Apr 27, 2012

Issuance of Bonds in Non-Listed and Closed Companies in Korea

With the recent amendment of the Korean Commercial Code (KCC) and the issuance of the Presidential Decree for the KCC, Korea will now allow, when specific requirements are met, the issuance of bonds including redeemable and derivative bonds under article 469 of the Commercial Code of Korea for listed and non-listed companies. 

Matters relating to issuance and management may be delegated to a commissioned trustee company.  Major shareholders, controlled shareholders and other interested parties are prohibited, by the law, to act as trustees. 
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SeanHayes@ipglegal.com
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, the Philippines, Myanmar, Vietnam and the U.S.
www.ipglegal.com

Apr 25, 2012

Amended Korea Commercial Code on In-Kind Contributions

The Presidential Decree to the amended Korea Commercial Code notes that an appraisal by the Korean courts is no longer necessary when issuing equity stocks in exchange for an in-kind contribution in a company if:

1.  The amount of the in-kind contribution is less than KRW 50,000,000 and accounts for less than 20% of the entire equity of the company;
2.  The value of the in-kind contribution is less than the book value listed in the balance sheet of the issuing company; and
3.  Listed securities are contributed at a price equal to or less than the market price.

Other posts on the amended Commercial Code of Korea:
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SeanHayes@ipglegal.com IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, the Philippines, Laos, Myanmar, Vietnam and the U.S.

Apr 24, 2012

Export Licenses in 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
/
Electronic
Products

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
T
echnology 
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 LTE/LTE Terminals.
Design technologies of P.
User Interface (UI) technologies for smart devices.
Design technologies of Baseband Modem for WiBro terminals.

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Sean Hayes, IPG's Co-Chair of the Korea Practice Team, may be contacted at: SeanHayes@ipglegal.com SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines,Vietnam and the U.S. www.ipglegal.com

Apr 16, 2012

Selling your Franchise Into Korea: Korean Franchise Law Basics

Korea has seen its share of unscrupulous local franchisors.  Issues with local franchisors has lead to Korea adopting one of the most franchisee-friendly franchise laws in Asia.

The initial franchise act in Korea was passed in 2002.  This act was substantially amended in 2007 and some revisions were made in 2010.

The Act on Fairness in Franchise Transactions may be found on the website of the Korean Legislative Research Institute. The translation is far from perfect and without a reading of the Presidential Decree to the Act, the reading of the Act may be fruitless endeavor.

The major requirements regarding franchise disclosure statements, fees, termination and non-renewal are noted in the Presidential Implementation Decree to the Act on Fairness in Franchise Transactions.  The Decree, to my knowledge, has not been, officially, translated.

Major Changes to the Korean Franchise Act of 2002 (2008 & 2010):
  • Comprehensive Franchise Disclosure Statement is required to be filed with the Korean Fair Trade Commission (KFCC).  The KFCC, normally, takes two months to review the filing.  Don't market your franchise in Korea before going through this procedure.  The specific details required to be noted in the disclosure statement has been detailed in a Model Franchise Disclosure Statement that was drafted by the Korea Fair Trade Commission.  Your international franchise disclosure statement will not be adequate for Korea.
  • Implementation of a 14-day "cooling-off" period.  No money can be taken or agreements signed with a franchisee until 14-days of receipt of the Franchise Disclosure Statement.  This means the Franchise Disclosure Statement that has been approved by the KFCC, not, your international disclosure statement. 
  • Prohibition of operating in competition with a franchisee by franchisor.
  • Set aside of a portion of franchise fee in trust.
  • Non-renewal only based on "just-cause."  Termination, only, based on "just cause," with an opportunity to remedy.
The Korean Franchise Law has been criticized for being too projective of franchisees (difficulty to terminate non-complying franchisees), thus, leading major international franchisors to only enter the market through a joint venture with a local conglomerate.

We have found that many of our clients have had issues, also, with local conglomerates and some have had few issues with SME franchisees.  The key is a detailed localized Franchise Disclosure Statement, a good localized franchise package and on-the-ground experts assisting.

