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Kim & Chang Legal Newsletter (2025 Issue 3) This is a quaterly update of legal developments in Korea from Kim & Chang. This issue includes: “Yellow Envelope Act” Passes National Assembly Plenary Session Key Antitrust and Competition Policy Directions of New Administration Introduction of Directors’ Duty to Protect Shareholders’ Interests and Other Changes to Regulatory Framework on Corporate Governance KFTC Announces Proposed Amendment to Review Guidelines on Deceptive Labeling and Advertising Promulgation of September 9, 2025 Amendment to Korean Commercial Code and Additional Legal Updates KCS Introduces System of “Batch Submission of Data on Customs Value Declarations” Regulatory Update: Key Takeaways from Enforcement of Amended K-REACH and CSCA Amendment to Subordinate Statutes to Act on Resource Circulation of Electrical and Electronic Equipment and Vehicles Policy Trends on Stablecoins Prior Consultation Requirements for Requests by Foreign Governments or Institutions for Information Concerning National Strategic Technologies Securitization of Life Insurance Policy Death Benefits IP High Court Publishes Its Standard Procedures for Reviewing Civil Cases Updates on Section 232 Investigations on Semiconductors and Semiconductor Manufacturing Equipment Introduction of Project REITs and Relaxation of REIT Regulations New Initiatives to Eliminate Unfair Trade Practices in Capital Market: Announcement of Action Plans and Follow-Up Steps 2025 Proposed Tax Law Amendments ? Notable Items To view the newsletter, please click on the link below. Kim & Chang Legal Newsletter (2025 Issue 3) .content_view .view_area a { color: #2c3e50; text-decoration: none; }
2025.10.30

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Enhanced Disclosure Requirements for Bonds Exchangeable for Treasury Shares As previously communicated (Link), following the implementation of the amended Korean Commercial Code (the “KCC”), a court issued the first injunction regarding the issuance of bonds exchangeable for treasury shares, which recognized the legitimacy of the business judgment of management with respect to such issuance. Since then, a significant number of listed companies have disclosed plans to either dispose of their treasury shares or issue bonds exchangeable for treasury shares, and this development is drawing significant attention from the market. In response, the Financial Services Commission has announced proposed amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act, the aim of which is to strengthen disclosure requirements for listed companies regarding their treasury stock holdings and disposal plans. Specifically, the disclosure requirements will be expanded from mandatory annual disclosures for treasury share holdings of 5% or more, to semiannual disclosures for holdings of 1% or more. As part of these enhanced regulations regarding the disposal and disclosure of treasury shares, the Financial Supervisory Service (the "FSS") announced on October 16, 2025 an improvement to the disclosure system to ensure that key information related to the issuance of exchangeable bonds backed by treasury shares is fully provided to investors. Accordingly, the disclosure form will be revised to require inclusion of critical information on the issuance of exchangeable bonds, such as the impact on existing shareholders' interests. Going forward, any violations of disclosure obligations regarding the holding or disposal of treasury shares will be subject to strict enforcement. According to the FSS announcement, 50 exchangeable bond issuances were planned in the third quarter of 2025, totaling approximately KRW 1.5 trillion, a number surpassing the 28 total issuances amounting to KRW 986.3 billion for all of 2024. Especially notable is the recent surge, with 39 exchangeable bond issuances amounting to approximately KRW 1.2 trillion planned in September 2025 alone, accounting for roughly 78% of the total issuances (by number) scheduled in the third quarter. In particular, the FSS’s announcement has garnered attention for its detailed explanation of concerns and precautions regarding the issuance of exchangeable bonds backed by treasury shares. According to the announcement: (a) from a company’s perspective, if exchangeable bonds are issued hastily without thorough consideration of other financing options and assessment of needs, the trust of shareholders (who may have anticipated shareholder returns through cancellation of treasury shares) could be undermined, potentially harming corporate value; (b) from the capital market’s perspective, the market has generally reacted negatively, as evidenced by declining stock prices following decisions to make such issuances; and (c) from an investor's perspective, most issuances of exchangeable bonds are accomplished through private placements, and despite the possibility of resale, investors experience difficulties in obtaining sufficient information necessary for investment decisions, such as the rationale behind the issuance and the details of feasibility assessments. To address these issues, the FSS plans to revise the disclosure standards so that, effective immediately from October 20, 2025, all key information - including the impact on shareholder interests - must be detailed in both the key information report for issuing exchangeable bonds and the key information report for disposing of treasury shares. When issuing exchangeable bonds backed by treasury shares, the following information must be specifically and