On December 23, 2022, proposed amendments to Korean tax laws for 2022 were finally adopted and implemented by the National Assembly (“Tax Reform”). As a follow-up measure, on January 18, 2023, the Ministry of Economy and Finance of Korea announced proposed amendments to the enforcement decree of Korean tax laws for 2022 (“Proposal”). The Proposal is expected to be promulgated in February 2023. 

On January 13, 2023, the Seoul Administrative Court dismissed an appeal filed by SkyPeople Corporation (“SkyPeople”), which sought to cancel the Game Rating and Administration Committee’s (“GRAC”) decision not to rate its blockchain-based, play-to-earn (P2E) game entitled “Five Stars for Klaytn” (the “Game”).  

On January 25, 2023, the Financial Services Commission (the “FSC”) released its proposed measures to significantly improve foreign investors’ access to Korean capital markets (the “Release”).  More specifically, the proposed measures include the following key takeaways: 

The Korea Fair Trade Commission (the “KFTC”) recently established a new division dedicated to reviewing merger cases involving foreign parties (“Foreign Mergers”), and is continuing to make various systematic reorganization efforts to effectively respond to the increasing need for more efficient merger reviews. In 2021, the KFTC reviewed approximately 1,100 merger cases, experiencing about a 150% increase compared to 2018. Korea’s current merger review system and the limited number of case handlers (eight in total), made it difficult to provide timely support for the innovative growth of the companies and effectively respond to large-scale Foreign Mergers. As a result, the KFTC expects to implement various systematic changes as follows: 

A Korean pharmaceutical company (“Company”) agreed to receive a certain percentage of its annual purchase quantity as “free samples” when importing raw materials for pharmaceuticals from overseas suppliers. According to the above agreement, the customs authority issued a challenge that the goods, which were imported by the Company without making a separate payment relevant to the price of goods, fall under Article 31 (transaction value of goods of the same kind or quality) of the Korean Customs Duty Act (“KCDA”) as opposed to Article 30 (transaction value) of the KCDA. Based on such finding, the transaction value of the goods was rejected and customs duties assessed based on the transaction value of similar goods previously imported for a fee.

The Korea Fair Trade Commission (the “KFTC”) recently announced proposed amendments to the KFTC’s Review Standard for Business Combination (“M&A Review Standard”) and Guidelines for Reporting Business Combinations (“M&A Notification Guidelines”), as well as the KFTC’s plans to establish a new Global M&A Division in response to the growing number of global M&As. The current proposed changes are the result of efforts by the KFTC’s Task Force on Merger Control Regime Reform, which sought public opinion as well as holding discussions with market participants and academics on the issue from June 2022, to properly reflect and respond to the changes in the recent global M&A trends and the economic environment. 

On October 14, 2022, a proposal (“Proposal”) was announced for purposes of introducing a special tax regime applicable to foreign flow-through entities for Korean tax purposes. The primary legislative intent of the Proposal is to allow Korean investors to make investments into foreign jurisdictions primarily through foreign private equity (PE) funds without facing additional adverse tax implications in foreign jurisdictions resulting from making such investments via foreign corporations or investment vehicles that are deemed as reverse hybrid entities.

It is essential for international securities companies and offshore investors to review your own records for any known or unknown potential violations. Please contact us to discuss your particular facts.  Please note that, in addition to naked short selling, certain covered short selling may be in violation of the Korean regulations. 

On September 16, 2022, Ki-jeong Han, a professor at Seoul National University (“SNU”) School of Law, was appointed as the next Chairperson of the Korea Fair Trade Commission (“KFTC”) by President Yoon Suk-yeol. With the appointment of the new KFTC Chairperson four months into President Yoon’s administration, the new administration’s policy goals regarding Korean competition law enforcement are expected to be actively implemented.

Fines totaling KRW 100 billion, together with corrective orders, handed down by Personal Information Protection Commission (PIPC) on September 14, 2022

On July 21, 2022, the Ministry of Economy and Finance (MOEF) released its proposed amendments to the Korean tax laws for 2022. The key policy initiatives announced in the proposals are aimed at: (i) stimulating the economy through reasonable modifications to the tax law; (ii) stabilizing citizens’ livelihoods by reducing tax burdens; (iii) strengthening the tax system by improving fiscal sustainability and tax fairness; and (iv) creating a taxpayer-friendly environment by increasing taxpayer convenience. The MOEF projects that the tax revenue will drop by approximately KRW 13.1 trillion over the next five years as a result of the revisions. Revenue from income taxes and corporate taxes are expected to decrease by KRW 2.5 trillion and KRW 6.8 trillion respectively, accounting for 71% of the total decrease in revenue anticipated from the tax reforms. If the proposals are approved at the National Assembly, the amendments will become effective as of January 1, 2023.

