On February 15, the Fair Trade Commission approved a merger of the country’s top cell phone provider with the No. 2 broadband Internet provider, with a few conditions. You can read (more…)
Category: Commercial Business
Can a Representative Director Of a Company Donate Company’s Assets to Other Legal Entity For Which He’s Serving As Its Representative Director Simultaneously Without a Consent By the Board Of Directors?
According to the Korean Commercial Act, a transaction between a director and a company shall acquire an approval by the board of directors(Article 398 of the Commercial Act). This is for the purpose of preventing the director from using his status in engaging in a transaction of the company leading to promoting his or a third party’s interest and causing damages to the company and its shareholders.
Here comes the question: if the general meeting of shareholders adopts a resolution ratifying an interest-conflicting transaction which had not yet been approved by the board of directors, the transaction can be validated ex post facto?
The Supreme Court denied it in its Decision 2005Da4284 Delivered on May 10, 2007.
In this case, Mr. Choi Soon Young, who at that time served as the representative director of Daehan Life Insurance Co., Ltd(the plaintiff) and the president of the Shindonga Educational Institute(the defendant), had donated about 18,000,000 USD to the defendant on behalf of the plaintiff company.
The Supreme Court held that “unless there are special circumstances where there should be the consent of all shareholders or that the approval is stipulated in the articles of incorporation as the right of the shareholders’ meeting, the approval of an interest-conflicting transaction between a director and the company shall be deemed to be subject to an arbitrary decision by the board of directors, so if an interest-conflicting (more…)
Korean Supreme Court’s Ground-Breaking Decision Regarding “Unfairness” in the Abuse of Market Dominating Position in POSCO Case
The Monopoly Regulation and Fair Trade Act of Korea(herein after the “Act”) prohibits certain types of act as a market dominating enterpriser’s act of abusing its status(for example, a transaction refusal act). However the Act requires the existence of “unfairness” in market dominating enterpriser’s act. So there has been a dispute with regard to how to determine the existence of “unfairness”.
This case is the first Supreme Court’s decision on that key issue in anti-trust law where POSCO refused to supply hot rolled steel coils to a local company. The Supreme Court held that “unfairness should be acknowledged only where a transaction refusal act can be deemed as perpetrated with intent or objective of maintaining or reinforcing monopolistic status at the market, i.e., influencing a market order artificially by restricting a free competition at the market, and with the evaluation that the refusal act is likely to have anti-competition effects from the objective point of view”.
Also the court held that “the party alleging a market dominating enterpriser’s act of abusing its status must prove that the transaction refusal has the intent and objective as an act likely to cause effects of suppressing a competition (more…)
Korean Court Finds the Head Of Korea’s Lone Star Operation Guilty in KEB Case
On February 1, the Seoul Central District Court found Mr. Paul Yoo, the head of U.S. private equity fund Lone Star’s South Korean operations (Lone Star Advisory Korea) guilty of manipulating the stock price of a credit card unit of KEB. Mr. Paul Yoo was sentenced to five years in jail and ordered to be immediately detained. Also the court ordered KEB and LSF-KEB Holdings SCA, a Belgium-based unit which holds Lone Star’s stake in KEB, to pay 25 billion won ($26.50 million) each in fines, saying both secured unfair profits as a result of the stock-rigging. Lone Star said it would appeal.
It was the first court verdict in a long-running legal battle between South Korean prosecutors and Lone Star’s South Korean operations. This case is important because it could affect British-based bank HSBC’s plan to pay $6.3 billion for a majority stake of KEB, a deal which is pending regulatory approval.
But the regulatory Financial Supervisory Commission said it would delay a decision on Lone Star’s status as a top shareholder in KEB and on approving a sale of the bank until all legal issues over the fund are resolved. Actually Lone Star is fighting back to the Korean prosecutors in 2 legal trials. This case is one part of them, and the other trial involves a former finance ministry official and (more…)