South Korea is a developed nation with an economy largely focused on exports.

South Korea is the fifth largest manufacturing country in the world. In particular, the South Korean semiconductor industry has maintained its place as the second largest in the world since 2013. South Korea is also the fifth largest automobile manufacturer in the world and has leading music and film entertainment industries.

As of December 2021, the total population of South Korea was about 52 million, with a decreasing population. The primary language spoken is Korean. However, English is taught in schools and many South Koreans are proficient in English.

Well-established relations are essential to doing business in South Korea. In-person meetings are generally preferred to telephone calls, teleconferences or emails. It is customary to carry and exchange business cards at the start of a business meeting.

Except for certain prescribed job categories, it is forbidden by law for employees to work for more than 52 hours per week. Generally, a work week is five days from Monday to Friday.

In 2021, the South Korean shipping industry experienced record-breaking highs marked by great increases in profitability due to high shipping rates. South Korea is also seeing a global expansion of its entertainment industry with successes in popular music, film and television.

Many South Korean businesses, including large conglomerates, have shown increased interest in environmental, social and governance (ESG) issues, resulting in the creation of ESG teams and the adoption of new ESG initiatives.

The presidential election took place on 9 March 2022 and was won by the opposition candidate Yoon Suk-yeol of the conservative People Power Party. The outcome of the election may have a significant impact on business and the regulatory environment in South Korea. President Yoon has made promises to support business and revitalise economic growth using new economic policies centred on the private sector, with government support such as through deregulation and lowering of corporate taxes. He has also pledged to promote R&D and provide other support for key industries, including AI, software, semiconductors, the metaverse, biotech and nuclear energy.

The Serious Accidents Punishment Act (SAPA), came into force on 27 January 2022 and holds employers criminally liable in the event of serious industrial or public accidents.

South Korea has a civil law system, which has been historically influenced by Japanese and European laws and common law principles. More recently, US law has become influential in South Korean commercial law.

South Korea is governed in large part by federal laws. However, local governments also have certain degrees of autonomy and can enact self-governing ordinances with binding power.

Foreigners intending to invest in South Korea must report certain investments to the Minister of Trade, Industry and Energy in advance. Foreign investment plans that must be reported in advance include:

Foreign investors must pre-obtain permission from the Minister of Trade, Industry, and Energy to acquire shares and invest in companies engaged in the defence industry.

In addition, certain industries are subject to restrictions on share acquisitions by foreigners (see below, Specific Industries).

Foreign investors for these purposes include:

Certain industries are subject to restrictions on share acquisitions by foreigners (see below, Specific Industries).

Under the Foreign Investment Promotion Act and its enforcement decree and rules, foreign investments are not permitted in:

The South Korean government implements UN sanctions through domestic laws such as the Foreign Trade Act. Under the Inter-Korean Exchange and Co-operation Act, trade with North Korea can only occur with approval from the Minister of Unification.

Exports or imports of certain items (such as conventional weapons, weapons of mass destruction, software, technology and other items related to manufacturing missiles) with North Korea through third countries are prohibited without permission from the Minister of Trade, Industry and Energy. Relevant information may be found at https://www.kosti.or.kr/kosti_eng/contents/sanAna.do or https://sanction.kosti.or.kr/home/nationHomeIndex.do. Information on sanctioned countries and items are only available in Korean.

Under the Foreign Exchange Transactions Act, the South Korean government supervises foreign exchange reserves and monitors foreign exchange markets to maintain stability. In general, payment or receipt of foreign currency between residents and non-residents must be reported to the Bank of Korea or a foreign exchange bank.

Under the Act on Reporting and Using Specified Financial Transaction Information, financial institutions must verify certain prescribed information when opening new accounts for customers.

If the immediate customer is ultimately governed or controlled by a natural person (the actual owner), financial institutions must verify the actual owner's real name and nationality. If the immediate customer is a corporation or an organisation, financial institutions must verify the actual owner's name, birthdate and nationality.

A financial institution must report to the Commissioner of the Korea Financial Intelligence Unit if it has reasonable grounds to suspect that either:

Under a recent amendment to the Act on Reporting and Using Specified Financial Transaction Information, virtual asset service providers are now also considered to be financial institutions.

