Case Studies
[Platform] Veat Songdo-yeong Attorney, Awarded "Day of Science and Information Communications" Commendation by the Prime Minister
Law firm Veat partner lawyers have been recognized for their contributions to the growth of startups through the establishment and spread of the regulatory sandbox system and have received the Minister of Personnel and Labor Commendation at the ‘2020 Science & Telecommunications Day’ ceremony. For more details, please refer to the Platum article by clicking the image. Thank you. Law firm Veat.
[Startup_Investment] Please consult with a lawyer and review the business plan template.
Law firm Veat provides legal advice related to M&A, investment, and more. It works with several VCs and accelerators, including Altos Ventures, Uri Technology Investment, Hanwha Investment & Securities, and Spring Camp. Therefore, Veat analyzes legal issues related to investment from diverse and professional perspectives, rather than simply preparing legal documents and performing legal risk analysis based on the numerous cases it has handled to accumulate experience and know-how. It also provides various consulting services to ensure customer satisfaction by deriving the best alternatives for the identified problems. Law firm Veat ranked 5th in the Bloomberg 2020 annual league tables M&A legal advisory category based on transaction volume. Partner Attorney Seong-ho expressed gratitude to its partner firms for trusting and collaborating with Law firm Veat in 2020 despite the difficult circumstances due to the COVID-19 pandemic and its 3-level increase to the 5th rank. Although it is a new law firm among those ranked in the league table, it provides differentiated legal advice related to investment, M&A (takeover and acquisition) based on abundant experience and expertise. Key business cases handled by Law firm Veat in relation to investment and M&A are as follows. Please contact Law firm Veat if you need more detailed advice. CJ O Shopping's acquisition of Artwork Korea (Fun Shop): During the acquisition of Artwork Korea by CJ O Shopping, Veat provided Deal Sourcing, process design, and related legal advice, representing CJ O Shopping. Investment by Altos Ventures and SoftBank Ventures in Hyperconnex: During the investment by Altos Ventures and SoftBank Ventures in Hyperconnex, Veat represented Altos Ventures, providing legal advice among others. Thank you. Law firm Veat Dream
[Consulting] Providing comprehensive consulting for the operation of application services.
Law firm Veat conducted legal review regarding application service operations for A’s application and personal information handling policies, personal information collection and provision, etc., and identified personal information flowcharts to provide comprehensive consulting. A operated an application service that allows users to check and store their personal and medical information on the application. In this process, they contacted Law firm Veat to review legal limitations related to personal information handling policies, personal information collection and provision, and to establish a systematic personal information system. Veat meticulously analyzed A’s application service and prepared an terms of service complying with the “Act on Protection of Consumer Rights in Transactions” (Electronic Commerce Act), the “Act on the Regulation of Contracts” (Contract Act), “Personal Information Protection Act,” and the “Act on Promotion of Information and Communication Network Utilization and Protection of Information.” It also reviewed legal limitations and provided detailed guidance on solutions. Furthermore, it identified personal information flowcharts and offered comprehensive consulting by analyzing consent phrases at each personal information collection, the timing and cases for receiving personal information collection and provision consent, and analyzing the compliance with the “Fourth Basic Personal Information Protection Plan”. Recently, the Personal Information Protection Committee announced the “Fourth Basic Personal Information Protection Plan,” which contains core tasks for personal information protection. This aims to effectively improve the consent system, which had previously only been implemented formally, and plans to allow individuals to continuously access information on how their personal information is used from the information controller’s website & application. In response, companies receiving personal information and consent are paying more attention to ensuring the legality of personal information processing, and the need for personal information advisory services is also increasing. The Personal Information Protection Team of Law firm Veat provides optimal consulting, including preparing personal information processing consent forms and personal information handling policies, responding to on-site inspections by the relevant government agencies, crisis management for breaches and leaks, and GDPR compliance, as well as internal policy development and training. Please contact Law firm Veat if you need assistance with personal information processing, personal information collection and consent, or personal information consulting. Contact Law firm Veat Thank you. Law firm Veat
[Stock Options] 5 Things to Watch Out For When Granting/Exercising Stock Purchase Options
