Japan–Korea Cross-Border Acquisition: Legal Due Diligence for the Korean Subsidiary

Case Details: A Japanese manufacturing company sought to acquire its long-term Korean partner through a share transfer structure to ensure stable supply-chain operations.

Because Japanese M&A transactions often raise issues involving related-party transactions, unwritten commercial arrangements, and change-of-control risks, the client engaged Decent Law Firm’s International Practice Team to conduct a full-scope legal due diligence.

The Korean target operated mainly as an import-distribution business, but the Japanese side identified several areas of concern—including potential related-party dealings, financial soundness, oral contracts with key partners, and latent labor liabilities—requiring comprehensive verification. Decent conducted a Full-Scope Legal Due Diligence on these matters.

Decent's Strategy: Leveraging our experience collaborating with Japanese law firms, Decent applied a cross-border DD standard tailored to Japan-origin acquisitions.

We prioritized the examination of (i) oral contract structures with major customers, (ii) potential related-party transactions, (iii) the target’s zero-debt financial structure, and (iv) retirement benefit reserves and other contingent liabilities.

To secure post-acquisition business continuity, we advised including a consulting-agreement clause for the existing representative. Additionally, we reflected critical representations and warranties in the SPA—such as the absence of related-party transactions, accuracy of the shareholder registry, and safeguards against double transfer—to mitigate acquisition risks identified by the Japanese side.

Outcome: "Full Legal Due Diligence Report Delivered"

Our investigation confirmed that the Korean target had minimal financial, labor, and regulatory risks, with no legal impediments to the acquisition and stable operational continuity.

The due-diligence findings served as a key reference for the Japanese headquarters and its partnering law firm in making the final acquisition decision.

Decent Law Firm’s International Practice Team and corporate-law specialists continue to advise Japanese and global clients on Korea-based acquisitions, providing full-scope legal due diligence, SPA review, and cross-border M&A support.

For assistance with Cross-Border M&A, DD, or SPA matters, please contact our team.

#Korea M&A # Legal Due Diligence Korea # Cross-Border Acquisition Lawyer # SPA Review Korea # Company Korea Investment

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