ContentsOn February 27, 2012, the National Assembly passed the revised Monopoly Regulation and Fair Trade Act (the “MRFTA”), which strengthens the authority of the Korea Fair Trade

1 CORPORATE and M&A

• Appraisal Right of a Shareholder that Failed to

Provide Notice of its Objection to the Merger

Prior to the General Shareholder’s Meeting

• LEE & KO Advises Samsung Electronics in the

Restructuring of its Display Business

ANTI-TRUST & COMPETITION

• The Monopoly Regulation and Fair Trade Act

Revised to Strengthen the Korea Fair Trade

Commission

• Enforcement of the Consent Order System

LABOR & EMPLOYMENT

• Supreme Court Rules that Periodic Bonuses Paid

Out Every Quarter Constitutes Ordinary Wages

• The Constitutional Court of Korea Rules the

Labor Union Report System Constitutional

BROADCASTING & TELECOMMUNICATIONS

• Amendment of the ICNA and the Korean

Government’s Plan to Expand Restrictions on

the Use and Collection of Resident Registration

Numbers

BANKING, FINANCE & SECURITIES

• Announcement of Expected Enactment of

Amendments to Trust System Provisions of the

Financial Investment Services and Capital

Markets Act

• More Demanding Documentation Standards for

Securities Registration Statement Concerning

Derivatives Linked Securities - Effective from

March 1, 2012

• Introduction of Reporting System for Massive

Short Selling Positions

REAL ESTATE & CONSTRUCTION

• Enactment of the Green Building Creation

Support Act

DISPUTE RESOLUTION

• Seoul Administrative Court Shut Down an

Underqualified College

INTELLECTUAL PROPERTY

• The Supreme Court en banc Issues a Unanimous

Decision in a Patent Suit

3

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22

Contents

AWARDS and RECOGNITIONS

• LEE & KO Recognized as a Leading Law Firm

by “Chambers Asia 2012” in All Practice Areas

• Awards and Appointments

LEE & KO NEWS

• LEE & KO Published ‘LEE & KO Pro Bono

Report’

• LEE & KO Sponsors ‘Family Concert’

Organized by the Social Welfare Society

LEE & KO MEMBERS

• Attorney Jin So Joins LEE & KO

• Attorney Young Jin Chung Joins LEE & KO

• Attorney Heon Myung Jeung Joins LEE & KO

• Attorney Seong Won Chang Joins LEE & KO

• Attorney Young Hoon Jung Joins LEE & KO

• Attorney Byeong Jun Son Joins LEE & KO

• Attorney Jun Pil Ha Joins LEE & KO

• Attorney Jang Hyuk Yeo (U.S. Licensed) Joins

LEE & KO

• Attorney Seung Hyeon Kim (U.S. Licensed)

Joins LEE & KO

• Attorney Soo Ryun Kim Joins LEE & KO

• Lee & Ko Hires 29 New Attorneys

• Academic and Professional

Associations/Activities

LEE & KO in the NEWS

• April, 4, 2012 The Financial News – [Lawyer in

the Spotlight] LEE & KO Attorney Jeong Hwan

• March, 28, 2012 The Financial News - [Lawyer

in the Spotlight] LEE & KO Attorney Chung

Hwan Choi

• March, 17, 2012 The Lawtimes - [Chinese Law

on China Investment] Governing Law

Provisions when Entering into a Contract with

a Chinese Company

• March, 17, 2012 The Lawtimes - Law Firms

Look to Enhance Service to “Satisfy the Needs

of Customers”

• Etc.

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Spring 2012 │ 1 www.leeko.com

Appraisal Right of a Shareholder that Failed to Provide Notice of its

Objection to the Merger Prior to the General Shareholder’s Meeting

On March 30, 2012, the Supreme Court held that, if the notice provided to shareholders for the

convening of the general shareholder’s meeting (for purposes of approving a merger) did not

contain information regarding the appraisal rights of shareholders and the procedures for

exercising such appraisal rights, then a shareholder may exercise its appraisal right even if such

shareholder did not notify the Company in writing of its objection to the merger prior to the

general shareholder meeting (Supreme Court Decision 2012 Ma 11, March 30, 2012).

Article 522(3) of the Korean Commercial Code (“KCC”) provides that a shareholder must have

provided the company with prior written notice of its objection to the merger in order for such

shareholder to exercise its appraisal rights; and Articles 374(2) and 530 require that content

regarding a shareholders appraisal rights, including procedures for exercising such appraisal rights,

be included in the notice to shareholders for the shareholder meeting being convened for approval

of the merger transaction.

The Supreme Court emphasized that Articles 374(2) and 530 are provisions aimed at protecting

the minority shareholders in opposition to mergers. The Court further stated that there is

significant possibility that a shareholder will not be able to exercise its appraisal rights in the

absence of instructions for such appraisal right exercise in the notice to shareholders. Therefore,

the Court held that, if a company failed to include such required content regarding appraisal rights

in the shareholder’s meeting notice, then a shareholder may still exercise its appraisal right even if

it did not provide prior written notice of its opposition.

The above decision is significant in that it makes possible the exercise of appraisal rights by

shareholders who did not provide prior written notice of their opposition (as required by the KCC),

if the company has failed to notify its shareholders of the appraisal right.

CORPORATE and M&A

If you have any questions regarding this issue please contact:

Kyu Wha LEE ∙ [email protected] ∙ 82-2-772-4321 / Sang Gon KIM ∙ [email protected] ∙ 82-2-772-4362

http://www.leeko.com/


LEE & KO Advises Samsung Electronics in the Restructuring of its

Display Business

Samsung Electronics established Samsung Display by spinning-off its LCD business on April 3,

2012, and is currently reviewing the prospects of a potential merger of Samsung Display with

Samsung Mobile Display or S-LCD.

Since the review stage of the LCD business spin-off, LEE & KO has been continuously advising

Samsung Electronics on this LCD business restructuring in an effective and timely manner.

This LCD business spin-off transaction has been given intense attention by the industry as it

concerns the establishment of the world largest LCD specializing company valued at KRW 22.7

trillion. By providing effective legal representation in this transaction, LEE & KO continues to

display its strength and deep expertise in the M&A field.

