Strategies for Establishing (or Converting into) and Operating Non-Financial Holding Companies

Our Corporate Governance & Shareholder Disputes Practice provides solutions for establishing and operating holding companies under the Monopoly Regulations and Fair Trade Law (the “FTL”) by examining various issues, including without limitation: 

• Analysis on the validity and appropriateness of converting into a holding company, and if appropriate, advice on optimal structure, strategy for conversion and specific conversion method, such as all-inclusive stock transfer/swap, spin-off, merger, merger through spin-off, business transfer and investment in kind;
• Advice on regulatory compliance, including regulations regarding listed companies and procedure for exchange offer, holding company regulations, etc. under the FTL, and obtaining approval/authorization from the Korea Fair Trade Commission and the Financial Services Commission (the “FSC”);
• Advice on revenue model and general business strategy in relation to the operation of holding companies and their control/step-in rights over subsidiaries, including advice on sharing of management information and preparation of subsidiary management plan, contracts and bylaws.   

Reorganization of Group Ownership Structure

Our Corporate Governance & Shareholder Disputes Practice provides legal advice to financial-industrial groups and large business groups involving circular equity investment on the following: 

• Management plan and investment structure reorganization plan for financial affiliates;
• Advice on consolidated supervision and strategy on governance structure regarding separation of financial and non-financial capital;
• Preparation of an optimal plan for dissolving or mitigating cross-shareholding and interlocking investments in various forms;
• Restricted voting rights caused by separation of financial and non-financial capital and affiliates ownership structure;
• Any and all practices regarding reorganization of investment structure and ownership structure between affiliates or related companies; and
• Advice on obtaining regulatory licenses/permits required during governance restructuring.

Affiliates Restructuring and Reorganization of Affiliates’ Assets, Liabilities and Capital

Our Corporate Governance & Shareholder Disputes Practice provides legal advice on the following issues to enhance business efficiency and maximize corporate value: 

• Advice on reorganization strategies for group affiliate portfolios and business portfolios;
• Reorganization of affiliate structure including consolidation of affiliates, separation of affiliates and procedure for implementation;
• Strategizing to improve financial structure including reorganization of affiliates’ assets, liabilities and capital;
• Analysis on financial effect and business performance following reorganization of affiliates structure, including estimation of transaction costs and relevant taxes therefrom.

Strategies for Establishing (or Converting into) and Operating Financial Holding Companies

Pursuant to the Financial Holding Companies Act and other financial laws and regulations, our Practice assists with the establishment of and conversion into bank holding companies and non-bank holding companies (including insurance and financial investment holding companies) by advising on the following issues: 

• Review of the necessity and appropriateness of converting into a holding company system (including advice on establishing and operating financial holding companies such as their portfolios) and preparation of optimal structure and procedures for conversion;
• Review of conversion costs including related taxes;
• Analysis on corporate governance including change of ownership ratio and governance structure of a financial holding company;
• Preparation of application for license and other documentation, including licensing procedure of the FSC;
• Advice on responding to investors and other key interested parties;
• Support for incorporation as subsidiary or lower-tier subsidiary and acquisition of related FSC approval;
• Advice on outsourcing, concurrent position holding by officers, sharing of client information and functional integration; and
• Advice on other issues relating to the holding company system. 

Vertical or Horizontal Affiliation of Intercompany and Intra-Company Transactions

Our Practice provides comprehensive legal advice necessary for efficient management of problems that arise from intercompany transactions including the following issues: 

• Due diligence on intercompany transactions;
• Assessment of profit and loss and estimation of tax burdens arising from intercompany transactions;
• Analysis on regulatory risk arising from intercompany transactions;
• Analysis and counsel on implications of regulatory trends in intercompany transactions;
• Provision of efficient solutions for intercompany transactions including proposal of alternative transaction structures and corporate governance structures; and
• Review on conflict of interest issues and establishment of plans to minimize transaction costs caused by intercompany transactions.

Strategies for Forming Stable Governance Structures and Effectively Succeeding Management Rights

Our Practice provides legal advice necessary for sustainable corporate growth and development on the following issues: 

• Establishment and implementation of strategies for forming a stable governance structure;
• Job assignment and allocation of authorities in management; 
• Establishment of management structure and relevant agreement/bylaws within a business group, including protection of management rights; and
• Any and all issues regarding management rights and succession of governance structure.

