Case Studies
Law firm Veat’s expert review regarding the departure of a co-founder and the execution of a stock acquisition contract
Law firm Veat received a request from a Web3 company (hereinafter referred to as "client") to review potential legal risks that may arise from the departure of one of the co-founders and to provide support in reviewing the stock purchase agreement. Law firm Veat protects the client from internal instability within the company and analyzed potential legal risks in the process of acquiring the shares held by the departing co-founder so that the client can proceed with the business smoothly even after the co-founder's departure. Specifically, we provided guidance on reviewing the content to prevent the possibility of disputes over shares or other rights to the company, even after the co-founder’s departure, especially in situations where a founding agreement has not been concluded. Also, Law firm Veat provided guidance on the obligation of non-competition and confidentiality, as the departing co-founder could inflict serious damage to the client based on the know-how accumulated in the former company, and detailed reviewed and explained the provision prohibiting defamation in case of a non-smooth departure. Elements to consider when a partner departs Most startups often begin without a founding agreement that explicitly states the allocation of shares or rights and obligations. In such situations, there is a high probability of disputes over shares or other rights after a co-founder departs, as there are no clear commitments between the co-founders. Furthermore, there is a possibility that the departing co-founder may start a new business in the same market or leak the former company's trade secrets to a third party, and the co-founder may also make malicious statements about the company and management. To prepare for such cases, it is essential to clearly state the valuation of the shares, the method of share transfer, and the method of payment in the share purchase agreement when acquiring the shares held by a departing partner. Also, it is necessary to draft a partnership agreement and include clauses on non-competition and confidentiality to prevent the departing partner from causing negative situations for the company in the future. It is also important to review legal measures to protect the company's reputation against negative statements made by the departing partner. Therefore, we recommend that startups receive a comprehensive legal review from a lawyer specializing in corporate advisory services before a co-founder departs, so that the business can continue stably even amidst significant changes. Law firm Veat provides optimized solutions to various legal issues faced by various startups and companies based on abundant experience and legal expertise in the startup field. In particular, Law firm Veat provides professional advice based on a deep understanding of legal requirements related to advanced technology industries such as IT, startups, and Web3. If you need a review of a founding agreement, a stock purchase agreement, or any other partnership agreements, please contact Law firm Veat. Thank you. Law firm Veat"
Location Information Act Violation Law firm Veat’s Customized Response Strategy
Law firm Veat performed the work of drafting and submitting a submission document regarding the advance notification of fines and corrective orders received due to suspected violations of the Location Information Act on behalf of a location information service provider (hereinafter "client"). The Act on the Protection and Use of Location Information (hereinafter "Location Information Act") stipulates legal obligations that location information service providers must comply with when collecting, using, and providing personal location information. If these are violated, the service provider may receive a fine, a corrective order, and in some cases, criminal penalties, making it a core legal provision that companies operating businesses utilizing location information must comply with. The client is a location information service provider, and was found to have violated the Location Information Act through an inspection by a government agency, and subsequently received advance notification of fines and corrective orders. Law firm Veat actively responded on behalf of the client by submitting a submission document to reduce the fine and revoke the corrective order. Law firm Veat’s Response Strategy 1. Active Cooperation in Fact-Finding Inspection Location information service providers must comply with various regulations, and smooth cooperation with regulatory agencies can act as a mitigating factor in future regulatory response processes. Law firm Veat demonstrated that the client had cooperated to the maximum extent possible with the regulatory agency’s fact-finding inspection, in an effort to secure a margin for fine reduction. 2. Emphasis on Corrective Measures for Reasons for Advance Notification It was clearly stated that the client had revised the location information collection and usage process to comply with the law, and had established an additional preventive plan. Through this, Law firm Veat demonstrated the client’s proactive improvement efforts, and induced the regulatory authorities to issue a more lenient disposition. 3. Presentation of Grounds for Fine Reduction and Legal Basis The law provides for provisions allowing for a reduction in fines under certain circumstances, and accordingly, Law firm Veat thoroughly reviewed the legal basis for fine reduction under the Location Information Act, detailed the client’s operational situation and past legal compliance records, and demonstrated the legitimacy of fine reduction along with legal basis. Violation of the Location Information Act can entail considerable legal liability in business operations, making prompt and systematic response essential. Law firm Veat provides customized legal advice to clients in such complex regulatory environments.
