Opening of Indonesia Desk
Kim & Chang has opened its Indonesia Desk in partnership with SSEK, a top-tier Indonesian law firm.
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ニュースレター もっと見るニュースレターSupreme Court Abolishes “Social Norm Reasonableness” Standard for Disadvantageous Changes to Rules of Employment In principle, an employer must obtain group consent from employees through a collective decision-making process to amend the rules of employment (“ROE”) that could result in disadvantageous changes to working conditions that deprive employees of their vested rights and interests. The Supreme Court’s firmly established position on this issue has been that the failure to obtain group consent in and of itself will not nullify the disadvantageous change if the change is reasonable in light of social norms, notwithstanding the potential disadvantage to employees (Supreme Court Decision 78Da1046, September 12, 1978; Supreme Court Decision 87Daka2853, May 10, 1988, etc.). On May 11, 2023, however, the Supreme Court issued an en banc decision reversing its position, holding that “...unless there are special circumstances to conclude that the labor union or employees abused their group consent right, the disadvantageous change shall not be deemed valid solely on the ground that it is reasonable in light of social norms...” (Supreme Court Decision 2017Da35588, 35595, May 11, 2023). Specifically, the Supreme Court provided the following reasons for abolishing the social norm reasonableness standard: (i) the employees’ collective consent right is an important procedure in achieving labor-management equality under the Constitution and the Labor Standards Act and thus cannot be ignored merely because the changes to the ROE are “reasonable” or “appropriate;” (ii) it contradicts Article 94, Paragraph 1 of the Labor Standards Act, which explicitly requires group consent for any disadvantageous changes to the ROE; (iii) “reasonableness based on social norms” is an ambiguous concept that will impair legal stability and predictability if maintained; (iv) changes to working conditions should be made through persuasion and good faith efforts by the employer; and (v) disadvantageous changes to the ROE can be made without group consent if employees abuse their group consent right. The Supreme Court highlighted the group consent right as a significant procedural requirement and held that the proposed change, considered “reasonable in light of social norms,” cannot justify the failure to fulfill such a procedural requirement in making disadvantageous changes to the ROE. Through this decision, the Supreme Court reconfirmed the need for employers to engage in serious persuasion and good faith efforts to obtain the group consent required to make disadvantageous changes to the ROE. That said, the Supreme Court also recognized the court’s authority to accept disadvantageous changes to ROE without group consent on an exceptional basis where employees abuse their group consent rights. This Supreme Court decision has made it even more important for employers to obtain group consent and engage in good faith efforts to persuade employees prior to making any disadvantageous changes to the ROE. We also note that the Supreme Court expressly acknowledged the possibility of the employees’ abuse of group consent rights being the basis for recognizing disadvantageous changes if the employer engages in persuasion and good faith efforts. [Korean Version]2023.05.15
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ニュースレター もっと見るニュースレターFollow-up Measures to Improve Soundness of IPO Market On December 19, 2022, the Financial Services Commission announced the “Measures to Improve Soundness in IPO Market including Prevention of Fictitious Subscription,” which intends to (i) make institutional investor demand forecasts in IPOs more effective for the assessment of appropriate offering price band, (ii) prevent fictitious oversubscription by institutional investors participating in demand forecast by having IPO underwriters make allocations based on their confirmed capabilities to pay for the subscribed and allocated shares, and (iii) prevent excessive share price fluctuations immediately after IPOs, including through allowing room for more share price movements on the day of the IPO. Based on the above proposed measures, the financial authorities have implemented follow-up measures, such as amending the Business Regulations on Underwriting Securities (the “Underwriting Business Regulations”) and the Best Practices for Lead Managers (the “Best Practices”). On April 5, 2023, the financial authorities announced the “Notice of Proposed Amendment to the Underwriting Business Regulations to Improve Soundness of IPO Market,” and on April 26, 2023, the amendment to the Financial Investment Business Regulations were approved. The key contents are as follows. More Effective Demand Forecasting The Best Practices have been amended to require at least a five business days’ demand forecast period to ensure effective demand forecasting, subject to adjustment if necessary by taking into account the issuer’s funding schedule, market conditions and IPO size. In addition, IPO shares may not be allocated to institutional investors who are deemed to have no or little contribution to the determination of offering price, such as those who did not provide their offer or presented excessively high or low prices during the demand forecasting period. The amendment will take into effect for IPOs for which a registration statement is filed on or after July 1, 2023. Meanwhile, an amendment bill to the Financial Investment Services and Capital Markets Act has been proposed and is currently under review by the National Assembly. The bill