Ranked “Tier 1” in All Seven Areas in IFLR1000
Kim & Chang once again received the highest ranking “Tier 1” in all areas surveyed for Korea in the 2022 edition of IFLR1000.
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Newsletters VIEW MORENewslettersNational Assembly Passes Amendment to Expand Scope of Technical Data Protected Under Subcontracting Act On July 23, 2021, the National Assembly passed a bill to amend the Fairness in Subcontracting Transactions Act (the "FSTA"), which aims to (i) reinforce the protection of technical data of SMEs by expanding the scope of technical data protected under the FSTA and by requiring the signing of a non-disclosure agreement ("NDA"), and (ii) make it easier for a subcontractor engaged in a damages lawsuit against a contractor to obtain evidentiary materials from the contractor through a court subpoena. The amendment will become effective six months after promulgation by the President. Key details of the amendment are as follows. 1. Easing of the confidentiality criteria to qualify as protected technical data (Article 2 (15)) The amendment eases the confidentiality criteria that must be met in order to qualify as protected technical data under the FSTA. The previous definition was data that are "maintained confidential through reasonable efforts," but the amendment deletes the "through reasonable efforts" qualifier. In order for data to be eligible for protection from technology misappropriation under the FSTA, certain conditions must be met to show that such data are technical and confidential in nature. However, because the pre-amendment FSTA requires technical data to be "maintained as confidential through reasonable efforts," there have been cases where subcontractors, which are often relatively ill-equipped to manage the confidentiality of their data, failed to demonstrate that they have been making reasonable efforts and failed to have their technical data recognized as eligible for protection under the FSTA. To address this issue, the amendment will delete the "through reasonable efforts" qualifier so that technical data will be recognized as confidential in nature even if the confidentiality had not been maintained through reasonable efforts. Going forward, as a broader range of technical data managed by subcontractors will be eligible for protection under the FSTA, it is important that companies sufficiently review beforehand whether the data they request from subcontractors can be deemed as technical data under the FSTA, and whether the request for data is justifiable. It will also be important to avoid failure to provide a written request to subcontractors for the technical data or misuse of subcontractors’ technical data, which are types of technology misappropriation prohibited under the FSTA. 2. Requirement for the signing of NDAs (Article 12-3 (3)) The amendment requires companies to sign NDAs when requesting subcontractors to provide technical data because, in practice, it is difficult for the subcontractors, due to their weaker bargaining power, to demand that the contractor sign an NDA regarding the technical data they provide to the contractor. Furthermore, the amendment specifically requires that such NDAs specify the scope of the technical data, names of the contractor's executives/employees who will be holding the technical data, obligation to maintain confidentiality, prohibition of use of the technical data for other purposes, duty to compensate upon violation of the NDA, and other requirements prescribed by the Presidential Decree. Therefore, it will be necessary for companies to prepare a standardized NDA template regarding subcontractors' technical data going forward. We also recommend that the companies review their signing protocol before the amendment takes effect in order to avoid violating the FSTA. 3. Introduction of new court orders to produce materials (Articles 35-2 to 35-5) The amendment enables the courts to order the contractor to produce evidentiary materials that are necessary to prove harm or calculate damages when a subcontractor files a damages lawsuit against the contractor. If ordered by the court to produce materials, the contractor must produce those materials even if they are trade secrets, unless there is a legitimate reason for refusing to do so. Furthermore, the amendment prescribes that, if the contractor refuses to comply with a court order to produce materials without a legitimate reason, the subcontractor’s claim in court will be recognized as a fact by the court. In order to protect the contractors’ interest, the amendment implements a set of rules to minimize the leakage of the contractors’ trade secrets produced to the court in a damages lawsuit, which includes a confidential deliberation process, court orders to maintain confidentiality, and notification of requests made to view court records in the case. Details of these rules are as follows. Rule Content Confidential deliberation process The courts may order the submission of materials in order to determine whether there is a legitimate reason to refuse to comply with the court order to produce those materials, and in doing so may not disclose those materials to a third party. Court orders to maintain confidentiality The courts may order those who learned of a trade secret to not use the information for purposes other than for the litigation or disclose the information to a third party. Violation of a court order to maintain confidentiality may result in imprisonment for up to two years or a fine of up to KRW 20 million. Notification of requests made to view court records The relevant party to a damages lawsuit will be notified when a third party, who was not ordered by the court to maintain confidentiality, requests to view the court records of the case. [Korean version]2021.08.04