Commercial Advertisement Newsletters Safe Sending Guide
Law firm Veat received a request from AI data collection specialized company A (hereinafter referred to as “the client”) and drafted personal information collection and use consent forms and advertising information consent forms for newsletter distribution. Law firm Veat ensured the client understood that newsletters containing profit-seeking advertising information must comply with legal regulations, as they are an important marketing tool for overall business operations, and reviewed and provided guidance regarding whether the newsletter to be sent to the client falls under the ‘profit-seeking advertising information’ defined in the Information and Communications Network Act. Law firm Veat also supported the client in complying with appropriate consent and prior notification procedures that meet legal requirements. In particular, Law firm Veat advised the client that they must obtain explicit consent from recipients of advertising information before sending it, in accordance with the Personal Information Protection Act and the Information and Communications Network Act, and drafted personal information collection and use consent forms and advertising information consent forms to that end. What is profit-seeking advertising information? The ‘profit-seeking advertising information’ defined in the Information and Communications Network Act refers to all forms of information that companies provide for services, products, etc., to induce consumer purchases or increase corporate profits, regardless of the client’s voluntary information collection. It may be classified as such if it is aimed at generating revenue, even if it appears to be a simple provision of information. If a newsletter is periodically sent and used as a marketing tool to generate revenue beyond simple information provision, it may be classified as ‘profit-seeking advertising information.’
Is the specific virtual asset transaction support act of a virtual asset business operator illegal?
Law firm Veat performed legal consultation regarding whether the virtual asset business operator’s support for specific virtual asset transactions infringes upon domestic laws. Accordingly, Law firm Veat conducted in-depth reviews to determine whether the actions of the business operator violate the “Act on Reporting and Use of Specific Financial Information” (hereinafter referred to as the “Specific Financial Information Act”) and the “Act on Protection of Virtual Asset Users” (hereinafter referred to as the “Virtual Asset User Protection Act”). Review of the Specific Financial Information Act
Law firm Veat, Choi Sung-ho, Representative Attorney, Selected for Leading Lawyers 2024 Corporate and M&A Division
Law firm Veat’s Choi Sung-ho, representative lawyer, has been selected for 'Leading Lawyers 2024'. 'Legal Times Leading Lawyers 2024' spotlights professional lawyers who are active on the front lines of corporate law, selecting them by field and featuring them in the 'Legal Times 2024 Leading Lawyers Special Edition.’ It is comprised of lawyers who have excelled in various legal fields, with participation from major law firms and individual lawyers. Selection criteria include expertise in legal practice, performance, client evaluations, and recommendations from fellow lawyers, selecting trusted experts in the legal community. Law firm Veat’s Choi Sung-ho, representative lawyer, has been recognized for providing important legal advice in areas such as investment, M&A, foreign investment, venture & startup, personal information, and blockchain, which are key areas of corporate law, covering the entire M&A process, including drafting and negotiating investment and merger contracts and risk management, and has been selected for the 'Leading Lawyers 2024’ Corporate and M&A category. Particularly, representative lawyer Choi Sung-ho of Law firm Veat has been selected for the sixth consecutive year from 2019 to 2024, establishing his position in the Corporate and M&A field. Law firm Veat, centered on representative lawyer Choi Sung-ho, who has expertise in the Corporate and M&A field, assists with essential legal reviews and contract structuring when preparing for or expanding business through mergers and acquisitions, and has successfully led investment and M&A for numerous IT and startup companies, effectively resolving legal issues in complex merger and acquisition processes. Law firm Veat showed performance that ranked among the TOP5 in the Bloomberg and The Bell’s league table for the first half of 2024 M&A market, demonstrating Veat’s unique expertise in investment and M&A. If you need various investment and M&A legal advice based on investment and M&A consulting experience, such as large-scale deals, small and medium-sized M&A, investment attraction for startups and venture capital (VC), and joint investment, please contact Law firm Veat, and refer to the detailed contents of this article at Legal Times ([Legal Times Special Edition=Leading Lawyers 2024] Corporate and M&A). Thank you. Law firm Veat
2024.9.15. Revised Electronic Financial Transactions Act Implementation! New Risk Management Solutions for PG and Prepaid Business Operators