thoroughly included in the "Other Matters to Consider When Making Investment Decisions" section of the Key Information Reports for "Issuance of Exchangeable Bonds" and "Disposal of Treasury Shares”: (1) Reasons for choosing to issue exchangeable bonds backed by treasury shares instead of other financing methods; (2) Review of the appropriateness and rationale for the timing of the issuance; (3) Potential impact on the company’s governance structure and decision-making in the event of an actual share exchange; (4) Anticipated impact on interests of existing shareholders; (5) Plans regarding the possible resale of the exchangeable bonds or exchanged shares after the issuance (including the terms and conditions of any advance agreements); (6) Name of arranger(s) involved, if any. In its recent announcement, the FSS also emphasized that the financial authorities will institute strict measures, including the issuance of corrective orders and the imposition of administrative fines, in response to any future violations of disclosure requirements related to treasury shares. The FSS also advised companies to take great care when disclosing matters pertaining to the holding or disposal of treasury shares, including under the revised regulations. As explained previously, the government and the National Assembly continue to discuss the proposed third amendment to the KCC, which would mandate, among other things, the cancellation of treasury shares (Link), and, as a result, there has been increasing scrutiny from minority shareholders and other stakeholders regarding the disposal of treasury shares through means such as the issuance of exchangeable bonds. In particular, the disposal of treasury shares is closely tied to directors' duty under the amended KCC to protect shareholders' interests. Therefore, the new disclosure requirements introduced by the FSS’s strengthened regulations should not only be seen as a matter of regulatory compliance, but should also be specifically reviewed and deliberated by directors when making decisions about disposing of treasury shares through the issuance of exchangeable bonds. It is also advisable for companies to keep proper records of such discussions to ensure that the directors fulfill their obligations and mitigate risks of potential liability. [Korean Version]
2025.10.24

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Naver Shopping Prevails in Supreme Court Appeal Regarding Alleged Search Algorithm Self-Preferencing 1. Overview of the Naver Shopping Search Algorithm Case In January 2021, the Korea Fair Trade Commission (the “KFTC”) imposed a corrective order and administrative fine of KRW 26.6 billion on Naver (the “Corrective Order”) after finding that from around February 2012 to August 2020, Naver altered its product search result ranking algorithm (the “search algorithm”) of Naver Shopping, a comparison shopping service, to favor sellers who are listed on Naver Smart Store, an open market platform service. Specifically, the KFTC found that Naver’s act of altering the search algorithm constituted (i) an abuse of its market-dominant position and unfair trade practices through discriminatory treatment under the Monopoly Regulation and Fair Trade Act (the “MRFTA”) (Articles 5(1)3 and 45(1)2), and (ii) unfair trade practices as an unfair customer solicitation through deceit (Article 45(1)4 of the MRFTA). Naver filed an administrative appeal with the Seoul High Court seeking to revoke the Corrective Order, but on December 14, 2022, the Seoul High Court dismissed Naver’s claims in their entirety (the “High Court Decision”). Kim & Chang represented Naver in Naver’s appeal of the High Court Decision to the Supreme Court, and by presenting comprehensive arguments focusing on various aspects of the legal errors and insufficient examination of the High Court Decision, were able to successfully obtain a decision to fully reverse the High Court Decision and to remand the case to the High Court (Supreme Court decision 2023Du32709 rendered on October 16, 2025, the “Supreme Court Decision”). 2. Key Issues in Dispute and the Supreme Court’s Decision The Supreme Court Decision is the first court ruling to apply established competition law principles and precedents to the issue of self-preferencing by online platform operators, marking its symbolic importance and significance. In particular, the Supreme Court Decision extensively addressed important competition law principles, including (i) whether online platform operators have an obligation to provide equal treatment to competing products or services, (ii) the standard of determining anti-competitive concerns in a case concerning leverage of market power, (iii) the scope and limits of business discretion in setting search algorithms from the perspectives of anti-competitive concerns and potential for consumer misconception, and (iv) the need for careful evaluation of anti-competitive intent. Accordingly, the Supreme Court Decision will serve as a precedential case having a profound impact on the KFTC’s future regulatory enforcement and lower court decisions concerning the similar issues. While a variety of issues were disputed and addressed in this case, the key issues and the Supreme Court’s ruling on these issues can be summarized as follows. (1) Regarding the alleged act of discriminatory treatment, the Supreme Court held that neither the “unfairness” of the abuse of market dominance nor the “significance and unfairness” of unfair trade practice due to discriminatory treatment can be recognized. That is, in connection with