Lee & Ko

Partner Chang Ho Seong of Lee & Ko’s Dispute Resolution Group has been named by Asian Legal Business (ALB) to its 2025 list of the Top 30 Litigators in Asia. Having served as a judge for 24 years since 1999, Mr. Seong brings deep insight from his time on the bench, during which he presided over a broad spectrum of civil, criminal, and administrative cases across multiple court levels spanning the Seoul Central District Court, the Seoul High Court, and the Supreme Court. He now draws on his extensive judicial experience to provide clients with litigation and legal advisory services in response to disputes and provisional dispositions involving civil, criminal, corporate, construction, real estate, banking, securities, financial, administrative and intellectual property matters. Among his recent selected representations, Mr. Seong successfully defended SPC Group Chairman Young-in Heo in a high-profile criminal case involving allegations of breach of trust under the Monopoly Regulation and Fair Trade Act, securing a full acquittal at the court of first instance — an outcome ultimately upheld by both the appellate court and the Supreme Court. He also obtained a full acquittal at the court of first instance on behalf of former Chairman Yang-ha Choi of Korean furniture company Hanssem in a criminal collusion case, which was subsequently dismissed on appeal. These achievements reaffirm his proven expertise and capacity in handling complex criminal and administrative litigation. ALB Magazine, published by Thomson Reuters, is a leading legal publication in the Asia-Pacific region. In its June issue, ALB recognized the top 30 litigators in Asia who have delivered outstanding results in high-impact litigation across the region.

Lee & Ko has once again garnered top-tier recognition across all evaluated categories in the 2025 edition of the IAM Patent 1000. The firm earned the highest band ranking of “Gold” in both patent litigation and prosecution, along with additional distinctions as “Highly Recommended” in transactions and “Recommended” in trade secret litigation. This marks the 11th consecutive year that the firm has ranked in the Gold tier for litigation and the fourth year running as a Highly Recommended firm for transactions. Notably, 10 attorneys and patent attorneys at Lee & Ko have been listed as “Recommended Individuals” across all key practice areas—litigation, prosecution, transactions, trade secrets, etc.—in recognition of their exceptional expertise in the patent field. Ranked lawyers - Litigation: Un Ho Kim, John Kim, Jae Hoon Kim, Keum Nang Park, Hwan Sung Park, and Hayoun Chun - Prosecution: Hyeon Gil Ryoo and Sungsoo (Sean) Hwang - Transactions: Hayoun Chun and Yong Jin Cho - Trade secrets: Hong Seon Kim Lee & Ko’s IP Practice Group provides legal services catered to clients in response to various IP-related disputes in the United States, Europe, Japan, and other countries by leveraging its extensive overseas network while delivering optimal outcomes in IP-related consultancy and disputes through a nuanced understanding of both technology and law. A prime example of the group’s litigation excellence is its recent success representing Coway in a long-running patent infringement dispute with ChungHo Nais over ice water purifier technology. Following three years of protracted hearings, the Korean Supreme Court issued a final judgment in favor of Coway, bringing to an end the lengthy legal battle between the two companies that spanned 11 relentless years. Widely regarded as the longest-running patent litigation in Korea, this case began in 2014 when ChungHo Nais filed a complaint for patent infringement and damages against Coway. ChungHo Nais prevailed in the court of first instance, with the court acknowledging infringement claims and awarding significant compensation. Amid its multiple, though unsuccessful, patent invalidation attempts, Coway newly retained Lee & Ko in 2022 for the appellate phase, and stepping in at a pivotal juncture, the firm eventually secured a complete dismissal of all claims brought by ChungHo Nais, culminating a dramatic reversal and a landmark victory on behalf of Coway before the Supreme Court in this high-profile patent dispute. Lee & Ko’s IP Practice Group also successfully represented Wonik PNE in a case involving the unauthorized patent registration of a secondary battery activation device developed by one of its employees in the course of performing official duties, by leading the case from filing a patent ownership transfer suit to securing a favorable ruling on behalf of Wonik PNE. In addition, the group is at the forefront of protecting companies from the leakage or misappropriation of their core technologies through its active engagement in trade secret litigation. As additionally evidenced by a recent court victory on behalf of Naver, where the firm obtained an injunction against unauthorized crawling of real estate listing data, Lee & Ko continues to reaffirm its strong track record across the full spectrum of IP law, including patents, trade secrets, and copyrights. This year’s newly awarded Gold ranking in the prosecution category further highlights its deep bench and outstanding expertise throughout all facets of IP matters. IAM is a global patent publication released every year that conducts surveys and interviews with patent experts and law firms all over the world, and ranks the best law firms and experts in the patent field by country and sector, based on submissions and client feedback.

Lee & Ko was selected as a Tier 1 law firm in Korea for the following 9 categories by ‘Benchmark Litigation Asia-Pacific 2025’, a world-renowned publication which highlights the fields of dispute resolution and litigation. Firm Ranking - Commercial and Transactions - Competition/Antitrust - Construction - Insolvency - Intellectual Property - Labor and Employment - Product Liability and Recall - Tax - White Collar Crime In addition, 51 Lee & Ko attorneys were selected as either ‘Litigation Stars’ or ‘Future Stars’ in recognition of their achievements in their respective fields. Ranked Lawyers - Litigation Star Competition/antitrust: Jangwoo Park, Jeong-Ho Sun, Pyoung Keun Song, Mi Ji Lee, Hwan Jeong Commercial and transactions: Won Seok Ko, Jae Heon Park, Dajoo Jung, Jin Soo Han Construction: Myung Jong Kim, Seon Tae Kim, Chanik Jang Intellectual Property: Un Ho Kim, Jae Hoon Kim, Keum Nang Park, Hayoun Chun International arbitration: Sang Hoon Han Insolvency: Wan Shik Lee, Jung Hyun Lee, Jiwoong Lim Labor and employment: Young Jin Kim, Hyunseok Song, Sang Hoon Lee, Chang Soo Jin Product liability and recall: Dajoo Jung Tax: Tom Kwon, Sung Hwan Kim, Ok Hyun Ma, Byeong Jun Son, Kyung Tae Kim White collar crime: Jae Deog Bae, Jin So, Tae Yop Lee, Young Sub Jang - Future Star Competition/antitrust: Byong Ki Chung Construction: Janghee Yoon, Joo Hye Hong Intellectual Property: Hyeon Gil Ryoo International arbitration: Saemee Kim, Grace Yoon Labor and employment: William Kim Product liability and recall: Yangsuk Han Tax: Steve Minhoo Kim, Soo Hyuk Yim Future Star(Practice Not Stated): Se young Kang, Jaewoo Kwak, Ki Jung Sung, Soo Yeon Oh, Jung Ho Ryu, Kyeong-Seop Yoon, Kiri Yi, Gang Cheol Chu Benchmark Litigation conducts its annual rankings based on in-dept analysis of law firm submissions and interviews with legal practitioners, clients, and litigation experts.

Lee & Ko received the honor of “South Korea Firm of the Year” at the Benchmark Litigation Asia-Pacific Awards 2025. Presented annually by Benchmark Litigation, a leading global publication dedicated to litigation and dispute resolution, the “South Korea Firm of the Year” is awarded to only one leading firm in each country in the field of dispute resolution. Lee & Ko, recognized consecutively from 2021 to 2023, has received the esteemed accolade once again, reaffirming its continued standing as a top-tier dispute resolution practice in South Korea. This recognition reflects the firm’s competence and excellence in handling complex dispute resolution matters, as notably demonstrated by the IP Practice Group securing a final victory for Coway in a prolonged, nearly 11-year infringement dispute with ChungHo Nais over ice-making water purifier technology. In addition, two of the firm’s attorneys garnered individual honors: Miji Lee, a partner of the Antitrust & Competition Group was named to the “Top 100 Women in Litigation 2025”; while Joohye Hong, a partner of the Real Estate & Construction Group was selected for the “Top 40 Under 40 2025.” Asia-Pacific’s “Top 100 Women in Litigation” recognizes 100 distinguished female professionals within the region, selected through months of in-depth research. Ms. Lee is a seasoned antitrust lawyer with extensive experience in advising and representing both domestic and multinational clients across the full spectrum of competition law matters, from initial investigations by the Korea Fair Trade Commission (KFTC) to successive stages of administrative, criminal, and other antitrust litigation. On the other hand, Asia-Pacific’s “Top 40 Under 40” recognizes 40 lawyers, the most accomplished litigators under 40, selected through rigorous research and high evaluations. Ms. Hong is a construction and real estate specialist with strong industry experience in construction, real estate, energy, and social overhead capital (SOC) projects. Her practice includes negotiating EPC contracts related to the export of nuclear reactors to the Dukovany plant in the Czech Republic, providing regular legal counsel for overseas nuclear power plant exports for projects in the UAE and Saudi Arabia, and representing special purpose companies established for privately financed infrastructure projects such as railways, particularly in cases involving total project cost increases and insurance claims. She also provides guidance and legal representation on a wide range of construction-related matters, including disputes arising from power plant construction projects. Benchmark Litigation annually hosts the Benchmark Litigation Asia-Pacific Awards, which recognize the most notable dispute resolution cases and law firms in the Asia-Pacific region each year, based on law firm submissions, interviews with litigation experts, and independent research.

On April 23, 2025, the Korea Fair Trade Commission (KFTC) announced and implemented the amendment to the "Guidelines on the Operation and Evaluation of Competition Compliance Programs (CP)" (Competition CP Guidelines). The Competition Compliance Program (Competition CP) is an internal compliance system, which may include education or supervision mechanisms, established and operated by companies to comply with Korean competition laws. The KFTC performs evaluations on companies adopting Competition CP for voluntary compliance with laws and regulations under the KFTC’s authority, assigns ratings from the evaluation results, and provides incentives such as mitigation of corrective measures, reduction on administrative fines, and exemption from ex officio investigations based on the ratings. With the recent growing interest in Competition CP, followed by the significant increase in the number of companies applying for Competition CP evaluation, there emerged the need to revise the evaluation criteria in order to encourage the adoption of Competition CP and ensure substantive Competition CP rating evaluations. With the amended Competition CP Guidelines, the KFTC has adopted more rigorous evaluation criteria to provide rating-based incentives primarily to companies with substantive Competition CP systems, while also reducing disadvantages to companies with violation histories to incentivize them to adopt the Competition CP system. We summarize below the key details of the amendments to the Competition CP Guidelines for further reference.   Key Amendments to the Competition CP Guidelines   1) Introduction of Designation System for Excellent Companies   The amended Competition CP Guidelines have simplified the previous six-tier rating system (AAA, AA, A, B, C, D) to a three-tier rating system (AAA, AA, A), while maintaining the previous rating standards.   CP Rating Evaluation Points (Pre-Amendment) Evaluation Points (Post-Amendment) AAA 90 to less than 100 AA 80 to less than 90 A 70 to less than 80 B 55 to less than 70 Abolished C 40 to less than 55 D 0 to less than 40   Before the amendment, incentives such as mitigation of corrective measures, reduction of administrative fines and exemption from ex officio investigations were provided to all AAA, AA, and A-rated companies. Under the amended Competition CP Guidelines, benefits for A-rated companies will be abolished, and incentives will only be provided to AAA and AA-rated companies. However, given there is a grace period for policy changes, the abolished incentives for A-rated companies will apply starting from the 2026 Competition CP rating evaluation.   CP Rating Incentive Retained After Amendment Previous Incentives Exemption from Ex Officio Investigation Mitigation of Corrective Measures Reduction of Administrative Fines AAA Retained 2 years 2 levels Up to 15% AA Retained 1 year 6 months 1 level Up to 10% A Abolished (From 2026 evaluation) 1 year 1 level Up to 10%    2) Violation Histories to Result in Less Disadvantages The pre-amended Competition CP Guidelines adopted an ”automatic rating downgrade” system where Competition CP operating companies that received sanctions such as administrative fines or criminal referrals for violating competition laws would have their ratings downgraded by up to two levels. However, the amended Competition CP Guidelines have now abolished this approach and instead reduced the disadvantage to a deduction of five evaluation points. Additionally, the amended Competition CP Guidelines specify that companies applying for Competition CP rating evaluation for the first time will not be subject to deductions for past violations. The amended Competition CP Guidelines, however, have introduced qualitative evaluation criteria to maintain rigorous Competition CP assessments. The Evaluation Review Committee of KOFAIR (Korea Fair Trade Mediation Agency) may downgrade a company’s final ratings or exclude a company from receiving excellent company designation if the company causes social controversy due to competition law violations or significantly undermines the credibility of the Competition CP system. The amended Competition CP Guidelines have also abolished the ”rating deferral system” that suspended the evaluation process when the KFTC launched an investigation into violations. Under the amended Competition CP Guidelines, Competition CP rating evaluations will proceed on schedule even when an investigation has been launched or an examination report was issued during the evaluation process. This amendment was implemented to address unfair situations where companies faced delays in evaluation when ultimately no charges resulted.   3) Other Changes (Extra Points, Changes in Evaluation Procedure, etc.)   The amended Competition CP Guidelines have introduced a maximum grant of 1.5 extra points for companies which received "excellent" or higher grades in the KFTC's evaluation of the performance of their obligations under subcontracting, distribution, agency, and franchise agreements in the previous year. The criteria for granting extra points for the establishment and operation of a self-regulated dispute mediation organization have also been modified. Previously, 0.7 points were granted for the establishment of a mediation organization, and 0.3 points for receiving and handling dispute-related opinions collectively. However, under the amended Competition CP Guidelines, the points for establishment have been reduced to 0.4, while the categories for opinion reception (0.2 points) and handling performance (0.4 points) have been separated and the corresponding points have been increased. The evaluation process has been restructured as well. The previous process of Stage 1 (document evaluation), Stage 2 (on-site evaluation), and Stage 3 (in-depth interviews) has been restructured to Stage 1 (document evaluation including grants on extra points), Stage 2 (face-to-face evaluation), and Stage 3 (on-site evaluation). Under the amended Competition CP Guidelines, on-site evaluations will be conducted only for those companies scoring 80 points or higher after the first two stages, or when the Evaluation Review Committee determines as necessary. This amendment seeks to reduce the burden on the evaluators while securing comprehensive reviews for companies likely to qualify for an AA-rating or higher.   Implications of the Competition CP Guidelines Amendment   The KFTC has emphasized the development of a meaningful voluntary compliance culture that goes beyond the formal operation of competition compliance systems. The amended Competition CP Guidelines reflect the KFTC’s fundamental policy direction and include various measures to strengthen the core purpose and effectiveness of the Competition CP system. The amended Competition CP Guidelines aim to enhance the quality of Competition CP operations by limiting incentives to exemplary companies. To receive these benefits, companies must develop Competition CP systems that address the evaluation criteria while making continuous efforts to ensure that their voluntary compliance programs function effectively. Notably, since on-site evaluations—which verify the accuracy of documents and face-to-face evaluation results—are mandatory for ratings of AA or higher, company-wide attention and participation would be required. Furthermore, the amended Competition CP Guidelines have made the adoption of Competition CP more accessible by reducing disadvantages for companies with violation histories. Under the previous system, companies with histories of competition law violations had virtually no likelihood of achieving high Competition CP ratings, causing such companies to abandon compliance programs entirely. The amended Competition CP Guidelines have significantly reduced the deductions applied for past violations and have completely exempted deductions on companies applying for a Competition CP rating evaluation for the first time. Therefore, companies with violation histories are provided with an equal opportunity to benefit from Competition CP operations by demonstrating their commitment to future competition law compliance. Considering these changes, it is recommended to establish a substantive compliance framework focused on fostering a long-term competition law compliance culture, rather than pursuing short-term strategies solely for obtaining incentives. If you have any questions regarding this article, please contact below: Hwan JEONG ([email protected]) Jeong-Ho SUN ([email protected]) Suruyn KIM ([email protected]) Miji LEE ([email protected]) In Seon LEE ([email protected]) Frank S. SHYN ([email protected]) For more information, please visit our website: www.leeko.com