On September 15, 2024, the revised “Electronic Financial Transactions Act” (hereinafter "the Revised Act") came into effect, significantly strengthening regulations related to prepaid electronic payment means. This article introduces the main contents of the revised Electronic Financial Transactions Act and the changes companies should be aware of, and explores the implications. Strengthening of Prepaid Charge Protection Obligations (Revised Electronic Financial Transactions Act Article 25-2) One of the important changes in this revised Act is the establishment of prepaid charge protection obligations. The prepaid service provider must separately manage an amount equivalent to more than 50% of the prepaid charge amount as stipulated by presidential decree through a prepaid charge management institution, such as a bank, as stipulated by presidential decree. Furthermore, the prepaid service provider must keep the prepaid charge in a safe manner, such as through trust, deposit, or payment guarantee insurance. This protects the users' deposits from being seized, transferred, or provided as collateral by external parties. Failure to comply with the separate management obligation for prepaid charges may result in penalties and suspension of business. Strengthening of Prepaid Service Registration Criteria (Revised Electronic Financial Transactions Act Article 2, Article 28) According to the Revised Act, registration is exempt only when the outstanding balance of the prepaid electronic payment means is less than 300 million KRW and the total annual issuance amount is less than 500 million KRW. It has also refined the management of the amount required for guarantees or insurance for prepaid electronic payment means issued free of charge. Meanwhile, the reasons for exemption from prepaid service registration have been narrowed, so that registration is exempt only when issuing prepaid electronic payment means that are used only at a single merchant. That is, the exemption requirements are met only when the number of merchants is single, and accordingly, issuers of prepaid electronic payment means used at various merchants are required to fulfill registration obligations. Also, paper-based certificates converted electronically are also defined as prepaid electronic payment means and included in the scope of regulation. Along with this, the definition has been expanded to include prepaid electronic payment means used only by parent or subsidiary companies. Refund of Prepaid Charges (Revised Electronic Financial Transactions Act Article 19) Furthermore, the Revised Act has expanded the reasons for which consumers can receive a refund of prepaid electronic payment means. Companies must include in their terms and conditions that they must pay the full amount of the balance if they unilaterally change the usage terms of the prepaid electronic payment means or reduce the number of merchants. However, this may be excluded in exceptional situations such as merchant closure. Establishment of Prepaid Service Provider Behavior Rules (Revised Electronic Financial Transactions Act Article 27) The Revised Act newly adds behavior rules to protect users by the prepaid service provider. Accordingly, only prepaid service providers with a certain degree of financial soundness can issue prepaid electronic payment means at a discount or pay credit points to users, thereby limiting the provision of economic benefits to users. Companies providing electronic payment agency (PG) services or prepaid charging services need to prepare carefully before the expiration date of the prepaid service provider registration grace period (within 6 months before the effective date). If newly registering as a prepaid service provider, the necessary capital must be secured, related administrative procedures must be completed, and if the usage terms of the prepaid electronic payment means are changed or the number of merchants is reduced, a refund obligation may arise, so merchant contract conditions must be checked. Also, the prepaid charge management system should be checked to ensure that prepaid charges are kept safely through trust, deposit, or payment guarantee insurance methods, and the company’s comprehensive situation should be considered to reflect the requirements of the revised law. This revised Act strengthens the obligation for companies providing prepaid charge services to register as prepaid service providers and comply with legal requirements. Accordingly, companies operating points and similar services need to expedite the preparation of prepaid service provider registration procedures in accordance with the revised law, and the legal expert with deep understanding of the registration eligibility and legal requirements under the e-commerce related laws should carefully review the issue. Law firm Veat provides the latest legal advice based on in-depth analysis and interpretation of important legal changes such as the revised Electronic Financial Transactions Act, so that companies can minimize legal risks and continue stable business operations. Law firm Veat designs customized response strategies that reflect the specific business model and operating status of each company when providing legal advice, supporting electronic financial service providers to maintain business flexibility while complying with the law. Law firm Veat provides optimal legal solutions for companies pursuing both legal compliance and innovative growth, and will be a trusted partner to help them maintain safe and efficient operations even under new regulations. If you have any questions regarding the revised Electronic Financial Transactions Act, please contact Law firm Veat. Thank you. Law firm Veat
Game paid content refund lawsuit, victory through interpretation of the Electronic Commerce Act.
