Advice on company takeovers

Similarly to Germany, the Republic of Korea is heavily dependent on exports. Although there is not such a broad-based SME sector, there are a considerable number of successful small and medium-sized enterprises with globally competitive products and services. Another parallel between the two countries is that Korea also suffers from an ageing society and many inventors and company founders are retiring without successors. This creates opportunities for foreign companies to take over attractive small or medium-sized enterprises in Korea, for example with the aim of maintaining production in Korea, perhaps for the entire Asian market, expanding or deepening the product range, or gaining additional turnover.

However, in recent years it has been noticeable in company takeovers of up to about 30 million euros that during negotiations parties have been talking past each other for a longer time, even though each side believed that the other understood them. Reasons for this include the Confucianist business culture of the Koreans, the sometimes overly enthusiastic approach of the Europeans, but also the lack of experience and false expectations of successful company founders when selling their life's work.

In the case of company acquisitions, we therefore advise to engage in a consulting company in Korea with foreign background even before hiring lawyers, who can check out in advance in Korean whether the expectations of the parties are sufficiently aligned and explain this assessment to the European company, for example in German or English, including the corresponding cultural background. It is then advisable to engage a Korean law firm that also employs foreign lawyers who can assist in the project in the respective langauge and with the cultural background of the European client, so to speak also as a mediator between the different business cultures.

For example, a German lawyer will also explain things to a German businessman that are self-evident to every Korean, but which most Germans have never heard of or cannot really relate to. A simple example: the compulsory use of a representative directors' seal in Korea. It is easy to understand that the seal replaces the signature of the representative director (by the way, that is how we call managing directors in Korea), but it is not always explained (without malicious intent, since the following information is known to every Korean) that there are also seal imprint certificates issued by the court, and that when used, i.e. attached to a sealed document, the seal imprint then has the legal effect similar of a notarized signature in Germany. Therefore, if you leave your seal and perhaps also a seal impression certificate to a third party out of ignorance, the third party can use your notarized signature at will. As representative director, you are in principle personally liable to the company for any damage caused by such misuse.

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Your point of contact in Korea: Joachim Nowak

DAERYOOK & AJU LLC

7 - 16F, Donghoon Tower
317, Teheran-ro, Gangnam-gu
Seoul 06151, Republik Korea

CELL +82 10 9001 6430
TEL   +82 2 3016 9594
FAX  +82 2 3016 5222

www.draju.com
nowak@draju.com

More "Small" Companies - Broadening the Definition

India recently expanded the definition of a "small" company by doubling the thresholds for paid-up capital and annual turnover to INR 40 million and INR 400 million (currently approx. EUR/CHF 460,000 and 4.6 million), respectively. This means reduced compliance, such as leaner annual financial statements, no mandatory rotation of auditors and fewer board meetings and, thus, facilitates business in India.

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Your point of contact in India: Dr. Jörg Schendel

Suman Khaitan & Co.

W-13, West Wing, Greater Kailash Part-II
Delhi 110048, Indien

www.sumankhaitanco.in
germandesk@sumankhaitanco.in
schendel@adwa-law.com

Merger control - Discussion of the Japan Fair Trade Commission's new guidelines on the submission of documents

The Japanese competition regulator Japan Fair Trade Commission (JFTC) issued separate guidelines on the disclosure of internal documents entitled "The Fair Trade Commission's Practices Regarding the Submission of Internal Documents in Business Combination Reviews" ("Guidelines") in June 2022. The Guidelines are controversial in the legal community in Japan.

There is no concrete experience with the implementation of the new Guidelines yet. Requests for internal documents have not been part of the JFTC's general standard practice in merger reviews. In the past, they were mainly limited to a detailed review process of Phase II mergers and only rarely to complex Phase I cases. A recent example of this was the merger of LINE and Yahoo in 2019, where minutes of board meetings and emails from employees and officers also had to be submitted.

From a lawyer's point of view, an increased push for careful documentation already in the run-up to any commencement of discussion will be needed. Clear guidelines are welcome in principle, as it has often been difficult in legal practice to encourage clients to document seriously and to keep documents in an orderly fashion. Documents can in most cases be requested for the period starting 2 years prior to the filing of the request for examination.

Unlike in many other countries, however, there is no clear concept of attorney-client privilege in Japan, which is why draft versions with attorney comments can theoretically also be requested. It will therefore be necessary to pay more attention, especially in the case of strategic recommendations with a connection to antitrust law, to carefully consider lawyer commentary and ideally reduce it to references to the legal framework.

However, it is also possible to narrow down the scope with the supervisory authority on the basis of the guidelines. Since the intention of the new Guidelines is to catch up with the merger law framework in the EU and the US, it may be a good strategy to refer to the confidentiality of legal advice in these other jurisdictions as possible guidance.

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Your point of contact in Japan: Michael Müller

Mueller Foreign Law Office

Shin-Kasumigaseki Building
3-3-2 Kasumigaseki, Chiyoda-ku
Tokyo 100-0013, Japan

TEL       +81 3 6805 5161
FAX       +81 3 6805 5162

www.mueller-law.jp
info@mueller-law.jp

Malaysia as a destination for sustainable investment

Traditionally, the sole criterion for (foreign) investment was the maximization of shareholder value. This old view does not hold any longer as sustainability starts playing a much more important role. The reason for this shift can among others be found in new legislation, such as the German Supply Chain Responsibility Act, which will come into force on 1 January 2023, as well as the anticipated EU Directive on Supply Chain Responsibility. However, more and more companies themselves have understood that sustainability is important. They set their own targets and need to satisfy their customers’ demands.

