Bangkok Herbert Smith (Thailand) Ltd 1403 Abdulrahim Place 990 Rama IV Road Bangkok 10500 T: +66 2657 3888 F: +66 2636 0657 Beijing Herbert Smith LLP 28th Floor Office Tower Beijing Yintai Centre 2 Jianguomenwai Avenue Chaoyang District Beijing PRC 100022 T: +86 10 6535 5000 F: +86 10 6535 5055 Berlin Gleiss Lutz Friedrichstrasse 71 10117 Berlin T: +49 30 800 979-0 F: +49 30 800 979-979 Brussels Herbert Smith LLP Central Plaza Rue de Loxum 25 1000 Brussels T: +32 2 511 7450 F: +32 2 511 7772 Gleiss Lutz Central Plaza Rue de Loxum 25 1000 Brussels T: +32 2 551 1020 F: +32 2 551 1039 Stibbe Central Plaza Rue de Loxum 25 1000 Brussels T: +32 2 533 5211 F: +32 2 533 5212

Dubai Herbert Smith LLP Dubai International Financial Centre Gate Village 7, Level 4 PO Box 506631 Dubai UAE T: +971 4 428 6300 F: +971 4 365 3171 Stibbe Dubai International Financial Centre Gate Village 7, Level 4 PO Box 506631 Dubai UAE T: +971 4 428 6300 F: +971 4 365 3171 Düsseldorf Gleiss Lutz Bleichstrasse 8-10 40211 Düsseldorf T +49 211 54061-0 F +49 211 54061-111 Frankfurt Gleiss Lutz Mendelssohnstrasse 87 60325 Frankfurt/Main T: +49 69 95514-0 F: +49 69 95514-198 Hong Kong Herbert Smith 23rd Floor, Gloucester Tower 15 Queen’s Road Central Hong Kong T: +852 2845 6639 F: +852 2845 9099 Jakarta Hiswara Bunjamin and Tandjung Herbert Smith LLP associated firm 23rd Floor, Gedung BRI II Jl. Jend. Sudirman Kav. 44-46 Jakarta, 10210 T: +62 21 574 4010 F: +62 21 574 4670 London Herbert Smith LLP Exchange House Primrose Street London EC2A 2HS T: +44 20 7374 8000 F: +44 20 7374 0888

London (continued) Stibbe Exchange House Primrose Street London EC2A 2ST T: +44 20 7466 6300 F: +44 20 7466 6311 Luxembourg Stibble Luxembourg, Avocats 20, rue Eugène Ruppert L-2453 Luxembourg T: +352 26 6181 F: +352 26 6182 Madrid Herbert Smith Spain LLP Paseo de la Castellana 66 28046 Madrid T: +34 91 423 4000 F: +34 91 423 4001 Moscow Herbert Smith CIS LLP 10 Ulitsa Nikolskaya Moscow 109012 T: +7 495 363 6500 F: +7 495 363 6501 Munich Gleiss Lutz Karl-Scharnagl-Ring 6 80539 Munich T: +49 89 21667-0 F: +49 89 21667-111 New York Stibbe 489 Fifth Avenue, 32nd floor New York, NY 10017 T: +1 212 972 4000 F: +1 212 972 4929 Paris Herbert Smith LLP 66, Avenue Marceau 75008 Paris T: +33 1 53 57 70 70 F: +33 1 53 57 70 80 Prague Kubánek & Nedelka v.o.s. Gleiss Lutz associated firm nám. Republiky 1a 110 00 Prague 1 T: +420 225 996-500 F: +420 225 996-555 Saudi Arabia Al-Ghazzawi Professional Association Herbert Smith LLP associated firm Jeddah Commercial Centre, 3rd Floor, Al Maady Street Corniche Al Hamra P.O. Box 7346 Jeddah 21462 T: +966 2 6531576 F: +966 2 6532612

Herbert Smith LLP, Gleiss Lutz and Stibbe are three independent firms which have a formal alliance.

