquisition of The Fortegra Group, a U.S.-based specialty insurance company with operations in the U.S. and Europe, in a transaction valued at approximately USD1.65 billion—one of the largest overseas insurance M&A deals by a Korean insurer. WHY IT MATTERS The transaction marks a significant step in DB Insurance’s global expansion strategy, strengthening its footprint in the U.S. market and broadening its product offering in specialty insurance, while diversifying revenue streams beyond the domestic market. FULL DEAL SUMMARY Yulchon is advising DB Insurance on the acquisition of The Fortegra Group, Inc., a Florida-based specialty insurer focusing on automobile warranty, consumer product warranties and related specialty lines with operations in the U.S. and Europe. The closing of the deal is pending the receipt of regulatory approvals. Through its acquisition, DB Insurance gains full ownership of The Fortegra Group, reinforcing its U.S. and European presence and strategic positioning in high-growth specialty insurance segments. 5. Hanwha Aerospace – Cross Border Joint Venture and Missile Supply Arrangement in Poland / USD 4B Strategic joint venture formation and missile supply arrangement supporting localized defense production in Europe QUICK TAKE Yulchon advised Hanwha Aerospace on the establishment of a cross-border joint venture with Poland’s WB Group to localize missile production in Poland, together with a related missile supply arrangement valued at USD 4 billion. WHY IT MATTERS This transaction represents a significant outbound investment by a Korean defense company in Europe and reflects a shift from export-focused models toward localized production through joint ventures. The deal required careful alignment of cross-border M&A structuring with defense-industry regulations, industrial security requirements and technology-transfer considerations, underscoring the growing complexity of defense-sector transactions. The transaction also highlights the accelerating global footprint of Korea’s defense industry, positioning K-defense players as long-term strategic partners in Europe’s defense supply chain rather than mere exporters. FULL DEAL SUMMARY Yulchon advised Hanwha Aerospace on all legal aspects of the transaction, including cross-border joint venture structuring, shareholder arrangements, corporate governance, outbound investment, industrial security, export controls, and technology and IP matters, while coordinating with non-Korean counsel. 6. L’Oréal – Acquisition of Gowoonsesang Cosmetics Expanding premium K-Beauty through the Dr.G brand QUICK TAKE Global beauty group expansion into a Korean derma-brand with strong international growth potential. WHY IT MATTERS Reinforces K-Beauty’s position in the global skincare market through a high-profile strategic acquisition. FULL DEAL SUMMARY Yulchon advised L'Oréal Groupe on its acquisition of Gowoonsesang Cosmetics Co., Ltd., owner of the Korean skincare brand Dr.G, from Swiss retail group Migros. The transaction, signed on 23 December 2024, will integrate Dr.G into L'Oréal's Consumer Products Division, strengthening its skincare portfolio and accelerating the global expansion of K-Beauty. If you would like to learn more about Yulchon’s Corporate/M&A group or explore how we can support your transaction, please feel free to contact: Young Su SHIN ([email protected]) Jae Hyun PARK ([email protected]) For more information, please visit: https://yulchonllc.com/yulchonllc/newsletter/2026/ma/year-in-review-2025.html