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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Newsletters VIEW MORENewslettersKim & Chang Legal Newsletter (2021 Issue 2) This issue includes: Amended Case Handling Rules and Consent Decree Rules Take Effect Introduction of Revised IBA Rules on Taking of Evidence in International Arbitration Obligations Regarding Workplace Harassment Reinforced with Amendment to LSA Comprehensive Amendment to E-Commerce Act Proposed Amendment to FSCMA on Private Fund Regulations Regulators to Reform Suspension Rules Regarding Licensing Applications Act on Supervision of Financial Conglomerates Taking Effect Proposed Amendment to Insurance Business Act on Short-Term Micro-Insurance Implication of Korea Customs Service’s Reorganization Amendments to Notification on Operation of Customs Valuation US Agrees to Discussion on Partially Waiving Intellectual Property Rights to Respond to COVID-19 New Provisions Against Misappropriation of Business Ideas Added to Unfair Competition Law Legislative and Regulatory Updates on Online Platforms, AI and OTT Services MOE Announces Carbon Neutrality Implementation Plan to Achieve Carbon Neutrality by 2050 Major Changes in Product Packaging and Recycling Regulations Supreme Court Finds Termination Based on Poor Performance Reasonable Kim & Chang Legal Newsletter (2021 Issue 2) .content_view .view_area a { text-decoration: none; } .content_view .view_area ul li:before { top: 11px; }2021.06.29
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Newsletters VIEW MORENewslettersUpdate on HR/Labor Law Amendments On April 29, 2021, a total of eight proposed amendments to labor-related laws, including the Labor Standards Act (the “LSA”), were approved in the plenary session of the National Assembly and were promulgated into law on May 28, 2021 (collectively the “Amendments” and “Amendment” singularly). Different effective dates have been specified for the Amendments, as some are expected to take effect immediately, while others are granted a one-year grace period. In addition to the introduction of regulations imposing criminal sanctions for violations, the Amendments include several issues that companies should note with regard to HR management, such as the duty to issue a wage statement and the duty of safety managers and health managers. In this regard, we provide further guidance for companies on the Amendments as follows: Key Changes to the LSA (Effective from November 19, 2021) Provisions have been added to the law to allow the Labor Relations Commission (the “LRC”) to issue an order of remedy even for an employee whose fixed-term employment has expired or who has reached the age of retirement. Accordingly, even in cases where it is not possible for the company to reinstate the employee to his or her former position, the LRC may issue a relief order requiring the employer to pay money and valuables equivalent to wages that the employee concerned would have received during the period of dismissal. The upper limit of the penalty for non-compliance with the LRC’s relief order, which was KRW 20 million for each occurrence of non-compliance (which can be levied up to four times in total), has now been increased to KRW 30 million (with no change to the frequency). In addition, when wages are paid to employees, the LSA was amended to introduce an obligation on the company to issue a wage statement to employees either in writing or electronically, specifying the matters prescribed by the Presidential Decree, such as wage items and calculation method. Key Changes to the Equal Employment Opportunity and Work-Family Balance Assistance Act (the “Equal Employment Act”) New provisions have been added to expand the reasons for childcare leave by pregnant employees. In the past, childcare leave was allowed only for employees who had children aged eight or younger or in the second grade or lower. However, the amendment expands the scope of eligibility for granting childcare leave to female employees who are pregnant so that they may use childcare leave if they have a risk of miscarriage or stillbirth. Also, the current law enables employees to split childcare leave up to two periods, but under the Amendment, the childcare leave that a pregnant employee uses for maternity protection will not be subject to the split limit. This Amendment will take effect starting November 19, 2021. The law has also been changed to introduce relief measures with the LRC for violations of the Equal Employment Act, enabling the LRC to issue corrective orders to cease discriminatory acts, improve working terms and conditions, and award appropriate compensation. Furthermore, this Amendment provides additional regulations prohibiting disadvantageous treatment of employees who file a request for relief (criminal liability upon violation thereof) and imposing fines for violating the confirmed corrective orders. This Amendment will take effect from May 19, 2022. Key Changes to the Industrial Accident Compensation Insurance Act (Effective from January 1, 2022) Provisions requiring advance payment of funeral expenses have been added, allowing employers to pay funeral expenses in advance at the request of the bereaved family if the employee concerned is presumed to have died in the performance of his or her duties. Under this Amendment, in cases where an employee who suffered an industrial accident requires a long-term medical treatment or is expected to have a disability thereafter, the Korea Workers’ Compensation and Welfare Service may request the employer to prepare and submit a reinstatement work plan with respect to the said employee. And accordingly, a new system to support the return-to-work of employees by the Korea Workers' Compensation and Welfare Service has been established, which support is to be based on the reinstatement work plan submitted. Key Changes to the Occupational Safety and Health Act (the “OSHA”) (Effective from November 19, 2021) Under the current OSHA, there is no provision restricting safety managers from concurrently serving as health managers and vice versa. However, the amended OSHA requires employers of workplaces which fall under the size of a workplace prescribed by the Presidential Decree to have safety managers and health managers exclusively responsible for