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ENFORCEMENT DECREE OF THE SECURITIES AND EXCHANGE ACT

ENFORCEMENT DECREE OF THE SECURITIES AND EXCHANGE ACT

INTRODUCTION

Details of Enactment and Amendment

- Enactment: This Decree was enacted by the Cabinet Decree No. 618 (Mar. 30, 1962) to prescribe the matters delegated by the Securities and Exchange Act and those necessary for the enforcement thereof following the enactment of the same Act on January 15, 1962 for the purpose of contributing to the development of national economy by ensuring fairness in the issue, sale, purchase and other transactions of securities to facilitate the distribution thereof and protect investors.
- Amendment: This Decree has arrived at its present form as a result of being amended 41 times after being wholly amended on February 9, 1977 following the enactment thereof, and the latest amendment was on March 28, 2005.

Main Contents

- This Decree provides for securities under Article 2 (1) 9 of the Act.
- This Decree prescribes the procedures, etc. for public notification of announced purchase.
- This Decree prescribes the methods of marketing and the procedures for application for permission regarding the operation of securities business in a foreign country by a domestic securities company.
- This Decree prescribes that the officer and employee of securities company are permitted to acquire and dispose of stocks, held by the government, sold pursuant to the Furtherance of the Capital Market Act, or stocks allocated to members of employee stock ownership association pursuant to the Furtherance of the Capital Market Act though they are prohibited from buying and selling stocks except for the method of securities savings, etc.
- This Decree prescribes the standards, procedures, etc. for the registration of investment consulting business.
- This Decree prescribes the extent of minority stockholder who may request for purchase of stocks to the corporation concerned without attending stockholders' meeting in case he is against the resolution of the board of directors.
- This Decree prescribes the requirements and procedures for the designation of public corporation.
- This Decree prescribes that the Stock Exchange may request data to the securities company if necessary to grasp the abnormal situation of sale and purchase in the securities market.
- This Decree prescribes the calculation methods and procedures of return, etc. of short-term margin of selling and buying.
- This Decree prescribes the standards for acquisition, disposition, etc. of one's own stocks.
- This Decree prescribes the requirements, procedures, etc. in case that a stock-listed corporation or KODAQ listed corporation intends to merge with other corporation.

ENFORCEMENT DECREE OF THE SECURITIES AND EXCHANGE ACT
Amended by Presidential Decree No. 18757, Mar. 28, 2005

CHAPTER I GENERAL PROVISIONS

Article 1 (Purpose)
The purpose of this Decree is to stipulate matters necessary for the enforcement of the Securities and Exchange Act (hereinafter referred to as the Act ). <Amended by Presidential Decree No. 18687, Jan. 27, 2005>

Article 2 (Definition)
Definitions of terms used in this Decree shall be subject to the provisions of the Act.
[This Article Newly Inserted by Presidential Decree No. 10823, May 15, 1982]

Article 2-2 (Issuer of Securities Depository Receipt)
The term person designated by the Presidential Decree in Article 2 (1) 8 of the Act means the Korea Securities Depository established pursuant to Article 173 of the Act (hereinafter referred to as the Depository ). <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 2-3 (Designation of Securities)
(1) The securities prescribed in Article 2 (1) 9 of the Act mean those falling under any one of the following subparagraphs: <Amended by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18297, Feb. 28, 2004; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18596, Dec. 3, 2004; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Beneficiary certificates issued by a trust company in accordance with the provisions of the Trust Business Act;
1-2.Beneficiary certificates issued by a trust company according to an asset securitization plan under the Asset-Backed Securitization Act (hereinafter referred to as an asset securitization plan );
2.Beneficiary certificates issued by any asset operation company under the Act on Business of Operating Indirect Investment and Assets;
2-2.Equity share of a private investment fund under subparagraph 4-2 of Article 2 of the Act on Business of Operating Indirect Investment and Assets;
3.Beneficiary certificates issued by any foreign business operator of indirect investment and assets (referring to any person who runs the business of operating indirect investment and assets in a foreign country in accordance with foreign Acts and subordinate statues governing the operation of indirect investment and assets; hereinafter the same shall apply);
3-2.Investment certificates issued by a special purpose company for securitization according to an asset securitization plan;
3-3.Mortgage-backed bonds issued by a special purpose company for mortgage-backed bonds according to a bond securitization plan under the Special Purpose Companies for Mortgage-Backed Bonds Act;
3-4.Housing mortgage securities and school fees loan securities issued by the Korea Housing Finance Corporation established pursuant to the Korea Housing Finance Corporation Act according to its bond securitization plan;
3-5.Bonds or certificates that show equity shares of anonymous companies, limited partnerships or limited-liability companies provided for in the Commercial Act;
4.Bills prescribed by the Minister of Finance and Economy from among those which are issued for the purpose of financing by an enterprise;
5.Deleted; <by Presidential Decree No. 18687, Jan. 27, 2005>
6.Bonds or certificates issued according to the standards as prescribed by the Ordinance of the Ministry of Finance and Economy which indicate rights which may effect the sale and purchase of stocks or transactions involving the transfer of money between the parties concerned by the unilateral declaration of intention of a party in accordance with the method as set in advance in link with fluctuations in the prices of specific stock certificates or the price index of stocks that are traded on the securities market, the KOSDAQ market or any foreign market similar thereto;
7.Bonds or certificates issued according to the standards as prescribed by the Ordinance of the Ministry of Finance and Economy which indicate claims for the payment of stock certificates or money (referring to the money equivalent to the value of the relevant stock certificates, securities or written instruments) in link with fluctuations in the prices of specific stock certificates or the price index of stocks that are traded on the securities market, the KOSDAQ market or any foreign market similar thereto; and
8.Bonds or certificates (excluding those falling under subparagraphs 6 and 7) that show contractual rights to make profits or avoid losses according to the ways that are predetermined in link with fluctuation on what falling under any one of the following items according to the standards that are set by the Ordinance of the Ministry of Finance and Economy:
(a)The prices of securities and interest rates provided for in each subparagraph of Article 2 (1) of the Act and the numerical values of the index number that are calculated based on the former;
(b) Prices and interest rates of what are determined by the Ordinance of the Ministry of Finance and Economy and the numerical values of index numbers that are computed based on the former; and
(c) The indices of credit risk (referring to changes in the credit ratings, bankruptcies or liability coordinations, etc. of parties or third parties; hereinafter the same shall apply).
(2) The futures trading referred to in subparagraph 1 (c) of Article 3 of the Futures Trading Act shall be deemed securities in the application of the provisions of Articles 188, 188-2 and 188-3 of the Act: Provided, That in case where the right can be exercised to perform the futures trading of stock certificates or anyone becomes the party to the exercise of such right, the application of the provisions of Article 188 (1) of the Act shall be limited to the futures trading that holds the status of the share seller. <Newly Inserted by Presidential Decree No. 18687, Jan. 27, 2005>

Article 2-4 (Public Offering of New or Outstanding Securities)
(1)In conducting the public offering of new securities as provided for in Article 2 (3) of the Act, the number of persons who are solicited to subscribe for securities to be newly issued shall be 50 or more.
(2)In conducting the public offering of outstanding securities as provided for in Article 2 (4) of the Act, the number of persons who receives an offer to sell or are solicited to make an offer to buy the outstanding securities which have already been issued outside the securities market or the KOSDAQ market (excluding the case where the trade of securities is intermediated under Article 52-2 (1) of the Act) shall be 50 or more. <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
(3)In calculating the number of 50 persons in paragraphs (1) and (2), the person who has been solicited to subscribe for securities or to make an offer to sell or buy securities (hereinafter referred to as solicitation for an offer ) during past six months from the date of the solicitation for an offer with regard to the same type of securities subject to the solicitation for an offer, other than through public offering, shall be included, but a person falling under any of the following subparagraphs shall be excluded: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
1.Where a person, as a stockholder of an issuer, has the largest number of stocks together with the specially related person (referring to the spacially related person as provided in Article 10-3 (2) of this Decree; hereinafter the same shall apply), the person himself (hereinafter referred to as the biggest stockholder ) and a stockholder who has 5/100 or more of the total number of issued and outstanding stocks;
2.An officer (referring to a director, an auditor, or a person who is in fact equivalent to such a director or auditor; hereinafter the same shall apply) of an issuer, and a member of an employee stock ownership association under the Framework Act on Worker s Welfare;
3.An affiliated company (referring to the affiliated company as provided for in the Monopoly Regulation and Fair Trade Act; hereinafter the same shall apply) of an issuer and officers thereof;
4.Where an issuer is a corporation whose stock certificates are not listed (excluding any KOSDAQ-listed corporation and any corporation which has ever conducted public offering of new or outstanding stocks), stockholders thereof;
4-2.Where an issuer, who is a foreign enterprise established under foreign Acts and subordinate statutes, sells stocks of the foreign enterprise to officers and employees of its domestic affiliated company according to the stock purchase system, etc. for promoting the employee s welfare, officers and employees of the domestic affiliated company;
5.Where an issuer is a company under incorporation, promoters thereof;
6.Institutional investors as provided in Article 17 (1) of the Enforcement Decree of the Corporate Tax Act (hereinafter referred to as the institutional investors ); and
7.Other persons as having a special relation or an expert who may know well the financial situation or the contents of business of an issuer as prescribed by the Financial Supervisory Commission.
(4)In case, even if the calculation as provided in paragraph (3) proves that the number of persons who receives the solicitation for an offer is less than 50 and therefore it does not fall under the public offering of new securities, the securities concerned may be transferred to 50 persons or more within one year from the date of issuance of the securities concerned and it falls under the criteria for resale stipulated by the Financial Supervisory Commission, it shall be regarded as the public offering of new securities. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
(5)The term solicitation for an offer in paragraph (3) means the activities to make known the fact that securities are to be issued or sold or to guide the procedure of acquisition of them with such methods as an advertisement through newspapers, broadcasting, magazines, etc., a wide distribution of printed matters like a letter of information or a leaflet for advertisement, etc., the holding of an explanatory meeting for inducement of investment, electronic communication, etc. in order to induce the person who is solicited to acquire securities.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 2-5 Deleted.
<by Presidential Decree No. 18325, Mar. 22, 2004>

