One of the major parts of our law practice here at IPG Legal for international clients, in Korea, is the structuring of joint ventures and the resolution of joint venture disputes in Korean courts and through arbitration. I find, in many of these cases, the non-Korean party is not in need of a joint venture with a a Korean party to succeed in Korea and the Korean party does not realize or has no intent in satisfying obligations under the
Continue readingCategory: Korean M and A
14 Things to Consider Before Starting a Manufacturing Business in South Korea
Korea, in many cases, is a 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, protection of IP 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
Continue readingSouth Korea Offers a Variety of Business Visas for those Wishing to Conduct Business in Korea
South Korea offers several types of business visas for foreign nationals who want to conduct business activities in the country. These include the D-7 (Investor/Business Manager) Visa, D-8 (Corporate Investment) Visa, and D-9 (International Trade and Investment) Visa, among others. Each type of visa has its own eligibility requirements and conditions, and applicants must provide proof of their business plans and financial ability in order to obtain the specific visa. Korea’s visa laws are, often, changing. For an article quoting
Continue readingForming a Joint Venture in Korea? Beware a Common Pitfall
A client, a minority shareholder in a foreign-capital invested company in Korea is involved in litigation with other company shareholders (Korean shareholders) over issues the client had with the majority and other shareholders. The client requested me to post this article to warn others entering the Korean market via a Joint Venture or similar arrangement. This article is note intended to discourage entering the Korean market via a joint venture. JVs in Korea are, often, beneficial for businesses looking to
Continue readingProposed Amendments to the Monopoly Regulation and Fair Trade Law: 2023
Proposed Amendments to the Monopoly Regulation and Fair Trade Law: Extending Merger Notification Exemptions and Adding a Voluntary Commitment System. The Monopoly Regulation and Fair Trade Act (MRFTA) is being revised, and the Korea Fair Trade Commission (KFTC) has released an advance notice of these proposed changes, which include, among other things, (i) expanding merger notification exemptions; and (ii) introducing commitment processes for merger control. (the “Proposed Revisions”). The KFTC will solicit and compile feedback on the Proposed Revisions during
Continue readingMergers & Acquisitions in The Korean E-Commerce Market: Opportunities for Foreign Niche E-Commerce Sites
First-generation Korean e-commerce enterprises are currently working to integrate recently acquired businesses and create new business prospects in the fiercely competitive E-commerce market of Korea. Last month, Korea Center, the owner of Enuri.com, the nation’s oldest online shopping mall and Danawa, another local e-commerce business, merged. In order to increase their ability to compete in the market, the two businesses intend to operate their e-commerce platforms independently while eventually building an integrated system forthe analysis of online shopping data. The
Continue readingTips for Start-up Success in Korea: Korean Business Basics
Despite the economic challenges presented by the COVID pandemic, there are still plenty of opportunities for start-up companies in South Korea. Many of the long-term foreign attorneys in Korea shall advise that South Korea remains a perfect testbed for foreign companies in the East Asian marketplace. Local and national governments remain committed to fostering long-term partnerships with foreign start-ups within Korea. The attorneys at IPG Legal have put together a list of their top tips to help your start-up succeed
Continue readingKorea 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
Continue readingHow Foreign Importers Entering Korea May Prosper from the Korean Middle Class in Korea being Screwed by Inflation: Screwflation
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
Continue readingMergers & 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.
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. 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
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
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
Continue readingThe Korean Corporate Restructuring Promotion Act of 2018: Korean Insolvency Law Updates
The recently enacted Korean Corporate Restructuring Promotion Act (hereinafter as “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 proceeding, because the belief that out-of-court proceedings shall lead to more
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
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
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,
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
Continue readingFiduciary Duties of Korean Directors/Representative & Controlling Shareholders of Korean Companies
Directors of companies, registered in Korea, many be held criminally and civilly liable for acts as a director (in limited cases even controlling shareholder can be held criminally liable). Many acts (or inactions) that would not be deemed criminal in the West are, often, deemed criminal in Korea. Additionally, matters that are considered in the West as mere “civil” matters, often, begin and end at the Korean prosecutor’s office. A little due diligence, complying with corporate formalities, nuanced corporate governance
Continue reading7 Musts to Succeed 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, likely, succeed and which companies will, likely, fail. We are far from perfect, but companies that succeed in Korea, normally, have the following seven things in common: 1. Comprehensive Understanding of the Korean Market by a Neutral Local Consultant This understanding, normally, comes from one of the
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