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 tax liability is established shall have the secondary tax liability for the amount of such money shortage: Provided, That in case of an oligopolistic stockholder under subparagraph 2, his/her secondary tax liability shall be limited to the amount calculated by multiplying the amount obtained by dividing the amount of such

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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 Franchisor (deep pocket) was not insolvent and, thus, the only available option for collection was via the Franchisor.  One caveat is that the Franchisor was paid a commission by the Supplier/Distributor for sales to the Franchisee and as noted above, the Franchisee was mandated to use this specific Supplier.  Thus, the

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Korean Child Abduction Law Explained

Child Abduction Law in Korea is a developing area of Korean law because of Korea’s Criminal and Family Law’s interaction with the recently ratified Hague Convention on the Civil Aspect of International Child Abduction and recent noted issues that have been covered in the local and international press.  Please note this area of law in Korea is developing and Korea’s child abduction jurisprudence is quickly developing and local law is necessary to consider with the interaction between the laws of the jurisdiction of the Mother and Father. One case sheds light on international child abduction law in Korea.  A Vietnamese Mother and a Korean Father with marriage difficulties were planning to divorce.  The Vietnamese Mother removed the child of the couple to Vietnam and returned to Korea for employment purposes.  The child was moved to Vietnam to be raised by the family of the Vietnamese Mother. The couple divorced after the alleged

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Korean Pretrial Detention: Korean Criminal Law Basics

Korea allows a prosecutor, via approval by a court, the right to hold a defendant pending trial in a criminal case for up to 180 days.  The approval by the Court is the granting of a Pretrial Detention Warrant, also, often referred to, in English, as Korean Arrest Warrant.  In most cases, a decision, in a criminal case, must be rendered within 180 days of the time of the detention or the Defendant must be released from detention prior to the rendering of the judgment by the court.  While bail is possible, in Korea, bail is not typically granted.  In the not so distant past, when a prosecutor requested a Pretrial Detention Warrant (Pretrial Arrest Warrant), the court nearly universally approved this Pretrial Detention Warrant. Prosecutors, normally, rarely fail to obtain a Pretrial Detention Warrant, however, with a proactive Korean Defense Attorney, often a release pending the disposition in a case

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Korean Adoption Law Protests at Olympics in Korea

A good broadcast on issues with Korea’s Adoption Law may be found at: Channel 11 News.  We, regrettably, have handled litigation against the Korean government on issues related to adoption law.  Because of changes to Korea’s adoption law it is much more difficult to adopt children from Korea.  The number of abandoned children is on the rise and it doesn’t seem like Korean families shall pick up the slack anytime soon. The broadcast notes, in part, that: “Abandoned at a fire station in Seoul, South Korea, Dr. Eckerle says she is thankful that her adoptive family in Minnesota found her at 6 months of age. “I wouldn’t have had a family, I wouldn’t have had a chance for education or what I wanted to make of myself, which was to be a doctor and an advocate for children and for families, and I would not have had any of those

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Does a Korean court have the power to issue a preliminary attachment on Korean assets stemming from a foreign court claim?

A situation often arises when a plaintiff is suing a Korean debtor in a foreign court and the non-Korean plaintiff wishes to attach the Korean-based assets of the Korean defendant in Korea.  Typically, the plaintiff found no assets of the defendant abroad and fears the disposal of the assets in Korea.  Thus, typically, the plaintiff wishes to file to a Korean court a request for a provisional attachment of the assets of the prospective defendant.  While, provisional attachments of assets of Korean defendants in lawsuits pending in Korea courts is common – this situation is not common and few courts, or Korean law firms, have handled these type matters. Thus, the question is, in short, does a Korean court have the power to issue provisional/preliminary attachment of Korean-based assets based on a claim stemming from a pending or future foreign lawsuit against the owner of these Korean-based assets?   Yes.  Korean courts may

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Lesson I: Korean Legal Terms & Phrases

