Kwon Hyangyeop: "We Must Prevent Technology Sovereignty Expropriation Through Mergers and Acquisitions"

Representative Proposal for Amendments to the National Advanced Strategic Industries Act and the Industrial Technology Protection Act

Kwon Hyangyeop, a member of the Democratic Party of Korea (representing Suncheon, Gwangyang, Gokseong, and Gurye in South Jeolla Province), announced on the 20th that she has introduced the so-called "Technology Sovereignty Protection Act." This act consists of proposed amendments to the Special Act on Strengthening and Protecting the Competitiveness of National Advanced Strategic Industries and the Act on Prevention and Protection of Industrial Technology Leakage. The amendments would apply the foreign investment approval system to mergers and acquisitions (M&A) of domestic corporations in which individuals of foreign nationality exercise dominant influence.

Under current law, entities possessing national advanced strategic technologies or national core technologies must obtain approval from the Minister of Trade, Industry and Energy when engaging in foreign investment activities such as overseas mergers and acquisitions or joint ventures.

Kwon Hyangyeop, Member of the National Assembly.

Recently, there has been controversy over whether cases in which individuals of foreign nationality indirectly pursue mergers and acquisitions through domestic corporations should be classified as foreign investment. Concerns have been raised that such methods create regulatory blind spots in the oversight of foreign investment.

Additionally, given the intensifying global competition for technological supremacy and the diversification of M&A strategies, there have been calls to strengthen economic security by treating such domestic corporations as foreign investors and requiring them to obtain foreign investment approval.

The proposed amendments stipulate in both laws that a "domestic corporation in which an individual of foreign nationality exercises dominant influence" shall also be regarded as a foreign investor. By elevating the scope of foreign investment from the current enforcement decree level to the level of the law itself, the amendments aim to prevent the expropriation of national advanced strategic technologies and national core technologies by foreign capital.

Kwon stated, "In this era of global technological supremacy competition, capital crosses borders and mergers and acquisitions circumvent nationality. As methods of technology expropriation become more sophisticated, the law must also block these cunning loopholes."

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