Law firm Veat represented a Metaverse game development company (hereinafter “Client”) and won in an e-commerce dispute, solidifying its position as a game-specialized law firm. The main issue in this lawsuit was whether refunds were possible for paid content purchased in a mobile game due to the game developer's non-fault game service interruption. The plaintiff, a game user, purchased paid content from the Client's mobile game and was using it when the game service was suspended due to a decision by the Game Management Committee, and the Client immediately provided a game (hereinafter “Modified Game”) reflecting the reason for the suspension to the game users. The plaintiff argued that a refund was possible under the E-commerce Act because the Modified Game or the paid content provided by the Client differed from the displayed/advertised content or the contract content. Furthermore, it emphasized that the plaintiff's refund request was a legitimate consumer right, considering the insufficient advance notice regarding the service interruption. Law firm Veat meticulously analyzed this case based on its specialized knowledge and experience in e-commerce and game-related matters. First, it argued that the game usage contract, which is a gratuitous contract, is not subject to the E-commerce Act, distinguishing it from the paid content purchase contract, which is a contractual one, and particularly emphasized that the service interruption due to the Game Management Committee's decision could not be attributed to the Client's fault. Furthermore, regarding the paid content purchase contract, it proved that the paid content was provided in accordance with the displayed/advertised content or the contract content, based on the fact that the same paid content usage was possible even in the Modified Game. As such, Law firm Veat successfully proved that the plaintiff's claim was without merit, and as a result, the court fully adopted the defendant's argument, judging that the suspension of the game service due to the Game Management Committee’s decision did not constitute the Client’s fault and that the plaintiff could continue to use the paid content identically through their existing account in the Modified Game, therefore it did not fall under the provision of Article 17(3) of the E-commerce Act, which stipulates that the goods are delivered differently from the displayed/advertised content or the contract content. Refund issues related to changes or interruptions of game services may frequently occur in the future, so this case can serve as an important precedent in e-commerce disputes arising in the game industry. Law firm Veat, as a game-specialized law firm that proactively responds to legal issues arising in the game industry and e-commerce, closely monitors legal changes that may affect game services, such as the Fair Trade Commission guidelines. Because these regulatory changes can significantly affect how game companies operate their businesses, Law firm Veat provides optimal legal advice to game companies so they can comply with regulations while achieving their business goals. In particular, Law firm Veat has extensive experience in IT legal advisory areas, such as the E-commerce Act, paid content refund issues, and game litigation, and provides in-depth advice on complex legal issues facing innovative technology companies like those in the Metaverse. Through this kind of legal advice, Law firm Veat supports its clients in successfully operating their game businesses. If you need the help of a game law specialist for operating your business, including paid content refunds, please contact Law firm Veat. Thank you. Law firm Veat
Law firm Veat, specializing in IT, wins software service lawsuit with IT expertise.
Law firm Veat successfully represented the defendant software development company (hereinafter referred to as "customer") in a lawsuit related to software service contracts. This case arose from a contract in which the plaintiff agreed to provide an integrated information system construction service to the customer. At the time of the contract, the plaintiff agreed to complete the system within a certain period of time in exchange for service fees and license fees. However, the plaintiff failed to complete the system on time due to insufficient development capabilities and frequent personnel changes, resulting in the customer terminating the contract with the plaintiff. However, the plaintiff filed a lawsuit claiming that the customer should pay the balance and additional development costs and labor costs even after the contract was terminated. The plaintiff argued that the customer demanded the development of features not included in the original contract, causing delays, and that the customer’s unilateral termination of the contract caused damage while the system was almost complete. In this lawsuit, Law firm Veat emphasized that the customer terminated the contract for a legitimate reason stipulated in the contract and refuted all of the plaintiff's claims. Specifically, it proved that the plaintiff failed to complete the system construction on time and that the system was in a state where the main functions did not operate normally. It also pointed out that there was a lack of objective evidence to substantiate the plaintiff's claims for additional costs and labor costs. Law firm Veat also argued and proved that the plaintiff did not properly request intermediate reports or inspections during the system construction process and that the plaintiff was terminated due to the failure to properly develop the system. Ultimately, the court ruled that the plaintiff could not claim the balance and additional development costs from the customer because the contract was terminated properly based on the facts proven by Law firm Veat, and the customer won the lawsuit in its entirety. How can we prevent software disputes? Software development contracts can easily lead to conflict during the development process if technical