SOUTH KOREA Law and Practice Contributed by: Ho Joon Moon, Sung Min Kim, Allen Hyungi Ryu and Joon Sung Hong, Lee & Ko
(as it deemed necessary) certain sanctions regimes of its main allies, such as the USA and the EU, with the legislative intent of contributing to the international effort to maintain global peace and security. A great deal of domestic legislation exists regarding international sanctions applicable to several economic sectors, including the following. • The Foreign Trade Act is mainly applicable to trade sanctions. • Economic and financial sanctions are governed mostly by the FETA and the CFT/WMD Act. • Other types of sanctions such as travel bans, avia - tion bans and maritime sanctions are governed by: (a) the Immigration Act; (b) the Customs Act; (c) the Coast Guard Affairs Act; (d) the Act on Arrival and Departure of Ships; and (e) the Aviation Safety Act. 3.4 Competition Law and Antitrust Under the MRFTA, if a company with total assets or revenues of KRW300 billion or more as of the end of the immediately preceding fiscal year and a company with total assets or revenues of KRW30 billion or more as of the end of the immediately preceding fiscal year establish a JV company in South Korea, a business combination report must be filed with the KFTC. The total assets or revenues for the purpose of the forego - ing are calculated on a consolidated basis, including assets or revenues of companies worldwide main - taining affiliate status with the constituent companies both before and after the merger. If these thresholds are met, the notification to the KFTC must be made within 30 calendar days after the closing date. If either of the JV partners is a large company with worldwide assets or annual revenue of KRW2 trillion or more (on a consolidated basis), the transaction is subject to a pre-closing filing, and a notification to the KFTC is required after the date of signing but before the closing date (ie, the registration of the merger with the court registry). The parties cannot implement the transaction without clearance from the KFTC in the case of a pre-closing filing. The party with the larg - est equity stake in the JV company is responsible for submitting the business combination report filing
(hereinafter, the company required to file the business combination report is referred to as the “Reporting Company”, and the other party is referred to as the “Partner Company”). In addition, the amendment to the MRFTA in 2021 introduced new thresholds for transactions involv - ing small-sized targets. Under the amended MRFTA, even for a transaction that does not satisfy the thresh - olds described earlier in this section, a filing can be required when: • the transaction value is KRW600 billion or more; and • the Partner Company has had significant business activities in South Korean domestic markets. “Significant business activities” are those where: • the Partner Company has sold or provided prod - ucts or services to at least one million people per month in the South Korean market during the immediately preceding three years; or • the Partner Company has either leased R&D facili - ties or used R&D personnel in South Korea and had an annual R&D budget of at least KRW30 bil - lion for the South Korean market during the imme - diately preceding three years. The MRFTA was further amended in 2024, and the fol - lowing four types of transactions will be exempt from the business combination report obligation (effective from 7 August 2024): • establishment of private equity funds; • mergers and asset/business transfers between a parent and its subsidiary; • interlocking directorships involving less than one third of the directors (excluding the interlocking directorships involving the representative director); and • mergers between affiliates where the total assets or revenues of the merged entity itself are less than KRW30 billion.
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