SOUTH KOREA LAW AND PRACTICE Contributed by: Tehyok Daniel Yi, Gun Kim, Kyu Hyun Kim, Sun Hee Kim, Yong Whan Choi, Yong Min Lee, Jung Woo Lee and Hyeon Jeong, Yulchon LLC
includes special exemptions for technology-rated or crowd-funded companies. Requirements for Foreign Investors Foreign investors are subject to specific requirements under the FSCMA. These requirements are as follows. • Private off-market transactions – permitted for: (a) the acquisition of 10% or more in voting rights or if they confer board representation; or (b) the sale of shares totalling more than 10% or more in voting rights or conferring board repre - sentation. • Public-purpose corporations – foreign ownership is limited as stipulated in the articles of incorpora - tion, but in any event, to 40% of the total number of equity securities. • Trading listed securities or derivatives – foreign investors must open a trading account and comply with transaction reporting requirements. 5.3 Investment Funds Foreign investors structured as investment funds are not subject to additional regulations beyond those applicable to other types of foreign investors. 6. Antitrust/Competition 6.1 Applicable Regulator and Process Overview South Korea operates a merger control regime and is considered one of the most rigorous jurisdictions in Asia for enforcing merger control regulations. Reportable Transactions The MRFTA, South Korea’s statutory source of anti - trust/competition law enforced by the KFTC, mandates merger filing for the following types of transactions, provided they meet the applicable filing thresholds. • Share acquisition: the acquisition of 20% or more of a target company’s voting shares (15% if the target is a listed company) triggers a filing require - ment. A filing is also required if an entity already holding 20% (15% if the target is a listed company) acquires additional shares and becomes the larg - est shareholder.
• Business or asset transfer: acquiring or leasing all or a “significant portion” of another company’s business or operational fixed assets or taking over another company’s management. “Significant por - tion” refers to when: (a) a transferred or leased business segment either constitutes an independent operational unit or the business/asset transfer results in a substantial reduction in the transferor’s rev - enue; and (b) the transfer exceeds 10% of the transferor’s total assets as recorded on its balance sheet at the end of the previous fiscal year or KRW10 billion. • Statutory merger: transactions where the absorbed entity ceases to exist after being integrated into the surviving company. • Joint establishment of a new company: following the formation of a new JV, the largest shareholder is required to submit the merger filing. • Interlocking directorate in large-scale companies: when the employee or officer of a large-scale company under the MRFTA holds a directorship in another company. Filing Thresholds Filing obligations under the MRFTA are triggered when either of the following thresholds are met. • Size-of-party threshold: filing is required if: (a) one party to the transaction has sales or total assets of at least KRW300 billion and the other party has sales or total assets of at least KRW30 billion; and (b) both the acquirer and target are foreign com - panies, or the target is a foreign company, each of the foreign parties must have sales in Korea of at least KRW30 billion. It is worth noting that sales, total assets, and domestic revenue are calculated by aggregating the figures of the party to the transaction and its affiliates, both pre- and post-transaction. • Size-of-transaction threshold: even if the above size-of-party thresholds are not met, filing is required if: (a) the transaction value exceeds KRW600 billion; and
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