Korean Business Law

Korean Business Law

Elgar Korean Law series

Edited by Hwa-Jin Kim

The approach of the book is two-fold. On the one hand the book offers valuable insight into the fundamental principles of Korean business law, and landmark cases in the field. On the other hand there is extensive analysis of more recent developments and of current issues raised by recent court cases. The book combines coverage of Korean corporate law and Korean financial law and includes detailed examination of corporate law issues such as director liability, minority shareholder protection, and the dynamic practice area of mergers and acquisitions, and of financial law topics, including private equity, structured finance and foreign financial institutions.

Chapter 5: Piercing of the Corporate Veil in Korea: case commentary

Joseph Cho and Eun Young Shin

Subjects: asian studies, asian law, law - academic, asian law


1 Joseph Cho and Eun Young Shin INTRODUCTION I. Today’s corporations set up subsidiaries for a variety of reasons including optimal corporate governance and diversification of business. In the context of a parent-subsidiary relationship, there may be situations where, from a legal standpoint, each constituent company exists as a separate entity, whereas, from an economic viewpoint, the subsidiary in effect operates under uniform control of the parent. In situations involving such a corporate group, treating the parent company and its subsidiary as distinct legal entities may result in an outcome that, depending on the facts involved, defies the principle of justice and equity. The utility of piercing the corporate veil2 has been debated in Korea in an ongoing bid to redress such possible inequity. Arguably, while the concept of veil piercing3 is not confined to the realm of parent company-subsidiaries, cases involving a single economic unit would, in general, be more prone to veil piercing than others. In fact, the doctrine of veil piercing is likely to foment more issues and controversies in the parent-subsidiary context than any other. In the case at hand,4 the plaintiff put forward the allegation that the defendant’s denial of liability behind the façade of a subsidiary controlled by it amounted to an abuse of corporate personality in contravention of 1 This is an updated version of a piece that was originally published in Journal of Korean Law, Vol. 9, No. 1 in December, 2009. 2 See Black’s Law Dictionary 1168 (7th ed....

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