Execution of Stock Options in Korean Corporations under Korean Commercial Code

Stock options, in Korea, are often provided to senior foreign and domestic employees of companies in Korea.  For stock options, in non-listed/non-public companies in Korea, to be exercisable by employees in Korea (thus a valid option) the option must be approved, in most cases, at a general shareholders meeting of the Korean company. Another article that may be of interest can be found at: Granting & Exercising Stock Options in Korea.   The articles of incorporation should be amended or should

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Protecting your Intellectual Property Rights in Korea: Avoid “Trying Different Things & Smoking Funny Things”

A popular song regularly played on the radio proclaims that in the summer of 1989 the songwriter, Kid Rock, was “trying different things and smoking funny things.”  If you have any exposure to the Korean market, do your business a favor and don’t be like the songwriter.  All business with any exposure to the Korean market must have a plan in place to protect their intellectual property.  Thus, for the sake of your company, at a bare minimum, you should

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Audit Proof your Independent Contractor Expenses

I just read a great post on an even better blog entitled the New York Small Business Law Blog. The blog post – Tips on Making your Independent Contractors Audit Proof – notes that the feds are increasing their efforts to crack down on misclassified independent contractors. They advise the attorney gave on how to avoid the scrutiny of the government would have also been useful for a client of ours that ran into an issue with the Korean National Tax Service and the Ministry

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Korea’s Fairness in Subcontracting Transactions Act Amendments of July 2021

The Korean National Assembly passed a bill in July of 2021 that amends the Fairness in Subcontracting Transactions Act (“Subcontracting Act”). The Act makes major changes with regard to discovery in litigation and aims to protect the intellectual property/confidential data/technical data (“Technical Data”) of subcontractors from poaching by prime contractors. For another article on Korea’s Subcontracting Act please see: Fair Transactions in Subcontracting Act of Korea: So Buyer Beware or Simply Avoid the Risk and Buy the Seller. 2021 Amendments

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Debtor’s Liability to New Owner after Transfer of Business and Trade Name

A developer recently contacted IPG Legal concerning a dispute with a supplier of building materials.  The developer purchased building materials from a supplier with payment to be forwarded 30-days after receipt of the materials. This is a common practice when a supplier has a long-term relationship with a developer, provides a consistent flow of supplies to a developer, and the developer is solvent. Here comes the problem.  The supplier was sold and the business and trade name was transferred to

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The Ten Commandments of Labor Relations in South Korea: Korean Human Resources Basics

Korea has one of the most capricious and least efficient labor forces in the world (which the exception of a few industries) and China is catching up with Korea very fast. Vietnam, Cambodia, Laos, Malaysia, Indonesia and the Philippines will soon follow. The fault is not only on the employees, but on the employers.  Korean companies have departed for greener fields in China to discover that the fields are not as green as originally imagined. Many of these same companies,

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Korean Prosecutors & Police Powers under Amended Criminal Procedure Law

One of the most substantial changes in the powers between the Prosecutors’ Office and Police Office was enacted by the Korean National Assembly through amendments to the Korean Criminal Procedure Act and Prosecutors’ Office Act. These Amendments were made to the Criminal Procedure Act of Korea and the Prosecutors’ Office Act of Korea that shall take effect in 2021. The Amendment reduce the power of the Korean Prosecutions to initiate investigations in certain types of cases, while expanding the powers

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Alternative Legal Fee Arrangements at Korean-based Law Firms: Limited Scope Representation Explained

Many Korean law firms have been willing to work in relationships based on a non-time charge flat-fee or contingency basis for Korean clients.  However, many of these law firms in Korea have been unwilling to work on alternative fee arrangements with non-Korean clients, because of, among other things, the requirement to represent the client in a far different manner than that of a Korean client and, also, reduced competition in the foreign-client market, because of the reality that only a

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International Arbitrations in Korea under the IBA Rules

Procedural Arbitration rules are key to the efficient and effective adjudication of arbitration disputes in Korea and, also, worldwide.  These arbitration rules govern and set out the framework for the arbitration process. Evidence gathering and presentation are important aspects of the above procedure, and yet, institutional and ad hoc rules that provide arbitration guidelines on other matters such as the appointment of arbitrators and the nature of award and costs are, usually, silent on this point. Advantages of such a

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Whistleblower Protections in Korea Expanded through revised Whistleblower Protection Act