Article 2-6 Deleted.
<by Presidential Decree No. 18687, Jan. 27, 2005>

Article 2-7 (Requirements, etc. for Employee Stock Ownership Association)
(1)The term organization created after satisfying requirements prescribed by the Presidential Decree in Article 2 (18) of the Act means an employee stock ownership association under the Framework Act on Worker s Welfare having the by-law which meets the standards prescribed in the following subparagraphs: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.It shall satisfy the following standards for membership of the association:
(a) It shall permit all employees of the corporation concerned [if the corporation is a financial holding company under the Financial Holding Companies Act (hereinafter referred to as the financial holding company ), they include employees of its subsidiary and sub-subsidiary which is neither a stock-listed corporation nor a KOSDAQ-listed corporation] to join the association; and
(b) It shall prohibit an officer appointed at the general meeting of stockholders of a corporation, which is neither a stock-listed corporation nor a KOSDAQ-listed corporation among subsidiaries or sub-subsidiaries of a financial holding company, from being a member of the association, and if a person holds the position of such officer after he becomes a member of the association, shall get him disqualified from holding membership of the association;
2.It shall prohibit the association from seeking loans on its account for the purpose of purchasing stocks;
3.It shall meet the following standards for the method of allotting stocks acquired by the association to its members:
(a) Stocks acquired by the association shall be allotted to its members in such a manner as provided in Article 19 of the Enforcement Decree of the Framework Act on Worker s Welfare, among which the stocks acquired through contribution made by the corporation concerned (including a subsidiary or sub-subsidiary of a financial holding company, which is neither a stock-listed corporation nor a KOSDAQ-listed corporation) or its big stockholder, etc. shall be allotted to its members within three to seven years after the stocks are provisionally distributed to the members accounts, according to the by-law; and
(b) Where the association or its members fall under any cause as provided in the main sentence of Article 19 (3) of the Enforcement Decree of the Framework Act on Worker s Welfare or a subsidiary or sub-subsidiary of a financial holding company loses its qualification as a member of the association in consequence of separation from the financial holding company, it shall provide that the stocks provisionally distributed must be alloted to the members of the association without any delay; and
4.It shall meet the following standards for depositing and withdrawing stocks acquired by the association or its members:
(a) The stocks which the association or its members have acquired shall be deposited within one month from the date of acquisition with the securities finance company established under Article 145 of the Act (hereafter in this Article referred to as the securities finance company ); and
(b) The members of the association shall withdraw the stocks deposited with the securities finance company through the association after one year passes from the date they are put to the members accounts: Provided, That where it falls under any subparagraph of Article 20 (2) of the Enforcement Decree of the Framework Act on Worker s Welfare, the same shall not apply, and the stocks withdrawn shall be returned to the members of the association without any delay.
(2) The securities finance company may re-deposit the stocks deposited pursuant to paragraph (1) 4 (a) with the Depository.
(3) The detailed matters necessary for the organization and operating method of the employee stock ownership association under paragraph (1) shall be prescribed by the Ordinance of the Ministry of Finance and Economy.
[This Article Wholly Amended by Presidential Decree No. 17518, Feb. 9, 2002]

CHAPTER II REGISTRATIONOFSECURITIES

Article 3 (Securities which are Exempted from Registration)
(1) The term corporate bonds as prescribed by the Presidential Decree provided in the proviso of Article 3 of the Act, means corporate bonds of which the payment of principal and interest is guaranteed by the financial institutions, etc. which fall under any of the following subparagraphs (hereinafter referred to as guaranteed bonds ), excluding convertible bonds, bonds with warrants, participating bonds as provided in Article 84-12 (hereinafter referred to as participating bonds ) and exchangeable bonds as provided in Article 84-13 (hereinafter referred to as exchangeable bonds ). In this case, guaranteed bonds the payment of which is guaranteed by the Korea Credit Guarantee Fund under subparagraph 8 shall include those guaranteed by the credit guarantee fund for the industrial infrastructure under the Act on Private Participation in Infrastructure: <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16773, Apr. 1, 2000; Presidential Decree No. 17791, Dec. 5, 2002; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18736, Mar. 8, 2005>
1.Financial institutions as prescribed in the Banking Act;
2.The Korea Development Bank as prescribed in the Korea Development Bank Act;
3.The Industrial Bank of Korea as prescribed in the Industrial Bank of Korea Act;
4.The Long-Term Credit Bank as prescribed in the Long-Term Credit Bank Act;
5.Deleted; <by Presidential Decree No. 15516, Nov. 29, 1997>
6.Merchant banks as prescribed in the Merchant Banks Act;
7.Insurers as prescribed in the Insurance Business Act;
8.The Korea Credit Guarantee Fund under the Credit Guarantee Fund Act and the Korea Technology Credit Guarantee Fund under the Korea Technology Credit Guarantee Fund Act; and
9.Securities companies.
(2)The term securities as determined by the Presidential Decree in the proviso of Article 3 of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 16773, Apr. 1, 2000; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18146, Nov. 29, 2003; Presidential Decree No. 18297, Feb. 28, 2004; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18596, Dec. 3, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Beneficiary certificates issued by trust companies under the Trust Business Act;
2.Beneficiary certificates issued by any asset operation company in accordance with the Act on Business of Operating Indirect Investment and Assets;
2-2.Equity share of a private investment fund under subparagraph 4-2 of Article 2 of the Act on Business of Operating Indirect Investment and Assets;
3.Beneficiary certificates issued by any foreign business operator of indirect investment assets;
4.Bonds issued by securities companies;
5.Redeemable housing bonds issued by the person who has obtained the approval of the Minister of Construction and Transportation on the issuance of the redeemable housing bonds under the Housing Act;
6.Deleted; <by Presidential Decree No. 18687, Jan. 27, 2005>
7.Mortgage-backed bonds issued by special purpose companies for mortgage-backed bonds pursuant to the bond securitization plan under the Special Purpose Companies for Mortgage-Backed Bonds Act;
8.Beneficiary certificates issued by trust companies pursuant to the asset securitization plan; and
9.Housing mortgage securities and school fees loan securities issued by the Korea Housing Finance Corporation established pursuant to the Korea Housing Finance Corporation Act according to its bond securitization plan.
[This Article Wholly Amended by Presidential Decree No. 15312, Mar. 22, 1997]

Article 4 Deleted.
<by Presidential Decree No. 13634, Apr. 28, 1992>

Article 5 (Administration of Registered Corporations)
Until new or outstanding securities publicly offered by the corporation under subparagraph 2 of Article 3 of the Act are listed on the securities market or the KOSDAQ market, the Financial Supervisory Commission shall administer the corporation concerned as a registered corporation: Provided, That bonds publicly offered by the corporation, other than the bonds stipulated in Article 3 (1) are not listed, the corporation shall be administered as a registered corporation until redemption of the bond is completed. <Amended by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Wholly Amended by Presidential Decree No. 10823, May 15, 1982]

CHAPTER III REGISTRATIONSTATEMENT OF SECURITIES

Article 5-2 (Securities Whereto Chapter III of Act is Applied)
The term bonds prescribed by the Presidential Decree in Article 7 of the Act means those listed in each of the following subparagraphs: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Bonds issued by the merchant banks under the Merchant Banks Act;
2.Bonds issued by the specialized credit financial companies under the Specialized Credit Financial Business Act; and
3.Bonds issued by the special purpose companies for mortgage-backed bonds under the Special Purpose Companies for Mortgage-Backed Bonds Act pursuant to Article 14 of the said Act.
[This Article Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001]

Article 5-3 (Securities Which are Exempted from Application of Chapter III of Act)
The term securities as determined by the Presidential Decree in Article 7 of the Act means those listed in each of the following subparagraphs: <Amended by Presidential Decree No. 18297, Feb. 28, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Securities provided for in Article 3 (2) 1 through 3, 5 through 7 and 9;
2.Where the State or local government sells through public offering the securities owned by it, the relevant securities; and
3.Where the Government-invested institutions under the Framework Act on the Management of Government-Invested Institutions (hereinafter referred to as the Government-invested institutions ) and other corporations deemed by the Financial Supervisory Commission that there would be no problem in the protection of investors even if a report on securities is not filed, sell through public offering the securities as stipulated by the Financial Supervisory Commission from among the securities owned by them, the relevant securities.
[This Article Wholly Amended by Presidential Decree No. 17291, Jul. 7, 2001]