Please be aware that the KFCC has aggressively audited local and foreign franchisees and has not been shy in fining and filing lawsuits against franchisors that are not in compliance with Korea's franchise law.

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SeanHayes@ipglegal.com
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S. www.ipglegal.com

Apr 12, 2012

Korean Medical Dispute Mediation and Arbitration Agency

 IPG has handled numerous medical malpractice matters for plaintiffs and defendants of medical malpractice cases in Korea in Seoul courts and we were, prior, to having knowledge of the composition of the new Korean Medical Dispute Mediation and Arbitration Agency very pessimistic about its usefulness for plaintiffs. 
 
When we first heard about the enactment of the new Korean medical malpractice law we were skeptical if the system would be useful for plaintiffs, since, often, the court and prosecutors are able to assert more pressure on doctors than this Commission and worried that this agency would be dominated by doctors.

However, after a discussion with one of the standing commissioners of the Korean Medical Dispute Mediation and Arbitration Agency, who we know well and who we worked with in the past, we have come to realize that the composition of the lends itself to providing a fair forum for both doctors and patient plaintiffs.

In many cases, the court may be the best option for a plaintiffs, however, this agency may be more suited in handling the more complex matters, because of the nature of the Korean courts.

We will be writing more articles on medical malpractice in Korea over the next few weeks. 
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IPG's Co-Chair of the Korea Practice Team may be contracted at: SeanHayes@ipglegal.com

SeanHayes@ipglegal.com
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S. www.ipglegal.com

Apr 11, 2012

Korean Divorce Explained by U.S. Military

 The U.S. Military in Korea drafted an excellent, basic, explanation of the divorce procedure in Korea. Divorce, in Korea, is possible even if both parties to the divorce proceedings are not Korean and were not married in Korea.

As noted in the document, if you are involved in a contested divorce or are not willing to jump through the hoops at the Seoul Family Court in an uncontested divorce, promptly retain a lawyer.  It is essential to obtain an attorney that has handled a significant amount of family law cases for expats.   I advise retaining a Korean attorney that works hand-in-hand with a foreign attorney.

The explanation of the divorce procedure in Korea can be found at: Divorce in Korea.

Other posts on divorce/custody issues in Korea:
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SeanHayes@ipglegal.com

IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, the Philippines, Myanmar, Vietnam and the U.S. www.ipglegal.com

Apr 8, 2012

Why are U.S. Cars not Popular in Korea even with Decrease in Tariffs from FTA

According to an article in the Korea Times, the Korea-U.S. FTA has not increased the popularity of U.S. cars, even though the price of the cars have decreased by nearly USD 5,000.  Why are U.S. cars not popular in Korea?
The Korea-U.S. free trade agreement (KORUS FTA), which went into effect March 15, removed 5.2 million won ($4,596) from the price of one Ford-made Lincoln, but this failed to boost sales.

The lackluster performance was made more manifest as March saw the biggest monthly increase in the number of newly-registered imported cars; and German brands maintained their dominance.

According to the Korea Automobile Importers and Distributors Association (KAIDA), the number of newly registered imported cars last month increased by 15.8 percent to 10,648 from the previous month.

But the sales of U.S. models from Ford, General Motors and Chrysler fell in growth despite aggressive marketing activities and the 4 percent tariff deductions on all models.

Under the KORUS FTA, tariffs on U.S.-made cars were lowered to 4 percent from 8 percent immediately. The remaining tariffs will be lifted completely in four years.

Ford has lowered its price by around 2.8 million won on average, and has also cut component prices by up to 35 percent.

“We will also introduce new models from May and June,” an official from Ford Korea said. “Our goal this year is to sell over 6,000 cars here.”

Thanks to their aggressive marketing, the sales of Ford surged by 80.9 percent to 416 vehicles in March from the previous month’s 230.

At a glance, this performance seems to be a drastic improvement, but in reality, its cars are actually losing their popularity.

Compared to the same period last year, sales of Ford cars decreased by 5.9 percent and the market share also decreased to 3.91 from 4.4 percent. 
What do you think?
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SeanHayes@ipglegal.com
 IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, the Philippines, Vietnam and the U.S.
www.ipglegal.com