The Commissioner can also request information from financial institutions.

Except as otherwise provided in certain laws, regulations and other statutes, foreign investors and foreign-invested companies are treated in the same manner as South Korean nationals or corporations in relation to grants and incentives.

Under the Foreign Investment Promotion Act, foreign investors can receive cash grants for land/building purchase costs or rents for the installation of factory facilities if they:

However, the foreign investment must be through the acquisition of new stock, or have a foreign investment ratio of 30% or more, to qualify for such cash grants.

Eligible foreign investments (see above, Grants) may also receive:

In addition, foreign investment zones that are designated to be exclusively leased or transferred to foreign-invested companies may offer sites at reduced rents and, depending on the circumstances, reductions or exemptions from applicable rents and taxes. Foreign-invested companies may also be allowed to lease land, factories or other property owned by the government and rental fees are reduced or exempted under certain circumstances.

Foreign investments recognised under the Foreign Investment Promotion Act include:

The Commercial Act recognises the following business vehicles:

Companies can also be formed through joint ventures and investment trusts.

Most foreign-invested businesses are stock companies or limited companies. Stock companies, which facilitate multiple subscribers and the transfer of shares, can also issue bonds and be publicly listed.

Limited companies have commonly been the preferred form for foreign-invested businesses because, as they are exempt from external audits, they can minimise public disclosures of certain company information. However, with the amendment of the Act on External Audit of Stock Companies, limited companies that meet certain criteria, such as having KRW50 billion or more in total assets or sales as of the end of the immediately preceding business year, have also become subject to external audit requirements.

The Commercial Act prescribes the incorporation process of stock companies as follows:

The official costs for incorporation of stock companies are as follows:

Foreign investments must be reported in advance to the Minister of Trade, Industry and Energy. Within 60 days of the payment of the investment, foreign investors must also file for registration as foreign-invested companies with the Minister of Trade, Industry and Energy. Foreign investment reports and registrations as foreign-invested companies are processed immediately (the entire process of incorporation including the report and registration usually takes two weeks), and there are no additional costs.

In general, stock companies are not subject to maximum or minimum share capital limits, while limited companies' minimum amount per unit of investment must be KRW100 or more. However, businesses in regulated industries may be required to have a minimum share capital under the applicable statutes, and a minimum of KRW100 million capital investment is required to qualify as a foreign investment under the Foreign Investment Promotion Act (see Question 7).

For stock companies, accepted forms of in-kind investments include:

For in-kind investments, the articles of incorporation must expressly specify the:

On the directors' request, a court-appointed inspector must inspect and report to the court whether the in-kind investment has been made.

The same forms of in-kind investments are acceptable for limited companies. However, limited companies are not required to inspect and report to the court whether such in-kind investments have been made.

Restrictions on Rights Attaching to Shares. Although shareholders are in principle free to transfer their shares to third parties, the articles of incorporation may require approvals from the board of directors. In such cases, share transfers without the board's approval are not enforceable against the company. In addition, courts have upheld restrictions on share transfers contained in shareholders' agreements.

The appointment of stock company auditors and appointments/dismissals of audit committee members of publicly listed companies usually require shareholder votes. For stock companies and publicly listed companies with total assets worth KRW2 trillion or more as of the end of most recent business year, shareholders holding more than 3% of the total issued and outstanding shares (excluding non-voting shares) cannot exercise voting rights attached to those shares in excess of 3% in connection with these auditor or audit committee votes.

Automatic Rights Attaching to Shares. All shareholders are automatically entitled to:

Shareholders holding more than a certain portion of the total issued and outstanding shares automatically have the right to:

In stock companies, the general meeting of shareholders must appoint:

However, companies with less than KRW1 billion in total capital can appoint only one or two directors, and elect not to appoint an auditor.

For limited companies, a minimum of one director must be appointed by the articles of incorporation or at a general meeting of members. Limited companies can elect not to appoint an auditor.

There are no residency requirements or restrictions on foreign managers or directors.