Article 5-4 (Entries in Registration Statement and Documents to be Attached Thereto)
(1)Deleted. <by Presidential Decree No. 18757, Mar. 28, 2005>
(2) A registration statement on the public offering of new or outstanding securities provided for in the main sentence of Article 8 (1) of the Act shall specify the following matters under the conditions as prescribed by the Financial Supervisory Commission: <Amended by Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Signatures affixed by the representative director and directors provided for in Article 8 (4) of the Act to matters referred to in each subparagraph of Article 5-8 (2);
2.Matters concerning public offering of new or outstanding securities:
(a)General matters concerning public offering of new or outstanding securities;
(b)Contents of the rights of securities that are put on public offering of new or outstanding securities;
(c) The risky elements of investment in the acquisition of securities that are put on public offering of new or outstanding securities;
(d) In case where anyone intends to underwrite securities, the opinion on the securities that are put on public offering of new or outstanding securities to him;
(e) The purposes of using the fund; and
(f) Other matters necessary to protect investors; and
3.Matters concerning issuers:
(a)The general situation of any company (in the case of any corporation that is in the process of its incorporation, the objectives of its business);
(b) Details of its business (in the case of any corporation that is in the process of its incorporation, the business plan);
(c) Matters concerning financial affairs (excluding any corporation that is in the process of its incorporation);
(d) The audit opinion of the auditor provided for in the Act on External Audit of Stock Companies (hereinafter referred to as the auditor );
(e) Matters concerning organs, including the board of directors of the company and its affiliates;
(f) Matters concerning shareholders;
(g) Matters concerning officers and employees;
(h) Details of transactions executed by interested persons; and
(i) Other matters necessary to protect investors.
(3) The registration statement referred to in paragraph (2) shall be accompanied by the following documents: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Articles of association;
2.A copy of the minute of the general meeting of stockholders (for a corporation under organization, a general meeting of promoters) or a copy of the minute of the meeting of the board of directors (in case where the securities are issued pursuant to Article 418 (2) of the Commercial Act, the specific managerial objectives of issuing such securities, the relationship between the issuer and persons other than shareholders and the explanatory note of selecting the persons other than shareholders shall be entered in the minute) which has decided on the issue of the securities concerned;
3.If any permission, authorization, or approval, etc. from an administrative agency is required for the issuance of the securities concerned, documents attesting such permission, authorization, or approval, etc.;
4.If any contract is entered into for the underwriting of the securities concerned, a copy of the written contract;
5.If it is intended to list the securities falling under each of the following items on the securities market or the KOSDAQ market, a document pertaining to the result of preliminary listing examination that shows the confirmation of the conformity of the relevant securities with the listing regulations by the Korea Securities and Futures Exchange (hereinafter referred to as the Exchange ) that is established pursuant to the Korea Securities and Futures Exchange Act:
(a) Securities referred to in Article 2 (1) 6 of the Act;
(b) Securities referred to in Article 2 (1) 7 of the Act (limited to those which have the nature of stock certificates);
(c) Securities referred to in Article 2 (1) 8 of the Act (limited to those which are issued based on the securities of item (b));
(d) Securities provided for in Article 2-3 (1) 3-5; and
(e) Securities referred to in Article 2-3 (1) 6; and
6.Such other documents as may be necessary for the protection of investors.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 5-5 (Submission of Shelf Registration Statement)
(1)A shelf registration statement referred to in the proviso of Article 8 (1) of the Act (hereinafter referred to as the shelf registration statement ) shall specify the following matters under the conditions as prescribed by the Financial Supervisory Commission: <Amended by Presidential Decree No. 18350, Apr. 1, 2004>
1.Signatures affixed by the representative director and directors provided for in Article 8 (4) of the Act to matters referred to in each subparagraph of Article 5-8 (2);
2.The scheduled period of issue;
3.The estimated amount of issue;
4.Matters relating to an issuer referred to in Article 5-4 (2) 3; and
5.Such other matters as may be necessary for the protection of investors.
(2)The shelf registration statement shall be accompanied by the following documents: Provided, That in the event that it is possible to confirm information on accompanied documents through the joint use of administrative information provided for in Article 21 (1) of the Act on Promotion of the Digitalization of Administrative Affairs, etc. for Creation of Digital Government, such confirmation may replace the accompanied documents: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Articles of association;
2.A certified copy of the corporate register;
3.An audit report made by auditors;
4.If it is required to prepare consolidated financial statements under the Act on External Audit of Stock Companies (hereinafter referred to as the consolidated financial statements ), an audit report made by an auditor on the consolidated financial statements; and
5.A copy of minutes of the board of directors which has decided to make a shelf registration.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 5-6 (Special Provisions relating to Documents to be Attached to Securities Registration Statement and Matters to be Entered in Such Statement)
Notwithstanding Articles 5-4 (2) and (3) and 5-5, the Financial Supervisory Commission shall, if necessary to protect investors, determine and announce separately matters to be entered in and documents to be attached to a registration statement under Article 8 (1) of the Act (hereinafter referred to as a securities registration statement ) which are to be submitted by a foreign corporation, etc.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 5-7 (Scope of Forecast Information)
The term matters as determined by the Presidential Decree in Article 8 (2) 4 of the Act means matters which the requested person has evaluated about the adequacy of forecast information where a request for evaluation is made by an issuer about forecast information referred to in Article 8 (2) 1 through 3 of the Act.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 5-8 (Confirmation and Examination of Registration Statement by Representative Director, etc.)
(1) The term important matter prescribed by the Presidential Decree in Article 8 (4) of the Act means the matter related to the company or its securities, which is information that may greatly affect the rational judgment of investors or the value of securities from among the matters of entries provided for in Article 5-4 (2) 2 and 3.
(2) The term matters prescribed by the Presidential Decree in Article 8 (4) of the Act means matters falling under each of the following subparagraphs: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.The fact that entries of the registration statement are personally confirmed and examined with great attention;
2.The fact that entries of important matters or indications are not omitted in the registration statement, false entries or false indications are not found in the registration statement and the registration statement does not carry any entry and any indication that could seriously mislead any person who uses such entry and such indication; and
3.In the case of a corporation that is subject to external audit under Article 2 of the Act on External Audit of Stock Companies, the fact that such corporation operates the internal accounting control system in accordance with Articles 2-2 and 2-3 of the same Act.
[This Article Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004]

Article 5-9 (Submission of Additional Shelf Registration Document)
(1) The entries in an additional shelf registration document under Article 10 (2) of the Act (hereinafter referred to as an additional shelf registration document ) shall not include any alteration of the entries in a shelf registration statement concerned (including a registration statement on any correction).
(2) The additional shelf registration document shall state the following matters under the conditions as prescribed by the Financial Supervisory Commission: <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
1.Outline of public offering of new or outstanding securities;
2.The scheduled period of issue and the estimated amount of issue in a shelf registration statement;
3.The records of public offering of new or outstanding securities during the scheduled period of issue; and
4.Such other matters as may be necessary for the protection of investors.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 6 (Drawing up of Prospectus)
(1) A prospectus under Article 12 (1) of the Act (hereinafter referred to as a prospectus ) shall be prepared with a classification of the column for title and the text.
(2)The column for title of the prospectus shall include the following matters under the conditions as prescribed by the Financial Supervisory Commission: <Amended by Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The effective date of the securities registration under Article 8 (1) of the Act (hereinafter referred to as the securities registration );
2.The amount of public offering of new or outstanding securities concerned;
3.The period of offer;
4.The period of payment;
5.The place of inspection of a copy of the securities registration statement concerned and a prospectus;
6.In conducting stabilization or market making under Article 83-8, the effect that such stabilization or market making may be conducted on the securities market or the KOSDAQ market;
7.The effect that any alteration may be effected in part of the entries in the securities registration statement concerned until the initial date of offer;
8.The effect that it may not be said that the Government recognizes the entries in a securities registration statement as true or correct or guarantees or approves the value of the securities; and
9.Such other matters as may be necessary for the protection of investors.
(3) If a registration statement is submitted in accordance with the main sentence of Article 8 (1) of the Act, the matters under each subparagraph of Article 5-4 (2) shall be entered in the text of a prospectus, and if an additional shelf registration document is submitted, the matters provided for in Article 5-5 (1) 4 and each subparagraph of Article 5-9 (2) shall be entered in the text of the prospectus. <Amended by Presidential Decree No. 18350, Apr. 1, 2004>
(4) An issuer, who has prepared a prospectus, shall submit it to the Financial Supervisory Commission on the date the securities registration concerned takes effect (for an issuer who has submitted a shelf registration statement, the date of submitting an additional shelf registration document).
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 7 (Matters to be Excluded from Prospectus)
Of the matters which are required to be stated in a securities registration statement, matters under each of the following subparagraphs shall be excluded from the entry in a prospectus in accordance with the proviso of Article 12 (2) of the Act: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18687, Jan. 27, 2005>
1.Matters falling under military secrets in accordance with Article 2 of the Military Secret Protection Act; and
2.Activities and business of an issuer as approved by the Financial Supervisory Commission.

Article 7-2 (Method of Drawing up Preliminary Prospectus, etc.)
(1)The column for title of a preliminary prospectus under Article 13 (2) 2 of the Act (hereinafter referred to as the preliminary prospectus ) shall include the following matters under the conditions as prescribed by the Financial Supervisory Commission: <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
1.Matters of Article 6 (2) 2 through 6;
2.The effect that the securities registration statement in question is submitted to the Financial Supervisory Commission but its effect has yet to be taken and any alteration may be effected in part of its entries until it takes effect; and
3.Such other matters as may be necessary for the protection of investors.
(2) Any person who intends to use a preliminary prospectus shall, at the time of making a securities registration, submit both a securities registration statement and a preliminary prospectus.
(3) Any issuer who has submitted a preliminary prospectus under paragraph (2) may, if no alteration is made in the entries of a securities registration statement until the securities registration concerned takes effect, substitute a preliminary prospectus for a prospectus. In this case, the column for title of a preliminary prospectus shall be rectified into the column for title of a prospectus stating the matters specified in subparagraphs of Article 6 (2).
(4) The provisions of Article 6 (1) and (3) shall apply mutatis mutandis with respect to the preparation of a preliminary prospectus.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 7-3 (Method of Preparing Simple Prospectus, etc.)
(1)A simple prospectus under Article 13 (2) 3 of the Act (hereinafter referred to as a simple prospectus ) shall specify or indicate matters described in the following subparagraphs: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.If the effect of the securities registration concerned has yet to be taken, matters specified in the following items:
(a) Matters of Article 6 (2) 2 through 6;
(b) The effect that the securities registration statement is submitted to the Financial Supervisory Commission, but its effect has yet to be taken and any alteration may be effected in part of the entries thereof until it becomes effective;
(c) In case where it is intended to list securities under every item of Article 5-4 (3) 5 on the securities market or the KOSDAQ market, the result of a preliminary listing examination that shows the confirmation of the conformity of the relevant securities with the listing requirements by the Exchange;
(d) Such matters to be entered in the text of a prospectus under Article 6 (3) as the Financial Supervisory Commission deems that such entry or indication is necessary for the protection of investors; and
(e) The effect that a preliminary prospectus or a prospectus is to be seen for the detailed contents of the public offering of the new or outstanding securities and for the matters relating to their issuer; and
2.If the registration on the securities is in force, the following matters:
(a) Matters of Article 6 (2) 1 through 8; and
(b) Matters of subparagraph 1 (c) through (e).
(2) In entering or indicating matters set forth in subparagraphs of paragraph (1) in a simple prospectus, any information unfavorable to the issuer shall not be omitted nor shall only information favorable to him be cited.
(3) Any person who intends to use a simple prospectus shall submit the simple prospectus to the Financial Supervisory Commission not later than three days prior to its use. <Amended by Presidential Decree No. 17907, Feb. 24, 2003>
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 7-4 (Person Liable for Indemnification for False Entries, etc.)
The term persons prescribed by the Presidential Decree in Article 14 (1) 2 of the Act means persons whose qualifications are certified as attorneys, patent attorneys or tax accountants, etc.
[This Article Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004]