Stock options (stock purchase options, stock option) explained? A stock option (stock purchase option, stock option) is a system in which company executives are granted the right, at the time determined at the time of granting the stock option, to purchase the company’s own shares or newly issued shares at a price decided at the time of granting the stock option. When executives are granted stock options, they have an economic incentive to work hard for the company. Because the value of the company’s shares increases, the value of the shares they will receive also increases. Ultimately, the company can use stock options to secure the long-term commitment of key personnel while providing them with future growth potential. In particular, in smaller companies, because the company’s performance is closely linked to the overall performance of the company, stock options can be a powerful motivator. Regarding non-listed companies and venture companies, please note the 5 key points to consider when granting or exercising stock options as described above! 1. The number of stock options and the recipients are determined by law. Korean stock option laws specifically detail the requirements for stock options. Stock options are essentially a system for creating future shareholders. Because they can be misused, they can undermine the interests of existing shareholders and destabilize the company’s corporate governance. According to the current Commercial Act, the company must first meet the following requirements under the Commercial Act before issuing stock options. ① The company must specify in its articles of association that it can issue stock options. ② The stock options should only be granted to executives of the company who have contributed to or can contribute to the company’s establishment, management, and technological innovation. ③ When the granted stock options are exercised, the newly issued shares or own shares issued by the company should not exceed 10% of the company’s total issued shares. ④ The exercise price, which determines the economic benefits gained from exercising stock options, should be the higher of the actual value of the shares at the time the stock options were granted and the face value. 2. Venture companies can issue more stock options and grant them to a wider range of people. If the company qualifies for the Special Act on Venture Companies (hereinafter referred to as the “Venture Companies Act”), it can use stock options more flexibly. Because companies need to use stock options to manage their business, the Venture Companies Act stipulates that companies can issue up to 50% of the total issued shares as stock options, and can also grant stock options to non-employee technical and management experts. In particular, if the company meets certain requirements stipulated in the Venture Companies Act, it can grant stock options at a strike price lower than the market price at the time of granting the stock options. This has allowed companies to offer employees greater economic compensation through stock options, which has, in turn, increased the effectiveness of stock options. 3. Generally, the stock option issuance must be resolved by a shareholder meeting. Just because the number of stock options and the recipients have been determined in accordance with legal requirements and the decision of the shareholder meeting, the company cannot immediately issue stock options. Before issuing stock options, the company must pass a special resolution at a shareholder meeting to determine the recipients of the stock options, the method of granting them, the exercise price, and the exercise period. A special resolution at a shareholder meeting refers to a resolution in which at least 3/2 of the shareholders present at the shareholder meeting vote in favor of the proposal, and at least 1/3 of the total issued shares also vote in favor. However, in the case of venture companies, if certain requirements are met, they can decide on the issuance of stock options through a board of directors instead of a shareholder meeting. When deciding to issue stock options through the board of directors, the company must carefully review the Venture Companies Act and the Commercial Act. 4. The exercise period of stock options is also regulated by law. Although the company grants stock options and the shareholder meeting resolves them, the executive cannot immediately exercise the stock options after a few months to buy the company’s shares at a low price. Under the Commercial Act, executives can only actually exercise stock options after they have been employed by the company for a period of at least 2 years. The purpose of stock options is to motivate executives to work hard to increase the value of the company’s shares. If executives can exercise stock options too early, this purpose cannot be fully achieved. Furthermore, the 2-year employment requirement is the minimum required period of employment stipulated by law. If a company stipulates that executives can exercise stock options three or five years after the granting of stock options, the stock options can only be exercised after that stipulated exercise period has elapsed. 5. The effect of early termination or resignation of stock option employees. What happens if an executive who was granted a 2-year stock option to A Company resigns at B Company after 1 year? As seen above, only those who have been employed by the company for a period of at least 2 years can exercise stock options. Therefore, the executive who resigns at B Company can no longer exercise the stock option. However, what if the resignation is voluntary instead of a layoff? In the case of venture companies, if the company grants stock options to an employee and the employee dies or retires within 2 years after the grant of the stock option, or due to the employee’s own responsibility, the employee can still exercise the stock option. However, in the case of non-venture companies, if the employee retires or resigns due to a reason not attributable to the employee within 2 years after the stock option is granted, the employee cannot exercise the stock option. Therefore, when an executive receives a stock option and is laid off within 2 years, the executive will not be able to exercise the stock option and will lose the expected profit. If you need legal advice regarding stock options and stock purchase options, please contact Law Firm Veat. Thank you. Law Firm Veat
[Legal Advice] Providing legal advice regarding domain ownership following A's AD server separation for IT services provided.