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Newsletters VIEW MORENewslettersKorean Government Announces Plans to Abolish Shutdown System and Create Healthy Gaming Environment for Juveniles On August 25, 2021, the Ministry of Education, the Ministry of Culture, Sports and Tourism and the Ministry of Gender Equality and Family (the “Relevant Ministries”) jointly announced the “Plans to Abolish Shutdown System and Create Healthy Gaming Environment for Juveniles” (the “Announcement”). At present, juveniles’ playtime of game products are regulated in Korea as follows: (i) the shutdown system uniformly prohibits the provision of Internet games to juveniles under the age of 16 from 12:00 a.m. to 6:00 a.m. (Article 26 of the Youth Protection Act) (the “Shutdown System”); and (ii) the selective gaming hours system allows juveniles under the age of 18 or their legal representatives to place restrictions on how and when juveniles may use game products, among others (Article 12-3 of the Game Industry Promotion Act) (the “Selective Game Hours System”). The key to the recent announcement is to abolish the Shutdown System and consolidate regulations on juveniles’ game use into the Selective Game Hours System. Abolishment of Shutdown System: The Announcement does not automatically abolish the Shutdown System—rather, it announced that the Relevant Ministries would take measures to abolish the Shutdown System. As the Shutdown System is stipulated in the Juvenile Protection Act, the abolishment would become effective only upon the amendment of the Juvenile Protection Act at the National Assembly. While it is difficult to predict when this would occur, given that (i) the Relevant Ministries formalized the abolishment of the Shutdown System and announced their plan to immediately begin pursuing such abolishment this year, (ii) members of both the ruling party and opposition party have proposed a bipartisan bill to abolish the Shutdown System, and (iii) the presidential election is scheduled for April next year, it is expected that the Juvenile Protection Act will be amended, and the Shutdown System will be abolished, at the end of this year or early next year. Promotion of Selective Game Hours System: Meanwhile, the Relevant Ministries proposed in the Announcement a number of measures to prevent any side effects that may arise from sudden deregulation, one of which is to strengthen the Selective Game Hours System from 2022. The Relevant Ministries announced ideas to supplement certain parts of the Selective Game Hours System, but further monitoring is warranted as specific plans for implementation have yet to be developed. However, as the Relevant Ministries stated that they will inspect service providers of their compliance with the Selective Game Hours System through the Game Rating and Administration Committee, service providers would need to have a sufficient understanding of and properly comply with the Selective Game Hours System. Amendment to Game Industry Promotion Act: Further, the Relevant Ministries unveiled their plan to require service providers to disclose the relevant likelihood of probability-based items and introduce regulations on advertisement of game products harmful to juveniles. It appears that they are planning to pass the bill to overhaul the Game Industry Promotion Act (the “Amendment Bill”) that the Ministry of Culture, Sports and Tourism proposed at the end of last year through Assemblyman Sang-Heon Lee. Please refer to this article for the key provisions of the Amendment Bill. [Korean version] .content_view .view_area ul li:before { top: 13px; }2021.09.03
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Newsletters VIEW MORENewslettersChanges Regarding Public Holidays Falling on Weekends A proposed amendment to the Public Holidays Act was promulgated into law on July 7, 2021. At the time of its passage, substitute holidays (e.g., recognizing the next business day as a public holiday if it falls on a weekend) were expected to apply to all public holidays, including Christmas. However, considering the adverse impact an excessive number of substitute holidays can have on the business sector, the government decided that it would not apply substitute holidays to New Year’s Day (January 1), Buddha’s Birthday (April 8 in the lunar calendar), Memorial Day (June 6) and Christmas (December 25), which are all public holidays but not national holidays. In accordance with the above decision, the government recently announced the Proposed Amendment to the Regulations on Holidays of Government Offices (Presidential Decree) on July 16, 2021. The Proposed Amendment designates a total of 11 public holidays as being subject to substitute holidays while excluding the four public holidays described above. In addition, the Proposed Amendment specifically provides substitute holidays for National Liberation Day, National Foundation Day and Hangeul Day in the second half of 2021, which overlap with Saturdays and Sundays. In principle, because additional holidays are usually provided rather than rescheduled to different dates, employees will be entitled to two paid days off (i.e., weekly holidays and substitute holidays) when substitute holidays apply. That said, the Ministry of Employment and Labor (the “MOEL”) clarified that companies are not required to recognize a public holiday as a paid day off if such public holiday overlaps with a day on which work is not scheduled (MOEL Wages and Working Hours Division-743, March 30, 2020). Therefore, we advise companies to note the foregoing position of the MOEL with regard to payment of holiday work allowances. [Korean version]2021.08.03
