法律简讯Asia Region Funds Passport Regime to be Implemented in Korea in May 2020 Korea's Financial Services Commission announced on January 20 that the Asia Region Funds Passport ("ARFP") will be implemented in Korea from May 27, 2020 and that it is revising subordinate provisions of the Financial Investment Services and Capital Markets Act in accordance with the Memorandum of Cooperation on the Establishment and Implementation of the Asia Region Funds Passport ("MOC"), which was signed by the governments of Korea, Australia, Japan, New Zealand and Thailand in April 2016. The aim of the ARFP is to facilitate the offer of interests in certain collective investment schemes ("CIS") established in ARFP member countries to investors in other ARFP member countries through improved market access and regulatory harmonization. Overview of ARFP Regime The ARFP provides a multilateral framework within which a CIS operator who operates an eligible CIS (a Passport Fund) in a passport member country ("home country") will be able to offer interests in the fund to investors in other Passport member countries ("host country"). Becoming a Passport Fund is a two part process ? registration by the home country regulator and then approval for entry by the host country regulator. To be registered, the home country regulator must be satisfied that (among other things) the fund operator is an eligible entity and the fund satisfies certain eligibility requirements, which are set forth in Annex 3 "Passport Rules" of the MOC. For an operator to be classified as an eligible entity, it must satisfy certain requirements, including (among others) requirements relating to value of funds under management, capital, organizational competence and track record. In addition, only funds investing in currency, deposits, depository receipts over gold, transferable securities and money market instruments are eligible to become a Passport Fund. Once registered and operating, a Passport Fund must comply with ongoing compliance and notification requirements in both the home and host jurisdictions. Home country laws and regulations will apply to the registration of the Passport Fund and the CIS operator's management of the Passport Fund, while host country laws and regulations will apply to the interaction between the investor and the Passport Fund. For example, an Australian Passport Fund offered in Korea will be subject to Korean laws on distribution, disclosure, complaints handling and marketing, while the registration and ongoing management of the Australian Passport Fund would be subject to Australian laws. Key Takeaways From May 27, 2020, eligible CIS operators managing eligible CIS in Australia, Japan, New Zealand and/or Thailand will be able to apply to the Financial Supervisory Service of Korea to publicly offer interests in the funds to investors in Korea. If registered in another ARFP member country as a Passport Fund, the fund will, in principle, be deemed eligible for a simplified registration process in Korea without having to separately register the CIS in Korea or be licensed in Korea. Such CIS operators that are interested in doing so will be subject to Korean laws on distribution, disclosure, marketing and ongoing obligations, so it would be prudent for such CIS operators to become familiar with these laws in advance. From May 27, 2020, eligible CIS operators in Korea will be able to register their Korean funds in Korea as Passport Funds. If registered as a Passport Fund, the fund will, in principle, be deemed eligible for a simplified registration process in other ARFP member countries without having to separately register the CIS in each of those countries or be licensed in each country. Taking Advantage of the ARFP Regime Asset managers in Korea and in ARFP member countries (and local counsel in those countries) who are interested in taking advantage of the benefits of the ARFP regime may wish to consider (i) reviewing whether they and the retail funds they wish to offer satisfy applicable eligibility requirements for registration as Passport Funds in their home countries and (ii) reviewing the laws of prospective host countries that will govern distribution, disclosure, marketing and ongoing obligations applicable to Passport Funds in those host countries.2020.02.07
法律简讯KFTC Releases Results of Latest Survey on Franchise Transactions On January 29, 2020, the Korea Fair Trade Commission ("KFTC") issued a press release on the results of its latest round of written surveys on franchise transactions. Conducted for a three-month period that ended in November 2019, the surveys targeted around 200 franchisors and 12,000 franchisees in 20 industries. Among others, franchisees were asked whether they have been faced with fair trade law violations by their franchisors. Based on their answers, the KFTC found that unfair trade practices in the franchise industry continued to decline for the third year in a row since 2017. We summarize key details of the survey results as follows. Issue Survey Results Directly-managed stores 93% of franchisors views that prior experience in operating directly-managed stores is helpful when expanding into a franchise business, and leads to greater sales for their franchisees as well as better business for the franchisors. Ad campaigns and promotional events 21.7% of franchisees views that their franchisor did not provide a breakdown of the expenses after conducting an ad campaign or promotional event. 