Article 8 (Public Notice of Securities Registration Statement and After-Report)
The Financial Supervisory Commission shall, in accordance with Article 18 of the Act, keep the registration statement of securities and the after-report at a specified place and make them available for public inspection for three years. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18757, Mar. 28, 2005>

Article 9 (Matters to be Excluded from Disclosure)
The provisions of Article 7 shall apply mutatis mutandis to the matters which are not to be made available for public inspection in accordance with the proviso of Article 18 of the Act. <Amended by Presidential Decree No. 16966, Sep. 8, 2000>

Article 9-2 (Public Offering Made without Filing Registration Statement)
(1) An issuer, who makes a public offering of new or outstanding securities without filing a securities registration statement, shall take the following measures in accordance with the provisions of Article 18-2 of the Act: <Amended by Presidential Decree No. 18350, Apr. 1, 2004>
1.Prior to the public offering of new or outstanding securities, he shall submit documents stating his financial status or business results to the Financial Supervisory Commission (limited to an issuer liable to make a registration with the Financial Supervisory Commission under Article 3 of the Act). In this case, such documents shall be subject to the completion of an auditing by an external auditor or a confirmation and indication of opinion by a certified public accountant under the conditions as determined by the Financial Supervisory Commission;
2.In making solicitation for an offer, he shall enter or indicate the following matters in printed materials, etc. In this case, with respect to his financial status or business results, he shall not enter or indicate any matters inconsistent with the contents of documents submitted under subparagraph 1 or any false facts therein:
(a) Matters referred to in each item of Article 5-4 (2) 2 and 3; and
(b) Matters of Article 6 (2) 2 through 4;
3.When the public offering of new or outstanding securities is commenced, he shall forthwith submit to the Financial Supervisory Commission the method of making solicitation for an offer and matters entered or indicated in printed materials, etc. under subparagraph 2. This shall also apply to any alteration in the method of making solicitation for an offer or in the matters entered or indicated in printed materials, etc. after the commencement of the public offering of new or outstanding securities; and
4.When the public offering of new or outstanding securities is completed, he shall forthwith notify the results to the Financial Supervisory Commission.
(2) Where an issuer is to submit to the Financial Supervisory Commission documents concerning his financial status and business results under paragraph (1) 1, such documents may be substituted by a written statement with the indication of seeing documents, if any, which were already submitted prior to the public offering of new or outstanding securities concerned and whose contents are not altered.
(3) Where the public offering of outstanding securities meets the following requirements, the issuer of the securities shall be deemed to have taken the measures of paragraph (1): <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18350, Apr. 1, 2004>
1.The public offering of the outstanding securities has been made through brokerage method under Article 84-27 (5);
2.The public offering has been made by minority stockholders (excluding an issuer and underwriter of the securities); and
3.The issuer of the securities has made public notification of the following contents under the conditions as prescribed by the Financial Supervisory Commission:
(a) Matters relating to an issuer under Article 5-4 (2) 3; and
(b) Documents stating matters relating to the financial status and business results of an issuer under paragraph (1) 1.
(4) The Financial Supervisory Commission may determine detailed standards for measures to be taken under paragraph (1).
(5)The term minority stockholders in paragraph (3) 2 means the stockholders who own stocks or contribution certificates of less than the amount which is the lesser of 1/100 of the total amount of issued and outstanding stocks or contributions to the corporation concerned and three hundred million won: Provided, That the biggest stockholder and the specially related persons shall not be regarded as minority stockholders. <Newly Inserted by Presidential Decree No. 17518, Feb. 9, 2002>
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 9-3 (Measures of Financial Supervisory Commission)
The term measures prescribed by the Presidential Decree in the former part of Article 20 of the Act with the exception of its subparagraphs means those which fall under any of the following subparagraphs: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17907, Feb. 24, 2003>
1.Advisory opinion of removal of officers;
1-2.Restriction on the issuance of securities for a specified period;
2.Announcement of sanctions suffered for violation of the Act;
3.Demand for a submission of commitment letter;
4.In case of violation of the Act, accusation or report to the investigation agencies;
5.In case of violation of other Acts, report to the related institutions or investigation agencies; and
6.Warning or caution.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 9-4 (Registration Form, etc.)
The form for registration, etc. of the public offering of new or outstanding securities and other necessary matters shall be determined by the Financial Supervisory Commission.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

CHAPTER IV TENDEROFFERFOR SECURITIES

Article 10 (Securities Subject to Tender Offer)
The term voting stocks or any other securities prescribed by the Presidential Decree provided for in the main sentence of Article 21 (1) of the Act means, among the securities issued by a stock-listed corporation or a KOSDAQ-listed corporation, those which are related to voting stocks and which fall under any of the following subparagraphs (hereinafter referred to as stocks, etc. ): <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Stock certificates;
2.A certificate representing preemptive rights;
3.Convertible bonds;
4.Bonds with warrants; and
5.Exchangeable bonds (limited to those bonds which may be exchanged for the securities prescribed in subparagraphs 1 through 4; hereafter in this Chapter the same shall apply).
[This Article Wholly Amended by Presidential Decree No. 15312, Mar. 22, 1997]

Article 10-2 (Criteria for Calculating Number of Counterparts of Tender Offer)
(1)The term period prescribed by the Presidential Decree provided for in the main sentence of Article 21 (1) of the Act means the past six months prior to the date on which the purchase, etc. (referring to the purchase, etc. as stipulated in Article 21 (1) of the Act; hereafter in this Chapter the same shall apply) of the stocks, etc. concerned is conducted.
(2)The term persons of not less than the number prescribed by the Presidential Decree provided for in the main sentence of Article 21 (1) of the Act means 10 persons or more which are obtained by adding the number of persons who are the counterparts of the purchase, etc. of the stocks, etc. concerned and that of the persons who have been the counterparts of the purchase, etc. of the stocks, etc. concerned during the period stipulated in paragraph (1).
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 10-3 (Scope of Specially Related Persons)
(1)The specially related persons as provided for in Article 21 (1) of the Act means the specially related persons and joint holders.
(2)The term specially related persons provided for in paragraph (1), means those who fall under any of the following subparagraphs:
1.Where the person in question is an individual, persons falling under any of the following items:
(a) A spouse (including a person who is under de facto marital relations; hereinafter the same shall apply);
(b) A paternal blood relative of not more than six degrees of relationship and the wife of a paternal blood relative of not more than four degrees of relationship;
(c) The husband and children of a paternal blood relative of not more than three degrees of relationship;
(d) A maternal blood relative of not more than three degrees of relationship and the spouse and children of such person;
(e) A paternal blood relative of not more than two degrees of relationship of the spouse, and the spouse of such person;
(f) A lineal ascendant of the birth parents of an adoptee;
(g) A person who enters a family as an adopted child and his/her spouse, and a lineal descendant of an adoptive family of the person who enters a family as an adopted child;
(h) The natural mother of a person born out of wedlock;
(i) A person sharing a livelihood with the person in question, or a person who maintains his/her livelihood based on money or other property of the person in question;
(j) Where the person in question, alone or together with the persons who have the relation provided for in items (a) through (i) to him, contributes not less than 30/100 of the capital or has de facto control over principal matters related to the management of a corporation or any other organizations, such as the appointment and removal of officers thereof, the corporation or such other organizations concerned and officers thereof; and
(k) Where the person in question, alone or together with the persons who have the relation provided for in items (a) through (j) to him, contributes not less than 30/100 of the capital or has de facto control over principal matters related to the management of a corporation or any other organizations, such as the appointment and removal of officers thereof, the corporation or such other organizations concerned and officers thereof; and
2.Where the person in question is a corporation or any other organization, the person falling under any of the following items:
(a) Officers;
(b) Affiliated companies and officers thereof;
(c) An individual who, alone or together with the persons who have the relation provided for in each item of subparagraph 1 to him, contributes not less than 30/100 of the capital of the person in question or has de facto control over principal matters on the management of the person in question, such as the appointment and removal of officers, and the persons and organizations (excluding the affiliated companies; hereafter in this subparagraph the same shall apply) who have the relation provided for in each item of subparagraph 1 to the individual and officers thereof; and
(d) In case the person in question, alone or together with the persons who have the relation provided for in items (a) through (c) to him, contributes not less than 30/100 of the capital or has de facto control over principal matters on the management of an organization, such as the appointment and removal of officers thereof, the organization concerned and officers thereof.
(3)Where the number of stocks, etc. which the person falling under any item of subparagraphs of paragraph (2) possesses is less than 1,000 or he presents evidence that he does not fall under the provisions of paragraph (4), he shall not be regarded as the specially related person in the application of this Chapter and Articles 86-3 through 86-10. <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
(4)The term joint holders in paragraph (1) means persons who have agreed to perform one of the following acts by agreement or contract with the principal: <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
1.Act of acquiring or disposing of stocks, etc. jointly;
2.Act of mutually transferring or taking over stocks, etc. after acquiring the stocks, etc. jointly or separately; and
3.Act of exercising voting rights (including rights which can give instructions to excercise voting rights) jointly.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 10-4 (Holding Which is Equivalent to Ownership)
The term cases prescribed by the Presidential Decree as owning or its equivalents in Article 21 (1) of the Act means those which fall under any of the following subparagraphs: <Amended by Presidential Decree No. 16745, Mar. 4, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
1.The case of owning stocks, etc. for one s own account irrespective of name;
2.The case of having a claim for the delivery of stocks, etc., by the operation of law, sale and purchase agreement, or other contracts;
3.The case of having a right of acquisition or disposal of the stocks concerned, etc. or having voting rights (including the rights to give instructions as to exercise of voting rights) by the operation of law or a money trust contract, a security contract, or other contracts;
4.The case of having a right to complete the sale and purchase of stocks, etc. in accordance with the unilateral promise, and upon exercise of such right, becoming the purchaser thereof;
5.The case of becoming a purchaser by exercising securities option concerned, where performing the futures trading of securities referred to in subparagraph 1 (c) of Article 3 of the Futures Trading Act (hereinafter referred to as the securities option trading ); and
6.The case of being granted the stock options as provided for in Article 189-4 of the Act (hereinafter referred to as the stock option ).
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 11 (Purchase, etc. Which is not Subject to Tender Offer)
The term purchase, etc. prescribed by the Presidential Decree in the proviso of Article 21 (1) of the Act means those which fall under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291, Jul. 7, 2001>
1.Purchase, etc. of stocks, etc. for the purpose of retirement (excluding the stock retirement under Article 189 of the Act);
2.Purchase, etc. of stocks effected in response to the excercise of appraisal rights of stockholders;
3.Purchase, etc. of stocks, etc. from the specially related person;
4.Purchase, etc. of stocks, etc. by the exercise of preemptive rights or rights to demand for conversion or exchange;
4-2.Purchase of stocks, etc. by the method of intermediating the trade of securities under Article 52-2 (1) of the Act; and
5.Purchase, etc. of stocks, etc. as prescribed by the Financial Supervisory Commission, which do not infringe upon the rights and interests of any other stockholders, other than the matters as provided in subparagraphs 1 through 4-2.
[This Article Wholly Amended by Presidential Decree No. 15312, Mar. 22, 1997]