Directors subject to a duty of loyalty to the company can be held liable for damages caused to the company as well as to third parties if they intentionally or negligently act in violation of any statute or the articles of incorporation, or neglect their duties. If the violation or neglect was pursuant to board resolutions, the directors who consented to the resolutions can also be held liable. The company can limit the directors' liability to the company to six times their remuneration in its articles of incorporation, but this limitation will be invalid if the directors acted intentionally or caused damages through gross negligence. Liability insurance for executive officers is available.

A parent company is not liable for its subsidiary's liabilities except under special circumstances where a parent company participated in or directed unlawful activities by its subsidiary. However, Korean courts have held that in exceptional cases, where the independent status of the corporate form was abused, or when a parent company effectively was acting itself and the subsidiary's existence was merely a formality, the parent company may be held liable (known as "piercing the corporate veil").

Environmental laws and regulations are increasing in scope and importance. For example:

The primary sources of regulations concerning environmental issues include the:

Employment in South Korea is primarily regulated by the Labour Standards Act (LSA). Other relevant laws include the:

Foreign employees working in South Korea are also subject to the above laws.

In principle, unless the contract selects a governing law, employment contracts are governed by the laws of the nation where the employee ordinarily provides their services. If the employee does not ordinarily provide services within one nation, the laws of the nation where the employer's business office is located apply. The mandatory South Korean rules of law apply even when a foreign law governs the employment contract. As many provisions of South Korean labour laws are mandatory, employees working abroad while under the control or supervision of South Korean employers will also be governed by South Korean labour laws.

Under the Act on Private International Law, protections afforded to employees under mandatory rules of law in the countries where the employees ordinarily provide their services cannot be avoided by employment contracts designating the laws of another country as the governing law.

Although written contracts are not mandatory, employers must provide employees with written statements specifying:

As such, it is a common and recommended practice to execute written agreements that specify these elements.

As employees typically receive written statements specifying their terms of employment, it is unlikely that courts would find implied terms contradicting express terms in employment contracts. However, in some cases courts have found certain implied terms to be operative in employment relationships, based on the purpose of relevant laws and the need to protect employees.

Collective agreements are permitted. In addition, employers who regularly employ ten or more employees must prepare Rules of Employment and report them to the Minister of Employment and Labour. Rules of Employment or employment contracts that contradict provisions of the relevant collective agreements are void.

With some limited exceptions, employers must obtain work permits issued by employment security offices to hire unskilled foreign workers.

Skilled foreign workers do not require work permits, but they must have residency status. To obtain residency status, the employee must obtain a work visa, the type of which varies depending on the occupation. The processing fee for work visas is negligible. It usually takes three to four weeks for a visa to be approved. Employees intending to stay in South Korea for more than 90 days must apply for alien registration at the local Immigration Office. The official processing fee is negligible and approvals usually take two to three weeks.

If employment rules are to be modified in a manner unfavourable to employees, including in connection with corporate transactions, the employers must first obtain the employees' consent. There can also be other circumstances where employers must consult with a union regarding corporate transactions. For example, where consultation is required by a collective agreement, and the employers violate the agreement and proceed with transactions without consultation, fines (of up to a maximum of KRW10 million) can be levied against the employers under certain circumstances under the Trade Union And Labour Relations Adjustment Act. In addition, a labour union may obtain injunctive relief if management conducts a transaction without union consent where such consent is required under the applicable collective agreement.

Dismissal in South Korea is not "at-will" and an employee can only be dismissed for "just cause" under the LSA.

While there is no clear definition of "just cause", courts have held that a cause for dismissal is just if the employee's conduct renders continuation of the employment impossible under socially accepted norms. As it is often difficult to prove just cause for a termination, in many cases employers seek to reach a termination settlement agreement with employees.

Statutory Minimum Notice. Under the LSA, an employer must provide an employee with notice of dismissal at least 30 days in advance or pay compensation equivalent to at least 30 days' ordinary wages in lieu. However, employers are exempt from the duty of advance notice or payment of wages in lieu if either:

Severance Payment. In addition, on termination of employment, employers must provide statutory severance pay called a "retirement allowance" of approximately one months' pay for every year of employment to any employee who has worked for one year or longer.

Grounds for Unfair Dismissal. If there is no valid cause for dismissal attributable to the employee, the dismissal will be considered unfair.

