Newslettera Quarterly update of Legal Developments in Korea | Spring 2011

CONTENTS[Corporate]Recent Amendments to the Korean Commercial Code ................................................................... 2

[Litigation]Directors’ Obligations Under the Amended Korean Commercial Code ...................................................... 3

[Antitrust & Competition]FTL Amendments to Reduce the Scope of the Business Combination Report Filing Requirement ......................... 4Introduction of Treble Damages Under the Subcontract Act .............................................................................. 4

[Securities]Introduction of Regulation on Discretionary Investment Management Agreement and Trust Agreement Including Wrap Account, Etc. ......................................................... 5

[Banking]Enactment of Personal Information Protection Act - Its Relationship With the Credit Information Act .................... 6Amendment to Depositor Protection Act ........................ 7

[Insurance]Strengthening Risk Management for Outsourcing of Asset Management by Insurance Companies .......................... 8

[Real Estate]Proposed Amendments to the REIT Act to Increase Investment Freedom ..................................................... 9

Effectiveness of Amended Enforcement Decrees Related to

the Act on National Land Planning and Use .................. 9

[Labor & Employment]Rise in Legal Disputes in Relation to Ordinary Wages ..... 1040-Hour Work Week to be Applied to All Companies:

Including Companies With Less Than 20 Workers .......... 10

[Tax]Launching of NTS Forensic & Anti Tax-Evasion Center ... 11Update on Recent Amendments to Korean Tax

Treaties ................................................................ 12

[Environment]Act on Registration, Evaluation, Authorization and Restriction

of Chemical Substances ............................................. 12

[Intellectual Property]Courts’ Tendency for Harsh Punishment for Misappropriation

of Trade Secrets ............................................................ 13

[Broadcasting & Telecommunication]Enactment of General Privacy Regulation - Personal Information Protection Act ........................................... 14Amendment to the Game Industry Promotion Act ........ 14

[Customs & International Trade]Amendments to the KCS Notification on Customs Valuation ...................................................................... 15

Selected Representations Hyundai Motor Company Group Consortium acquired a 34.88% stake in Hyundai Engineering & Construction

Court order prohibiting manufacture, sale and import of products using trade secrets

Successful defense of LG Uplus against alleged breach of privacy damages claims

KCC approves C&M’s majority stake acquisition in two broadcasting companies

Firm News Top rankings in all 15 practice areas and 39 leading individuals in Korea - Chambers Asia 2011 GuideNamed “National Law Firm of the Year for Korea“ - IFLR Asia Awards 2011Ranked as “Elite” in competition practice - GCR 100Ranked as one of the top 100 arbitration practices worldwide - GAR 100No.1 M&A advisor in Korea - mergermarket M&A League Tables of Legal Advisors for Q1 2011

On March 11, 2011, the National Assembly passed

a number of proposed amendments to the Korean

Commercial Code (the “KCC”). These amendments, which

comprise the final phase of an amendment process that

began in 2005, represent the most large-scale revisions to

the KCC since its inception. Notably, they include an array

of provisions that aim for more flexibility and transparency in

corporate governance.

The amendments were promulgated on April 14, 2011 and

will become effective from April 15, 2012. The following

are brief descriptions of the key changes set forth in the

amendments.

1. more Flexibility for corporate Governance and

Financial Structure

● new Forms of Business entities: The amendments

introduce limited partnerships modeled after U.S.-style

limited partnerships, which consist of general partner(s)

and limited partner(s). The amendments also provide for

limited liability companies modeled after U.S.-style limited

liability companies, which acknowledge the limited liability

of members while granting them autonomy to establish,

manage, and structure the organization of the company.

● Diverse Stock types: Following the amendments,

companies will be able to issue shares with no voting

rights or with restricted voting rights, as well as shares

that have different rights in relation to the distribution

of profits, liquidation, stock conversion or redemption.

The added flexibility resulting from this change will make

it easier for companies to raise capital. In addition, the

amendments will allow companies to issue no-par value

stock, which is currently prohibited.

● Squeeze outs: The amendments also permit squeeze

outs of minority shareholders – i.e., compulsory

acquisitions by a controlling shareholder (with a stake of

95% or more) of shares held by minority shareholders

at fair value. In exchange, minority shareholders will

be granted appraisal rights which they can exercise

by demanding fair compensation from the controlling

shareholder as consideration for their shares.

● more Flexible Dividend Policies: Pursuant to the

amendments, dividend payments can be approved by

the directors of a company under certain circumstances

(instead of each time having to undergo approval at a

general meeting of shareholders). The amendments also

allow the payment of non-cash dividends in addition to

cash dividends.

● use of Legal reserves: The disposition of legal reserves

is strictly restricted under the KCC. Following the

amendments, however, the shareholders of a company

can resolve to use the legal reserves exceeding 150% of

the company’s capital to pay dividends or for certain other

purposes.

● acquisition of treasury Shares: The KCC has had

strict limitations on the acquisition of treasury shares, but

the amendments will allow companies to acquire treasury

shares in an amount up to their distributable profits.

● elimination of Prohibition against offsetting

Payments of Share capital: The provisions in the KCC

that prohibit the offsetting of share capital payments will

be eliminated, making it possible for companies to effect

debt/equity swaps.

● relaxed rules Governing merger consideration:

Under the amendments, the surviving company in a

merger may pay the shareholders of the company being

merged into just cash or bonds, without the need to

deliver to such shareholders any new shares of the

surviving company.

● improvements to Private Loan System: Ceilings on

the total issuance amount of bonds will be abandoned.

Further, the KCC will provide a legal basis for issuing

participating bonds and a variety of other bonds.

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CORPORATE By Jong Koo Park (jkpark@kimchang.com), Young Min Lee (ymlee@kimchang.com)

RECENT AMENDMENTS TO THE KOREAN COMMERCIAL CODE

On March 11, 2011, the National Assembly passed

an amendment (the “New Amendment”) to the

Korean Commercial Code (the “KCC”), which will become

effective in May 2012. Among other provisions, the

New Amendment introduces new provisions imposing

strengthened responsibilities to directors especially

with respect to their dealings with the company. Over

the past few years, the number of shareholder derivative

lawsuits and criminal complaints filed in connection with

“related-party transactions” between a company and such

company’s director or executive officer has seen a gradual

increase. Enactment of the New Amendment is expected

to result in an even sharper increase in the number of such

shareholder derivative lawsuits and criminal complaints filed

against directors and executive officers going forward.

Specifically, the New Amendment seeks to regulate in a

stricter manner directors’ conduct that benefits themselves

or their family members at the expense of the company’s

interests. For example, under the New Amendment, a

company must obtain the affirmative votes of at least

two-thirds of the board to grant to a third party a business

opportunity related to (i) information a director learns

through his/her capacity as the company’s director or (ii) the

company’s core business.

With respect to “self-dealing” transactions (e.g.,

transaction between a director and the company), the

New Amendment stipulates that the affirmative votes of

at least two-thirds of the board are required for a company

to enter into an agreement with a director, immediate

family members of a director, the director’s spouse, or a

corporate entity owned by one of such persons. Currently,

only the agreement between a company and a director was

subject to approval of two thirds of the board. The New

Amendment also stipulates that the terms of such “related

party” agreement must be fair. While an agreement

that violates the foregoing requirements may not be

automatically deemed null and void solely based on such

violations, a director either directly or indirectly involved

with such agreement may face civil and/or criminal liability.

In addition to the foregoing, the New Amendment

includes a provision limiting liability of the director to the

amount equal to six (6) times the said director’s annual

compensation in case a company incurs damage as a result

LITIGATION By Byung Chol Yoon (bcyoon@kimchang.com), Kyung Ho Kim (khkim2@kimchang.com)

DIRECTORS' OBLIGATIONS UNDER THE AMENDED KOREAN COMMERCIAL CODE

2. enhanced transparency in corporate Governance

● Prohibition of the appropriation of Business

opportunities: A new provision will be added to the

KCC that prohibits directors of companies from causing

their relatives or other third parties to appropriate business

opportunities that are beneficial to the relevant company.

