Bae, Kim & Lee LLC

David Pyun joined BKL, one of the leading law firms in South Korea, as a senior US attorney from Kim & Chang in June 11.

KEY TAKEAWAYS Covered short sales of KRX-listed stocks will continue to be banned until March 30, 2025.

I Revival of Comprehensive Audit Significance The reinstatement of a comprehensive audit of all issues (as opposed to a special audit that is instigated when a particular issue has arisen) (“Comprehensive Audit”) by the Financial Supervisory Service (“FSS”) means that the selected financial institutions will need to be better prepared for the increased breadth and depth of the upcoming Korean regulatory audits. Impacted entities include: (i) Korean Financial institutions including banks, securities companies, insurance companies, and asset management companies; and (ii) local Korean branches and subsidiaries (including banks, securities, insurance and asset management) of foreign financial institutions. The following takeaways are noteworthy:

Under amendments to IT Networks Act, set to take effect in March 2019, offshore online businesses, meeting thresholds of nexus to Korea, will be required to designate local agent for regulatory oversight purposes. Amended rules will also newly restrict onward transfer (to additional countries) of personal information by offshore parties, and, on a reciprocity basis, allow regulators to restrict transfers of personal information to countries that likewise restrict outflows of such data.

*For better understanding of this article with other graphics , we highly recommend you to visit our firm's website as below. http://www.bkl.co.kr/upload/data/20180410/bkl-legalupdate-2018000410.html#.WsxBYIhuaHs   Nearly 4 years after they first began discussions to revise the law, the Korean National Assembly passed a bill on February 28, 2018 to amend the Labor Standards Act (“LSA”), to reduce the maximum working hours. The new law will reduce Korea’s maximum working hours (“Maximum Working Hours”) from 68 hours per week to 52, will make all public holidays mandatory paid days off, will reduce the number of special industries that are exempt from restrictions on Maximum Working Hours, and will provide much needed clarification on overtime premiums for weekend working hours. The law will become effective on July 1, 2018 and will apply to large companies before being rolled out in stages to smaller companies. The main changes affected by the bill are summarized below. If you have any questions or would like further information on this topic, please feel free to contact us.    

Amid the widespread attention that sexual harassment/violence in the workplace has received due to international movements such as the “Me Too” movement, the Supreme Court of Korea has recently rendered a significant decision on the need to reform the judicial system’s approach to sexual harassment cases.

A bill to amend the Unfair Competition Prevention and Trade Secret Protection Act (the “UCPA”) was promulgated on April 17, 2018, and is scheduled to take effect on July 18, 2018.  The bill introduces significant amendments to the UCPA, namely stipulating store interior designs as business marks and making the unauthorized use of “ideas” an act of unfair competition, thereby substantially expanding the applicability of Subparagraph 1 (j) of Article 2 (“fraudulent use of another person’s product”) of the current (or pre-amendment) UCPA.

Under changes to Location Information Act, to take effect in October 2018, businesses will be allowed to track goods after obtaining registration instead of license.

Legislators have put forward an advanced draft of amendments to the Telecommunications Business Act, Korea’s main telecom statute. The draft amendments, proposed on March 29, 2018, would finalize changes anticipated since August 2017, so as to relax license requirements and foreign ownership restrictions for telecom carriers. Amendments seem likely to pass within 2018, with effect 6 months following passage. Various standards will depend on further regulations, for which Ministry drafting is expected in coming months.

On January 23, 2018, the Financial Supervisory Service and the Financial Service Commission published additional guidelines to regulate banking and financial transactions involving cryptocurrency exchanges (each, an "Exchange"). The key points of these guidelines are summarized below.

On December 28, 2017, the Korean joint task force on cryptocurrency, consisting of various governmental agencies including the Office for Government Policy Coordination, Financial Supervisory Commission, the Ministry of Justice and the Ministry of Strategy and Finance, among others, announced that it will continue its implementation of its previously announced emergency measures on December 13, 2017 (for more information, please see BKL’s 12/14 newsletter), and in addition take the following actions.

In response to the recent speculation frenzy over virtual currency trading and increase in virtual currency-related crimes, the Korean government announced emergency measures yesterday, December 13, 2017, the main points of which are summarized below:

Bae, Kim & Lee LLC ("BKL") was named as the "Competition & Antitrust Firm of the Year" at the Asialaw Asia-Pacific Legal Practice Awards 2017 at the JW Marriott Hotel in Hong Kong on November 28, 2017. The "Competition & Antitrust Firm of the Year" is a highly coveted award bestowed by Asialaw, which is the Asia Pacific's leading legal publisher owned by Euromoney, a global business and finance magazine.

Bae, Kim & Lee ("BKL") has been named the "Best Firm in South Korea" at the Euromoney Legal Media Group Asia Women in Business Law Awards 2017 hosted by the global legal publisher Euromoney Legal Media Group on November 9, 2017 at the JW Marriott Hotel in Hong Kong. Furthermore, senior partner Il Young CHO was honored as the best lawyer in transfer pricing while senior patent attorney Catherine Eunkyeong LEE was recognized as the best lawyer in patent and trademark prosecution among Asia's leading women in the legal profession.