The proposed comprehensive amendment to the Private International Law (the “amended PIL”) was approved by the plenary session of the National Assembly on December 9, 2021 and is effective from July 5, 2022. As a result of this comprehensive amendment, the amended PIL has 35 new provisions relating to international jurisdiction in the general provisions and the respective provisions, providing detailed rules compared to the previous PIL which provided only a single article setting out the principle. Seven provisions out of the existing 62 provisions have been amended as well. Due to the amendment, enhanced prediction regarding international jurisdiction has become possible, and a new system is now in place to ensure propriety in specific cases relating to international jurisdiction.

With the election of a new president in March 2022, Korea is currently in the midst of significant changes, including in the area of competition law and criminal sanctions.  The Korea Fair Trade Commission has also been continuing its active enforcement activities, with a recent landmark decision over an international freight rate cartel by various ocean liners following several years of investigation.  We provide further developments and our analysis on both issues below. 

The Act on Special Measures for Reinforcement and Protection of Competitiveness of National Advanced Strategic Industries (the “Strategic Industry Act” or the “Act”), as promulgated on February 3, 2022 and scheduled to become effective in August of this year, newly defines the “national advanced strategic industry” and “national advanced strategic technology” in aiming to develop and protect the relevant industries.  In this article, we will examine the legislative history and key details of the Act.

On April 20, 2022, the Securities and Futures Commission (“SFC”) published a circular which states that the ‘music copyright fee participation claim’ which Musicow Inc. (“Musicow”) offers constitute ‘investment contract securities’ under the Financial Investment Services and Capital Markets Act of Korea (“Capital Markets Act”). 

Mr. Yoon Suk-yeol, the presidential candidate of the conservative People Power Party, won the presidential election on March 9.

By reflecting the normative factors of ESG management, the Financial Services Commission (the “FSC”) amended the Corporate Governance Report Guidelines (“Guidelines”) on March 7, 2022. Based on such amendment, the FSC announced its plans to: (1) newly establish specific principles to ensure that companies describe their policies to protect shareholders in the event of a change in the ownership structure, such as through a split-off or merger, etc.; (2) strengthen the obligation to explain any insider trading such as with an affiliate or shareholders; and (3) ensure that the CEO succession policy is clearly described, including a plan for installation of an audit committee, if any, thereby enhancing the transparency of corporate management.  The key amendments to the Guidelines, and the ripple effects and implications of such amendments are as follows:

Yoon Suk-yeol’s victory in South Korea’s presidential election on March 9, 2022 marks a rightward turn in the country’s leadership, to succeed the liberal administration of outgoing President Moon Jae-in. Yoon, a former chief prosecutor under Moon, had resigned in early 2021 under pressure for investigations into a key Moon ally. Mainly on the strength of his profile ensuing from that controversy, and despite zero political experience, he was named standard bearer of the main conservative opposition party, the “People Power Party”. 
At the end of the long and often acrimonious contest, Yoon won with 48.6% of the vote, a razor-thin margin over his ruling Democratic Party candidate Lee Jae-myung. The result is seen as reflecting, among other things, broad discontent over sky-high housing costs and inflation all around. Evidently pivotal, also, was an endorsement of Yoon in the final week from a center-right candidate who had been running third. Yoon Suk-yeol, 61, lawyer and ex-prosecutor, newcomer to politics, will serve as President of Korea through 2026. 

Netflix suit filed in April 2020 had sought declaratory judgments confirming that Netflix (i) has no obligation to negotiate network usage fees with SKB and (ii) has no obligation to pay any network usage fees. 

District Court decision of June 25, 2021 rejects Netflix arguments on both counts, ruling Netflix has an obligation to pay SKB for network usage (greatly expanding in recent years) – but stops short of delineating method or form of consideration. 

On May 21, 2021, the Korean National Assembly passed partial amendments to the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc. (the “IT Network Act”).  The amendments were promulgated on June 8, 2021 in the official legislative gazette and will take effect 6 month after the promulgation.  

Korean government has named tentative group of six online content providers – Google, Facebook, Netflix, Naver, Kakao, Wavve – as required to implement measures for ensuring “convenient and stable service”, pursuant to amended Telecommunications Business Act.

Famous for its global mega-hit idol group BTS, Big Hit Entertainment (“Big Hit”) made its debut on the KOSPI Market of the Korea Exchange, with its shares starting to be traded on October 15, 2020 at the stock opening price of KRW 270,000 per share, being double the IPO price of KRW 135,000 per share. Big Hit’s IPO was the largest Korean IPO in the past three years having been 1,117 times oversubscribed by institutional investors and 607 times

BKL recently launched its Center for Law and Economics (CLE), through which it plans to provide clients with differentiated services based on joint and coordinated legal and economic analyses, applicable throughout all industries both domestic and abroad.

NeoImmuneTech, Inc. ("NeoImmuneTech"), a US Delaware corporation engaged in the biotech business, successfully consummated its Korean IPO and listing on the KOSDAQ market of depositary receipts (the “KDRs”) representing shares of its common stock on March 16, 2021. NeoImmuneTech is the second foreign company to be listed on the KRX through the technology growth company special listing track (“Special Tech Track Listing”), following US company Psomagen’s KOSDAQ listing in 2020.