● expanded restrictions on Self-dealing transactions:

Currently, only directors are subject to restrictions on

self-dealing transactions. Following the amendments,

however, such restrictions shall apply to directors and

major shareholders, relatives of such directors and major

shareholders, as well as affiliated companies.

● “executive officer” System: The amendments allow

companies to choose to appoint an executive officer who

will be dedicated to overseeing the executive functions

of the company, under the supervision of the board of

directors.

● “compliance officer” System: All listed companies

of a certain size will be required to implement compliance

control regulations and to appoint a compliance officer

responsible for monitoring adherence to such regulations.

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The proposed amendments to the Monopoly Regulation

and Fair Trade Law (the “FTL”), mainly aimed to reduce

the scope of the business combination report requirements,

were submitted to the National Assembly for passage on

March 14, 2011.

The proposed amendments to the FTL exempt a company

from the requirement to file a business combination report

in the event that fewer than one-third of the total number

of officers hold interlocking positions, while companies are

currently required to file a business combination report even

when only one interlocking director is appointed. Further,

the proposed amendments grant exemption from the filing

obligation to companies established for investment purposes

or for specializing in specific types of businesses, when such

companies engage in a share acquisition, an establishment of

a joint venture company and an appointment of interlocking

officer(s).

The proposed amendments also provide that the KFTC may

impose aggravated administrative fines on companies if

the officers of such companies are involved in a violation

of the FTL. In addition, the proposed amendments set forth

statutory grounds for company compliance programs, which

have been instituted only on the basis of a KFTC notification

to date.

On March 11, 2011, the National Assembly passed

amendments to the Fair Transactions in Subcontracting

Act (the “Subcontract Act”), which introduce, among other

things, punitive damages.

The purpose of the amendments is to (i) encourage shared

growth through cooperation between large corporations

and small- and medium-sized enterprises (“SMEs”) and (ii)

eradicate unfair subcontracting practices between large

corporations and SMEs. In addition, the amendment seeks

to enhance business conditions for SMEs by establishing fair

subcontracting relationships even among SMEs. In order to

achieve the foregoing, the amendments expand the scope

of SMEs and the subcontract transactions subject to the

Subcontract Act. The amendments also provide the Korea

Federation of Small and Medium Business with the right to

request for adjustment to subcontracting prices as well as

require the KFTC to conduct survey regarding subcontract

transactions, publish the results of such survey, and make

criminal referrals of those who commit material violation of

the law.

In particular, the amendments categorize illegal appropriation

of SMEs’ technology by large corporations into the category

of “technology demand” or “technology misappropriation”

and introduce ways to impose strong sanctions against

ANTITRUST & COMPETITIONBy Sung Eyup Park (separk@kimchang.com), Kyu Hyoung Jeon (kyuhyoung.jeon@kimchang.com)

FTL AMENDMENTS TO REDUCE THE SCOPE OF THE BUSINESS COMBINATION REPORT FILING REQUIREMENT

of the director’s conduct; provided, however, that such

conduct is neither intentional nor grossly negligent.

On a slightly different note, in light of the employers’

growing awareness of the importance of retaining top

talent and effectively limiting the employees’ liabilities, the

New Amendment also provides for the establishment of

limited partnerships (LPs) and limited liability companies

(LLCs).

INTRODUCTION OF TREBLE DAMAGES UNDER THE SUBCONTRACT ACT

such illegal appropriations. The amendments prohibit large

corporations from demanding that smaller subcontractors

provide the technology owned by the subcontractors

without justifiable reasons, and if large corporations make

such demand for technology, contractors are required to

communicate the purpose of such demand to subcontractors

and negotiate various terms such as confidentiality,

ownership of the technology and compensation for use of

the technology. The agreed terms must be provided in writing

to subcontractors. Furthermore, under the amendments, in

case a contractor demands that its subcontractor provide

technical data for itself or for third parties without complying

with the foregoing conditions and, as a result, it causes

damages to the subcontractor, the contractor will be held

liable for such damages. Under the amendments, the

original contractor may be held liable for treble damages

arising from misappropriation of the concerned technology

by the contractor for itself or for third parties. Lastly,

the amendments also place the burden of proof on the

contractor for the nonexistence of negligence or willful

misconduct.

The KFTC and the government have been generally opposed

to the idea of implementing the punitive damage system

in connection with the misappropriation of technology by

large corporations on the basis that such imposition of

punitive damages is too progressive as it conflicts with the

principles of free competition as well as the principles of

actual damages stipulated under the Korean Civil Code.

But this time, they heeded the request from the National

Assembly, which urged for the inclusion of such provisions.

Nevertheless, some commentators have raised concerns over

the constitutionality of punitive damages system.

The partial amendment to the Regulations on Financial

Investment Business (the “Amendment”) went into

effect on January 18, 2011 pursuant to the resolution

of the Financial Services Commission dated January 12,

2011. The Amendment places emphasis on provision of

customized services for investors and strengthening of

investor protection so that management of discretionary

investment management agreements and trust agreements

(including wrap accounts, etc.) (the “Discretionary Investment

Management Agreement”) can be distinguished from that

of collective investment vehicles such as funds. The salient

points of the Amendment are summarized as follows:

1. establishment of criteria for Provision of customized

Services: The Discretionary Investment Management

Agreement must be managed to provide customized

services to investors that should take into consideration

investors’ financial condition and investment purposes,

etc. In addition, an individual investor’s right to directly

impose control over the asset management decisions

of discretionary investment managers must also be

guaranteed.

2. establishment of criteria for classification between

collective order and collective management: The

Discretionary Investment Management Agreement must

prohibit collective management of accounts which

means that the discretionary investment managers

cannot equally settle the acquisition and disposition

of certain securities to all the accounts under their

management. The discretionary investment manager

must consider the financial condition and investment

purpose of the investors before selecting securities to

purchase for such investors. However, the discretionary

investment manager may place collective orders, which

means that the manager can acquire shares of a certain

company on behalf of all his accounts and distribute

such shares in different proportions to the accounts

SECURITIESBy Sun Hun Song (shsong@kimchang.com), Bong Suk Koo (boongsuk.koo@kimchang.com)

INTRODUCTION OF REGULATION ON DISCRETIONARY INVESTMENT MANAGEMENT AGREEMENT AND TRUST AGREEMENT INCLUDING WRAP ACCOUNT, ETC.

Spring 2011 | 5

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based on the financial condition and investment purpose

of the investors. For example, if there are three investor

accounts managed by a discretionary investment

manager, he/she cannot acquire shares of a certain

company to compose of 10% of the portfolio of each

of the three investor accounts but can acquire shares of

a certain company to compose of 10%, 7% and 2% of

each of the three investor accounts.

3. adjustment of Fee System of Wrap account and

establishment of criteria for Granting Success Fee

of Discretionary investment manager: In case of

wrap account, the commission from individual trades

(transaction service fees) shall not be collected. However,

discretionary investment management fees can be

collected. Success fees can be collected only if the

criteria for such success fee is tied to a reliable index

(such as KOSPI 200) as its base index (which means

that the performance of the discretionary investment

manager will be compared to the performance of the

index) (provided, that a separate agreement between

discretionary investment manager and investor can be

entered into to separately agree on the success fees).

4. Limit on inter-company Sharing of Discretionary

investment management information: In case of

wrap account, the consultation with investor, in principle,

shall be limited to the discretionary investment manager

who is responsible for the investor’s account, and the

account manager, who does not have investment

decisions, shall only consult with the investor based on

the management report that has been prepared using

the account information as of two weeks ago. This is

intended to minimize the potential follow-up trading

that may arise out of disclosure of the management

report to the market and to enable a fruitful investment

consultation to be performed.