requirements and rights relationships are not clarified. To prevent these conflicts in advance, it is necessary to approach contract drafting and communication management with caution. The most important part of a software development contract is to clearly define the scope of development. Many development disputes arise from contracts where specific requirements are not clearly stated between the client and the developer, or contracts are written abstractly. To prevent this, the client should clearly define the desired functions, user interfaces, algorithms, and other details of the software and specifically reflect them in the contract. Also, as seen in the above case, it is necessary to document each stage of development with intermediate reports or intermediate inspections to determine whether each stage has been completed. Another important aspect of a software development contract is the ownership and assignment of rights of the deliverables. If it is not clearly defined who the copyright or source code of the software development results belong to, problems may arise in subsequent maintenance or improvement work. Especially, if the client does not clearly secure the rights to all or part of the software, additional costs may arise whenever modifications or improvements are needed, or in the worst case, the software may have to be redeveloped from scratch. Law firm Veat provides various legal services from contract drafting to litigation to prevent these problems in advance. Law firm Veat’s IT attorneys, who simultaneously understand complex technical elements and legal issues in the IT field, approach the technical and legal aspects of IT/software/data from multiple perspectives to provide more convincing evidence for the customer’s situation in court. If you need software development contract drafting and review, or software development related dispute resolution, please contact IT-specialized Law firm Veat. Thank you. Law firm Veat
[Law firm Veat TIP] Can apartment blueprints be recognized as copyrighted works?
Law firm Veat TIP team (Technology Intellectual Property) has contributed an article to Platum, a startup-focused media platform, covering copyright issues related to apartment interior design drawings. Generally, apartment design drawings may be difficult to receive copyright protection due to legal and architectural constraints that limit creativity. In this column, we have explained the requirements for apartment interior design drawings or golf course design drawings to be protected as works, namely the necessity of creativity. [This link] allows you to review this column. The column published by Law firm Veat TIP team has provided useful information to designers and architects who are curious about whether architectural works, including apartment design drawings, are eligible for copyright protection. Whether architectural works such as apartment design drawings are protected may vary depending on legal and architectural requirements, so it is important to have them reviewed in detail by a legal expert and protect your rights regarding your creations. Law firm Veat TIP team provides legal advice on copyright protection of apartment design drawings and other architectural works to support the rights of designers and creators. If you need legal advice regarding apartment design drawings and other architectural works, please contact Law firm Veat. Thank you. From Law firm Veat
When purchasing stocks with tokens, what is the obligation to report under the Foreign Exchange Transactions Act?
Law firm Veat received a request from domestic corporation A (hereinafter referred to as “client”) regarding a review of whether foreign exchange reporting is required when a foreign corporation pays and purchases shares of the domestic corporation in the form of tokens. The Foreign Exchange Transaction Act manages the flow of capital by requiring foreign exchange reporting when foreigners and foreign corporations acquire domestic assets. A non-resident acquiring securities, including stocks, in Korea requires a securities acquisition report to ensure that the inflow and transaction of foreign capital are properly managed and regulated. Regulations are evolving to include not only physical assets such as stocks and real estate, but also digital assets. When a foreign corporation acquires shares from a domestic resident, the acquisition of securities by a non-resident is, in principle, a subject for securities acquisition reporting under the Foreign Exchange Transaction Act. Therefore, when a foreign corporation purchases shares from a Korean resident, that transaction must be reported to the relevant authorities under the Foreign Exchange Transaction Act. However, it is necessary to confirm whether foreign exchange reporting is required even when paying a new type of digital asset, 'tokens,' as consideration. Tokens are a type of digital asset based on blockchain technology and are a kind of cryptocurrency or digital right that can perform various functions. Tokens are mainly issued on blockchain networks, and their value and purpose vary depending on the purpose of issuance. Tokens have characteristics different from traditional currencies or securities, which may make the scope of application of the Foreign Exchange Transaction Act unclear. Law firm Veat comprehensively analyzed whether the transaction is subject to securities acquisition reporting under the Foreign Exchange Transaction Act, considering the specificity of tokens different from existing assets and confirming the matters with the relevant ministry. The Law firm Veat Foreign Exchange Reporting Center provides one-stop services for the entire process from report preparation to submission to the relevant authorities for various types of foreign exchange transactions that require reporting. If you have any difficulties with foreign exchange reporting, please feel free to contact [Law firm Veat Foreign Exchange Reporting Center]. Thank you. Law firm Veat