Tax Liability of Controlling Shareholders in a Korean Company: Tax Law Updates

Under Article 39 of Korea’s Framework Act on National Taxes, unpaid taxes owed to the Korean government are enforceable against certain “ologopolistic” shareholders of respective debtor company’s shareholder.  This secondary liability of shareholders is codified within the Framework Act on National Taxation.  Article 39 of the Framework Act on National Taxes, specifically, notes that: “Where the property of a corporation is not enough to pay national taxes, additional dues and disposition fees for arrears imposed upon or to be paid by the corporation, any person who falls under any of the following as of the date on which the national

Continue reading »

Privity of Contract in Franchise Agreements in Korea: Korean Franchise Law Updates

Normally, in Korea, a contract/agreement cannot confer rights nor impose obligations upon a person who is no a party to the contract/agreement.  One interesting case, in franchise law, applied this principle to the benefit of the franchisor and the detriment to a supplier.  A Supplier delivered food through a Distributor to a Franchisee based on a franchisee requirement iterated in a franchise agreement with a franchisor.  The case brings to light, also, the potential liability of franchisors for acts of Korean franchisees.  The dispute occurred, of course, since the Supplier was not paid for an outstanding order, since the Franchisee was insolvent.  The

Continue reading »

Korean Commercial Liens versus Korean Civil Liens

Korea, in short, has two major types of liens – Commercial Liens and a Civil Liens.  For example, in a dispute between a contractor and a landowner or developer, a contractor make execute a Commercial Lien or Civil Lien.  A Commercial Lien is governed by the Korean Commercial Code while a Civil Lien is governed by the Korean Civil Code.  I shall for ease, utilize the contractor and landowner (developer) for example purposes only.  For explanation of Korea’s law on attachment please see: Preliminary Attachments in Korea Korean Civil Liens Korean Civil Liens are governed by the Korean Civil Code.

Continue reading »

Provisional Attachments of Assets in Pending Litigation in Korea Courts

A party attempting to collect on a debt or potential liability based on breach of contract or torts in Korea may obtain a Provisional Attachment of an Asset. Another useful tool to expedite proceeding in a Korean civil matter is to Obtain a Payment Order from a Korean Court.  A provisional attachment is considered provisional, since the attachment is executed prior to the final judgement. The, facial, purpose of a provisional attachment is to secure assets necessary for enforcement in cases where a defendant may conceal or dispose of assets. However, a provisional attachment, often, encourages settlement. We advise most creditors attempting

Continue reading »

English-speaking Korean lawyers and International Lawyers at International Law Firm in Korea discussing issues of Korean Law

IPG Legal is a leading client-focused international law firm with offices in Korea that is, often, selected over the ubiquitous Korean Law Firms when success is essential and success depends on nuanced street-smart advice, proactive  and unconflicted representation. Our attorneys are, intentionally. different from the crowd.  From our retired judge partners to our junior associates, we are all trained with an intense focus on client success, lawyer proactivity, and to understand the nexus between your commercial and legal needs. Our attorneys shall never push to you useless memos, non-nuanced legal advice or get you into litigation without an honest assessment of

Continue reading »

A Franchisor may be Unable to Prosecute a Franchisee for Embezzlement in Korea

Article 355 of Korea’s Criminal Act defines embezzlement as: “a person who, having the custody of another’s property, embezzles or refuses to return the property shall be punished by imprisonment for not more than five years or a fine not exceeding fifteen million won.” In a landmark case in Korea’s Franchise Jurisprudence, the Supreme Court ruled a franchisee may not be held criminally liable for embezzlement for “arbitrary spending of funds” and not paying franchise fees under the franchise agreement, since the Supreme Court deemed that the funds are not funds held, in short, in trust for the franchisor and

Continue reading »

Execution/Enforcement of American, European & other Nation Court Judgments in Korean Courts

Question:  I have a final judgment against a Korean individual from a New York state court.  How can I enforce this judgment in Korea against this Korean individual? Korean Central District Court. Answer: A foreign judgment, in Korea, can be executed based on meeting the requirements of the Civil Execution Act of Korea and Civil Procedure Act of Korea.  The relevant provision are Article 26 and Article 27 of the Korean Civil Execution Act and Article 217 of the Korean Civil Act.  If you interested in enforcing a Korean judgment abroad, please view our sister blog at: Enforcing a Foreign

Continue reading »

Will the Korean Government Kill Bitcoin? The legality of Bitcoin in Korea

Bitcoin in Korea Local Korean vernaculars have reported that Bitcoin and other “Alt Coins” are to be investigated by the Bank of Korea, Korea’s Prosecutors Office and other government agencies. It is alleged by some in the Korean government that these crypto-currencies may be nothing more than Ponzi or Pump & Dumb Schemes.  While, others, proclaim these currencies are at the foundation of freedom and they help to fight inflation imposed by central banking authorities, allows for anonymous transactions and low transaction fees. If the Korea government has made up its mind on the future of Bitcoin in Korea we