Saudi Arabia (continued) Al-Ghazzawi Professional Association Herbert Smith LLP associated firm Arabian Business Center Prince Muhammad Street PO Box 381 Dammam 31411 T: +966 3 8331611 F: +966 3 8331981 Al-Ghazzawi Professional Association Herbert Smith LLP associated firm King Faisal Foundation North Tower, 4th Floor K. Fahd Road PO Box 9029 Riyadh 11413 T: +966 1 4632374 F: +966 1 4627566 Shanghai Herbert Smith LLP 38th Floor, Bund Center 222 Yan An Road East Shanghai 200002 T: +86 21 2322 2000 F: +86 21 2322 2322 Singapore Herbert Smith LLP 50 Raffles Place #24-01 Singapore Land Tower Singapore 048623 T: +65 6868 8000 F: +65 6868 8001 Stuttgart Gleiss Lutz Maybachstrasse 6 70469 Stuttgart T: +49 711 8997-0 F: +49 711 855096 Tokyo Herbert Smith 41st Floor, Midtown Tower 9-7-1 Akasaka, Minato-ku Tokyo 107-6241 T: +81 3 5412 5412 F: +81 3 5412 5413

Guide to lending and taking security in Asia

Warsaw Pietrzak Siekierzynski Bogen Sp. k. Gleiss Lutz associated firm ul. Z`lota 59 00-120 Warsaw T: +48 22 22242-00 F: +48 22 22242-99

Second edition, October 2010

www.herbertsmith.com www.gleisslutz.com www.stibbe.com

092010

Amsterdam Stibbe Stibbetoren Strawinskylaan 2001 PO Box 75640 1070 AP Amsterdam T: +31 20 546 06 06 F: +31 20 546 01 23

Budapest Bán, S. Szabó & Partners Gleiss Lutz associated firm József nádor tér 5-6 1051 Budapest T: +36 1 266-3522 F: +36 1 266-3523

Guide to lending and taking security in Asia (Second edition)

Abu Dhabi Herbert Smith LLP Suite 302, 3rd Floor Al Bateen Towers C2 Building Al Bateen PO Box 106178 Abu Dhabi UAE T: +971 2 412 1700 F: +971 2 412 1701

Contents Guide to lending and taking security in Asia Introduction

1

Australia

Freehills

Bangladesh

Dr Kamal Hossain and Associates

15

Cambodia

DFDL Mekong

22

China

Herbert Smith LLP

29

Hong Kong

Herbert Smith

37

India

Amarchand & Mangaldas & Suresh A. Shroff & Co.

46

Indonesia

Hiswara Bunjamin & Tandjung (in association with Herbert Smith LLP)

55

Japan

Anderson Mori & Tomotsune

64

Korea

Kim & Chang

72

Lao PDR

DFDL Mekong

79

Macau

João Nuno Riquito - Advogados

87

Malaysia

Skrine

94

Mauritius

BLC

106

Mongolia

Lynch & Mahoney LLC

115

Myanmar

DFDL Mekong: Myanmar Thanlwin Legal Services, Ltd.

122

Nepal

Kusum Law Firm

130

New Zealand

Russell McVeagh

135

Pakistan

Orr Dignam & Co

144

Philippines

SyCip Salazar Hernandez & Gatmaitan

154

Singapore

Herbert Smith LLP

159

Sri Lanka

Nithya Partners

173

Taiwan

Lee and Li

181

Thailand

Herbert Smith (Thailand) Limited

187

Vietnam

DFDL Mekong

195

Profiles

2

201

Published by Herbert Smith 23rd Floor, Gloucester Tower 15 Queen’s Road Central Hong Kong Tel: +852 2845 6639 Fax: +852 2845 9099 www.herbertsmith.com

No photocopying The information provided in this publication is general and may not apply to any specific situation. Legal advice should always be sought (where appropriate, from advisers based in the relevant jurisdictions) before taking any action based on the information provided. The publisher and authors bear no responsibility for any acts or omissions contained herein. Information provided is accurate as at August 2010. © Herbert Smith LLP 2010