5. inducement of independent investment Decision

of Securities company, etc.: There shall be no limit

imposed on a securities company’s receiving an advice

from an investment advisory company, but a system shall

be implemented that requires the securities company

to undergo independent procedures and process for its

own investment decision.

6. amendment to Discretionary investment management

report: The discretionary investment management

report shall be amended in a way that it includes both

the objective indicators such as expenses incurred,

current status of fees and trading turnover ratio, etc.

on the investor accounts and the subjective items such

as investment strategy and evaluation of investment

tendencies, etc. for the purpose of informing the investor

of the investment decisions made.

Matters relating to the provision and use of customers’

personal information by financial institutions have

been governed mainly by the Act on Use and Protection of

Credit Information (the “Credit Information Act”).

The Act on Protection of Personal Information (the “Personal

Information Protection Act”) was passed into law on March

29, 2010, and financial institutions are subject to the

Personal Information Protection Act on matters not governed

by the Credit Information Act, although controversy may

arise as to the scope of reach of each legislation since the

Personal Information Protection Act states that it will be

superseded by the Credit Information Act where the Credit

Information Act explicitly governs.

In this regard, set forth below are key items of the Personal

Information Protection Act that are expected to affect

financial institutions in connection with the treatment of

personal information of their customers.

BANKINGBy Sang Hwan Lee (shlee@kimchang.com), Sun Woo Kim (sunwoo.kim@kimchang.com)

ENACTMENT OF PERSONAL INFORMATION PROTECTION ACT - ITS RELATIONSHIP WITH THE CREDIT INFORMATION ACT

In order to restructure insolvent mutual savings banks, the

Depositor Protection Act was amended on March 29, 2011

to newly establish and manage certain separate accounts for

such restructuring (the “Separate Accounts”). In this regard,

set forth below are the key items of the amendment.

● establishment of Separate accounts: The Depositor

Protection Act requires the Korea Deposit Insurance

Corporation to manage deposit insurance funds to use

them as the financial resources for the restructuring of

insolvent financial institutions. The Depositor Protection

Act requires a separate deposit insurance fund to be

established for each type of financial institutions, such as

banks, mutual savings banks and insurance companies,

which is managed as a separate account. The amendment

to the Depositor Protection Act newly establishes the

Separate Accounts within the deposit insurance funds

which are to be the financial resources to be used only for

the restructuring of mutual savings banks.

● Financial resources for Separate accounts:

The amendment to the Depositor Protection Act

stipulates that the financial resources for the separate

accounts are to come partly from the existing deposit

insurance payments, and partly from the government

contributions. More precisely, 45% of the deposit

insurance payments, which have been made to each

account managed separately by each type of financial

institutions, are to be paid to the Separate Accounts.

In addition, the government is to contribute its public

financial resources to the Separate Accounts.

● Duration for management of Separate accounts: The

amended Depositor Protection Act will become effective

April 1, 2011, and the Separate Accounts established

thereunder are to be managed at least temporarily until

December 31, 2026. In addition, the Korea Deposit

Insurance Corporation is to annually report the balance

of the Separate Accounts and its management plan

relating thereto, and publish a white paper on the

management status of the Separate Accounts.

● expanded Scope of regulated information: The

Credit Information Act mainly regulates the provision

and use of “Personal Credit Information” which

combines personal information and credit information

and secondarily regulates the “Personal Identification

Information”. However, the Personal Information

Protection Act regulates personal information in general,

thereby expanding the scope of information subject to

regulation.

● restrictions on Sensitive information and

identification information: Under the Personal

Information Protection Act, “Sensitive Information” and

“Identification Information” can be transferred or used

only after obtaining consent from the relevant person,

separate from the consent to be obtained in connection

with the provision and use of other personal information.

● restrictions on transfer of Personal information

to outside of Korea: In order to provide personal

information to a third party outside of Korea, consent

must be obtained from the relevant person under the

Personal Information Protection Act.

● Duty to notify the Leakage of Personal information:

Entities dealing with personal information are required to

promptly notify any leakage of personal information to

the affected persons.

AMENDMENT TO DEPOSITOR PROTECTION ACT

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In light of the recent increase in interest rates and

heightened volatility of the stock market amid a surge

of discretionary investment assets in insurance companies’

portfolios, the Financial Supervisory Service (the “FSS”)

recently conducted examination of insurance companies’

practice related to outsourcing of asset management.

According to the FSS, the examination revealed certain

areas for improvement and therefore the regulator is said

to continue monitoring the market practice and supervise

insurance companies which face potential risks associated

with outsourcing of asset management.

1. Selection of asset management companies

The FSS’ examination confirmed that insurance companies

did not have in place appropriate standards for ensuring

the objectivity in selecting asset management firms, nor

did they diligently implement the standards they had.

The FSS is planning to guide insurance companies to

ensure objectivity in selecting the asset management

firms by inviting other relevant departments such as the

risk management department in the process and to duly

comply with their internal standards and procedures for

the selection process.

2. internal control over asset management outsourcing

agreement

Insurance companies have been found lacking adequate

advance and post-facto control systems for investment

in high-risk assets such as futures and options. The FSS

is planning to guide insurance companies to strengthen

advance risk control by, for example, including provisions

for prior consultation in the outsourcing agreement

before entering into high-risk transactions and thoroughly

implementing post-facto control mechanisms such

as exercise of the termination right for breach of the

outsourcing agreement by the asset management

companies.

3. evaluation of asset management companies

The FSS found that insurance companies did not

adequately conduct objective evaluation of the risk

management by the asset management companies and

there were even some cases where the evaluation of

asset management firms was conducted solely by the

asset management department of insurance companies

without involvement of other relevant departments.

The FSS is planning to guide insurance companies to

strengthen risk management by, for example, having the

evaluation of the asset management firms cross-checked

by the risk management department of insurance

companies, and to ensure propriety of evaluation

standards by, for example, assessing risk management

systems and risk management capabilities as criteria for

evaluation.

INSURANCEBy Woong Park (wpark@kimchang.com), In Sang Kim (iskim@kimchang.com)

STRENGTHENING RISK MANAGEMENT FOR OUTSOURCING OF ASSET MANAGEMENT BY INSURANCE COMPANIES

REAL ESTATEBy Yon Kyun Oh (ykoh@kimchang.com), Jee Yong Seo (jeeyong.seo@kimchang.com)

PROPOSED AMENDMENTS TO THE REIT ACT TO INCREASE INVESTMENT FREEDOM

In order to promote a stable growth of the real estate

market through the facilitation of the real estate indirect

investment market, amendments to the Real Estate

Investment Trust Act (the “REIT Act”) have been proposed

that would significantly increase investment freedom in real

estate investment trust companies (“REITs”).

On January 28, 2011, the Ministry of Land, Transport and

Maritime Affairs proposed amendments to the REIT Act,

which, in substance, lifted restrictions on the maximum

percentage of in-kind contributions and development

project investments, increased the maximum percentage of

shares which a single shareholder may own, and increased

the scope of business of REITs. Under the proposed

amendments, a REIT would be able to freely determine in

accordance with its articles of incorporation the percentage

of its investments in leasing business and development

projects and, once a REIT has been funded with the

statutory minimum paid-in capital amount, there would

be no limit on the percentage of in-kind contributions. In

addition, a single shareholder (together with its specially

related parties as defined under the REIT Act) would be able

to own up to 70% of the shares of a REIT and, in the event

a REIT has excess cash, such REIT would be able to lend to

entities undertaking development projects an amount equal

to up to 50% of such REIT’s net assets.

The current proposed amendments are intended to help

solve the recent real estate market recession and the

problem of insolvent project financings. The period for

submission of comments to the proposed amendments

expired on February 16, 2011. If approved by the Cabinet

after review by the Ministry of Government Legislation, the

above proposed amendments are expected to be submitted

to the National Assembly for final vote.