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Newsletters VIEW MORENewslettersAmendments to the Cloud Computing Act On July 9, 2021, Assemblywoman Jung-suk Yang and ten other assemblymen submitted a proposed amendment to the Act on the Development of Cloud Computing and Protection of Its Users (the “Proposed Amendment”) to the National Assembly. The Proposed Amendment was subsequently referred to the National Assembly’s Science, Technology, Information and Telecommunication Committee (the “Committee”). The key details of the Proposed Amendment are as follows: 1. Recommendation for use of private cloud computing services by government agencies, local governments and public institutions (Article 20 of the Proposed Amendment) The existing law requires the government to promote the use of private cloud computing services by public institutions. Many have commented that local governments and public institutions, in addition to government agencies, should also be encouraged to use private cloud computing services and thereby contribute to further development of the cloud computing industry. The Proposed Amendment reflects such opinion and requires local governments and public institutions in addition to government agencies to try to use cloud computing services. 2. Grounds for cloud security certification and cancellation (Article 23 and Article 37 of the Proposed Amendment) Under the current legal framework, the Minister of Science and ICT is to (i) establish and announce standards for quality and performance of cloud computing services and data protection and (ii) recommend cloud computing service providers to comply with such standards. Any matters related to major security certification systems are to be regulated under notices issued by the Ministry of Science and ICT. However, the Proposed Amendment expressly sets forth matters related to security certification and cancellation in order to establish a system for cloud computing technology and strengthen data security. The Proposed Amendment will be vetted by the Committee and subsequently reviewed in a plenary session and the cabinet meeting. Once passed at the National Assembly, the Proposed Amendment will come into effect one year after its promulgation (Addendum of the Proposed Amendment). Given the Proposed Amendment’s provisions regarding promotion of cloud computing services and security certification for cloud computing technology, further development of the Proposed Amendment should be monitored. [Korean version] .content_view .view_area ul li:before { top: 13px; }2021.08.03
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Newsletters VIEW MORENewslettersVietnam Legal Update – New Securities Law The National Assembly has passed Law No. 54/2019/QH14 on Securities on November 26, 2019 (the “New Securities Law”). The New Securities Law took effect as of January 1, 2021. Key changes brought by the New Securities Law are as follows: 1. Public Company Pursuant to the New Securities Law, a Vietnamese joint-stock company is considered a public company if it falls into one of the following categories: Type 1: having minimum paid-up charter capital of VND 30 billion (approx. USD 1.3 million), and at least 10% of the number of voting shares held by at least 100 investors who are not a major shareholder—i.e., a shareholder holding 5% or more of the total voting shares (“Major Shareholder”); or Type 2: having successfully carried out an initial public offering through registration with the State Securities Commission of Vietnam (the “SSC”). 2. Public Offering 2.1. Initial Public Offering The New Securities Law provides stricter conditions for an initial public offering of shares (“IPO”). An issuer has to meet the following conditions to proceed with an IPO: It has paid up charter capital of at least VND 30 billion (approximately equivalent to USD 1.3 million). Its business operation in the two previous years is profitable and it does not have accumulated losses in the year of registration for IPO. Its General Meeting of Shareholders has approved the plans for IPO and the usage of proceeds from the IPO. At least 15% of its voting shares are offered to at least 100 shareholders who are not a Major Shareholder; in case the charter capital of the issuer is VND 1,000 billion (approximately equivalent to USD 43.5 million) or more, at least 10% of its voting shares are offered to at least 100 shareholders who are not a Major Shareholder. The Majors Shareholders of the issuer prior to the IPO commit to hold together at least 20% of the charter capital of the issuer for at least one year from the completion of the IPO. The issuer is not under criminal investigation or prosecution and has no criminal record on violation of economic management order. The issuer has engaged a securities company to consult it in preparing the IPO registration dossier, unless the issuer is a securities company. The issuer commits to list or register its shares for trading in the securities trading system after the completion of the IPO. The issuer opens an escrow account to receive the proceeds from the IPO. Note that the conditions