SOUTH KOREA Law and Practice Contributed by: Ohryung Lee, Joceline Park, Maria Chang and Hakrae Cho, Bae, Kim & Lee LLC
7.2 Restrictions The restrictions that, among others, may apply to foreign investment in Korea are set out below. Sectors in Which Foreign Investment Is Restricted There are certain sectors where foreign invest - ment is prohibited. These sectors include postal services; central banks; legislative agencies; administrative agencies; courts; prosecutors’ offices; police; fire departments; educational institutions (including early childhood education institutions, primary schools, middle schools, high schools and universities, graduate schools, and special schools); art, industrial, profession - al, political, religious, labour, and environmental movement organisations; nuclear power genera - tion businesses; and radio and terrestrial broad - casting businesses. The ratio of foreign investment in companies in certain sectors may not exceed a certain thresh - old. For example, the foreign investment ratio must be less than 50% in companies engaged in beef cattle breeding, air transportation, and magazine and newspaper publishing. A detailed list of prohibited or restricted areas is published annually by the Ministry of Trade, Industry and Energy (MOTIE). Government Approval A prospective foreign investor in certain restrict - ed sectors must obtain approval from the rel - evant government agency: A prospective foreign investor in a defence com - pany must obtain prior approval from MOTIE. A foreign investor wishing to invest in a company that possesses “national core technology” or to transfer “national core technology” overseas
must obtain prior approval from MOTIE. National core technologies include those related to semi - conductors, displays, batteries, automobiles/ railways, steel, shipbuilding, nuclear energy, information and communication, and biotech - nology. The list of national core technologies is published by MOTIE. Recently, the Korean government has taken steps to strengthen the protection of national core technologies. Some provisions of the For - eign Investment Promotion Act, effective from 28 July 2016, require foreign investors acquir - ing control over companies managing defence industry companies, where there are concerns that it may affect the stable supply of defence materials, to undergo a review by the Foreign Investment Review Committee. Also, a legal amendment (Act on Prevention of Divulgence and Protection of Industrial Technology) has been passed, which includes regulations such as: • requiring prior approval from the Ministry of Trade, Industry, and Energy (MOTIE) for for - eign mergers, acquisitions, and joint ventures involving companies holding national core technologies, including those controlled by foreign individuals or foreign companies; • applying stricter criteria when reviewing M&A transactions involving companies holding national core technologies; • expanding the definition of industrial tech - nology leakage and infringement to include unauthorised leakage or use of industrial technologies outside designated locations; • increasing the punitive damages limit from three times to five times the damage amount; and • raising fines for individuals involved in tech - nology leakage when they are aware that the technology will be used overseas.
511 CHAMBERS.COM
Powered by FlippingBook