9/02/2015

The Korean Law Blog Nominated for Best Law Blog Award

The Expert Institute has nominated The Korean Law Blog as one of the Best Law Blogs. We were nominated in the category of Commercial Litigation.  If we get enough votes we will win a little award. 

In order to vote for the The Korean Law Blog as one of the best Legal Blogs please click: The Expert Institute and scroll down to The Korean Law Blog. 

We, sincerly, thank you for your support. 
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info@ipglegal.com

8/21/2015

So you Want to Start a Partnership/Joint Venture in Korea?

Business, in Korea, can be profitable and enjoyable.  However, business in Korea can, also, lead you to a jail cell and premature balding. 

One key to success, in Korea, is to get the Korean joint venture structured by a professional from the start of the relationship with your joint venture partner(s).  Don't just download a joint venture agreement or partnership agreement from the internet.  Vet your partner and, also, learn the expectations of your partner.

We know you have "limited funds" (we all have limited funds -even multinationals and Donald Trump have limited funds) choosing to forgo having the deal structured by a professional and just downloading an agreement off the internet will, likely, lead to you having even less funds, less time and less hair.

Do not be what my father likes to call young kids these days - knuckleheads.  I saw cases that ended up in the Prosecutor's Office (we even filed some) and cases that lead to deportation. The amount of money that it costs to have a professional draft these agreements, must, be considered part of the cost of doing business. The amount should be no major issue for most.

Hey, I recently did a deal where one of the partners exclaimed that your final invoice was less than the cost of his pizza oven.   I love having our services being compared to a pizza oven.  That agreement, normally, will last longer than that pizza oven.

While this law firm, typically, assists multinational companies we, also, enjoy assisting some of the more entrepreneurial SMEs.

However, be prepared for some time with me. We never just slap in front of you a form agreement and have you make some comments on it. This is a waste of time and a sign of a hack.

Some basics that you lawyer, must, consider with considering your joint venture and articles of incorproation prior to starting a joint venture in Korea.
  1. Duties, Responsibilities, Roles, Titles and Expectations of each Partner?; 
  2. Arbitration, Language and Forum for Dispute Resolution?; 
  3.  Management Structure?; 
  4. Valuation, Windup, Termination?; 
  5. Remedies for Breach?; 
  6.  Exit Strategy;
  7. Outside Investors;
  8. Due Diligence, Due Diligence, Due Diligence - Did I mention Due Diligence?; 
  9. Limit Powers of the Representative Director?; 
  10. Retain Power to Appoint and Remove the Representative Director?; 
  11. Expansion Plans;
  12. Retain Majority Control or include other Minority Protection Clauses?; 
  13. Investment of Proceeds. 
  14. Hire an Independent Accountant and Utilize a Neutral REAL Statutory Auditor?; 
  15. What are you Getting out of the Joint Venture?; 
  16. What are you Giving Up?; 
  17. What is the Purpose of the Joint Venture?; 
  18. Financing Options?;
  19. Chushik, Yuhan etc.?;
  20.  and The List Goes On 
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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.

8/20/2015

Five Businesses to Avoid in Korea

We get a number of hare-brained foreigners that have requested advice on the opening of some peculiar businesses.  Here are a few businesses that we do not advise opening in Korea.
  1.  Farming. Prohibited for foreigners and foreign companies.  For example, the growing of rice and barley is prohibited for foreigners.  The farmers don't even want to be in this business.  Stay away.
  2. Publishing & Broadcasting.  Prohibited for foreigners to own 50% or more of a publishing company and totally prohibited in the case of radio & TV.  The industry is, also, saturated and the few foreigners operating as a minority shareholder in the publishing industry have faced difficulties in recent years, because of fierce competition for advertisers. 
  3. Raising Dogs for Consumption.  I, actually, had a man call me about this one.  Ignoring that this may be a prohibited business for foreigners, you will, likely, have a few protestors that will make it very difficult to do business.  If you love to eat or watch others eat dogs, we suggest considering a planet that doesn't have animal protection societies. 
  4. Any Business that is in Direct Competition with the Big Boys.  SHHH. Samsung.  Enough said.
  5. Did I Mention not Competing with the Big Boys?