This is a first in a serious of posts I shall make for those wanting to learn a little about Korean legal terms. I shall try to post a lesson every week.   I shall try to make this simple at first.  This may be a useful tool, also, for those that are just learning Korean, since I added a few simple sentence.  If you can’t read Korean characters – learn.  The alphabet is easy to learn and I promise that you shall never be able to pronounce words without learning the Korean alphabet. Lesson I: Korean for Korean Law I. Korean Words of the Week A. Supreme Court: 대법원 B. Constitutional Court: 헌법재판소 C. High Court: 고등법원 D. District Court: 지방법원 E. Administrative Court: 행정법원 F. Family Court: 가정법원 G. Patent Court: 특허법원 E. To Go: 가다 F. To Be : 이다 II. Weekly Korean Sentences A. I am going to

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Expiration Versus Termination of a Distribution Agreement in Korea: Korean Distributor Basics

While Korean Law does not specifically detail the differences in treatment in law between the non-renewal (expiration) of a distribution agreement versus the termination, in reality, Korean courts are less likely to rule in favor of distributors in cases where a distribution agreement is not renewed.  Thus, typically, it is advisable to have a distribution agreement based on a specified term of years.  However, even with the expiration of the Korean Distribution Agreement, termination risks exist. In some cases, Korean courts have noted that termination and even non-renewal is a violation of Korean Law since the non-renewal or termination of the Korean distributor was not based on “good faith.”  In many cases, Korean courts have required a showing of “good cause” to terminate or even to not renew a relationship.  Contractual formalities and structural realities often assist in allowing a non-performing distributor from prevailing in court.  Thus, a nuanced and

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Debt Collection Cases in Korea on the Rise: Buyers and Sellers Beware

My firm has noticed a sharp increase in the number of requests for the debt collection services of my team. One of these cases involves an unpaid invoice from a British company to a Korean wholesaler for over USD 700,000. The British company was duped by a small paid invoice which was quickly followed by an unpaid large invoice. Of course, the Korean company (not a company –one guy and a personal bank account) was not capitalized and has few assets. The case shall be handled through a criminal filing. The other matters are for mainly low six-figure debts or claims based on faulty or non-delivered goods. Some of the cases involved nothing more than scams to the less than careful foreign businesses. Others were caused by the squeeze that the liquidity crisis has put on local small businesses. I have written articles on this in the past. Please conduct

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Law Review Article on Korean Legal Education

I stumbled upon a good law review article on issues with Korean legal education.  The article can be found at: Legal Education in Korea. The abstract for the article is found below.  Worth a read. Korean legal education has been functioning differently from the American legal education system. Comparing it with the American legal education system, this article investigates the meanings of Korean legal education and its aspirational goals under Article 2 of the Law School Act, attempts to identify and analyze the current issues of Korean legal education, and makes recommendations to the Korean legal education reformers to help to create a successful legal education system. Adopting the U.S. graduate law school system in 2007 before the 2008 economic crisis, Korean law schools failed to see the current changes in U.S. law schools and to adopt more practical pedagogy with specific learning outcomes. Additionally, law schools failed to cure

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Future of Bitcoin in Korea according to FTC: Korean Cryptocurrency Updates

The head of the Korean Fair Trade Commission has noted to local vernaculars that he does not agree with Justice Minister Park Sang-ki’s comment that “cryptocurrency investment is gambling.”  He further noted that: “cryptocurrency recently emerged as an issue in Korea and other laws do not have the exact legal clauses that relate to closing exchanges.”  Thus, indicating, in part, that the Korean government doesn’t have the specific power to close the Korean cryptocurrency exchanges.  Of course, the FTC Chairman’s opinion does not have any legal binding effect, however, his opinions are widely respected by academics and legal practitioners. Many legal practitioners I have spoke to, in Korea, believe that the government shall not have the power, because of the number of traders in Alt Currencies to ban trading in Alt currencies.  This reality may lead to a settling of this issue via the imposing of capital gains tax on