Remedies. An employee may choose to challenge a dismissal by:

Because it can be difficult to prove just cause for dismissals, it is common for employers to negotiate termination agreements when seeking to dismiss an employee.

There are no specific laws or regulations aimed at protecting a particular class or group of individuals. However, under the LSA, an employer cannot dismiss:

However, these prohibitions may be relaxed if the employer pays the employee a negotiated lump sum settlement amount.

Under the LSA, dismissals for managerial reasons must arise from "urgent managerial necessity" such as organisational restructuring in response to economic, industrial and technical changes.

Employers can implement redundancies and mass terminations for managerial reasons under the LSA if the following four conditions are all satisfied:

In addition, employers must report to the Ministry of Employment and Labour at least 30 days before the intended date of dismissal if the redundancy or mass termination will include:

South Korean tax law and the Framework Act on National Taxes recognises the concept of tax residency. The Income Tax Act defines a tax "resident" as an individual who has their domicile or place of residence for at least 183 days in a tax year (January 1 to December 31) in South Korea. The term "domestic corporation", which is equivalent to "resident" under the Income Tax Act, is similarly defined in the Corporate Tax Act as a corporation with its headquarters, main office or actual business management place in South Korea.

Tax residency is determined both by the taxpayer's:

Tax resident employees are taxed on all domestic and foreign income under the Income Tax Act. There are progressive tax rates between 6.6% and 49.5% depending on the tax basis. In addition, South Korea operates a social security system comprised of:

Tax resident employees are mandatorily enrolled in this system and the premiums are paid by both employees and employers. The employees' premiums are based on the income tax basis amount and most of these premiums are withheld from monthly salaries.

Under the Income Tax Act, non-tax resident employees are taxed on income from domestic sources only. The same tax rates applied to tax resident employees are also applied to non-tax resident employees for this income, unless there are applicable tax treaties in place to prevent international double taxation of income and capital. Because South Korea does not tax capital, capital is excluded from such treaties' names and provisions. Where there are tax treaties, they take precedence and are applicable to residents of both signatory countries.

Employers must pay:

The Corporate Tax Act distinguishes domestic corporations from foreign corporations. Domestic corporations are corporations with their headquarters, main office or actual business management location in South Korea. Domestic corporations must pay corporate taxes on all income whether generated in South Korea or overseas. Such corporate taxes are incurred on a yearly basis for income attributed to the corporation for each business year.

Foreign corporations are organisations with their headquarters or main offices in a foreign country (and that do not have an actual business management location in South Korea) that are either:

Even if the headquarters or main office of an organisation is in a foreign country, it will be considered to be a domestic corporation if it has a permanent establishment/branch in South Korea and this is regarded as a place for the actual management of its business.

Foreign corporations must pay corporate tax on income from domestic sources and income generated from the transfer of real estate.

Income is considered to be from a domestic source if it is generated by assets, business activities, the exercise of rights or performance of services located in South Korea.

Income generated from online sales by foreign corporations is also subject to corporate tax.

Domestic corporations pay corporate taxes on:

The corporate tax rates applicable to different tax basis amounts are:

Foreign corporations only pay corporate taxes on:

If a tax treaty is applicable, it takes precedence. Otherwise, foreign corporations pay the same corporate tax rates as domestic corporations.

Other national or local taxes applicable to corporations include:

If a foreign corporation receives dividends as a shareholder and generates dividend income, the income constitutes income from domestic sources and is subject to income tax. If the foreign corporation is from a country that is a signatory to an applicable tax treaty, the limited tax rate of 0% to 15% applies. If the corporation is not from a signatory state, the withholding tax rate of 20% (local income tax 10% excluded) applies.

If the shareholding foreign corporation has a domestic place of business, the limited tax rate under the tax treaty does not apply to the dividend income attributed to the domestic place of business, and the dividend income is subject to taxation as part of the total income that must be reported and paid.

In contrast, dividend income not attributed to a domestic place of business is subject to separate taxation that will be automatically withheld, with a limited tax rate under the tax treaty.

If there is no domestic place of business, the obligation to pay tax is fulfilled when the taxes are withheld as separate taxation.

