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  Introduction of Relief Measures with the Labor Relations Commission for Sexual Discrimination and Sexual Harassment in the Workplace An amendment to the Equal Employment Opportunity and Work-Family Balance Assistance Act (the “Act”) introducing procedures for relief with the Labor Relations Commission (the “LRC”) regarding sexual discrimination and sexual harassment in the workplace was passed at a cabinet meeting on October 20, 2020. Currently, in the event of sexual discrimination/sexual harassment in the workplace, the Act only provides penalties for failure to take any corrective action. In addition, the Act does not provide any means/recourse for employees to request corrective measures. Under the proposed relief procedures, we note that, if sexual discrimination/sexual harassment takes place in the workplace and an employer fails to comply with its obligations under the Act with respect to the victim (employee), etc., victims would be able to file a claim with the LRC for corrective measures to be imposed. In such a case, the employer would bear the burden of proof. Accordingly, if the LRC recognizes that sexual discrimination has taken place in the workplace, it may issue a corrective order on the employer to cease such discriminatory acts, amend its working terms and conditions under the Rules of Employment, Collective Bargaining Agreement, etc., and award appropriate compensation (within the amount of three times the amount of damages). These orders may also be effective with respect to other employees who were subject to such discrimination. In addition, the proposed amendment provides that in case of an employer’s failure to comply with its obligation to take the appropriate measures for employees who are victims of sexual harassment in the workplace, or if it is recognized that such employees were treated disadvantageously, the employees concerned may be entitled to relief under corrective orders such as discontinuation of disadvantageous treatment, compensation, etc. If an employer fails to comply with a finalized corrective order, this may result in an administrative fine. If the above amendment is submitted to the National Assembly this month, or shortly thereafter, and passes, it will be effective one year after the date of promulgation. [Korean version]

