Case Studies
[Consultation] Review of whether esports mobile platform services are illegal.
Law firm Veat provided legal advice regarding the legal risks related to the mobile platform service of Company A’s esports game ahead of its domestic launch. Company A aimed to minimize the risks by conducting a preliminary legal review regarding whether the esports mobile platform service had gambling elements ahead of its domestic release. Accordingly, Veat thoroughly grasped the provided service and examined it in detail, focusing on ▲The Act on Promotion of Competition and Fairness (“Competition Act”) violations, ▲The Act on Special Acts and Criminal Punishment of Special Circumstances (“Special Acts Regulation Act”) violations, and ▲The Act on Criminal Punishment, including the crime of gambling facilitation, to determine the possibility of being punished, ▲The Act on Promotion of Game Industry (“Game Industry Act”) regarding whether the “game” or “gambling game” within the designated terms falls under the regulations of the law, and provided a report. Veat focused on reviewing areas that could be problematic due to violations of regulations in order to provide legal advice regarding the gambling elements of the service. Even if a business or service is conducted overseas, there is a possibility of being regulated according to relevant regulations, and further, there is a possibility of facing criminal penalties. Therefore, the advice of an expert with extensive experience in the relevant field is needed to minimize legal issues. Law firm Veat provides legal advice to minimize legal issues and ensure the stable growth of its clients based on its experience in legal review related to various businesses and services. If you need legal advice regarding game, esports, and mobile platform services, please contact Law firm Veat. Thank you. Law firm Veat.
[Registration] Fines Imposed Due to Default Registration? Check Mandatory Change of Registration!
When operating a corporation, there are frequently situations where you need to file registrations after the initial establishment registration. When you are busy running the company, it's easy to miss essential registration items that arise repeatedly. However, if you miss a corporate registration, you may have to pay a maximum of 500,000 won in fines? When the items listed on a Corporate Registration Certificate of Proof are changed or a reason such as corporate dissolution and liquidation occurs, you must apply for corporate registration within 2 or 3 weeks from the date the change occurs (depending on the reason). If the application deadline is missed, a fine of up to 500,000 won will be imposed –
[Consulting] Providing legal advisory services related to overseas direct investment reports and other matters required during the Flip process.
Law firm Veat provided legal advice related to securities acquisition reports and overseas direct investment reports, as well as other relevant legal counsel during the flip process involving Flip (Flip). A Corporation, a company specializing in developing and supplying AI-based software, sought to conduct a flip – the process of establishing a foreign subsidiary and converting it into a parent company for the domestic subsidiary. During this flip process, existing shareholders of the domestic subsidiary transferred their shares as capital to acquire new shares of the foreign subsidiary, leading to a request for legal advice from B, a former shareholder. Upon conducting the flip, the composition of shareholders would remain the same in the foreign entity, but the legal domicile of the parent or holding company would change to the foreign country, which creates favorable conditions for receiving investment from overseas venture capital firms (Venture Capital, hereinafter referred to as VC), and it is beneficial for companies established with a focus on overseas expansion from the outset, and it is easier to comply with the laws of the country of establishment. However, in the case of the flip, cooperation with overseas affiliated company's legal jurisdiction, there may be many cases where cooperation with foreign law firms is required, and it is necessary to strictly comply with procedures under ordinances such as the Foreign Exchange Transactions Act, so the help of experts with abundant practical experience is needed. Veat carefully reviewed the transaction structure of this flip, considered relevant ordinances and the opinions of the relevant ministries, and provided contracts for changes in capital structure, such as stock exchange agreements and share issuance agreements, as well as contracts for preserving and transferring shareholder rights, and provided share valuation advisory services, and conducted securities acquisition reports and overseas direct investment reports to domestic regulatory agencies. Recently, according to a report released by the Financial Supervisory Service on April 1, 2020, individuals and companies frequently fail to understand their reporting and notification obligations under the Foreign Exchange Transactions Act, leading to penalties, warnings, and criminal investigations by the prosecution. Therefore, it is necessary for financial consumers to pay particular attention.
[Investment] Have you checked these things before investing your company overseas?