Articles 11-2 and 11-3 Deleted.
<by Presidential Decree No. 15687, Feb. 24, 1998>

Article 11-4 (Publication, etc. of Tender Offer)
(1)The publication of tender offer under Article 21-2 (1) of the Act shall be made on two or more newspapers covering nationwide from among the general dailies or the special dailies in economy field under the Registration, etc. of Periodicals Act. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
(2)The term matters prescribed by the Presidential Decree in Article 21-2 (1) 6 of the Act means those listed in each of the following subparagraphs:
1.Current status of a tender offerer and the specially related persons (referring to the specially related persons under Article 21 (1) of the Act; hereinafter the same shall apply);
2.Matters concerning a person handling tender offer affairs;
3.Manner of tender offer;
4.Whether there exists any prior consultation with the officers or the biggest stockholder of the issuer of stocks, etc. subject to tender offer (hereinafter referred to as the company which is an object of tender offer ), and if any, the contents thereof;
5.Plan on the future of the company which is an object of tender offer, after the completion of tender offer; and
6.Place for a perusal of a tender offer statement and an explanatory note of tender offer.
(3) Where the person who intends to make a tender offer submits the tender offer statement (including any statement prepared in the form of electronic documents) under Article 21-2 (2) of the Act, such tender offer statement shall be accompanied by the documents (including electronic documents) listed in the following subparagraphs: Provided, That in the event that it is possible to confirm information on accompanied documents through the joint use of administrative information provided for in Article 21 (1) of the Act on Promotion of the Digitalization of Administrative Affairs, etc. for Creation of Digital Government, such confirmation may replace the accompanied documents: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.In case a tender offerer is an individual, a certified copy of his resident registration (in case of a foreigner, the document which is equivalent to it);
2.In case a tender offerer is a corporation or any other organization, the articles of association and a certified copy of company register or the document which is equivalent to it;
3.A copy of the contract concerning the affairs related to tender offer;
4.The documents proving the balance of the account at financial institutions or the holding of other funds which are not less than the amount necessary for tender offer;
5.In case of tender offer through an exchange with other securities, the documents proving the holding of the securities which a tender offerer intends to deliver as the price for exchange: Provided, That in case where intending to make a tender offer in order to receive the investment in kind for the purpose of not falling under the criteria of Article 8-2 (1) 2 of the Monopoly Regulation and Fair Trade Act, the documents proving the issuance of new stocks;
6.In case the permission, authorization, or approval of the Government is needed for the purchase, etc. of stocks, etc., the documents proving that the permission, authorization, or approval is given;
7.A draft for the publication of tender offer;
8.In case a statement under Article 8 (1) of the Act is to be filed with respect to the tender offer through an exchange with other securities, the documents containing the same details of matters as are to be contained in the relevant statement; and
9.Other documents determined by the Financial Supervisory Commission as those necessary for verifying the matters stated on the tender offer statement.
(4) Deleted. <by Presidential Decree No. 18757, Mar. 28, 2005>
(5) The term matters prescribed by the Presidential Decree in Article 21-2 (2) 7 of the Act means each of the following subparagraphs:
1.Matters on the person handling tender offer affairs;
2.Current status of the company which is an object of tender offer;
3.Manner of tender offer;
4.Particulars of formation of the funds necessary for tender offer or of the securities which are an object of exchange (in case of borrowing funds, the source from which money is borrowed shall be included therein);
5.Situation of holding and transactions of the stocks, etc. of the company which is an object of tender offer by a tender offerer and the specially related persons for the latest one year;
6.Whether there exists any prior consultation with the officers or the biggest stockholder of the company which is the object of tender offer, and if any, the contents thereof;
7.Plan on the future of the company which is an object of tender offer, after the completion of tender offer;
8.In case there is a mediator or an agent of tender offer, matters concerning it; and
9.Place for a perusal of a report on tender offer and an explanatory note of tender offer.
(6) The draft for the publication of tender offer under paragraph (1) and the tender offer statement under paragraph (3) shall be subject to the form prescribed by the Financial Supervisory Commission.
[This Article Wholly Amended by Presidential Decree No. 17291, Jul. 7, 2001]

Article 11-5 (Period for Tender Offer)
The term period prescribed by the Presidential Decree in Article 21-2 (3) of the Act means the period that is not less than 20 days but not more than 60 days: Provided, That in case, during the period of the tender offer concerned, a counter tender offer (hereinafter referred to as the counter tender offer ) is filed, the period may be extended to the last day of the period of the counter-tender offer. <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18757, Mar. 28, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 12 (Period during Which Exercise of Voting Rights is Restricted)
The term period prescribed by the Presidential Decree in Article 21-3 of the Act means the period from the date on which a purchase of the stocks, etc. is made in violation of Article 21 (1) or 21-2 (1) or (2) of the Act until the day preceding that becoming unable to exercise voting rights by the disposal of the relevant stocks, etc.
[This Article Wholly Amended by Presidential Decree No. 17291, Jul. 7, 2001]

Article 12-2 (Subject of Transmission of Copy of Statement)
(1)The term stocks, etc. prescribed by the Presidential Decree in Article 22 of the Act means exchangeable bonds. <Amended by Presidential Decree No. 17291, Jul. 7, 2001>
(2)The term person prescribed by the Presidential Decree in Article 22 of the Act means an issuer of stocks, etc. which are objects of exchange. <Amended by Presidential Decree No. 17291, Jul. 7, 2001>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 12-3 (Acquisition of Stocks, etc. by Other Means Than Tender Offer)
The term case prescribed by the Presidential Decree in Article 23 (2) of the Act means any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
1.Where a contract for the purchase, etc. of the stocks, etc. concerned is concluded before a tender offer statement is filed, and it is not subject to the tender offer as provided for in Article 21 (1) of the Act at the time of the conclusion of the contract concerned as well as the fact that the contract concerned has been concluded and the contents thereof is written in the tender offer statement;
2.Where a person handling tender offer affairs is entrusted with the purchase, etc. of stocks, etc. by a person other than a tender offerer and the specially related persons; and
3.Where the Financial Supervisory Commission determines as not detrimental to the rights and interests of other stockholders even though the purchase, etc. of stocks, etc. other than through tender offer is permitted.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Articles 12-4 and 12-5 Deleted.
<by Presidential Decree No. 18757, Mar. 28, 2005>

Article 12-6 (Prohibition of Modification of Condition of Tender Offer)
The term purchase conditions as prescribed by the Presidential Decree in the proviso of Article 23-2 (1) of the Act means those which fall under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
1.Reduction of period of tender offer;
2.Alteration of the type of consideration to be paid to the tendering stockholders: Provided, That where the type of consideration which the tendering stockholders may choose is added, it shall not apply; and
3.Other cases prescribed by the Financial Supervisory Commission as the modification of the conditions of tender offer which are unfavorable to the tendering stockholders.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 12-7 (Exceptional Withdrawal of Tender Offer)
The term such case as prescribed by the Presidential Decree in the proviso of Article 24-2 (1) of the Act means the case which falls under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Where a counter tender offer is made;
2.Where a tender offerer falls under any of the following items:
(a) Death;
(b) Dissolution;
(c) Bankruptcy;
(d) Dishonor of bills or checks issued; and
(e) Where the causes as determined by the Financial Supervisory Commission have occurred, such as the grave disaster which was unpredictable at the time of publication of tender offer, other than items (a) through (d); and
3.Where the condition that the tender offer may be withdrawn has been publicly announced at the time of tender offer publication and written in the tender offer statement, if a cause falling under any of the following items happens to a company which is an object of tender offer:
(a) Merger;
(b) Aquisition by transfer or transfer of important business or assets (referring to the acquisition by transfer or transfer of business or assets provided for in each subparagraph of Article 84-8 (1));
(c) Dissolution;
(d) Bankruptcy;
(e) Dishonor of bills or checks issued;
(f) Delisting securities; and
(g) Other than items (a) through (f), the matters prescribed by the Financial Supervisory Commission, such as the grave disaster which was unpredictable at the time of tender offer publication.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 13 (Presentation of Opinion on Tender Offer)
The issuer of stocks, etc. for which the tender offer statement is filed in accordance with Article 25 of the Act may present his opinions on the said tender offer by means of advertisement, correspondence or other documents. In this case, the important matters shall not be omitted and the contents shall be such that no misunderstanding may be caused therefrom. <Amended by Presidential Decree No. 15312, Mar. 22, 1997>

Article 13-2 (Exception to Full Purchase)
The term case where the Presidential Decree prescribes in the proviso of Article 25-2 (1) of the Act means the case where the condition falling under any of the following subparagraphs has been publicly announced at the time of tender offer publication and written in the relevant tender offer statement: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291, Jul. 7, 2001>
1.The condition that all of the tendered stocks, etc. shall not be purchased where the total number of tendered stocks, etc. is less than the number of stocks, etc. scheduled to be purchased through tender offer; and
2.The condition that purchase will be made proportionally up to the number of stocks, etc. scheduled to be purchased through tender offer and all or a part of excess will not be purchased where the total number of tendered stocks, etc. exceeds the number of stocks, etc. scheduled to be purchased through tender offer.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 13-3 Deleted.
<by Presidential Decree No. 15687, Feb. 24, 1998>

