The “domestic agent” requirement under the proposed amendment to the Korean Telecommunications Business Act (the “TBA”) was ratified at the National Assembly’s plenary session on May 20, 2020.  The requirement will become effective six months after the amended TBA is promulgated.  In the upcoming legislative process which will last through late November or early December of this year, the key issues will be (i) the scope of value-added telecommunications service providers (“VSPs”) subject to the requirement and (ii) the particulars of the “user protection” tasks to be performed by the domestic agent. 

VSPs Subject to the Domestic Agent Requirement 

The domestic agent requirement is to apply to the VSPs that will be subject to another newly adopted obligation under the TBA—the new Article 22-7 to require certain VSPs to “ensure stable services.”  The obligation under Article 22-7 likely will apply to VSPs that meet certain thresholds in terms of number of users or volume of traffic generated.  Accordingly, the domestic agent requirement likely will apply to VSPs with fairly sizeable operations in Korea.  The details will be provided in the corresponding amendments to the Presidential Decree. 

User Protection Tasks Under the Domestic Agent Requirement 

A key role of the domestic agent will be to facilitate “user protection” in connection with the services provided by its principal VSP.  Regulators are considering what specific tasks should be required in that role and set forth in the Presidential Decree.  As the domestic agent requirement is linked to the obligation to “ensure stable services,” the regulators are considering a narrower approach of requiring only those user protection tasks necessary to ensure stable services.  However, it is possible that the regulators will require an even wider range of tasks to be performed by domestic agents, i.e., all tasks and services for preventing user harm and processing reasonable requests and complaints by users, as required under the current Article 32 (1) of the TBA.  In any event, the subject VSPs will have to ensure their domestic agents perform their tasks properly, as the VSPs could be held liable for any violation of law by their agents. 

Considerations When Designating a Domestic Agent 

There are no particular requirements or restrictions on who may be designated as a domestic agent, and multinational VSPs often consider designating their Korean subsidiaries or external legal counsel as domestic agents.  In doing so, VSPs should consider factors such as practical benefits from common corporate understanding and procedures but also maintaining the separateness between the entities.