the element of “unfairness,” the Supreme Court determined that there were legal errors and insufficient examination in the High Court Decision, which recognized the existence of anti-competitive concern and anti-competitive intent: ? The Supreme Court clarified that “there is no legal basis to require Naver to provide equal treatment when setting transaction conditions with other companies solely on the grounds that Naver is a market-dominant online platform operator.” In other words, the Supreme Court held that under the MRFTA, being a market-dominant platform operator does not automatically impose a duty of equal treatment toward competitors’ products or services. ? Applying the standard established in the POSCO case (Supreme Court decision 2002Du8626 rendered on November 22, 2007), the Supreme Court closely examined whether the conduct at issue “raises concerns of actual anti-competitive effects, such as price increases, output reduction, impediment to innovation, reduction in number of effective competitors, or decrease in diversity,” rather than merely causing some disadvantage to competitors. While the High Court Decision recognized anti-competitive concerns on the grounds that “it cannot be entirely ruled out that there was no concern of anti-competitive effects,” the Supreme Court clarified that mere abstract concern is insufficient and it must be recognized that “there is specific concern of anti-competitive effects caused by the discriminatory conduct” in the marketplace platform market where the concern of anti-competitive effect is at issue. ? In light of the above standard, the Supreme Court also held that the fact that there could be a “leverage of market power” in the relevant markets, whereby Naver altering the search algorithm in the comparison shopping market affects competition in the adjacent marketplace platform market, does not automatically make the conduct more anti-competitive. ? The Supreme Court also pointed out that effective competition continued in this case considering that Naver’s comparison shopping service only served a limited role as an entry path to marketplace platforms, that competing marketplace platforms have continuously grown, and that promising new entrants have entered the relevant markets. On this basis, the Supreme Court held that the High Court Decision erred by failing to sufficiently examine the causal relationship ? i.e., whether Naver’s relatively fast growth was a result of the alleged conduct or “competition on the merits” and overall expansion of the market. ? The Supreme Court also held that Naver’s anti-competitive intent was not proven, finding that adjusting and changing search algorithms, along with studying the resulting variations in search exposures, is an ordinary business activity for search service providers, and may be part of “competition on the merits,” and therefore Naver’s anti-competitive intent or purpose cannot be presumed simply on the ground that Naver reviewed the effect or impact of changes to the search algorithm. In particular, the Supreme Court pointed out that it is standard practice for search algorithms to be gradually improved through numerous steps or review, and it was unlawful for the KFTC to impose sanctions by recognizing anti-competitive intent and purpose based on just five search algorithm alterations that were selectively chosen among dozens of iterative search algorithm improvements made by Naver over the relevant period. (2) Regarding unfair customer solicitation, the Supreme Court reaffirmed the principle that an obligation of equal treatment does not necessarily arise from the nature of the comparison shopping services and held that the alleged conduct cannot be considered as deceitful or having the potential to cause consumer misconception: ? The Supreme Court first held that business operators “may design their search algorithm to determine whether to expose certain product information based on the operators’ own value judgments and business strategies” and that the business operators do not have a duty to disclose such specific value judgments or business strategies to consumers or the public. That said, the Supreme Court also established a clear limitation that a search algorithm might be unlawful if it is deceptive or fraudulent and “may interfere with consumers’ rational product choices or harm fair competition or transaction order.” ? The Supreme Court concluded that neither deceit nor potential for consumer misconception are recognized in the present case considering that Naver had informed consumers about the factors that are taken into account in sorting the search results for the “Naver Shopping Ranking Order” criterion, provided a variety of other sorting criteria such as price and number of reviews in addition to the “Naver Shopping Ranking Order” criterion, and that the average consumer would not rely solely on the “Naver Shopping Ranking Order” to determine a product’s superiority or advantages. 