Case Studies
[Consulting] Drafting and Review of Mobile Application Terms of Service - Law firm Veat
The business method of providing electronic commerce and reservation services through mobile applications has become a business method utilized by many people. In order to provide services to users and members through mobile applications, service terms and conditions must be written. Since the service terms and conditions play an important role in preventing potential legal risks by defining the rights and obligations of the company and the user, it must be written with content appropriate for the services provided by the company. Company A requested the writing of service terms and conditions that must be applied between Company A, which operates a mobile application for business styling services, and the application users and members. The corporate advisory team of Law firm Veat examined the application's services and recognized the characteristics of the services provided by the application and the method of service provision, and especially considered all the methods to legally provide the business styling service according to the current law, and wrote and provided the service terms and conditions for Company A. Thank you. Law firm Veat
[Advice] Legal advice regarding stock option grants
Startups often find it difficult to provide high salaries or similar financial compensation to founding members and key personnel. In such cases, stock options (right to purchase shares) can be a useful tool to attract key personnel. When stock options are granted to employees, the company may not be able to provide immediate large financial rewards, but can compensate them in line with the company's growth, and employees can be motivated to contribute to the company’s growth. Because stock options affect the company’s equity structure, the Commercial Code stipulates the requirements for their issuance. However, for startups and venture companies, if certain requirements are met, they can grant stock options with more relaxed issuance requirements through the “Special Measures Act for Fostering Venture Companies” (hereinafter referred to as the Venture Business Act). Company A inquired to Law firm Veat whether the company could set the exercise price at a value (par value) lower than the market price of the company's shares when granting stock options. Veat, noting that the recently amended Venture Business Act provides an exception that allows for the setting of an exercise price at a value lower than the market price under certain conditions, found a method for granting stock options utilizing this provision and delivered it to Company A. Through Veat's advice, Company A was able to issue stock options at a value lower than the market price so that core developers could receive greater rewards.
[Consultation] Consultation regarding reporting procedures when issuing overseas parent company stock as incentive
A, a global startup with a parent company in the United States and a subsidiary in Korea, wanted to provide its Korean subsidiary’s employees with incentives in the form of shares of its US parent company. In this case, from the employees’ perspective, they would be acquiring shares of a foreign company, and A needed to confirm whether separate reporting or licensing procedures were necessary when paying incentives. Law firm Veat informed A that, in principle, when a Korean (resident) acquires shares of a foreign company, a securities acquisition report must be submitted to the Bank of Korea, and guided A on the principal reporting obligations and that such reporting obligations have several types of exceptions. Veat determined that, considering the number and type of shares of A's US subsidiary, and whether it is a listed company or a foreign investment company, it would not qualify for the reporting exceptions stipulated in the Foreign Exchange Transaction Act and related enforcement decrees and rules. Therefore, it informed A that if the overseas parent company's shares are to be paid as incentives, the employee receiving the incentive must personally submit a securities acquisition report, and provided detailed guidance on the preparation of necessary documents and procedures. Thank you. Law firm Veat
[Advisory] Providing Legal Guidance on Posting Online News Articles
Online internet articles are easily accessible to anyone using the internet, and it is very easy to copy or save the full text. Therefore, many people post the full text or links to articles written by news companies on internet homepages, communities, blogs, and SNSs and share them. However, if many internet users upload posts in this way and distribute internet articles for the public to see in the same way, there is a high probability of legal problems. News articles can also be protected by the current copyright law as works, except for specific cases, and may constitute copyright infringement depending on the form of posting. Copyright infringement acts such as unauthorized copying may be subject to criminal punishment under the current copyright law, so it is very important to pay close attention. Company A posted an article related to Company A written by a reporter from media company B on the Company A homepage bulletin board, but received a copyright infringement notice from media company B and inquired to Law firm Veat about how to deal with it. In response, Law firm Veat referred to the copyright law, Supreme Court precedent, and related legal theories to determine whether the newspaper article posted by Company A was subject to copyright and the possibility of Company A’s posting action violating the copyright law, and provided Company A with legal guidelines that it should follow. Thank you. Law firm Veat
[Consulting] Review of Copyright and Terms of Service for SNS Service
A company was preparing to launch an SNS service where fans of entertainers could create and share information, images, and videos about stars, and communicate with each other. In this process, A company determined that there was a possibility that copyright infringement disputes would arise between users and copyright holders when users create and modify images and videos of entertainers, and that A company itself could be held responsible. Accordingly, A company entrusted Law firm Veat with investigating whether A company could be held responsible for copyright infringement by users in various service usage situations, and simultaneously entrusted them with drafting terms of service that would allow freedom from such legal responsibility. Veat comprehensively analyzed the exemption requirements for online service providers in accordance with copyright law, and the exemption requirements for information and communication service providers under the Information and Communication Network Act, and provided a summary of the measures that A company should take in service operation. In addition, they drafted terms of service that clearly specify the areas of responsibility for users and A company in the event of copyright infringement within A company’s service, to prevent unnecessary disputes in advance.