Amended Enforcement Decrees related to the Act on

National Land Planning and Use (“NLPU Act”) was

promulgated and went into effect on March 9, 2011.

As reported in the Autumn 2010 edition of the Kim &

Chang Newsletter, the amended Enforcement Decrees

relating to the NLPU Act lift certain restrictions on

contiguous development. Unlike the previous Enforcement

Decrees, which uniformly restricted the issuance of

development permits where the size of a contiguous

area permitted for a specified purpose exceeds a certain

threshold (e.g., 5,000 m2 in the case of green area

preservation area and 30,000 m2 in the case of industrial

area), the amended Enforcement Decrees relating to the

NLPU Act permit the issuance of development permits

even in the case of contiguous development if systematic

development is determined to be possible upon review by

the city planning committee.

The amended Enforcement Decrees also provide that where

an actual user of a factory or other building located within

certain designated areas approved for land transactions

(“Land Transaction Approved Area”) no longer needs a

portion of such facilities after acquiring the same as a

EFFECTIVENESS OF AMENDED ENFORCEMENT DECREES RELATED TO THE ACT ON NATIONAL LAND PLANNING AND USE

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Recently, the number of disputes involving ordinary

wages has increased. The ordinary wage is a basis

for calculation of overtime, nighttime or holiday work

allowances as well as compensation for unused annual

leaves. The Enforcement Decree of the Labor Standards

Act provides that wage, which is paid to a worker for a

prescribed task or his or her entire job on a regular and flat

basis, shall be included in the ordinary wage. Under the

relevant case law precedent, however, an unfixed payment

that is paid, or of which the amount may vary depending

upon satisfaction of certain conditions such as good work

performance, shall not be included in the calculation of

ordinary wage.

Many companies have traditionally adopted, officially or

unofficially, their own rules not to include, when calculating

ordinary wage, fixed bonus, performance-based payment,

position allowances, subsidy for private pension meal

allowances, transportation allowances, holiday and vacation

allowances, gift expenses, etc. that are regularly paid at

certain times of each year. However, many have argued,

more recently, that such payments and allowances must

also be included when calculating the ordinary wage. In

this regard, unpaid wage claims have been increasingly filed

by the workers, in the automobile and transport industry

in particular, seeking compensation for the difference

between the amount of the current allowance for overtime

work and unused annual leaves paid by the companies and

the amount calculated based on the ordinary wage that

includes fixed allowances and other types of payments

illustrated above.

Accordingly, in mindful of potential disputes which

may arise in the future, it is advisable for companies to

review their current practices to see whether some of the

companies’ allowances and payments that are not included

when calculating the ordinary wage are otherwise paid to

their workers on a regular, flat or fixed basis.

Pursuant to the Enforcement Decree of the Labor

Standards Act that was amended as of December

29, 2010, starting from July 1, 2011, the 40-hour work

week rule will be applied to all companies and workplaces

including those with less than 20 workers, which rule is

currently applicable only to those companies or workplaces

with 20 or more workers. As a result of this amendment,

such leaves as the paid monthly leave and the paid

LABOR & EMPLOYMENTBy Weon Jung Kim (wjkim@kimchang.com), Hyun Jae Park (hyunjae.park@kimchang.com)

RISE IN LEGAL DISPUTES IN RELATION TO ORDINARY WAGES

result of contractions in business activity or other changed

circumstances, such user may lease the portion no longer

needed. This represents the lifting of the previous restriction

which only permitted a factory of other building located

within a Land Transaction Approved Area to be used only

for the originally permitted purpose even if excess space

arises as a result of a changed circumstance after acquisition

thereof.

40-HOUR WORK WEEK TO BE APPLIED TO ALL COMPANIES: INCLUDING COMPANIES WITH LESS THAN 20 WORKERS

menstruation leave, which are being granted under the

existing 44-hour work week system shall be abolished.

Major working conditions subject to change pursuant to

this universal application of the 40-hour work week rule are

as follows:

● Maximum Overtime Work Hours: The current weekly

maximum overtime hours, i.e., 12 hours per week, shall

be temporarily relaxed to 16 hours for 3 years from the

effective date of the 40-hour work week rule.

● Additional Compensation for Overtime work: Compensation

of an additional 25% shall also be temporarily applied for

calculating compensation for the first 4 hours of overtime

work for 3 years from the effective date of the 40-hour

work week rule.

● Introduction of Compensational Leaves: Paid leaves, instead

of monetary compensation, can be granted for overtime,

nighttime or holiday work hours.

● Abolishment of Paid Monthly Leaves: Paid monthly leaves

shall be abolished. However, paid annual leaves shall be

expended.

● Menstruation leave will change from the current 1 day of

paid leave per month to 1 day of unpaid leave per month.

● Introduction of the “rule to promote the use of paid

annual leaves”

The National Tax Service (the “NTS”) announced through

its official press release dated February 8, 2011 the

recent launch of a Forensic and Anti Tax-Evasion Center

(“FAC”) within the NTS and plans for other FACs to be

established within the various regional tax offices across

Korea.

On March, 17, 2011, the NTS established the FAC to cope

with what it sees as increasingly complex and sophisticated

tax evasion techniques and activities employed by

corporations and individuals. As part of this program, the

NTS will also create similar FACs in the regional tax offices

located outside of the Seoul metropolitan area.

Among other things, the FACs will be responsible for

carrying out forensic investigations on corporations and

individuals suspected as having engaged in tax evasion as

well as development of analytical techniques and tools with

special emphasis on monitoring electronic or cyber space

forums. Through this program, the FACs are expected to

monitor and target aggressive tax evasion activities such

as those pertaining to financial instrument transaction

(futures, swaps, options, long-term insurance, etc), and

irregular cyber transactions together with the cooperation

of the Financial Intelligence Unit (the “FIU”).

In order to further strengthen enforcement against

potential tax evasion, the NTS also announced its plans

to put together a special task force comprised of experts

specializing in electronic database, e-commerce, financial

planning, etc.

TAXBy Sang Ik Han (sihan@kimchang.com), Sang Do Ki (sdki@kimchang.com)

LAUNCHING OF NTS FORENSIC & ANTI TAX-EVASION CENTER

Spring 2011 | 11

12 | Newsletter

The Ministry of Strategy and Finance (the “MOSF”)

announced through its official press release the recent

amendments to the Korea-Malaysia Tax Treaty and Korea-

Austria Tax Treaty.

In a two day session from January 14, 2011 to January 15,

2011, the MOSF met with Malaysian authorities to discuss

amendments to the Korea-Malaysia Tax Treaty and reached

a tentative agreement on an amended tax treaty. Among

other things, amendments include (i) lowering of tax rate

on dividends, interest and royalty, and (ii) taxation of the

source country on income earned by real estate-rich company

(greater than 25% share holding ratio). In addition, provisions

on the limitation of benefits have also been included in the

amended draft to prevent tax evasion through treaty shopping

and to facilitate the exchange of tax information. Of particular

note, Labuan has been excluded from eligibility under the

Korea-Malaysia Tax Treaty.

The MOSF also announced on January 31, 2011 amendments

to the Korea-Austria Tax Treaty. In accordance with the

amended draft, Korea and Austria can now exchange tax

information of the taxpayer such as business registration

number, personal information of the shareholder and

trust beneficiary, accounting records on transactions, bank

statements, details on financial transaction, etc.

UPDATE ON RECENT AMENDMENTS TO KOREAN TAX TREATIES

The Ministry of Environment (the “MOE”) announced on

February 25, 2011 the draft Act on Registration, Evaluation,

Authorization and Restriction of Chemical Substances (the

“Draft Act“).

Since the Toxic Chemicals Control Law (the “TCCL”) entered

into force in 1991, chemical substances in Korea have been

regulated under the TCCL. Because the TCCL only requires

the registration and submission of information relating to

the toxicity or hazardousness of what are considered new

chemicals, the government faced challenges in systematic

management of the majority of existing chemicals that

had been introduced in the Korean market prior to 1991.