proposes to (i) introduce a cornerstone investor system, where preferential allocation of a portion of IPO shares may be made to credible expert institutional investors to hold those shares for agreed holding periods, in order to promote stable share prices after an IPO and (ii) permit the testing-the-waters with institutional investors before the filing of registration statements. Prevention of Fictitious Oversubscription The amendment to the Financial Investment Business Regulations has obliged lead managers to confirm subscribers’ capabilities to pay for subscription prices. The allocation of IPO shares without confirming such capabilities may be deemed as an unsound business activity, and subject to sanctions such as an administrative fine. In addition, the amended Underwriting Business Regulations have established a specific criteria for confirming capability to pay for the subscription price (i.e., (i) to verify the equity capital, in the case of proprietary assets, and the total amount of assets of each entrusted asset group participating in demand forecasting, in the case of entrusted assets, or (ii) to verify such capabilities according to internal regulations/guidelines prepared by the lead manager), and any institution that participates in demand forecasting in excess of its capability to pay the subscription price may be designated as an unfaithful participant of demand forecasting and allocation of IPO shares to such investor may be prohibited. The regulation on confirmation of capabilities to pay for subscription prices will be applicable from the registration statements initially filed on or after July 1, 2023, and the designation of unfaithful participants for forecasts in excess of capabilities to pay will take effect from January 1, 2024, after a grace period. Prevention of Excessive Fluctuations in IPO Share Price In order to prevent multiple individual investors from suffering losses due to a sharp drop in IPO share prices immediately after an IPO, (i) the Best Practices have been amended to permit underwriters to make differential allocations based on different lock-up periods so as to prevent sale of a large volume of IPO shares in a short period of time after the expiration of a single mandatory lock-up period (to take effect on July 1, 2023), and (ii) the Detailed Enforcement Rules of the KOSPI Market Business Regulations have been amended to change the share price trading range on the day of the IPO to 60%~ 400% of the offering price (currently, 63%~260% of the offering price) to promote active trading on the day of the IPO without suspension, thereby providing investors with fair trading opportunities and expediting the discovery of an equilibrium price in the market (to take effect on June 26, 2023). It is expected that the follow-up measures to the “Measures to Improve Soundness in IPO Market including Prevention of Fictitious Subscription” will enable subscription and allocation of IPO shares based on actual demand and payment capabilities and provide for the development of a more effective and fairer IPO market. [Korean Version]2023.05.09
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ニュースレター もっと見るニュースレターRecent Developments in KFTC’s Efforts to Regulate Dark Patterns On April 21, 2023, the Korea Fair Trade Commission (“KFTC”) issued a press release on the Policy Direction for Protecting Consumers from Online Dark Patterns (the “Plan”). This was the first major announcement on dark patterns by the KFTC since declaring in its 2023 Enforcement Plan (published on January 26), reflecting the need to prepare effective regulatory measures against dark patterns as an enforcement priority for this year. The Plan, which reaffirms the KFTC’s determination to strictly regulate dark patterns, reveals how the KFTC classifies dark patterns into specific types of conduct and how it plans to regulate each of those types going forward. 1. Classification of Types of Dark Patterns and Assessment of Need for Regulation of Each Type It is necessary for the KFTC to clarify how the conduct generally known as “dark patterns” could be regulated under Article 21, Paragraph (1), Item 1 of the Consumer Protection in E-Commerce Transactions Act (“E-Commerce Act”), which prohibits companies from “providing false or exaggerated information or using deceptive means to solicit customers, engage in transactions with consumers, or prevent consumers from cancelling orders.” The Plan accordingly (i) classifies dark patterns into specific types, (ii) assesses the need for regulation for each type, and (iii) explains how the KFTC plans to enforce those regulations. Under four major categories of defrauding, misleading, obstructive and pressuring dark patterns, the Plan identifies 19 specific types of conduct: seven of which require full regulation as they are deemed to cause significant consumer harm; six types that also require regulation but only under limited circumstances; and the remaining six types for which the KFTC found little need for regulation. Further, of the 13 types that require either full or limited regulation, the Plan distinguishes between those that require enactment of additional legislation and those that can be regulated under the current E-Commerce Act. Key details of the 13 types requiring regulation are as follows. Dark Patterns Requiring Full Regulation (Seven Types) Category Type Description Need for Additional Legislation Defrauding Hidden renewals Without notifying consumers, renewing their service agreements when such renewal would result in transitioning free services to fee-based services or charging of higher fees Yes Misleading False discounts Displaying false information on discounts to induce consumers to purchase products at