92.2% of franchisees thinks that franchisors should gain consent from their franchisees before launching an ad campaign or promotional event if the franchisees have to pay part of the expenses. 40.6% of franchisees views that franchisors should obtain at least "70%" of their franchisees' consent before launching such an ad campaign or promotional event. Mandatory purchases On the practice of franchisors designating items for mandatory purchase, 16% of franchisees states that the designated items are too expensive, followed by the 11.3% who views that unnecessary items are designated for mandatory purchase. Franchisees' right to organize 8.5% of franchisees answers that they had experienced disadvantages for joining or participating in a franchise association (5.7 percentage point increase from the previous year). Store environment upgrades According to franchisors, on average, 84.6% of the franchise store environment upgrade costs were paid by the franchisor (up 3.8 percentage points from the previous year) and interior renovations were conducted once every 8.1 years (0.3 years later than the previous year). As the problem of the franchisors' request to upgrade franchise store environments, 33% of franchisees thinks that franchisors charge an excessive price for the requested interior work, while 19% views that they are coerced to do unnecessary interior works. For your reference, the press release also states that going forward, the KFTC will be focusing on the following policy directions regarding franchise transactions. Ensure enactment of the amendment bill to the Fairness in Franchise Transactions Act ("FFTA"), currently pending before the National Assembly, that purports to obligate franchisors to (i) obtain consent of franchisees before conducting ad campaigns or promotional events; and (ii) have prior experience in operating directly-managed stores—which is helpful when expanding into a franchise business. Amend the Enforcement Decree to the FFTA to the extent that it provides specific grounds for immediate termination of franchise agreements, to protect franchisees from unfair terminations for exercising their right to organize. Improve the practice of designating items for mandatory purchase, by creating guidelines and encouraging voluntary compliance of franchisors through joint efforts with local governments, including market surveys and disclosure statement analysis.2020.02.07
法律简讯Promulgation of Amendments to the Act on Ownership and Management of Strata Buildings On February 4, 2020, certain proposed amendments to the Act on Ownership and Management of Strata Buildings (the “Strata Building Act”) were promulgated into the law (the “Amendments”). The Amendments will take into effect one year after the date of the promulgation (i.e., from February 5, 2021). Below are some of the notable changes under the Amendments: 1. Consent threshold required to alter common use areas lowered Currently under the Strata Building Act, for structural alternation of common use areas of a strata building, it requires affirmative vote of more than 3/4 of the total number of the strata unit owners and the owners whose units represent more than 3/4 of the total exclusive area of the building as resolved at an owner’s association meeting. Under the Amendments, the affirmative voting thresholds were relaxed to more than 2/3 of the total number of the strata unit owners and the owners whose units represent more than 2/3 of the total exclusive area of the building. Further under the Amendments, for alteration of common use areas to address aging buildings and to take related preventive measures where such alterations could affect the ownership of the unit holders or the scope of their land use right, it requires affirmative vote of more than 4/5 of the total number of the strata unit owners and the owners whose units represent more than 4/5 of the total area of the building. It appears that this new provision is intended to relax the affirmative voting threshold and promulgate it into the law the unanimous approval standard previously set by a court precedent which required unanimous consent by all strata unit owners when involving alteration of common use areas of a strata building which could affect the ownership and land use right of the unit owners. 2. Requirement to report the building manager to the relevant government offices Under the Amendments, for a strata building having 50 or more units, when a building manager is appointed, the building manager must report its appointment to the relevant government offices (such as the “gu” district office). It appears that the amendment is intended to improve the transparency of the strata building management and administrative supervision by the authorities. 3. Requirement to conduct financial audit on management of strata building Under the Amendments, for a strata building having 150 units or more, the building must undergo financial audits by an auditor at least once every year, and the auditor must report the outcome of the audit to the strata unit owners and the unit occupants. However, if more than 2/3 of the total number of the strata unit owners and the owners whose units represent more than 2/3 of the total exclusive area of the building resolve at an owners’ associating meeting not to receive such financial audit for any given year, the financial audit can be omitted for the concerned year.2020.02.05
