Bail Granted in Korea for Alleged Violations of Korean Banking Laws

We are proud to announce that we, recently, prevailed in a white-collar criminal matter concerning an alleged crime involving violations of Korea’s Banking Laws.  The allegations stemmed from transactions between a payment processor and a major Korean financial institution.  Bail was granted for the non-Korean banker/businessman and, promptly, upon the granting of the bail by the Korean court, the Seoul Prosecution decided to drop all charges against our client.  In Korea, it is very difficult to obtain bail in cases that are being vigorously pursued by the Prosecution.  The conviction rate, in Korea, is greater than 99%. We are proud to note that our criminal defense team has been successful in obtaining bail and not guilty verdicts for the majority of our foreign clients.  Our success is based on the dedication, passion and proactive nature of a very experienced retired judge, prosecutor and one of Korea’s best known expat attorneys.

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Merger/Acquisition Opportunities in Korea: Lotte Korea Buys KT Car Rental from KT Corp.

In a sign of changing times in Korea, KT Corp., a company best known for its telecom business, has sold its car rental business to the unlisted Hotel Lotte Co. Ltd., a company controlled by Lotte Group. The publicly reported acquisition price is over US$900 million. Lotte is a leading Korean-Japanese hotel company with its hands into about everything imaginable including construction, retail, textile, food products, beverages, oil & gas and entertainment.  However, it competitive advantage is in retail shopping and the hotel business.  KT is the former national telecom and, now, a leading player in both fixed and mobile telecommunication.  Yes, I also question why a telephone company would own a car rental company.  The answer lies, often, in the excessive need for conglomerates to grow their ranks of buildings, employees and news headlines.  Often the reason for business lines being formed outside of the competitive advantage of the

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Credit Rating Agencies in Korea: Due Diligence of Your Supplier, Franchisee, Joint Venture Partner & Distributors

Korea has established four credit rating agencies.  The four agencies are: National Information & Credit Evaluation (NICE); Korea Investor Services (KIS); Korea Ratings (KR); and Seoul Credit Rating & Information (SCRI). Some reports provided by these rating agencies are provided in English.  However, many of the English reports are not complete.  Thus, it is advisable to make sure if you have an English version of a report that it is same as the Korean version of the report. Additionally, it is best to have someone with knowledge of the Korean business climate review the reports, since some clues to issues are unique to Korea. Some companies are required to have a credit rating performed by a Korean rating agency.  If a company wishes to issue asset-based securities and unsecured bonds the company, in Korea, will need to apply for a credit rating via one of the Korean credit rating agencies.

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Corporate Bankruptcy/Restructuring in Korea: The Line Begins Here (Korea’s Chapter 7 & 11 Bankruptcy)

Corporate bankruptcy/insolvency procedure in Korea is similar, in many respects, to the U.S. Chapter 7 & Chapter 11 bankruptcy procedures with some significant differences. Korean corporate insolvency structure is legislated via the Korean Debtor Rehabilitation and Bankruptcy Law (KDBRB).  The KDBRB replaced a convoluted and often conflicting myriad of laws in the form of the Corporate Rehabilitation, Composition and Bankruptcy Act.  On April 1, 2006 this new law became effective. Bankruptcy Basics in Korea (Chapter 3 of Korean Debtor Rehabilitation and Bankruptcy Law)Bankruptcy, in Korea, is a court-managed liquidation procedure.  The procedure is governed by Chapter 3 of the KDBRB.  The basic salient aspects of bankruptcy in Korea are: The bankruptcy procedure commences after a filing by either a debtor, creditor or group of creditors and determination by the court that a company is “bankrupt.”   The holding of the court that a company is “bankrupt” suspends any execution actions based

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Hanwha Korea Loses Battle in New York Court over Forum Non Conveniens Issue