In comparison, the EU and Japan have already adopted a

chemicals management system under which companies

are obligated to submit toxicity information for all chemical

substances circulated in the market above a certain

threshold.

Under the Draft Act, the MOE expands the registration

requirement to all chemicals designated as Substances

Subject to Evaluation (“SSE”), for which further evaluation

is deemed necessary based on their known characteristics,

usage and circulation volume. The Draft Act also proposes

the classification of substances of very high concern, such

as carcinogens, as restricted or prohibited substances, the

quantity and usage of which must be reported to the MOE.

In order for foreign entities exporting chemicals into Korea

to fulfill its obligations under the Draft Act, it allows the

appointment of an individual or entity organized under

Korean law as their only representative. The Draft Act also

requires manufacturers and importers of the same chemical

substances to file their registration jointly, unless separate

submission is otherwise permitted by the MOE.

The Draft Act is expected to apply to chemicals

manufactured or imported in quantities of 0.5 metric ton

or more per year, as designated by the MOE. The MOE

believes the threshold of 0.5 ton will bring under regulation

approximately 80% of the chemical substances currently

circulated in the market. As the Draft Act imposes new

obligations, and as a result the burden placed on companies

ENVIRONMENTBy Yoon Jeong Lee (yjlee@kimchang.com), Seong Ik Hwang (sihwang@kimchang.com)

ACT ON REGISTRATION, EVALUATION, AUTHORIZATION AND RESTRICTION OF CHEMICAL SUBSTANCES

engaged in the business of manufacturing, importing or

handling chemicals is expected to increase substantially,

they are advised to pay close attention to this Draft Act and

prepare in advance for the upcoming changes in law.

This Draft Act is expected to pass the final vote of the

National Assembly some time during 2011. Under the

MOE’s plan, pre-registration of substances will begin as early

as 2014. As the specific rules and regulations implementing

the Draft Act are yet to be announced, a close monitoring

of further developments is recommended.

Recently, a subcommittee of the Seoul Central District

Court, designated as being responsible for establishing

sentencing standards, announced the results of its findings

and analysis of courts’ sentences issued for crimes of trade

secret misappropriation during the period between 2009

and November 2010 within the Seoul jurisdiction and the

reasoning adopted for the court sentences.

The subcommittee found that the courts in the past had

underestimated the amount of damages awarded to

plaintiffs due to the difficulties of evaluating the value of

the subject trade secret or calculating the actual damage

amount and issued relatively more lenient sentences to

defendants because they tended to be first-time offenders.

But the subcommittee also noted that the necessity to

impose harsher sentences has arisen since the crime of

trade secret misappropriation causes serious damages to

aggrieved companies and the relevant industry over a long

period of time and it ultimately hinders fair competition and

overall industrial development in the society and, in case of

leakage of trade secrets overseas in particular, it impairs

global competitiveness of the relevant domestic industry.

The subcommittee emphasized that, in principle, an

offender who misappropriates trade secrets related to some

of the major industries which have the most competitiveness

in the global market, such as semiconductors, automobiles,

ships, etc. to overseas, or anyone who serves a high-ranking

position in his/her company (i.e., the victim company) needs

to serve actual jail time.

Moreover, the subcommittee mentioned that in case the

misappropriated trade secret is deemed highly valuable

causing substantial damages to the aggrieved company or

in case the defendant has received economic benefit or has

procured a high-ranking position in a competitor company,

an additional 3- to 6-month jail time may be considered.

In particular, if the defendant is deemed to have actively

engaged in one or more crimes such as abusing his/her

high-ranking position thereby breaching the duty of loyalty

owed to his/her company or having a subordinate be

involved in the crime, imprisonment of more than 1 and a

half years may be considered.

On the contrary, in case a defendant in the capacity of

a subordinate is deemed to have simply followed his/

her superior’s instructions or to have contributed to the

development of the technology, and if the aggrieved

company submits a petition seeking the court’s leniency

or if a settlement has been reached with the aggrieved

company, the subcommittee takes the view that reducing

the defendant’s jail time by 3- to 6-month may be

considered.

INTELLECTUAL PROPERTYBy Jay (Young-June) Yang (yjyang@kimchang.com), Ji Eun Lee (jelee1@kimchang.com)

COURTS’ TENDENCY FOR HARSH PUNISHMENT FOR MISAPPROPRIATION OF TRADE SECRETS

Spring 2011 | 13

14 | Newsletter

AMENDMENT TO THE GAME INDUSTRY PROMOTION ACT

On March 11, 2011, the amendment to the Game

Industry Promotion Act was passed into law by the

National Assembly, which provides for the following major

requirements. This amendment will become effective in the

second half of 2011.

● Certain game products which are not compatible with the

rating review by the Game Rating Board given the nature of

the manufacturing and distribution channels, will be rated

by the distributor of such game products in accordance with

the criteria agreed by and between such distributor and the

Game Rating Board.

● Use of devices, machines or operation rules closely related

to the game contents for the purpose of stimulating

speculative activities of game players will be prohibited.

● Distribution or production with intent to distribute

computer programs not authorized by the game service

provider or devices or machines for the purpose of impeding

normal operation of a game product will be prohibited.

This amendment is expected to promote the growth of

the domestic open marketplaces where game products are

widely created and distributed by Korean developers through

permitting the so-called self rating system by the open market

operators.

On March 11, 2011, the National Assembly

passed a draft bill for the Personal Information

Protection Act (“PIPA”), which is expected to take

effect within approximately 6 months. The information

telecommunications service providers who are subject to

the Act on Promotion of Information Telecommunications

Networks and Protection of Information (“APITN”) will also

have to comply with the following aspects of the PIPA that

are not currently covered by the APITN:

● Newly-established regulations on CCTV and other video

information processing;

● Enlargement of the scope of personal information

including employee’s information;

● New requirement to obtain separate consent for sensitive

information and personally-identifiable information; and

● Newly-established notice and report obligation for

information leakage incidents and class actions.

As the PIPA expands and adds effective enforcement

mechanism to the privacy legal regime developed under the

APITN, information telecommunications service providers

should exert a high level of due care to manage and protect

the customer and employees privacy.

BROADCASTING & TELECOMMUNICATIONBy Dong Shik Choi (dschoi@kimchang.com), Mi-Ryung An (mran@kimchang.com)

ENACTMENT OF GENERAL PRIVACY REGULATION - PERSONAL INFORMATION PROTECTION ACT

Recently, the Korean Customs Service (the “KCS”)

amended its Notification on Customs Valuation

(the “KCS Notification”), which provides detailed rules

on customs valuation matters stipulated under the

Korea Customs Duties Law (the “KCDL”). The KCS

Notification became effective as of March 30, 2011.

One of the most salient amendments to the KCS

Notification is an addition of an importer’s affirmative

defense in proving the appropriateness of his or

her import value from related party transactions.

Specifically, under the KCS Notification, if the importer

can show that the import price between related parties

is “adequate to ensure recovery of all costs plus a

profit which is representative of the firm’s overall profit

realized over a representative period of time in sales

of goods of the same class or kind,” the importer can

establish that such price had not been influenced by

the related party status of the exporter and importer.

Although the above defense based on circumstances

of sale is already stipulated under the WTO Valuation

Agreement 1994 (Agreement on Implementation of

Article VII of the General Agreement on Tariffs and

Trade 1994), it has been very difficult for Korean

importers to invoke this particular defense, since the

KCDL does not specifically recognize the foregoing as

one of the defenses that may be put forwarded by an

importer in trying to defend his or her import price.

It is expected that this amendment will pave the way

for multinational importers in Korea to actively defend

appropriateness and acceptability of their import price

notwithstanding the related party status with their

exporters.