法律简讯Amendments to the 5% Reporting Rules On January 29, 2020, the Enforcement Decree of the Financial Investment Services and Capital Markets Act ("FSCMA") was amended (the "Amended Enforcement Decree") to take effect from February 1, 2020 (the "Effective Date"). The most significant aspect of the Amended Enforcement Decree is the implementation of changes to the substantial shareholding reporting requirements which applies to any person holding 5% or more of equity securities issued by a listed company in Korea (the "5% Reporting Rules"). Changes to the 5% Reporting Rules under the Amended Enforcement Decree is driven by the creation of a third category of investment objective named as "General Investment Purpose." Currently, the FSCMA contemplates two categories of investment objectives for purposes of the 5% Report: (i) shareholders with the intent to influence the management of the company ("Management Participation Purpose") and (ii) shareholders without the intent to influence management of the company ("Portfolio Investment Purpose"). The new category of investment objective, General Investment Purpose, is intended to capture those investors who do not intend to engage in activities constituting Management Participation Purpose but seek to exercise their shareholders' rights more actively than portfolio investors ("General Investment Purpose"). We discuss below key aspects of the changes to the 5% Reporting Rules. 1. Narrowing of the scope of activities constituting Management Participation Purpose Under the FSCMA, investors exercising Management Participation Purpose activities are defined as those investors intending to affect the company's business management by exercising their influence against the company or its officers on matters including but not limited to appointment, dismissal or suspension of official duties of a director or statutory auditor, amendments to the articles of incorporation with respect to the organization of the company such as the composition of the board of directors, or changes to the company's paid-in capital. Under the Amended Enforcement Decree, certain activities previously stipulated as Management Participation Purpose will no longer be considered as such. Those activities excluded from the list of Management Participation Purpose activities are: (i) exercise of shareholder rights granted under the Korean Commercial Code in response to illegal conduct by the company and its directors or statutory auditors (e.g., right to file for injunction against tort and right to request for dismissal of officer(s)); (ii) professional investors such as public pension funds seeking to amend the investee company's articles of incorporation in line with the stewardship principles publicly announced by such investors as part of their overall mandate to improve the governance of their portfolio companies; and (iii) seeking changes to the dividend policies of the investee companies. Going forward, the foregoing activities will be categorized as General Investment Purpose related activities which will be subject to a simpler set of reporting requirements as compared to the reporting requirements under Management Participation Purpose category. 2. Application of differentiated reporting requirements by investment objective Differentiated reporting requirements apply under the 5% Reporting Rules depending on the investment objective of the investor with the strictest requirements applying to the Management Participation Purpose reporting category. We highlight below some key aspects to consider for filing the 5% Report under the Amended Enforcement Decree. 1) Management Participation Purpose The deadline for filing the amended 5% Report which is five business days from the trigger event and the related disclosure requirements for reporting under this category of investment purpose remain unchanged under the Amended Enforcement Decree. However, due to the narrowing of the activities constituting Management Participation Purpose as discussed above, some investors will now need to file an amendment to their 5% Report and report under the new category of investment objective, General Investment Purpose, to the extent their investment objective falls under the new category. 2) Portfolio Investment Purpose The 5% Report for Portfolio Investment Purpose is intended to capture those investors intending to exercise only those rights guaranteed under the law to all shareholders such as voting rights, preemptive rights and dividend rights. The reporting deadline for the amendment report and related disclosure requirements remain unchanged. Amendment reports are required to be filed either by the tenth day of the month following an amendment event other than a change in investment purpose or in the case of a change in investment purpose, an amendment report must be made by the fifth business day following the change. Investors who have filed the 5% Report under the Portfolio Investment Purpose category should review and assess their intended investment objectives and determine if their investment objectives now fall under the new category of investment objective, General Investment Purpose which would require making an amendment to the existing 5% Report. 