Hanwha Life Insurance, a Korean Insurance company, case against UBS AG was dismissed by a New York court.  We are, likely, to see the case filed in Korea or Hong Kong in the near future.  This, holding, if appealed, will, likely, be upheld.  The lawsuit stems from Hanwha loss of US$ 30million in a complicated financial product.  The case is, also, weak on the merits, since, intern alia, Hanwha is a sophisticated investor or, at least, should be one. The Manhattan Supreme Court (NY trial court) noted that: “While this court is capable of applying Korean law, a Korean court is more familiar with such law and better suited to resolve the parties’ disputes . . . (claims) arose almost entirely from events and transactions that took place outside of New York and mainly in Korea and Hong Kong.” Let’s see if the case goes any farther in Hong Kong

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Korea Contracts Don’t Forget the Counter-party: Due Diligence before Executing an Agreement in Korea

We see numerous matters coming before us from parties in the States or Europe that are importing a product from a Korean company.  Of course, the products are either faulty or never come. We, also, see cases where a Korean company is importing a product and the importing party ends up not being the party that the American or European company thought they were doing business with. Also, often, companies in Korea are broken up into smaller companies.  The manufacturing arm may be one company, the sales arm one company and these companies are wholly owned by a holding company.  Of course, the agreement ends up being with the broke sales arm. Thus, know the counter-party.  Due Diligence is required.  Due Diligence is not checking the firms website or simply matching up the name on the PO with the Wire Instructions.  A wire will, normally, clear even if the name

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 21, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 21, 2014Korean Legal News Reported by the Media on the Week of July 21, 2014 South Korea Plans $40 Billion Stimulus to Tackle Weakening Growth Seoul to push tax on corporate cash reserves U.S. Chamber of Commerce chief urges FTA implemantation Workers in Their 60s Outnumber 20-Somethings Mortgage deregulation raises concerns Most Recent Posts from the Korean Law Blog Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor Opportunities in Korea’s Growing Tuning & Performance Modification Industry for Foreign Companies Korean Fugitives on the Run: Getting more Difficult with Change of Law Distribution Agreements in Korea: Crawl before you Walk Is Samsung Doomed? No Innovation Price Trap ___ Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney

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“Samsung’s First Family Struggles to Keep Grip on Company” Report by Bloomberg

The Samsung saga continues.  Lee Jae-Yong is likely to take over from his father soon.  It looks like Lee Kun-Hee’s health is not improving.  Bloomberg has an interesting article on this issue that may be found on the link below.   The Lee Family owns less than two percent of the total shares of Samsung Group, though they near absolutely control 74 companies “through a web of share holdings.” However, because of recently enacted regulations and tax laws, the family may lose its influences over the companies.  President Park has banned “new cross holdings.” Under current tax law in Korea, heirs have to pay inheritance taxes of 50 percent of the asset value which means that Lee Jae-Yong may have to pay about  $6 billion as inheritance taxes. While the Lees are planning to take two companies public in order to raise money to pay the inheritance taxes, Lee Jae-Yong has faced another challenge. According to

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 14, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal For the Week of July 14, 2014.Korean Legal News Reported by the Media on the Week of July 14, 2014 LG outpaces Samsung in UHD TV panel market in May: data Hana Bank set for merger with KEB Economists Doubt Korea Can Return to Solid Growth Line to Be Listed on Tokyo Stock Exchange Korea ranks third in e-trade readiness Most Recent Posts from the Korean Law Blog Opportunities in Korea’s Growing Tuning & Performance Modification Industry for Foreign Companies Korean Fugitives on the Run: Getting more Difficult with Change of Law Distribution Agreements in Korea: Crawl before you Walk Is Samsung Doomed? No Innovation Price Trap Foreign Account Tax Compliance Act (FACTA) in Korea ___Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of July 7, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal For the Week of July 7, 2014Korean Legal News Reported by the Media on the Week of July 7, 2014 Science Ministry to Introduce Laws for Better Mobile Service Plans Validity of Financial Holding Firms in Question Bank of Korea Hints at Rate Cut Pantech Sinking into Deeper Liquidity Crisis Samsung Chief Marks 2 Months in Hospital Most Recent Posts from the Korean Law Blog Is Samsung Doomed? No Innovation Price Trap Is Korea’s “Copy Culture” the Largest Threat to the U.S.? On Fox Business Korean Immigration Law’s 20% Rule Challenged Material Breach of Contracts Under Korean Law: Primary Obligations vs. Secondary Obligations Samsung’s Shareholdings Explained by Wall Street Journal ___ Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have worked