In addition, the KCS amended certain provisions of its

Notification relating to the Advance Customs Valuation

Arrangement (the “ACVA”), a program introduced in

2008 that allows an importer to obtain KCS’ advance

approval that his or her import price is not influenced

by the related party status. These amendments include,

among others, clarifications on types of supporting

documents that an ACVA applicant should submit, the

scope of customs audit exemption during the pendency

of the ACVA application, and other substantive and

procedural matters relating to ACVA application and

review procedures.

Through these amendments, the KCS hopes to improve

cooperation with importers in customs valuation

matters and increase the number of ACVA applications

going forward.

CUSTOMS & INTERNATIONAL TRADEBy Wangi Ahn (wgahn@kimchang.com), Janghyun Ryoo (jhryoo@kimchang.com)

AMENDMENTS TO THE KCS NOTIFICATION ON CUSTOMS VALUATION

Spring 2011 | 15

16 | Newsletter

SELECTED REPRESENTATIONS

AFFINITY EQUITY PARTNERS SOLD ITS RCPS AND CB IN KOREA DIGITAL SATELLITE BROADCASTING CO., LTD.

On January 27, 2011, Affinity Equity Partners (“AEP“)

completed the sale of redeemable convertible preferred

stock (RCPS) and convertible bonds (CB) in Korea Digital

Satellite Broadcasting Co., Ltd. to KT Corporation. The total

value of the deal was KRW 246.4 billion. The sale comes

approximately three years after AEP’s acquisition of the RCPS

and CB issued by Korea Digital Satellite Broadcasting Co.,

Ltd. in 2007 and 2008 respectively.

Kim & Chang, which previously advised AEP in connection

with the acquisition of the RCPS and CB in 2007 and 2008,

represented AEP in all aspects of the recent sale to KT

Corporation, including but not limited to negotiation of the

share purchase agreement, and provision of advice on the

deal structure and tax related matters.

NEW YORK LIFE INTERNATIONAL, LLC SOLD ITS 100% STAKE IN NEW YORK LIFE INSURANCE LIMITED (KOREA)

Kim & Chang represented New York Life International, LLC

(“NYLI“), in its sale of its 100% stake in New York Life Insurance

Limited (Korea) (“NYLK“), a Korean subsidiary of NYLI.

On February 1, 2011, NYLI, one of the leading life insurance

companies in the world, completed the sale of its 100%

stake in NYLK to ACE INA Holdings, Inc. (“ACE“). The closing

of NYLI’s sale of NYLK to ACE was made pursuant to a Share

Purchase Agreement that was entered into on October 26,

2010.

Kim & Chang advised and acted as local counsel for NYLI in

connection with the sale of NYLK in every aspect, including

negotiating the Share Purchase Agreement, conducting

sell-side due diligence, advising on regulatory, tax and other

matters, assisting with labor relation issues, and assisting the

parties in obtaining all necessary governmental approvals.

HYUNDAI MOTOR COMPANY GROUP CONSORTIUM ACQUIRED A 34.88% STAKE IN HYUNDAI ENGINEERING & CONSTRUCTION

On April 1, 2011, the Hyundai Motor Company Group

Consortium, consisting of Hyundai Motor Company, Hyundai

Mobis and Kia Motors Corp., purchased 34.88% of the total

issued shares of Hyundai Engineering & Construction Co., Ltd.,

the #1 construction company in Korea, from nine financial

institution shareholders including Korea Exchange Bank. The

total purchase price for this transaction was KRW 4.960

trillion. Through this transaction, Hyundai Motor Company

acquired a 20.93% stake for KRW 2.976 trillion, Hyundai

Mobis acquired an 8.72% stake for KRW 1.240 trillion and

Kia Motors acquired a 5.23% stake for KRW 744 billion.

Kim & Chang advised the Hyundai Motor Company Group

Consortium in this transaction.

SUCCESSFULLY DEFENDED HYUNDAI MOTOR ON THE VALIDITY OF HYUNDAI E&C'S TERMINATION OF MOU

The acquisition by the Hyundai Motor Company Group

Consortium (“Hyundai Motor“) of Hyundai Engineering

& Construction Co., Ltd. (“Hyundai E&C”) (as described

above) also brought about fierce litigation between Hyundai

Motor and Hyundai Group.

At the conclusion of a bidding process for Hyundai E&C,

which commenced in June 2010, Hyundai Group was

declared as the preferred bidder to acquire Hyundai E&C

after narrowly beating Hyundai Motor in an extremely

competitive bidding race. Shortly after becoming a

successful bidder, amid growing public concerns over the

validity and original source of the funds Hyundai Group

furnished for the purpose of consummating the acquisition

and that it had claimed as its own, the creditors of Hyundai

E&C officially requested Hyundai Group to verify the source

of such funds. When Hyundai Group failed to provide

verification materials to the creditors’ satisfaction, Hyundai

E&C terminated the MOU with Hyundai Group regarding

the contemplated acquisition and decided to declare

Hyundai Motor the preferred bidder.

Subsequently, Hyundai Group filed a complaint with the

Seoul Central District Court in which it requested the court

to issue a preliminary injunction to prevent Hyundai E&C

from terminating the MOU. Hyundai Motor intervened in the

suit and successfully argued that Hyundai E&C’s termination

of the MOU was legitimate. On January 4, 2011, the Seoul

Central District Court denied Hyundai Group’s request for

preliminary injunction. Hyundai Group then appealed the

decision to the Seoul High Court, which on February 15,

2011 denied Hyundai Group’s appeal. After the Seoul High

Court rendered its decision, Hyundai Group decided against

filing an appeal with the Supreme Court.

Kim & Chang represented Hyundai Motor and successfully

defended on its behalf the validity of Hyundai E&C’s

termination of the MOU, and later represented Hyundai

Motor in its acquisition of Hyundai E&C.

RESALE PRICE MAINTENANCE AND APPLICATION OF RULE OF REASON ANALYSIS

In a case involving an alleged resale price maintenance practice

by Callaway Golf Korea Ltd., the Supreme Court held on March

10, 2011 that minimum resale price maintenance practices

should be allowed in limited circumstances where certain

market characteristics provide a justifiable reason. The Supreme

Court, in essence, confirmed that the rule of reason analysis

should be applied to resale price maintenance practices.

The lower court decision rendered by the Seoul High Court

which affirmed the KFTC decision held that as the FTL

prescribed resale price maintenance as per se illegal, there

was no need to review whether the resale price maintenance

has an anticompetitive effect for so long as a resale price was

designated and enforced.

However, after noting that the main purpose behind the FTL

was to promote competition thereby increasing consumer

welfare and that the purpose behind regulating resale price

maintenance practices was to prevent harm to consumer

welfare caused by restrictions placed on price competition

in the distribution process, the Supreme Court held that, if

the subject resale price maintenance practice has a justifiable

reason (such as promoting intra-brand competition in the

relevant product market, thereby ultimately increasing

consumer welfare), such practice should be allowed as an

exception to the rule even though the FTL prescribes that

resale price maintenance is per se illegal.

The Supreme Court reversed and remanded the case back to

the Seoul High Court after recognizing that the plaintiff was

denied an opportunity to establish a justifiable reason for

maintaining a resale price. If the Seoul High Court finds on

remand that there was a justifiable reason, such as increase

in consumer welfare through a higher level of intra-brand

competition in the relevant market or competition for better

services, this will be the first case in which a resale price

maintenance practice is found not to be in violation of the FTL.

Kim & Chang represented Callaway Golf Korea Ltd. We

believe that the Supreme Court’s ruling and the Seoul High

Court’s decision upon remand will redefine the standard

of analysis for determining the legality of resale price

maintenance practices.

VOGO FUNDS ACQUIRED A 44.0% STAKE IN TONG YANG LIFE INSURANCE CO., LTD.

