1/20/2017

Fleeing Korea while under Police/Prosecutor Investigation: International Hold in Korea

From changes a couple of years ago in the computer system and policy of the Korean Immigration Services, even if the Korean prosecution/police have not requested that an accused be placed on an international hold, some records of police investigations, indictments and proposed fines and sentences by the prosecution/police are being reported to the Korean Immigration Service.

An international hold, in Korea, is an official procedure that flags passports and fingerprints and prevents one, under this international hold, from departing Korea prior to the lifting of the international hold.

law firm Korea, IPG Legal, SJ Law Firm


Even if you are not under an official international hold, Korea Immigration may refuse your departure or entry into Korea based on information from data being shared between the Police, Prosecution, National Tax Service and other Korean government agencies.  Please note that the Korea Immigration is a branch of the Ministry of Justice. The Ministry of Justice is in charge of the majority of prosecutions in Korea. 

Thus, in short, someone under investigation in Korea may be stopped at the airport even if not under an official international hold.  

Thus after arrest, fleeing to the airport may not be advisable.  If you are perceived to being fleeing Korea, things may get much worse. 

Other articles on Korean criminal law and criminal attorneys that may be of interest:
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

1/12/2017

Korea's Improper Solicitation & Graft Act's Institutions and Individuals?: Scope of Application of Korea's Graft Act

The Scope of Application of the Improper Solicitation and Graft Act of Korea ("Graft Act") was a hotly contested issue that led to court challenges.  The Constitutional Court of Korea has upheld the Graft Act of Korea.

More details, including a list of articles on the Graft Law of Korea, may be found at: Improper Solicitation & Graft Act of Korea.

The Scope of Application is defined in Article 2 & Article 11 of the Bribery Act.  The Act applies to both Korean and foreign nationals.  The Act applies to foreign nationals, only, for prohibited acts within Korea and to Koreans for prohibited acts universe wide.




Summary of the Scope of Application of the Graft Act of Korea

Article 1(a) Institutions
  1. Highest Government Organs (National Assembly, Ordinary Courts, Constitutional Court)
  2. Other Government Organs (election commissions, Board of Audit and Inspection, Human Rights Commission)
  3. Central Government Administrative Agencies
  4. Local Governments
  5. Education Offices
  6. 318 Institutions under Article 1(a) of the Improper Solicitation and Graft Act of Korea
Article 1(b) Institutions
  1. Public Service Related Institutions
  2. 983 Institutions under Article 1(b) of the Improper Solicitation and Graft Act of Korea
Article 1(c) Institutions
  1. Public Institutions not covered under Article 1(b) institutions
  2. Two Institutions under Article 1(c) of the Improper Solicitation and Graft Act of Korea (321 institutions overlap with Article 1(b) institutions - omitted from this count
Article 1(d) Institutions
  1. Kindergartens
  2. Elementary, middle, high schools and others schools
  3. National, public and private universities
  4. Over 1000 Institutions under Article 1(d) of the Improper Solicitation and Graft Act of Korea
Article 1(e) Institutions
  1. TV & Radio Broadcasters
  2. Newspapers (print and online)
  3. Magazines
  4. Communication businesses (will have an article on this issue in the near future)
  5. Over 16,000 Institutions under Article 1(e) of the Improper Solicitation and Graft Act of Korea.
Article 11 Individuals 
  1. Individual that "improperly" solicited a public official; or
  2. Individual who offered "unacceptable" advantage. 
  3. Will have an article on "improper solicitations" and "unacceptable advantages" in the near future. 
Please check back frequently, we shall be writing articles on this issue over the next couple of weeks.  

___
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  Sean is known for his proactive New York-style street-market advice and his aggressive and non-conflicted advocacy.  Sean works with some of the leading retired judges, prosecutors and former government officials working in Korea.

Sean's profile may be found at: Sean C. Hayes

1/11/2017

Korea's Improper Solicitation and Graft Act: Kim Young-ran Act

The Improper Solicitation and Graft Act of Korea ("Graft Act") was enacted on March of 2015 and came into effect in September of 2016.

Korea's Anti-Corruption and Civil Rights Commission published in English and Korea a decent Handbook to the Graft Act.  The Handbook to the Improper Solicitation and Graft Act of Korea may be found at: Handbook to Korea's Graft Act.  It is worth a read.

Please check back to this blog.  We shall be writing over the next couple of weeks articles on:

  • Scope of Application of the Improper Solicitation and Graft Act of Korea
  • Hypothetical Improper Solicitations in Korea under the Graft Act of Korea
  • Hypothetical Acceptance of Financial or other Advantages under the Graft Act of Korea.
  • Disciplinary Actions/Punishments under the Improper Solicitation and Graft Act of Korea.
  • Overview of the Kim Young-ran Act.

IPG Legal
www.ipglegal.com


___
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  Sean is known for his proactive New York-style street-market advice and his aggressive and non-conflicted advocacy.  Sean works with some of the leading retired judges, prosecutors and former government officials working in Korea.