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Witholdings Taxes on Transactions between Korean & Hong Kong Companies

The Republic of Korea and Hong Kong signed a double taxation treaty on July of 2014.  The treaty will come into force, if ratified, by the respective assemblies.  Under Korea Tax Law, the, normal, withholding tax is 22%.  The main purpose of the treaty is to reduce this rate and, also, allow the governments to share information on potential tax evaders.  This double taxation treaty, among other things, includes provisions for: A 15% Withholding Tax on dividends and a 10% Withholding Tax if the company receiving the funds owns a minimum 25% interest in the company remitting the dividends;  A 10% Withholding Tax on most interest and royalties;  A cooperation mechanism to share tax information in order to apprehend Korean tax evaders; and  Taxation on capital gains, only, in the country where the income was earned.  ___Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of June 30, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of June 30, 2014Korean Legal News Reported by the Media on the Week of June 30, 2014 FSS Chief Pledges to Back Foreign Firms Cho Steering Hanjin Shipping Out of Liquidity Crunch Park, Xi Boost Security, Business Ties Korea, China to Seal FTA by Year’s End Won Goes from Strength to Strength Most Recent Posts from the Korean Law Blog Is Samsung Doomed? No Innovation Price Trap Is Korea’s “Copy Culture” the Largest Threat to the U.S.? On Fox Business Korean Immigration Law’s 20% Rule Challenged Material Breach of Contracts Under Korean Law: Primary Obligations vs. Secondary Obligations Samsung’s Shareholdings Explained by Wall Street Journal ___ Sean Hayes may be contacted at: [email protected] 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

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of June 23, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of June 23, 2014Korean Legal News Reported by the Media on the Week of June 23, 2014 Samsung, LG at War over Android Wearables Hyundai Motor to Be Fined for Overstated Fuel Economy Korea Recognized for Combating Money Laundering Asiana Accepts Responsibility for Crash Penalties Likely for Woori Bank Most Recent Posts from the Korean Law Blog Is Korea’s “Copy Culture” the Largest Threat to the U.S.? On Fox Business Korean Immigration Law’s 20% Rule Challenged Material Breach of Contracts Under Korean Law: Primary Obligation vs. Secondary Obligations Samsung’s Shareholdings Explained by Wall Street Journal Finding a Distributor Agent to Sell/Market Your Products in the South Korean Market ___ Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have

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Weekly Korean Legal News From International Law Firm – IPG Legal for the Week of June 16, 2014

Weekly Korean Legal News From International Law Firm – IPG Legal for the week of June 16, 2014Korean Legal News Reported by the Media on the Week of June 16, 2014 Watchdog to Tighten Monitoring of Stock Trading by Paper Companies FSC, FSS Fight Over Authority Samsung and Korea’s Copy Culture Uzbekistan, South Korea Sign Declaration on Strategic Partnership Development Korea, China Discuss Maritime Border Most Recent Posts from The Korean Law Blog Korean Immigration Law’s 20% Rule Challenged Material Breach of Contracts Under Korean Law: Primary Obligations vs. Secondary Obligations Samsung’s Shareholdings Explained by Wall Street Journal Finding a Distributor or Agent to Sell/Market Your Products in the South Korean Market Korean Tax Laws on Entertainment Companies in Korea: Overseas Tax Deductions ___Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the first non-Korean attorney to have

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Sean Hayes to give Speech at American Bar Association Conference in LA

Sean Hayes will give a presentation entitled Mickey Mouse, Sports Stars, Celebrities, Billions of Dollars at Stake. Who Owns the Rights to an Individual’s or a Character’s Image? 10:30 – 12:30 April 11, 2014. The speech is part of the ABA Business Law Spring Meeting in LA.  More information can be found at: ABA [email protected] (c) Sean Hayes – SJ IPG. All Rights reserved.  Do not duplicate any content on this blog without the express written permission of the author. [email protected]

