Korean Small Business Partnerships/Joint Ventures: Pubs, Distributors, Exporters, Boutiques, Franchises and Basic Manufacturing etc.

Starting a small business in Korea can be enjoyable and profitable if you get the business on the right track from the start.  Too often we see those with “limited funds” (we all have limited funds -even multinationals have limited funds) choosing to forgo having the deals structured by a professional and just downloading a “partnership” agreement off the internet.  Do not be what my father likes to call President Obama – a knucklehead.  I have learned from my 13 years working in Korea (Can’t believe I have been here for 13 years), that this choice, normally, ends in either a failed business or a person contacting me with a case that, now, requires our litigation services.   I even saw cases end up in the prosecutor’s office.  The amount of money that it costs to have a professional draft these agreements, must, be considered part of the cost of

Continue reading

The Korean War in Full Tom Coyner Color

There has been a great deal of activity commemorating the 60th anniversary of the Korean War armistice, but there has been little review of the events that made up the second half of that war. One may recall the basics: war begins in June 1950, UN responds in July, fighting around the Pusan Perimeter until August, Incheon landing and retaking of Seoul in September, UN forces capture North Korea, Chinese forces push back UN forces from October through December and fighting occurs around the 38th parallel during the first half of 1951. Then details seem to disappear during the two-year stalemate from July 1951, followed by the armistice negotiations with continued fighting until July 1953. In other words, after the Allied Forces retook Seoul a second time in March 1951, there is little mention, other than the casualties and a few battles. So, what really happened during those ensuing two

Continue reading

Korean Invention Promotion Act: Employee Inventions in Korea

 The Korean Investment Promotion Act (“IPA”) was amended in June of 2013.  The amendments will come into force at the end of January of 2014.  Major Amendments to Korean IPA 1.  Employers will no longer obtain, automatically, a non-exclusive royalty-free license to all inventions by employees.  Employers will, now, have to implement company policies and/or include in employment contracts provisions to grant rights to inventions to employers.  The amendment will not apply to employers deemed by the Act on Small to Medium Enterprises to be SMEs. 2.  Employers will have an easier time establishing that “reasonable” compensation was paid in exchange for an assignment of inventions under the invention compensation policies of the employer.  The amendment, however, maintains the, present, uncertainty by still maintaining abstract guidelines, partially, based on future unknown profits that are, only, realized often years after assignment of the invention. 3.  Employers are required to establish an

Continue reading

Criminal Convictions Finally Leading to Prison Sentences for Chaebol Leaders

Chey Jae-Won, younger brother of Chey Tae-Won (the former chairman of SK Group that was convicted of embezzling USD 43 million and sentenced to four years in prison earlier this year) just had his acquittal overturned last week by the Seoul High Court.  Jae-Won had, until now, managed to avoid experiencing the same fate as his older brother by convincing the Court that he had little to do with his brother’s fraudulent conversion of SK Group’s assets.  Now, Jae-Won is looking at a 3 1/2 year prison sentence that almost matches his older brother’s 4. Jae-Won’s conviction comes just a week after Koo Cha-Won (former chairman of LIG Group) and his oldest son were themselves slapped with three-year prison sentences for issuing USD 198 million of fraudulent company bonds. It has been a common complaint amongst many Koreans that chaebol leadership is never held to account in the court system. 

Continue reading

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

Continue reading

Korea Legal News for the Week of September 1, 2013

This Week’s Korean Legal News Reported by Media Park calls for closer macroeconomic coordination during G20 summit Chun Doo-hwan’s family inching closer to paying fine Park invites Italian firms to Gaeseong Prosecution chief denies news report on extramarital child Gov’t to inspect KORAIL Hyosung chairman Cho under tax probe Seoul, Beijing agree on basic guidelines for FTA negotiations Coffee shops add to Pyongyang’s dolce vita Seoul to issue W200 bil. childcare bonds S. Korea places import ban on all fisheries products from Japan’s Fukushima region Most Recent Posts from The Korean Law Blog Renewal Rights/Terms for Commerical Leases in Korea Under Amended Commercial Building Lease Protection Act of Korea  South Korea Begins 7th Round of Negotiations with China on Free Trade Agreement Proposed Amendment to Real State Development Business Act of Korea: Rating of Real Estate Development Projects Korean Visa Rules Still not Strict Enough for Some in the Korean