  2020.11.05
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  FSC Proposes Enforcement Decree to the Financial Consumer Protection Act On October 28, 2020, the Financial Services Commission (the "FSC") released a proposed enforcement decree (the "Proposed Enforcement Decree") to the newly enacted Financial Consumer Protection Act (the "Act") which is scheduled to become effective on March 25, 2021. The public comment period on the Proposed Enforcement Decree is open until December 6, 2020. The Proposed Enforcement Decree contains implementing provisions for the Act mainly in the areas of (i) scope of financial products and sellers subject to the Act, (ii) registration requirements for sales agents/brokers of financial products, (iii) internal control requirements for financial institutions, and (iv) detailed requirements on the six principles for the sale of financial products. In addition, conditions for the right to withdraw subscriptions and the right to terminate contracts and punitive penalty surcharge which are being newly adopted by the Act are detailed in the Proposed Enforcement Decree. Below are key aspects of the Proposed Enforcement Decree. 1. Application of the Act and Entry Requirements for Sales Agents/Brokers All financial products which are classified as deposits, loans, investment products and insurance products are subject to the Act. As a result, financial products offered by credit unions, P2P lending firms and registered credit service providers will also be regulated by the Act. Under the Proposed Enforcement Decree, sales agents/brokers intending to provide their services online rather than in-person will be subject to more stringent conditions for registration such as installation of algorithmic programs designed to prevent conflicts of interest with consumers and setting up deposit funds to be used towards compensation for customer losses. Independent financial advisors will be subject to registration requirements similar to those applicable to investment advisors under the Financial Investment Services and Capital Market Act. 2. Internal Control Requirements for Consumer Protection Sellers of financial products will be required to have the following internal control structures in place: The authority and responsibilities of the decision maker such as the representative director or a director in the implementation of internal control measures; Organizational structure and personnel in charge of consumer protection matters including the establishment of a financial consumer protection committee; Inter-departmental consultation procedures for the development and sale of financial products, process for the deliberation and incorporation of outside opinion, standards for vetting advertisements, mandatory training requirements for officers and employees and their qualification requirements, standards for prevention of conflicts of interest, management of confidential information, and disclosure obligations when potential harm to consumers arises; and Standards for performance-based compensation of officers and employees in charge of sales. 3. Six Principles Regulating Selling Activities In order to ensure effective compliance with the principles of suitability and appropriateness when selling financial products, the Proposed Enforcement Decree establishes standards for suitability and appropriateness and will require sellers to maintain evaluation reports of whether suitable and appropriate products have been sold to consumers. Furthermore, sellers of financial products (such as banks and securities companies) will now be required to prepare product descriptions themselves such that the sellers are accountable in carrying out their duty to explain products to the customers. The Proposed Enforcement Decree also prohibits sellers of financial products from obtaining exemptions from their customers to comply with the suitability standards or inducing consumers to manipulate their information. It also establishes and/or reinforces regulations on advertisements, such as prohibition on misleading consumers to perceive the sales agents/brokers as direct sellers, and engagement in monopolistic activities, such as demanding excessive fees or forcing direct sellers to delegate sales of financial products to certain sales agents/brokers. Furthermore, sellers will be required to promptly disclose to consumers when they become aware of a potential violation of the law or potential loss to the consumers. 4. Right to Withdraw Subscriptions, Right to Terminate Contracts and Punitive Penalty Surcharge The right to withdraw subscriptions within the statutory cooling-off period and the right to terminate contracts sold in breach of the regulatory requirements will be exercisable by customers broadly across all financial products except where application of such rights may be impossible due to the particular characteristics of the product. The right to withdraw subscriptions applies to all loan and insurance products, as well as investment products such as non-monetary trust contracts and highly complex funds. The right to terminate contracts applies to long-term contracts but it must be exercised within one year from the time that the customer becomes aware that the financial product was sold in breach of the regulatory requirements. Sellers will now be subject to a punitive penalty surcharge up to "an amount that is the purpose of the contract" which would mean that the ceiling on punitive penalty surcharge is the deposit amount in case of deposit products, loan amount in case of loan products, investment amount in case of investment products and insurance premium in case of insurance products. The public comment period for the Proposed Enforcement Decree is 40 days from October 28, 2020 to December 6, 2020. Comments to the Proposed Enforcement Decree can be submitted to the FSC via mail, email or fax by indicating (i) agreement or disagreement with the proposal (including reasons for such opinion), (ii) name, address and phone number of the submitter and (iii) other noteworthy particulars for reference. The subordinate regulation for the Enforcement Decree will be announced in December 2020 by way of an FSC notice. [Korean version]

  2020.11.05
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  Overview of Key Terms and Implications of the Three Laws of Fair Economy and Class Action Act (I) The Korean government recently proposed the enactment of legislation/amendment bills with respect to the Korean Commercial Code, the Monopoly Regulation and Fair Trade Law, the Act on Supervision of Financial Groups (collectively referred to as the “Three Laws of Fair Economy”), and the Class Action Act. Many of these proposals are likely of great interest to market participants, such as the introduction of multi-level derivative suits and class actions, the separate election of audit committee members, the partial removal of the exclusive criminal referral powers of the Korea Fair Trade Commission and the expansion of the scope of parties subject to regulations against self-interested transactions. We plan to provide an overview of key terms and implications of these proposed changes over two newsletters, the first of which (attached below) deals with the potential impact on corporate governance and M&A. [Korean version]

  2020.11.04
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  Korea Environmental Legal Update (Autumn 2020) This issue includes: MOE Announces the GHG Emission Permit Allocation Plan for the 3rd Planning Period Expiration of the Grace Period for the Packaging Recyclability Grade and Labelling System and Marking of Separate Discharge Heightened Regulation of the Use of Hazardous Substances in Electronic & Electrical Products Upcoming Enforcement of the Amended Act on Transboundary Movements of Wastes New Standards for Classification and Disposal of Mercury Wastes [Korean version]

  2020.10.30
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