In December 2024, the Korean National Assembly enacted and finalized the 2025 Tax Law amendment proposals into Law (Tax Law Amendments).  Subsequently, on January 16, 2025, the MOEF also finalized and published the amendments to the Tax Law Presidential Decrees (Tax Regulation Amendments) (collectively, the Tax Amendments) These Tax Amendments are designed to foster dynamic economic growth by reducing the tax burden and streamlining the overall tax system. Key highlights are as follows. Some of the key Tax Amendments that may be of interest to foreign invested companies and foreign investors include the following.  Unless otherwise stated, the Tax Amendments described below are effective as of January 1, 2025. Additional measures to promote and strengthen National Strategic Technologies In a move to bolster the Korea's semiconductor industry amidst global uncertainties, the government will implement additional set of support measures spanning the fiscal, tax, finance, and infrastructure sectors. These measures aim to enhance the competitiveness of the country’s key strategic technologies, particularly in regard to the semiconductor ecosystem. Key Tax Law Amendments with respect to these measures include the following, among others: Increase in R&D tax credit rate from 20% to 50% and extension of the sunset period for such credits for designated “National Strategic Technologies” and “New Growth Technologies” from December 31, 2024 to December 31, 2027. Increase in investment tax credit rate from 15% to 25% and extension of the sunset period for such credits for designated National Strategic Technologies from December 31, 2024 to December 31, 2027. Additional amendments to Global Minimum Tax Rules To better align the domestic Global Minimum Tax (GloBE) rules with the OECD’s Model Rules and Administrative Guidance, the Tax Amendments clarified definitions of key terms such as “Group”, “Constituent Entity”, “Permanent Establishment”, and “Partially Owned Intermediate Parent”. The Tax Amendments (i.e., both Tax Law Amendments and Tax Regulation Amendments) also add new provisions, including exceptions to the De Minimis rules, safe harbor provisions, allocation methods for the top-up tax, and an extension to the GloBE information return filing deadline. Addition of cities and provinces to Special Opportunity Development Zones In November 2024, 6 additional cities and provinces, including Ulsan, Sejong and Gwangju, were designated as “Special Opportunity Development Zones”.  This follows the initial designation of 8 major cities and provinces in June 2024, including Daegu, Busan, Jeonnam, Gyeongbuk, Jeonbuk, Gyeongnam, Daejeon and Jeju. Special Opportunity Development Zones are the Korean government���s initiative to promote large-scale investment in regional areas by providing fiscal and tax support as well as enhanced settlement and living conditions. Companies, including foreign invested companies starting businesses or establishing new business places in these zones will receive various tax holidays, exemptions and special incentives. Extension of special tax regime for shipping enterprises (tonnage taxation) and increase of tonnage tax rate To enhance the international competitiveness of the shipping industry, the special corporate income tax regime for shipping enterprises (tonnage tax) will be extended by 5 years, until December 31, 2029. In addition, different rates will apply to so-called “standard ships” (i.e., company-owned vessels, and vessels subject to certain specified charter or lease agreements), as opposed to non-standard ships. Non-standard ships will be subject to a 30% increased rate for the operating day profit per ton. Abolition of the proposed Financial Investment Income Tax To protect domestic investors and promote the development of the capital markets, the planned introduction of the Financial Investment Income Tax, including the proposed “crypto tax” or tax on virtual assets—scheduled for implementation on January 1, 2025—has been abolished. Instead, the existing capital gains tax regime for stocks and related financial instruments will remain in place. Exclusion of valuation gains from the calculation of distributable profits for real estate investment companies In order to improve tax equity between real estate investment companies under the Real Estate Investment Company Law and real estate funds under the Capital Markets Law, and to encourage real estate investments, valuation gains arising from real estate or other assets held by a Korean real estate investment company will be excluded from the company’s distributable profits when applying the “dividend income deduction” provision.. This Tax Regulation Amendment applies to tax returns filed on or after the effective date of the amended Presidential Decree of the Corporate Income Tax Law. Expansion in the application of 30% of EBITDA interest limitation rule Previously, interest expenses paid by both financial and general holding companies on amounts borrowed from foreign related parties were fully deductible (i.e. fell outside the 30% of EBITDA interest limitation rule, which was codified into the Korean international tax regime from the OECD BEPS Action 4). Under the Tax Regulation Amendments, interest payments by general holding companies (i.e. those not engaged in the financial or insurance business) will no longer be exempt from the interest limitation rule. Revision of definition of Korean tax residency for individuals Under the Tax Amendments, effective from tax year beginning on or after January 1, 2026, Korean tax residency requirement for individuals will include not only those who reside in Korea for 183 days or more during a calendar year (as is currently the case), but also those who have resided in Korea continuously for 183 consecutive days or more over two calendar years. Expansion of automatic information exchange to include crypto assets As an anti-tax avoidance measure, under the Tax Law Amendments, the automatic financial information exchange system will be expanded to include data on crypto assets (and other virtual assets). The Amendments represent the domestic implementation of the OECD’s Crypto-Asset Reporting Framework, and regulated crypto-asset operators will be notified of their new obligations by the MOEF. The requirement for the exchange and submission of crypto-asset information will be applicable from January 1, 2027. Due diligence procedures will be applicable from January 1, 2026. Simplification of withholding tax exemption applications by non-residents and foreign companies investing in government bonds Recognizing the challenges in identifying sub-investor information when investing in government bonds through OIVs, the Tax Amendments reduce the burden of proving beneficial ownership and streamline the application process. These changes aim to enhance investor convenience and stimulate investment demand. Simplification of the OIV application and withholding process for tax exemption Under the Tax Amendments, a private OIV itself will be deemed the beneficial owner of interest income and capital gains from government bonds, without the need to identify the underlying investors (as was already the case for public OIVs). Moreover, if any of the underlying investors are Korean residents or domestic companies, they will be able to report and pay taxes directly, without incurring withholding taxes. The scope of the withholding tax exemption on interest income from government bonds has also been expanded to include foreign private funds, in addition to the existing exemption for foreign public funds. 2. Establishment of refund application process for non-resident individuals and foreign companies Non-resident individuals and foreign companies will also be able to apply for a refund of withholding tax on interest and capital gains derived from government bonds directly, not only through withholding agents (as was previously the case). Simplification to Foreign Financial Account (FFA) reporting obligation process Under the Tax Law Amendments, exemptions from FFA reporting obligations have been expanded to include: (i) individuals recognized as residents of another contracting state under a tax treaty due to a lawsuit or mutual agreement procedure; and (ii) residents and domestic companies whose FFAs are verified through foreign trust details submitted to the tax authority. New compliance requirement for personal services income paid to non-resident individuals and foreign companies without a Korean PE Previously, when Korean-sourced personal service income was paid to non-resident individuals or foreign companies without a Korean PE, the recipients could receive a withholding tax exemption under a relevant tax treaty without needing to submit any application. Pursuant to the Tax Amendments however, for payments taking place on or after January 1, 2026, such recipients will be required to apply for exemption / non-taxation and submit a payment invoice when receiving payments for personal service income. Changes to reporting procedures relating to transfer price adjustments through an amended tax return Previously, under transfer pricing regulations, taxpayers could claim a tax refund by filing an amended tax return, to adjust a transaction price to the arm’s length price. Under the Tax Law Amendments, taxpayers will now need to submit evidence supporting the arm's length price along with the amended tax return and declaration form for transfer price adjustment. Additionally, for such claims, the Korean tax authorities’ deliberation deadline has been extended from 2 months to 6 months from the date of filing the claim. Addition of foreign companies to the controlled companies subject to gift tax due to deemed donation When a controlled company benefits from a transaction with a related party of its controlling shareholder, it is deemed that the controlling shareholder has received a donation from the related party, and gift tax is imposed accordingly. This rule was previously limited to domestic controlled companies, but under the Tax Regulation Amendments, this has been expanded so that it also applies to foreign controlled companies.  

The KFTC has announced its ‘2025 Annual Work Plan’ which identifies key tasks to restore the civil economy and to create a fair trade foundation for future-proofing as follows: 1) promoting innovation competition for future-proofing, 2) enhancing the economic vitality of SMEs and micro-entrepreneurs, and 3) strengthening consumer protection and promoting rights and interests. Please refer below for highlights of the KFTC's announcement and how enterprises may respond to them. Promoting Innovation Competition for Future-Proofing A. Combating Collusion and Unfair Trade Practices As in previous years, the KFTC has announced intensive monitoring for collusion this year. In particular, the KFTC will focus on collusion in four areas that will directly result in economic burden on the public. Four focus areas: (i) health and safety, (ii) consumer goods (food, furniture, etc.), (iii) construction and intermediate goods, and (iv) public procurement The KFTC also plans to prepare countermeasures through case reviews, legal studies, and in-depth analyses of new types of collusion (collusion using AI, information exchange collusion, etc.). Further, the KFTC will focus on improving unfair trade practices in Korea’s core business sectors (such as telecommunications, automobiles, and semiconductors), and will strengthen surveillance of unfair subcontracting transactions (such as failure to issue documents, non-payment, etc.) and technology misappropriation in the fields of advanced strategy, software, content, and industrial machinery.  B. Streamlining Merger Review to Secure New Growth Engines for the Future To support sustainable growth, the KFTC will streamline merger review to improve the market structure and support implementing an innovation ecosystem (i.e., expedite review in areas where business reorganization and entry into new businesses are urgent).  C. Promote Fair Competition in the Online Platform Market To lay the institutional foundation for promoting fair competition in the online platform market, the KFTC seeks to promote the amendment of the Monopoly Regulation and Fair Trade Act to block quickly the four typical types of anticompetitive behaviors of giant online platforms.   Legislative Advocacy Ÿ   Pursuing legislation to curb the four anticompetitive behaviors (i.e., self-preferencing, tying, multihoming restrictions, and most-favored-nation demands) of online platforms in six service areas (i.e., brokerage, search, SNS, video, OS, and advertising) Areas of Focus Ÿ   Unfair trade practices on subscription, vertical and mobile platforms (e.g., tying, forced transaction, preventing competitors from entering the market) Ÿ   Consumer deceptive practices on overseas online brokerage platforms (e.g., advertising prices which are not actually applicable)   Enhancing the Economic Vitality of SMEs and Micro-Enterprises  A. Ensuring Fair Payment for SMEs and Suppliers in the Subcontracting and Distribution Sectors The KFTC has been making efforts to ensure the fair share of SMEs through enactment of the subcontract price linkage system. This year, the KFTC announced that it will promote comprehensive improvement measures aimed at strengthening the stability of payment for subcontracting and distribution. Through the revision of the Subcontracting Act, the KFTC will nullify the contractual effects of unfair special contracts and enable unjust enrichment claims by subcontractors. Also, the KFTC has announced an intensive inspection of the online shopping industry's delayed payment and shifting of promotional costs to SMEs. B. Improvement of Business Conditions for Franchisees and Agencies The KFTC plans to (i) introduce a ‘disclosure system’ for Franchise Disclosure Document to strengthen the business stability of franchisees and (ii) amend the Agency Act to ensure the right of agencies to organize in order to improve their bargaining power and to stipulate a strict procedure to provide prior notice when terminating an agency contract. This year, the KFTC plans to check for status and take actions regarding “franchisor's delivery and event cost-shifting” as well as unfair trade practices (cost-shifting, management interference) against agencies dealing with “products closely related to individuals’ lives such as dairy products and tires”. C. Increasing Protections for Self-employed and Reducing Business Obstacles The KFTC will further strengthen its monitoring of unfair trade practices of online platforms in order to resolve business difficulties and strengthen protection for self-employed individuals. The KFTC will correct unfair trade practices such as delivery apps' demand for MFN and self-preferencing. In addition, the KFTC announced that it will conduct a survey on unfair trade practices of ‘restaurant technology’ such as reservation and queueing apps, remote ordering apps, and table ordering devices, which have been actively adopted by self-employed individuals in recent years. Related companies will need to proactively check for unfair trade practices and prepare improvement measures accordingly. Strengthening Consumer Protection and Promoting Rights and Interests In the 2025 Annual Work Plan, the KFTC further has emphasized its commitment to consumer protection and announced plans to strengthen investigations and inspections in industries of interest to the KFTC. As the importance of consumer protection is emphasized, consumer disputes are expected to increase and will be monitored strictly by the KFTC. In preparation for these changes, enterprises in these industries will need to thoroughly conduct preliminary inspections to prevent violations of the law and enhance their compliance systems. In addition, it will be timely to take active measures to respond to consumers. A. Protecting Consumers in Digital Transactions The KFTC will continue its efforts to prevent dark patterns (consumer deceptive practices) and improve the system for strengthening consumer rights in subscription services such as C2C platforms (e.g., online platforms for second-hand transactions) and OTT. B. Preventing Consumer Damage in New Type and Global Transactions In order to expand consumer protection in new types of transactions, the KFTC will (i) increase the refund rate for new types of gift certificates (such as mobile gift certificates) and review the terms and conditions related to transfer and refund, (ii) investigate AI-washing (the practice of exaggerating or falsely claiming that a business uses AI in its products, services, or operations to make them appear more innovative or technologically advanced than they actually are), and (iii) revise the Consumer Protection Guidelines for Specialty Sales to prevent consumer harm related to transactions in temporary exhibition venues such as pop-up stores. In addition, to prevent consumer harm arising from global transactions as consumers increasingly shop overseas, the law will be amended to require overseas online platforms to designate domestic agents for Korea to fulfill their obligations to resolve consumer complaints and disputes, and to establish guidelines to prevent the distribution of harmful and certified products. Recommended Response Strategy The 2025 Annual Work Plan aims to build a foundation for fair trade that will secure the recovery of the civil economy and sustainable growth engines for the future. Accordingly, as KFTC inspections and investigations will be conducted in various areas included in the work plan, enterprises will need to be prepared to prevent violations of the law through preliminary inspections and by strengthening their compliance systems, as well as to respond flexibly to KFTC policy changes. Strengthen proactive checks To prevent violations of the law, enterprises will need to strengthen their monitoring systems and increase their understanding of the relevant laws and regulations. This will help minimize unnecessary legal risks. Establish a voluntary compliance system The importance of CP is constantly emphasized. Establishing CP internally, conducting fair trade training, and preparing legal responses will be an important response strategy for enterprises. Understand the flow of policies and systems It is important to monitor continuously the flow of new policies and systems promoted by the KFTC and develop strategies accordingly. Staying informed and prepared is key to responding appropriately to the changing laws and regulations.  