Continue reading

Korea Legal News for the Week of August 25, 2013

This Week’s Korean Legal News Reported by Media Spy agency seeks arrest warrant against leftist lawmaker  N.Korea fires hawkish army chief  Seoul rejects ILO’s call for gov’t union  Senior tax officials banned from dining, golfing with conglomerate executives  Korean, U.S. defense chiefs discuss troop control transfer  Ssangyong makes major comeback  Kia Motors union stages 2nd partial strike  Hyundai to Build Car Parts Plant in U.S.  Gov’t to cut home acquisition tax rate  Seoul call center staff go on strike  Most Recent Posts from The Korean Law Blog  Korea’s Low Birth Rate: Problem that May be Impossible to Fix Korea Companies Defendants in Anti-Dumping Lawsuits Second to Only China: Check the Verasity of Data Produced by Korean Companies More Damage from Militant Unions & Rising Labor Costs in Korea: GM to Reduce Production in Korea Hyundai Motors on the Fast Track to a 45,000 Employee Strike Business Opportunities in Korea Getting

Continue reading

Korea’s Low Birth Rate: Problem that May be Impossible to Fix

South Koreans take pride in leading the world in many categories. But one distinction is vexing – the lowest birthrate of the world’s most developed economies. The economic and political ramifications are massive.  And yet one wonders if effective countermeasures are even possible. The International Herald Tribune, recently, ran a story about private and government initiatives to encourage marriages and thereby raise South Korea’s birthrate.  For the past three years, for example, South Korea’s Ministry of Health and Welfare has promoted dating parties for its employees with counterparts from corporations. Other corporations have responded favorably to invitations from various government organizations to organize similar events.  Meanwhile, “no internal dating” corporate rules are disappearing as more and more business leaders take seriously birthrate-related problems, such as fewer future workers. While all of this may sound potentially positive, we find Koreans nonetheless being highly selective – no, extraordinarily picky – about whom

Continue reading

Korea Legal News for the Week of June 9, 2013

This Week’s Korean Legal News Reported by Media S. Korea turns up the heat as foreign automakers make inroads S.Korea’s Samsung Heavy wins $1.3 bln order from Statoil S.Korea shippers join overseas rivals in shunning Iran business GM mulls moving Opel Mokka from Korea to Spain – report S.Korea opens $20 bln credit line for Mexico infrastructure S. Korea to discuss with Myanmar on inking investment guarantee pact South Korean women struggle in workforce Seoul to become bridge between U.S., China through FTAs Korea immune from U.S. military budget cuts: Pentagon official U.S. lawmakers renew call for putting N. Korea on terror list Most Recent Posts from The Korean Law Blog Definition of Copyright in Korea: Ideas vs. Expressions Definition of “Author” under Korean Copyright Act: Entertainment Law Cases in Korea Korea Enforcing Laws: Seoul Police Arrests Union Leader Legal/Compliance Checklist for your Korean Company: Top 7 Things to Do

Continue reading

Private Detectives, Tattoo Artistists and Chiropractors in Korea Will Become Legal Professions?

It is illegal to be a private investigator, tattoo artist or chiropractor in Korea.  Of course, Korea has private investigators, tattoo artists and chiropractors.  Thus, those practicing these occupations in Korea face criminal prosecutions and fines. Additionally, the clients of those practicing these occupations are not safeguarded by the typical administrative agency regulations that serve to protect these individuals.  Some issues have occurred with regard to private investigators.  Some have utilized tactics that many consider less than ethical.  These criticisms may be lessened with the regulation of the profession.  I believe in the near future that tattoo artists and private investigators will become legal occupations, but I believe you will see a vigorous fight from massage therapists (anma- blind practitioners), pharmacists and doctors towards legislation of the chiropractic profession.   Some lawyers are against the private investigator profession, but in my own straw pole I found no Korean attorney that

Continue reading

Apple Infringed Samsung Patents According to U.S. ITC: Standard Essential Patents