CORPORATE and M&A


Kyu Wha LEE ∙ [email protected] ∙ 82-2-772-4321 / Sang Gon KIM ∙ [email protected] ∙ 82-2-772-4362



The Monopoly Regulation and Fair Trade Act Revised to Strengthen the Korea Fair Trade Commission

On February 27, 2012, the National Assembly passed the revised Monopoly Regulation and Fair

Trade Act (the “MRFTA”), which strengthens the authority of the Korea Fair Trade Commission

(the “Commission”), to be enforced starting June 22, 2012.

Noteworthy changes are as follows:

1. Spun-off companies liable for administrative surcharges (Article 55-3)

Prior to the revision, the MRFTA had been unclear as to whether the Commission could levy

administrative surcharges on a newly-established company spun off from the company in

violation of the MRFTA, and the Supreme Court had ruled negatively. Therefore, the spin-off

company was able to avoid paying the administrative surcharges. However, following the

revision, there is a clear provision, which allows the Commission to levy fines on (i) a company

from which the spin-off company is formed, (ii) a company established through a spin-off or

through a split and merger, and (iii) a company established through a merger between the

surviving company (from which the spin-off company is formed) and another company. Thus,

going forward, companies may not evade administrative surcharges through spin-offs.

2. Extension of the statute of limitations (Article 49)

Pursuant to the revision, the statute of limitations for KFTC’s disposition of a violation of the

MRFTA has been extended from 5 to 7 years from the date of conclusion of the violating act.

Moreover, once the KFTC investigation is commenced, the KFTC has 5 years thereafter to issue

orders for remedial measures or impose surcharges. This provision will be applicable starting

with the first case following the enforcement of the revised MRFTA regardless of whether the

alleged unlawful act itself had occurred prior to the enforcement date.

3. Increase in administrative surcharges for prohibited activities of enterprisers organization

(Article 28)

Consistent with the maximum administrative surcharge rate of 10%, which is applicable to

collusions that only involve business undertakings, under the revised MRFTA, collusions by

enterprisers organization may also be subject to a maximum administrative surcharge rate of

10%, rather than the previous maximum rate of 5%.



Yong Seok AHN ∙ [email protected] ∙ 82-2-772-4341 / Sung Man KIM ∙ [email protected] ∙ 82-2-772-4317



4. Clarification of the examination period in merger filling (Article 12)

Prior to the revision, the MRFTA did not contain a clear provision regarding the examination

period, and the provision prohibiting execution of mergers for 30 days (which may be extended

by up to 90 days, if necessary) following the filing of the pre-merger report had been interpreted

to grant the KFTC 30 days to process the report in practice. However, following the revision, the

KFTC will have 30 days (which may be extended by up to 90 days, if necessary) to notify the

results regardless of whether the merger filing was made before or after the merger. This

revision is expected to increase the foreseeability in the length of the examination period.

5. Criminal sanctions for physical interference with KFTC investigation (Article 66)

Prior to the revision, only an administrative fine was imposed on interference with investigation.

However, following the revision, the violent acts/language or intentional delay/obstruction of

entry may now be subject to a maximum imprisonment of 3 years or a maximum administrative

fine of KRW 200 million. Thus, companies should exercise caution so as not to raise the issue of

interference relating to KFTC investigations.






Enforcement of the Consent Order System

Pursuant to the revised Monopoly Regulation and Fair Trade Act (“MRFTA”) on December 2, 2012,

which includes the consent order system, the Korea Fair Trade Commission (the “KFTC”) has

issued the “Regulation of the Administration and Procedures of the Consent Order System”

(hereinafter, the “Regulation”) containing the detailed procedures and operational guidelines,

which has been effective since of April 1, 2012.

The consent order system allows the undertaking under investigation to settle the case upon

submitting suggestions for self-corrective measures. The detailed process of the consent order

system is as follows:

1. The undertaking may apply for the consent order proceeding at any time before the KFTC

deliberates on the case regarding an act that is not in clear/serious violation of the MRFTA

(e.g.,cartel) and does not require criminal sanctions.

2. The original committee (either Plenary Session or Subcommittee) for the assigned case then

decides upon whether to grant the application for the consent order proceeding.

3. Once the application is granted, the original KFTC investigation and deliberation process is

suspended and the KFTC officer consults the applicant to prepare a tentative consent order to be

reported to the chairman of KFTC. This tentative consent order may be revised for a period of 30






days or more upon the hearing of views and the discussion with interested parties, the

administration, and the Public Prosecutor General.

4. The original committee (either Plenary Session or Subcommittee) then confirms the final

consent order. However, if the undertaking fails to perform the final consent order, the KFTC

may impose compulsory performance money or cancel the corrective order.

5. For reference, the consent order may also be cancelled upon a subsequent finding of (i) a

substantial change in market conditions or other relevant factual circumstances or (ii) an

inadequacy or inaccuracy in the information furnished by the applicant for the consent order

proceeding. If the consent order is cancelled, the original investigation and deliberation process

would resume.

Under the consent order system, companies can save time and costs, as well as prevent negative

company image. In this regard, the KFTC has announced that it plans to actively employ the

consent order system, and the system is expected to be especially useful in the areas of restriction

on combination of enterprises and abuses of dominant position in the market.






Supreme Court Rules that Periodic Bonuses Paid Out Every Quarter

Constitutes Ordinary Wages

The Supreme Court held that bonuses periodically and uniformly paid out to the employee

constitutes ordinary wages (Supreme Court Decision, 2010 Da 91046, March 29, 2012).

While the Supreme Court has not changed its basic legal interpretation regarding ordinary wages,

the Decision is meaningful in that the court has finally recognized the ordinary-wage-nature of

periodic bonuses.

Ordinary wage refers to the wage periodically and uniformly paid for labor and serves as the basis

for calculation of allowances for overtime, night/holiday shifts, and paid/annual leave. Prior to the

Decision, the general interpretation was that bonuses, unlike basic salary, were not included in

ordinary wages and were therefore not considered in the calculation of overtime allowance, etc.