Malaysia has understood the importance of sustainability and will be launching the Malaysian Sustainable Development Goals (SDG) Investor Map in 2023. This tool has been jointly developed by Malaysian Investment Development Authority and UNDP in Malaysia, Singapore & Brunei Darussalam and will facilitate sustainable foreign investment to Malaysia.

According to recent surveys among investors, German companies plan to increase their investments in Malaysia in the year 2023 significantly. The SDG Investor Map will certainly facilitate these investments.

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Your point of contact in Malaysia: Dr. Harald Sippel

Skrine

Level 8, Wisma UOA Damansara
50 Jalan Dungun, Damansara Heights
Kuala Lumpur, Malaysia

TEL      +60 1 8211 4958
FAX       +60 3 2081 3999

www.skrine.com

SIM Registration Act in force

SIM card users have until 26 April 2023 to register so that the SIM card does not lose its validity.

Until now, the Philippines were one of a few countries in the world where a SIM card could be purchased without registration, but now registration is mandatory. The new law aims to protect consumers from illegal activities such as fraud, smishing (a provoked call back on expensive phone numbers) and other types of mobile and online scams. These activities have spread through the use of prepaid SIMs, according to the government.

Newly purchased cards will remain disabled until activated. For cards already in use, there will be a 120-day period for registration from 27 December 2023. This period ends on 26 April 2023. Registration can be done at any branch of the main telecommunication provider. Philippine nationals will have to present a common identification document such as the PhilSys ID or driving licence. Foreign nationals residing in the Philippines must also present their passport.

Tourists and business who do purchase a SIM card upon arrival at the airport for short trips must register as well. When registering, a passport must be presented as well as a proof of hotel booking showing an address where the subscriber can be reached. Such cards are then automatically deactivated after 30 days. This period corresponds to the period for which the stay is usually granted upon entry. So anyone who takes a card with them from a past visit after 26 April 2023, which is also still valid, may be surprised if they do not receive a signal about this on arrival. A quick stop at one of the phone shops will solve the problem.

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Your point of contact in the Philippines: Lutz Kaiser

Villanueva Gabionza & Dy Law Offices

20th/F Corporate Center
139 Valero St., Salcedo Village
Makati City 1227, Philippines

CELL      +63 995 985 4957
TEL        +63 2 8813 3351
FAX       +63 2 8816 6741

www.vgdlaw.ph
manila@adwa-law.com

Business meetings 101 - Introduction to Taiwanese Business Etiquette

Business etiquette in Taiwan is strongly influenced by Chinese culture and tradition. "Guanxi" is probably magic word here. This means that business life often revolves around the personal relationship between business partners. This requires friendly cultivation and growth over a long period of time. Therefore, networks of old classmates are not uncommon. Once such a network of relationships has been established, business opportunities and strong loyal cohesion arise from it.

This is also the reason for the tendency to introduce others at a first business meeting instead of introducing oneself. It is important to always pay attention to the face of the other side and not to make them lose face e.g. by being very harsh and making heavy accusations. However, this should not be misunderstood as an obligation to ingratiate oneself with the business partner, but rather that a diplomatic conduct is advisable.

As a rule, it is advisable to be punctual and substantially prepared for meetings, even if these meetings are usually not firmly structured.

The usual etiquette also includes the business cards, which should be accepted with both hands followed by a look at each other according to politeness. It is also not unusual to place the cards on the table while conducting the meeting. Taiwanese are usually calm and patient in their business behavior, also a direct no is often avoided, so that a longer silence may also be a rejecting answer. In addition, more personal questions should be expected as part of cultivating friendship. A satisfactory conclusion to the meeting has a higher priority than a punctual one, which is why it is advisable to schedule sufficient time.

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Your point of contact in Taiwan: Michael Werner

Eiger Law

Bldg. A, 2F, 25-2 Ren Ai Rd, Sec. 4
Taipei 10685
Taiwan

CELL      +886 9 8726 1326
TEL        +886 2 2771 0086
FAX       +886 2 2771 0186

www.eiger.law
info@eiger. law

Delays in issuing work permits

Currently, there is an official processing time of at least three months for work permit applications. The acceptance of applications at both stages of the procedure is delayed by at least four weeks each, allegedly due to an overload of the competent authorities. Such delays were common during the COVID-19 pandemic and now seem to be establishing themselves as regular processing times

As we are currently receiving an increasing number of requests for additional documents in the applications we are processing (both extensions and new grants), which further delay the procedure, it can unfortunately not be completely ruled out that these delays are part of a restriction campaign. According to the local press, the local labour market is allegedly very badly affected by the slump in consumer spending in the USA and Europe, and there is now also frequent talk among our extended client base of temporary closures of one or even two months due to TET (Chinese New Year, 20.01. - 26.01.2023).

Please take note of these extended processing times for work permits to ensure that your expatriate can be integrated into the local payroll accounting system as soon as possible.

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Your point of contact in Vietnam: Christian Brendel

Brendel & Associates Law Co., Ltd.

D&D Tower, 10th Floor
458 Nguyen Thi Minh Khai Ward 2, District 3
Ho-Chi-Minh-Stadt, Vietnam

CELL     +84 98 978 4791
TEL       +84 28 3911 2008
FAX       +84 28 3911 2010

www.brendel-associates.com
info@brendel-associates.com