SOUTH KOREA Law and Practice Contributed by: Ho Joon Moon, Sung Min Kim, Allen Hyungi Ryu and Joon Sung Hong, Lee & Ko
Lee & Ko Hanjin Building 63 Namdaemun-ro Jung-gu
Seoul 04532 South Korea
Tel: +82 2 772 4000 Fax: +82 2 772 4001 Email: mail@leeko.com Web: www.leeko.com
1. Market Conditions 1.1 Geopolitical and Economic Factors Over the past 12 months, macroeconomic and geo - political developments – including global inflation, the wars in Ukraine and the Middle East, and the evolving US trade policy landscape (eg, the Inflation Reduction Act, CHIPS Act, and export controls on China) – have had a notable impact on the structure and strategic objectives of joint ventures (JVs) involving South Kore - an companies. In response to US subsidy regimes and local con - tent requirements, South Korean battery and EV parts manufacturers are increasingly entering into joint- venture transactions with US automakers to estab - lish production facilities in the US. These JVs often involve complex structuring, including phased capital commitments, tax incentives, and joint control mecha - nisms. In addition, with India’s emergence as a key growth market, there has been an increasing trend of JV transactions between South Korean and Indian com - panies within India. 1.2 Industry Trends and Emerging Technologies As of 2025, joint-venture activity has been particularly active in strategic sectors such as EV batteries, semi - conductors, hydrogen, and clean energy. The surge in JV activity in these industries is largely attributable to US policy initiatives such as the Inflation Reduction Act (IRA) and the CHIPS Act.
2. JV Structure and Strategy 2.1 Typical JV Structures
A traditional joint-venture company (JVC) in the form of a stock company ( chusik hoesa in Korean, similar to a corporation in the USA) is the most commonly used form of JV in South Korea. A JVC in the form of a lim - ited liability company ( yuhan hoesa ) is also often used. Some of the key advantages and disadvantages of using chusik hoesa are as follows. • Advantages: (a) public offering of shares is permitted; (b) issuance of debentures is permitted; and (c) the corporate laws (and cases) around chusik hoesa are well established, as it is the most commonly used form of corporate entity in South Korea. • Disadvantages: (a) rules around management structure are gener - ally more restrictive than for other forms of corporate entities (eg, minimum three directors and one statutory auditor required for com - panies with paid-in capital of KRW1 billion or more, maximum three-year term for directors, etc); and (b) it is generally subject to more stringent public disclosure requirements. Some of the key advantages and disadvantages of using yuhan hoesa are as follows. • Advantages:
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