The United States’ International Trade Commission has overturned ITC Judge James Gildea’s September ruling that Apple did not violate Samsung’s patents alleged to be utilized in AT&T models of the iPhone 4, iPhone 3GS, iPad 3G and iPad 2 3G. President Obama has 60 days to review the order that has placed a partial ban on the imports of older versions of Apple IPhone and IPad products.   The ban relates to the use of Apple of “standard essential patents,” specifically the 3G wireless technology to transmit multiple services simultaneously that is owned by Korea’s Samsung.  Three related claims by Samsung were dismissed by the ITC. The majority of scholars and most U.S. government agencies believe that the damage for violation of these type “patents” should be low-cost licenses – not a ban on imports.  What do you think?  Other articles that may be of interest: Patent Bullies vs. Samsung

Continue reading

Korean Corporate Governance Reported as One of the Worst by an Economist

What is the cause of the Korean discount? An economist article hits the nail right on the head. So what is the source of the “Korea discount”, which means that the KOSPI has a forward price-to-earnings ratio of under ten, below most other Asian stockmarkets (see chart)? There are a few possibilities. The national economic model is still built on exports, often in highly cyclical industries such as shipbuilding. The capital structure of South Korean firms has historically been debt-heavy.In this section But the prime cause of the discount is more likely to be poor corporate governance at the family-run chaebol conglomerates that dominate the economy. Nefarious schemes to pass on control to sons, avoid taxes and exploit company assets for the benefit of family members are widely discussed in private. They are also lambasted abroad: a 2010 survey by CLSA, a broker, placed the country third-from-bottom in Asia on

Continue reading

Personal Data Protection in Korea under the Korean Information and Communications Network Act

Under the Korean Act on the Promotion of Information and Communications Network Utilization and Information Protection, Etc. (“ICNT”) a Government Notice, that entered into force last month, mandates all the major information services providers and data centers to become Information Security Management Systems certified. The Notice was a reaction to security breaches that may have revealed confidential information of users of various websites.  The Notice requires all press agencies, on-line shopping malls,  web portals and the like with revenue of over KRW 10 million or over 1 million users to become certified or face shutdown and a KRW 10 million fine. Those required to comply with the notify must be certified by the end of this year.   We predict that it may take up to four months for a site to be certified compliant according to a consultant we work with.  The new law may be welcomed by foreign and

Continue reading

Pharmaceutical Companies in Korea: Criminal Sanctions and Vicarious Liability

Early this year, the Seoul Central District Prosecutors office charged a mega Korean pharmaceutical company and a dozen of its employees with providing rebates in the amount of approximately KRW 4.7billion to hospitals.  Dozens of doctors have, also, been subpoenaed for accepting rebates through agents.  Revisions in Korean Medical Services Act, Korean Pharmaceutical Act, and the the Medical Device Act provide criminal punishment for the provider and, also, receiver of rebates. Late last year, a similar scandal hit medical device companies. The most important issue for my foreign readers is that it is no longer true that Korea does not have vicarious liability.  The vast majority of scholars, in Korea, believe that a corporation may not be held criminally liable as a principle of a crime.  The Supreme Court and Constitutional Court of Korea have agreed with this notion.   However, today, many laws contain vicarious liability clauses.  The Constitutional Court

Continue reading

Korean Legal News for the Week of January 27, 2013

This Week’s Legal News Reported by Media Korea tycoon sentenced for embezzling more than $40 million Korea becomes the red flag for Asia’s currency war Korea court rules Samsung chairman doesn’t have to share inheritance with older brother Korea to welcome back 5,000 Vietnamese workers Korea warns North against nuclear test Apple loses appeals bid in Samsung patent battle North Korea refuses to pay Polish builders Korea 4th-largest source for adoptees in US Sale of Korean relic taken in wartime leads to arrest Park, Harper agree to push Korea-Canada FTA Most Recent Posts from The Korean Law Blog Protecting Trade Secrets in Korea: Top 5 Things to Know Before Subjecting your Business Secrets to the Korean Market Korea’s President Lee to Pardon Cronies and “Too Big to Fail’ Companies Sad News for a Samsung Worker: Chemical Leak at Hwaseong Plant Inside Korea’s Two-Tiered Economy by Tom Coyner Sean Hayes in the