CHAPTER V SECURITIES BUSINESS

Article 14 (Capital of Securities Company)
The minimum capital of the securities company as provided in Article 28 (3) of the Act shall be as follows: <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
1.In case of the securities company which conducts all of the business provided for in Article 28 (2) 1 through 3 of the Act, 50 billion won;
2.In case of the securities company which conducts the business provided for in Article 28 (2) 1 and 2 of the Act, 20 billion won;
3.In case of the securities company which conducts the business provided for in Article 28 (2) 2 of the Act, 3 billion won;
4.In case of the securities company which conducts only the following businesses from among businesses of Article 28 (2) 1 and 2 of the Act, 2 billion won:
(a) A securities sale business which targets securities under items of subparagraph 5;
(b) A securities consignment sale business which targets securities of Article 2 (1) 1 and 2 of the Act; and
(c) A securities sale brokerage business which targets securities under items of subparagraph 5 in any other place than the securities market and the KOSDAQ market (hereinafter referred to as the over-the-counter market );
5.In case of the securities company which conducts a securities sale brokerage business in the over-the-counter market targeting the following securities from among businesses of Article 28 (2) 2 of the Act, 2 billion won:
(a) Securities of Article 2 (1) 1 through 4 of the Act; and
(b) Securities of Article 2 (1) 7 of the Act (limited to those which have the nature of securities of item (a)); and
6.In case of the securities company which conducts the business provided for in Article 28 (2) 4 of the Act, 15 billion won.
[This Article Wholly Amended by Presidential Decree No. 15312, Mar. 22, 1997]

Article 15 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>

Article 15-2 Deleted.
<by Presidential Decree No. 16367, May 27, 1999>

Article 15-3 (Business Fund for Branch Office of Foreign Securities Company)
(1) The minimum business fund for any branch office and any other business office of a foreign securities company (hereinafter referred to as a branch office of a foreign securities company ) under Article 28-2 (2) of the Act shall be as follows:
1.In case of a branch office of a foreign securities company which conducts the business of subparagraph 1 of Article 14, fifteen billion won;
2.In case of a branch office of a foreign securities company which conducts the business of subparagraph 2 of Article 14, ten billion won;
3.In case of a branch office of a foreign securities company which conducts the business of subparagraph 3 of Article 14, three billion won; and
4.In case of a branch office of a foreign securities company which conducts the business of subparagraph 4 of Article 14, two billion won.
(2) The business fund of Article 28-2 (2) of the Act shall be a fund in Korean currency, won, with which the head office of a foreign securities company provides a branch office of the foreign securities company to establish a branch office of the foreign securities company or to conduct the business and a fund transferred from the earned surplus reserve which a branch office of the foreign securities company has accumulated. <Amended by Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
[This Article Wholly Amended by Presidential Decree No. 16966, Sep. 8, 2000]

Article 15-4 (Fiction of Operating Funds of Branch Office of Foreign Securities Company as Capital)
(1)In applying the Act to the branch office of a foreign securities company regarded as a securities company under Article 28-2 (4) of the Act, the operating fund as provided in Article 15-3 shall be considered as capital thereof. <Amended by Presidential Decree No. 16966, Sep. 8, 2000>
(2)A foreign securities company s branch office shall reserve the amount equivalent to the ratio that is set by the Financial Supervisory Commission as the earned surplus within the scope of not less than 1/10 to not more than 2/100 of the net profit of the current period until the amount reaches 1/2 of the operating fund. <Newly Inserted by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18757, Mar. 28, 2005>
(3)A foreign securities company s branch office shall not use the earned surplus reserve under paragraph (2) unless it needs the surplus to compensate for the branch office s deficit or disposes of the surplus on approval by the Financial Supervisory Commission. <Newly Inserted by Presidential Decree No. 15687, Feb. 24, 1998>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 15-5 (Scope, etc. of Assets which Foreign Securities Company Holds in Republic of Korea)
(1)The assets which a foreign securities company as provided in the latter part of Article 28-2 (5) of the Act holds in the Republic of Korea, shall be as follows: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16966, Sep. 8, 2000>
1.Cash, and savings, installment savings, or installments which he has in financial institutions in the Republic of Korea;
2.Securities which are deposited or kept in the Republic of Korea;
3.Loan and other claims to the person in the Republic of Korea;
4.Tangible and intangible fixed assets in the Republic of Korea; and
5.Other than subparagraphs 1 through 4, the assets prescribed by the Financial Supervisory Commission from among those for which compulsory execution is possible and of which encashment is easy in accordance with domestic laws.
(2)Any foreign securities company shall hold in the Republic of Korea assets equivalent to the sum of operating funds and debts in accordance with the method provided for in any subparagraph of paragraph (1). <Amended by Presidential Decree No. 16367, May 27, 1999>
(3)Any branch office of a foreign securities company shall settle accounts independently from its head office, and in case the settlement of accounts proves that the assets held in the Republic of Korea under paragraph (2) are less than the total amount of operating funds and debts, such assets shall be made up within the period that is set by the Financial Supervisory Commission within the scope of 90 days from the date on which the settlement of accounts becomes definite. <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 15-6 (Representative and Acting Representative of Branch Office of Foreign Securities Company)
(1)The provisions pertaining to officers of a securities company in the Republic of Korea shall apply mutatis mutandis to the representative of a branch office of a foreign securities company.
(2)When there is no representative of a branch office of a foreign securities company or when the representative is unable to perform his duties as such, if a representative is not newly appointed or a person acting for him is not designated, a person having interests in the branch office concerned may require the Financial Supervisory Commission to appoint a person to execute the duties by proxy temporarily (hereinafter referred to as the acting representative ). <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
(3)Upon request of the interested person under paragraph (2), the Financial Supervisory Commission shall require the branch office concerned to appoint or designate a representative or an acting representative within 10 days. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
(4)If the branch office concerned does not appoint or designate a representative or an acting representative within the period referred to in paragraph (3), the Financial Supervisory Commission shall designate an acting representative without delay and the branch office concerned shall register that fact at location thereof. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
(5)When the Financial Supervisory Commission designates an acting representative under paragraph (4), it may order the branch office concerned to pay reasonable remuneration to the acting representative. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 15-7 Deleted.
<by Presidential Decree No. 17291, Jul. 7, 2001>

Article 16 Deleted.
<by Presidential Decree No. 16367, May 27, 1999>

Article 17 (Application for Permission)
(1)A person who intends to obtain permission for a securities business under Article 28 (1) of the Act shall submit to the Financial Supervisory Commission an application for permission specifying the following matters: <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
1.The trade name;
2.The location of the principal office and branch offices;
3.Matters concerning the composition of personnel, including the chief executive officer and officers;
4.Matters concerning financial affairs, including the capital;
5.Matters concerning physical facilities;
5-2.Matters concerning the business plan; and
6.Matters concerning the business for which he intends to obtain permission.
(2)The documents under each of the following subparagraphs shall be attached to the application referred to in paragraph (1): Provided, That where a securities company engaging in only a part of the business under any subparagraph of Article 28 (2) of the Act intends to obtain permission for the whole of the business under any subparagraph of the said paragraph, the documents to be required shall be limited to the documents under subparagraphs 1, 2, 5, and 7:
1.Articles of association;
2.The business plan (including presumptive financial statements) and estimated revenue and expenditure statement for three business years after the commencement of business;
3.A document specifying the locations and names of the head office and branch offices, etc.;
4.A certified copy of corporate registry;
5.A balance sheet as of the date of application for permission (as of the latest business year, in case of application for combining securities business);
6.The curriculum vitae and career certificates of officers;
7.Documents stating the names or titles of stockholders who have 1/100 or more of the total number of issued and outstanding stocks and the number of their stocks as of the date of application for permission (as of the end of the latest business year, in case of application for combining securities business); and
8.Other documents prescribed by the Financial Supervisory Commission which are necessary for the examination of permission requirements under the Act or this Decree.
(3) A person who intends to obtain permission of a securities business for a foreign securities company under Article 28-2 (1) of the Act shall submit to the Financial Supervisory Commission an application for permission stating the following matters: <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
1.The trade name and location of the head office;
2.Matters concerning financial affairs, including the business fund;
3.The names and titles of officers of the head office;
4.The title and location of a branch office of the foreign securities company;
5.Matters concerning the composition of personnel, including the representative of a branch office of the foreign securities company;
6.Matters concerning the business for which he intends to obtain permission; and
7.The commencement date of the business, if he conducts in his country the same type of business as the business for which he intends to obtain permission.
(4) The application for permission under paragraph (3) shall be accompanied by the following documents: Provided, That in the event that it is possible to confirm information on accompanied documents through the joint use of administrative information provided for in Article 21 (1) of the Act on Promotion of the Digitalization of Administrative Affairs, etc. for Creation of Digital Government, such confirmation may replace the accompanied documents: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.The articles of association and the certified copy of the corporate registry (including its equivalent);
2.Documents stating the content of the business;
3.Documents stating the method of conducting the business for which he intends to obtain permission;
4.A copy of minutes of the board of directors which has decided upon the establishment of the branch office;
5.Documents stating personal record of the representative of the branch office and attesting to it;
6.The balance sheet, income statement, and documents relating to the disposition of earned surplus or the disposal of deficit, for the latest three business years;
7.Documents stating the names or titles of major stockholders (referring to the major stockholders under Article 188 (1) of the Act; hereinafter the same shall apply) and the number of their stocks;
8.The business plan (including presumptive financial statements) and estimated revenue and expenditure statement for three business years after the commencement of business; and
9.Other documents, as prescribed by the Financial Supervisory Commission, which are required for the examination of permission requirements under the Act or this Decree.
[This Article Wholly Amended by Presidential Decree No. 16966, Sep. 8, 2000]