Moreover, the Ministry of Employment and Labor has also provided guidelines stating that

payments made under the name of “periodic bonuses” do not qualify as ordinary wages and has

been advising companies accordingly. Thus, in practice, the companies had a firm belief that

periodic bonuses did not qualify as ordinary wages.

However, such beliefs of the companies were shattered by the Decision and the practical effect of

the Decision is very significant, as the expansion of ordinary wages may cause huge amounts of

contingent liability for the companies.

Following the Decision, the Federation of Korean Trade Unions from the labor sector has shown

movement to prepare a large-scale lawsuit, and the companies appear to be preparing to change

their general practice of increasing bonuses, allowances, etc. without increasing the basic salary.

However, since the Decision does not recognize the ordinary-wage-nature of all bonuses, we would

need to determine on a case-by-case basis as to whether the payments are paid out periodically and

uniformly.

LABOR & EMPLOYMENT


Wan JOO ∙ [email protected] ∙ 82-2-772-4677 / Sang Hoon LEE ∙ [email protected] ∙ 82-2-772-4345



The Constitutional Court of Korea Rules the Labor Union Report

System Constitutional

The Constitutional Court of Korea held in a unanimous decision that “the provision of the Trade

Union and Labor Relations Adjustment Act, which requires that the establishment report be

rejected in the case that a staff, other than a laborer, is a member of the union,” is constitutional

(Constitutional Court Decision, 2011 Honba 53, March 29, 2012).

Upon the rejection of its establishment report for inclusion of a fired employee in 2009, the Korean

Government Employees’ Union (KGEU) petitioned the Constitutional Court of Korea for a reversal

of the rejection, and in doing so, claimed that the provision is unconstitutional.

The Constitutional Court of Korea ruled that “a labor union is an organization formed for the

preservation of the laborer himself, and the fact that a labor union may be established by fulfilling

the requisite conditions does not constitute ‘screening,’ which ‘permission’ involves.”

As such, the court ruled that “the system of rejecting the establishment report cannot be deemed

as a ‘license system for association’ which is unconstitutional,” and that “the establishment of an

insubstantial labor union should not be allowed simply upon the filing of a report to the

government office.”

LEE & KO has successfully represented the Ministry of Employment and Labor in the above case to

receive a judgment, which holds that the provision is constitutional.

LABOR & EMPLOYMENT


Wan JOO ∙ [email protected] ∙ 82-2-772-4677 / Sang Hoon LEE ∙ [email protected] ∙ 82-2-772-4345



Amendment of the ICNA and the Korean Government’s Plan to

Expand Restrictions on the Use and Collection of Resident

Registration Numbers

The Act on Promotion of Information and Communications Network Utilization and Protection of

Information, etc. (the “ICNA”) as amended will become effective on August 18, 2012.

The key changes are as follows:

1. Restrictions on the online use of the resident registration numbers (“RRNs”) (Article 23-2);

2. Notification of data leak or breach (Article 27-3);

3. Statutory expiry of a valid use period for personal data (Article 29.2);

4. Notification of uses of personal data and sensitive data (Article 30-2);

5. Data protection in the network/service planning or designing stage and appointment of a chief

security officer (Articles 45-2 and 45-3); and

6. Introduction of a personal data protection and management system (Article 47-3).

The purpose of the amendment is to improve the level of data protection and enhance the data

protection regime of Korea. Under the restrictions being placed on the collection and use of the

RRNs, the information and communications service providers (“ICSPs”) may not collect or use

RRNs of their service users, unless falling under certain limited exceptions. They must also

dispose of all collected RRNs in two years from the effective date of the amendment. Further, they

should be mindful of the enhanced data protection regime as summarized in points 3 and 4 above

– e.g., the obligation to dispose of personal data unused for a certain period of time (to be

prescribed) and the obligation to regularly notify users of the specifics of their uses of users’

sensitive data as well as personal data.

Details necessary for the implementation of the above changes – i.e., exceptions to the restriction

on the online use of RRNs, specific measures to be taken in relation to the disposal of personal data

upon the expiry of a valid use period, types of information to be provided in the notification of data

breach, the notification cycle and methods, and any other matters pertinent thereto – are yet to be

provided through subordinate regulations and related public notifications.

Especially, in relation to the restrictions on the use and collection of RRNs, on April 20, 2012, the



Kwang Bae PARK ∙ [email protected] ∙ 82-2-772-4343 / Yu Jin KIM ∙ [email protected] ∙ 82-2-772-4346



Korea Communications Commission (“KCC”), the Ministry of Public Administration and Security,

and the Financial Services Commission jointly announced a “Comprehensive Plan for Minimizing

Collection And Use of RRNs.” The regulators plan to apply the system for restricting use of RRNs

(currently applicable to business entities regulated by the ICNA) to public agencies and private

entities, as well.

(1)In the Data Collection/Use Stage

• As a general rule, the collection and use of RRNs are prohibited, unless otherwise permitted by

law or regulation or inevitable

• Alternative means for the verification of user’s identity must be provided, such as I-Pins, a

publicly certified identity verification system, mobile phone number, and the like, in lieu of

collecting or using the RRNs.

(2)In the Data Management Stage

• Starting from public agencies, personal computers for their personnel handling RRNs must be

segregated from the internet network, and the coverage of this requirement will expand to any

other entities in phases. It is also required to install software that can block RRNs included in a

post on any chatting/bulletin board within websites.

• In the case of subcontracting of the outsourcing of processing of RRNs under the Data

Protection Act (a.k.a. the Personal Information Protection Act), more enhanced protective

measures must be taken, and sanctions against violation of the foregoing measures will be

imposed.

(3)In the Stage of Responding to Intrusion

• The status of existing vulnerabilities – e.g., illegal sale and purchase of RRNs, id theft, forgery of

identification certificates and so on – must be examined. Constant monitoring of foreign-based

websites (including websites based in China) is required to prevent leakage of RRNs abroad.