Continue reading

Korea’s President Lee to Pardon Cronies and “Too Big to Fail” Companies

Once upon a time, end-of-tenure presidential pardons served a useful purpose as reformers tried to correct past wrongs, such human rights violations, which were too politically problematic at those times. And in some cases involving foreigners, pardons could be used to flush jails of non-Korean miscreants to planes heading for their home countries. But over the past decade, this presidential prerogative has been misused to rescue political cronies and executives of “too big to fail” enterprises, without risking ensuing political blowback. While South Korea is better than most Asian countries in being a nation of laws, there is an understandable cynicism about the law held my most Koreans. The big fish have a way of getting undeserved leniency while the more common Korean can expect a greater brunt of the law if convicted. This is another example of what I’ve been recently labeling as the “Two-Tier Korea” consisting of the

Continue reading

Korean Contractual Holidays vs. Statutory Holidays: Korean Paid Leave/Holidays Explained

The, only, statutorily mandated holidays are the Weekly Holidays under Article 53 of the Korean Labor Standards Act; Labor Day under Article 55; Maternity/Paternity Leave under Article 74; and Annual Paid Leave under Article 60.  These statutorily mandated holidays are required to be paid holidays under law. Most companies recognize Sunday, Independence Movement Day, Foundation Day, Liberation Day, New Year’s Day, Thanksgiving, Lunar New Year, Hangul Day, Buddha’s Birthday, Christmas Day, Children’s Day, Election Day and Memorial Day as days off.  These Public Holidays and Sick Leave are not required to be paid days off.  However, most companies specify that these are paid leave days under the rules of employment of the company.    Thus, for example, a company may require an employee to take time off on a particular Public Holiday instead of taking annual paid leave.  Also, an employer may dock annual leave for a sick day.  These practices,

Continue reading

Utilization of Accountants in Termination of Employees for Urgent Business Necessity (Urgent Managerial Need) in Korea

We have used, for all cases we were involved in regarding the layoff of Korean workers, accountants to argue that the layoff is for urgent managerial need.  We have, often, been questioned by clients if the extra expense is necessary.  Yes the expense is necessary and here is why.   A case last year shows the need to utilize accountants in all cases where an employer intends to layoff workers based on “urgent business necessity” under the Korean Labor Standards Act (LSA).  A case handed down by the Supreme Court in the first half of last year ruled that a layoff did not violate the LSA, since urgent managerial necessity existed because of “external factors,” including the lack of overseas demand for the employer’s products.  The Supreme Court confirmed the holding of the High Court that noted that the District Court was wrong in emphasizing the possibility that overall production

Continue reading

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

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 Seoul 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 few attorneys in Korea are capable of handling the needs of international clients in Korea. Korean and foreign clients, often, have different expectations of the role of attorneys.  A Korean client is, often, willing to be a passive participant, since the client knows the attorney is motivated, primarily, through a significant contingency fee.  Contingency fees are common in Korea in all matters, including criminal and family matters.  Thus, clients often

Continue reading

12 New Items Prohibited from Export from Korea by Overflow of Core National Technology Law of Korea

The following is the list of the 12 new items that have been newly prohibited from export from Korea without an export license/acceptance of report of export from the Ministry of Knowledge Technology of Korea.  The export prohibition was implemented by the Overflow of Core National Technology Law of Korea.   The prohibition takes affect from the beginning of 2011. Electric /ElectronicProducts Foundry process & device technologies of less than 31 nms. Design/process/manufacturing technologies of AMOLED panels (except for module assembly process technology). Design technologies of lithium secondary batteries with high-energy density (200Wh/Kg or more)  & high-temperature safety for electric cars. Information Technology  Products          Design technologies of system for Advanced LTE/LTE. Design/process technologies of Mobile Application Processor SOC. User Interface (UI) technologies for Smart Phone Devices. Design technologies of Baseband Modems for Advanced LTE/LTE. Design technologies of RFIC and PAM for Advanced LTE Terminals. Design technologies of Base Station for Advanced

Continue reading