higher prices No False recommendations Deleting negative consumer reviews or creating fake positive reviews No Bait and switch Posting content that falsely advertises the sale of products that are not available for sale as “bait” to lure consumers No Disguised advertisements Providing consumers with content that do not appear as advertisements, but are in fact advertisements in disguise (e.g., deceptive adverting) No Trick questions Asking consumers questions that trick them into making unintended replies or choices, or that require significant attention to detail to properly understand the question (e.g., double-barreled questions, double negatives, vague questions) No Obstructive Hidden information Concealing, downplaying or omitting important information that is necessary for making informed purchasing decisions as a means to solicit consumers or engage in transactions with consumers No Dark Patterns Requiring Limited Regulation (Six Types) Category Type Description Scope of Regulation Need for Additional Legislation Defrauding Gradual disclosure of costs Intentionally displaying a low price on the first search results page, then gradually revealing hidden costs as the consumer proceeds to make the purchase, and ultimately charging a higher price that includes the hidden costs Exceptionally allow gradual disclosure of costs when it is difficult to list the total amount to be paid on the search results page (e.g., when the price changes depending on the options selected) Yes Misleading False hierarchies Using a visually conspicuous design to highlight options that are unfavorable to consumers or favorable to the company, thereby misleading consumers to believe that those are the only options available or that their selection is required Limit regulations to when consumers need to make decisions that could lead to additional charges, e.g., for purchasing products, entering into or canceling agreements Limit regulations to when there is a concern that the visually conspicuous difference (e.g., in size, shape, color) could mislead consumers into thinking that there is a hierarchy among the listed options or that selection of the highlighted options are necessary to make a purchase Yes Pre-selection of purchase options Pre-select options that are favorable to the company in an inconspicuous manner and induce consumers to inadvertently accept those options without noticing Limit regulations to pre-selection of options confirming consent to purchase a product or service, which could likely lead to unexpected payments Yes Obstructive Obstruction of cancellation or withdrawal Prevent consumers from freely cancelling orders, terminating an agreement or cancelling membership by restricting such process or making it more complicated than the process for placing orders, entering an agreement, or joining membership Exceptionally allow imposition of a more complicated process when there is a justifiable reason for doing so (e.g., to check information necessary for settlement of payments) Yes Obstruction of price comparison Conduct that makes it difficult to compare prices or sales conditions of various products Limit regulations to when displaying prices of different products, without a justifiable reason, by using different units (e.g., size, number of item, bundles) to make it difficult to compare prices No Pressuring Repeated interference Pressing consumers to perform a specific action by repeatedly urging them, e.g., through pop-up notifications, to perform that action Limit regulations to when repeated demands to consumers to change their decision are made within a short amount of time Exceptionally allow repeated interference when consumers are given the choice to opt out of receiving such notices for a specific duration (e.g., clicking on a box that says “Do Not Show This Notification For One Week”) Yes 2. Future Direction of KFTC’s Efforts to Regulate Dark Patterns For the six types of conduct that are difficult to regulate under existing laws (i.e., hidden renewals, gradual disclosure of costs, false hierarchies, pre-selection of purchase options, obstruction of cancellation or withdrawal, and repeated interference), the KFTC is expected to actively support discussions at the National Assembly (“NA”) for necessary legislation to expand the scope of regulation. Key details of anticipated efforts by the KFTC are as follows. (1) Amendments to the E-Commerce Act Expanding the Scope of Regulation The KFTC is expected to work on amending the E-Commerce Act so that it can cover the six types of conduct that require regulation but are difficult to regulate under current law. On April 20, a day before the Plan was released, a bill was proposed to the NA to amend the E-Commerce Act. As the bill aims to establish a legal basis for regulating those six types of conduct, it will be necessary to closely monitor future developments as the bill goes through the legislative process. Notably, the bill proposes to newly impose the following obligations and prohibitions on e-commerce companies: A. Obligation to notify consumers when charging a higher amount or transitioning from free to fee-based services. B. Obligation to make visible to consumers the total amount to be paid when making purchases. C. Prohibition of not notifying consumers of the total amount to be paid when making purchases, (e.g., notifying only a part of the total amount to be paid). D. Prohibition of asking consumers, without prompting, during the purchase process for a certain product, whether they want to purchase a different product, thereby inducing them to agree to purchase another product. E. Prohibition of inducing consumers to select a certain option by making that option visually conspicuous (e.g., in