On April 2, 2019, the Financial Supervisory Service announced ‘Status of Violations of the Foreign Exchange Transactions Act in 2019 and Consumer Precautions.’ Among the 1,103 total violations, violations related to Foreign Direct Investment accounted for 602 cases, or 54.6%. Furthermore, a review of violations of mandatory requirements reveals that failure to report new registrations accounted for 51.5% of the total, indicating that transaction parties are not fully aware of the reporting obligations. Due to a lack of knowledge of the reporting and reporting obligations under the Foreign Exchange Transactions Act, there are many cases where individuals receive penalties or warnings, or even face prosecution, due to violations of the Foreign Exchange Transactions Act. Therefore, special attention is required from consumers. STEP 1. Confirm the content of reporting and reporting obligations Under the current Foreign Exchange Transactions Act, individuals and corporations (parties to foreign exchange transactions) must report to the Governor of the Bank of Korea or the President of a foreign exchange bank in advance when making overseas investments or other foreign exchange transactions. In the case of Foreign Direct Investment, reporting obligations exist for each stage of the transaction (acquisition, disposal, etc.) even after the initial reporting, so caution is advised. STEP 2. Confirm precautions based on whether the transaction goes through a bank When making capital transactions through a bank, you should inform the bank of the purpose and content of the transaction and receive accurate guidance on reporting and reporting obligations under the Foreign Exchange Transactions Act before proceeding with overseas remittances, etc. Conversely, capital transactions that do not go through a bank, such as equity contributions, contract modifications, gifts, and offsets, often involve cases where there is no actual movement of funds, making it difficult to receive assistance from the bank's foreign exchange department. Therefore, special care is required. STEP 3. Confirm major violation cases 1. Acquisition of Overseas Securities Foreign investor A, several years ago, invested approximately 10 million won in a Korean company through a block trade and attempted to receive funds from the sale of the acquired shares at 80 million won, but the bank blocked the withdrawal due to the absence of reporting on the investment case. → Penalty imposed ▶ 「Foreign Exchange Transaction Regulation」 Article 7-32: A non-resident must report to the Governor of the Bank of Korea when acquiring securities from a resident. ▶ 「Act Promoting Foreign Investment」 Article 5 (Reporting of Foreign Investment) ① A foreigner (defined as including special relationships in accordance with Article 2, Paragraph 1, Clause 4(a)(2)) must, when making a foreign investment in accordance with the methods described in each item of Article 2, Paragraph 1, Clause 4, must previously report to the Minister of Trade, Industry and Energy in accordance with the rules prescribed by the Minister of Trade, Industry and Energy. 2. Foreign Direct Investment Resident A remitted 30,000 USD to a local subsidiary in Vietnam without disclosing that it was funds for foreign direct investment to the President of a foreign exchange bank. → Penalty imposed ▶ 「Foreign Exchange Transaction Regulation」 Article 9-5: A resident must report to the President of a foreign exchange bank when making foreign direct investment. For foreign investment companies or foreign investment enterprise, failure to properly complete the relevant reporting can lead to problems in proving investment funds. Law Firm Veat provides comprehensive advice, including advice on overseas investment, drafting related contracts, and obtaining legal approvals, based on its extensive experience in corporate investment advisory. If you need help interpreting the Foreign Exchange Transactions Act, the Act Promoting Foreign Investment, etc., regarding foreign exchange transactions, please contact Law Firm Veat. Thank you. Law Firm Veat
[Consulting] Providing legal consulting related to white labeling.
Law firm Veat provided legal advice related to white labeling in response to a request from A, a company providing IT services. ’White labeling’ refers to the fact that a company that manufactures products exists separately, but a company that handles distribution and sales attaches its own brand to the product and sells it. A requested that Veat draft a declaration specifying obligations such as statements and guarantees regarding the IP (intellectual property rights) of the solution developed by B, a collaborating company, concerning the launch of a solution branded with white labeling. Recently, as white labeling has become more active in industries such as manufacturing, investment, finance, and IT, the need for related legal responsibility and advice has also emerged together. Law firm Veat is a law firm specializing in IT, comprised of IT-focused lawyers selected by the Korean Bar Association and lawyers with backgrounds in engineering. If you need advice related to white labeling and IT company legal affairs, please contact Law firm Veat. Thank you. Law firm Veat.
[Consulting] Legal query and review on personal information related to A Corp, which provides location-based services.