Dividend income under the Income Tax Act includes dividends, shares of profits or surplus received from a foreign corporation by a South Korean resident who is a shareholder of the foreign stocks issued by the foreign corporation. The dividend income tax rate is 15.4%, consisting of a 14% general income tax rate plus 1.4% of local income tax rate when the dividend is equal to or less than KRW20 million. If the dividend exceeds KRW20 million, it is included when calculating the tax base of global income tax and taxed at the global income tax rate based on the amount of the global income. However, if the income tax for dividend income has already been withheld by the source country and a person acts on behalf of the foreign corporation to make the payment in South Korea or is given the authority to make the payment, only the remaining tax amount after deducting the tax amount already withheld by the source country is withheld from that person, to avoid double taxation.

If a foreign corporation, as a shareholder, receives interest and generates interest income, that income constitutes domestic income and is subject to income tax at the same rates as other income.

If a foreign corporation, as a shareholder, receives IP royalties and generates royalty income, that income constitutes domestic income and is subject to income tax at the same rates as other income.

There are no regulations prohibiting borrowing funds from foreign affiliates, provided that a foreign exchange report is filed on borrowing. If the interest rate deviates from the market rate, the difference from the market rate amount may be included in gross income and be subject to corporate income tax.

Under the Monopoly Regulation and Fair Trade Act, a domestic company belonging to business groups subject to limitations on cross shareholding cannot guarantee debts.

Under the Financial Investment Services and Capital Markets Act, a financial investment business entity is not prohibited from granting credit to an overseas local corporation, the management of which is de facto under control of that entity by holding at least 50% of the total number of issued shares or having invested at least 50% of the total amount of the investment.

Domestic corporations can only conduct business operations abroad by establishing either:

The Adjustment of International Taxes Act requires tax adjustments for transactions with foreign related parties. In an international transaction with a foreign related party in which the transfer price is lower or higher than an arm's length price, a resident may file a report on, or a rectification claim for, the tax basis or the amount of tax, as adjusted based on the arm's length price.

The South Korean government only imposes tariffs on imported goods. The tax basis is determined by the price or quantity of the imported goods. The tariff schedule classifies the goods into 21 parts and 97 categories, and the tariff rates are set differently for each category. Domestic taxes such as value added taxes are also levied alongside customs duties.

However, if the tariff rates in applicable multilateral treaties are lower than the default tariff rates, the treaties' rates take precedence.

As of May 2022, South Korea has executed the Convention for the Avoidance of Double Taxation with 97 countries, of which 94 are in effect, two are not yet in effect, and one is suspended. The major counterparties include:

Restrictive agreements and practices are regulated by the Monopoly Regulation and Fair Trade Act (MRFTA).

Competition-restricting practices and other conducts that have been identified as hindering fair trade under the MRFTA include:

The Korea Fair Trade Commission (KFTC) can order corrective measures or impose penalty surcharges. For serious violations, the KFTC can file criminal charges with the Prosecutor General and criminal punishment may be imposed.

The MRFTA is also applicable to acts occurring outside of South Korea, if those acts affect the domestic market. The Act on Private International Law provides that South Korea's mandatory rules of law (including a significant portion of the MRFTA) apply even when the governing law of the contract has been agreed to be foreign law.

See above, Restrictive Agreements and Practices.

The MRFTA requires business combinations (mergers and acquisitions) to be reported to the KFTC when they reach the relevant thresholds. Although such reporting is generally required after the transaction has occurred, it must be filed before the transaction takes place if one of the parties involved is a company with total assets or revenue of KRW2 trillion or more.

Transactions must be reported if they meet both the following conditions:

On examining the restrictive effects of a merger or acquisition on competition, the KFTC may order corrective measures (including prohibitions or conditional approvals) or impose fines.

Mergers or acquisitions between a domestic company and a foreign company or between foreign companies are also subject to the business combination reporting requirement if the transaction meets both the following conditions:

There are no industry-specific reporting requirements.

The Improper Solicitation and Graft Act (ISGA) prohibits improper solicitations made to public servants, as well as public servants' acceptance of money or goods irrespective of whether such conduct was a part of any kind of reciprocal arrangement.