(4)In the Ex Post Facto Stage

• Subordinate regulations to the ICNA will be amended, so that business entities from which

RRNs are leaked may be sanctioned by a penalty of up to 1% of their turnover and that, the

competent authority may (a) issue an order of suspension of work duties of a chief executive






officer who is liable for a tort relating to the RRNs, or (b) advise dismissal from his/her work

position.

Upon the amendment to the ICNA and subsequent legislations becoming effective, companies and

businesses collecting and using personal data, including RRNs, need to be prepared for the

changes to their business environment, paying keen attention to the specifics thereof.

For your information, the ICNA applies to “information and communications service providers”

(“ICSPs”) which are defined to be (i) commercial providers of information services (including

those provided by way of using a telecommunications service (e.g., Internet service) – typically,

online service providers (including content providers and application providers), or (ii)

telecommunications service providers (including facilities-based carriers, resale carriers and value-

added service providers).






Announcement of Expected Enactment of Amendments to Trust

System Provisions of the Financial Investment Services and Capital

Markets Act

On March 22, 2012, Korea’s Financial Services Commission (FSC) made an announcement

concerning certain amendments that are expected to be enacted with regard to the trust system

provisions of the Financial Investment Services and Capital Markets Act (FSCMA). According to

the announcement, the trust regulatory system will be reformed by, among other things,

expanding the scope of trust categories eligible to issue beneficiary certificates (which has up until

now been limited only to monetary trust assets) to allow the issuance of beneficiary certificates by

all types of trusts, including negative assets (debt) and security interest trusts.

The proposed amendments to the FSCMA are related to the recent amendment of the Trust Act

(expected to go into effect on July 26, 2012) and are intended to make the specific changes needed

in the trust related provisions of the FSCMA in order for the new trust system contemplated by the

amended Trust Act to become fully activated. The relevant changes planned for the trust-related

provisions of the FSCMA are as follows:

1. Expansion of Scope of Assets That Can Be Held in Trust

Under the revised Trust Act, the scope of objects that can be held in trust is now comprehensively

stated to be “assets.” Accordingly, even negative assets (debt) can be the subject of trust

arrangements, and such things as security interests and business operations are also expressly

included within the scope of assets that may be held in trust.

Pursuant to the expansion of the scope of eligible trust assets under the Trust Act, the proposed

amendments to the FSCMA include debt and security interests (i.e. interests in collateral) as types

of assets that may be held in trust. The FSCMA amendments have excluded “business operations,”

however, citing concerns about potential harm to investors, and negative impacts on the overall

soundness of trust business operations as reasons for such exclusion.

2. Introduction of Secondary Entrustment System

Previously, the Trust Act did not contain any express provisions or provide any clear guidance on

the issue of whether secondary entrustments [(i.e. a trust company’s entrustment of trust assets to

another trust company)] were permitted. This situation gave rise to a certain amount of confusion



Wonkyu HAN ∙ [email protected] ∙ 82-2-772-4383 / Hyunjoo OH ∙ [email protected] ∙ 82-2-772-4690



in the market. The amended Trust Act now provides that secondary entrustments are permitted,

so long as the trust beneficiary consents to such arrangement.

Accordingly, the proposed amendments to the FSCMA also provide that trust companies may

make secondary entrustments to other trust companies. Additionally, it should be noted that, in

order to protect investors, prevent confusion and ensure that rights and obligations related to the

management of relevant trust assets will be clearly defined, the proposed FSCMA amendments

prohibit any further re-entrustment of the trust assets by the secondary trust company to any other

trust company.

3. Expansion of Scope of Trusts Eligible to Issue Beneficiary Certificates

Previously, the Trust Act did not contain any provisions concerning the eligibility of trusts to issue

beneficiary certificates and the relevant provisions of the FSCMA have only permitted the issuance

of beneficiary certificates by money trusts. Under the amended Trust Act, however, provisions

have been added that allow for the issuance of beneficiary certificates by trusts in relation to all

types of trust assets.

The proposed amendments to the FSCMA also reflect this aspect of the amended Trust Act by

adding provisions allowing the issuance of beneficiary certificates for all types of trust assets.

However, the proposed amendments to the FSCMA impose certain conditions to protect investors

with respect to the issuance of beneficiary certificates, such as: (i) a requirement that the issuance

of beneficiary certificates by a trust company will be regarded as falling within the scope of

regulated investment dealer services and the issuing trust company will therefore be subject to the

same business conduct rules that apply to licensed investment dealers, (ii) a requirement that the

underlying trust assets be appraised (in accordance with the same appraisal standards that apply

to the valuation of fund assets) to determine the actual market price or fair value , and (iii) a

requirement that the total amount/price of issued beneficiary certificates will not exceed the total

value of underlying assets. Additionally, in order to promote greater transparency in financial

transactions and to take into account concerns with regard to loss and theft-related risks, as well as

related transaction costs, the proposed FSCMA amendments only permit the issuance of

beneficiary certificates in registered form and require that all issued beneficiary certificates be

deposited with the Korea Securities Depository.

The proposed FSCMA amendments summarized above completed the advance public notice period

of 40 days, which ended on May 5, 2012, and have been submitted to the Ministry of Government

Legislation.






More Demanding Documentation Standards for Securities

Registration Statement Concerning Derivatives Linked Securities -

Effective from March 1, 2012

The Financial Supervisory Service (FSS) has revised its Public Disclosure Documentation

Standards (PDDS), with the result that more demanding documentation standards, including

requirements for inclusion of more information concerning matters that may have a material

impact on investor decision making, will now be imposed in connection with the filing of Securities

Registration Statements (SRS) for derivatives linked securities. The new PDDS have been in effect

since March 1, 2012. In support of the new PDDS, the FSS and the Korea Financial Investment

Association (KOFIA) have worked together to prepare and publish guidelines for the preparation

of SRS documentation in relation to derivatives linked securities. The published guidelines, which

include illustrative documentation for specific types of derivatives linked securities, were also

made available on March 1, 2012 to coincide with the effective date of the new PDDS.

