SOUTH KOREA Law and Practice Contributed by: Soo Bong Jung, Jinwook Song, Jinwon Choi and Jiyoung Sohn, Bae, Kim & Lee LLC
• price collusion; • creating a false impression that prices will rise; • spreading false rumours; • making false or misleading representations; • engaging in price stabilisation prior to the expiry of the restricted period during a public offering; • engaging in market making prior to the expiry of six months following a public listing; or • taking actions to profit from price fluctuations. Both “intent” and “purpose” must be proven to estab - lish market manipulation. If convicted of market manipulation, the perpetrator may face imprisonment ranging from one year to a life sentence and, depending on the amount of profits or avoided losses, a criminal fine assessed based on the following formula: • KRW500 million, if the profits or avoided losses cannot be accurately assessed or if the amount equivalent to five times the profits or avoided losses is KRW500 million or less; and • an amount between three and five times the profits or avoided losses from the misconduct. Unfair Trading While the FISCMA seeks to prohibit improper activities in trading publicly listed securities through measures such as the restrictions on insider trading and market manipulation, it also restricts “unfair trading” in rela - tion to non-listed securities, such as private place - ment (“unfair trading” may also apply to publicly listed securities). Unfair trading is defined as the trading of securities or financial investment instruments characterised by: • the presence of unfair means, a scheme or trickery; • a false description or representation of a material fact or omission of a material fact necessary to prevent others from being misled; or • the usage of inaccurate market prices to attract demand for trading or make any other transaction, each in relation to financial investment instruments. The dissemination of false rumours, use of deceptive schemes, use of threats or attempts to cause fluctua -
tions in prices in relation to a trade in financial invest - ment securities are also prohibited. If convicted of unfair trading practices, the perpetra - tor may face imprisonment from one year to a life sentence and, depending on the amount of profits or avoided losses, a criminal fine assessed based on the following formula: • KRW500 million, if the profits or avoided losses cannot be accurately assessed or if the amount equivalent to three times the profits or avoided losses is KRW500 million or less; or • an amount between three and five times the profits or avoided losses from the misconduct. 3.5 Tax Fraud Korean tax laws provide for the criminal punishment of intentional tax offences such as tax evasion, failure to issue a tax invoice or the issuance of a fraudulent tax invoice, title lending, failure to comply with an order to pay accrued taxes and failure to withhold taxes. Of the foregoing, tax evasion and the failure to issue a tax invoice or the issuance of a fraudulent tax invoice are the most common tax offences. Tax evasion refers to the act of refusing to pay taxes or securing a tax refund/credit by fraud or other unlawful means, such as producing false documents, destroy - ing financial books and records, concealing assets, and fabricating or concealing certain income, profit, acts or transactions. The punishment for tax evasion depends on the amount of unpaid taxes and ranges from imprisonment for up to a life sentence and/or a criminal fine of up to double or quintuple the amount of unpaid taxes. The failure to issue a tax invoice or the issuance of a false tax invoice is punishable by imprisonment for up to 30 years, depending on the tax amount involved, and/or a criminal fine of up to double to quintuple the total amount of the relevant VAT, based on the value of the products/services to which the tax invoice per - tains. While there is no legal obligation to deter tax evasion, a company may face a criminal fine if an individual executive or employee is found guilty of a tax offence
261 CHAMBERS.COM
Powered by FlippingBook