3. Significance and Implications of the Supreme Court Decision The Supreme Court Decision is the first ever decision by the Supreme Court on the issue of self-preferencing by an online platform business and serves as a leading precedent that establishes competition law standards for assessing the legality of self-preferencing practices by platform operators. In particular, the Supreme Court made clear that there is no legal basis to require an online platform operator to treat other companies’ products equally to its own products or services when setting transaction conditions with the other companies, solely on the ground that the online platform operator is a market dominant business. The Supreme Court also presented certain standards where self-preferencing can become an issue, such as existence of anti-competitive concerns and potential infringement on consumer choice. The Supreme Court Decision is expected to enhance legal predictability regarding the legitimacy of self-preferencing practices and promote innovation and competitive opportunities, especially for companies that newly enter the market, as was the case for Naver. The Supreme Court Decision will also serve as an important reference point for the KFTC’s future enforcement and lower court decisions concerning similar issues. In addition, considering the ongoing discussions regarding regulatory approaches and legislative considerations for online platform operators, companies are advised to closely follow the impact of the Supreme Court Decision on competition law regulation of online platform operators in the future. [Korean Version]
2025.10.22

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Possibility of Recognizing Criminal Jurisdiction over Foreign Entities 1. The Supreme Court of Korea recently held that criminal jurisdiction under Korean law can also extend to foreign entities that hire individuals who have previously violated criminal laws of Korea within the territory of Korea pursuant to vicarious liability provisions. In a case where employees formerly employed by a domestic company accessed and acquired files containing industrial technologies and trade secrets, subsequently exported such files without authorization, and then shared them with an overseas entity that they became employed with, the Supreme Court ruled that Korean criminal jurisdiction is established not only over the employees but also over the foreign entity that employed them (Supreme Court Decision 2022Do8664, August 14, 2025). The Supreme Court found that, as long as the conspiracy among employees regarding the disclosure or acquisition of trade secrets, the viewing and photographing of industrial technologies and trade secrets, and the unauthorized export of such secrets took place within the territory of Korea, the crime will still be deemed as having been committed within Korea even if the actual outflow, disclosure, use, or acquisition of industrial technologies and trade secrets later took place outside Korea. Furthermore, the Supreme Court held that these violations by the employees form a part of the criminal act attributable to the foreign entity under the vicarious liability provisions under the Act on Prevention of Divulgence and Protection of Industrial Technology and the Unfair Competition Prevention Act. Therefore, the foreign entity can also be deemed to have committed the crime within the territory of Korea for purposes of criminal liability. 2. It should be noted that even when a foreign entity does not have a separate legal entity in Korea but operates through a branch, liaison office, etc., the foreign entity may still be subject to criminal liability under vicarious liability provisions if employees in Korea violate Korean criminal laws. This Supreme Court decision establishes the criteria for determining Korea’s criminal jurisdiction over companies and individuals subject to vicarious liability provisions. Notably, this decision suggests that even if a foreign entity operates in Korea through branch or liaison offices instead of a separate legal entity, in the event employees at these offices commit a crime in Korea, Korean criminal jurisdiction may apply to the foreign entity, which may face criminal punishment in accordance with applicable laws. In light of the above, even when conducting business in Korea without any local presence (i.e., where a foreign company does not even have a branch, liaison office, etc.), foreign companies must thoroughly manage and supervise their employees to prevent violations of Korean criminal laws and to mitigate risks to such foreign companies. [Korean Version]
2025.10.16

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PIPC Announces “Pseudonymized Information System and Operation Innovation Plan” On September 24, the Personal Information Protection Commission (the “PIPC”) unveiled the “Pseudonymized Information System and Operation Innovation Plan” during the 4th National Affairs Ministerial Meeting. This initiative follows the 1st Core Regulation Rationalization Strategy Meeting (held on September 15, 2025, and presided over by the President). The plan aims to establish a robust foundation for the effective use of high-quality data, a critical element in enhancing AI competitiveness, by improving the systems and processes surrounding pseudonymized information. The main points are summarized below: 1. Creation of Environment for Active Data Sharing (1) Cost Reduction and Support for Pseudonymization The PIPC is set to drastically lower the costs associated with pseudonymization. The PIPC will implement a “one-stop support system for pseudonymization” for the public sector, managed by specialized institutions designated by the PIPC. The PIPC will also verify the adequacy of pseudonymization performed by these institutions. Additionally, the PIPC will pursue a legislation to establish a trustworthy body for certifying the adequacy of both pseudonymization and anonymization processes. (2) Alleviation of Legal Risks Starting November, the PIPC will introduce the “No Action Letter” system, allowing organizations to confirm within 30 days whether an unclear case constitutes a violation of law. If the PIPC deems such case as outside the scope of a regulatory action, it will be exempted from sanctions, unless circumstances materially change. Furthermore, by year-end, the PIPC plans to issue guidelines addressing key conflict points between AI technology and the pseudonymized information system, as well as indemnification guidance for public officials acting without willful misconduct or gross negligence.