their designated duties. In case where a service recipient company and a service providing company perform work in the same location, the service recipient company is obligated to check the time and details of work and safety and health measures for the service providing company. Additionally, the service recipient company is obligated to adjust the time and details of work if there is a risk of fire or explosion due to performance of work in the same location (criminal liability upon violation thereof). Key Changes to the Protection, etc. of Fixed-Term and Part-Time Employees Act (the “PFPEA”) (Effective Immediately) The amended PFPEA provides grounds for being exempt from vicarious liability, allowing employers who can demonstrate that they have exercised due care or supervision to prevent a violation of the PFPEA by the employers’ agents and employees to be exempt from paying a criminal fine. In addition to the above, the Amendments include various matters such as the enactment of the Act on the Protection and Support of Essential Employees, amendment of the Labor Relations Commission Act, and amendment of the Framework Act on Employment Policy. Please let us know if you need more detailed information in this regard. [Korean version] .content_view .view_area ul li:before { top: 13px; }2021.06.24
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Newsletters VIEW MORENewslettersKFTC Announces Proposed Amendment to the Enforcement Decree to the FTL On June 4, 2021, the Korea Fair Trade Commission (the “KFTC”) announced the proposed amendment (“Proposed Amendment”) to the Enforcement Decree (the “Enforcement Decree”) to the Monopoly Regulation and Fair Trade Law (the “FTL”). This proposed amendment to the Enforcement Decree is a follow-up action to the overall amendment to the FTL itself, which will come into force on December 30, 2021. The Proposed Amendment sets out specific details to supplement the relevant provisions in the amended FTL. The Proposed Amendment will go through the opinion canvassing period from June 4, 2021 to July 14, 2021, and once finalized, it will come into force at the same time as the amended FTL on December 30, 2021. Among the amendments, we highlight below the key provisions relating to the size-of-transaction test for merger filing, information exchange as a type of cartel, and revocation of leniency benefits. 1. New Merger Notification Threshold Based on Size of Transaction [Article 21 (8) and (9)] Article 11 (2) of the amended FTL creates a new merger notification threshold for the acquisition of a small-sized company, in which the acquiring company must notify the acquisition if (i) the transaction value meets a certain threshold amount and (ii) the acquired company or its affiliate is active in the Korean market at a “substantial level," even if the transaction does not meet other thresholds based on the size of the parties and Korean turnover. The Proposed Amendment will provide that: the transaction value threshold is KRW 600 billion; and the term “substantial level” means one of the following: the acquired company or its affiliate sells or provides products or services in the Korean market to at least one million persons on a monthly basis for three years immediately preceding the notification date; or the acquired company or its affiliate (a) has leased a domestic R&D facility or utilized research personnel for three years immediately preceding the notification date and (b) had an annual R&D budget of at least KRW 30 billion (approx. USD 27 million) at some point during the three-year period immediately preceding the notification date; or other factors similar to (i) or (ii) as further notified by the KFTC. Even more specific matters related to the above provisions, including how they are to be construed, will be provided through KFTC notifications. 2. Information Types in Information Exchange Collusion [Article 43] Article 40 (1) 9 of the amended FTL prohibits companies from engaging in unlawful information exchange collusion. The Proposed Amendment provides the following as types of information that are subject to information exchange prohibition: cost of products or services; quantity of products delivered, quantity of products in the inventory, or quantity of products sold; terms and conditions of products, services or payment. In addition, the KFTC is expected to issue additional guidelines to further describe more specific criteria for determining when information exchange collusion substantially restrains competition. 3. Grounds for Revoking Leniency Benefits [Article 54 (1)] Under Article 44 (3) of the amended FTL, if a person who filed for leniency with the KFTC and was granted leniency benefits (the “leniency applicant”) during a KFTC investigation of a cartel case later makes statements before the court, which differ from those made during the KFTC investigation, the leniency applicant’s benefits can be revoked. The Proposed Amendment sets out the specific grounds for revoking the leniency applicant’s benefits as follows: if the leniency applicant denies material statements or submission during a court proceeding; if the leniency applicant submits false materials; if the leniency applicant fails to diligently cooperate in the trial without a justifiable reason, such as not appearing before the court; or if the leniency applicant files an action claiming that he/she is denying the act of collusion in contravention of the leniency application. As noted above, the Proposed Amendment is currently going through the 40-day opinion canvassing period, ending on July 14, 2021. It would therefore be advisable to review how each of the provisions in the Proposed Amendment may affect your business, and if necessary, consider submitting opinions to the KFTC during this period. [Korean version]2021.06.09