3) General Investment Purpose The 5% Reporting Rules under the General Investment Purpose category requires additional disclosures compared to reporting under the Portfolio Investment Purpose category. For instance (i) source of funds for the subject investment including the identity of the lender in case debt financing was used and (ii) material terms of the contracts related to the equity securities are required to be disclosed. The reporting deadline for the initial report to be filed under the General Investment Purpose category is five business days from the trigger event. Amendment reports are required to be filed by the tenth business day following an amendment event other than a change in investment purpose and in the case of a change in investment purpose, an amendment report must be made by the fifth business day following the change. Reporting deadlines applicable for the first report since the adoption of the Amended Enforcement Decree should be noted. In cases where the trigger event for the 5% Report (either for the initial report or the amendment report) arose before the Effective Date, but the reporting deadline has not lapsed as of the Effective Date, the relevant 5% Report may be made in accordance with the 5% Reporting Rules which were in place prior to the Amended Enforcement Decree. However, investors whose investment objectives fall under the newly adopted General Investment Purpose category of investment objective as of the Effective Date must file their reports in accordance with the requirements under the Amended Enforcement Decree within five business days (i.e., February 7, 2020) from the Effective Date. Investors subject to the 5% Reporting Rules are advised to exercise particular care in reviewing their circumstances so that the 5% Reporting Rules are fully complied with in accordance with the new standards set forth under the Amended Enforcement Decree.2020.01.31
法律简讯Recent Government Updates Relating to Artificial Intelligence – AI Infra Expansion Plan On December 29, 2019, the Ministry of Science and ICT (“MSIT”) announced a large-scale plan to expand innovation infrastructure, such as AI learning data and high-performance computing resources, in 2020. This expansion is consistent with the MSIT’s continuing movement made in 2019 to create an innovation ecosystem to position Korea as an AI powerhouse. The main objectives of the above plan are summarized below, details of which can be found at the AIHub website (www.AIHub.or.kr). Expand the scope of AI learning data opened to the public: from 21 types and 43.5 million cases in 2017-2019 to 20 types and 60 million cases in 2020 Expand the target number of companies to support high-performance computing resources specialized in AI development: from 200 companies in 2019 to 800 companies in 2020, etc. Expand the size of AI algorithm competition: from 20 challenges in 2019 to 40 challenges in 2020 Promote new AI voucher businesses for the proliferation of AI across all industries: support 14 companies in 2020 In addition, the Korea Communications Commission announced on January 2, 2020 that it would establish a Center for Intelligence Information Society Policies (the “Center”) to ensure a comprehensive, mid-to-long-term response system for user protection policies in relation to intelligence information technology such as AI. The main areas of the Center’s researches and activities are: Research and innovation: conduct mid-to-long-term research projects to forecast social and ethical issues that may arise due to intelligence information technology (e.g., research on intelligence information societies, collect and analyze data by conducting panel surveys, propose ways to improve policies and infrastructure based on its research on relevant laws and systems); and Policy implementation: operate a multi-dimensional, cooperative expert network to collect opinions on the direction of user policy and create a consensus on key issues (e.g., establish and operate multi-dimensional, cooperative networks, such as public-private networks, global cooperative partnerships and knowledge sharing networks). Therefore, it seems necessary to continuously monitor the MSIT’s detailed plans and movements in relation to its plan to expand AI infrastructure, and to pay careful attention to the Center’s activities and proposed policies for protecting users of an intelligence information society in the future.2020.01.28
“Band 1” Rankings in 18 Practice Areas
In Chambers Asia-Pacific 2020, Kim & Chang was again recognized as the most top-tier ranked firm in Korea, receiving “Band 1” in 18 practice areas.查看更多
Winner of “Korea Law Firm of the Year” for Seventh Consecutive Year
At the ALB Korea Law Awards 2019 on November 15, 2019, Kim & Chang won “Korea Law Firm of the Year” for the seventh year in a row.查看更多
Only Korean Firm Among the World’s Top 100 Law Firms
According to The American Lawyer’s “The Global 100,” Kim & Chang ranked among the world’s top 100 law firms for the sixth year in a row.查看更多
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