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“Fair Use” Korean Copyright law

Dear Professor Hayes : I am in the process of completing a book on the modern history of the Republic of Korea. A good deal of my work cites news reports, published journals, and first hand reports mentioned in other books, Web sites and personal blogs. My book chronicles the modern developments from the eyes of foreigners who reside or resided in Korea. My publisher wants to confirm that Korea has a “fair use” doctrine, therefore, allowing me to cite the works of others.  Author in Rhode Island Dear Author: In general, the copyright holders, in Korea, may solely economically exploit a copyrighted work for the life of the author of the work plus 50 years. Korean Copyright Law provides that copyright infringers may be held liable in civil court and even punished in criminal court. In recent years, the Korean prosecution has been vigorous in prosecuting copyright infringers and

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Is Bitcoin Banned for Foreigners in Korea? Korean Bitcoin Law Updates

This Law Firm has wrote a few articles on Bitcoin Law in Korea.  This Alt Currency/Bitcoin Law articles may be found at: Court Challenges to Governments Ban on Cryptocurrency in Korea and Will the Korean Government Ban Bitcoin? Other article can be found via searching the Blog.  A Forbes article notes, with one significant caveat, that: “All foreigners, including residents, nonresidents and “kyopo” ethnic Koreans with foreign citizenship, will be banned from trading cryptocurrencies in Korea, the FSC’s foreign media department said by email. Minors are banned after Prime Minister Lee Nak-yeon earlier claim the cryptocurrency craze could lead the youth toward crime.” However, the article, additionally notes that: “However, Kang noted a loophole. In the new system, foreigners and minors can’t possibly make investments as it operates on a bank’s real-name account, but they could potentially use corporate accounts to make additional investments. ‘There’s no limit to that for now. We haven’t

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Infertility/Subfertility & Childcare Leave Law in Korea

The recent Moon Administration is making drastic changes to Korea’s Employment & Labor Law.  A prior article on promises made by the Moon Administration was posted earlier in the year.  Two interesting changes relate to “Subfertility Leave” and “Childcare Leave.”  We shall be updating the reader over the next couple weeks on numerous other issues that are important for employers and employees to understand about Korean Employment & Labor Law.  Check back often and subscribe via the link to Right.   Fertility Leave Law in Korea Employees facing fertility issues may receive three days off per year with one of these days off being a paid day off – exceptions, however, exist.  This amendment shall, likely, come into effect from May of 2018. Childcare Leave Law in Korea The present childcare leave law, in short, provides 40% of the regular salary in leave up to a maximum of KRW 1 million/month. 

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Non-Compete Restrictive Covenant in Employment Contracts in Korea

Korean courts have invalidated numerous, non-compete agreements, reduced the amount of time of the non-compete period and/or have reduced liquidated damage amounts for violation of non-compete agreements.  Courts typically balance the freedom to work (an ability to work outside the specific field) with the significance of the interest in the employer to enforce the covenant not to compete.  The primary factors courts utilize in determining whether to enforce a non-compete agreement are: if compensation was paid in exchange for the covenant not to compete; if the interest being sought protection over includes valuable trade secrets and other valuable intellectual property; if the position of the employee was such that the employee would be able damage the future of the employer; if the employee was terminated for justifiable reasons; if the industry practice is to enforce covenants not to compete; and if the employee is harmed by the covenant not to

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Legality of an Employer Lockout in Korea: Korean Labor & Employment Law Basics