Article 17-2 (Detailed Requirements for Permission)
(1)Detailed requirements for manpower and physical facilities which a person, who intends to obtain permission for a securities business, must be complete with under Article 32 (1) 2 of the Act shall be as follows:
1.He shall have necessary manpower including specialized securities personnel with expert knowledge and sound quality concerning the securities business for which he intends to obtain permission and computer personnel, etc. to conduct the business of the securities company; and
2.He shall build necessary computer system and secure sufficient business space including offices to conduct a securities business for which he intends to obtain permission.
(2) The business plan under Article 32 (1) 3 of the Act shall meet the following requirements:
1.It shall be appropriate and feasible in respect of prospect for revenue and expenditure;
2.It shall meet standards for financial soundness; and
3.It shall not be in violation of Acts and subordinate statutes and shall be unlikely to disturb sound financial order.
(3) The term major investor as prescribed by the Presidential Decree in Article 32 (1) 4 of the Act means any person falling under any of the following subparagraphs:
1.The biggest stockholder;
2.A stockholder who is specially related to the biggest stockholder; and
3.A major stockholder.
(4) The term any person who virtually exercises his influence over important matters concerning the management of such corporation and is prescribed by the Presidential Decree in Article 32 (1) 4 of the Act means any person falling under any of the following subparagraphs:
1.The biggest stockholder of a corporation which is the biggest stockholder (including any person who virtually controls a corporation which is the biggest stockholder, if he is obviously different from the biggest stockholder of the corporation); and
2.The representative of a corporation which is the biggest stockholder.
(5) A major investor under Article 32 (1) 4 of the Act shall meet the requirements specified in the attached Table: Provided, That in any case of the following subparagraphs, the Financial Supervisory Commission may determine such requirements separately:
1.Where it is intended to obtain permission for a securities business for the purpose of combining such a securities business;
2.Where a securities company, which is running part of the business under any subparagraph of Article 28 (2) of the Act, intends to obtain permission for a securities business to conduct any other securities business than its current securities business; and
3.Where a securities company merges with another company.
(6) The Financial Supervisory Commission may determine concrete standards for the detailed permission requirements under paragraphs (1), (2) and (5).
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 17-3 (Examination of Establishment Permission for Branch Office of Foreign Securities Company)
(1) Detailed requirements for permission, which a foreign securities company intending to obtain establishment permission for a branch office or any other business office shall meet under Article 32 (2) of the Act, shall be as follows: <Amended by Presidential Decree No. 17907, Feb. 24, 2003>
1.It shall satisfy the requirements of subparagraph 4 (b) through (e) of the attached Table;
2.It shall satisfy the requirements of Article 17-2 (1) and (2); and
3.The substance of supervision over a foreign securities company by the supervisory organization of its own country shall satisfy internationally recognized supervisory standards.
(2) The Financial Supervisory Commission may determine concrete standards for detailed permission requirements under paragraph (1).
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 17-4 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>

Article 17-5 Deleted.
<by Presidential Decree No. 16966, Sep. 8, 2000>

Article 18 Deleted.
<by Presidential Decree No. 12352, Dec. 31, 1987>

Article 18-2 (Eligibility, etc. for Officers)
(1) Deleted. <by Presidential Decree No. 16367, May 27, 1999>
(2)The term other Acts and subordinate statutes related to financial matters as prescribed by the Presidential Decree in Article 33 (2) 3, 4 and 5 of the Act means: <Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15604, Dec. 31, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16709, Feb. 14, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17791, Dec. 5, 2002; Presidential Decree No. 18297, Feb. 28, 2004; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.The Bank of Korea Act;
2.The Banking Act;
3.The Act on Business of Operating Indirect Investment and Assets;
4.The Insurance Business Act;
5.The Merchant Banks Act;
6.The Mutual Savings Banks Act;
7.The Act on Real Name Financial Transactions and Guarantee of Secrecy;
8.The Futures Trading Act;
8-2.The Korea Securities and Futures Exchange Act;
9.The Act on the Establishment, etc. of Financial Supervisory Organizations;
10.The Depositor Protection Act;
11.The Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation;
12.The Specialized Credit Financial Business Act;
13.The Korea Development Bank Act;
14.The Industrial Bank of Korea Act;
15.The Long-Term Credit Bank Act;
16.The Export-Import Bank of Korea Act;
17.The Credit Unions Act;
18.The Trust Business Act;
19.The Credit Guarantee Fund Act;
20.The Korea Technology Credit Guarantee Fund Act;
21.The Community Credit Cooperatives Act;
22.The Support for Small and Medium Enterprise Establishment Act;
23.The Use and Protection of Credit Information Act;
24.The Foreign Exchange Transactions Act;
25.The Foreign Investment Promotion Act;
26.The Asset-Backed Securitization Act;
27.The Special Purpose Companies for Mortgage-Backed Bonds Act;
28.Deleted; <by Presidential Decree No. 18350, Apr. 1, 2004>
29.The Act on the Structural Improvement of the Financial Industry;
30.The Secured Debentures Trust Act;
31.The Financial Holding Companies Act;
32.The Corporate Restructuring Investment Companies Act; and
33.The Korea Housing Finance Corporation Act.
(3) The term any person as prescribed by the Presidential Decree in Article 33 (2) 4 of the Act means any officer or employee at the time of occurrence of a cause of cancellation of permission or authorization, etc. of business (for a corporation or company for which permission or authorization, etc. is canceled pursuant to Article 14 (2) of the Act on the Structural Improvement of the Financial Industry, any officer or employee at the time of occurrence of a cause of timely corrective measures referred to in Article 10 of the said Act), who falls under any of the following subparagraphs: <Amended by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
1.An auditor or a member of the inspection committee;
2.An officer who has been subjected to a demand for caution, warning, reprimand, suspension from duties, or demand for removal from office, or other disposition by the Financial Supervisory Commission or the Governor of the Financial Supervisory Service (hereinafter referred to as the FSS Governor ) established under the Act on the Establishment, etc. of Financial Supervisory Organizations for an unlawful or unjust act in connection with occurrence of a cause of cancellation of permission or authorization, etc.;
3.An employee who has been subjected to a demand for suspension from duties or any severer disposition by the Financial Supervisory Commission or the FSS Governor for an unlawful or unjust act in connection with occurrence of a cause of cancellation of permission or authorization, etc.; and
4.A person who is subjected to the sanction under subparagraph 2 or 3 but already resigned his position or office before such sanction measure is taken.
[This Article Newly Inserted by Presidential Decree No. 10823, May 15, 1982]

Article 18-3 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>

Articles 19 through 23 Deleted.
<by Presidential Decree No. 12352, Dec. 31, 1987>

Article 24 (Application for Authorization of Merger)
When a securities company intends to obtain authorization for a merger in accordance with Article 35 (1) of the Act, the said company shall submit to the Financial Supervisory Commission an application therefor, wherein the reasons for and time of the merger are stated, by attaching thereto the documents enumerated in the following subparagraphs: <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 16323, May 24, 1999; Presidential Decree No. 18757, Mar. 28, 2005>
1.Agreements for merger;
2.Articles of association of the company which continues to exist after a merger or which is newly established due to a consolidation;
3.Balance sheets and inventories of each company concerned; and
4.Other documents that are prescribed by the Financial Supervisory Commission as being necessary to confirm matters entered in the application for authorization.

Article 25 (Matters to be Considered at Time of Authorizing Merger)
(1)Where the Financial Supervisory Commission intends to authorize a merger under Article 35 (2) of the Act, it shall examine whether or not it satisfies the following standards: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.A merger shall not disturb the sound order of a financial market;
2.A securities company which survives after a merger or a securities company which is newly established after such merger shall meet standards for the soundness of financial affairs determined by the Financial Supervisory Commission;
3.The scope of business to be conducted after a merger shall be appropriate;
4.Customers shall not suffer any unjust loss due to a merger; and
5.The procedures and contents of a merger shall be allowed by the Act, the Commercial Act, the Monopoly Regulation and Fair Trade Act, and other finance-related Acts and subordinate statutes.
(2) The Financial Supervisory Commission may set concrete standards for matters to be examined under paragraph (1).
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 26 (Application for Authorization of Transfer or Acquisition of Business)
(1)When a securities company intends to obtain the authorization for transfer or acquisition of business in accordance with Article 35 (1) of the Act, the said company shall submit to the Financial Supervisory Commission an application therefor, wherein matters under each of the following subparagraphs are stated: <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 16323, May 24, 1999>
1.Trade name;
2.Location of the head office;
3.Matters relating to the capital; and
4.Time for transfer or acquisition.
(2)The documents under each of the following subparagraphs shall be attached to the application referred to in paragraph (1): <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
1.The proceedings of the general meeting of stockholders, if the transfer or acquisition has been resolved therein;
2.The latest balance sheet and inventory;
3.A copy of transfer or acquisition agreement; and
4.Other documents that are prescribed by the Financial Supervisory Commission as being necessary to confirm matters entered in the application for authorization.

Article 27 (Matters to be Considered in Authorizing Transfer and Acquisition of Business)
The provisions of Article 25 shall apply mutatis mutandis to authorization for the transfer and acquisition of business of a securities company.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 28 Deleted.
<by Presidential Decree No. 14910, Feb. 12, 1996>

Article 28-2 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>

Article 29 Deleted.
<by Presidential Decree No. 14910, Feb. 12, 1996>

Article 30 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>

Article 30-2 (Scope of Specially Related Persons)
The term relatives and other specially related persons of him as designated by the Presidential Decree in subparagraph 3 of Article 36 of the Act means those who fall under Article 10-3 (2).
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 31 (Matters to be Reported)
(1)When a securities company falls under any of the following subparagraphs, the said company shall report to the Financial Supervisory Commission in accordance with subparagraph 5 of Article 36 of the Act: <Amended by Presidential Decree No. 10823, May 15, 1982; Presidential Decree No. 14229, Apr. 30, 1994; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.When the capital of the company (the business fund in case of a domestic branch office of a foreign securities company) is changed;
2.through 4.Deleted; <by Presidential Decree No. 14229, Apr. 30, 1994>

5.Deleted; <by Presidential Decree No. 13634, Apr. 28, 1992>
6.When the company is punished in accordance with Chapter XI of the Act;
7.When the company becomes a party to a lawsuit which has important effect on its business;
8.When a bankruptcy petition is filed with respect to the company concerned;
9.When the company applies for the commencement of composition, when a decision on the authorization of composition is finalized, or when composition becomes void;
10.When the company receives a disposition for arrear of tax or when it is subject to punishment in violation of the provisions of Acts and subordinate statutes relating to taxation;
11.When the company makes any foreign direct investment or establishes an overseas business office or other offices under the Foreign Exchange Transactions Act;
12.When the company establishes a domestic office (limited to domestic offices of foreign securities companies); and
13.When the grounds accrue that are prescribed by the Financial Supervisory Commission as being seriously influencing the management and property, etc. of the securities company.
(2)Deleted. <by Presidential Decree No. 14229, Apr. 30, 1994>