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Garnishing Wages in Korea: Collection of Debts in Korea

I received a call from a friend asking about information concerning collecting on a large personal debt. He loaned money to a “friend” and the friend never made a payment on the loan. Word to the wise, don’t make large loans to friends—-cry poverty instead. In Korea, after a judgment or order to pay by a court, a plaintiff can collect on an unpaid debt through garnishing wages. Garnishing of wages is normally the best way to guarantee the collection of debt when a debtor doesn’t have real or personal property.  Most law firms can perform the service for a modest fee. Amount that May be Garnished in Korea Less than W1.2mil (No wages can be garnished) W1.2mil – W2.4mil (Monthly Wage – W1.2mil) W2.4mil –W6mil (1/2 Monthly Wage) Over W6mil (Half monthly Wage minus W3mil divided by two plus W3mil minus monthly wage) Examples:1. W2,000,000 Monthly Pay (Can garnish

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Ssangyong’s Korean Bankruptcy/Rehabilitation Proceeding & Many other Korean-based Construction Companies

Ssangyong Engineering & Construction filed for rehabilitation proceeding based on the Korean Debtor Rehabilitation and Bankruptcy Act.  The Act requires, among other things for: 1.  The Receiver to submit to the court a Creditor List;2.  For the court to determine that the company’s “going concern” value is greater than the “liquidation” value of the company;3.  The Receiver to submit to the court a Rehabilitation Plan;4.  The Rehabilitation Plan to be approved by 2/3 of the unsecured and 3/4 of the secured claims. This procedure is similar to Chapter 11 in the United States.   We have a few cases that are proving to be very difficult to obtain approval of both secured and unsecured creditors.  Often, the Rehab Plan is, only, approved after litigation, prosecutions and/or one creditor gobbling up a good deal of the other debts.   This case will be interesting.  For the purpose of full disclosure we are

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Attaching Assets in Korea: Security on Movable Property and Receivables in Korea

The Ministry of Justice has recently announced a draft bill concerning the securitization of movables and receivables. The Bill has been pushed for strongly by SMEs. SME’s have complained, since the 1997 Currency Crisis that they are unable to adequately capitalize at market rates. Representatives of the IMF, that I spoke with a few years back, also were very keen on this type of bill. They believed that this Bill will help foster SMEs and new entrant’s potential for innovation and growth. At present, over 92% of securitized lending is through real estate. The reason stems from the lack of a disclosure system for movables and receivables. The Bill intends to address this issue and solve the problem of SME with adequate raw materials, account receivables, intellectual property, and inventory and no real property. Basic Details of the Act on Security on Movable Property and Receivables (the “Bill”): 1. Grantors

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Korea’s Data Privacy and Data Protection Law

Korea’s Personal Information Protection Act has replaced, in whole, the Public Agency Data Protection Act of Korea and, in part, the Act on Promotion of Information and Communications Network Utilization and Information on September of 2011. The new privacy law is one of the strictest laws in the world.   Please seek advice prior to engaging in any business where data of customer will be collected. Over the next couple of weeks please check back to this blog.  We will be updating the reader on: Basics of the new Korea data protection law; The Data Protection Commission; The Personal Information Dispute Mediation Committees; The Korea Communications Commission; The Korea Internet & Security Agency; also We will provide sample privacy and data collection statements. _______Sean Hayes may be contacted at: [email protected] Sean Hayes is co-chair of the Korea Practice Team at IPG Legal. He is the only non-Korean to have worked

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Stock Options in Closed Korean Corporations

For stock options in Korea to be exercisable, thus valid options, the option must be approved, in most cases, at a general shareholders meeting of the Korean company.  If approval of the shareholders is obtained the articles of incorporation of the Korean company should, inter alia, note: An intention that a stock option may be granted in specified cases;  The number of shares to be issued or transferred in the case of exercising the stock option;  Qualifications of a person to whom a stock option is to be granted; Exercising period of the stock option; and  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

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