Korea Kim & Chang Lending a lender require a licence to lend money to a company based in Korea 1 Does (the “borrower”)? Are there any exemptions available? The Lending Business Registration and Consumer Protection Act (the “Lending Business Act”) applies to commercial lending transactions with Korean borrowers in business activities (ie, continuously and repeatedly for profit making purposes). An entity that intends to engage in (i) the business of providing loans to Korean residents, (ii) the business of acquiring claims arising from loan agreements and collecting them, or (iii) the loan “brokerage” business in Korea, must register with the relevant municipal government in which such lender intends to engage therein. If an entity holds a lending licence issued under other relevant laws such as a banking licence or a credit specialty business licence, under the Lending Business Act, a separate registration is not required to engage in the lending business. Certain loan transactions not included in the definition of “lending business” under the Lending Business Act are exempt from the registration requirement. Such transactions include loans made to employees by employers, loans made to members of a labour union by the labour union, loans made by the government or local governments, and loans made by non-profit organisations according to their purpose of establishment. While a specific exemption was not provided in respect of foreign lenders lending to a company based in Korea, the prevailing view in Korea is that the provision of syndicated loans to Korean institutions by foreign lending entities is generally not “doing lending business in Korea” thus will not trigger the registration requirement.

are the consequences of making a loan to a borrower in Korea without 2 What a licence? Engagement in the lending business without either registering under the Lending Business Act or obtaining a licence pursuant to any other law is punishable by up to five years in prison or KRW50 million in fines.

a borrower based in Korea have to deduct amounts for withholding tax 3 Will on interest payments made to an overseas lender? In principle, a borrower based in Korea will have to deduct amounts for withholding tax on interest payments made to an overseas lender. However, if the borrower qualifies under the Foreign Exchange Transactions Act as an institution engaged in “foreign exchange affairs” (as most Korean financial institutions do) and receives a foreign currency loan to be redeemed in foreign currency from a foreign financial institution (ie, the lender) as prescribed by the Foreign Exchange Transactions Act, then such withholding tax on interest paid to the lender would be exempted.

there any limit to the level of interest that can be charged on loans made in 4 IsKorea? In the case of loans made by a company registered under the Lending Business Act to individual persons or certain small companies as enumerated in the Lending Business Act, the level of interest charged on loans may not exceed 49% per annum. In the case of loans made by credit financial companies holding a lending licence issued under any other relevant laws, the level of interest charged on loans may not exceed 49% per annum. If the default interest rate imposed by banks and bank holding companies exceeds 25% per annum, then the maximum default interest rate may not be greater than 1.3 times the normal interest rate. In the case of other credit financial companies other than banks and bank holding companies, if the default interest rate exceeds 25% per annum, then the difference between the normal interest rate and the default interest rate may not be greater than 12% per annum. Loans not subject to any of the above laws (ie, private lending transactions for non-business purposes) may not charge an interest rate of more than 30%.

Guide to lending and taking security in Asia 2010/2011

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Korea – Kim & Chang

for one lender to agree that a second lender may be preferred 5 Isoverit possible the first lender for repayment of debt irrespective of when that debt was incurred? If it is possible, how would you document such an arrangement?

Yes, such priority may be set in the form of an agreement between the first and second lender (which may or may not include the borrower) whereby the first lender acknowledges priority of the second lender and agrees to transfer any payments to the second lender in case relevant payments are made to the first lender before the full repayment of the second lender. However, such agreement will only be binding on the relevant parties and will not be applicable to any third parties.

Taking security a lender have to be licensed or registered in order to take security over 6 Does assets in Korea or a guarantee from an entity incorporated in Korea? No. However, a foreign exchange report may be required to be filed in certain cases as required by the Foreign Exchange Transactions Act (eg, transactions between a Korean resident and a non-resident).

the taking of security in Korea result in a lender being liable to tax in 7 Does Korea? No.

8 Can a security interest be taken in Korea over the following assets? 8.1

Land

Yes. Security over land is typically taken by way of mortgage (in practice, security interests commonly take the form of a kun-mortgage ). To create a mortgage, the parties must first enter into a mortgage agreement and then file a joint application for recordation of the mortgage in the court registry. A mortgage is automatically perfected upon creation (ie, a mortgage agreement and a public recordation) and no further action is required for perfection. A kun-mortgage is a special type of mortgage and can be used to secure any type of debt. In practice, parties enter into a kun-mortgage (rather than ordinary mortgage) in almost all cases. It is distinct because it secures debt in an amount up to a certain maximum or ceiling amount without regard to intermediate increases or decreases in the debt so long as the amount remains below such predetermined ceiling amount. If the amount of principal outstanding plus interest at any given time happens to fall below the registered maximum secured amount, the kun-mortgage will only secure such amount of the debt, but no more. If the amount of principal outstanding plus interest at any given time exceeds the registered maximum secured amount, then any amounts exceeding limit will not be secured. Accordingly, it is advisable to fix the maximum amount at a level that exceeds the principal by an adequate margin. 8.2