Lee & Ko has been selected as one of the “Best Overall Law Firms” at the Korea Law Awards 2024, hosted by Asia Business Law Journal(ABLJ). This recognition underscores the firm’s dedication to delivering one-stop legal services and its exceptional performance across a wide range of practice. In addition to this prestigious accolade, Lee & Ko has been distinguished in 23 practice areas, including corporate, mergers & acquisitions, banking, arbitration, inbound investment, real estate, insurance, patent, fintech, and healthcare. Best Overall Law Firms Anti-corruption & anti-bribery Arbitration / ADR Aviation Capital markets Competition & antitrust Compliance & corporate governance Corporate & commercial Defense Energy & natural resources Entertainment & sports Fintech Healthcare & life sciences Inbound investment Infrastructure & project finance Insolvency & restructuring Insurance & reinsurance Licensing & franchising Mergers & acquisitions Patent litigation Private equity & venture capital Real estate Structured finance & Securitisation ABLJ has recognized two significant cases handled by Lee & Ko in 2024, including the arbitration with Westinghouse Electric Company before the Korea Commercial Arbitration Board(KCAB), where Lee & Ko represented Korea Electric Power Corporation(KEPCO) and Korea Hydro & Nuclear Power(KHNP), as well as the regulatory advisory services and government support related to the Ministry of Health and Welfare’s reassessment of the reimbursement eligibility for the pharmaceutical product Mosapride. Clients have acknowledged Lee & Ko for its outstanding logic, extensive experience, and prompt responses, noting the firm’s ability to effectively persuade foreign regulatory authorities. Asia Business Law Journal, a leading legal publication in the Asia-Pacific region, conducts annual surveys of lawyers from both domestic and international law firms and corporations. The journal assesses firms based on performance data submitted by domestic law firms for each practice area, beginning in 2021.  

The amendments to the Act on Prevention of Divulgence and Protection of Industrial Technology (APDPIT) were passed at the plenary session of the National Assembly on December 27, 2024.The amendments enhance and supplement the regulatory framework for national core technology (NCT) by addressing operational gaps identified in the current system. Key changes include the introduction of an ex officio decision notification system, whereby authorities can require entities to undergo official determination of their NCT ownership status. Additionally, entities that acquire the NCT ownership status must complete a registration process. The amended APDPIT also strengthens industrial technology protections through several measures, including increasing the cap on punitive damages and penalties for leaking or misappropriating industrial technologies, while easing the elements for establishing industrial technology misappropriation. The amended APDPIT will take effect 6 months following its promulgation. Noteworthy Changes to Regulating NCT under the Amended APDPIT ■    Newly introducing ex officio decision notification system and registration policy Under the current APDPIT, companies, research institutes, specialized institutions, universities, and other entities in possession of industrial technologies (collectively, the Entities) may apply to the Minister of Trade, Industry and Energy (MOTIE) for official determination of whether their technologies qualify as NCT. (Article 9(6) of the current APDPIT). However, concerns have been raised that this official determination process is only available through voluntary applications by the Entities. To address these concerns, the amended APDPIT introduces new provisions enabling MOTIE to notify ex officio decisions requiring companies, research institutes, specialized institutions, universities and other entities (collectively, the Companies) to seek official determination of their NCT ownership when MOTIE deems that technologies qualifying as NCT may be owned by the Companies (Article 9-2(2) of the amended APDPIT). Upon receiving such notification, the Companies must file an application for NCT ownership determination within 30 days. This period may be extended by up to 30 additional days upon prior consultation with MOTIE, provided there is justifiable cause (Article 9-2(3) of the amended APDPIT). The amended APDPIT also requires the Companies to register as NCT-owning entities with MOTIE within 30 days from the date of receiving MOTIE’s official determination of their ownership of NCT or National Advanced Strategic Technology (NAST) or acquiring NCT through assignment from the Entities (Article 9-3 of the Amended APDPIT). Under the amended APDPIT, the Companies may face a penalty not exceeding KRW 10,000,000 (approximately USD 6,800) if they fail to file an application to seek official determination of the NCT ownership status within 30 days of receiving MOTIE’s ex officio decision notification or undertake the required registration process within the prescribed 30-day period (Articles 39(1)(i) and (ii) of the amended APDPIT). ■ Streamlining procedures for suspending, prohibiting or restoring unapproved or unreported NCT exports or cross-border mergers and acquisitions Even under the current APDPIT, where the Entities have failed to obtain approval or make required advance reporting for NCT exports and cross-border mergers and acquisitions, or have obtained such approval or made such reports through deceitful means, MOTIE may (i) request an investigation by the head of an intelligence and investigation agency, (ii) have the results reported to the Industrial Technology Protection Committee (ITPC) and (iii) following ITPC deliberation, order remedial measures including suspension, prohibition, or restoration to the original state (i.e., unwinding of the transaction) (Articles 11(7) and 11-2(9) of the current APDPIT). The amended APDPIT makes a distinction between an Entity’s “failure to obtain the approval or make advance reporting” and “obtaining the approval or making advance reporting through deceitful means”. Under this distinction, in case the Entity, without approval or reporting, exports NCT or proceeds with a cross-border merger and acquisition, MOTIE may immediately order suspension, prohibition or restoration to the original state, thereby streamlining the procedures. (For your information, if the approval has been obtained or the advance reporting has been made by way of making false statements or otherwise using deceitful means, MOTIE may take the procedure outlined above) (Articles 11(8) and 11-2(10) of the amended APDPIT). On that note, the amended APDPIT did not revise “the head of an intelligence investigation agency” to “the Chief of National Intelligence Service (NIS)” (For your information, under the Presidential Decrees, namely Planning and Adjustment Regulations governing Intelligence and Investigation Work, agency include the National Intelligence Service, the Prosecutors’ Office and the National Police Agency), but the term is read to mean the NIS Chief (Please note that the Foreign Investment Promotion Act expressly designates the NIS Chief.). ■  Newly introducing charges for compelling compliance for unapproved or unreported cross-border mergers and acquisitions As explained above, under the current APDPIT, MOTIE may order measures, including suspension, prohibition and restoration to the original state, against unapproved or unreported NCT exports and cross-border mergers and acquisitions (Article 11-2(9) of the current APDPIT). However, the effectiveness of the current APDPIT has been put to question due to non-availability of sanctions for failing to comply with such orders regarding cross-border mergers and acquisitions. To strengthen enforcement, the amended APDPIT introduces a new provision authorizing the imposition of charges compelling compliance against persons that do not comply with MOTIE orders regarding cross-border mergers and acquisitions. These charges may be levied up to KRW 10,000,000 (approximately USD 6,800) per day, commencing from the day following the expiration of the compliance deadline (Article 11-3 of the amended APDPIT). Noteworthy Changes towards Strengthening Industrial Technology Protection ■  Raising the cap on punitive damages for willful industrial technology misappropriation and the penalty for technology leakage Under the current APDPIT, if an industrial technology misappropriation is deemed willful, the award can be increased up to three times the damage recognized by the court. However, the amended APDPIT has raised this cap to quintuple damages (Article 22-2(2) of the amended APDPIT). Additionally, the amended APDPIT has increased the penalty for leaking NCT with knowledge that it will be utilized in overseas countries to KRW 6.5 billion (approximately USD 4.4 million), up from KRW 1.5 billion (approximately USD 1 million). For leakage of industrial technologies, the penalty has also become more substantial, increasing to KRW 3 billion (approximately USD 2 million) from KRW 1.5 billion (approximately USD 1 million) (Articles 36(1) and (2) of the amended APDPIT). ■    Relaxing criteria for establishing industrial technology misappropriation and expanding the applicability scope Under the current APDPIT, the following activities are prohibited as acts of industrial technology misappropriation: (i) when a person under confidentiality obligation through contracts with an Entity leaks industrial technology with the knowledge that unjust profits will be gained and harm will be inflicted to such Entity (Article 14(ii) of the current APDPIT), (ii) when a person exports NCT or proceeds with cross-border mergers and acquisition involving NCT without obtaining the approval or after obtaining the approval using deceitful means with the knowledge that NCT is or will be used in overseas countries (Article 14(vi) of the current APDPIT), (iii) when a person exports NCT or proceeds with mergers and acquisition involving NCT without making advance reporting or after making advance reporting using deceitful means with the knowledge that NCT is or will be used in overseas countries (Article 14(vi-2) of the current APDPIT), (iv) when a person under confidentiality obligation through contracts with an Entity refuses the Entity’s return-or-destroy requests after no longer having the right to store or use industrial technology for the purposes of gaining unjust profits or inflicting harm to such Entity (Article 14(vi-3) of the current APDPIT). The amended APDPIT has been revised to ease the elements for establishing an act of industrial technology misappropriation by deleting “with the knowledge that unjust profits will be gained and harm will be inflicted to such Entity ” from (i) -type misappropriations, “with the knowledge that NCT is or will be used in overseas countries” from (ii) and (iii)-type misappropriations, and “for the purposes of gaining unjust profits or inflicting harm to such Entity” from (iv)-type misappropriations (Articles 14(ii), (iii), (ix) and (x) of the amended APDPIT). Furthermore, the following acts have been added to the list of acts of industrial technology misappropriation: (i) when a person with access to industrial technology pursuant to contracts with an Entity leaks industrial technology outside the designated place(s) without permission or uses or discloses industrial technology outside the permitted scope of use, (ii) when such person introduces, brokers or solicits industrial technology misappropriations and (iii) when such person exports NCT after failing to make advance reporting to MOTIE or making advance reporting using deceitful means (Articles 14(iv), (vi) and (viii) of the amended APDPIT). Regarding punishment requirements for acts of industrial technology misappropriation, the requirement of “for the purposes of using industrial technology, or causing it to be used, in overseas countries” has been relaxed to “with the knowledge that industrial technology will be used in overseas countries” (Articles 36(1) and (2) of the amended APDPIT). Implications With the introduction of the ex officio decision notification system and the registration policy in these latest amendments, companies that believe they own NCT face an increased urgency to undertake official determination and registration procedures without delay. Also, NCT exports and cross-border mergers and acquisitions are now subject to more rigorous controls, since MOTIE may immediately order remedial measures (e.g., suspension, prohibition and restoration to the original state) on unapproved or unreported transactions. MOTIE may impose charges to compel compliance for non-compliant persons in the case of unapproved or unreported cross-border mergers and acquisitions. Furthermore, criminal actions can be pursued against the act of exporting NCT without making advance reporting or making advance reporting using deceitful means, which has been added to the statutory list. Given the increased importance of obtaining approval and making advance reporting for NCT exports and cross-border mergers and acquisitions, a need for thorough preparation cannot be overstated for NCT-owning companies. Finally, increased caps on punitive damages and penalties, coupled with the expanded scope of punishment, signify stronger protections for industrial technology and NCT. In this heightened regulatory environment, companies must exercise increased caution to avoid inadvertent misappropriation of other companies’ industrial technology or NCT.  

