Edited by Hwa-Jin Kim
Chapter 7: Review of Korean laws pertinent to Foreign Financial Institutions' Korean business: with emphasis on a few issues that are frequently raised in practice
7. Review of Korean laws pertinent to Foreign Financial Institutions’ Korean business: with emphasis on a few issues that are frequently raised in practice Hyunjoo Oh OVERVIEW I. There are two ways in which foreign investment firms and foreign banks (each a “Foreign Financial Institution”) do business in Korea – (1) establish a local operational base in Korea in the form of a subsidiary, branch, etc. and have that local operational base obtain relevant licenses and offer services onshore (the “Onshore Operation”) and (2) offer services to Korean residents directly from an offshore base without having any local operational base (the “Offshore Operation”). In case of the Onshore Operation, the local operation base and its activities would be subject to the regulations that Korean financial institutions would be subject to regarding such activities except for those matters that statutes say otherwise. In the case of the Offshore Operation, a Foreign Financial Institution’s activities are generally deemed to take place outside Korea, to have little effect on Korea and to be insufficient grounds for imposing license requirements on such Foreign Financial Institution. However, if such activities are deemed to have direct impacts on the Korean market, such Foreign Financial Institution would be subject to pertinent Korean regulations, such as license requirements (e.g. foreign non-discretionary investment advisors or discretionary investment advisors are required to obtain licenses before they can provide services to domestic residents from their offshore bases) and registration statement requirements (e.g. a public offering of foreign-currency denominated securities by a Foreign...
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