Securities Class Action Suit Law

The securities class action suit law commenced on 01 January 2005. Class action suits can be initiated for unfair trading involving the use of inside information and market manipulation. Companies can also be open to a class action for a deliberate falsification of financial statements and disclosure violation.

Foreign Exchange Liberalization Plan

On 19 May 2006, the government announced it was accelerating foreign exchange liberalization to attract investment capital for new infrastructure, and to promote foreign exchange market development. The foreign exchange liberalization plan is now expected to be completed in 2009 instead of 2011. The first phase of the two-phase program is scheduled for 2006-2007.

The plan will (i) internationalize the won; (ii) liberalize foreign exchange transactions, including Korean overseas investments; and (iii) accelerate development of the foreign exchange market.

Consolidation of securities and capital market laws

The Republic of Korea has proposed legislation to consolidate the Securities and Exchange Act, Futures Trading Act, and other capital market-related laws under a single act - tentatively called the Consolidated Capital Market Act. Some of the major changes contained in the newly proposed legislation include:

• Financial services deregulation. The removal of restrictions strictly separating securities, futures, asset management, trust services, and other financial services businesses (excluding banking) to integrate their financial services business.

• Broadening the scope of financial investment products. The meaning and scope of financial investments and products offered will reverse from the current system of enumerating what is allowed to a system defining what is illegal.

• Deregulation of indirect investment. Current restrictions will be removed that recognize only trust investments (in the form of beneficiary certificates), corporate-type investment companies (mutual funds), and private equity funds as indirect investment vehicles. Thus, other entities recognized under the Commercial Code can be included as indirect investment vehicles.