Korean Virtual Currency Market Overview The proliferation of virtual currencies in South Korea has resulted in a highly volatile environment for speculative and unregulated trading on the Korean virtual currency exchanges. The Korean virtual currency market remains desirable to issuers of initial coin offerings (“ICOs”), due in large part to Korea’s advanced e-commerce, online banking and P2P infrastructure being readily suited to the adaptation of blockchain technologies. In recent months, the Korean government has shown growing interest in, and concern about, the widespread availability, sale and use of virtual currencies in Korea, particularly with regards to the potential for fraudulent or illegal activities, and the increasingly speculative nature of the Korean virtual currency market. In response, several Korean regulatory bodies including the Financial Services Commission (the “FSC”), the Financial Supervisory Service (the “FSS”) have issued proposals, guidance and directives in an attempt to formulate a regulatory response to the growing Korean virtual currency market.

Wu Cheol SONG, a senior partner at Bae, Kim & Lee LLC (“BKL”), was named the “Disputes Star of the Year” in South Korea at the Asialaw Asia-Pacific Dispute Resolution Awards 2017 held on September 28, 2017 at the Grand Hyatt Hotel in Hong Kong.

Proposed changes to the Telecommunications Business Act would simplify and significantly relax license requirements, and ease foreign ownership restrictions for telecom carriers. The amendments also aim to require common carriers, especially mobiles, to offer a more affordable consumer telecom rate structure, under standards to be decided. The amendments seem likely to pass largely as-is by 1Q 2018, possibly coming into effect by mid-2018. A number of standards will depend on further regulations, for which drafts should issue in the coming months.

The Ministry of Strategy and Finance announced its proposed tax law amendments for 2018 on August 2, 2017. This tax alert highlights the proposed change to the capital gains exemption currently available to foreign investors engaged in on-the-market transactions.

Mr. Kap-You (Kevin) KIM, a senior partner at Bae, Kim & Lee LLC (“BKL”), has been appointed as President of the International Arbitration Committee of the Korea Commercial Arbitration Board (“KCAB”).

Bae, Kim & Lee LLC ("BKL") and Linklaters LLP jointly held the "European Real Estate Investment Seminar" on June 8, 2017 at the Park Ballroom of the Conrad Hotel in Yeouido, Seoul, attracting approximately 150 attendees from legal and overseas affairs teams at leading investment institutions and asset managers, including pension funds, insurance companies, banks and securities firms.

Deeming Oracle US the beneficial owner, the Tax Tribunal upheld assessments against Oracle Korea on license fees paid to Ireland affiliate going back to 2008. Tax judgment is now on appeal by Oracle to the administrative law court. The Korean Tax Tribunal has affirmed National Tax Service (NTS) assessments totaling some KRW 300 billion (approx. USD 260 million) against Oracle Korea, as withholding taxes on software license fees paid to an Ireland affiliate (Oracle Ireland), on the basis that beneficial ownership was with Oracle Corporation (Oracle US). The NTS, in 2011 and 2015, imposed the withholding taxes based on the Korea-US tax treaty, which calls for a 15% withholding rate as opposed to no withholding under the Korea-Ireland tax treaty. The Tax Tribunal has upheld the NTS assessments, citing among other things Oracle US’s ownership of the software and control over the income, as contrasted with the minor role of Oracle Ireland.

Korean appeals court orders Google to disclose to Korean users what personal information Google passed to U.S. government. A Korean appellate court has ordered Google Korea along with its U.S. parent Google Inc. (together, “Google”) to disclose to users of the Google search service, when they so request, the scope and status of the users’ personal information (including search records) that Google has provided to the U.S. government. The decision of the Seoul High Court, handed down in February (released in March) 2017, concluded that, notwithstanding the choice of California law in the terms of service, Google’s use and handling of information was subject to rights of the local users under Korean law, mandating disclosure to them of what was passed to third parties including the U.S. authorities – except to the extent the disclosure is prohibited under U.S. law.

Bae, Kim & Lee ("BKL") has hired Seong Soo KIM, a former Presiding Judge of the Seoul Central District Court as a partner in its litigation practice group.

Bae, Kim & Lee LLC ("BKL") emerged from the ALB Korea Law Awards 2016 as one of the two biggest winners on the night, receiving highly coveted awards for "Deal Firm of the Year," "Litigation Law Firm of the Year," and "Intellectual Property Law Firm of the Year." In addition, the firm's reputation as advisor of choice on the biggest and most complex deals in the market was confirmed by wins for "Deal of the Year" in nearly all of the awarded categories, while BKL M&A partner Ri Bong HAN was honored as "Dealmaker of the Year" for the second consecutive year.