SOUTH KOREA Law and Practice Contributed by: Ie Hwan Yoo, Hang Jin Chang and Da Eun Jung, Kim & Chang
For shares existing in electronic form, the pledgor must submit an application to its account man- agement company for the creation of the share pledge. The share pledge is created and perfect- ed when the pledgor delivers to the pledgee a copy of the ledger of its share custody account, which records the pledge and the name of the pledgee. Inventory Korean law generally requires assets subject to a security interest to be specifically identifiable. Therefore, under Korean law, a valid security interest cannot be granted over a fluctuating pool of assets where each asset within the pool is not specifically identified. However, certain exceptions have been recognised by courts (eg, a valid security interest can be granted in inven- tories stored in a segregated storage facility). Bank Accounts A bank deposit is considered the depositor’s claim against the depository bank. The pledge of a claim can be perfected against third par- ties in the same way as for monetary claims. The bank′s deposit agreement will usually pro- hibit a pledge from a bank account without the bank′s consent, which means that consent from the depository bank is required (and should be fixed-date-stamped). Monetary Claims In order to perfect a pledge or yangdo dambo over monetary claims (such as receivables) against any third party (including the underlying obligor), the security provider must either: • deliver a notice of pledge (or assignment) to the underlying obligor with a fixed-date stamp affixed to it (eg, a notice to the debtor by contents-certified mail, via a post office in Korea); or
• obtain a written consent to the pledge (or assignment) with a fixed-date stamp affixed to it. If there is a contractual restriction on the assign- ment or creation of a security interest in the underlying contract, the security provider must obtain the underlying obligor′s consent to the pledge (or assignment) with a fixed-date stamp affixed. In addition, any instruments relating to the monetary claim should be delivered to the secured party. In relation to the effectiveness of the security interest over future monetary claims, the follow- ing elements are required for the valid creation of the security interest over monetary claims to be generated in the future (based on the views of leading commentators and precedents from the Korean Supreme Court): • the monetary claims can be reasonably iden- tified and specified; and • the monetary claims are likely to be gener- ated in the near future. Intellectual Property Rights For the creation of a pledge over a trade mark, patent or any other intellectual property rights, the pledge must be registered with the Korea Industrial Property Office (KIPO). The KIPO registration fees must be paid. The relevant fees and expenses depend on the number of intellectual property rights subject to the pledge. It usually takes two weeks from the date of submitting the application to the KIPO to complete the registration of the pledge. Real Property The most popular forms of security granted over real property are the following.
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