The new PDDS provide that SRS documentation submitted for derivates linked securities must

uniformly contain all such information and warnings as are reasonably necessary for investors to

make a well-informed investment decision, including such things as: (i) a statement that the

investor should carefully review the related investment prospectus and SRS (or, as applicable,

universal shelf registration statement) when deciding whether to invest; (ii) an explanation that

the financial product is a highly complex financial instrument and that the return on investment

can vary significantly depending on the price of underlying assets and that investment should only

be made pursuant to gaining a full understanding of the relevant investment risk factors; and (iii) a

warning to the effect that, since the rate of return on the investment will be determined by

redemption price calculations linked to the value of underlying assets, such rate of return and

related rights may vary due to a range of factors, including the nature of the underlying assets, past

price/value trends and changes in the management environment affecting such assets, etc., the

investor should gain a full understanding of such potential factors before deciding to invest.

Additionally, disclosures of relevant risk factors are now subdivided into four subcategories, as

opposed to the 3 categories (“price fluctuation risk,” “issuing company risk” and “other investment

risks”) that were used prior to March 1, 2012, to include “early termination/early redemption risks”

as a newly added risk disclosure subcategory. Furthermore, the disclosure instructions and the

amount of information required for each subcategory have become more detailed and demanding

than before.






With regard to underlying assets associated with derivatives linked securities, the previous PDDS

only required a simple statement to indicate what the underlying assets were. The new PDDS now

require the inclusion of detailed information concerning the underlying assets, including such

things as past price fluctuation trends, etc., with the result that the scope of information required

to be furnished concerning underlying assets has become considerably more demanding.

LEE & KO is now assisting various clients by reviewing documentation to be submitted and

providing advice as needed to help clients comply with the new PDDS.






Introduction of Reporting System for Massive Short Selling Positions

The Financial Services Commission (FSC) announced on March 14, 2012 that it would be

introducing a reporting system, by way of amendments to the Enforcement Decree for the

Financial Investment Services and Capital Markets Act, for massive short selling positions,

pursuant to which investors will be required to submit reports with data on their short selling

positions and changes in such positions whenever their short selling positions exceed a specified

level. Under the new system, the relevant reports will need to be filed to both the FSC and the

Korea Exchange (KRX).

Under Article 208, Paragraph 2, Subparagraph 3 of the amended Enforcement Decree, the

reporting system will apply to convertible bonds, bonds with warrants, participating bonds,

exchangeable bonds, equity securities, beneficiary certificates, derivatives linked securities,

depositary receipts relating to any of the foregoing and such other categories of securities as the

FSC may designate from time to time through appropriate public notification. According to the

FSC, the reporting system is needed due to the substantial impact that large short selling positions

can have on the overall stability of the securities market and the fairness of market pricing. Under

the new reporting system, a party who makes or intends to make massive sale orders that exceed a

certain level (as determined by the FSC) will be required to submit a report on the details of such

massive short selling position to both the FSC and the KRX in accordance with the procedure and

format prescribed by the FSC for such purpose.

While the above-mentioned amendment of the Enforcement Decree will establish the basis for

legally imposing such massive short selling position reporting obligation, the details of the specific

standards that will apply when the reporting system is implemented have not yet been determined.

For example, such matters as the level at which the reporting requirement will be triggered, the

timing of report filings and the reporting method and format, etc. are still under consideration and

the FSC is in the process of collecting opinions and analyzing analogous systems used in other

jurisdictions in connection with its preparation of the relevant standards and detailed

requirements, which will be reflected in the Financial Investment Business Regulations after the

FSC has made the relevant determinations. At present, the massive short selling position

reporting system is expected to be implemented sometime in the third quarter of 2012.

The FSC’s introduction of this new reporting system for massive short selling positions is seen as

an initiative by the FSC to improve the compatibility of Korea’s regulatory system with global

systems and, in particular, to align Korea’s regulation of short selling with internationally






recognized standards, such as the “Four Principles of Short Selling Regulation” announced the

International Organization of Securities Commissions (IOSCO).

In October 2008, pursuant to the onset of the global financial crisis of 2008, the FSC broadly

imposed a prohibition against the short selling of KOSPI and KOSDAQ securities, with the

exception a few categories of securities, such as ELW and ETF. Afterwards, beginning in June

2009, the FSC lifted the short selling restriction with regard to non-financial stock. Subsequently,

the FSC temporarily again imposed an across-the-board prohibition against the short selling of

KOSPI and KOSDAQ securities from August through November of 2011, after which the FSC for

the most part reverted to the less restrictive policy that had been in effect prior to August 2011. A

general prohibition against the short selling of financial stock has remained in effect since October

2008.






Enactment of the Green Building Creation Support Act

For purposes of setting a comprehensive and systematic foundation to vitalize green construction,

the Green Building Creation Support Act has been enacted and will be implemented starting from

February 2013.

A green building means a building which is highly efficient in terms of energy use and has a high

rate of new and renewable energy use while minimizing emissions of greenhouse gases. Pursuant

to the Green Building Creation Support Act, a basic plan and a development plan will be

established by the central and local governments in order to promote the construction of green

buildings. In addition, programs for green construction certification and energy efficiency rating

certification will be implemented in order to vitalize the construction of green buildings.

Furthermore, the total amount of energy consumption of a building will be set and regulated for

the goal of reducing greenhouse gases emitted from buildings.

In particular, under the Green Building Creation Support Act, an energy saving plan must be

submitted when constructing a building having over a certain size. In case a building is sold or

leased, the relevant contract must include an evaluation report on the energy efficiency rating of

the building. Any violation of such requirement may be subject to an administrative fine.

The enactment of the Green Building Creation Support Act has set the foundation for vitalizing

green construction and is expected to contribute to the reduction of greenhouse gases emitted from

buildings, which account for a quarter of all greenhouse gases emitted in Korea.

REAL ESTATE & CONSTRUCTION


Dong Eun KIM ∙ [email protected] ∙ 82-2-772-4397 / Chan Ik JANG ∙ [email protected] ∙ 82-2-2191-3014



Seoul Administrative Court Shut Down an Underqualified College

On March 13, 2012, the Seoul Administrative Court ruled that an order rendered by the Minister of

Education, Science and Technology (“MEST”) for closing down Sunghwa College, which was then

operated by Educational Foundation Serim Academy (“EFSA”) and dissolving EFSA, is enforceable.