Public servants who improperly receive, request or promise money or goods in excess of KRW1 million in value per transaction (KRW3 million in aggregate per year) are criminally punishable. Even where the received money or goods do not exceed this value, public servants receiving money or goods exceeding the maximum values allowed for a particular purpose (such as to facilitate social relationships or rituals) may be subject to administrative fines. In addition, the Criminal Act prohibits improper solicitations to public servants, either directly or through third parties, and imposes administrative fines for violations.

Definition and Legal Requirements. Patents protect certain technical creations with industrial applicability, novelty and inventiveness. Patents grant the right to exclusively own or use an invention for a certain period of time.

Registration. Patents must be registered with the Korean Intellectual Property Office (KIPO), which provides guidelines on the application procedure and examination criteria.

Enforcement and Remedies. Patentees can seek injunctions or damages against infringers of their patent rights, in addition to other necessary measures such as disposal of goods and removal of equipment. Infringers also may be subject to imprisonment of up to seven years or a fine of up to KRW100 million.

Length of Protection. Patents are protected for 20 years from filing.

Definition and Legal Requirements. Registration of a trade mark grants the right to use the registered mark for the designated goods. Trade marks must be distinguishable from those of goods or services of other persons and identifiable as an indication of the source of a specific person's goods or services.

Protection. Trade marks must be registered with KIPO, which provides guidelines on the application procedure and examination criteria. Unregistered trade marks, if widely recognised, may still be protected under the Unfair Competition Prevention and Trade Secret Protection Act (UCPTSPA).

Enforcement and Remedies. Trade mark right holders can seek similar remedies against infringers as those available to patentees (see above, Patents).

Length of Protection and Renewability. Trade marks are protected for ten years from registration and are renewable every ten years. However, if the trade marked goods are not used in commerce for a period of three years, the trade mark registration may be subject to cancellation.

Definition. Registered designs are intended to protect the shape, pattern, colour, or any combination thereof, of articles with industrial applicability, novelty and creativity.

Registration. Registered design applications must be filed with KIPO, which provides guidelines on the application procedure and examination criteria.

Enforcement and Remedies. Design right holders can seek similar remedies against infringers as those available to patentees (see above, Patents).

Length of Protection and Renewability. Registered designs are protected for 20 years from the filing date and are not renewable.

Definition and Legal Requirements. The UCPTSP effectively protects unregistered designs by prohibiting the transfer and lease of goods where the shapes of those items have been copied from the goods created by others.

Enforcement and Remedies. Anyone whose business interests have been damaged or are likely to be damaged can seek injunctions, damages and measures necessary to restore their business reputation.

Length of Protection. The protection lasts for three years from the date the shape of the goods was completed, including the production of the prototype.

Definition and Legal Requirements. Copyrights are exclusive rights given to creative works or productions that express human thoughts and emotions.

Protection. Copyrights are protected without registration because a copyright occurs at the time of creation of the works. However, copyrights are better protected if the right is registered with the Korea Copyright Commission, because registration gives rise to a legal presumption as to the authorship.

Enforcement and Remedies. Copyright holders can seek damages and can request suspension of infringement, disposals of goods made through infringing acts, or other necessary measures. Copyright infringements are punishable by imprisonment of up to five years or a fine of up to KRW50 million, or both.

Length of Protection and Renewability. Copyrights are protected for 70 years from the death of the author. Copyrights for works made for hire and cinematic works are protected for 70 years from the date the works were made public.

Definition and Legal Requirements. Utility model rights are granted for devices related to the shape, structure, or combination thereof, of industrially practicable articles. Such rights are formed on the registration with KIPO of devices with novelty and inventiveness.

Enforcement and Remedies. Owners of utility model rights can request prohibition or prevention of infringement against infringers. Infringers are punishable by imprisonment of up to seven years or a fine of up to KRW100 million.

Length of Protection and Renewability. Utility model rights are protected for ten years from filing and are not renewable.

Marketing agreements are primarily governed by the Civil Act, the Commercial Act and the Act on the Regulation of Terms and Conditions.