VOGO Investment established two private equity funds,

Vogo Fund II-1 and Vogo Fund II-2 (collectively, the “VOGO

Funds”), for which VOGO Investment will act as the general

partner. The VOGO Funds acquired a 44.0% stake in Tong

Yang Life Insurance Co., Ltd. from Tong Yang Financial

Services Corp., Tong Yang Capital and Tong Yang Securities

Inc. (collectively, the “Tong Yang Affiliates”), for a total

purchase price of approximately KRW 852 billion. The Tong

Yang Affiliates, which participated in the VOGO Funds as

limited partners in connection with this transaction, will

have a call option to purchase shares of Tong Yang Life

Insurance Co., Ltd. from the VOGO Funds. The transaction

was completed on March 23, 2011.

Spring 2011 | 17

18 | Newsletter

Kim & Chang provided extensive legal advice to VOGO

Investment and the VOGO Funds, including advice on the

transaction structure, key agreements, establishment and

funding process and procurement of governmental approvals,

such as the approval from the Financial Services Commission

for change of the majority shareholder.

COURT ORDER PROHIBITING MANUFACTURE, SALE AND IMPORT OF PRODUCTS USING TRADE SECRETS

The Seoul Central District Court recently issued an injunction

in favor of a company (“Company A”) whose former

employees took Company A’s trade secrets when they left

the company and used them in developing a competitor

company’s new automobile (“Company B”). The injunction

prohibits Company B from manufacturing, selling, exporting,

etc. of the relevant half-finished products and parts of

automobiles for a period of 3 years from the date on which

the injunction order becomes final and conclusive.

The court’s above injunction order was issued based on

the following facts: (i) the ex-employees were mainly

engaged in developing and manufacturing automobiles

during their employment with Company A; (ii) when they

left Company A, they actively engaged in collecting certain

materials containing the company’s trade secrets, such as

blueprints/drawings, 3-dimensional models, various test

results, technology standard materials, etc., by means of

downloading them to their computers; (iii) after termination

of their employment with Company A, they joined Company

B and made reference to and used those blueprints/drawings

and technology standard materials for all components and

constituents of Company A’s automobile of the same level,

including body, chassis, engine and transmission, design,

power-train interface, etc., in the course of developing a

new automobile for Company B, and as a result, Company

B presumably saved a substantial amount of time and efforts

which it would have been otherwise required to spend

in developing the automobile on its own - for example,

formulating concepts and drawing basis designs, etc. which

are necessary in the early stage of the development; (iv)

such misappropriation of Company A’s trade secrets was

not an accidental act of some employees, but it was rather

a systematic and organized scheme where Company B’s

representative director and officers and directors were

involved.

Company B completed the development of the new

automobile based on the materials that were taken from

Company A, manufactured parts and half-finished products

thereof, and exported them to its headquarter located in

Russia, and thereafter, the headquarters assembled them,

produced and sold finished automobiles in the market.

The Court determined that the three-year injunction period

was proper considering various factors, including the non-

competition period stipulated in the employment agreements

between Company A and its ex-employees involved in

this case, the rapid growth in automobile technology, and

Company B’s experience, technology and know-how in

developing automobiles. It also ordered the destruction of

the half-finished products and parts that have already been

manufactured and stored in Company B’s offices, factories,

stores, etc.

Kim & Chang represented Company A in this case and was

instrumental in successfully bringing about the above court’s

injunction order.

KCC APPROVES C&M’S MAJORITY STAKE ACQUISITION IN TWO BROADCASTING COMPANIES

On February 25, 2011, the Korea Communications

Commission (“KCC”) approved C&M Co., Ltd.’s acquisitions

of an 84.9% stake in GS Gangnam Broadcasting Inc., and a

99.8% stake in GS Ulsan Broadcasting Inc. from GS Home

Shopping Inc., for an aggregate purchase price of KRW 382.4

billion in accordance with the Korea Broadcasting Act and

Telecommunications Business Act. Kim & Chang provided

legal advice on relevant review points of the KCC approval

and successfully represented C&M during the review and

hearing process conducted by the KCC. With this approval

and the successful subsequent completion of the transaction,

C&M, the leading Korean cable company having the highest

number of cable subscribers (more than 2 million), is poised to

solidify its dominant position in the Seoul Metropolitan Area.

aWarDS & ranKinGS

top rankings in all 15 practice areas and 39 leading

individuals in Korea - chambers asia 2011 Guide

In the 2011 edition of the Chambers Asia Guide, a leading

global legal journal published by Chambers and Partners,

Kim & Chang was ranked as the top firm in Korea in the

following 15 practice areas: Banking & Finance, Capital

Markets, Competition/Antitrust, Corporate/M&A, Dispute

Resolution, Employment, Insurance, Intellectual Property,

International Trade, Real Estate, Restructuring/Insolvency,

Shipping, Shipping: Finance, Tax and Technologies, Media

& Telecommunications. Also, in the Asia-Pacific region, our

firm was recognized as one of the leading law firms in the

Arbitration (International) practice area. Kim & Chang is

the only law firm in Korea with a top ranking in all of the

surveyed areas.

Further, 39 Kim & Chang professionals were recognized as

“Leading Individuals“ in their respective practice areas as

follows. In particular, Mr. Jong Koo Park (Corporate/M&A)

and Mr. Yon Kyun Oh (Real Estate) were selected as “Star“

individuals, which is the highest ranking.

Banking & Finance Capital Markets

Soo Man Park Ick Ryol Huh

Young Kyun Cho Hi Sun Yoon

Chang Hyeon Ko Young Man Huh

Myoung Jae Chung (U)

Competition/Antitrust Corporate/M&A

Kyung Taek JungJae Hong Ahn

Sung Eyup Park Youngjin Jung

Kyung Taek JungJong Koo Park (*)

Luke Shin

Dispute Resolution Employment

Jin Yeong Chung Byung Chol Yoon Eun Young Park Jung Keol Suh

Chun Wook HyunWeon Jung Kim

Paul Cho

Insurance Intellectual Property

Jin Hong LeeJae Hong AhnWoong Park

Jay Young June YangDuck-Soon Chang

Chun Y Yang Jay Kim

Man-Gi Paik

International Trade Real Estate

Youngjin JungYon Kyun Oh (*)

Kwon Lee Kwan Sik Yu

FIRM NEWS

SUCCESSFUL DEFENSE OF LG UPLUS AGAINST ALLEGED BREACH OF PRIVACY DAMAGES CLAIMS

On February 10, 2011, the Seoul High Court denied the

damages claims brought by 278 individuals against LG Uplus,

a Korean mobile carrier. Even though no evidence was

presented as to whether the personal information of most

plaintiffs had actually been accessed by third parties, the

plaintiffs demanded compensation for mental suffering

from being exposed to the risk of unauthorized access to

their private information by third parties. As there were no

precedents on this point, the Seoul District Court previously

held for the plaintiffs and ordered payment of damages of

KRW 100,000 for each of the plaintiffs. However, on appeal

the Seoul High Court reversed the judgment by the lower

court and dismissed the complaints filed by the plaintiffs. This

reversal marks a more rational and objective stance taken by

the high court unlike certain precedents of the lower courts.

Kim & Chang represented LG Uplus in the appellate

proceedings after the previous representation by another law

firm resulted in an unfavorable decision for LG Uplus at the

District Court level. Kim & Chang successfully defended LG

Uplus at every stage of the process by formulating effective

legal arguments based on in-depth factual analyses. Kim &

Chang’s extensive experience and know-how in handling

privacy disputes were instrumental in conducting thorough

case analysis and developing effective legal arguments which

contributed to the successful reversal of the lower court’s

decision in favor of LG Uplus.

Spring 2011 | 19

Restructuring/Insolvency Shipping

Chang Hoon Baek Jin Yeong Chung

Byung Suk Chung Jin Hong Lee

Shipping: Finance Tax

Byung Suk Chung

Woo Hyun Baik D.J. Yeo

Stefan Moller Jay Shim

TMTAsia-Pacific Region

Arbitration (International)

Dong Shik Choi Tae Hyun Chung

Byung Chol YoonJohn Rhie (U)

※(*): Star, (U): Up and Coming

named “national Law Firm of the Year for Korea“ -

iFLr asia awards 2011

Kim & Chang won the “National Law Firm of the Year for

Korea“ award at the IFLR Asian Awards 2011. With this

latest award, Kim & Chang has been named the top law

firm in Korea for nine consecutive years by IFLR (International

Financial Law Review), which is published by Euromoney, the

world’s leading media group. The journal awarded national

law firms in 14 countries in Asia based on performance in

2010.

