SOUTH KOREA Law and Practice Contributed by: Hyeon-Deog Cho, Yeong-Ik Jeon, Ji-won Lim and Hakbum Ahn, Kim & Chang
joint stock company can be formed with the minimum capital of KRW100. 1.6 Minimum Number of Shareholders A joint stock company, a limited company and a lim- ited liability company must each have at least one shareholder or member. Generally, there are no residency or other eligibility requirements for such shareholders or members; how- ever, there may be applicable laws and regulations restricting foreign persons or entities from acquiring or holding shares for companies in certain industries, such as telecommunications, broadcasting and the airline/aviation industry. 1.7 Shareholders’ Agreements/Joint Venture Agreements While the KCC provides for certain shareholder rights and company obligations, such provisions are mostly applicable to listed companies or other companies with a large shareholder base. Therefore, Korean pri- vate companies often have shareholders’ agreements or joint venture agreements setting forth the terms and conditions of their corporate governance and the rela- tionship among the shareholders. 1.8 Typical Provisions in Shareholders’ Agreements/Joint Venture Agreements Shareholders’ agreements or joint venture agreements typically include provisions regarding: • the shareholding structure, subsequent financing obligations and pre-emptive rights of shareholders; • the board of directors (including composition, board nomination rights, procedural requirements, quorum for meetings and resolutions, and a list of matters requiring a super-majority resolution of the board of directors); • the management team of the company (including composition and officer nomination rights); • minority shareholders’ consent rights regarding key management and operational matters; • the meeting of shareholders (including procedural requirements, quorum for meetings and resolu- tions, a list of matters requiring a special resolution of the meeting of shareholders, and a list of mat-
ters requiring the approval or consent of certain shareholders); • transfer restrictions (including lock-up periods, permitted and/or prohibited transfers, rights of first offer or refusal, drag-along or tag-along rights and call or put options); • shareholder information and inspection rights and other covenants, such as non-compete undertak- ings; • the occurrence and resolution of deadlock events; and • termination and the effect of termination (such as dissolution or the exercise of penalty call or put options). Once duly executed and delivered by the parties, shareholders’ agreements or joint venture agree- ments constitute a valid and binding obligation that is enforceable against each of the parties to the applicable agreement. However, in the case of any breach of the terms or conditions of such agreement, the non-breaching party would only have a breach of contract claim against the breaching party, unless the provisions at issue also constitute a legal require- ment under the KCC or other applicable laws, or are otherwise reflected in the company’s AOI. Copies of private companies’ shareholders’ agree- ments or joint venture agreements are not publicly available. 2. Shareholders’ Meetings and Resolutions 2.1 Types of Meeting, Notice and Calling a Meeting The KCC requires joint stock companies to convene an annual general meeting (AGM) of the shareholders within three months after the end of each fiscal year. At an AGM, shareholders vote on the approval of the financial statements for the previous fiscal year, the declaration of dividends (if any), the appointment of a director or a statutory auditor, or any amendment to the AOI. As the fiscal year of most joint stock com- panies ends on 31 December, joint stock companies typically hold an AGM within the first quarter of each calendar year.
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