Law firm Veat provides legal query and review services related to personal information and location information for ICT-based startup A, which provides location-based services. A was inquiring about all obligations that must be notified to location information subjects when implementing services that provide personal location information to third parties. In response, Law firm Veat reviewed ▲ items requiring consent from location information subjects ▲ items that must be disclosed ▲ location-based service terms of service, in accordance with the Location Information Protection Act. It provided legal advice. In the case of location-based services that provide location information to third parties, it is necessary to carefully review related regulations due to differences from standard terms of service. The personal information protection team of Law firm Veat is helping to provide lawful and safe services by technically analyzing and understanding the customer’s services to ensure compliance with relevant regulations. If you need legal and technical assistance to prepare for audits and other measures by the relevant ministry related to location-based services, please contact Law firm Veat. Thank you. Law firm Veat
[Personal Information] Revised Data 3 Act A to Z ③ What is the impact of the Data 3 Act revision on corporations?
The Data 3 Law’s amendment, along with the expansion of data usage scope, has led companies to focus on developing new services and opportunities for creating them. Compared to foreign companies like Google and Amazon, which are already conducting targeted marketing using big data, domestic companies had limited scope for personal information usage. Consequently, this data 3 law amendment is expected to provide a catalyst for domestic IT companies to develop new technologies, products, and services utilizing big data. Companies that currently hold personal information can convert some of it into anonymous information, reducing the burden of personal information management, or utilizing the information to conduct marketing strategies or customer data analysis without regulatory restrictions. While the Data 3 Law amendment has created a foundation for developing new industries through the activation of data usage and established a basis for using anonymous information without the consent of the information subject, ① When providing customized services targeting specific individuals, the legitimate processing of personal information must be ensured, such as obtaining the consent of the information subject; and, ② In the event of processing information for the purpose of identifying a specific individual based on anonymous information, a fine of no more than 3% of the total revenue (not including related revenue) can be levied; or, in cases where calculation is difficult, a fine of 400 million won or 3% of capital stock, whichever is higher. ③ The penalty for damages in the Promotion of Information and Communications Network Act has been increased to 5 times the existing limit of 3 times. Furthermore, the ‘Personal Information Committee’ has been unified into a single body, and it is expected that the Personal Information Committee will develop various guidelines in the future. Since the emergence of big data, managing personal information has become a new business for companies. Consequently, various data management projects and related contract work have increased. Given the legal basis for data usage established by this Data 3 Law amendment, data sharing and transactions between industries are expected to become established, so companies need to thoroughly prepare follow-up measures for activating the data economy. The Personal Information Protection Team at Law Firm Veat provides comprehensive support, from legal advice on personal information compliance, including drafting personal information protection policies and consent forms, to personal information processing appropriateness consultation and personal information protection system establishment consulting. Based on its accumulated experience and expertise, Law Firm Veat utilizes its proprietary research methodologies and checklists, along with various materials, to diagnose and analyze personal information protection policies currently in use by companies, and to suggest improvement plans. For companies pursuing new businesses and requiring comprehensive consultations on personal information protection, please contact Law Firm Veat. Thank you. Law Firm Veat
[MCN] Fair Trade Commission to Inspect Unfair Contract Terms of MCN Companies
The Fair Trade Commission (hereafter, ‘Fair Trade Commission’) plans to examine the terms and conditions of Multi Channel Networks (MCNs) in order to foster a healthy solo creator platform ecosystem. Recently, the Fair Trade Commission took action against unfair contract terms by reviewing the service terms of Company A, a 1인 media platform specializing in games, and imposing measures such as prohibiting user complaints, restricting unilateral contract termination clauses, considering personal information processing as blanket consent, and other business liability clauses. Through this correction, it plans to guarantee the rights of 1인 media platform users and exert efforts to prevent harm. (Related materials) MCN is an abbreviation for Multi Channel Network, meaning multi-channel network. As the size of the MCN industry market has gradually increased through SNS domestically and internationally, the related legal issues have also become diverse. In particular, the domestic solo creator market is projected to grow sharply from 3조 8,700억 원 (approximately $3.87 billion) in 2018 to 8조 원 (approximately $8 billion) by 2023, while the possibility of harm to users is also an issue. MCN businesses and related service providers need to quickly revise their terms and conditions and examine whether there are illegal contents in the service provision process before the Fair Trade Commission starts its review. Law Firm Veat’s Entertainment Team provides advice to businesses of various forms to enable them to enter the market safely and easily in line with these trends. ◆ Providing comprehensive consulting services to businesses providing online services such as e-commerce and telemarketing to comply with the Consumer Protection Act and the Promotion of Information and Communication Network Utilization and Information Protection Act, and the Act on the Regulation of Contracts. ◆ Performing the work of drafting various provisions, including user agreements, personal information processing policies, and consent forms, suitable for the content and type of service provided. ◆ Providing guidelines on compliance with regulations related to advertising for MCNs, influencers, etc. - Drafting a branded content guideline for Company A, an MCN Corporation. - Providing legal advice on new promotions for B Company, an Influencer Commerce Company. - If you are facing MCN contract revisions or are concerned about the legality of the MCN service model, please contact Law Firm Veat. Thank you. Law Firm Veat. Check the Fair Trade Commission’s press release.