Shares in a Korean company Yes. Shares in a Korean company may be secured in the form of a pledge or kun-pledge. With respect to the former method, the Commercial Code provides for two types of share pledges: a registered pledge and an unregistered pledge. The key difference between the two is that the pledgee of a registered pledge is entitled by law to a security interest in (i) the cash or stock dividends declared in respect of the pledged shares, and (ii) liquidation proceeds in respect of the pledged shares, with a priority over other creditors, without attaching such dividends, liquidation proceeds or distributions, while the pledgee of an unregistered pledge will not be entitled to such rights. A security interest is created and perfected by an “unregistered” pledge when: (i) a pledge agreement is entered into by and between the pledgor and the pledgee and (ii) the certificates representing the pledged shares are delivered by the pledgor to the pledgee.

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In order to create and perfect on a security interest created by a “registered” pledge, in addition to items (i) and (ii) immediately above, the pledge must be registered in the shareholders’ registry maintained by the issuer of the shares and the pledgee’s name must be registered on the share certificates. There is no other filing or registration requirement other than as described above with respect to creation and/or perfection of a pledge of shares. A kun-pledge, as opposed to a general pledge, is a pledge which secures floating debt obligations, which is to be fixed at some future date, up to a maximum amount. Please also refer to the description of kun-mortgage in paragraph 8.1 above. 8.3

Bank accounts Yes. A bank deposit is considered the depositor’s claim against the depository bank and a pledge or a kunpledge may be established over such claim. The depositor (pledgor) may pledge its claims to a third party (secured party) via a pledge agreement or kun-pledge agreement and perfection is achieved when the pledgor sends a fixed-date stamped1 notice of pledge to its obligor and/or a written consent (fixed-date stamped) is obtained from the obligor. In addition, any instruments relating to the claim should be delivered to the secured party, although it is generally accepted practice that such delivery will be deemed made if the pledgor agrees to hold such instruments on behalf of the secured party. Banks’ deposit agreements usually prohibit a pledge of a bank account without the bank’s consent, and thus the consent of the depository bank would be required (the consent should also be fixed-date stamped).

8.4

Receivables (rights under contracts) Yes. Under Korean law, a secured creditor may take a security interest over receivables or any other rights under contracts and perfect such interests thereon. The security interest is created by executing a pledge (or kunpledge) which will require that the pledgor send notice (which should be fixed-date stamped by a notary) of pledge to its obligor under the claim and/or obtain the obligor’s consent (which should be fixed-date stamped by a notary) to the pledge. In addition, any instrument evidencing the claim should be delivered to the secured party, although such instrument may be held by the pledgor on behalf of the secured party. If a pledge or transfer of the receivable or contractual right is restricted in the relevant agreement, then the obligor’s consent should be obtained.

8.5

Insurance Yes. Insurance is considered the beneficiary’s claim again the insurer. The same discussion under paragraph 8.4 will apply.

8.6

Floating charge over all assets Korean law does not recognise the concept of a floating charge. However, there is the concept of a kunmortgage or kun-pledge to secure the debts with values that may fluctuate. A kun-mortgage or kun-pledge secures debt up to a fixed amount agreed upon by the lender and borrower (“Maximum Amount”) notwithstanding any fluctuations in the value of the debt so long as such value does not exceed the Maximum Amount. Please also refer to paragraph 8.1 above. Furthermore, Korean law requires that the collateral be specifically identifiable. Therefore, in principle, a valid security interest cannot be granted over a fluctuating pool of assets under Korean law. Certain exceptions are recognised by courts and laws. For example, a valid security interest can be granted in fungible property such as grain, oil and fishery held in a segregated storage facility. Korean law also recognises a special security interest in a factory (ie, land, building and equipment) that is created by registering a mortgage on the plots of land, buildings and equipment. This “factory foundation mortgage” also creates a security interest over any leasehold or industrial property rights related to such factory’s operations.

