Structure of an Exclusive Management Agreement for a K-Pop Artist (Standard Form Contract)

Posted by Joseph Hwang Joseph Hwang 6/09/2024

Structure of an Exclusive Management Agreement for a K-Pop Artist (Standard Form Contract) - Part 2.

Joseph Hwang

* Attention: This article is based on the latest version of the "Standard Form of Exclusive Contract for Musicians (hereinafter referred to as "SFEC", Notice No. 2024-0021, Ministry of Culture, Sports and Tourism of the Republic of Korea, amended on June 3, 2024)."

2. Parties to the Agreement

A contractor should have a juristic personality to enter into an agreement, such as a natural or juridical person (i.e., a corporation). To contract with the SFEC, one party as an artist must be a natural person and the other party as an exclusive management company must be a natural person or a corporation.

(a) Management Company (hereinafter referred to as the "Company")

It is better to be a corporation than an individual (sole proprietorship) to run an entertainment business as a business entity.

Of course, it is possible to run the business as both of them.

However, a corporation is a more trustworthy business entity than an individual, people weigh it that way.

Nevertheless, the Company that wants to contract with artists should be required to meet some conditions by the Popular Culture and Arts Industry Development Act of the Republic of Korea, such as the following:

"Article 26 (Registration of Popular Culture Planning Business)

(1) A person who intends to conduct popular culture planning business shall register with the Minister of Culture, Sports and Tourism. In such cases, the same shall apply to the modification of registered matters.

(2) A person who applies for registration pursuant to paragraph (1) shall meet the following requirements: <Amended on Mar. 13, 2018>

1. That he/she shall meet any of the following requirements: Provided, That in the case of a juristic person, at least one executive officer shall correspond thereto:

(a) Work experience of at least two years in the popular culture planning business;

(b) Completion of an educational course relating to the popular culture planning business run by a facility prescribed by Ordinance of the Ministry of Culture, Sports and Tourism;

2. A separate office."

Therefore, the artist who wants to contract with the Company should confirm the following facts: (i) The Company should have a certificate that is registered with the Korean government as an authorized company of popular culture planning business, whether an individual or a legal entity, (ii) The Company's office should be independent and physically separated from other business entities in the same space, and it includes the meaning that there should not be any business entities other than the company of popular culture planning business in the same floor or space whoever a tenant or property owner.

The reason for this provision is to protect the exclusively contracted artists under the control of the Korean government and prevent the possibility of the Company committing illegal activities such as sexual violence crimes against the artists or other crimes with the entertainment business license from the government.

The suicide of actress Jang Ja-yeon sparked the need for legislation. The case is a typical case of power and illegality, in that the high-powered corruption scandal in connection with the entertainment business by the management company, exposed the shameful underbelly of high society, where there are only victims and no perpetrators, and it is still ongoing. It is an unfortunate case. (See the links below.)

And the Popular Culture and Arts Industry Development Act additionally requires more qualifications for registration as an entertainment management company under Article 27:

"Article 27 (Grounds for Disqualification)

Any of the following persons may not operate or engage in the popular culture planning business: <Amended on Nov. 26, 2019>

1. Any person who is a minor, who is under adult guardianship, or under limited guardianship;

2. A person who was declared bankrupt, but has not yet been reinstated;

3. A person for whom three years have not passed since his/her punishment was fully executed or a decision to waive his/her sentence became final after he/she had been sentenced to a fine or higher for violation of this Act, Articles 287 through 292 and 294 of the Criminal Act, Article 5-2 of the Act on the Aggravated Punishment, etc. of Specific Crimes, the Act on the Punishment of Acts of Arrangement of Commercial Sex Acts, Etc. the Act on the Regulation of Amusement Businesses Affecting Public Morals and the Act on the Protection of Children and Youths against Sexual Abuse or for committing child abuse-related crimes under subparagraph 7-2 of Article 3 of the Child Welfare Act;

4. A person for whom three years have not passed since registration was revoked under Article 33 (1);

5. A juristic person that allows an officer, to whom any of subparagraphs 1 through 4 applies, maintain his/her position even after becoming aware of fact."

Therefore, for the above reasons, before entering into a contract with the Company, the artist must confirm whether the Company has registered or not by asking for submitting the certificate document for the artist's inspection to the Company. As a result after the artist's inspection, if the certificate is absent, entering into the contract with the Company shall be illegal, and the effectiveness of the contract under the illegal state would be invalid.

(b) Artist (hereinafter referred to as the "Artist")

The Artist who wishes to contract with the Company should be a natural person who is independently available for contracting. This means that the Artist must be 19 years of age or older and should be able to perform on his/her own without a legal representative, such as a parent. Because the Korean Civil Act stipulates the capacity of a minor as below:

"Article 4 (Majority)

Majority is attained by a person upon the completion of 19 years of age.

[This Article Wholly Amended by Act No. 10429, Mar. 7, 2011]

Article 5 (Capacity of Minor)

(1) A minor shall obtain the consent of his/her legal representative to perform any juristic act: Provided, That exceptions shall be made where the juristic act concerned is one merely to acquire rights or to be relieved from obligations.

(2) Any act done in violation of the provision of the preceding paragraph is voidable."

Any act performed without the consent of the legal representative of the Artist can be revoked. However, the right of revocation cannot be exercised if the minor has deceived the Company by altering the documents. In addition, the consent and authorization of the legal representative of the Artist may be revoked before the minor has entered into legal actions.

So if the Artist is a juvenile as a contractor in the SFEC, the SFEC requires the written consent of the legal representative. It's certainly an important one of the legal checking points before the contract of SFEC.

* Standard contract analysis continues in the series.

** References and quotations:

https://ent.kocca.kr/index.do

https://bizviking.com/%EC%97%B0%EC%98%88%EA%B8%B0%ED%9A%8D%EC%82%AC-%EC%B0%BD%EC%97%85-%EB%B0%A9%EB%B2%95%EA%B3%BC-%ED%98%84%EC%8B%A4/

https://blog.k-startbiz.org/%EB%B2%95%EC%9D%B8%EC%84%A4%EB%A6%BD/%EC%97%94%ED%84%B0%ED%85%8C%EC%9D%B8%EB%A8%BC%ED%8A%B8%EC%97%85-%EB%B2%95%EC%9D%B8%EC%84%A4%EB%A6%BD-%EC%A0%88%EC%B0%A8-%EC%95%8C%EC%95%84%EB%B3%B4%EA%B8%B0%EB%B9%84%EC%83%81%EC%A3%BC%EC%82%AC/

https://english.hani.co.kr/arti/english_edition/e_national/418199

https://www.latimes.com/archives/la-xpm-2011-jan-09-la-ca-cultural-exchange-20110109-story.html

https://elaw.klri.re.kr/kor_service/lawView.do?hseq=55344&lang=ENG

https://elaw.klri.re.kr/kor_service/lawView.do?lang=ENG&hseq=29453

Series Articles

Overview

https://www.musicbusiness.co.kr/2024/05/structure-of-exclusive-management.html