Continue reading »

Korea New Exchange (KONEX) Basics

The Korean Exchange (KRX) established, on July 1, 2013, an SME only-listed securities market with the, facial, purpose of providing a new avenue for SMEs in obtaining assets for investments.  A KONEX-listed firm with capabilities to list, at a later date, on the KOSDAQ or KOSPI may, also, benefit from a stream-lined procedure to list on the KOSDAQ or KOSPI.   Korea’s capital markets have been, strongly, criticized for not providing adequate funding sources for small companies.  Most funding for companies either comes from the banks or via modest government grants and loans.  With the banks becoming more conservative in funding

Continue reading »

Piercing the Corporate Veil in Korea: Suing Shareholders of a Corporation

It is possible, in some situations, for shareholders to be sued for the acts of a corporation.  The concept is called “piercing the corporate veil.” The Supreme Court of Korea has noted that the corporate veil may be pierced and a shareholder may be sued: “Where a company maintains the external appearance of a juristic person while it merely takes the form of a juristic person and, in substance, it is equivalent to other person’s private enterprise behind the corporate veil or used without justifiable reason in order to circumvent the application of laws against the person behind the corporate

Continue reading »

Wills, Trusts, Pre-Nuptial Agreements, Living Wills, and Power of Attorneys in Korea

We receive many calls requesting the notarization of wills, living wills, general and specific power of attorneys, prenuptial agreements and other like agreements and documents in Korea.  These documents are, often, just pulled from the internet. We, sometimes, notarize these agreements for clients, however, in most cases we refer the client to their local embassy in Seoul, since the embassy stamp has a far less chance of not being recognized in the foreign jurisdiction than a Korean notarial stamp and, also, advise a redraft of the document. This post was not written to tell you not to call me about

Continue reading »

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

Continue reading »

Collecting a Debt in Korea: Payment Orders are your Friends

We receive many emails concerning our collection services and this answer is an answer that I give for most collections matters involving debts with debtors that appear solvent. 1. Obtain a Payment Order & Send a Demand Letter (지급명령) A Payment Order Complaint is filed to the court and this complaint, if accepted by the court, is served on the debtor-defendant.  If the complaint is not answered in 14 days by the defendant the case is finalized and this finalized judgment can be executed.  If you are savvy, speak Korean and have some understanding of law, a payment order can be

Continue reading »

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.

Continue reading »

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

Continue reading »

Debt Collection in Korea: Foreign Creditor vs. Bankrupt Korea Debtor

The number of bankruptcy and rehabilitation filings in Korea are on the rise.  The Korean economy may be entering into a recession.  The last creditor to be paid is, typically, the foreign company. We receive emails, on nearly a daily basis, from companies and individuals attempting to collect a commercial debt in Korea. Many of these creditors are not aware that the debtor has filed for bankruptcy or is experiencing financial difficulties.   Please follow this basic advice and take a read of other others we wrote on this topic. Before Engaging in a Relationship with a Korean Company:1. Before

Continue reading »

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

Continue reading »

KORUS FTA: Impacts on Trade & Investment for Korea and the States (Guest Post by NerdWallet Journalist)

Guest Post by Maxime Rieman of NerdWallet In March 2012, the U.S.-South Korea Free Trade Agreement (KORUS FTA) went into effect after years of bilateral negotiation and months of contentious debates in both nations. After the North American Free Trade Agreement (NAFTA), this is the largest free trade agreement to which the United States has pledged itself. KORUS FTA covers a wide range of investment and trade matters and reduces each nation’s tariffs on the other’s goods by 95% over half a decade. Given the close economic ties between the U.S. and South Korea—the U.S. is South Korea’s third-largest trading

Continue reading »

Arrest/Attachment of Ships at Korean Ports: Maritime Liens in Korea

The arrest of vessels/ships in Korea is a common tool to satisfy judgements against debtors.  Korean courts allow the ex-parte arrest of ships.  The court, normally, does not request from the Korean counsel of the creditor/claimant evidence of how long the ship will remain in Korean waters, as is, sometimes, the case in other neighboring jurisdictions. We find Korea to be a much easier destination for arresting vehicles than many other Asian nations, because of the efficiency focus of the Korean court system and the less than efficient other Asian jurisdictions.  Typically, the arrest action will take a few days

Continue reading »

7 Musts in Succeeding in Business in Korea

We have the unique pleasure to have a bird’s-eye view of numerous clients’ businesses in Korea.  At this stage of our experience in Korea we are, typically, able to determine which companies will succeed and which companies will fail.  Companies that succeed in Korea, normally, do/have the following 7 Things: 1.  Comprehensive Understanding of the Korean Market by a Neutral Local Consultant This understanding, normally, comes from one of the few business consultants, in Korea, that arecapable of providing a decent market overview with a detailed list of potential targets and contacts within these targets.  We work with a handful

Continue reading »