[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