Various amendment bills were passed at the plenary session of the National Assembly on December 27, 2024, which include (i) in the Patent Act,setting a cap on the effective term of patent rights and to limit the number of patents eligible for extension under the patent term extension system; (ii) in the Patent Act and the Utility Model Act, adding exportation to the statutory list of acts of practicing inventions; (iii) in the Patent Act and the Utility Model Act, introducing penalties for violations by persons who are prohibited from filing patent applications in foreign countries for reasons of national defense; and (iv) in the Trademark Act, shortening the period for filing an opposition to trademark applications to facilitate securing of trademark rights and introduction of quintuple damages for trademark infringement. These amendments will come into force six months following their promulgation. The key changes are explained in further detail below. Changes to the Patent Term Extension System for Pharmaceutical Patents A. The term of an extended patent shall not exceed 14 years from the date of marketing approval (newly added proviso to Article 89(1) of the Amended Patent Act) Under the patent term extension system, the patent term may be extended for a certain period to compensate for time periods that the patented invention could not be substantially practiced even after the patent grant due to the considerable time it takes to obtain market approval from the Ministry of Food and Drug Safety (MFDS) in the context of pharmaceutical patents. The extended term shall be calculated in accordance with Article 4 of the Korean Intellectual Property Office’s ‘Regulations on the Operation of the Patent Term Extension System for Pharmaceutical Patents Based on Approval, Etc.’, which derives its authority from the relevant provisions in the Patent Act, its Enforcement Decree and Enforcement Rules. The term may be extended up to 5 years. While allowing the above extension, the amended Patent Act yet introduces a cap on the duration of the extended patent right, which is not to exceed 14 years from the date of market approval of the drug product. As a result of this amendment, when formulating their patent term extension (PTE) strategies, pharmaceutical patent holders will now need to simultaneously consider the 14-year period from the date of market approval of the drug product and the expiry date of the term of each patent before they file applications for seeking PTE. B. The number of patents eligible for protection is limited to a single patent under one marketing approval (newly added Article 90(7) of the Amended Patent Act) Under the current Patent Act, a pharmaceutical patent holder may file PTE applications to obtain PTEs of multiple patents by relying on the market approval of a drug product if there is more than one patent covering the approved product, and their patent grant dates are earlier than the market approval date. However, under the amended Patent Act, even if multiple patents cover the subject drug, the patent holder must choose a single patent for which it will file a PTE application. Consequently, there is a heightened need for pharmaceutical patent holders to carefully determine which of their patents relating to an approved drug should be extended before filing a PTE application (which must be filed within three months of the market approval date). In particular, the introduction of the 14-year cap mentioned above may be an additional factor affecting the choice of which patent to seek extension for, warranting a comprehensive consideration that takes into account various factors, including the strength of each patent right and the length of the possible extension period. Amendments to the Patent Act and the Utility Model Act to add exportation to the acts of practicing inventions (Article 2(3) of the Patent Act & Article 2(3) of the Utility Model Act) Article 2(3) of both the Patent Act and the Utility Model Act define the acts of “manufacturing, using, selling, leasing or importing, or offering for assignment or lease” as falling within the meaning of practicing an invention or conceiving a utility model, with “exporting” not included in the list. With the amendment, “exportation” has been added to the list of statutorily defined acts, in harmony with the Design Protection Act, the Trademark Act, the Act on Protection of New Varieties of Plants, and the Unfair Competition Prevention and Trade Secret Protection Act (the UCPA), all of which already define exportation as acts of practice and exploitation. Although an infringement claim can be made in cases where the export of infringing goods involves their manufacture and assignment as accompanying or preceding such export even under the current Patent Act, concerns have been raised that when “export” is at issue, it does not necessarily entail “assignment”, making it potentially difficult to establish infringement by subsuming the infringer’s export activities under other practicing acts. With the amendments to the Patent Act and the Utility Model Act, which include exportation as an act of practicing an invention or a utility model, a right holder may allege infringement against the infringer’s export activities pursuant to Article 225 of the Patent Act and Article 45 of the Utility Model Act. In other words, under the current legal framework, when the only clearly detectible act of an infringer is export, the right holder bears the burden of proof and persuasion in showing that the export activities are accompanied by or subsumed under other practicing acts (e.g., assignment). However, with this amendment, the right holder will be able to claim infringement and seek damages based on the exporting activities alone, which will provide greater protection to the right holder in infringement and damages actions. Amendments to the Patent Act and the Utility Model Act for Inventions Necessary for National Defense, Etc. A. Penalties are available for violation of confidentiality orders (Newly added Article 229(3) of the Amended Patent Act and Article 49(3) of the Amended Utility Model Act) The amended Patent Act and the amended Utility Model Act set forth penalty provisions so that a person who acts in violation of a government order prohibiting the filing of an application in a foreign country or mandating maintenance of an invention or a utility model in secrecy if necessary for national defense (the Confidentiality Order) can be subject to punishment. The violating person shall be punishable by an imprisonment of up to five years or a fine not exceeding KRW 50 million (approximately USD 34,000) (Article 229(3) of the Patent Act and Article 49(3) of the Utility Model Act). B. Joint penal provisions are introduced (Article 230 of the Amended Patent Act and Article 50 of the Revised Utility Model Act) The amendments to the Patent Act and the Utility Model Act also introduce joint penal provisions enabling imposition of a fine of up to KRW 100 million (approximately USD 68,000) on the corporation and representatives that are obligated to manage and supervise the person who violated the Confidentiality Order. Amendments to the Trademark Act, including Expedition of Trademark Registration and Introduction of Quintuple Damages A. The opposition period is shortened (Articles 57(3) and 60(1) of the Amended Trademark Act) The amendments to the Trademark Act shorten the period for filing an opposition to a trademark application and the period for accessing the application documents and annexes from two months to 30 days (Articles 57(3) and Article 60(1) of the Amended Trademark Act). Although current Trademark Act allows the public to access and oppose the application for two months by way of the application publication system, there have been comments requesting that the opposition period be shortened, considering the features of trademark rights – that is, application filings are made for trademarks already in use or in time for product launch. With this amendment, applicants will be able to secure their trademark rights faster. B. The cap on punitive damages for willful trademark infringement is increased to five times the damages (Article 110(7) of the Amended Trademark Act) Under the current Trademark Act, if the infringement of a trademark or an exclusive license is found to be willful, a court can award no more than three times the damages. This amendment increases the cap on punitive damages for willful infringement under the Trademark Act up to five times the damages, bringing it in line with the cap increase introduced in the previous amendments to the Patent Act and the UCPA.  

Amid the recent political turmoil following the impeachment of the President, the National Assembly successfully passed the Framework Act on Artificial Intelligence Development and Establishment of a Foundation for Trustworthiness (AI Framework Act) on December 26, 2024.With this achievement, the Republic of Korea (Korea) becomes the second jurisdiction worldwide, after the European Union, to adopt a comprehensive AI framework law, balancing regulatory requirements with the goal of fostering AI industry growth. I. Key Provisions of the AI Framework Act Definition of Key Concepts Artificial Intelligence (AI): Systems generating outputs, such as predictions, recommendations, or decisions, which impact real or virtual environments for specific objectives, with varying autonomy and adaptability (Article 2(ii)). High-Impact AI: AI systems that significantly affect human life, safety, or fundamental rights, and are used in sectors specified under the AI Framework Act and its Enforcement Decree such as energy, healthcare, nuclear operations, biometric data analysis, public decision-making, and education (Article 2(iv)). Generative AI: Systems producing text, images, videos, or other outputs based on the structure and characteristics of the input data (Article 2(v)). AI Business: Entities engaged in business related to the AI industry, including “AI development businesses”, which develop and provide AI systems, and “AI utilization businesses”, which offer products or services utilizing AI systems provided by AI development businesses (Article 2(vii)). The Scope of Application The AI Framework Act applies to activities conducted abroad if they impact Korea’s domestic market or users. However, the Act does not apply to AI systems developed and used exclusively for national defense or security purposes, as designated by Presidential Decree (Article 4). Requirements for AI Safety and TrustworthinessA. High-Impact AI AI businesses must evaluate whether their AI systems qualify as high-impact AI before launching related products or services. The Ministry of Science and ICT (MSIT) may provide guidelines for identifying high-impact AI and confirm its status if requested (Article 33(1) – (3)). When providing products or services utilizing high-impact AI, AI businesses must notify users in advance of such fact (Article 31(1)). Additionally, AI businesses are required to implement the following measures to ensure the safety and trustworthiness of high-impact AI: Develop and operate risk management plans. To the extent technically feasible, establish and operate a plan to provide explanations for AI-generated outputs, including the criteria used to infer such outputs, and the training data utilized to develop and use the AI. Establish and operate user protection measures. Ensure human oversight of AI systems. Maintain documentation demonstrating the measures taken to ensure the safety and trustworthiness of AI. Address additional measures to ensure safety and trustworthiness as determined by the National AI Committee (Article 34(1) – (3)). When providing products or services utilizing high-impact AI, AI businesses should also endeavor to obtain prior verification and certification regarding high-impact AI systems and assess their potential impact on fundamental rights (Articles 30(3) and 35). b. Generative AI When providing products or services utilizing generative AI, AI businesses must notify users in advance of such fact. AI businesses must also label outputs of such products or services clearly as AI-generated, particularly when the outputs mimic real-world sounds, images, or videos. For artistic or creative expressions, this obligation can be fulfilled in a manner that does not interfere with the display or appreciation of the work (Article 31(1)–3)). c. Other Requirements For AI systems exceeding computational thresholds set by Presidential Decree, relevant AI businesses are required to: Identify, evaluate, and mitigate risks throughout the AI lifecycle. Implement a risk management system for monitoring and responding to AI safety incidents. Submit the results of (i) and (ii) to the MSIT (Article 32(1) – (3)). Foreign AI businesses without a place of business in Korea that meet certain thresholds for user numbers or sales (to be specified in the Enforcement Decree) must appoint a local representative with a Korean address or office. The local representative is responsible for: Submitting the results of the implementation of safety measures for AI systems. Applying for the confirmation of high-impact AI by the MSIT. Supporting the implementation of safety and trustworthiness measures. Failure of the local representative to comply with the aforementioned obligations renders the foreign business liable for the violations (Article 36(1) – (3)). Regulatory Investigations and Sanctions The MSIT may conduct investigations into suspected violations of the AI Framework Act and issue correction or cease-and-desist orders upon confirming violations (Article 40(1) – (3)). Investigations may address potential violations of the following obligations: Notification and labeling requirements for generative AI outputs. Implementation of safety measures and submission of compliance results for AI systems exceeding computational thresholds set by Presidential Decree. Adherence to safety and reliability standards for high-impact AI systems. Non-compliance with correction or cease-and-desist orders, failure to fulfill notification obligations for high-impact or generative AI, or failure to designate a local representative may result in administrative fines of up to KRW 30 million (Article 43). AI Development and Industry Promotion The AI Framework Act requires the MSIT to implement measures for the production, collection, management, distribution, and utilization of AI training data. These measures include selecting and supporting projects that produce and provide training data. The MSIT is also required to establish an integrated system for managing and providing training data to the private sector (Article 15). The Act establishes a legal framework to establish and promote AI Data Centers through administrative and financial support for their construction and operation. It further emphasizes fostering AI-related expertise by attracting international talent and supporting domestic employment opportunities (Article 25). Key provisions in the Act also promote: The development and safe application of AI technology. Standardization of AI technologies. Support for small and medium-sized enterprises (SMEs) in adopting AI technologies. Promotion of AI start-ups and convergence initiatives. Facilitation of international cooperation and entry into global markets. Establishment of framework for AI testing and verification to support industry development and technological innovation. These initiatives collectively aim to establish a strong foundation for advancing AI technology and ensuring its safe implementation in Korea. II. Implications The AI Framework Act aims to balance the establishment of essential baseline regulations for AI development and use while avoiding the imposition of onerous administrative penalties or criminal sanctions that could stifle innovation. The Act also emphasizes and prioritizes supportive measures to foster and advance AI technology and industry growth, including provisions for AI training data, the establishment of AI Data Centers, and workforce expansion. It provides a legal foundation for the creation of the National AI Committee and the AI Safety Research Institute to ensure consistent policy implementation and oversight of AI safety. According to legislative procedures, bills passed by the National Assembly must be promulgated by the President (or Acting President) within 15 days of being forwarded to the government. The AI Framework Act specifies in its Annex that it will take effect one year after its promulgation, with the effective date anticipated in January 2026. Key details, including definitions of high-impact AI, computational thresholds, and safety measures will be further clarified through Presidential Decrees or notifications from the MSIT and companies are encouraged to remain informed on these developments. Additionally, given that implementing the measures required by the Act -- such as measures to ensure the safety and trustworthiness of high-impact AI – are expected to take significant time, companies should consider conducting a preliminary evaluation to determine whether their products or services may involve high-impact or generative AI and implementing the compliance measures outlined in the AI Framework Act to the extent possible to ensure readiness by the enforcement date.  

The 2025 edition of Chambers FinTech Guide has awarded Lee & Ko the highest ranking, Band 1, in the legal category. In its commentary, Chambers and Partners noted Lee & Ko as a premier law firm in South Korea, hailing its robust corporate and capital markets expertise and proven track record in advising and representing major financial institutions and FinTech startups across a broad spectrum of issues, such as digital payments, virtual assets, and internet banking. It further featured input from clients to highlight Lee & Ko’s exceptional ability to navigate regulatory compliance challenges and manage potential risks. It is worth noting that Lee & Ko’s Digital Finance Team advised and secured Galaxia Moneytree’s designation as an innovative financial service for issuing blockchain-based trust beneficiary certificates for aircraft engine leases, marking the first successful case by a law firm since the announcement of security token guidelines by Korea’s Financial Services Commission (FSC). Well-versed in matters related to the Electronic Financial Transactions Act, the team also provided counsel to major clients such as Samsung C&T, Shinsegae, Lotte Shopping, and HYBE on the registration of their prepaid business and successfully represented virtual asset companies, including DSRV and BDACS, in filing and obtaining a virtual asset service provider (VASP) license this year. Currently, Lee & Ko’s digital finance professionals handle legal affairs to provide regulatory assistance to global virtual asset companies such as Worldcoin, BitGo, and NTT Docomo for their entry into Korea. On the domestic front, they offer expert legal guidance to the largest cryptocurrency exchanges in Korea, namely, Dunamu (Upbit) and Bithumb, as well as major Korean companies like LINE NEXT, Shinsegae, Com2us, and SK Networks, in response to cryptocurrency regulatory authorities. In criminal cases, the team handles various high-profile cases involving virtual assets in Korea, such as the Terra-Luna and Haru Invest cases, demonstrating its unparalleled and in-depth expertise in the overall discipline of virtual assets. Furthermore, its competence extends to advising clients on obtaining innovative financial service status with a focus on integrating AI technologies into the financial sector, as showcased by a comprehensive legal review of Hana Bank’s use of AI-generated images. Hyunkoo Kang, a partner at Lee & Ko specializing in financial regulatory compliance, has been recognized as a notable practitioner in the individual category. Drawing upon outstanding expertise, Mr. Kang advises his clients on various FinTech and financial regulatory matters related to payment models, blockchain, and cross-border e-wallet services, among others. The Chambers FinTech Guide, one of the world’s leading legal ranking directories in the UK released by Chambers and Partners, identifies and ranks top law firms in the Fintech sector across more than 50 countries worldwide.  

