SOUTH KOREA Law and Practice Contributed by: Ki Wook Kang, Kyung Chun Kim, Junghae Kang and Do Kyeom Kim, Lee & Ko
tion, telecommunication) may be further regulated by the relevant government agencies supervising those particular industries. In regard to antitrust and competition issues, the Korea Fair Trade Commission (KFTC) has responsibil - ity to evaluate the potentially anti-competitive effects of M&A. The Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) are two primary regulators that oversee M&A activity by regulating the trading of shares of listed companies of the Korea Exchange through implementation of securities regu - lations. With respect to distressed M&A transactions, courts oversee M&A activities of companies under bankrupt - cy or restructuring proceedings. 2.3 Restrictions on Foreign Investments In Korea, the vast majority of areas and industries of business are open to foreign investment with only a few restrictions. However, foreign investments in certain business sectors are restricted for national security reasons. For example, the Telecommunications Business Act provides that foreigners may not own more than 49% of shares in a core telecommunications company. Similar restrictions are also applicable to other sec - tors, including electric power transmission and distri - bution, education and defence. Furthermore, certain cross-border transactions are subject to review and may be restricted for national security reasons. For more detailed information, see 2.6 National Security Review . Other than the rare cases of foreign investment restric - tions mentioned above, foreign investment into Korea is a relatively simple process that requires satisfac - tion of certain filing requirements. If a foreign investor invests KRW100 million or more and either (i) acquires 10% or more of the total issued and outstanding vot - ing shares or equity of a Korean company, or (ii) less than 10% but dispatches or appoints an executive officer to a Korean company, the investment will be considered as foreign direct investments (FDI) and
subject to the reporting requirement under the Foreign Investment Promotion Act (FIPA). Foreign investments that are not FDI per the requirements above are treat - ed as portfolio securities investments and are subject to a filing requirement under the Foreign Exchange Transaction Law. 2.4 Antitrust Regulations The Monopoly Regulation and Fair Trade Act (MRFTA) requires the filing of a business combination report if, whether listed or unlisted, a party that has total assets or sales of KRW300 billion or more combines its business with another party that has total assets or sales of KRW30 billion or more, subject to exceptions that this filing requirement may still be triggered for certain transactions as stipulated under Article 19 of the Enforcement Decree of the MRFTA although the parties to such transactions do not meet the afore - mentioned thresholds. In calculating the total assets or sales of a party, the total assets or sales of all affili - ates of the party that remain affiliated with the party after the business combination are aggregated. The filing of the report must be made to the KFTC gen - erally within 30 days from the closing of the transac - tion. However, transactions involving a large company group with total assets or sales of KRW2 trillion or more are, in principle, subject to pre-closing review by the KFTC. The statutory review period is 30 days from filing regardless of whether the filing is made before or after the closing. However, the KFTC, at its own dis - cretion, may extend the period for up to 90 additional days, thus making the total possible review period 120 days. Further, if the KFTC makes a request for additional information or materials, the review period is tolled until the requested items are submitted. In practice, when a transaction’s potential for restrict - ing competition is considered minimal, the review period usually takes approximately 30 days. However, if concerns regarding competitive restrictions arise, the review process may extend to several months. 2.5 Labour Law Regulations In Korea, there are no labour law regulations that require companies to obtain approval from their employees for share acquisition transactions, while in the case of business transfer transactions, in-scope
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