(Administrative Court Decision, 2012 Da 326, March 13, 2012)

On August 1, 2011, under a decision resulting from a special audit, the MEST rendered a corrective

order, ordering EFSA to: (a) take disciplinary action against the ex-college president of Sunghwa

College operated by EFSA and its faculty members and staff, and (b) cancel grades awarded to its

students and graduates. However, most of the order was unfortunately not complied with by EFSA.

Thus, on December 16, 2011, the MEST finally ordered that Sunghwa College, with a 2,000 student

body, should be closed down and the EFSA should be dissolved, finding no possibility of

continuing ordinary academic affairs.

In response, EFSA then filed a petition for continuance, arguing that certain procedural

requirements for the decision were not satisfied, and that the decision was unlawful for the reason

of abusing or exceeding the MEST’s discretion. However, the Seoul Administrative Court did not

accept EFSA’s arguments and held that the MEST’s decision was within its discretion, when taking

into consideration a number of violations by Sunghwa College of applicable laws and regulations

and the MEST’s order, and also the circumstances that Sunghwa College’s academic affairs were

rather improperly conducted. To the contrary, the court finds that the stay of the effectiveness of

the order would incur greater damages to students and faculty members and staff.” As a result, the

Court dismissed the case, finding that there was no chance that EFSA would win the main lawsuit

on the issue of effectiveness of the MEST’s decision, and that it could not recognize the urgent

needs for the stay of execution of the order.

Recently, the MEST announced a new policy to weed out underqualified colleges on a consistent

basis in order to protect students’ rights to proper education and to enforce a standard minimum

quality of college education. This case is significant in that the Court has affirmed the validity of the

MEST’s first-ever decision to close down a college pursuant to the above policy.

DISPUTE RESOLUTION


Yong Suk YOON ∙ [email protected] ∙ 82-2-772-4360 / Sung Woo LIM ∙ [email protected] ∙ 82-2-2191-3008



The Supreme Court en banc Issues a Unanimous Decision in a Patent

Suit

On January 19, 2012, the Supreme Court en banc issued a unanimous decision finding that “even if

an invalidation action against a patented invention is still pending, if it is clear that the patent will

be invalidated on the basis of obviousness, barring any special circumstances, an infringement

action or an action for damages based on such patent shall be deemed a patent misuse, and

therefore, not permitted” (Supreme Court Decision, 2010 Da 95390, January 19, 2012).

It is undisputed that a court seized of an infringement matter has the power to deny patent rights if

the patent lacks novelty. Prior to the recent decision; however, there has been continuing

discussion on whether the courts seized of patent infringement matters have the power to decide

on the non-obviousness of patents. The courts were divided by two views: (i) “for a patent that is

novel but obvious, the infringement court does not have the power to deny the patent rights before

a separate invalidation proceeding is concluded” (Supreme Court Decision, 91 Ma 540, June 2,

1992; Supreme Court Decision, 97 Hu 2095, October 27, 1998; Supreme Court Decision, 97 Hu,

1016, 1023, and 1030, December 22, 1998; and Supreme Court Decision, 98 Da 7209, March 23,

2001); and (ii) “a court seized of an infringement matter may decide on whether there is a clear

ground for invalidation based on obviousness, and in presence of such clear ground for

invalidation, an infringement action based on such patent is deemed a patent misuse and barring

any special circumstance, such action is not permitted” (Supreme Court Decision, 2000 Da 69194,

October 28, 2004). The recent decision is significant as the Supreme Court en banc has

unanimously decided that even before an invalidation action is concluded, a court seized of an

infringement action has the power to decide on the validity of a patent based on non-obviousness.

This recent decision effectively quashes former precedents. The decision empowers courts to

dismiss an infringement case for patent misuse, if a clear case of invalidation based on obviousness

exists. However, it remains to be seen as what will be considered a clear case of invalidation based

on obviousness. It would be important to see how subsequent cases develop in this regard.

INTELLECTUAL PROPERTY


Jae Hoon KIM ∙ [email protected] ∙ 82-2-772-4440 / Young-Mo KWON ∙ [email protected] ∙ 82-2-772-4446



LEE & KO Recognized as a Leading Law Firm by “Chambers Asia 2012” in All Practice Areas LEE & KO was recognized as a leading law firm by the leading legal market surveyor, Chambers

and Partners, in its publication “Chambers Asia 2012” in all practice areas.

“Chambers & Partners” is one of the most widely recognized directories of the legal profession, and

the current ranking has reconfirmed LEE & KO’s leadership in the legal field.

AWARDS and APPOINTMENTS • Chang Hee Suh, an attorney at LEE & KO’s Litigation Practice Group, has been appointed as a

new member of the National Electricity Monitoring Committee of the Ministry of Knowledge

Economy on February 1, 2012.

• Ji Young Lee, an attorney at LEE & KO’s Capital Market Practice Group, has received an award

in the capital market field at the Client Choice Awards hosted by the International Law Office

(ILO). The ILO Client Choice Award is highly recognized and the recipient of the award is

selected by a vote of corporate attorneys who work for companies that are members of the

Association of Corporate Counsel (ACC), which boasts more than 2,000 members.

• Hun Ko, an attorney at LEE & KO’s Capital Market Practice Group, has been appointed as an

advisor to the Entrepreneur Guarantee Evaluation Committee of the Korea Housing Finance

Corporation on February 27, 2012.

• Mee Hyon Lee, an attorney at LEE & KO’s Tax Practice Group, has received an Award from the

Ministrvy of Strategy and Finance in commemoration of Taxpayer Day, which was March 5,

2012.

• Young Mo Kwon, an attorney at LEE & KO’s Intellectual Property Practice Group, has been

appointed as a member of the Special Committee for the Improvement of Intellectual Property

Dispute Resolution System of the Presidential Council on Intellectual Property on March 7,

2012.