Sean's profile may be found at: Sean C. Hayes

1/05/2017

Korean Tax Risks of Foreign Corporation Deemed "Actual Business Management Locale" within Korea: Korea Tax Law Basics

Foreign corporations doing business in Korea may be deemed local corporations subject to taxation on worldwide income if the foreign-Incorporated company is deemed a Korean "domestic corporation" for tax purposes.

Thus, in most cases the establishment of a local Korean corporation is essential in assisting in shielding your foreign corporation from tax and other liabilities unless substantial reasons exist to not establish a local Korean corporate entity.

One of the most significant risks of foreign companies doing some business in Korea without a local entity is being deemed a local corporation subject to tax on worldwide income.  A domestic corporation under the Corporate Tax Act of Korea is a company with its "actual business management locale" within in Korea.

The Supreme Court has ruled on numerous cases in this regard.  One of most noteworthy recent cases is a case concerning a Singaporean company that marketed foreign securities in Korea.  The company succeed in the National Tax Service of Korea's challenge, however, the case cost the company a challenge right up to the Supreme Court.


Tax, Exempt, Foreign Corporation,

Domestic Corporation Test in Korea: "Actual Business Management Locale"
Test to Determine is a Foreign Corporation shall be treated as Korean Corporation for Tax Purposes in Korea

The Korean Supreme Court, in a myriad of cases noted, in short, that lower courts should consider the "totality of circumstances" and, thus, consider such factors to determine if a foreign-incorporated corporation shall be considered a Korean domestic corporation for tax purposes.

The Supreme Court of Korea notes that following factors must be considered:

  1. If key senior management is operating in Korea;
  2. Whether the company houses key financial and other documents within Korea; and
  3. Whether the company holds board meetings and other important meetings in Korea. 


In general, if the key management decisions are conducted outside of Korea and the local Korean office only executes these key management decisions and makes only executive management decisions based on these key management decisions, the foreign-incorporated company shall not be deemed a Korean domestic company for tax purposes.  

However, the National Tax Services has become more aggressive and in all but the most exceptional of situations, it is advisable to establish a local Korean company prior to engaging in any act that could be deemed as doing business in Korea.  

___
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  Sean is known for his proactive New York-style street-market advice and his aggressive and non-conflicted advocacy.  Sean works with some of the leading retired judges, prosecutors and former government officials working in Korea.

Sean's profile may be found at: Sean C. Hayes

1/02/2017

Guardianship Law in Korea: The Lotte Family Conservatorship Saga Continues

With news late in 2016 that the Seoul Family Court Appointed a Law Firm as Legal Guardian for Shin Kyuk Ho, founder of Lotte Group, and the negative effect the ruling had on his elder son’s efforts to regain control of the conglomerates, it is a good time for business owners and their families to understand what guardianship law may mean for businesses and families in Korea.

Guardianship, Act on Guardianship, Ward of State, Korea

Guardianship Law in Korea

The Adult Guardianship Act of 2011 of Korea in the main law, in Korea, creating a Guardianship/Conservatership System in Korea.

Under the Guardianship Act of Korea, a family court, in Korea, may declare a person to be legally "limited-incapable" if, as a result of, inter alia, mental illness or disability, a person lacks the mental capacity to make his or her own decisions or will jeopardize the livelihood or their family’s livelihood in he or she does make decisions without the guardian.  A limited-incapable is normally ordered for only a stated period of time and, sometimes, only for specific acts.

Additionally, a Korean family court may declare a person to be legally "full-incapable" when the person permanently lack the mental capacity to make decisions.

The legal definition of incapacity can apply to a wide range of circumstances, including: minor children, persons in bankruptcy, incompetent persons of legal age, or a person under a term of a criminal penalty.

The key issue for a Korean Family Court to determine, in guardianship matters, is whether the person lacks the capacity to handle his or her own affairs, owing to mental incapacity resulting from disease, disabilities, aging or any other reasons. Often, the court is guided by the medical opinion of a medical professional.

Once incapacity is determined, a court may order just about anyone as a guardian: family members, professionals, a private entity, such as a"guardianship corporation" and/or a public entity.  Once appointed, guardianship can last for an indefinite period of time, but can be limited in scope based upon the facts and circumstances.

There are no discrete guidelines that a guardian must follow, except that a guardian shall discharge his or her duties with due care and skill. Also, when possible, a guardian shall exercise power in a way that respects the ward’s wishes and intentions unless such would negatively effect the ward’s well-being.

The ruling in this particular matter underscores the need to plan for family members in advance of disability, disease and aging.

According to published reports, the two sons of Shin Kyuk Ho are battling for control of the family-run entity, and this latest ruling stops the eldest son from pursuing his claim without the guardian's consent.  At stake is the well-being of some affiliated 93 companies generating over $86 billion annually in revenue.
___
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.
Sean is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  Sean is known for his proactive New York-style street-market advice and his aggressive and non-conflicted advocacy.  Sean works with some of the leading retired judges, prosecutors and former government officials working in Korea.