The IFLR Asian Awards 2011 ceremony was held at the Island

Shangri-La Hotel in Hong Kong on March 3, 2011, and Ms.

Joan Chang and Messrs. Myoung Jae Chung, Alex Yang

and Changheon (Charles) Kwak of our firm attended the

ceremony.

ranked as “elite” in competition practice - Gcr 100

The world’s leading journal in competition law, Global

Competition Review 100 (GCR 100) has ranked Kim &

Chang’s Antitrust & Competition Practice as “Elite“, which is

the highest possible classification.

GCR 100 groups law firms into one of three categories: Elite,

Highly Recommended and Recommended. The evaluation

criteria include the size of a firm’s competition practice, the

number of attorneys nominated in its sister publication, The

International Who’s Who of Competition Lawyers, the results

of a survey asking law firms to nominate which other firm’s

competition practice they most admired, and the stability of

the firm’s antitrust team: who’s hiring, who’s firing, who’s

promoting and who’s leaving. The data covered the period

from July 31, 2009 to August 1, 2010.

GCR 100 made the following remarks regarding Kim & Chang:

“Kim & Chang is Korea’s biggest law firm - with more than

650 lawyers and specialists. It is also one of its oldest in

terms of competition law experience, and was the first firm

in Korea to establish a specific competition practice with

specialist lawyers...“

ranked as one of the top 100 arbitration practices

worldwide - Gar 100

For a third year in a row, Kim & Chang has been ranked as

one of the top 100 arbitration practices worldwide in Global

Arbitration Review’s “GAR 100“. GAR is the leading news

provider in international arbitration and conducts a survey

of the world’s leading arbitration firms every year. GAR 100

rankings are based on number of completed merits hearings;

number of “bet the company“ merits hearings; value of

current portfolio; number of pending cases as counsel;

number of pending cases under investment treaties; and

number of pending cases as arbitrator.

Further, Kim & Chang was honored with a “Special

recognition for contribution to international arbitration

culture“ award at the GAR Awards held in Seoul in March

2011.

no.1 m&a advisor in Korea - mergermarket m&a

League tables of Legal advisors for Q1 2011

In the mergermarket M&A League Tables of Legal Advisers

for Q1 2011, Kim & Chang ranked no.1 in Korea based

on both deal volume and deal count. In the Asia region

(excluding Japan/Australasia), Kim & Chang ranked fourth

based on deal count and eighth based on deal volume, and

in the Asia-Pacific region (excluding Japan), the firm ranked

ninth based on deal count and sixteenth based on deal

volume.

mergermarket is a global M&A intelligence service and a

member of the Financial Times group, an international media

group.

Spring 2011 | 20

SeminarS/announcementS

“international arbitration Day“ in Seoul organized by the

international Bar association

The IBA (International Bar Association) held its annual

“International Arbitration Day“ event at Shilla Hotel Seoul on

March 3 - 4, 2011 on the theme of “The inherent powers of

arbitral tribunals: good faith, ethics and efficiency in international

arbitration.“

On the second day of the event, Mr. Byung-Chol Yoon of our firm

participated in a panel discussion titled “Transnational regulation

of ethics in international arbitration: is there a need and how

might it be met? A debate.“

The event, which was the first IBA international conference to

take place in Korea, was successfully held with the participation

of more than 350 arbitrators, litigators, judges and government

officials from all around the world.

neW memBerS

We are pleased to announce that the following professionals

recently joined Kim & Chang:

Twelve former Korean judges, including Mr. Jae Hong Lee,

who was the former chief judge of Seoul Administrative

Court, joined our Litigation & Arbitration Department. The

former judges who newly joined Kim & Chang also include Mr.

Yu-Seog Won, a former presiding judge at Seoul High Court,

Mr. Seong Soo Park, a former presiding judge at Suwon

District Court, Mr. Byung Hoon Kwak, a former research

judge & presiding judge at the Supreme Court of Korea, Mr.

Hyunjong Lee, a former presiding judge at Anyang Branch

of Suwon District Court and Mr. cheol Hwan choi, a former

presiding judge at Seongnam Branch of Suwon District Court

and Mr. Hyun tae Bae, a former presiding judge at Incheon

District Court. Also, Mr. uhn Seok Lee, a former judge at Seoul

Central District Court, Mr. Jongchul Jang, a former judge at

Seoul Administrative Court, Mr. Joo Suk Kim, a former judge

at Gwangju District Court, Mr. Kyu Jin choi, a former judge

at Seoul Central District Court and Ms. Jeong Kim, a former

judge at Cheongju District Court, joined the firm as well. The

addition of these twelve former judges has greatly expanded the

Litigation & Arbitration Practice Group of Kim & Chang, and the

firm is confident that their abundant experience and expertise of

these attorneys will enhance the team’s expertise.

Messrs. Ho Keun ryu and Donghyuk chin newly joined the

firm and are working in the firm’s White Collar Criminal Defense

Practice Group. Before joining Kim & Chang, Mr. Ryu previously

worked as the Head Prosecutor in the Criminal Department of

the Suwon District Prosecutors’ Office and the Public Security

Department of the Seoul Central District Prosecutors’ Office, while

Mr. Chin worked as a Public Prosecutor at the Bucheon Branch of

the Incheon District Prosecutors’ Office and the Public Security

Affairs Division of the Ministry of Justice. Also, Mr. Sung Hun

cho has become a member of the firm’s White Collar Criminal

Defense Practice Group. Prior to joining Kim & Chang, Mr. Cho

was a director of the Crime Investigation Division and Chief of the

Public Relations Division at Seoul Metropolitan Police Agency.

Ms. Hye Won Park, who previously worked at Daeryook &

Aju, newly joined the firm.

We are pleased to announce that the following foreign attorneys

newly joined the firm. Mr. Jinho Joo, who previously worked at

the New York, San Francisco and Menlo Park offices of Shearman

& Sterling LLP, and Mr. chee Kwan Kim, who previously worked

at Davis Polk & Wardwell LLP, New York and Simpson Thacher

& Bartlett LLP, Hong Kong, recently joined the firm and started

working in the firm’s Finance Department. Mr. Seong Ho Suh,

a former partner at Richard Wang & Co. and King & Wood

in Beijing newly joined the firm’s Corporate Department. Mr.

DongWook Kim, a foreign attorney, who previously worked at

Samsung Fire & Marine Ins. Co. Ltd. as a legal counsel joined the

firm’s Insurance Practice Group. In addition, Ms. Seungyoon

Lee, a foreign attorney, joined the firm.

Kim & Chang is delighted to announce that following 16

Korean attorneys who completed their training at the Judicial

Research and Training Institute of the Supreme Court of Korea

joined the firm. They are areum Kim, Young-Shin Kim,

Jae Kyung Kim, Jin uk Kim, Kyung Ji ryu, Ji eun Park,

Ji Yeon Song, mi Jin Shin, Bit na ra Shin, Jongmin Lee,

eun Ho Jang, Ji Woong Jang, Ji Youn chun, Kun Hee

cho, Hyo Jin cho and Jisoo choi.

Ms. Jeung min rhee, U.S. CPA, who previously worked at Samil

PricewaterhouseCoopers in Korea and PricewaterhouseCoopers

in Stamford, Connecticut, joined the firm and is working in the

firm’s Tax Department.

21 | Newsletter

This publication is provided for general informational purposes only and should not be considered a legal opinion of KIM & CHANG nor relied upon in lieu of specific advice.

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