SOUTH KOREA Trends and Developments Contributed by: Ki Wook Kang, Kyung Chun Kim, Junghae Kang and Do Kyeom Kim, Lee & Ko
requirement for a special shareholders’ meeting reso - lution and appraisal rights for dissenting shareholders. As a result, this decision could have important impli - cations for M&A transactions and shareholder meeting governance in the future. The Characteristics of Korean Share Purchase Agreements Share purchase agreements in Korea have terms and conditions similar to those of share purchase agree - ments in other jurisdictions. The following are some of the noteworthy characteristics found in share pur - chase agreements in Korea: • The use of warranty and indemnity insurance is not unusual, although not as prevalent as in other jurisdictions. • Parties prefer to include a contract deposit pay - ment. • Merger filing approval by the Korea Fair Trade Commission is a major regulatory approval fre - quently included as a condition precedent to clos -
ing. Particularly with larger transactions, whether or not a hell or high water provision will be included regarding such approval is a major negotiation point as most large transactions require approval prior to closing. • Employment security provisions for a specific period (generally three years or less) are commonly included as covenants. • M&A bonuses for directors, officers and employees of the target company are often disputed between the parties; either the seller, buyer, or both can bear this obligation depending on the agreed arrange - ment between the parties. • Following the COVID-19 pandemic, whether or not to include diseases, epidemics, or pandemics within the definition of “Material Adverse Effect” has often become a point of negotiation. • Post-closing purchase price adjustments are often adopted, although not as prevalent as in other jurisdictions. • Representations and warranties are generally pro - vided as of the signing date and the closing date.
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