Overseas Affiliates’ Governance Structure and Incorporation of Overseas Holding Companies

With today’s globalization and localization of businesses and increase in overseas intercompany transactions, our Practice provides legal advice on:

• Preparation of strategies for overseas affiliate structures and intercompany transactions;
• Establishment of overseas holding companies necessary for overseas intercompany transactions and management of overseas subsidiaries; and
• Governance structure of overseas affiliates.

Business Management Supervision Including Alleviating Conflict of Interests and Operating Board of Directors and Audit Committees

Issues on governance structure of individual companies and conflict of interest require comprehensive and professional analysis encompassing various laws of diverse specialized fields including not only the Korean Commercial Code (the “KCC”), but also the Financial Investment Services and Capital Markets Act (the “FSCMA”), the FTL, the Act on the Corporate Governance of Financial Companies, multiple tax laws, and even criminal law. Thus, our Practice provides legal advice on the following issues: 

• Constitution and operation of the board of directors, including establishment and operation of such committees as required by laws or for managerial reason within the board of directors;
• Constitution and operation of internal audit organizations, including audit committees;
• Regulation and solutions for issues regarding director’s self-dealing and misuse of business opportunities;
• Exercise of minority shareholders’ rights and management liability;
• Management of officer liability (including directors, auditors and executives) by enhancing rationality in managerial decision-making; and
• Clarification of rights and obligations of interested parties and compliance with legal procedures in order to prevent potential disputes on an ex ante basis and solve materialized disputes on an ex post facto basis.

Our Corporate Governance & Shareholder Disputes Practice provides legal advice to various business groups and corporations including the following: 

• Business group which owns a number of affiliates and related companies, and is considering a conversion into a holding company system;
• Financial group which owns multiple financial affiliates, and is considering an establishment of a financial holding company; 
• Financial-industrial group which includes both financial and non-financial affiliates;
• De facto holding company including core affiliates of a business group and companies whose equities are largely held by affiliates; 
• Large and medium-sized companies engaging in various sectors of businesses; 
• Business group and investment company related to cross-shareholding and interlocking investment; 
• Business group with significant intercompany transactions or the affiliate in concern; 
• Group affiliates that have frequent transactions with overseas subsidiaries or affiliates; and 
• Financial and non-financial holding companies. 

Our Practice counsels clients on various governance restructuring matters, including establishment of multiple financial and non-financial holding companies.  Our recent representative cases include the following:

• Advised on the acquisition and incorporation of a subsidiary of Lotte Chemical Corporation by Lotte Corporation;
• Advised on the sale of shares of Samsung C&T Corporation (worth KRW 0.9 trillion) by Samsung Fire & Marine Insurance Co., Ltd. and Samsung Electro-Mechanics Co., Ltd.;
• Advised on the sale of shares of Samsung Electronics Co., Ltd. (worth KRW 1.2 trillion) by Samsung Life Insurance Co., Ltd. and Samsung Fire & Marine Insurance Co., Ltd.;
• Advised on the reorganization of business/governance structure of the Hyundai Motor Group;
• Advised on the exchange offer of shares of Lotte Confectionery Co., Ltd. and Lotte Chilsung Beverage Co., Ltd. by Lotte Corporation;
• Advised on the incorporation of Lotte Corporation by means of merger through spin-off of Lotte Shopping Co., Ltd., Lotte Confectionery Co., Ltd., Lotte Chilsung Beverage Co., Ltd. and Lotte Food Co., Ltd.;
• Advised on obtaining an approval for the change of a large shareholder of Lotte Card Co., Ltd. during the conversion of the Lotte Group into a holding company; 
• Advised on protecting the management rights of the existing management of the Lotte Group (advised on the defense strategies for a dispute over management rights, including meeting of the board of directors, general meeting of shareholders, injunction for perusal and duplication of accounting books, and injunction for prohibition of the general meeting of shareholders);
• Advised on the integration of investment business units of the Lotte Group by means of merger through spin-off of Lotte Corporation and six non-listed Lotte affiliates;
• Advised on the conversion of Woori Bank into a financial holding company;
• Advised on the conversion into a holding company through horizontal spin-off and exchange tender offer by Hyundai Development Company;
• Advised on the conversion into a holding company through horizontal spin-off and exchange tender offer by BGF Retail Co., Ltd.;
• Advised on the conversion of financial-industrial groups “A” and “B” into financial holding companies;
• Advised on the merger of Samsung C&T Corporation and Cheil Industries Inc.;
• Advised on the merger of SK Holdings and SK C&C;
• Advised on the conversion of the Korea Exchange (KRX) into a holding company;
• Advised on the IPO of SillaJen, Inc.;
• Advised on the IPO of Jin Air Co., Ltd.;
• Advised on the IPO of BGF Retail Co., Ltd.;
• Advised on the IPO of DongKoo Bio & Pharma Co., Ltd.;
• Advised on the conversion into a holding company under the FTL through horizontal spin-off and exchange offer and the incorporation as a subsidiary of a core entity by Crown Confectionery Co., Ltd.;
• Advised on the conversion into a holding company under the FTL through concurrent horizontal and vertical spin-offs and exchange offer and the incorporation as a subsidiary of a core entity by Cuckoo Electronics Co., Ltd.;
• Advised on the acquisition of management rights over the PPCB in Cambodia by the JB Financial Group; 
• Advised on the horizontal spin-off and incorporation of JEI Holdings Corporation by JEI Corporation and the conversion of JEI Holdings Corporation into a holding company through investment in kind in a core entity;
• Advised on the conversion into a holding company under the FTL through horizontal spin-off and exchange tender offer and the incorporation as a subsidiary of a core entity by HUONS Co., Ltd., a listed pharmaceutical company;
• Advised on the conversion into a holding company under the FTL through horizontal spin-off and exchange tender offer and the incorporation as a subsidiary of a core entity by COSMAX, Inc.;
• Advised on the conversion into a holding company under the FTL through horizontal spin-off and exchange tender offer and the incorporation as a subsidiary of a core entity by Golfzon Co., Ltd.;
• Advised on the acquisition of Woori Investment ＆ Securities Co., Ltd. by NongHyup Financial Group, Inc. and the subsequent merger with NH Investment & Securities Co., Ltd.;
• Advised on the merger of Hyundai Engineering Co., Ltd. and Hyundai AMCO Co., Ltd. within the Hyundai Motor Group;
• Advised on the in-kind investment of Rolling Hills Hotel by Hyundai Motor Co.;
• Advised on the merger between Daelim Corporation and Daelim I&S Co., Ltd.;
• Advised on the merger of Jungseok Enterprise into Hanjinkal;
• Advised on the merger of UniConverse Co., Ltd. into Korean Air Lines Co., Ltd.;
• Advised on governance restructuring of Hanjin Group including spin-off of Korean Air Lines Co., Ltd. and establishment of a holding company;
• Advised on capital reduction of Hanjin Energy Co., Ltd.;
• Advised on the establishment of NongHyup Financial Group Inc., Nonghyup Agribusiness Group Inc. (non-financial holding company), NongHyup Bank, NongHyup Property & Casualty Insurance Co., Ltd., etc. through business restructuring and spin-off of National Agricultural Cooperative Federation (“NACF”);
• Advised on a creditor protection procedure regarding the spin-off of NACF and on Global Consent Solicitation for MTN (mid-term note) creditors; 
• Advised on the business restructuring and incorporation through spin-off of Suhyup Bank of National Federation of Fisheries Cooperatives;
• Advised on the spin-off of MERITZ Fire & Marine Insurance Co., Ltd. and the establishment and operation of Insurance Holding Group Inc.;
• Advised on the merger through spin-off of Korea Confidence Information Co. and Nice Information Service Co., Ltd.;
• Advised on the establishment and operation of a holding company of Doosan Group; 
• Advised on the spin-off for multiple Doosan Group affiliates including the spin-off of Doosan Infracore Co., Ltd.; 
• Advised on the spin-off of Samhwa Crown & Closure Co., Ltd.;
• Advised on the establishment and operation of a holding company of Taekwang Group (TBROAD Holdings Co., Ltd.);
• Advised on the establishment and operation of a holding company of a major Korean distribution enterprise; 
• Advised on the spin-off of a credit card company of KB Financial Group Inc.; 
• Advised on the spin-off of credit card business of Woori Bank;
• Advised on the establishment of a financial holding company of The Jeonbuk Bank Co., Ltd.; 
• Advised on the establishment and operation of a financial holding company of Busan Bank Co., Ltd.;
• Advised on the establishment and operation of a holding company of Daegu Bank Co., Ltd.;
• Advised on the establishment and operation of a financial holding company of Citibank Korea Inc.;
• Advised on the restructuring of The Korea Development Bank (KDB) Group, spin-off of KDB, establishment and operation of KDB Financial Group Inc.; 
• Advised on the establishment and operation of a financial holding company of Kookmin Bank;  
• Advised on the establishment and operation of a financial holding company of SC First Bank Korea Limited.; and
• Advised on the establishment and operation of a financial holding company of Woori Bank.