This is an older article we posted nearly eight years ago. However, we fear the same is occurring today. Inflation may be a serious issue for Korea in the next couple of years. The Korea Times has reported that stagnant wages and food inflation is leading to “Screwflation” in Korea. This phenomenon is a potential opportunity for importers with an eagerness to directly access the market. The term Screwflation was coined by Wall Street guru Doug Kass. Kass explains the notion in his, typical, straight forward manner:
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Mergers & Acquisition Arbitration Matters under Korean Law at the KCAB
Mergers & Acquisitions (M&As) lead to disputes around the world, many of which are complex and involve money that may change substantially the future of a company, shareholders, employees and other stakeholders. Korea is no different in this respect. Korea witnessed the number of its cross-border transaction disputes explode during the 1997 IMF crisis and continue to steadily increase ever since. Many of these issues ended in arbitration and many others lead to criminal charges and into the Korean courts. While there are no readily available published
Continue readingDistribution Agreement in Korea: Factors to Always Keep in Mind
Prior to going into any relationship with a distributor/agent in Korea, please read my post entitled: Finding a Korean Distributor: The Top 10 Things to Know Before Going to Bed with a Distributor in Korea. Please read that post in combination with this post, prior to engaging a distributor or a Korean Agent. We see too many distribution agreements that are mere spun U.S. distribution or agent agreements. Please have your distribution agreement and all agreements you have in Korea drafted by an experienced and proactive attorney
Continue readingHow to Invest in Korean Free Economic Zones (KFEZs): Korean Market Entry
Korean Free Economic Zones (KFEZs) are specially designated areas designed to improve the business and living environments for foreign firms looking to invest in Korea. In 2003, Korea’s very first KFEZ was launched in Incheon following the passing of the adoption of the “Act on Designation and Management of the Free Economic Zones.” Since then an additional seven have begun operation, bringing the grand total of KFEZs in Korea to eight. Companies with business in KFEZs are eligible for tax credits and other incentives under the Foreign
Continue readingKorean Smart City Opportunities for Foreign and Domestic Companies Doing Business in Korea
The Korean government’s “2020 Smart Challenge” is officially rolling out with the Act on the Promotion of Smart City Development and Industry of Korea. The Act is coming into effect on Feb. 27, 2020. The Korean government is, specifically, launching three separate projects called: Korean City Challenge Open to large, SMEs and startup companies. Intended to encourage creative and technological solutions to problems in cities. Smart-mobility may be a large focus of the governments initiative. Korean Town Challenge Open to large, SMEs and startup companies. Intended to
Continue readingThe Korean Corporate Restructuring Promotion Act of 2018: Korean Insolvency Law Updates
The recently enacted Korean Corporate Restructuring Promotion Act (hereinafter “CRPA”) focuses on facilitating “…constant corporate restructuring and promotes the stabilization of financial markets and the development of the national economy, by providing for matters necessary to promptly and efficiently implement corporate improvement of enterprises with signs of insolvency.” (Art 1 (Purpose) CRPA). The CRPA is intended to facilitate out-of-Korean-court restructuring procedures. Often, debtors prefer out-of-court proceedings over in-court proceedings, because of the belief that out-of-court proceedings shall lead to more flexibility and less costs. In October 2018
Continue readingBuilding Systems Before JVs in Korea to Build Trust between Partners
A blog referred to me by the China Law Blog has a wonderful post on Developing Trust in China by Building Trustworthy Systems/Processes. The same advice given in this blog post is relevant to work done in Korea, Southeast Asia, China and even the West. We believe that the verification of the developing and implementation of these system is, often, necessary before building a joint venture relationship with a Korean company. The value of building systems is not to be underestimated in Korea. Koreans, in most respects,
Continue readingMinority Squeeze-outs in Companies in Korea
The amended Korea Commercial Code of 2012 allows majority shareholders with 95% of the shares of a company in Korea, to purchase the shares of the minority for “fair value.” Thus, allowing a statutory means under Korean Law to squeeze-out a minority shareholder. Fair value may be determined by the court if the parties are unable to reach an agreement within 30 days of a request by the majority shareholder to purchase the shares of the minority. We advise that you place a mechanism within your shareholder
Continue readingAntitrust/Competition Consent Orders in Korea
in 2011, the Korean National Assembly passed, along with the Korea-U.S. FTA and related bills, a law that allows the Fair Trade Commission of Korea (KFTC) to accept consent orders. A consent order is similar, in many respects, to a nolo contendere plea. The consent order process has allowed the KFTC to punish without the admission of guilt to the company. This has lead to a decrease, in recent years, of a burden on the KFTC, more efficient enforcement proceedings, and has sped up many M &
Continue readingKorean Merger Control and the Korean FTC
The Monopoly Regulation & Fair Trade Act of Korea (Fair Trade Act of Korea) is the main regulation governing mergers and acquisitions in Korea. In the majority of cases, reporting and approval is not required for a target company with a yearly turnover of less than KRW 20 billion. The specific jurisdictional thresholds shall be addressed in a followup article. This article is intended to, simply, provide a list of the main Merger Control issues . A more substantive article shall follow. The following types of transactions
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