size, shape, color) among other listed options. F. Prohibition of obstructing a consumer from cancelling orders, terminating agreements, or cancelling membership. G. Prohibition of repeated pop-up notifications asking if the consumer wants to change the options they have selected. (2) Proactive Enforcement of Law Against Dark Patterns According to the press release, the KFTC and the Korea Consumer Agency have launched a survey on dark patterns in major e-commerce industries, and the KFTC plans to work closely with consumer groups to conduct related surveys in the second half of this year. Through the surveys, the KFTC is expected to learn more about dark pattern marketing schemes used by major e-commerce companies and proactively enforce the law against those that fail to correct problematic conduct detected during the surveys. In particular, with regards to the seven types of conduct that can be regulated under existing law, the KFTC has stated that it will proactively enforce the law regardless of amendment efforts. It will therefore be necessary to closely monitor developments at the KFTC regarding the surveys and the results when they are announced, and other related regulatory movements. (3) New Guidelines for Preventing Harm Caused by Online Dark Patterns The KFTC also noted that within the first half of this year, it will explain the types of dark patterns that were confirmed to be in need of regulation immediately and start enforcing a new set of Guidelines to Prevent Harm Caused by Online Dark Patterns, which is expected to serve as the KFTC’s standards for regulating dark patterns. In light of these developments, companies are advised at this time to conduct a thorough inspection of their e-commerce business websites or mobile apps to see if there are any dark patterns mentioned above, especially those types that the KFTC emphasizes are in need of regulation, and take preemptive measures to minimize the chances of misleading consumers. [Korean Version]2023.05.03
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ニュースレター もっと見るニュースレターAmendments to the Venture Business Act Allow Multiple Voting Shares The proposed amendments to the Act on Special Measures for the Promotion of Venture Businesses (the “Venture Business Act”) were passed at the plenary session of the National Assembly on April 27, 2023, and will be promulgated and enforced (“Proposed Amendments”). The purpose of the Proposed Amendments is to systematically support the stable management of venture businesses by permitting the issuance of multiple voting shares with multiple voting rights per share to founders who meet the requirements stipulated in the Venture Business Act in order to allow them to cope with the dilution of founders’ shares resulting from the attraction of large-scale investments. The key provisions of the Proposed Amendments are as follows: 1. Issuing Multiple Voting Shares to Founders of Venture Business The Korean Commercial Code (the “KCC”) enshrines the principle of one-voting right per share, and prohibits differentiating the number of voting rights per share except for non-voting shares. The Proposed Amendments introduce an exception to such principle for a venture business that receives an investment above a threshold amount from a non-specially related party if the director, who is also the founder of the business, ends up owning less than 30% of the shares in the venture business as a result of the investment. In that case, the venture business may issue multiple voting shares to the founder by a resolution of the general meeting of shareholders in accordance with the articles of incorporation. The issuance of multiple voting shares requires a resolution of the general meeting of shareholders adopted by an affirmative vote of at least 3/4 of the total number of issued and outstanding voting shares, and up to ten voting rights can be attached to such voting shares as determined by the articles of incorporation. If a venture business has issued multiple voting shares or made any material change to such shares, it must submit a report to the Minister of SMEs and Startups, and keep and disclose the details of the issuance to its head office and branches. 2. Conversion of Multiple Voting Shares Into Common Shares and Restriction on Voting Rights If (i) a founder inherits or transfers multiple voting shares, (ii) loses his/her position as a director, or (iii) three years have passed since the day the venture business was listed, the founder’s multiple voting shares are converted into common shares. In addition, even a founder holding multiple voting shares may exercise only one vote per share when casting a vote to approve or disapprove a change in the terms of multiple voting shares, directors remuneration, reduction of director liability, appointment and dismissal of statutory auditors, capital reduction, or distribution of dividends, as is the case for common shares. The Proposed Amendments are expected to significantly impact future practices such as mergers and acquisitions, equity investments (including pre-IPO investments) and the listing of venture businesses. Moreover, given the active discussions on introducing multiple voting shares as a key means to defend management control of a company in Korea along with the Poison Pill, the Proposed Amendments are of great significance in terms of the reinforcing the overall legal system to protect management control and regulations on governance structure. [Korean Version]2023.05.02