[1] (3) Incentives for Provision and Use From the second half of this year, public institutions will receive additional points (up to 10) for supplying pseudonymized or synthetic information in the “Public Data and Data-Based Administrative Evaluation.” For private companies, provision of such data will positively influence their “corporate ESG evaluation index,” which is considered in credit ratings and financial reviews. The PIPC also plans to release “Guidelines on Pseudonymized Information Processing Fees” within this year, allowing public institutions to recoup pseudonymization costs from the processing fee revenues. 2. More Efficient Processing of Pseudonymized Information (1) Streamlining Pseudonymization Process The pseudonymization process, previously averaging 310 days from consultation to data release, will be made significantly more flexible. The PIPC will assess the risk levels based on “data risk” and “vulnerability of the processing environment,” and it will customize the pseudonymization processes depending on the risk level within this year. The PIPC will also clarify legal provisions to enable: - Confirmation of the adequacy of unstructured data by sample surveys post-pseudonymization for large datasets and - Exemption of Institutional Review Board review and individual consent requirement under the Bioethics Act when pseudonymizing health and medical data. (2) Facilitating Pseudonymized Data Combination The PIPC will issue legal interpretations to allow the combination of pseudonymized datasets by using connecting information[2], accompanied by safeguards to mitigate privacy risks. The PIPC is also considering legislation to allow unique identification information (e.g., resident registration numbers) to be combined in specific public interest cases, such as disease treatment and policy research. (3) Building Operational Infrastructure The PIPC will prepare a Prime Minister's Directive, to be effective from 2026, which will delineate the roles and responsibilities of the persons responsible for pseudonymized data at the entities providing pseudonymized data in the public sector. The PIPC will support the institutions to establish internal governance system before the Directive takes effect. 3. Maximization of Utility of Pseudonymized Information (1) Minimizing Data Loss The PIPC plans, within this year, to prepare a legislation bill to regulate the matters relating to the “Pseudonymization Adequacy Review Committee” in order to ensure that pseudonymization results in minimal data loss and that pseudonymization can take place at a consistently reasonable level. The PIPC will also improve access to the “Privacy Innovation Zone” (formerly the Privacy Safety Zone).[3] (2) Building Capacity and Expertise The PIPC will provide expanded support, such as acquisition of expert personnel, to training professionals and advancing technology to safeguard and utilize personal information and to strengthen the expertise of the Pseudonymized Data Utilization Support Center. (3) Promoting Use Cases and Innovation By year-end, the PIPC will publish online detailed use cases (such as combination rates and data schemas). Furthermore, the PIPC will develop data innovation promotion models by developing leading examples of pseudonymized data combination. For companies, these changes mean more clarity regarding pseudonymization requirements and new opportunities to leverage pseudonymized data in a variety of services, including AI. We recommend monitoring the forthcoming guidelines and considering strategic use of no-action letters and innovation zones to manage legal risks and expand data use possibilities. [1] A system under which a follow-up administrative sanction will not be imposed when a no-action letter is issued, unless special circumstances arise. [2] Information generated by one-way encryption of resident registration numbers. [3] It is a data analysis environment directly certified and managed by the PIPC to ensure the safety of data processing, allowing for the flexible use of pseudonymized data. Currently, five data analysis spaces are in operation. [Korean Version]
2025.10.15

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“Outstanding” in All 24 Categories and 66 “Leading Lawyers”

Kim & Chang was named “Outstanding” in all 24 categories in the 2025 edition of asialaw, once again receiving the highest recognition across all surveyed categories for nine consecutive years.
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Ranked in the World’s Top 100 Law Firms for the 12th Consecutive Year

For the 12th consecutive year, Kim & Chang was ranked among the world’s top 100 law firms in “The Global 200” rankings published by The American Lawyer and Law.com International.
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Kim & Chang Ranked “Tier 1” in All Eight Practice Areas

Kim & Chang once again received “Tier 1” (top-tier) rankings in all areas surveyed for Korea in the 2025 edition of IFLR1000. Additionally, 56 of our attorneys were recognized in their respective practice areas.
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