• Young Jae Cho, an attorney at LEE & KO’s Corporate Practice Group, has been appointed as a

member of the Livelihood Products Safety Technology Research Committee of the Korean

Agency for Technology and Standards on April 2, 2012.

AWARDS and RECOGNITIONS


Jae Hoon KIM ∙ [email protected] ∙ 82-2-772-4440 / Sung Woo LIM ∙ [email protected] ∙ 82-2-2191-3008



LEE & KO Published ‘LEE & KO Pro Bono Report’

On February 1, 2012, LEE & KO published ‘LEE & KO Pro Bono Report’, which includes the

introduction to various pro bono activities by LEE & KO members. That is, 131 attorneys from LEE

& KO participated in pro bono activities in 2011, spending a total of 2,671 hours on pro bono work.

In addition, 75 attorneys have been appointed as members of the Pro Bono Committee and are

currently participating in various pro bono activities including litigating on behalf of refugees,

providing legal advice to various groups such as the disabled, employees from overseas, workers in

the transportation business sector and people from North Korea, and establishing a “one school

one legal counsel” system. They also serve as mentors for teenagers and provide legal advice to

teenager support groups such as the Open Door Social Welfare Center.

LEE & KO Sponsors ‘Family Concert’ Organized by the Social Welfare

Society

LEE & KO sponsored the ‘Family Concert’ held on March 16, 2012, organized by the Social Welfare

Society. The concert was held to foster the independence, and aid in the nurture of children, of

single mothers. Actress Se-A Kim hosted the concert and cellist Kyu-Sik Kim played Munus

Ensemble.

When LEE & KO held its 4th Christmas Bazaar in December 2011, it donated the entire funds

raised from the event to the Social Welfare Society, which used the money to organize this ‘Family

Concert’.



LEE & KO NEWS



Attorney Jin So Joins LEE & KO Jin So joined LEE & KO on March 2, 2012. Previously, he worked as a public prosecutor for 16 years. He served in various prosecutor’s offices, including the Special Investigation Division of the Seoul District Prosecutor’s Office and the Central Investigation Division of the Supreme Prosecutor’s Office. He was in charge of cases regarding secret fund and accounting fraud as well as finance & tax related cases. Based on his vast experience, he is now part of LEE & KO’s Litigation & Arbitration Practice Group where he specializes in criminal defense, corruption prevention and compliance matters.

Attorney Young Jin Chung Joins LEE & KO

Young Jin Chung joined LEE & KO on March 2, 2012. He previously worked as a public prosecutor, where he investigated and prosecuted various matters including crimes involving intellectual property, finance and securities as well as tax evasion. With such extensive experience, he is now part of LEE & KO’s Litigation & Arbitration Practice Group where he specializes in criminal defense and general litigation relating to corporate, finance, and intellectual property litigation matters.

Attorney Heon Myung Jeung Joins LEE & KO

Heon Myung Jeung joined LEE & KO on March 2, 2012. Previously, he worked as a judge for thirteen years. He served in various courts, including Seoul District Court, Seoul Central District Court and Seoul High Court. Based on his prior experience as a judge, he is currently working as a partner in the Litigation & Arbitration Practice Group on commercial litigation (including corporate and international finance and securities) and issues related to the execution of warrants, criminal suits and auctions.



Attorney Seong Won Chang Joins LEE & KO Seong Won Chang joined LEE & KO on March 5, 2012. Since 1989, he served as a judge for 23 years in various courts, including as a chief judge in the District Courts, as a chief judge in the Seoul High Court, and as a professor of the Judicial Research and Training Institute. His primary practice areas are civil and criminal litigations in various legal areas, including intellectual rights and construction areas, and other various provisional relief cases such as civil provisional injunction.

NEW MEMBERS

LEE & KO MEMBERS



Attorney Young Hoon Jung Joins LEE & KO Young Hoon Jung joined LEE & KO in March 5, 2012. Since 1991, he served as a judge for more than 20 years in various courts including the Seoul Central District Court, the Seoul Eastern District Court and the Suwon District Court, where his practice was focused on civil, criminal (jury trials), administrative and family litigation. Based on his vast experience, he is expected to be heavily involved in all areas of the Litigation & Arbitration Practice Group at LEE & KO.

Attorney Byeong Jun Son Joins LEE & KO

Byeong-Jun Son joined LEE & KO on March 5, 2012. Before joining the firm, he was a chief judge at the Daejeon District Court, a research judge at the Supreme Court (Taxation), and a judge at the Seoul Administrative Court. Based on his experience and expertise, at LEE & KO, he is practicing in the field of taxation, handles disputes and litigations related to customs and international taxation and tax investigation, and provides general tax counseling.

Attorney Jun Pil Ha Joins LEE & KO

Jun Pil Ha joined LEE & KO on March 5, 2012. Before joining LEE & KO, he served as a judge for six years in various courts, including Chuncheon District Court and Suwon District Court. While at court, he handled a variety of civil, administrative, criminal and domestic relations cases. Currently, he specializes in litigation and corporate advisory. His practice areas include general civil litigation, general administrative litigation, corporate litigation, criminal litigation, family law litigation, and litigations related to customs, trademarks and customs clearance.



Attorney Jang Hyuk Yeo (U.S. Licensed) Joins LEE & KO Jang Hyuk Yeo, a US attorney, joined LEE & KO on March 12, 2012. Prior to joining LEE & KO, he was an associate at the Hong Kong office of Cleary Gottlieb Steen & Hamilton, where he has gained substantial experience in capital markets and M&A. He graduated from Columbia Law School in 2005 and is a member of the State Bar of New York. He is currently working in the Corporate and M&A Practice Groups of LEE & KO, and specializes in the areas of M&A, corporate governance, foreign investments, joint ventures and other general corporate matters.

LEE & KO MEMBERS



Attorney Seung Hyeon Kim (U.S. Licensed) Joins LEE & KO

Seung-Hyeon Kim joined LEE & KO on April 2, 2012. Prior to joining LEE & KO, he worked as an in-house counsel for Samsung CNT Corporation, Hanwha Group and Hanwha Engineering and Construction Corporation where he experienced various legal issues concerning construction, project-financing, international arbitration and international litigation. He has a special expertise in international construction contract negotiation including EPC contracts. He is a currently working in the Construction, Project Finance and International Arbitration & Cross-Border Litigation Groups of LEE & KO.