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Newsletters VIEW MORENewslettersAmended FSCMA Enforcement Decree Passed at Cabinet Meeting: Reform of Regulations on Information Barriers and Others The proposed amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (the "FSCMA"), which contain significant changes to the requirements relating to information barriers (informally referred to as "Chinese walls") and outsourcing by financial investment companies, were passed at the Cabinet Meeting held on May 11, 2021. The information barrier regulations in their current form were legislated in February 2009 at the time of the initial enactment of the FSCMA. Because these regulations expressly enumerate specific types of business activities that are required to be separated from one another and specify the methodologies for implementing such separation, they imposed excessive regulatory burden on financial investment companies and limited their ability to voluntarily strengthen their internal control measures or restructure their organizations to accommodate company-specific circumstances. To address such shortcomings, the Financial Services Commission (the "FSC") has been seeking to transform the existing information barrier regulations into a principle-based framework that would enable financial investment companies to design and operate their own information barrier system as part of their internal control standards in a manner that best serves their respective business objectives. As a result of these efforts, on April 29, 2020 the National Assembly passed amendments to the FSCMA which codify the principle-based framework so that companies can implement internal control measures tailored to their circumstances and at the same time strengthen the regulators' supervision and enforcement authority. The amended FSCMA took effect from May 20, 2021. The follow-on amendments to the Enforcement Decree of the FSCMA passed at the Cabinet Meeting on May 11, 2021 put into place subordinate regulations necessary to enforce the revised regulations on information barriers under the amended FSCMA. New Information Barriers Regulations Specifically, the amended FSCMA has abolished regulations that (i) prohibit officers and employees of financial investment companies from holding concurrent positions across different lines of businesses (e.g., investment dealing/brokerage, trust, collective investment, investment banking and prime brokerage businesses) and (ii) require financial investment companies to maintain physical segregation for different lines of business. Instead, the amended FSCMA sets forth basic principles for the operation of information barriers within each financial investment company as well as with third parties including affiliates, and requires individual financial investment companies to establish internal control standards consistent with these principles. The amended FSCMA also states that the Enforcement Decree will specify the types of information that must be protected by information barriers and the information barrier provisions that must be included in the internal control standards. The amended Enforcement Decree of the FSCMA designates two categories of information that must be protected by information barriers: (i) material non-public information and (ii) information pertaining to the sale, purchase or management of clients' assets. The second category consists of information on clients' sale, purchase and ownership of the financial investment products as well as information on the composition and management of collective investment assets, discretionary investment assets and trust assets. Notwithstanding such designation, the amended Enforcement Decree provides an exemption under which information that falls under the second category would be exempted from the separation requirement, provided that (i) considering its nature, the information would not potentially undermine investor protection and fairness in markets, (ii) the information when shared across different business groups or with third parties would not likely create a conflict of interests and (iii) relevant financial investment companies have determined that the information is permitted to be shared pursuant to their internal control standards and have publicly disclosed such determination in accordance with the Enforcement Decree. In addition, the amended FSCMA and the Enforcement Decree require the following points to be included in the financial investment companies' internal control standards: (i) the standards and procedures for operating information barriers; (ii) the requirements and procedures for over-the-wall exchange of information on an exceptional basis; (iii) operation of internal organization and designation of personnel responsible for overseeing and managing conflicts of interests, (iv) the types of transactions susceptible to conflicts of interests; and (v) accountability for the use of information subject to information barriers in breach of the internal control standards. Under the amended FSCMA and the Enforcement Decree, financial investment companies are required to (i) regularly monitor the adequacy and effectiveness of their internal control standards,(ii) conduct officer and employee training on the laws and regulations relating to information barriers and internal control standards, (iii) designate an executive officer or an employee to independently oversee matters pertaining to information barriers (the registered compliance officer would be permitted to also serve such function), (iv) operate a surveillance system that monitors segregation of information, and (v) disclose relevant sections of the internal control standards pertaining to key elements of the information barriers. Outsourcing by Financial Investment Companies The outsourcing regulations under the FSCMA prior to the amendments on April 29, 2020 effectively prohibited financial investment companies from outsourcing to third parties any activities regarded as core functions to their licensed business activities while permitting the outsourcing of only non-core functions. The amended FSCMA in principle permits financial investment service providers to outsource even certain core functions to duly licensed and registered third parties. However, the amended FSCMA specifically states that the internal control functions that involve decision-making authority as prescribed by the Enforcement Decree are not permitted to be outsourced to a third party. In this regard, the amended Enforcement Decree stipulates that the following functions are prohibited from being outsourced: (i) functions performed by the compliance officer, (ii) internal audit, (iii) risk management and (iv) credit risk analysis and assessment. To summarize, under the amended