Sean's profile may be found at: Sean C. Hayes

12/27/2016

Starting a Business in Korea: Foreign Capital-Invested Company, Branch or Liaison Office

There are three legal manners of entering into the Korean Market.  A business may enter as a Foreign Capital-Invested Company (Foreign Direct Investment Company), Branch or Liaison Office.  In most situations, the best manner to enter the Korean market is via the FDI Company route in order to avail of certain favorable tax treatment, not expose the foreign entity to liability, easier remittance of profits and easier processing of visas.


1. FDI Company (Foreign Capital-Invested Company)

  • Separate legal entity separate from the foreign company (Subsidiary of the Overseas Company)
  • Various benefits under Korea FDI laws and regulations (e.g. free trade zones).
  • Investment of at least KRW 100,000,000/investor.
  • Opportunity to obtain a D-8 Investment Visa.
  • Tax Support & Incentives available. 
FDI Company may be formed with the following types of businesses under the Korean Commercial Code (KCC):

Chushik Haesa (Joint Stock Company; Co. Ltd.; Corp.; Ltd.) 
Chushik Hoesa is the only corporate entity that is allowed, at the present, to publicly issue shares. The vast majority of incorporators in Korea choose the Chushik Hoesa corporate form. It is also the most common corporate form for foreign companies establishing subsidiaries in Korea and this will not change anytime soon.

Yuhan Hoesa (Private Company, sometimes referred to as an LLC)
Yunhan Hoesa is a closely held company that is prohibited from having more than 50 shareholders. In recent years, a few foreign companies (including some international hedge funds) have chosen Yuhan Hoesa.

 A few companies, recently, have chosen this form because of possible U.S. and E.U. tax benefits (pass-through benefits) and simplified reporting guidelines.  Additionally, there are few requirements in regard to directors, publication of balance sheet and accounting.

However, the KCC prohibits securitizing shares and issuing corporate bonds.

Hapja Hoesa (Limited Partnership; LLP)
With a Hapja Hoesa one or more partners must maintain unlimited liability and one or more partners may maintain limited liability. The entity is responsible to pay Korean corporate taxes and thus may not be treated as a pass-through entity.

Hapmyeong Hoesa (Partnership)
In a Hapmyeong Hoesa two or more partners form the partnership. The partners must maintain unlimited liability. The entity is responsible for corporate taxes and thus is not a pass-through entity. 

Hapja Johap (Limited Liability Partnership; LLP)
Hapja Johap is similar to Hapja Hoesa. With a Hapja Johap one or more partners may have unlimited liability and one or more partners may maintain limited liability. The critical difference between Hapja Hoesa and Hapja Johab is that Hapja Johap, like Johap (partnership) is not a separate legal entity. The tax treatment issues are not yet resolved; however, we doubt that it will be subject to double taxation, thus, we assume that it will be treated as a pass-through entity. The form, after the tax treatment issue is resolved, may be, in most cases, a more advisable solution than the Yunhan Hoesa form for those that may benefit from the pass-through nature of the entity.

Yuhan Chaekim Hoesa (Limited Liability Company; LLC) 
Yuhan Chaekim Hoesa is very similar to a U.S. LLC. It is intended to provide the advantages of Yuhan Hoesa and Chushik Hoesa. The liability is limited, shares are freely transferable between members, bonds may be issued, no capitalization requirements are imposed, no director or auditor requirements are imposed and the entity has easy exit requirements.

2. Branch Office

  • Considered the same legal entity as the overseas company (Headquarters).
  • Overseas manager is appointed as a manager of the branch. 
  • The conduct of the Branch can be imputed on the Headquarters. 
  • May engage in profit making in Korea.  

3. Liasion Office

  • May not engage in profit making in Korea.  
  • Intended for a company to engage in R &D, advertisement, research and explore the entry into the Korean market.  
___
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty.

Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.

Sean is known for his proactive New York-style street-market advice and his aggressive and non-conflicted advocacy.  Sean works with some of the leading retired judges, prosecutors and former government officials working in Korea.

Sean's profile may be found at: Sean C. Hayes

12/20/2016

Merry Christmas and a Happy Holidays to all our Clients and Friends



IPG Christmas
___
Sean Hayes may be contacted at: SeanHayes@ipglegal.com.

Sean is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked for the Korean court system (Constitutional Court of Korea) and one of the first non-Koreans to be a regular member of a Korean law faculty. Sean is ranked, for Korea, as one of only two non-Korean lawyers as a Top Attorney by AsiaLaw.  Sean is known for his proactive New York-style street-market advice and his aggressive and non-conflicted advocacy.  Sean works with some of the leading retired judges, prosecutors and former government officials working in Korea.

Sean's profile may be found at: Sean C. Hayes