Lee & Ko was ranked Band 1 by 'Chambers Asia-Pacific Guide 2025’ in 11 practice areas. For the individual rankings, 66 attorneys were recognized as ‘Leading Individuals’ throughout all practice areas. Firm Rankings  Banking & Finance  Capital Markets  Corporate/M&A  Dispute Resolution: Litigation  Employment  Intellectual Property  International Trade  Projects & Energy  Restructuring/Insolvency  Shipping Finance  Technology, Media, TelecomsRanked Lawyers  Banking & Finance: Yeo Kyoon Yoon, Woo Young Jung, Yong-Jae Chang, Myoung Chul Kwak, Dong Seok Woo  Capital Markets: Hyunjoo Oh, Seunga Hyun, Jun Woo Cho  Capital Markets: Securitisation: Jin Hong Kwon  Competition/Antitrust: Yong Seok Ahn, Hwan Jeong, Jeong-Ho Sun, Suruyn Kim  Corporate/M&A: Sanggon Kim, Hyeong Gun Lee, Ho Joon Moon, Yong Joon Yoon, Daehoon Koo  Dispute Resolution: Arbitration: Saemee Kim, Sanghoon Han, Grace Yoon  Dispute Resolution: Litigation: Won Seok Ko, Pyoung Keun Song, Seong Won Chang, Dajoo Jung  Dispute Resolution: White-Collar Crime: Tae Ki Ghil, Taeyop Lee, Youngsub Jang, Jae Man Yu, Jin So  Employment: Sang Hoon Lee, Chang Soo Jin, Hyunseok Song, William Kim  Insurance: Jinyoung Jung, Jin Hong Kwon, Yang Ho Yoon  Intellectual Property: Jae Hoon Kim, Un Ho Kim, Keum Nang Park, Hyeon Gil Ryoo, Vera Eun Woo Lee, Jaewoo Kwak, Hankil D. Kang  International Trade: Kichang Chung, Young Gee Park, Young Jae Cho, Hyunsoo Joo, Heysoo Kim  Projects & Energy: Dong Eun Kim, Hun Ko, Kwang Yul Kim, Jungmin Pak  Real Estate: Junghwan Lee, Dong Seok Woo  Restructuring/Insolvency: Eunjai Lee, Wanshik Lee, Jung Hyun Lee  Shipping: Jinyoung Jung, Yang Ho Yoon  Shipping: Finance: Woo Young Jung, Yunjeong Seo  Tax: Kyung Tae Kim, Byeong Jun Son, Tom Kwon  Technology, Media, Telecoms: Kwang Bae Park, Hwan Kyoung Ko, Ju Bong Jang, Samuel (Soon-Yub) Kwon, Sunghee Chae  North Korea - General Business Law (Expertise Based Abroad): Hyung Sub LimChambers Asia-Pacific Guide is a law firm evaluation publication released by Chambers and Partners, a leading global legal publisher based in England, which selects top law firms and top lawyers in the Asia-Pacific region each year based on a comprehensive analysis of data submitted by law firms, interviews with partner lawyers and clients, and recently accomplished work.  

Lee & Ko has been honored with two prestigious accolades at this year’s Asia IP Awards, held in Manila on November 17,named the ‘Korea Patent Contentious Firm of the Year’ and the ‘Korea Trademark Prosecution Firm of the Year’. This achievement marks a milestone as the first Korean law firm to win in two categories at the Asia IP Awards and a testament to the outstanding performance of our IP Practice Group once again. Drawing upon a deep understanding of cutting-edge technologies and a strong foundation in legal reasoning, Lee & Ko’s IP Practice Group has a proven track record of achieving optimal outcomes in advising and representing clients in domestic and international patent disputes. The Group provides clients with one-stop services across a broad spectrum of IP-related industries, including medicine, biotechnology, chemistry, semiconductors, electrical and electronic engineering, secondary cells, machinery, gaming, and entertainment. In response to international patent disputes in the U.S., Europe, Japan, and beyond, its efforts prioritize serving legal services tailored to clients through a robust network of leading global law firms. Beyond litigation, the Group is dedicated to offering an elevated level of support to deliver full-cycle solutions for patent and trademark matters, from the discovery and registration of patent and trademark rights to portfolio management. The Asia IP Awards honor the best law firms from around the region for demonstrating the highest standards in trademark, patent, and copyright work over the last year. The winners are selected from a shortlist of five law firms by votes of more than 5,000 in-house counsels worldwide.  

Lee & Ko won in total five categories in the ALB Korea Law Awards 2024, and has proven its potential as a leading law firm in Korea. In the Firm category, Lee & Ko was awarded “Litigation Law Firm of the Year” and “Energy and Resources Law Firm of the Year”. In the individual categories, Lee & Ko attorney Daehoon Koo (Corporate and M&A Practice Group) and attorney Hyunjoo Oh (Capital Markets Group) were selected as "Dealmaker of the Year" and "Woman Lawyer of the Year," respectively. The firm was also awarded "Project Finance Deal of the Year" in the deal categories. First of all, in the Firm categories, under which the best law firm in Korea is selected for each specialized area, Lee & Ko was awarded in two areas: “Litigation Law Firm of the Year” and “Energy and Resources Law Firm of the Year”. These awards highlight its long-standing achievements in assisting clients across various industries with all aspects of energy and resources-related issues, including not only energy and resource-related transactions but also regulatory, dispute, and trade matters amid the ongoing shift towards sustainable energy. Notably in the litigation field, the firm stood out by being selected as the Law Firm of the Year for the second consecutive year. It received high praise for successfully handling high-profile cases, including the injunction related to the selection of a preferred bidder for a major defense contract, the case seeking an injunction to prevent the government from enforcing a policy to increase medical school enrollment quotas, and the criminal case involving high-level executives at Korea’s largest cryptocurrency exchange. Furthermore in the individual categories, attorney Daehoon Koo (Corporate and M&A Practice Group) was selected as “Dealmaker of the Year” and attorney Hyunjoo Oh (Capital Markets Group) was selected as “Woman Lawyer of the Year”. Mr. Koo was recognized for his achievements in successfully closing various deals despite the recent downturn in the M&A market. These include advising on CJ Olive Young’s investor exit through a treasury stock acquisition, the sale of shares in SSG.com, LG Chem’s establishment of a joint venture with Eni S.p.A., as well as the sale of listed companies including MEDIANA and AP Satellite, the cross-border sale of Sealtech, Farm Hannong’s sale of chemical business, the public tender offer for BusinessOn, acquisitions and/or investments in Elogen, Convion, DeepX, and Lotte Aluminum’s vertical spin-off. Meanwhile, Ms. Oh, with 26 years of experience in the capital markets field, currently serves as the co-head of Lee & Ko’s Financial Regulatory Team. In February of this year, she became the first female partner to be appointed as member of Lee & Ko’s Management Committee, marking her active participation in the firm’s leadership. In the deal category, the firm demonstrated its outstanding capabilities by winning the “Project Finance Deal of the Year” award. This recognition was for its role in advising on the USD 860,000,000 project financing transaction by ECOPRO GLOBAL HUNGARY ZRT, a Hungarian subsidiary of ECOPRO BM Co., Ltd. for the construction of an electric vehicle battery plant in Hungary. ALB Korea Law Awards is one of the awards ceremony in the legal sector hosted by Asian Legal Business (ALB), an affiliate of Thomson Reuter, a prestigious legal professional media in Asia. ALB Korea Law Awards evaluates deals and in-house transactions based on materials submitted by each law firm.  

Partner Da Joo Jung from Lee & Ko’s Litigation Group has been recognized as one of the ‘Top 15 North Asia Litigators 2024’ by Asian Legal Business (ALB).  With over 16 years of experience across various court levels and agencies from 2005 to 2021, spanning the Seoul Central District Court, the Uijeongbu District Court, and the Planning and Coordination Office of National Court Administration at the Supreme Court, Mr. Jung brings unparalleled expertise in advising and representing clients in complex litigation matters related to corporate crimes, construction, real estate, banking, securities, finance, administrative litigation, and family inheritance disputes. Notably, Mr. Jung’s recent accomplishments include securing the acquittal of all defendants in the embezzlement case concerning Mildawon shares within the SPC Group and delivering favorable outcomes in criminal litigation, such as Kakao’s market price manipulation and the virtual asset (coin) market price manipulation cases. In addition, he has successfully handled a number of high-stakes civil litigation against major companies such as management disputes, including a preliminary injunction case prohibiting the issuance of new shares in SM Entertainment, etc., a shareholder class action involving the embezzlement of Osstem Implant, and a 5G service consumer class action against a mobile communications company. ALB Magazine, a leading legal publication in the Asia-Pacific region under Thomson Reuters, announced 15 exceptional litigators in North Asia in its October issue to highlight their exceptional performance in high-profile cases that have shaped the region’s legal landscape.  

As artificial intelligence (AI) technology is rapidly advancing and the pace of development has far exceeded the expectations of experts,there has been extensive discussion on how to properly control AI risks. In this global context, the EU Artificial Intelligence Act, the world’s first comprehensive regulation on AI, entered into force on August 1, 2024. In Korea, nine AI bills were proposed in the 21st National Assembly (May 30, 2020 to May 29, 2024) but were discarded when the Assembly’s term expired. In the 22nd National Assembly, which commenced on May 30, 2024, as of October 28, 2024, a total of 11 AI-related legislative proposals (collectively, AI Bills) have been introduced. Lee & Ko’s Tech & AI team would like to introduce the main contents of AI-related bills being discussed in Korea based on current legislative proposals. General Provisions First, the AI Bills commonly include “the electronic implementation of human intellectual capabilities” as a core element in their definition of AI. Furthermore, most of the AI Bills stipulate that these laws have the status of a general law for AI, AI technology, and AI industry, while some AI Bills further state that laws pertaining to personal information, copyright, public data, and AI in the defense sector shall take precedence as special laws in their respective fields. Establishment, Organization, and Authority of AI-related Government Organizations Most AI Bills stipulate the establishment of the ‘National Artificial Intelligence Committee’ as an organization to deliberate and decide on basic plans, policies, and R&D related to AI. These bills seek to establish a clear statutory foundation for the Committee, which has officially launched on September 26 with the President serving as the chairperson. It is also noteworthy that some bills propose the establishment of an 'Artificial Intelligence Safety Research Institute' under the Ministry of Science and ICT (MSIT) to analyze and research AI safety-related risks. This legislative initiative aligns with recent global movements on AI safety, including the Bletchley Declaration at the 2023 UK AI Safety Summit, which led to the establishment of various national institutions such as the U.S. AI Safety Institute (USAISI), and the Seoul Declaration and the Seoul Statement of Intent toward International Cooperation on AI Safety Science announced at the 2024 Seoul AI Summit. Meanwhile, in line with these developments, MSIT has announced plans to establish its Artificial Intelligence Safety Research Institute by November 2024. If passed, these bills would provide the legal foundation for this research institute. In addition, some bills establish the ‘National Artificial Intelligence Center’ under the MSIT to provide technical support for establishing and implementing basic AI plans, conducting AI-related surveys, analysis, research, and education. Laying the foundation for and fostering the AI industry Although the AI Bills differ in some detailed measures, they contain the following provisions to lay the foundation for the AI industry and promote its development: Support for projects to develop AI technology and promote safe use, etc. Promote and support AI technology standardization projects Establish measures for facilitating the supply of data necessary for AI development and use, including AI training, etc. Support companies in adopting and utilizing AI technologies Promote projects for the activation of startups in the AI space Foster convergence between AI and other technologies and industries Specific AI-related Regulations Regulations for Prohibited AI Regarding AI regulation, Rep. Kwon, Chil-sung’s (Democratic Party) bill stands out among the 11 AI-related bills currently introduced, as it is the only one that introduces the concept of ‘prohibited AI.’ His bill defines prohibited AI as “AI that is prohibited from development and use because it is recognized as a serious infringement or threat to human dignity and values, and human peace and safety,” while delegating specific types to the Enforcement Decree. Furthermore, while the bill prohibits the use of prohibited AI in principle, it allows development and use in limited cases after deliberation by the National Artificial Intelligence Committee, such as: searching for crime victims and missing children; preventing substantial and imminent threats to life or physical safety of persons or terrorist attacks; responding to requests from investigation authorities; and conducting necessary activities to apprehend criminals. AI in High-Risk Areas Moreover, most AI Bills define “AI used in areas that may have a significant impact on the protection of human life, physical safety, and fundamental rights” as ‘AI in high-risk areas.’ Representative fields of AI in high-risk areas include energy supply, drinking water supply, transportation system operations, AI systems used by public institutions for decisions affecting citizens, healthcare provision and usage systems, medical devices/digital medical devices, safe management and operation of nuclear materials and facilities, biometric information processing, and decisions or evaluations that significantly affect individual rights/obligations such as recruitment. Regarding AI in high-risk area, many AI Bills commonly stipulate that businesses intending to develop or use AI in high-risk AI area or products/services using such AI may request confirmation from the Minister of the MSIT whether their AI falls under the high-risk category. Some AI bills make this confirmation by the Minister of MSIT or the National Artificial Intelligence Committee mandatory. Furthermore, the AI Bills commonly impose an obligation on anyone who intends to provide a product or service using AI in high-risk areas to notify users in advance that the product or service is operated based on AI in high-risk area. Regarding operators’ responsibilities with respect to AI in high-risk areas, some AI Bills impose requirements to implement measures to ensure the reliability and safety of AI on developers of AI in high-risk areas or those providing products or services using it. These measures include establishing and operating risk management and user protection measures; documenting and maintaining records of reliability assurance measures; ensuring human oversight of AI in high-risk areas; and developing and implementing procedures to explain the AI’s final outputs, key decision-making criteria, and training data used. However, as the AI Bills only outline these general measures without specific requirements, the detailed regulatory requirements for AI in high-risk areas will be established through subordinate regulations and guidelines following the enactment of the legislation. Generative AI Regarding Generative AI, most AI Bills define generative AI as “AI that is designed to generate outputs such as text, sound, pictures, and videos at various levels of autonomy.” They also impose obligations on those who intend to provide products or services using generative AI to notify users in advance that their products or services are based on generative AI and to clearly label any outputs as being generated by generative AI. Notably, the bill proposed by Rep. Jeong, Jeom-sig imposes additional requirements on providers of generative AI products or services where the cumulative computational power used for training exceeds the threshold set by the Enforcement Decree. These providers must: (i) identify, assess, and mitigate risks throughout the AI lifecycle, and (ii) establish risk management systems for monitoring and responding to AI-related safety incidents. Implications The AI Bills proposed in the 22nd National Assembly do not seem to differ much from the bills reviewed in the 21st National Assembly in terms of their basic structure, but it will be interesting to see how the level of regulation for AI in high-risk areas, and the introduction of prohibited AI will be reflected in the National Assembly’s discussions. The AI Bills proposed in the 22nd National Assembly not only promote and foster the AI industry but also include some regulatory elements for AI in high-risk areas and generative AI. Nevertheless, it would be worth mentioning that, rather than adopting highly prescriptive provisions that might impede innovation, the regulatory framework in these bills appears to favor a flexible approach—one that can be shaped through regulatory guidelines and allows regulated entities room for discretionary action. Therefore, companies seeking to provide AI-related products and services should closely monitor the legislative trend of the AI Bills and the relevant developments by the regulatory bodies in the future. Further, the National Assembly’s public hearing on September 25, 2024, regarding the Basic Act on Artificial Intelligence suggests that its enactment process is likely to accelerate.  