[202004] Monthly Veat #4 - Legal Insight
https://stib.ee/Md82
[Personal Information] Revised Data 3 Law A to Z ② What parts of each law are changing?
In the previous installment, we examined the introduction of ‘anonymized information’ as a result of amendments to the Data 3 Act. We addressed provisions to allow businesses to utilize them by reducing the scope of ‘personal information’ in existing laws and not adding further information when it cannot be identified as a specific individual. This installment will examine the key provisions of the amended Data 3 Act. 1. Key Provisions of the Amended Personal Information Protection Act · Clearly defined the concept of personal information by establishing a framework of personal information, anonymized information, and anonymized information, and permitted processing of anonymized information for purposes such as statistical compilation, research, and public interest record preservation. · Businesses could combine data held by different companies through a specialized institution equipped with security facilities, as determined by presidential decree, and subject to approval from the agency, with the option to export the data after approval. · However, in the event of processing anonymized information or combining information aggregates, measures to ensure safety, as determined by presidential decree, such as preparing and maintaining records, were required; and prohibited specific individual identification attempts (with penalties for violation including criminal prosecution and fines). · The role of the Personal Information Protection Committee, previously divided among the Ministry of Public Safety and Security, the Broadcasting and Communications Committee, and the Financial Services Committee, was unified to strengthen its function as a control tower for personal information protection. 2. Key Provisions of the Amended Telecommunications Network Act · Revised similar and redundant provisions in numerous personal information-related laws, and established measures to improve governance for personal information protection. · Provisions pertaining to personal information protection within the Telecommunications Network Act were transferred to the Personal Information Protection Act, and the subject of regulatory and supervisory oversight was changed from the Broadcasting and Communications Committee to the Personal Information Protection Committee, with regard to online personal information protection. 3. Key Provisions of the Amended Credit Information Act · Introduced the concept of anonymized information to establish clear legal grounds for the legal basis for big data analysis and utilization. · Anonymized information could be utilized or provided without the consent of a credit information subject for purposes such as statistical compilation, research, and public interest record preservation. · Introduced provisions such as information consent grade, profiling response rights, personal credit information mobility rights, and strengthened information subject’s self-determination rights. · Expanded the penalty for unfair trade practices for personal credit information leakage from a punitive fine of 3 to 5 times to strengthen corporate responsibility. · Introduced numerous provisions related to big data activation, including the establishment of data-specialized institutions, data combination through data-specialized institutions, mandatory security measures for safe utilization of anonymized information, and strict post-release penalties for profit and improper re-identification. · Strengthened the position and function of the Personal Information Protection Committee and revised similar and redundant provisions in the Personal Information Protection Act and the Credit Information Act. · Introduced provisions related to regulation of credit information industries, MyData (MyData) industry introduction in the financial sector, etc. The public notice period for the revised enforcement regulations is from March 31st to May 11th. Due to coordination with relevant institutions, regulatory and legal review, and National Committee review, it is scheduled to be promulgated and implemented on August 5th. In addition, detailed procedures and specialized institution designation requirements for anonymized information combination, which are not included in the Personal Information Protection Act Enforcement Regulations, are scheduled to be announced for public notice in May. · The full text of the revised enforcement regulations can be viewed on the websites of the Ministry of Public Safety and Security, the Broadcasting and Communications Committee, and the Financial Services Committee: ‘Policy Materials/Legal Regulations/Public Notice’. · Thank you. Veat Law Firm.