I was motivated to write this post by my friends over at China Law Blog.  They wrote an article entitled: 4 Chinese Businesses to Avoid that was motivated by an article entitled: Keep Away from the Unicorns: 4 Chinese Businesses to Avoid.

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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.

8/18/2015

Navigating the Korean Bureaucracy one Beer at a Time

Slate has an interesting article on the Craft Beer scene in Korea.  I was interested in the article, since I get many calls from breweries with interest in understanding the laws related to brewing beers in Korea.  I, also, enjoy seeing these entrepreneurs succeed in a industry that is still dominated by major local and international players.

I wish, however, these individuals would consider that, often, sound advice is an investment that is as important as their brewing equipment.  Many of the problems I see are, directly, caused by a lack of willingness to obtain competent legal and business advisers.

I agree with the basic understandings of the article - law in Korea is, often, applied unequally and is, often, not even known by those regulating the industry.  Additionally, often, laws have little or no relation to the law's purpose.

The article notes, in part, that:
"None of the brewery heads believe that this legislation was designed to protect Hite and OB. 
Bryan Do wrote me: “[Hite and OB] are way too big to care about us little boys now. ... Word around town it is being spearheaded by the other smaller general license holders who feel that there are too many microbreweries popping up and reduce competition.” 
Erik Moynihan, CEO of Magpie Brewing Company, agreed, adding in an email that the newer general breweries that opened up with huge investments “haven’t had much luck penetrating the market and are in a vulnerable spot when the tiny guys making low investments (comparatively) can reap all of the same benefits—and are growing quickly. 
... In my opinion it [is an] attempt to unbalance the playing field: People with the money to ‘go big’ expect added benefits, protection, or access to specific sales channels.” 
The article is an interesting and amusing look at an industry and Korean regulations.  The article may be found at: Suds Korea.
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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. Sean's profile may be found at: Sean C. Hayes

8/17/2015

Stock Options in Closed Corporations in Korea

For stock options in Korea to be exercisable, thus valid option contracts, the option must be approved, in most cases, at a general shareholders meeting of the issuing Korean company.  If approval of the shareholders is obtained the articles of incorporation, for the option to be valid, should, among other things, note:
  1. An intention that a stock option may be granted in specified cases; 
  2. The number of shares to be issued or transferred in the case of exercising the stock option; 
  3. Qualifications of a person to whom a stock option is to be granted;
  4. Exercising period of the stock option; and 
  5. An intention that the granting of the stock option may be revoked by a resolution of the board of directors in specified cases. Korea Commercial Act art. 340-3(3)1. 
Additionally, the company granting the options should execute an agreement with the individual granting the options and the stock option should, only, be given to authorized recipients. 

If your company, in Korea, intends to grant stock options or you have received stock options in Korea please consult with an attorney that deals with these type of matters.  I have seen a recent incident that could have been avoided if the company and the employee, simply, had counsel that was not, only, aware of Labor and Employment Law in Korea.  This matter is much more than a Labor Law matter and, thus, a more nuanced counsel is, often, necessary.
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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 only non-Korean to have worked as an attorney 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.

8/11/2015

Korean Court Upholds Expulsion of Law Student at Judicial Research & Training Institute for Adultery

A male law student, expelled from the Judicial Research and Training Institute for having an affair with another law student, has just had his appeal to be reinstated denied. The male student's mother-in-law made the situation public after her daughter committed suicide after finding out about the affair.

The male law student was charged with adultery and expelled from the JRTI.  Although he was found guilty in a lower court of adultery, during the course of his appeal, the Constitutional Court ruled South Korea's adultery law unconstitutional, thus acquitting him of criminal wrongdoing.

Although the law student's criminal appeal was successful, the Court on Tuesday cited the seriousness of the case and denied his reinstatement to the JRTI. The female law student, with whom the male law student had an affair, was suspended from the JRTI for three months.

Before a South Korea's law school system changed in 2007, students who passed the bar exam in South Korea still had to undergo two years of additional legal training at the Judicial Research and Training Institute before being able to be qualified as an attorney.  An alternative path, now, exists that resembles the system in most States in the U.S.
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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. Sean's profile may be found at: Sean C. Hayes