Law firm Veat provided legal advice regarding the ownership and usage rights of AD server domain in connection with the separation of subsidiaries due to the merger and acquisition of A Company, a system software development and supply company. An AD server is a database that stores all resources on a network in a central repository; it is a kind of integrated management service. A Company was a subsidiary of B Group (conglomerate), but after the merger and acquisition, it was separated from B Group, and it wanted to confirm whether it could continue to use the B Group AD server domain it had been using before the separation. Accordingly, Law firm Veat thoroughly reviewed the current laws, including the Internet Address Resource Act (‘Internet Address Law’), the Trademark Act, and the Act on Prohibition of Unfair Competition and Protection of Trade Secrets (‘Prohibition of Unfair Competition Act’), and provided advice regarding the feasibility of using the AD server’s domain and future circumstances. Law firm Veat is a law firm specializing in IT, consisting of IT-focused lawyers selected by the Bar Association and lawyers from engineering backgrounds, and it provides advice to numerous IT companies. Based on professional understanding of IT technology and corporate legal affairs, it provides specialized legal services regarding domain ownership and usage rights disputes and domain changes during mergers and acquisitions. Please contact Law firm Veat if you need legal assistance related to server domain. Thank you. Law firm Veat Dream
[Consulting] Providing legal advice related to SAFE investments
Law firm Veat provides investment agreements including SAFE investment agreements, Investor Agreements, and employment agreements, as well as legal advice related to Veat’s client, a foreign company A, which provides augmented reality (AR) service applications. SAFE stands for ‘Simple Agreement for Future Equity’. It refers to a conditional equity purchase agreement. Originally conceived in Silicon Valley, USA, it is currently widely used as a venture capital system. It invests in startups with difficulty determining the value of companies and, after subsequent investments are made, decides the equity ratio of the initial investor according to the valuation of the subsequent investor. This is particularly beneficial for early startups, allowing for quick and concise investments, and avoiding disputes related to valuing the company from the company’s perspective, and securing investments. Veat prepared the SAFE investment agreement and provided legal review opinions regarding Investor Agreements and Employment Agreements for A’s client, a company whose personnel will subsequently enter into employment agreements with A, following the SAFE investment agreement with A. Recently, revisions to the ‘Act on Promotion of Venture Investment’ (Venture Investment Promotion Act) and the ‘Special Act on Promotion of Venture Companies’ (Venture Company Act), which explicitly codify the SAFE investment method, have been enacted and are approaching implementation. Given that the SAFE investment method has been adopted in line with global standards, we hope to promote private venture capital and individual angel investments, and we look forward to the growth of various early startups and venture companies with potential. Law firm Veat provides differentiated legal advisory services related to M&A (Mergers & Acquisitions) regarding numerous companies, based on its abundant experience and expertise. If you need professional legal advice regarding SAFE investment, conditional equity purchase agreements, investor agreements, and employment agreements, please contact Law firm Veat. Thank you. Law firm Veat Regards
[Startup Lawyer] Procedure for Establishing a Corporation
“Commercial Code” classifies ‘corporation’ into five types: merger companies, limited liability companies, joint-stock companies, corporations, and limited liability companies. Due to differences in registration procedures for each company type, it is advisable to determine the purpose of the business when establishing a corporation. Among ‘corporations’, ‘stock corporation’ is advantageous in terms of capital concentration, and if the business fails, the shareholders’ liability is limited. Therefore, it is the most frequently used type for registration under the “Commercial Code”. A ‘stock corporation’ is a company where capital is divided into shares, and shareholders become shareholders through the acquisition of shares, with shareholders being liable only within the limits of the acquisition price of shares (limited liability). Stock corporations can be established through two methods: founding establishment and public offering. Most stock corporations are established using the founding establishment method, where the founding member takes over all the initial shares. A founding member, is the person who signs the initial charter at the end of the initial charter of a stock corporation. There are no special restrictions on the qualifications of the founding member, so natural persons as well as legal entities can be founding members. Therefore, even if the person is a minor, they can become a founding member by being represented by a legal representative or obtaining consent; this is also possible for foreigners and foreign legal entities. In summary, when establishing a stock corporation, shareholders become founding members, and as the number of founding members is not restricted, it is possible to establish a company with one person. However, since there must be a director or auditor who performs the role of the report examiner, the minimum number of people actually required for establishing a stock corporation is considered to be two. Law firm Veat is handling corporate registration and establishment procedures for startups, and based on its extensive experience in establishing numerous stock corporations, it provides differentiated legal services, from drafting the charter, according to the establishment purpose of your company. If you need assistance with corporate establishment, please contact Law firm Veat. Thank you. Best regards, Law firm Veat.