1

Fixed-date stamping of a document is done by a notary public and constitutes legal evidence that the stamped document existed on

the date of the fixed-date of the stamp.


74


a company incorporated in Korea (the “guarantor”) give a guarantee for 9 Can the debt of the borrower? If the borrower is incorporated in a different country, would the guarantor still be able to give the guarantee?

The guarantor is generally permitted to give a guarantee for the debt of a borrower so long as such guarantee can be justified on the basis of corporate benefit from the guarantor’s perspective. A parent company’s guarantee for the benefit of its subsidiary is usually recognised as justifiable. However, a so-called upstream guarantee (ie, where a subsidiary guarantees the debt of a parent), will require specific grounds for justification. In addition, a publicly listed company is generally prohibited from providing a guarantee for the benefit of its major shareholders or specially related persons. However, as an exception to such general prohibition, a listed company is permitted to provide a guarantee to its major shareholders or specially related parties if such guarantee is (i) not expected to undermine the soundness of the listed company’s business, (ii) necessary in order to achieve the business purpose of the listed company and (iii) provided in accordance with appropriate lawful procedures and not otherwise contrary to the law. If the borrower was incorporated in a different country (ie, non-Korean resident), in addition to the restrictions above, the Foreign Exchange Transactions Act also applies and thus, certain foreign exchange reports along with other reports may need to be filed.

borrower becomes insolvent, will the secured assets be protected from 10 Ifthethegeneral creditors of the borrower? What claims would have priority over the security?

In principle, a secured party will have priority over all subsequent secured creditors, all unsecured creditors and claimants, priority being determined by the time of completion of perfection procedures. In practice, however, preferential creditors holding statutory preferred claims are deemed to have priority over secured creditors. Statutory preferred claims include certain tax liens, certain employee wage claims, small-sized residential lessee claims for security deposit refunds and certain other rights set out in the Korean Civil Code and other laws.

a lender enforce its security or claim under the guarantee freely after 11 Can default by the borrower or does a lender need a court order to enforce its

security or claim under the guarantee? If a court order or court involvement is required for security enforcement or a guarantee claim, how long will it approximately take to complete an enforcement of security? Enforcement of security: In the event of a default, the secured party may take certain remedial actions to enforce its interest in the secured collateral. First, it may initiate enforcement actions through the courts, which typically consists of a public auction. The time required for the completion of the auction process varies according to the type of property (whether it is land, a building, a house, etc.) and generally takes more than five to six months. If the debtor agrees, the secured party can take enforcement actions without the involvement of the courts through either a private sale or a transfer of title to the secured party to satisfy the obligations of the debtor. Enforcement of guarantee: A court order or court involvement is not required for a secured party or beneficiary to demand payment from a guarantor under a guarantee. However, in the event that the guarantor fails to make payments of the guaranteed obligations and the lender needs to enforce its rights under the guarantee against the guarantor’s assets, a court order and court involvement may then be necessary.

a liquidator or creditor of the borrower or guarantor prevent the 12 Can enforcement of a security or guarantee? In the bankruptcy proceedings under the Debtor Rehabilitation and Bankruptcy Law, the Secured Party will be permitted to exercise its security rights at any time notwithstanding the proceedings. A private sale or acquisition of collateral by a secured creditor would not be affected. The commencement of rehabilitation proceedings will have the effect of an automatic stay so that a secured party would not be permitted to dispose of any collateral located in Korea in any manner except in accordance with a court-approved rehabilitation plan.

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there any laws which prevent a company which has been acquired by the 13 Are borrower from providing financial assistance, granting security or giving guarantee to secure the loan used by the borrower to acquire such company?

