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A Function of the Extraterritorial Application Clause in the Korean Capital Markets Law: Focusing on the Applicable Law of Prospectus Liability in Cross-border Securities Offering

  • Journal of International Business Transactions Law
  • Abbr : IBT
  • 2020, (30), pp.179-226
  • DOI : 10.31839/ibt.2020.07.30.179
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law > Private Law > International Commercial Transactions Law
  • Received : June 30, 2020
  • Accepted : July 31, 2020
  • Published : July 31, 2020

Jong Hyeok Lee 1

1한양대학교

Accredited

ABSTRACT

When securities are offered to the public, a prospectus drawn up by an issuer should be distributed mainly by underwriters to investors in order for them to know the potential investment risks. Each country has its own capital markets law regulating a prospectus by way of promulgating administrative regulations, criminal punishment and civil liability to enforce a prospectus with accurate information to be drawn up and distributed so that investors are provided with accurate information on the issuer and the securities in question. In a case where an issuer is a foreign company and/or the market where securities are offered to the public is a foreign capital market, it is not certain whether the prospectus liability clause in the Korean capital markets law should be applied to those cases and which law should govern those cases. If a securities offering has foreign element(s), the applicable law on prospectus liability should be determined by the choice-of-law rules, irrespective of the extraterritorial application clause (Article 2) in the Korean capital markets law. Article 2 of the Korean capital markets law makes different roles respectively in civil liability, criminal responsibility and administrative restriction.

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