IT specialized law firm, Law firm Veat
Law firm Veat specializes in Venture and Technology. Veat has been striving to be a trusted partner providing the most suitable legal services to technology-based companies since its establishment in 2015. Veat boasts lawyers with deep understanding of IT and legal knowledge. Based on this expertise, Veat resolves legal disputes faced by IT companies by quickly and accurately identifying client needs. Innovative IT companies are consulting with Veat on legal issues, and actively pursuing lawsuits with a deep understanding of technology and experience. Veat’s experience and understanding of IT businesses are well reflected in the firm’s lawyers. Partner Attorney Cho Seong-ho, a graduate of Seoul National University’s Department of Computer Science, passed the 50th Judicial Examination and completed the 42nd Judicial Training Program. He has accumulated a significant amount of legal advisory and litigation experience based on his in-depth understanding of technology and his business insights gained through his extensive network in the IT industry. Partner Attorney Baek Seung-cheol, recognized as an “IT Specialist Lawyer” after passing the rigorous review of the Korean Bar Association’s Professional Division Review Committee, has also handled numerous cases related to personal information protection and infringement incidents. He provides preventive training on personal information protection and infringement incidents for various companies and public institutions. Attorney An Il-won, Senior Attorney, graduated from Yonsei University’s Department of Engineering and Computer Science and worked at Naver Corporation’s Search Development Center. He researched and developed the Decision-Making System for Search Engine Rankings (Search Engine Ranking System) and Distributed Database. He also participated in the ACM-ICPC Korean Regional Final Round, placing 7th (Silver Award) in the world’s largest and most competitive coding competition. He’s currently a member of the Open Source Software License Expert Community of the Korean Copyright Commission, and leverages his technical understanding of software and intellectual property to resolve legal issues. In 2019, Veat provided the following key advisory cases related to IT: ● Provided legal advisory to A, a company operating major portals and communities, regarding the feasibility of web crawling. ● Provided legal advisory to D, a company operating a virtual currency exchange, regarding the possibility of “Bitcoin Unfair Gain Recovery”. ● Provided legal advisory to H, a manufacturer and supplier of video software, during its investment process by Venture Capital firm R. ● Provided legal advisory to E, a website solutions company, regarding “Copyright Infringement” regarding similar sites operated by F. ● Provided legal advisory to S, a program development outsourcing company, regarding “Unpaid Development Costs for Programs”. ● Provided legal advisory regarding “Legal Response Strategies for Unlicensed Copying and Plagiarism” and other multiple cases. The following are representative winning cases provided by Veat in 2019: ● Successfully obtained an acquittal for Q, a company specializing in IT system development, in a case involving the infringement of trade secrets. ● Successfully reached a settlement after initiating a criminal adjustment procedure for V’s actions of deleting all data uploaded to its cloud storage service (web storage space). ● Successfully won the entire case including the counter claim against hardware and software manufacturing companies for W, a company operating in the manufacturing and retail of beauty tools, in a main case and counter case. Since its establishment in 2015, Law firm Veat has consistently provided legal support and advice regarding litigation and legal consultation related to new technologies leading the IT and 4th Industrial Revolution. New technologies often involve unfamiliar legal disputes that have not been previously known. Veat’s accumulated expertise in both IT and legal fields will be a great help in solving legal problems of innovative companies leading the new age. If you need legal advisory related to IT and advanced technologies, please feel free to contact Law firm Veat. Thank you. Law firm Veat Dream
[Consulting] Providing personal information consulting services to Company A operating a lodging business application.
Law firm Veat provided advisory services regarding the obligation of guaranteeing personal injury compensation liability for a service provision application operated by A company, which provides services to lodging businesses. A company’s application provides operational management services to lodging businesses, including ▲ product sales site and lodging business product synchronization services ▲ providing product brokerage services, during which “The Act on Promotion of Information and Communications Networks and Protection of Information” (Information Network Act) stipulates personal injury compensation liability guarantee obligation. The company sought to examine whether it was assuming this obligation. Following the amendment of the Information Network Act, 1) the revenue of the previous fiscal year exceeded 50 million won, 2) the number of users who store and manage personal information averaged more than 1,000 per day, and 3) information and communication service providers must join insurance or establish a reserve fund in order to guarantee personal injury compensation liability through information and communication methods. Accordingly, Law firm Veat conducted a comprehensive review of whether A company was assuming an obligation under Article 18 of 2 of the Information Network Act regarding its obligation to A company’s reservation users. Based on its experience providing legal advisory services to numerous IT startup companies, Law firm Veat provides professional advice by understanding the overall business. If you need legal advice regarding application services, such as compliance with current regulations, please contact Law firm Veat via contact. Thank you. Law firm Veat
[Consultation] Drafting of Sales Transfer Agreement and Agreement on Transfer of Status.
Law firm Veat prepared and provided a sales transfer agreement and a resolution on the transfer of contractual status based on the request of A, a software company providing internet • mobile services. A, hoping to create synergy, intended to acquire a new online service. Accordingly, Veat conducted a comprehensive review regarding the essential requirements for a significant sales transfer as stipulated in the Korean Commercial Code and case precedents, and provided a sales transfer agreement. Furthermore, Veat provided detailed explanations of the procedures required for a sales transfer in a separate document, as A plans to establish a subsidiary, B, and proceed with a sales transfer. Therefore, Veat also drafted a resolution on the transfer of contractual status from A to B, as part of the sales transfer agreement. Law firm Veat possesses extensive legal advisory experience related to sales transfer agreements, business transfer agreements, and M&A, and provides assistance to minimize legal risks. If you require professional legal advice regarding sales transfer agreements, including sales transfer agreements and resolutions on the transfer of contractual status, please contact Law firm Veat. Thank you. Law firm Veat.