On August 7, 2024, the Korea Fair Trade Commission (KFTC) implemented amendments to the Monopoly Regulation and Fair Trade Act (MRFTA) on the reporting and review of mergers. These amendments to the MRFTA include (i) introduction of voluntary commitment procedure and (ii) expansion on the scope of exemptions to merger filing. Additionally, the amendment to the Merger Review Guidelines was implemented on May 1, 2024 to reflect the characteristics of the digital economy and the pre-notification procedure was stipulated in the Merger Filing Guidelines. The following is a summary of these recent changes under the MRFTA on merger control in Korea. Voluntary commitment procedure The KFTC implemented a system for the submission of voluntary commitments in business combinations. In addition to amending the MRFTA, the KFTC enacted the Detailed Guidelines for the Operation of the System for the Submission of Voluntary Commitments in Business Combinations to set forth the voluntary commitment procedure in detail. Companies may benefit from this system as the KFTC’s review period can be shortened for a review of business combinations that are deemed to restrict competition. However, if the merging parties do not submit voluntary commitments, or if the KFTC does not accept the submitted commitments, the KFTC may impose its own remedies or block the business combination. An overview of the system for the submission of voluntary commitments is illustrated in the table below. Notification of preliminary assessment: The KFTC Examiner notifies the Reporting Party of the preliminary assessment on the relevant sector (market definition, etc.), anticompetitive concerns and the direction of potential remedies through an in-person meeting. Submission of voluntary commitments: The Reporting Party, after consulting with the other party, submits the proposed voluntary commitments including detailed commitments and method of implementation and evidence supporting that the proposed commitments effectively resolve noted anticompetitive concerns and confirmation of implementation within a reasonable time period. Assessment of voluntary commitments The KFTC Examiner evaluates whether the proposed voluntary commitments adequately address the noted anticompetitive concerns and notifies the parties through an in-person meeting (KFTC may seek the opinions of interested third parties or experts, if necessary). If the KFTC Examiner concludes that the proposed voluntary commitments are inadequate, the Reporting Party may be requested to modify such commitments (up to 2 requests for modification). However, if there are unavoidable circumstances, such as significant difficulty in preparing voluntary commitments to meet the requirements of the KFTC, additional requests are permitted. The period of time spent modifying proposed voluntary commitments is not calculated as part of the KFTC’s overall merger review period (i.e., does not start the clock on the merger review). Issuing the Examiner’s Report: If the KFTC Examiner determines the proposed voluntary commitments adequately address the noted anticompetitive concerns, such commitments will be considered and drafted in the Examiner’s Report as acceptable remedies together with the KFTC Examiner’s opinion. Procedures for Deliberation/Decision: If the Reporting Party submits a written opinion confirming agreement with the Examiner’s Report without any objections, the KFTC will (i) hold a plenary session within 15 days (instead of the standard 30 days) from the submission of the written opinion and (ii) issue a written decision within 20 days (instead of the standard 35 days) from the conclusion of the plenary session.   Expansion on the scope of business combinations exempt from merger filing obligation The following are types of business combinations that are exempt from merger filing obligation following the expansion of exemptions by the KFTC under the amended Merger Notification Guidelines and Merger Review Guidelines:   Business combination type subject to merger filing exemption Details on exemption Establishment of PEF l  The establishment of a private equity fund refers to investment where the investor will be the largest shareholder of the PEF. l  However, when an established PEF engages in M&As and the filing thresholds are met, merger notification is still required. l  The establishment of a special purpose company by a PEF still has a merger filing obligation. Less than 1/3 of interlocking directors l  An interlocking directorate involving less than 1/3 of directors of the counterparty is exempt from filing as there is difficulty in the interlocking directorate having influence on major decisions of the counterparty. However, merger filing is still required if the representative director is one of the interlocking directorates. Statutory mergers or business transfers between the parent company and subsidiary l  Statutory mergers or business transfers between the parent company and a subsidiary under the Commercial Code (a company with shares exceeding 50% of the total shares issued in another company is a subsidiary) are exempt from merger notification as such transactions are unlikely to cause new anticompetitive concerns. Mergers between affiliates with respective values less than KRW 30 billion l  Prior to the amendment to the MRFTA, in case of statutory mergers and consolidation between affiliates, the assets and worldwide sales of the counterparty company to be merged or consolidated were included. As this may result in the double-counting of the assets and sales of the merged/consolidated entity, the amended MRFTA provides that the assets and sales of the merged entity will be calculated on a non-consolidated basis (and not on a consolidated basis). Transfer of assets or business under KRW 10 billion l  The merger notification threshold for the transfer of a business or assets has increased to KRW 10 billion (from KRW 5 billion) or 10% of the total assets of the transferring company.   Amendment of Review Guidelines to reflect the characteristics of the digital economy On May 1, 2024, the KFTC implemented the amended Merger Review Guidelines to reflect and account for the characteristics of the digital economy and provision of free services by large online platform operators, among others, which were factors difficult to account for prior to the amendment. Amendment Contents of Amendment Subject of simplified merger review l  M&As involving online platform operators  are subject to simplified merger review if it is (i) a conglomerate merger and (ii) the service provided by the online platform is not complementary or a substitutable. n  However, if the average number of monthly users of the target (in the case of business transfers, the transferred business) in the immediately preceding year of the year which the filing occurs exceeds 5 million (counted by unique users, multiple visits by the same user are not counted) in Korea, the transaction is subject to a general merger review. l  Transactions where a limited partner (LP) in a private equity fund (PEF) participates in the capital increase of the PEF or acquires the shares of another LP, is subject to a simplified merger review. Defining relevant markets l  For multi-sided services that facilitate interactions between different user groups, multi-sided markets may be defined as separate markets for different user groups or a single market. l  For business combinations between entities that provide free services (i.e. compensation provided by means other than monetary payment), the relevant market may be defined based on demand substitution resulting from a decrease in service quality rather than change in price. l  The combination of businesses whose activities involving innovation, such as R&D, which are essential or active, may be defined as an "innovation market" considering that the companies are competing in terms of innovation rather than price. Examples of the innovation markets listed in the amendment include competition in the development of semiconductor manufacturing devices and operating systems (OS) for smart devices. Evaluating restrictions on competition l  When reviewing a business combination between online platforms, the strength of direct and indirect network effects of increasing the number of users or scale of data is considered in determining the business combination’s restriction of competition. l  In evaluating the restriction on competition for the provision of nominally free services, as it is difficult to calculate the market share based on sales because services are provided nominally free, the market share is calculated using alternative variables such as number of users and frequency in the use of the service. l  In evaluating the restrictions on competition in conglomerate mergers, as there is the potential to engage in tying or bundling products, the Merger Review Guidelines added a new criterion to assess the potential bundling effect of a conglomerate merger. Examples of increased efficiencies that consider the unique characteristics of the digital economy l  The increase in service users from the business combination that may increase the benefits for existing users through direct or indirect network effects. l  The use of additional data obtained from business combinations may be used to create innovative services or reduce the costs of the production or distribution process. l  Business combinations may broaden the range of services available to users and increase consumer benefits. l  For business combinations involving innovative digital tech startups, the exit of existing input capital may result in creating new startups and entry into the market that could significantly activate the startup ecosystem in Korea.   Pre-notification procedure Prior to the implementation of the pre-notification procedure for merger filings (Pre-notification) on August 7, 2024, the relevant parties were able to discuss whether a transaction was reportable or about the filing formalities (e.g., whether notifiable as a share acquisition or the establishment of a new company) of a transaction, while substantive issues regarding the filing were not included in such discussions. Citing the need to reduce the merger review period and prevent the issuance of unnecessary requests for information during the course of merger reviews, the KFTC amended its Merger Filing Guidelines to specifically state that for transactions involving complex transaction structures or multiple relevant markets subject to ordinary merger filing, which as a result may cause the parties difficulties in preparing a merger notification, the parties may consult with the KFTC by email prior to the submission of the merger filing. The KFTC released the following details regarding Pre-notification: The relevant parties can use Pre-notification not only for ordinary merger filings but also for simplified merger filings. There is no specified time period for Pre-notification. However, the parties must initiate Pre-notification at least 2 weeks prior to the filing. The merger filing can be submitted at any time, even after Pre-notification has been initiated by the parties. The parties are required to submit to the KFTC documents needed for consulting with the KFTC, but are not required to submit information that is not necessary for a substantive analysis (e.g., financial figures) or data requiring a substantial amount of time to prepare (e.g., market information); Such information can be submitted to the KFTC in the merger filing. The KFTC will notify the results of the Pre-notification by email. The KFTC will ensure and maintain consistency between the results of the Pre-notification and merger review, barring a significant change in the factual background or market status.  

Partner Da Joo Jung from Lee & Ko’s Litigation Group has been recognized as one of the ‘Top 15 North Asia Litigators 2024’ by Asian Legal Business (ALB). With over 16 years of experience across various court levels and agencies from 2005 to 2021, spanning the Seoul Central District Court, the Uijeongbu District Court, and the Planning and Coordination Office of National Court Administration at the Supreme Court, Mr. Jung brings unparalleled expertise in advising and representing clients in complex litigation matters related to corporate crimes, construction, real estate, banking, securities, finance, administrative litigation, and family inheritance disputes. Notably, Mr. Jung’s recent accomplishments include securing the acquittal of all defendants in the embezzlement case concerning Mildawon shares within the SPC Group and delivering favorable outcomes in criminal litigation, such as Kakao’s market price manipulation and the virtual asset (coin) market price manipulation cases. In addition, he has successfully handled a number of high-stakes civil litigation against major companies such as management disputes, including a preliminary injunction case prohibiting the issuance of new shares in SM Entertainment, etc., a shareholder class action involving the embezzlement of Osstem Implant, and a 5G service consumer class action against a mobile communications company. ALB Magazine, a leading legal publication in the Asia-Pacific region under Thomson Reuters, announced 15 exceptional litigators in North Asia in its October issue to highlight their exceptional performance in high-profile cases that have shaped the region’s legal landscape.  

Lee & Ko has been recognized as a top-tier firm in Managing IP's “2024 IP Stars” rankings in the categories of Trademark Disputes, Patent Disputes, Copyright & Related Rights, and IP Transactions. Particularly impressive is the firm’s performance in IP Transactions, where it has maintained the highest ranking for four consecutive years since the category was first introduced, further cementing its unparalleled expertise in this specialized field. In the individual rankings, 12 attorneys and patent attorneys from the firm have been listed as "IP Stars," "Rising Stars," and "Notable Practitioners," showcasing their distinguished achievements in the patent field:  Patent Star: Un Ho Kim, Jae Hoon Kim, Keum Nang Park, Hwan Sung Park Trademark Star: Jae Hoon Kim, Vera Eun Woo Lee, Sun Chang  Rising star: Min Soo Kim, Min Wook Kim, Sung Hoon Kim  Notable Practitioner: Seong Tahk Ahn, Kyung Jin Kim, Yikang Kang Leveraging its extensive network with leading international law firms, Lee & Ko’s IP Group delivers superior legal services tailored to meet the specific needs of clients in patent disputes across the United States, Europe, Japan, and other countries, and helps clients navigate the complex legal landscape by offering practical and effective solutions drawn from its deep technical and scientific expertise, along with its comprehensive knowledge of the laws and rules governing patent litigation. The Group’s practice encompasses all aspects of intellectual property, consistently achieving optimal outcomes in patent disputes and consultations across various industries, including pharmaceuticals, electrical and electronics, and secondary batteries. Some notable successes include its representation of OCI Holdings in a patent invalidation action, which led to a significant Supreme Court ruling on parameter inventions, successfully concluding a 7-year patent battle with a victory. It also provides robust support to Korean companies in U.S. patent infringement lawsuits, assisting clients at every stage of transactions and legal proceedings. Managing Intellectual Property (Managing IP) is a leading publication in the field of intellectual property. It annually ranks leading IP law firms by country and practice area based on surveys and interviews with IP professionals worldwide.  

Lee & Ko was honoured with the most awards among South Korean law firms by winning awards in 9 areas including ‘Asia Firm of the Year’ and ‘South Korea Firm of the Year’ in the 'Asialaw Awards 2024'. In particular, Lee & Ko has won both the ‘Asia Firm of the Year’ and ‘South Korea Firm of the Year’ Awards for the second consecutive years, and has demonstrated a clear difference from the second-ranked law firm, which has won 3 awards, by winning 10 awards in 9 areas. Regional Awards Capital Markets Lawyer of the Year - Hyunjoo Oh Competition/Antitrust Firm of the Year    Regulatory Firm of the YearJurisdictional Awards  South Korea Firm of the Year  South Korea Female Lawyer of the Year - Suruyn KimEditor’s Choice Awards  Asia Firm of the Year Impact Deals and Cases  LG Chem $2 Billion Exchangeable Bonds: Largest Equity-Linked Issuance Since 2021  Google v. KFTCClient Choice Awards South Korea Lawyer of the Year - Jeong Yoon Choi South Korea Honourable Mention Lawyer - Minhoo (Steve) KimIn addition to winning the ‘Competition/Antitrust Firm of the Year’ and the ‘Regulatory Firm of the Year’ awards, Lee & Ko was selected as one of the ‘Impact Deals and Cases’ for LG Chem’s issuance of $2 Billion Exchangeable Bonds (Capital Market) and claims for damages due to Google’s violation of the Fair Trade Act (Google v. KFTC) (Litigation). Furthermore, in the individual sector, Lee & Ko was recognised for its outstanding competence in various practice areas, as Lee & Ko attorney Hyunjoo Oh was selected as ‘Capital Markets Lawyer of the Year’ for lawyers in Asian region, attorney Suruyn Kim as ‘South Korea Female Lawyer of the Year’, attorney Jeong Yoon Choi as ‘Client Choice Awards-South Korea Lawyer of the Year’ and attorney Minhoo (Steve) Kim as ‘Client Choice Awards-South Korea Honourable Mention Lawyer’. Recently selected as the best law firm in all 24 areas in the Asialaw’s annual assessment, Lee & Ko has further solidified its status as the best law firm in the Asia-Pacific region and South Korea. Asialaw Award is given by Asialaw, which is an affiliate of the global financial journal Euromoney. Each year, the awards celebrate leading law firms across 11 practice areas, 7 industries and 23 jurisdictions in the Asia-Pacific region.