There are no explicit regulations that prohibit such financial assistance etc. However, Korean law states that directors have a fiduciary obligation and a duty of loyalty to act in the best interests of the company in accordance with applicable laws and regulations and the company’s articles of incorporation. If the directors of the Korean company cause the company to enter into a transaction (eg, providing a guarantee) in breach of their fiduciary duty as determined by a judicial body, the validity and enforceability of such transaction may be challenged and deemed invalid and unenforceable under Korean law. There were several Korean court cases (mostly criminal cases) in which the Korean courts found a breach of fiduciary duty resulting from a director causing the company to provide an upstream guarantee or providing the company’s asset as collateral for the shareholder’s financing from a third party financial institution. Also, as mentioned above, the company is generally permitted to provide financial assistance, grant security or provide guarantee (collectively, “Financial Assistance”) so long as such Financial Assistance can be justified as in the best interests of the company. Thus, Financial Assistance to the borrower (including upstream guarantees) requires specific grounds for justification. If there is no justifiable reason for providing Financial Assistance to secure the loan used by the borrower to acquire such company, such Financial Assistance would be deemed to fall beyond the scope of authority and power of the company and may be invalidated.

any security given by the borrower or guarantor or guarantee granted 14 Does by the guarantor have to be registered or filed with a governmental

body/court? What is the time period for such filing or registration to be made and what is the consequence if it is not made? Security interests created over registered assets (such as real estate, ships, automobiles, construction equipment etc.) shall be registered with the appropriate registry. Such registration takes approximately two to three days. If such registration is not made, the security interest will not be adequately created or perfected and the security will be void. Security interests created over non-registered assets (such as receivables etc.) or guarantees granted by the guarantor do not require a registration or filing with a governmental body or court save for certain foreign exchange reports pursuant to the Foreign Exchange Transactions Act, if applicable.

any security or guarantee give rise to any stamp duty/taxes/registration 15 Does fees? The registration of the security interest with the relevant registry is subject to certain registration taxes (including surtax) (ie, 0.24% of the recorded maximum secured amount in case of real estate, KRW9,000 per registration in the case of ship) and mandatory purchase of national housing bonds (ie, 1% of the recorded maximum secured amount in the case of real estate). In addition, moderate expenses in the form of stamp tax and fees may also be applicable.

it possible to grant a lender security over an asset which has already had 16 Issecurity granted over it to another person? If it is possible, how would you normally document such an arrangement?

Yes. In the case of a mortgage over real estate, relevant law explicitly acknowledges subsequent security interests. As for security over other assets such as shares or monetary claims, although there are no explicit laws permitting such subsequent security, there are also no regulations prohibiting the granting of subsequent security. As such, it is generally interpreted as permissible. Documenting a second security will generally be the same as that of granting the first security over such asset (security agreement and perfection). However, as a practical matter, the method of perfecting the subsequent security may differ from the method of perfecting the first security, especially when the perfection is of an exclusive nature such as possession or delivery of the asset.


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Regulated industries there any laws preventing the acquisition of companies or assets in the 17 Are following industries? 17.1

Oil/gas A single person (regardless of nationality) may not beneficially own or effectively control more than 15% of the voting shares of the Korea Gas Corporation. Also, shareholders of foreign nationality may only hold up to an aggregate of 30% of the shares of Korea Gas Corporation. There are no prohibitions against the acquisition of other companies in the oil or gas industry. Please note however, that all oil mining rights within Korea are reserved to the Korean Government.

17.2

Electricity Foreigners, in the aggregate, may own up to 40% of the total shares of Korea Electric Power Corporation and the ceiling placed on individual ownership is up to 3% of its total shares. Please also note that a licence under the Electricity Business Act is necessary in order to engage in the power generation business. Furthermore, licences in relation to the nuclear power generation are not granted to foreign investment companies as defined in the Foreign Investment Promotion Law.

17.3

Natural resources/mines With regard to hydraulic, thermal, wind, solar, and tidal power resources, the total amount of foreign investments in Korean power generation through the purchase of power generation plants of the Korea Electric Power Corporation shall not exceed 30% of the total power plants in Korea. Foreign investments in livestock and fishery industries shall not be equal to or exceed 50% of the shares of related companies, while foreign investments in rice and barley cultivation are prohibited.