FSCMA and Enforcement Decree, all functions other than the four types of functions specifically described in the Enforcement Decree (as summarized above) are in principle permitted to be outsourced, so long as a post-outsourcing report is filed with the regulator within two weeks from commencement of the outsourcing arrangement. However, outsourcing of essential functions directly related to the licensing and/or registration work should be subject to the filing of a pre-outsourcing report no later than seven days prior to commencement of the outsourcing arrangement, and these functions must be outsourced to a third party licensed and/or registered to perform such functions (including those licensed in foreign countries). Key Takeaways The amended FSCMA and Enforcement Decree are expected to provide financial investment companies with greater degree of flexibility to design and implement their organizational structure to best serve their business and regulatory compliance objectives. The FSC has publicly announced that it anticipates that the amendments will enhance innovation in the financial industry leading to improved efficiency in the capital markets. At the same time, the FSC stated that it will monitor and enforce breaches of the information sharing and outsourcing regulations more vigorously by actively utilizing the tools at its disposal such as imposition of criminal penalties and fines. This expression of intent indicates the additional emphasis and focus on the individual financial investment company's responsibilities to implement effective internal control systems. The amended FSCMA and Enforcement Decree have been in effect from May 20, 2021. Accordingly, financial investment companies are advised to familiarize themselves and take steps to comply with their obligations thereunder, including implementing the required internal control standards on information barriers in compliance with the new principle-based framework and appointing personnel responsible for implementation of new information barriers. In this connection, the Korea Financial Investment Association has recently distributed best practice internal control standards that reflect the requirements set forth under the amended FSCMA and Enforcement Decree.2021.05.18
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Newsletters VIEW MORENewslettersLegislative Update on Class Actions, Punitive Damages and SAPA – Class Action & Punitive Damages in Korea The legislative bills to create a class action and punitive damages system in Korea still remain pending, but have not yet been submitted to the legislature. In the meantime, we think it would be useful to also consider the requirements of the Serious Accidents Punishment Act (“SAPA”) which will become effective on January 27, 2022, as this law also has a close nexus to class actions and punitive damages. In this newsletter, we consider the “Serious Public Accidents” provision of SAPA. SAPA defines a “serious public accident” as an accident caused by defects in the design, manufacture, installation or management of “raw materials, products, public use facilities or public transportation” involving at least (i) one death, (ii) ten injuries requiring at least two months of treatment, or (iii) ten illnesses requiring at least three months of recovery time. SAPA imposes a duty on company management to take proactive measures to prevent issues such as product defects and serious accidents on their premises. Further, management at companies whose products cause a serious public accident could also face legal liability under SAPA. Theoretically, even failures in the sales or distribution process could also lead to SAPA liability. The scope of SAPA liability can be confusing, so we provide below a quick way to identify those accidents which can implicate SAPA. For this purpose, we think it is useful to consider three categories of accidents, i.e., those involving (i) raw materials or products, (ii) public use facilities or (iii) public transportation. Some obvious examples of the first category (raw materials or products) would include accidents caused by chemical substances or product components. As to who would be liable under SAPA, this would clearly include the manufacturer, but also those involved in the distribution process who failed to implement a system to notify consumers about the potential risks. Some examples of the second category (public use facilities) could include accidents caused by faulty construction, fires, crowd safety incidents (e.g., a stampede at a concert hall caused by poor planning) or even an outbreak of a virus at a hospital. This list can become very long, since public use facilities can be any place open to the public. Thus, the operators of such facilities must make sure that they have the right safety management system, along with having the right personnel and budget in place for operations in compliance with SAPA and other Korean environment, health and safety ("EHS") law requirements. The third category (public transportation) would include accidents involving any mode of public transport, e.g., planes, trains and automobiles. The examples here also become extensive, e.g., accidents caused by defective or improperly maintained buses or a fire caused by a defective automobile part. In cases involving public transportation such as buses, SAPA could also impose liability on both the vehicle manufacturer and transport business operator. Given the potential criminal implications, SAPA imposes a clear need for companies to reassess their operations and eliminate any risk factors, e.g., by making sure that there are no gaps in their compliance with Korean EHS laws. Incidents which implicate SAPA can also easily involve class actions and punitive damages, thereby demanding a more comprehensive review of potential liabilities. [Korean version] .content_view .view_area ul li:before { top: 13px; }2021.05.17
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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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Opening of Kim & Chang’s Singapore Office
With the opening of our Singapore office, we now take our successful track record to our clients on a wider regional platform.
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