Korea’s Whistleblower Protection Act is, often, criticized for having a too limited scope, since it narrowly covered specific iterated Korean government statutes. Thus, many in Korea have pushed for an expansion of the law to cover a more broad range of Korean laws. With this reality in mind, the Korean Whistleblower Protection Act was expanded to cover 467 statutes up from the prior 284 statutes. The amendment was effective since November of 2020. This Amendment led to many Korean government

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Wrongful Termination in South Korea

South Korea is not an “at-will” employment country which means that employer may not dismiss an employee for any reason nor without warning or notice. And under the Labor Standard Act, an employer who has five or more employees may not dismiss or suspend from work any of its employee without justifiable cause. And even with the presence of justifiable cause for dismissal, the employer is still required to give a minimum of 30 days advance notice to the employee

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New Korean Corruption Investigative Unit Established to Investigate High-Ranking Public Officials in Korea

Korean established a new investigative unit with the independent power to investigate High-Ranking Public Officials, family members of High-Ranking Public Officials and those associated in alleged crimes with High-Ranking Public Officials. This office shall be called the Corruption Investigation Office (“CIO”) for High-Ranking Public Officials. This independent investigative agency’s scope of power includes the investigation of the President of Korea, members of the Korean National Assembly, prosecutors, judges, senior public officials (Rank of Grade III or higher) and some senior

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SsangYong Motors files for Bankruptcy in Korea

It isn’t just foreign companies that have a robust history with Korea’s militant labor unions. The troubles of GM Korea and SsangYong Motors have been well documented over the last decade. This week SsangYong Motors finally succumbed to the pressures of the Korean market. The company filed for bankruptcy after defaulting on loan repayments of 60 billion won ($54.4m USD). SsangYong is unlikely to receive further government support, with the national government unlikely to step in to provide aid for

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Korea’s Legal Measures to Reduce Fine Dust Pollution

The Korean Special Act on Fine Dust Abatement and Management (hereinafter as “Special Act on Fine Dust”) entered into force on February 15, 2019. The law, primarily, focus is restricting producers of fine dust to reduce the fine dust level in Korea. The Special Act on Fine Dust defines different types of dust and enables officials to set certain fine dust reduction measures. Legal Definitions of Fine Dust The Special Act on Fine Dust provides definitions of “fine dust,” “micro-fine

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Calculation of Korean Hourly Wage Rate under the Minimum Wage Act of Korea

Korea’s minimum wage as per the Korean Minimum Wage Act in 2019 is determined by the Minister of Employment & Labor as KRW 8,350 per hour. The latest decisions of the Supreme Court developed a calculation standard/method for determining an hourly wage rate that is not in line with the opinion of the Ministry of Employment & Labor. In many such cases, a Ministry, simply, pushes to amend the law. This matter is important, since the standard hourly wage rate

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Korea Due Diligence for Joint Ventures, Licensing, OEMs and Buying a Korean Company

Intending to execute a joint venture agreement with a Korean company? Buying a Korean company? Licensing technology to a Korean company? OEM with a Korean supplier? Selling to a Korean company?Before going to bed with a Korean company (or individual) do a little due diligence.  The motivation for this article is an article by my friends over at the China Law Blog. Due diligence in Korea is not much different than due diligence in China.  However, don’t forget what is

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Starting a Manufacturing Business in South Korea: Top 14 Things to Know Before you Start a Business in Korea

Korea, in most cases, is a much better choice for the manufacturing of chemical, petroleum, construction equipment, complex crafted metals, specialty steel, automotive parts, semi-conductor, medical and pharmaceutical equipment and goods than China and most nations in Asia, because of Korea’s skilled work force, government incentives and increasingly transparent business practices. In many cases, manufacturing in Korea will not, in the end, be more costly than manufacturing in China, because of the increased efficiency of Korean workers and the, often,

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Distribution Agreements in Korea: Crawl before you Walk

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 in Korea. We see too many Korean distribution and agency agreements that are mere spun U.S. or European agreements.  Please have your Korean distribution agreement and all agreements you have in Korea drafted

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Distribution 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. 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

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Non-Registered Company Director (Executive Director/Senior Managerial Worker) in Korea deemed Employee under Korean Labor & Employment Law

Article 27 of the Labor Standards Act of Korea stipulates that all “employees” must be notified in writing of the reason for dismissal.  In most cases, 30-days notice or 30-days pay in lieu of notification is required.  Employees may, also, only, be terminated for “fault attributable to the employee” or “urgent managerial necessity.”  The burden is on the employer to prove “justifiable grounds for termination.”  All good proactive employment lawyers in Korea have detailed programs in place that assist in justifying

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