Attorney Soo Ryun Kim Joins LEE & KO

Soo Ryun Kim joined LEE & KO on May 1, 2012. Previously she worked at Allen & Overy in Paris. She graduated from Seoul National University School of Law and Northwestern University School of Law. She is a member of LEE & KO’s Corporate and Anti-Trust & Competition Practice Groups, where she handles various matters including antitrust litigations in court as well as cases that are being investigated by the Fair Trade Commission. She has provided legal advice to many companies in Korea relating to corporate and anti-trust issues.

LEE & KO Hires 29 New Attorneys

On February 1, 2012, LEE & KO hired Sang Woo Kim, Ji Hyeong Park, Ji Hye Park, Sung Hoon Shin, Dong Hyun Yoon, Ru Ree Lee, Sang Min Lee, Jin Hee Lee, Uni Chang and Hae Won Han, all of whom have completed the courses at the Judicial Research and Training Institute of the Supreme Court of Korea in 2012, and also Byung Wook Kam, Hye Weon Kim, Byung Ho Son, Hyun Ah Song, Min Young Lee, Hyung Joon Lee, Shin Jung, Young Joo Cho, Inho Choi and Jeong Yoon Choi, all of whom have graduated from Law Schools. On April 2, 2012, LEE & KO also hired Woo Jae Kim, Hong Yoon Kim, Hee Woong Lee, Byong Ki Chung, Seung Ho Choi, Jae Baek Choi, Gang Cheol Choo, Seung A Hyun and Jee Sub Hwang, all of whom have served as Judge Advocate Officers.



LEE & KO MEMBERS



ACADEMIC and PROFESSIONAL ASSOCIATIONS/ACTIVITIES

•Attorney Young Soog Na delivered a presentation at the ‘2012 Economics

Symposium

Attorney Young Soog Na of LEE & KO’s Anti-Trust & Competition Practice Group delivered a

presentation on February 22, 2012 at the ‘2012 Economics Symposium’. Ms. Na’s presentation

was titled “Regulation for Maintaining Lowest Resale Price.” She also gave a presentation at the

“Fair Trade Case Study Society” on March 29, 2012 on “Fair Trade Regulation and Internet

Shopping Mall” to the employees of the Fair Trade Commission and to the researchers at the

Korea Fair Trade Mediation Agency.

• Attorney Min-ho Lee delivered lecture at the Korean Fair Trade Commission

Attorney Min-ho Lee of LEE & KO’s Anti-Trust & Competition Practice Group delivered a lecture

on February 24, 2012 about “Issues Regarding the Abuse of Dominant Position in the Market and

Recent Case Study” for the Korean Fair Trade Commission’s education program for new and

transferred employees. He also gave a lecture on “Unfair Joint Activity” on March 23, 2012 to

employees from various companies for the educational program held by the Korean Fair

Competition to prevent unfair joint activities. Additionally, he gave a lecture titled “Methods to

Improve the Regulation for Corporate Collusion” for students at Seoul National University’s Anti-

Trust Course on March 26, 2012. He also gave a lecture titled “Ways to Prevent and Analyze the

Violation of the Fair Trade Act” on April 20, 2012 to employees of Samsung Group’s Compliance

Department. He also delivered a lecture about “Unfair Joint Activity” for the employees of

Samsung C&T Corporation’s Machinery and Plant Division.

•Attorney Hwang Sung Park delivered a special lecture for the Executive MBA Course

at Seoul National University Business School

Attorney Hwang Sung Park of LEE & KO’s Intellectual Property Group delivered a special lecture

on March 30, 2012 for the Executive MBA Course at Seoul National University Business School.

His lecture was titled “Introduction to U.S. Patent Litigations.”

•Attorney Chan Ik Jang delivered a lecture at the Korean Bar Association

Attorney Chan Ik Jang of LEE & KO’s Construction Practice Group delivered a lecture at the

Korean Bar Association on “Bill on Urban Development Regulating Reconstruction and

Redevelopment.”



LEE & KO MEMBERS



LEE & KO in the NEWS

• April, 4, 2012 The Financial News - [Lawyer in the Spotlight] LEE & KO Attorney Jeong Hwan

• March, 28, 2012 The Financial News - [Lawyer in the Spotlight] LEE & KO Attorney Chung Hwan

Choi

• March, 17, 2012 The Lawtimes - [Chinese Law on China Investment] Governing Law Provisions

when Entering into a Contract with a Chinese Company

• March, 17, 2012 The Lawtimes - Law Firms Look to Enhance Service to “Satisfy the Needs of

Customers”

• March, 15, 2012 Yonhapnews - City of Seoul Appoints Seung Hun Hahn to Head the Advisory

Committee

• March, 6, 2012 Newsis - LEE & KO Publishes its First ‘Pro Bono Report’

• March, 4, 2012 Seoul Economic Daily - Law Firms in Korea See Significant Increase in

Transactions




http://www.fnnews.com/view?ra=Sent1201m_View&corp=fnnews&arcid=201204040100034230002072&cDateYear=2012&cDateMonth=04&cDateDay=04

http://www.fnnews.com/view?ra=Sent1201m_View&corp=fnnews&arcid=201203270100225360013088&cDateYear=2012&cDateMonth=03&cDateDay=27

http://www.lawtimes.co.kr/LawNews/News/NewsContents.aspx?serial=63117

http://www.lawtimes.co.kr/LawNews/News/NewsContents.aspx?serial=63004&kind=AN

http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=102&oid=001&aid=0005555941

http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=102&oid=003&aid=0004372757

http://economy.hankooki.com/lpage/society/201203/e20120304171525117980.htm

Documents

ContentsOn February 27, 2012, the National Assembly passed the revised Monopoly Regulation and Fair Trade Act (the “MRFTA”), which strengthens the authority of the Korea Fair Trade