SOUTH KOREA Law and Practice Contributed by: Ho Joon Moon, Sung Min Kim, Allen Hyungi Ryu and Joon Sung Hong, Lee & Ko
located. Upon completion of the court registration, the new company will legally come into existence. Under the KCC, there is no minimum capital require - ment for chusik hoesa . However, the par value of a share must be at least KRW100. Accordingly, it is legally permissible to establish a chusik hoesa with a capital of KRW100 by issuing a single share with a par value of KRW100. 6. Core Terms of a JV Agreement 6.1 Drafting and Structure of the Agreement A JV vehicle in Korea is, in most cases, incorporated as a joint-stock company ( chusik hoesa ), although a limited liability company ( yuhan hoesa ) is sometimes used for a JV vehicle in limited matters. The terms of the JV documents for both chusik hoesa and yuhan hoesa are similar. The JV agreement will include the customary terms regarding the manage - ment and operation of the JV (ownership structure, management structure, and consent/veto rights), transfer restrictions (right of first refusal/offer, drag/ tag-along, etc), exit rights (eg, call, put right) and other commercial arrangements between the parties, among others. Some of the terms of the JV are also reflected in the articles of incorporation of the JV vehicle. Such terms include: • certain matters relating to management structure (eg, number of directors, term of the directors, etc); • quorum and voting requirements (including board of directors’ and shareholders’ reserved matters); • transfer restrictions; • matters relating to stock options and preferred shares; and • establishment of sub-committees.
The JV agreement will typically set out the matters that can be decided by executive officers, directors and shareholders. Furthermore, different quorum/voting requirements are typically stipulated in the JV agreement and/or the articles of incorporation of the JV. Representative Directors’ Decision-Making The representative director is the legal representative of the company, and is given broad authority to rep - resent and legally bind the company in its day-to-day operations. Board of Directors’ Decision-Making The board of directors is given the authority to decide any material matter pertaining to the company (except for those matters that are, by law or by the articles of incorporation, required to be approved by the share - holders). The board of directors’ decision-making is, in princi - ple, subject to the simple majority vote (ie, the major - ity of the directors attending the board of directors’ meeting plus the majority of the attending directors’ affirmative vote). Higher quorum/voting requirements can be required by law or set forth in the articles of incorporation. “Casting votes” are not permitted under the KCC. Shareholders’ Decision-Making The KCC sets out applicable voting requirements for certain matters (subject to either “ordinary resolu - tion”, “special resolution” or “unanimous resolution” by the shareholders). While JV participants can agree to higher voting requirements than as set out in the KCC, as a matter of law the requirements cannot be relaxed. “Ordinary resolution” means an affirmative vote (whether in person or by proxy) of a majority of the voting shares represented at such meeting, where the vote shall also account for at least one quarter of the total issued and outstanding voting shares of the company.
6.2 Governance and Decision-Making Decision-making is typically split among:
• representative directors; • the board of directors; and • shareholders.
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