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ニュースレター もっと見るニュースレターSouth Korea Tightens Export Control Measures Regarding Russia, Belarus, and North Korea While Reinstating Japan as Whitelisted Trading Partner The Ministry of Trade, Industry and Energy (“MOTIE”) promulgated the amended Public Notice on Trade of Strategic Items that adds controlled items with regards to Russia and Belarus, while restoring Japan to the trade whitelist.1 It also pre-announced the draft amendment to the Public Notice of Special Measures on Trade to Undertake Obligations for International Peace and Security Maintenance that adds 77 satellite-related items to the watch-list targeting North Korea. Amendment to Public Notice on Trade of Strategic Items The MOTIE confirmed and promulgated the amended Public Notice on Trade of Strategic Items on April 24, 2023, which in essence (i) expands the scope of items subject to export control on Russia and Belarus and (ii) reinstates Japan to South Korea’s trade whitelist. 1. 741 Items are Newly Added to the List of Items Subject to Catch-all License for Export to Russia and Belarus As pre-announced on February 24, 2023, the amended Public Notice expands the scope of items subject to export control regarding Russia and Belarus, effective from April 28, 2023. The amended Public Notice adds 741 items related to industrial machines, petroleum gas refining equipment, steel and chemicals, vehicles, and quantum computers to the existing 57 items. Exporting to Russia or Belarus any of the 798 items requires an export license issued by the MOTIE. The MOTIE has established the principle that it will ban all exports of listed items. It will, however, grant exceptional licenses after a case-by-case review for exports under a contract executed prior to April 28, 2023, or to a wholly-owned subsidiary located in Russia or Belarus (please refer to the attached Appendix 2-2 - Items Subject to Catch-all License, for more information on the newly added 741 items). Companies trading in the relevant business or trading goods newly included in the list, such as vehicles worth USD 50,000 or more (including used cars), should pay special attention to the current developments. With the amendment, South Korea now imposes a similar level of export control measures as the level currently imposed by the US and the EU. However, international demand for a complete ban on exports to Russia and Belarus is growing in response to the prolonged war in Ukraine. Continued monitoring is recommended as the Public Notice may be further amended to keep abreast of the global trend. 2. Japan is Restored on the Trade Whitelist As pre-announced on March 23, 2023, Japan is now back on the trade white list, three years and seven months after the country was removed from the list in 2019. From the effective date (April 24, 2023), licensing standards and documentation requirement imposed on strategic items exported to Japan have been relaxed. 3. Other Amendments to the Public Notice on Trade of Strategic Items In addition to the above, the amendment (i) allows Compliance Program partners of AA grade or higher to conduct self-assessment regarding export of technologies subject to catch-all license (amendment to Article 12(3)(i) of the Public Notice); (ii) exempts foreign satellite launch contractors from the requirement to submit end user pledges (enactment of Article 19(4)); (iii) extends the time period given for reimporting and discarding strategic items that were exported for inspection and testing from one year to five years, while adding requisite documents to be submitted (amendment to Article 26(1)(xv) and 26(2)); and (iv) adds or removes strategic items as agreed upon under the 4th multilateral Export Control Regime in 2022 (Appendixes 2 and 3). Pre-announcement of Draft Partial Amendment to Public Notice of Special Measures on Trade to Undertake Obligations for International Peace and Security Maintenance On April 24, 2023, the MOTIE pre-announced the draft amendment to the Public Notice of Special Measures on Trade to Undertake Obligations for International Peace and Security Maintenance. The Public Notice adds 77 satellite-related items to the watch list targeting North Korea, under which the items are banned for trade with North Korea. Companies should carefully review the amendment as the Notice applies not only to direct exports to North Korea but also to third parties in cases where North Korea is the final destination (Article 48 of the Public Notice). The chart below shows the current status of the watch list, including the newly added 77 satellite-related items (see attached Appendix 6 - North Korea Watch-list for more details). [North Korea Watch-list] Before Amendment After Amendment ① 89 items relating to nuclear ② 41 items relating to missiles ③ 60 items relating to submarines ① 89 items relating to nuclear ② 41 items relating to missiles ③ 60 items relating to submarines ④ 77 items relating to satellites (added) 1 Whitelist: The list of countries classified as belonging to “Zone A” under Article 10 and Appendix 6 of the Public Notice on Trade of Strategic Items. [Korean Version]2023.04.28
김·장 홍보
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“Tier 1” in All Practice Areas – Benchmark Litigation AP 2023
In the 2023 edition of Benchmark Litigation Asia-Pacific, Kim & Chang once again received “Tier 1” rankings across all ten practice areas. Additionally, 44 of our attorneys were named “Litigation Stars” and “Future Stars” in their respective practice areas.
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“National Law Firm” – IFLR Asia-Pacific Awards 2023
Kim & Chang was recognized as the “National Law Firm of the Year: South Korea” at the IFLR Asia-Pacific Awards 2023. Kim & Chang has been named as the leading law firm in Korea, having received this recognition 21 times since 2002, and has established its reputation as an innovative law firm.
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