17.4

Telecommunications Under the Telecommunications Business Law (the “TBL”), foreigners (including foreign entities and foreign governments) and “deemed foreigners” may not own more than 49% of the total issued and outstanding voting shares (including share equivalents such as depositary receipts) of a Korean broadcasting and telecommunications service company. In this regard, if a foreigner (together with its Specially Related Persons) is the largest shareholder of a Korean entity and such largest shareholder holds 15% or more of the total number of issued and outstanding shares of such Korean entity, then such Korean entity will be a “deemed foreigner”, whose shareholding in the broadcasting and telecommunications service company will be aggregated for the purpose of applying the 49% rule. However, a company holding less than 1% of the total issued and outstanding voting shares shall not be considered a “deemed foreigner” and thus its shareholding ratio is not counted when applying the 49% rule. In addition, the TBL provides that a foreigner or a foreign government may not become the largest shareholder of KT Corporation owning 5% or more of KT Corporation shares.

there laws preventing the taking of or enforcement of security in relation 18 Are to shares in or assets of companies in the following industries? 18.1

Oil/gas No. However, should the enforcement of security in relation to shares or assets of the companies result in the violation of the above mentioned investment restrictions, the voting rights of the exceeding shares may be restricted and the shareholder may be required to dispose of the exceeding shares.

18.2

Electricity No. However, should the enforcement of security in relation to shares or assets of the companies result in the violation of the above mentioned investment restrictions, the voting rights of the exceeding shares may be restricted and the shareholder may be required to dispose of the exceeding shares.

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18.3

Natural resources/mines No. However, should the enforcement of security in relation to shares or assets of the companies result in the violation of the above mentioned investment restrictions, the voting rights of the exceeding shares may be restricted and the shareholder may be required to dispose of the exceeding shares.

18.4

Telecommunications No. However, should the enforcement of security in relation to shares or assets of the companies result in the violation of the above mentioned investment restrictions, the voting rights of the exceeding shares may be restricted and the shareholder may be required to dispose of the exceeding shares.

Governing law the basis that the loan agreement and/or guarantee are governed by 19 On English law, is an English law judgment in relation to the loan agreement enforceable in Korea?

Korean courts recognise and enforce any monetary judgment against a Korean Party obtained in proceedings in England; provided that (i) such judgment was finally and conclusively given by a court having valid jurisdiction in accordance with the international jurisdiction principles under Korean law and applicable treaties, (ii) such Korean Party was duly served with service of process (otherwise by publication or similar means) in sufficient time to enable such Korean Party to prepare its or his defence in conformity with the laws of England (or in conformity with the laws of Korea if it was made to a Korean Party in Korea) or responded to the action without being served with process, (iii) recognition of such judgment is not contrary to the public policy of Korea and (iv) judgments of the courts of Korea are accorded reciprocal treatment under the laws of England.

Kim & Chang Contacts Phone Fax Email Website

S. H. Lee/S. J. Lee Seyang Building, 223 Naeja-dong, Jongno-gu, Seoul, Korea 110-720 +82 2 3703 1114 +82 2 737 9091~3 [email protected] www.kimchang.com

Kim & Chang is widely recognised as Korea’s premier law firm. Established in 1973, the firm has set the standard for excellence for legal services in every major area of practice. The principles we were founded on and which we still adhere to today allow us to provide the highest-quality legal advice to our clients - specialisation in core practice areas, dedication to meeting the unique needs of each client and internationalisation of staff. Having advised in the majority of major transactions, projects and cases in Korea, we have earned an unrivalled track record for developing innovative solutions to the increasingly complex legal challenges that our clients face, both in Korea and increasingly overseas. Our success derives from the outstanding quality of our professionals and staff. They include attorneys, patent attorneys, tax attorneys, economists and sector specialists, who number more than 650 today. They are exceptionally talented individuals who have graduated from most prestigious universities in Korea and around the world. They have honed their skills on challenging assignments. They are international in practice and outlook; many Korean attorneys are also licensed to practice in the US and our foreign attorneys have had work experience in the US, Japan, China and the EU countries and speak French, German, Chinese, Japanese, Swedish and Spanish in addition to Korean and English. But perhaps most importantly, our professionals can be distinguished by their singular commitment to providing the highest quality services to the firm’s clients as efficiently as possible. Our clients comprise an extraordinary roster of multinational corporations, domestic companies, international and domestic financial institutions, and private equity funds. They include most of the companies in the Fortune 500. Whether they are established industry leaders or start-ups, our clients can be assured of receiving the highest-quality advice that is uniquely tailored to their needs.


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