stated in (iv) to (vii) and (ix) above are newly introduced by the New Securities Law. 2.2. Subsequent Public Offering Under the New Securities Law the following conditions need to be met for a subsequent public offering (the “SPO”) of shares of an issuer: Conditions provided in (i), (iii), (vi), (vii), (viii) and (ix) above for an IPO. Its business operation in the previous year is profitable, and it does not have accumulated losses in the year of registration for the SPO. Total par value of the newly issued shares under the SPO does not exceed the total par value of its existing issued shares, unless the issuer (a) obtains an underwriting commitment for acquiring either all of issued shares for reselling or all remaining issued shares which have not been successfully distributed by the issuer, (b) issues shares for increasing its charter capital by using the owner’s equity, or (c) issues shares for share swap, merger or consolidation of enterprises. If the issuer issues new shares to raise capital for its investment project, the total number of shares issued to its investors has to reach at least 70% of the total number of shares intended to be issued. Further, the issuer shall have a plan to make up for the capital shortage in case the proceeds generated by the offering is inadequate. 3. Tender Offer An investor and its related persons (collectively the “Acquirers”) have to undertake procedures for a tender offer, including registration with the SSC, (the “Tender Offer”) in order to acquire shares in a public company or a securities investment fund (the “Target”) if such acquisition falls into one of the following cases. Pursuant to the New Securities Law, a Vietnamese joint-stock company is considered a public company if it falls into one of the following categories: The Acquirers intend to, directly or indirectly, acquire or subscribe for 25% or more voting shares/outstanding closed-end fund units of the Target (the “Target Securities”). The Acquirers already hold at least 25% of the Target Securities, and their subsequent acquisition/subscription results in their aggregate holding of 35%, 45%, 55%, 65% or 75% (respectively) or more voting shares/outstanding fund units. Unless a previous tender offer by the Acquirers has covered 100% of the Target Securities, if the Acquirers already hold 80% or more of the Target Securities, the Acquirers will be required to acquire all remaining Target Securities from the existing holders of the Target Securities on the same terms and conditions as in the previous tender offer within 30 days of such previous tender offer. The Acquirers will be exempted from the Tender Offer requirement if, among other things, their acquisition/subscription has been approved by the General Meeting of Shareholders/fund representative committee of the Target. 4. Private Placement Pursuant to the New Securities Law, only professional securities investors and strategic investors are entitled to participate in the private placement of equity-related securities (including shares, convertible bonds and bonds with warrants) issued by a public company. A professional investor is defined under the New Securities Law as an investor with strong financial or technical capacity in the securities sector, such as banks, securities companies, securities investment funds, and companies with contributed capital of more than VND 100 billion (approx. USD 4.35 million), or individuals having securities practice license. Strategic investors are investors who have been selected by the General Meeting of Shareholders for their financial and technical capacity and who have agreed to a lock-up period of at least three years. Except in certain cases, equity-related securities issued under a private placement will be subject to three-year and one-year lock up periods applicable to strategic investors and professional securities investors, respectively. The New Securities Law requires that there must be a cooling-off period of at least six months between the two consecutive issuance tranches of equity-related securities. 5. Re-Organization of the Stock Market Pursuant to the New Securities Law, the Vietnam Securities Stock Exchanges and its subsidiaries are required to organize the trading market for listed stocks in replacement of the Securities Trading Centre and Securities Stock Exchanges. The Vietnam Securities Depository and Clearing Corporation will be soon established to succeed the Vietnam Securities Depository as provided under the old law. Each of the Vietnam Securities Stock Exchanges and the Vietnam Securities Depository and Clearing Corporation will be organized as an enterprise operating under the governance of the New Securities Law and Law on Enterprises, having 50% charter capital or total voting shares held by the State and fully put into operation within two years from the effective date of the New Securities Law—i.e., by January 1, 2023. [Korean version]2021.08.02
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93 Professionals Named National Leaders in WWL: Korea 2021
In the 2021 edition of Who’s Who Legal: Korea, 93 attorneys, patent attorneys and certified public accountants from Kim & Chang were named “National Leaders.”
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South Korea National Law Firm of the Year at Chambers Asia-Pacific Awards
Chambers and Partners recognized that Kim & Chang “stands out for its breadth and quality of coverage across the full legal spectrum.”
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