Lee & Ko has once again been recognized as a Tier 1 law firm in the M&A Rankings 2024 by Asian Legal Business(ALB). In the run-up to the ALB rankings, Lee & Ko’s M&A Team has been honored with the ‘Best House Award’ at the 2nd DealSite IB Awards in recognition of its outstanding performance as a lead advisor on numerous M&A transactions, amid a weakened M&A market this year. The Team has also garnered the ‘Best Deal Award’ at the 15th Korea IB Awards, hosted by The Korea Economic Daily, for its pivotal role as a lead advisor in the acquisition of Osstem Implant by MBK Partners and UCK Consortium. These accolades complement Lee & Ko’s consistent top-tier rankings for its exceptional capabilities in handling M&A transactions, as recognized by leading domestic and international rating directories, including prestigious global publications such as the Chambers Asia-Pacific Guide, Legal 500, Asialaw Profiles, and IFLR1000. ALB, a legal magazine in the Asia-Pacific region under the global news services provider Thomson Reuters, annually evaluates and ranks law firms based on surveys and interviews with M&A professionals across 12 Asian countries.  

On September 11, 2024, the Korea Fair Trade Commission (the KFTC) announced a new roadmap for the legislation of the online platform regulation.In general, the new roadmap proposed the legislative plan to amend the Monopoly Regulation and Fair Trade Act (the MRFTA) to introduce new thresholds for the presumption of online platform operators’ market dominance, and to specify prohibited conducts of online platform operators. Rather than directly bringing in a dramatic change in the online platform regulation landscape by adopting a sector specific law, the KFTC chose to adjust current regulation first to handle various issues in the online platform sector. Ki-Jeong Han, the chairperson of the KFTC, implied that the new roadmap is the alternative to the past legislation plan for the EU Digital Markets Act (the DMA) style ex-ante regulation. As a clear sign that the KFTC is continuing to scrutinize on anticompetitive conducts in online platform sector, the new roadmap invites keen attention from the online platform operators doing business in Korea.   KFTC’s Proposals in New Roadmap In the new roadmap, the KFTC proposed the amendment of the MRFTA, the prime antitrust/competition law in Korea, to regulate anticompetitive conducts of market dominant online platform operators. Major amendments proposed by the KFTC are as follows: Item Details Adoption of Separate Thresholds for Ex-post Presumption of Online Platform Operator’s Market Dominance §  No DMA style ex-ante designation of market dominant online platform operators (gatekeepers) §  Online platform operator is presumed to be market dominant when following thresholds are met: 1)     a single online platform operator with 10 million or more number of users has market share of 60% or more in the relevant market; or 2)     three or less online platform operators with respective number of users of 20 million or more have aggregated market share of 85% or more in the relevant market; 3)     provided that, any online platform operator with annual platform related (direct and indirect) turnover less than KRW 4 trillion (approx. USD 3 billion, EUR 2.7 billion) shall be excluded from the presumption. Specification of Types of Online Platform Operator’s Abuse of Market Dominance §  Specify, in relevant law and regulation, market dominant online platform operator’s following conducts as types of the “abuse of market dominance: 1)     Self-preferencing 2)     Tying 3)     Restriction of multi-homing 4)     Demanding Most-Favored Nation(MFN) treatment §  Purposed to more actively regulating market dominant online platform operator’s conduct to exclude competing platform operator or to prevent new market entry Increase in Maximum Administrative Fine §  Increase maximum administrative fine on online platform operator’s abuse of market dominance from 6% to 8% of relevant turnover   The KFTC also specified (i) online transaction intermediation platforms, (ii) online search engines, (iii) online video platforms, (iv) social network service platforms, (v) operating systems, (vi) online ads as major sectors that will be the primary targets of the regulation. While there still are bills pending in the National Assembly that stipulate the EU DMA style ex-ante online platform regulation, the KFTC, in responding to the imminent need for the online platform regulation and the backlash from the market, took a step back from the adoption of ex-ante regulation of online platforms, and the legislation of an independent and specialized antitrust/competition law for the online platform sector.   Unsuccessful Efforts in Adoption of DMA Style Ex-ante Online Platform Regulation Since 2020, the KFTC has been on the drive to adopt sector specific antitrust/competition law regulation for online platforms. Initially, the KFTC proposed to introduce the “Fair Intermediation Transactions on Online Platform Act” (the FOPA), which primarily targeted to regulate unfair trades related to online transaction intermediation services. The bill was proposed in the 21st National Assembly however, was abolished following the expiration of the 21st National Assembly’s term. In responding to the growing needs for the section specific regulation in the online platform industry, the KFTC, besides the FOPA, adopted various sector specific regulations and guidelines in divert areas of antitrust/competition law (the KFTC also adopted sector specific regulations for consumer protection in online platform sector). Followings are major developments made by the KFTC in regards to the online platform or digital sector.   Developments Details Adoption of “Transaction Value” Merger Notification Thresholds §  Introduced transaction value merger notification thresholds to keep anticompetitive “killer acquisitions” under watch Amendment of Merger Review Guidelines §  Introduced guidelines regarding: 1)     definition of relevant market for industries in which entities provide free services or involve multi-sided markets; 2)     competitive assessment to cover special characteristics of the digital sector (e.g. network effects, increased barriers to entry, factors to be considered in reviewing anticompetitive effects of merger concerning free services) 3)     analysis of pro-competitive effects of mergers in digital sector Introduction of “Guidelines for Review of Online Platform Operators’ Abuse of Market Dominance” §  Introduced new guidelines specific to the online platform sector for the review of abuse of market dominance by online platform operators. §  Stipulated to consider special characteristics of online platforms, including (i) multi-sided markets and cross network effects, (ii) economy of scale as barrier to entry, (iii) importance of data, (iv) freely provided services in reviewing online platform operators’ potential abuse of market dominance §  Specified factors to consider in defining relevant markets in online platform sector. §  Specified factors to consider in determining the possession of market dominance in online platform sector (e.g., cross-network effect, market influence as “gatekeeper”, ability to collect and use big data etc.) §  Specified following conducts as types of online platform operators’ abuse of market dominance: 1)     Self-preferencing 2)     Tying 3)     Restriction of multi-homing 4)     Demanding Most-Favored Nation(MFN) treatment   Upon the EU’s implementation of the DMA, the KFTC initiated the discussion on the need for the DMA style ex-ante online platform regulation in Korea. The KFTC, highlighting the necessity of swift and effective response against online platform operators’ abuse of market dominance, proposed the enactment of “Platform Competition Promotion Act” (the PCPA) which includes the rules for the ex-ante designation of market dominant online platform operators or “gatekeepers”. While the KFTC was already able to regulate online platform operators’ abuse of market dominance with regulations in the MRFTA, the KFTC aimed to expedite and streamline the investigation process in online platform sector by avoiding tedious process of defining a relevant market through economic analysis. However, the KFTC’s attempt to adopt ex-ante regulation through the PCPA faced fierce resistance in the market. Korean online platform markets’ competition landscape is quite unique in the age of global “big tech” companies in that domestic platforms are flourishing in markets despite of the global big tech companies’ market penetration. The unique competition landscape resulted in the concern that the ex-ante designation of “gatekeepers” result in the regulation only on domestic platform operators and not the global big tech companies, which was the focus of the EU’s DMA and online platform regulations in other jurisdictions, resulting in uneven playing field in favor of global big tech companies. Furthermore, as Korea is one of the pioneering country in digital era nurturing a myriad number of start-up companies, there also were concerns that a precipitate adoption of sector specific ex-ante regulation would hinder the innovation in the market. The new roadmap is the KFTC’s response in confronting the fierce resistance in the market and requests for active enforcement of antitrust/competition law in online platform sector. The KFTC renounced the adoption of ex-ante regulation and decided to amend the MRFTA to tackle online platform operators’ abuse of dominance while minimizing the negative effects of the sector specific regulation. Limits of Proposed Legislation Plan in KFTC’s New Roadmap Save for introducing separate thresholds for the presumption of market dominance and increasing the maximum amount of administrative fine, the proposed legislation plan on online platform regulation in the KFTC’s new roadmap, in general, is a clarification of the rules in KFTC’s Guidelines for Review of Online Platform Operators’ Abuse of Market Dominance. Further considering that only very limited number of online platform operators would be captured as market dominant players under the new thresholds of market dominance presumption, and that the KFTC was already able to investigate online platform specific abuses of market dominance (e.g., self-preferencing) with existing laws and regulations, the proposed legislation plan in the KFTC’s new roadmap is less likely to result in substantial change in the online platform regulation landscape. In addition, the legislation plan did not provide predictability (especially to global online platform operators) on the scope of online platform operators which would likely to be captured under the regulation. The KFTC’s proposed thresholds for market dominance presumption of online platform operator stipulates that any online platform operator with annual platform related (direct and indirect) turnover (including those of affiliates) less than KRW 4 trillion (approx. USD 3 billion, EUR 2.7 billion) shall be excluded from the presumption. However, the thresholds do not provide clear explanation on the scope of “platform related turnover” and “indirect turnover”. If the turnover refers to domestic turnover, most of the global big tech companies engage in Korean business could be excluded from the market dominance presumption. To avoid such situation, the KFTC is likely to widen the scope of “platform related turnover” and “indirect turnover”, and in this case it would be extremely difficult for global online platform operators to predict whether the regulation is applicable to their business without a clear definition. Furthermore, as the “less than KRW 4 trillion” threshold may allow most of online platform operator to avoid the presumption of market dominance (as for domestic platform operators, only 3-4 online platform conglomerate would be captured), the regulation under the new roadmap may also not be as effective as it intended to be. Implications Despite of the limits and problems, the KFTC’s new roadmap clearly demonstrates the KFTC’s will to strengthen the enforcement of antitrust/competition law in the online platform sector. Furthermore, considering that the KFTC has been conducting relentless investigations on global online platform operators, the KFTC is also likely to utilize the new regulations to expand the scope and targets of the abuse of market dominance investigation on global online platform operators doing business in Korea. In addition, in a long-term, the new roadmap may pave the road for the National Assembly to enact a sector specific ex-ante regulation in the online platform sector. In this regard, the KFTC’s new roadmap invites the keen attention of online platform operators (especially global big tech companies) to keep in track of the future legislative developments in online platform regulations.  

Lee & Ko was selected as an outstanding law firm in all 24 sectors (below) of ‘Asialaw Profiles’ for four consecutive years.Lee & Ko was recognized once again for its high level of competence as a leading law firm in Korea as it set apart from other domestic law firms that have only received outstanding rankings in certain fields. Additionally, 44 Lee & Ko professionals were named Senior Statesman/ Elite Practitioner/ Distinguished Practitioner/ Notable Practitioner/ Rising Star and these individuals were provided special recognition for their expertise in the field. Firm Rankings Industry Sectors  Aviation and Shipping  Consumer goods and Services  Industrials and Manufacturing  Insurance  Pharmaceuticals and Life sciences  Technology and Telecommunications  Banking and Financial services  Energy  Infrastructure  Media and Entertainment  Real estate    Practice Areas  Banking and Finance  Competition/Antitrust  Corporate and M&A  Intellectual Property  Labour and Employment  Regulatory Tax  Capital Markets  Construction  Dispute Resolution  Investment Funds  Private Equity  Restructuring and InsolvencyRanked Lawyers  Banking and Financial services: Woo Young Jung, Yeo Kyoon Yoon, Yong-Jae Chang, Hyunjoo Oh, Seunga Hyun, Myoung Chul Kwak  Banking and Finance: Woo Young Jung, Yeo Kyoon Yoon, Yong-Jae Chang, Myoung Chul Kwak, Samsung Kim, Min Ha Song  Capital Markets: Hyunjoo Oh, Seunga Hyun  Competition/Antitrust: Yong Seok Ahn, Hwan Jeong, Hyun Chul Kim, Jeong-Ho Sun, Jeong Yoon Choi, Suruyn Kim  Corporate and M&A: Kyu Wha Lee, Sanggon Kim, Ho Joon Moon, Hyeong Gun Lee  Dispute Resolution: Won Seok Ko, Saemee Kim  Energy: Dong Eun Kim, Hun Ko, Tom Shin  Infrastructure: Dong Eun Kim, Hun Ko, Tom Shin, Samsung Kim, Min Ha Song  Insurance: Gidon Nam, Jinyoung Jung, Jin Hong Kwon  Intellectual Property: Jae Hoon Kim, Un Ho Kim, Keum Nang Park, Jaewoo Kwak  Labour and Employment: Sang Hoon Lee, Chang Soo Jin, Hyunseok Song , William Kim  Media and Entertainment: Kwang Bae Park  Real estate: Jung Hwan Lee  Restructuring and Insolvency: Wan Shik Lee, Eunjai Lee, Jung Hyun Lee  Shipping: Jinyoung Jung , Gidon Nam  Tax: Jay Shim, Ok Hyun Ma, Sung Hwan Kim  Technology and Telecommunications: Kwang Bae Park, Hwan Kyoung Ko, Samuel (Soon-Yub) Kwon, Yong Seok AhnAsialaw Profiles is published by Asialaw, which is an affiliate of the global financial journal Euromoney, and each year Asialaw Profiles ranks law firms and professionals in the Asia-Pacific region based on law firm submissions, interviews with lawyers and clients, and independent research and announces the results.

