본문 바로가기

JIPYONG LLC

ENG
Search Menu
Close
Delete Search
프린트하기
Jipyong News|KOREA LEGAL INSIGHT
2023 in Review & 2024 Outlook by Practice Chairs
2024.01.08
M&A and Corporate
 
The M&A market, which experienced a general downturn in 2022, continued its stagnant pace throughout 2023 due to factors such as inflation, rising interest rates and accompanying difficulty of obtaining funding, falling share prices, and domestic and foreign instability caused by regional wars.

Nonetheless, there has been a steady demand for small to mid-sized M&A deals, led primarily by blind funds with cash surplus.  It is anticipated that the number of M&A transactions involving companies at risk of insolvency will continue to rise in 2024.  Continued re-evaluation of companies will also likely work to narrow the expectation gap between buyers and sellers, which would likely result in increased M&A transactions involving mid-sized companies and tech companies.


Finance
 
Owing to the U.S. Federal Reserve’s rate hikes following a period of quantitative easing during the COVID-19 pandemic, global inflation caused by various wars, and continued rise in interest rates generally, the domestic PF market remained subdued in 2023.  Various financial institutions
involved in foreign real estate development and sales have, in general, found it difficult to find suitable investment opportunities due to factors such as the collapse of multiple large Chinese developers and the falling real estate prices in the U.S. caused by a sharp decline in demand for commercial leases.  Domestic situation was similarly grim, with many development and M&A financing projects being on hold due to interest rates and real estate prices that have stayed high, and financial institutions with funds tied up in ongoing projects exercising particular caution about exploring new opportunities.

While the market is projected to remain depressed in 2024 a silver lining can be expected from foreign investors who, emboldened by the strong dollar, may be looking for the right time to acquire companies, real estate, and bonds at a discount.  Moreover, given the rising risk of defaults by insolvent development sites or bankrupt debtors, there may be an increased interest among financial institutions in managing bad loans and selling project financing development sites.


Capital Markets
 
The IPO landscape remained stagnant in 2023 due to repeated benchmark interest rate increases by the U.S. Federal Reserve, prolongation of the War in Ukraine, increased uncertainties of the Israel-Hamas conflict, and high interest rates, exchange rates, and consumer prices.  A distrust of the capital
markets have risen among domestic investors due to a number of high-profile stock manipulation scandals such as the “Ra Deok-yeon Case” and the “Young Poong Paper Case.”  A further controversy ensued with the ban on short selling imposed toward the end of the year, sparking disputes as to the maturity and health of Korea’s capital markets.

For 2024, a key date of note will be the general election that will be held in April 2024.  Stock issuance and the IPO market are expected to remain conservative even after the elections, however, due to the risk of recession and corporate restructuring.


Construction & Real Estate
 
Given Korea’s declining growth rate and uncertainties in its capital markets, Korea’s commercial real estate market for 2024 is expected to continue to be in the slump as it did for much of 2023.  Transactions for office buildings in the Seoul Metropolitan Area for 3Q 2023 fell by 35% compared to the
previous year, and high interest rates are casting a shadow over the 2024 outlook.  The slowdown of global economic growth in general, the government’s cuts to the R&D budget, and numerous cases of corporate restructuring are all factors that may contribute to a high number of vacancies in office buildings.

There are some areas for cautious optimism, however.  While project financing was generally unremarkable during 2023 due to governmental liquidity injections, a number of financial investment companies subject to NCR (net capital ratio) regulations are expected to be put up for sale in 2024.  Moreover, there appears to be a steady interest in alternative real estate investments such as data centers and senior housing.  Also, some of the policy included in the Seoul 2030 Plan announced by the Seoul Metropolitan Government in February 2023 may be of interest to potential urban redevelopment investors, such as (i) the expansion of residential areas within city centers, and (ii) relaxing the restrictions on floor area ratios and building heights as an incentive for securing urban green spaces.


Antitrust & Competition
 
In 2024, the Fair Trade Investigation Division of the Prosecutors’ Office is expected to continue its recent tendency to conduct direct investigations, with a particular focus on insider trading and unlawful cartel conduct cases.  Meanwhile, Korea’s Fair Trade Commission (“KFTC”) – which issued
Guidelines on the Voluntary Management of Online Dark Patterns on July 31, 2023 – is likely to strengthen its efforts to protect consumers and regulate the so-called online dark patterns (i.e., user interface designed to deceive users).

The KFTC is also expected to deepen its cooperation with other governmental organizations to tackle various novel issues of competition law in 2024.  For instance, the KFTC is expected to work closely with the Ministry of Culture, Sports, and Tourism to regulate subcontracting issues in new industries.  The KFTC is also expected to cooperate with the Ministry of Environment to regulate labeling and advertisement relating to environmental effects (e.g., greenwashing).  For issues relating to Fair Transactions in Subcontracting Act (such as price adjustment), the KFTC is expected to collaborate with the Ministry of SMEs and Startups.


Global Dispute Resolution
 
Amidst a global economic downturn, international investment disputes appear to be on the rise.  A number of Korean companies have become embroiled in disputes involving joint ventures with foreign partners.  The wars in Ukraine and Gaza have presented additional difficulties for international commercial dispute resolution due to growing procedural
delays and enforcement issues.  Another noteworthy development is the increase in smaller scale disputes.  These trends are expected to continue in 2024.


Labor & Employment
 
The 3 most important factors that impact labor-related issues are (1) socioeconomic changes, (2) amendments to the law, and (3) new court holdings.
The most notable socioeconomic changes in recent times are Korea’s aging population (especially with regard to its labor market) and the widespread return to office following the close of the COVID-19 pandemic.  As seen in recent Supreme Court decisions, employment issues concerning employees past the age of retirement and part-time laborers appear to be on the rise.  Moreover, workplace harassment cases have also increased following the return to office, and the trend is expected to continue into the foreseeable future.

As for legal changes, the most notable one is the so-called “Yellow Envelope Bill” that was recently passed by the National Assembly.  Although the bill was vetoed by President Yoon in early December, collective bargaining and labor disputes will likely generate a fierce debate in the coming months.  Moreover, inquiries relating to Serious Accidents Punishment Act (“SAPA”) are expected to increase.  In particular, many companies with 5 to 49 employees will be required to implement a comprehensive health and safety management system beginning on January 27, 2024 under SAPA.
 
Lastly, courts in Korea are currently hearing cases relating to whether bonuses constitute ordinary wages, and whether performance-based incentives constitute average wages.  Depending on the outcome of these cases, wage disputes may see an increase in 2024.
Back to List

Professionals