[Consultation] Review of the legality of ad-blocking functionality in apps
Company D planned a project (OO project) to include a feature in D's app that removes advertisements and other distractions when users view news, allowing them to focus on the content. D inquired with Law fir Veat regarding whether removing advertisements from the media's website in this way violates relevant laws and regulations. In response, Law fir Veat researched the current status of ad-blocking software, which has recently been problematic in ad tech, along with litigation cases in the United States and Germany, and domestic and international legal scholarship, to examine recent trends related to this issue. Furthermore, Veat researched relevant theories and lower court rulings regarding the possibility of violating Article 1(c) of the 'Act on Protection of Business Competition and Trade Secrets.' Law fir Veat provided legal advice on whether such a feature is illegal, based on these domestic and international research results and its prior experience in litigation and advisory services related to copyright law and the Act on Protection of Business Competition.
[Consultation] Review of the legal validity of email contracts
Currently, almost all business operations of companies are conducted via email and electronic documents due to reasons such as speed and convenience. However, in contrast, legal documents such as contracts are still commonly drafted as physical paper documents. Company A inquired about whether an email has the validity of a contract, as it wishes to enter into a contract with another company via email rather than using a standard contract form. In response, Law firm Veat reviewed the requirements for contract formation when entering into a contract via email, and the requirements for electronic documents, such as email contracts, to have the same validity as a standard paper document. We also provided information on relevant precedents and other information to allow Company A to consider legal aspects when entering into a contract. Thank you. Law firm Veat
[Advisory] Review of the possibility of granting stock options to employees of a subsidiary.
Startups often find it difficult to provide high salaries or similar monetary compensation to founding members and key personnel. In such cases, stock options (right to purchase shares) can be a useful tool to attract key personnel. When stock options are granted to employees, the company may not be able to provide immediate substantial monetary compensation, but can reward them in line with the company's growth, and employees can be motivated to contribute to the company's growth. Because stock options affect the company's equity structure, the Commercial Code stipulates the conditions for their issuance. However, for startups and venture companies, if certain conditions are met, they can grant stock options with more relaxed issuance conditions through the “Special Measures Act for the Promotion of Venture Companies” (hereinafter referred to as the Venture Companies Act). Fintech startup A inquired with Law firm Veat whether it could grant stock options on its parent company’s shares to the employees of its subsidiary. Veat, considering the provisions and legislative intent of the Venture Companies Act, clarified the conditions for granting stock options to the subsidiary's employees and then conveyed this information to A. Thank you. Law firm Veat
[Investment] P2P financial company Lendit attracts 100 billion investment from Altos Ventures 등으로부터. Law firm Veat
Leading domestic fintech company Lendit has secured 10 billion KRW in Series B investment from venture capital firms Yellowdog, Altos Ventures Korea, and Collaborative Fund, based on its high growth potential. As multiple investors jointly invested a large sum, the investors presented various investment conditions and demanded considerable authority over the company. In this process, Lendit aimed to harmonize the investors’ rights and its own rights. Law firm Veat accepted Lendit’s request and advised on the negotiation of investment conditions that could maximize the protection of Lendit's, the investee company, and the interested parties’ rights while integrating the demands of multiple investors. Also, to balance the rights of the Series Seed and Series A investors and the rights of this investment, Veat analyzed all of Lendit’s past investment contracts and prepared and provided data that could compare the rights of existing shareholders for each round based on key investment conditions. Furthermore, Law firm Veat designed a Term Sheet that would satisfy both the investors and Lendit and drafted the Series B investment contract and shareholder agreements based on it, and provided an amendment investment contract that modifies the rights of existing shareholders. Additionally, it prepared and provided English subscription agreements and English shareholder agreements that Collaborative Fund, located in the United States, would sign. Lendit and the investors in this investment smoothly coordinated the investment conditions based on the data and legal advice provided by Law firm Veat, and as a result, Lendit was able to successfully complete the Series B investment. Thank you. Law firm Veat
[Investment] Women's shopping mall collection service Zigzag secures 7 billion won investment
Law firm Veat provided legal advice in the process of Croaky.com, which operates the Zigzag service, working with Stonebridge, and successfully concluded this investment attraction. Croaky.com received its first investment of 3 billion won from Altos Ventures in April last year. Approximately one year later, it secured Series B investment, providing capital for stable domestic service operations as well as future overseas expansion. Croaky.com's Zigzag service (app) provides a service that allows users to view popular women's shopping malls in Korea at a glance. You can understand it as like Google for women's shopping malls. Launched in June 2015, it has currently surpassed 6 million downloads and boasts an average of 1.5 million users per month, demonstrating rapid growth. Law firm Veat will walk alongside Croaky.com as a partner growing together, and will support the success of Croaky.com and Zigzag. Thank you. Law firm Veat