Korea, in the eyes of many domestic and foreign companies, has been lax in the enforcement of the rights of employers to run a business.  One noted cases that lead to a decision by the Supreme Court of Korea comes to mind.  Because of a labor strike at a major automobile parts manufacturer and the physical blocking of the use of replacement workers and employer machinery by the employees, the employer implemented a partial unpaid lockout of certain employees (employees were employed by a unit of the employer), thus disallowing certain workers to enter the workplace in order to prevent further disruption of the manufacturing process.  The employees physically blocked production and thus did not allow certain orders to be fulfilled by the employer, thus affecting the employer’s business. The case is a great case to demonstrate Korea’s Lockout Law. Following the lockout, the locked-out employees, on several occasions, expressed

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IPG’s Korean Employment & Labour Law Chapter in Global Legal Insights 2018

IPG is proud to announce the contribution of the Korean chapter to GLI’s 2018 Edition of Employment & Labour Law.  The publication contains chapters from 29 different countries.  The publication may be found at: Employment & Labor Law, Sixth Edition. Key Issues addressed are, among others,: -General Labour Market Conditions in Korea -Employment Policies under the Moon Administration -Litigation Trends in Korea -Definition of “Ordinary Wage” in Korea -Korean Supreme Court’s Regular Interval Bonus Case -Director as an Employee for Korean Employment Security Purposes -Korean Employee Lockouts -Layoffs and Dismissals Based on Fault of the Employees in Korea -Korean Restrictive Covenants Law -Trade Secrets Protection in Korea -Severance Payments in Korea -Childcare Leave in Korea -Maternity Leave in Korea -Paternity Leave in Korea -Annual Leave in Korea Please see the other articles below and via the Employment Law Tag. [ABTM id=1137]

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Part-time Worker Annual Paid Leave Obligations under the Korean Labor Standards Act

Employers, in Korea, are in most cases required to grant annual paid leave to full-time and even part-time workers working in Korea-based companies.  Exceptions to this Korean annual paid leave law exist for Korean workers that work, on average, less than 15 hours per week for these Korean-based companies. Article 18 of the Korean Labor Standards Act notes that: “(1) The terms and conditions of employment of part-time workers shall be determined on the basis of relative ration computed in comparison to those work hours of full-time workers engaged in the same kind of work at the pertinent workplace.” However, annual paid vacation leave and other articles/obligations under the Korean Labor Standards Act do not apply to “workers whose contractual work hours per week on an average of four weeks (in cases where their working periods are less then four weeks, then, based on such period of work) are less

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Korean Cryptocurrency Case Filed to the Korean Constitutional Court: Korean Bitcoin Updates

The author of this blog, formerly worked for the Constitutional Court of Korea and he is excited to see this matter being litigated in Korean courts.  The issue, as I have always noted, is simply if government are willing to protect the freedom of individuals to trade and speculate in asset classes of the choosing of the investor.  While, I am far from sold on Bitcoin (and other Alt Currencies) as a long-term asset class plays – of course any free democracy shall allow its citizens to invest in asset classes the government doesn’t favor.  The key to this issue, seemingly, is just if Alt Currencies shall be considered mere asset classes. As the reader likely knows, various branches of the Korean government have noted that the Korean government shall either ban Bitcoin exchanges in Korea, prohibit banks from linking accounts to exchanges or otherwise prohibit the use of Alt

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Korean National Tax Service Tax Law News Release to Foreign Corporate Taxpayers: Korean Tax Law Updates

The following Korean Tax Law News is a publicly released Korean tax notification that is intended for foreigner companies in Korea.  The notification was not translated or drafted by this law firm.  For any questions on this notification please Contact Us. Korean Tax Law News 【January 2018】 ☞ The following Korean tax information is translated from Korean for foreign-invested companies, and is not legally binding. ※ Year-end tax settlement by foreign workers in Korea □ With the increase in foreigners residing in Korea, the number of foreign workers in Korea has increased every year as well. ○ For the convenience of foreign workers‘ year-end tax settlement in Korea, here are a few tips on year-end tax settlement for foreign workers this year. □ If a foreigner has wage and salary income generated in Korea, he/she should perform year-end tax settlement just like domestic workers, regardless of his/her sojourn period and

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