The terms of agency agreements can be freely agreed by the parties unless they contravene the MRFTA and the Fair Agency Transactions Act.

In addition to the MRFTA, the following regulations are also applicable to distribution agreements:

Franchising agreements are governed by the Fair Transactions in Franchise Business Act, the primary requirements of which are:

The laws and regulations applicable to both B2B and B2C e-commerce businesses include the:

The general terms and conditions and/or privacy statements displayed on websites may also be subject to the Act on the Regulation of Terms and Conditions, in which case the terms must be written in Korean.

E-commerce businesses providing goods and services to end-consumers are also subject to the Act on the Consumer Protection in Electronic Commerce (E-Commerce Act). The Framework Act on Consumers also may apply to related matters that are not otherwise specifically addressed in the E-Commerce Act.

The E-Commerce Act is the primary source of regulation specifically applicable to online platform businesses. The E-Commerce Act sets out the responsibilities of online platform businesses in relation to consumers, but it does not expressly require online platform businesses to conduct due diligence on the traders using their platforms. If an online platform business fails to make clear that the platform is not a party to the consumers' transactions, the platform business may be held jointly liable for any damages caused to the consumers by intentional or negligent actions of the traders using the platform.

The MRFTA, which regulates anti-competition activities, applies to online platform businesses. Online platform businesses giving preferential treatment to their own products compared to third-party products may constitute a violation of the MRFTA.

In addition, there are proposed legislative bills that are intended to further expand the regulation of online platforms, but those bills are currently on hold at the National Assembly.

The Act on Fair Labelling and Advertising is the principal law regulating all types of advertising activities.

The KFTC has established specific guidelines in accordance with the Act on Fair Labelling and Advertising, including the:

Under the PIPA and the Act on the Protection and Use of Location Information, businesses that wish to perform marketing activities to targeted individuals must obtain informed consent from the data subjects.

The Act on Door-to-Door Sales (DTDA) governs direct marketing activities.

The MRFTA prohibits unfair trade practices such as soliciting or coercing customers of competitors. However, this does not prohibit the use of promotional activities such as buy-one-get-one-free offers. In the Guidelines for Assessment of Unfair Trade Practices, the KFTC sets standards for determining the types of marketing or promotional activities that violate the MRFTA.

In addition to the MRFTA, there are statutes restricting particular promotion activities for select product categories. For example, the Medical Service Act prohibits businesses from providing economic benefits to medical personnel for the promotion of medical devices or pharmaceutical items.

The laws addressing data protection include the:

Although the South Korean government does not have one overarching regulation specifically aimed at protecting consumer privacy, the following Acts regulating personal information and data protection apply to consumers:

Product liability and product safety are regulated primarily by the Product Liability Act (PLA). The PLA defines a "defect" as any shortcoming in the manufacturing, design or description of the product that results in a lack of the level of safety ordinarily expected of the product. The PLA imposes liability on manufacturers for damage and injury caused by defective products and includes provision for joint and several liability. Distributors and retailers of defective products can be held liable, but only when the consumers cannot identify the manufacturer.

The following laws also regulate product safety:

Other laws regulate recalls for specific product groups. For example:

Recently, there have been discussions on allowing class actions in product liability suits, but no legislation has yet been enacted.

Main Activities. The Korea Fair Trade Commission (KFTC) performs the following roles under the MRFTA:

Main Activities. The Ministry of Environment oversees investigations and conducts research and evaluations related to environmental conservation and the prevention of environmental pollution, as well as imposing environmental regulations on various projects.

Main activities. The Financial Services Commission is responsible for the following matters:

Main Activities. The Ministry of Trade, Industry and Energy oversees matters related to trade, industries, commerce, foreign investments, mid-sized enterprises, R&D of industrial technologies and energy resources.

Main Activities. The Ministry of Employment and Labour oversees matters related to:

A significant amount of business in South Korea is conducted through "chaebols", which are conglomerates that are managed by families. Notable chaebols in South Korea include Samsung, Hyundai, SK, LG and Lotte. Most chaebols maintain control through changes in governance structures and holding companies. Since the IMF crisis in 1997, corporate governance structures have improved through the introduction of international financial reporting standards, outside directors and audit committee systems.