Lee & Ko has been selected as a Tier 1 firm in all 8 categories under the IFLR(International Financial Law Review) 1000 2024 edition and solidified its position once again for its high level of competence as a leading law firm in Korea.Lee & Ko has secured the highest ranking, a Tier1, in all practice areas for more than 13 consecutive years and 55 Lee & Ko professionals were recognized as ‘Leading Lawyers’ throughout all practice areas. Firm Rankings  Banking and Finance  Capital Markets: Debt  Capital Markets: Equity  Capital Markets: Structured Finance and Securitisation  M&A  Private Equity  Project Development  Restructuring and InsolvencyLeading Lawyers  Banking and Finance: Sangwoo Ahn, Lachlan Barth, Yong-Jae Chang, Young Je Cho, Eun Sam Choi, Woo Young Jung, Kwang Yul Kim, Dong Eun Kim, Insoo Kim, Hyunsu Kim, Hun Ko, Myoung Chul Kwak, Myung Hyun Ryu, Yunjeong Seo, Tom Shin, Dong Seok Woo, Yeo Kyoon Yoon, Paul Hyun Joon Yoon  Capital Markets: Sae Ho Ahn, Hyunji Bae, Jun Woo Cho, Kyoung Jun Cho, Seung Hoon Choi, Wonkyu Han, Seunga Hyun, Donga Jung, Dongyon Kim, Jiseon Kim, Munsik Kim, Jin Hong Kwon, Hankyung Lee, Hyunjoo Oh Corporate and M&A: Yong Seok Ahn, Da Hye Cho, Seok Pyo Hong, Sung Mee Hong, Hwan Jeong, Ki Wook Kang, Sanggon Kim, Sung Min Kim, Daehoon Koo, Gu Beom Kwon, Eunjai Lee, Je Won Lee, Hyeong Gun Lee, Kyu Wha Lee, Seung Hwan Lee, Ho Joon Moon, Kyu Seok Park, Kyung Gyoon Park  Investment Funds: Je Won Lee, Seung Hwan Lee  Project Development: Sangwoo Ahn, Lachlan Barth, Eun Sam Choi, Jinyoung Jung, Kwang Yul Kim, Insoo Kim, Hyunsu Kim, Jungmin Pak  Restructuring and Insolvency: Seok Pyo Hong, Sung Mee Hong, Eunjai Lee, Jung Hyun Lee, Wanshik Lee, Seung Hwan Lee, Jiwoong LimIFLR1000 is the only financial legal directory that evaluates the law firms and their attorneys worldwide based on their achievements in finance and corporate transactions.  

On August 13, 2024, the Financial Services Commission (FSC) of Korea announced its 「Financial Sector Network Separation Improvement Roadmap」(the Roadmap). This initiative aims to enhance the competitiveness of the financial industry in the rapidly evolving IT landscape. Background Network separation policies, while effective in protecting customer information and trade secrets from various security threats, have become increasingly viewed as an outdated and overly restrictive regulation unique to Korea. These policies have been criticized for hindering the global competitiveness of the domestic financial industry, especially in the face of emerging technologies such as cloud computing and AI. There have been persistent requests for regulatory improvements, citing significant operational inefficiencies for financial companies, hindrances to the adoption of new technologies, and difficulties in research and development due to network separation. In response, the FSC has developed and announced the Roadmap to improve network separation regulations and comprehensively reform financial security laws and systems in the medium to long term, pursuing a paradigm shift to find a new balance between innovation and security. The Roadmap primarily focuses on: (1) allowing financial companies and electronic financial business entities (collectively, financial companies) to use generative AI; (2) significantly expanding the scope of cloud-based application usage; (3) improving the research and development environment for financial companies; and (4) advancing regulatory exceptions, including the implementation of a “Stage 2 Sandbox.” With the introduction of the Roadmap, it is expected that AI and IT development in the financial sector will be invigorated, and the utilization of financial data will significantly increase. Key Points of the Roadmap Allowing the Use of Generative AI The FSC has announced plans to permit financial companies to adopt and utilize cloud-based generative AI through regulatory sandboxes. This initiative will grant exceptions to current network separation restrictions, allowing financial companies to leverage cutting-edge AI technologies. Recognizing the potential risks associated with generative AI, the FSC will implement comprehensive security measures as prerequisites for participation in these sandboxes. Furthermore, the Financial Supervisory Service (FSS) and the Financial Security Institute (FSI) will play crucial roles in ensuring the safe adoption of these technologies. They will conduct thorough security inspections and provide tailored consulting services for companies applying to the sandbox program. Expanding the Use of Cloud-Based Applications (SaaS) The FSC has also announced plans to significantly broaden the scope of Software as a Service (SaaS) usage in the financial sector. This expansion will extend to various business operations, including security management and customer relationship management (CRM). Notably, the FSC will also permit the use of SaaS for processing pseudonymized data and on mobile devices, marking a substantial increase in the potential applications of cloud-based services. These changes are expected to enhance operational efficiency and enable financial companies to leverage cutting-edge cloud technologies across a wider range of their activities. However, recognizing the potential security concerns that may arise from this expanded use of SaaS, the FSC has stated that it will develop and impose specific security measures as conditions for regulatory sandbox designation. This approach mirrors the safeguards being implemented for generative AI usage, ensuring that innovation in cloud services is balanced with robust security protocols. Improving Research and Development Environment The FSC will amend the Electronic Financial Supervision Regulation to create a more conducive environment for innovation in the financial sector. These amendments will ease physical restrictions on transferring R&D results, allowing for a more fluid exchange of ideas and technologies within financial companies. Additionally, the changes will permit the use of pseudonymized data in R&D processes, opening up new possibilities for data-driven innovation. Building on the regulatory improvements made in November 2022 that allowed free internet usage in R&D environments, these new changes are anticipated to significantly enhance the ability of financial companies to develop innovative products and services that better meet evolving customer needs. Enhancing Regulatory Sandboxes Lastly, the FSC plans to advance its regulatory sandbox program, potentially implementing a “Stage 2 Sandbox” as early as next year, subject to a comprehensive assessment of the operational performance and safety of the current “Stage 1 Sandbox.” This enhanced sandbox environment would allow financial companies to directly process non-pseudonymized personal credit information, representing a significant expansion of regulatory exceptions. However, recognizing the increased data utilization scope, the FSC has stated that it will impose additional security measures. This initiative demonstrates the FSC’s commitment to fostering innovation while maintaining robust data protection standards in the financial sector. Implication These regulatory changes are expected to have significant and broad implications for the financial sector in Korea. Through the sandbox program, financial companies will be able to utilize generative AI technologies that were previously restricted, and the scope of permissible SaaS applications will be significantly expanded. These advancements are anticipated to substantially enhance the overall competitiveness of the financial industry. Specifically, the introduction of AI and SaaS-based solutions is expected to improve operational efficiency in several key areas, including business process automation, Enterprise Resource Planning (ERP) systems, and compliance monitoring programs. Furthermore, these changes are likely to facilitate increased utilization of financial data, particularly in the realm of big data analytics. However, it is important to note that the FSC has stated it will impose “security measures for expected risks” as conditions for participation in the sandbox program. As such, financial companies should proactively prepare for these requirements. It would be prudent for companies to closely monitor the forthcoming detailed security measures and take preemptive steps to address any necessary preparations.  

On July 25, 2024, the Ministry of Economy and Finance released the 2024 proposed tax law amendment proposals (“Proposals”). The finalization of the Proposals will be subject to further deliberation and approval by the National Assembly. If approved, the Proposals will be implemented from January 1, 2025 unless otherwise specified. Some of the key Proposals include the following. Extension of special tax regime for shipping enterprises (tonnage taxation) and increase of tonnage tax rate To enhance the international competitiveness of the shipping industry, the special corporate income tax regime for shipping enterprises (tonnage tax) will be extended by 5 years, until December 31, 2029. In addition, effective for 3 years starting from January 1, 2025, different rates will apply to so-called “standard ships” (i.e., ships owned by a shipping enterprise, or used by a shipping enterprise under a bareboat charter), as opposed to “non-standard ships”. Non-standard ships will be subject to a 30% increased rate for the operating day profit per ton. Tax incentives for shareholder returns (limited to a 3-year period) New tax incentives will be introduced to promote shareholder returns. These incentives aim to align the interests of management with those of investors, thereby enhancing shareholder returns, increasing capital inflows, and boosting stock values, and to address the so-called “Korea Discount” issue. There is a sunset provision, with the incentives effective till December 31, 2027 (3-year period): New special tax credit to promote shareholder returns Under the Proposals, when a KOSPI- or KOSDAQ-listed company: (i) discloses a “Corporate Value Enhancement Plan”; and (ii) increases its shareholder return amounts compared to the previous year and by more than 5% compared to the average of the previous three years, there will be a corporate income tax credit equal to the increase in shareholder returns exceeding 5%. New individual shareholders’ special taxation for dividend income paid by company with increased shareholder returns Effective January 1, 2025 – December 31, 2028, which is one year longer than ① above, considering the timing of dividend payments, when a KOSPI- or KOSDAQ-listed company that increases shareholder returns pays dividends, the dividend income received by individual shareholders will be subject to separate, lower tax. Exclusions from distributable profits of valuation gains arising from real estate In order to encourage indirect real estate investments, valuation gains arising from real estate or other assets held by a Korean real estate investment company will be excluded from the company’s distributable profits. Reductions to inheritance and gift and tax (“IGT”) rates Under the Proposals, the top IGT rates will be reduced from 50% to 40%. Additionally, the threshold for the lowest 10% rate bracket will be increased from KRW 100 million to KRW 200 million. Furthermore, the exemption amount for inheritance tax per child will be increased from KRW 50 million to KRW 500 million. Abolition of premium valuation of shares held by the largest shareholder for IGT purposes To support business succession, the currently law adding a 20% premium to the valuation of shares held by the largest shareholder and related parties, for IGT purposes will be abolished. Expansion in the application of thin capitalization (“thin cap”) rule to general holding companies Currently, interest expense paid by both financial and general holding companies on amounts borrowed from foreign related parties is fully deductible (i.e., exempt from the 30% interest deduction limitation rule). Under the Proposals, interest payments by general holding companies (i.e. those not engaged in financial or insurance business) will no longer be exempt from the thin cap rule capping the net interest deduction at 30% of adjusted income (i.e., EBITDA). Expansion of definition of Korean tax residency for individuals Effective from January 1, 2026, Korean tax residency for individuals will include not only those who reside in Korea for more than 183 days during a calendar year (as is currently the case), but also those who have resided in Korea continuously for more than 183 consecutive days over two calendar years. Expansion of automatic information exchange to include crypto-assets Effective from January 1, 2027, as an anti-tax avoidance measure, the automatic financial information exchange system will be expanded to include data on “crypto-assets”. The term "crypto asset" refers to digital representation of value that relies on a cryptographically secured distributed ledger or similar technology to validate and secure transactions. The requirement for the exchange and submission of crypto-asset information will be applicable from January 1, 2027. Due diligence procedures will be applicable from January 1, 2026. Simplification of withholding tax exemption applications by non-residents and foreign companies investing in government bonds Currently, when non-resident individuals and foreign companies invest in Korean government bonds (as well as Monetary Stabilization Bonds) through a private OIV, it is necessary for each of these investors separately to submit a tax residence certificate and a tax exemption application to claim tax exemption/exemption from withholding tax on interest and capital gains derived from government bonds. By contrast, a public OIV can apply for the exemption application as the deemed beneficial owner, without needing to disclose the underlying investors. Simplification of the OIV application process for tax exemption Under the Proposals, the private OIV itself will be deemed the beneficial owner of interest income and capital gains from government bonds, without the need to identify the underlying investors (as is already the case for public OIVs). But if any of the underlying investors are Korean residents or domestic companies, they will be permitted to report and pay taxes directly without incurring withholding taxes. Establishment of refund application process for non-resident individuals and foreign companies Under the Proposals, non-resident individuals and foreign companies will also be able to apply for refund of withholding tax on interest and capital gains derived from government bonds directly, not only through withholding agents (as is currently the case). Simplification to Foreign Financial Account (“FFA”) reporting obligation process Under the Proposals, taxpayers excluded from FFA reporting obligations will also include: (i) persons who are recognized as residents of another Contracting State pursuant to a tax treaty due to a lawsuit or mutual agreement procedure; and (ii) residents and domestic companies whose FFAs are verified through foreign trust details submitted to the tax authority. Expansion of scope of deemed donation in transactions between a controlled company and its controlling shareholder When a controlled company benefits from a transaction with a related person of its controlling shareholder, it is deemed that the controlling shareholder has received a donation from the related person, and gift tax is imposed on the controlling shareholder based on the deemed donation. Under the Proposal, this deemed donation will now also include distributions of profits through capital transactions. New compliance requirement for personal services income paid to non-resident individuals and foreign companies without a Korean PE Currently, when Korean-sourced personal service income is paid to non-resident individuals and foreign companies without a Korean PE, the recipients can receive a withholding tax exemption under a relevant tax treaty without needing to submit any application. Effective from January 1, 2026, it will become mandatory for such recipients to make an application for exemption/non-taxation, accompanied by supporting documentation. Changes to reporting procedures relating to transfer price adjustments through an amended tax return Currently, under Korean transfer pricing regulations, taxpayers can claim a tax refund by filing an amended tax return, to adjust a transaction price to the arm’s length price. Under the Proposals, taxpayers will now need to submit proof of the arm’s length pricing along with the amended tax return and declaration form for transfer price adjustment. Additionally, the deadline for the Korean tax authority to decide whether to accept or reject such an amended tax return has been extended from 2 months to 6 months after the filing date. Additional Amendments to Global Minimum Tax Rules To better align the domestic Global Minimum Tax (GloBE) rules with the OECD’s Model Rules and Administrative Guidance, the Proposal clarifies definitions of key terms such as “Group”, “Constituent Entity, “Permanent Establishment”, and “Partially Owned Intermediate Parent”. The proposal also adds new provisions, including exceptions to the De Minimis rules, safe harbor provisions, allocation methods for the top-up tax, and an extension to the GloBE information return filing deadline.