Article 32 Deleted.
<by Presidential Decree No. 13634, Apr. 28, 1992>

Article 33 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>

Article 34 Deleted.
<by Presidential Decree No. 17518, Feb. 9, 2002>

Article 35 (Exception to Restrictions on Securities Transaction by Officers, etc.)
The term other cases to be prescribed by the Presidential Decree in Article 42 of the Act means as follows: <Amended by Presidential Decree No. 10823, May 15, 1982; Presidential Decree No. 12352, Dec. 31, 1987; Presidential Decree No. 13940, Jul. 28, 1993; Presidential Decree No. 14229, Apr. 30, 1994; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16745, Mar. 4, 2000; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The case of sale and purchase of securities issued by a corporation other than a stock-listed corporation and a KOSDAQ-listed corporation: Provided, That this shall not include the case where the sale and purchase of the securities is made through any brokerage under Article 84-27 (5);
2.The case of sale and purchase of securities referred to in Article 2 (1) 1 through 4 of the Act (including the equivalents of bonds or certificates referred to in Article 2 (1) 1 through 4 of the Act from among bonds or certificates which a foreign corporation, etc. issued) and securities referred to in Article 2-3 (1) 6 through 8 of this Decree (excluding a case where securities fall under the sale and purchase of stock certificates as a result of the exercise of the right on the securities), beneficiary certificates, or stock certificates issued by investment companies incorporated in accordance with the Act on Business of Operating Indirect Investment and Assets: Provided, That this shall not apply to the case falling under the proviso of subparagraph 5;
3.The case of acquiring listed securities or KOSDAQ-listed securities through succession, donation (including bequeathal ), exercise of mortgage right, or accord and satisfaction, or disposal of such securities so acquired;
4.The case of disposal of stocks acquired by an officer or employee of a securities company before he has the said position;
5.The case of disposal of the stocks, convertible bonds, bonds with warrants of the relevant corporation or the convertible bonds eligible to request an exchange with the stocks of the relevant corporation, which have been acquired before it becomes a stock-listed corporation or a KOSDAQ-listed corporation: Provided, That this shall not apply to the case of disposal within the elapse of one year since an acquisition by other method than a public offer of new or outstanding securities;
6.The case of acquisition of stocks publicly offered or of disposal of stocks so acquired;
7.The case of selling and purchasing listed securities or KOSDAQ-listed securities upon obtaining the approval thereof after reporting to the Financial Supervisory Commission according to the criteria determined by the Financial Supervisory Commission;
8.Deleted; <by Presidential Decree No. 15312, Mar. 22, 1997>
9.The case where a member of the employee stock ownership association acquires stocks through the association or disposes of stocks so acquired;
10.The case of acquisition of stocks or of disposal of stocks acquired, by exercising stock options;
11.The case of acquisition of stocks by exercising the preemptive rights derived from the stocks acquired in accordance with subparagraphs 3 through 10, or of disposal of such stocks acquired;
12.Deleted; <by Presidential Decree No. 18687, Jan. 27, 2005>
12-2.The case where stock certificates are disposed of as the right on securities provided for in Article 2-3 (1) 6 through 8 is exercised, which are acquired by any officer or any employee of a securities company before he is appointed as the officer or he is hired as the employee; and
13.The case of disposal of securities which he acquired by exercising the right to perform the securities option trading, which any officer or any employee of a securities company conducted before attaining to the said position.

Article 35-2 Deleted.
<by Presidential Decree No. 17291, Jul. 7, 2001>

Article 35-3 (Scope, etc. of Customer Deposits)
(1) The scope of customer deposits which a securities company has to deposit (including trust; hereafter in this Article through Article 35-9, the same shall apply) with a securities finance company (hereinafter referred to as the depository ) referred to in Article 145 of the Act pursuant to Article 44-3 (1) of the Act means money excluding money of Article 3 (3) 1 through 4 of the Enforcement Decree of the Depositor Protection Act among money deposited from customers in connection with securities transaction or other transaction. <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
(2) The specific standards for calculating customer deposits referred to in paragraph (1), the deposit time and the deposit cycle shall be determined by the Financial Supervisory Commission. <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
(3) A securities company shall deposit at least the amount calculated pursuant to paragraph (2) with the depository. <Amended by Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 35-4 (Exceptional Assignment of Customer Deposits)
The cases where a securities company which has deposited customer deposits (hereinafter referred to as a depository securities company ) may assign customer deposits deposited pursuant to Article 44-3 (3) of the Act shall be as follows:
1.Where a depository securities company assigns to a company which absorbs the depository securities company by a merger or is newly established by consolidating the depository securities company and another company; and
2.Where a depository securities company assigns all or part of securities business to the company which takes over it according to the contents of assignment.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 35-5 (Withdrawal of Customer Deposits)
A depository securities company may withdraw customer deposits deposited with the depository according to the standards falling under each of the following subparagraphs:
1.Where customer deposits already deposited are larger than customer deposits to be deposited: The difference between deposited customer deposits and customer deposits to be deposited;
2.Where the cause of preferential payment occurred under Article 44-3 (4) of the Act: Deposited customer deposits; and
3.Where the Financial Supervisory Commission approves as necessary such as large-scale request for payment of customer deposits at the same time from customers: Approved amount.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 35-6 (Time for Public Announcement for Payment of Customer Deposits)
The term period as determined by the Presidential Decree in the latter part of Article 44-3 (4) of the Act means two months from the date on which a cause of any subparagraph of paragraph (4) of the said Article occurs: Provided, That where it is impossible to make public announcement within the said period for occurrence of any inevitable cause, he may extend such period within one month on approval by the Financial Supervisory Commission.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 35-7 (Operation of Customer Deposits)
(1) Financial institutions referred to in Article 44-3 (6) 2 of the Act mean financial institutions referred to in Article 3 (1) 1 through 8.
(2) The term methods determined by the Presidential Decree in Article 44-3 (6) 3 of the Act means as follows: <Amended by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Loans to a depository securities company secured on securities (including negotiable certificates of deposit);
1-2.Loans, secured on national bonds, to a person determined by the Financial Supervisory Commission;
2.Buying of the Bank of Korea currency stabilization bonds under Article 69 of the Bank of Korea Act; and
3.Other methods deemed capable of safe operation of customer deposits, which are determined by the Financial Supervisory Commission.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 35-8 (Management of Customer Deposits)
The depository shall manage deposited customer deposits, in good faith and sincerity, separately from its own property. <Amended by Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 35-9 (Detailed Matters on Management, etc. of Customer Deposits)
Detailed matters necessary for the deposition, withdrawal, payment and management of customer deposits shall be determined by the Financial Supervisory Commission.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 35-10 (Deposition of Securities by Securities Companies)
(1)The term bonds or certificates as determined by the Presidential Decree in Article 44-4 (1) of the Act means any of securities, bonds or certificates as follows: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Negotiable certificates of deposit; and
2.Foreign currency bonds referred to in the Foreign Exchange Transactions Act, which are determined by the Financial Supervisory Commission.
(2) The term those as determined by the Presidential Decree in Article 44-4 (2) of the Act means any of securities, bonds or certificates as follows: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Securities referred to in Article 2 (1) of the Act;
2.Negotiable certificates of deposit; and
3.Foreign currency bonds referred to in the Foreign Exchange Transactions Act, which are determined by the Financial Supervisory Commission.
(3) Where a securities company keeps in custody any securities, bonds or certificates, other than securities to be deposited referred to in Article 173-7 of the Act, with the Korea Securities Depository by deposition in custody or other methods, it shall be deemed to deposit them pursuant to Article 44-4 of the Act.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 35-11 (Notification of Transaction)
(1)When purchase and sale on the basis of order of customers and other transactions are concluded under Article 46 of the Act, a securities company shall without delay notify the customer concerned of the item, quantity, price, and other contents of transaction.
(2)Every securities company shall notify its customers of details of its monthly and quarterly transactions and its current balance under the conditions as prescribed by the Financial Supervisory Commission. <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
(3)Deleted. <by Presidential Decree No. 18757, Mar. 28, 2005>
(4)The detailed matters necessary for the notification of purchase and sale and other contents of transaction and balance situation by a securities company, shall be prescribed by the Financial Supervisory Commission. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 35-12 (Period for Disposal of Treasury Stock)
The term period prescribed by the Presidential Decree in the latter part of Article 46-2 of the Act means three months from the date of acquisition.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 35-13 (Business Report)
The business report provided in Article 47 of the Act (hereafter in this Article referred to as the business report ) shall include the following matters: <Amended by Presidential Decree No. 17518, Feb. 9, 2002>
1.The outline of a company such as its history and organization;
2.Matters relating to the contents of business to be conducted by a company;
3.Matters relating to the financial affairs of a company such as its financial standing and business records;
4.Matters relating to officers and employees such as the brief personal records of outside directors and the compliance officer under Article 54-4 (2) of the Act (hereinafter referred to as the compliance officer ) and the holding situation of professional securities manpower (including professional derivatives manpower);
5.Matters relating to the biggest stockholder (including any person specially related to him) and major stockholders;
6.Matters relating to business connections with any person specially related to the company;
7.Matters relating to the current condition and protection of deposited property such as customer deposits and customer deposit securities;
7-2.Matters relating to the contents of business, situation of transaction, and situation of appraised profit and loss (including any appraised profit and loss concerning the relevant transaction for evading any risk from over-the-counter derivatives), etc. concerning the over-the-counter derivatives transaction under Article 36-2 (1) 1-2;
8.Matters relating to the management of shops and manpower;
9.Where a company or its officer or employee has been subjected to a certain measure taken by the Financial Supervisory Commission or the FSS Governor, etc. for the latest five years, the contents of such measure; and
10.Other matters, relating to the business or management of a securities company, determined by the Financial Supervisory Commission as those which are to be known to the general public.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 35-14 (Restrictions on Officers Engaging in Other Business)
The full-time officer of a securities company shall not be allowed to engage in the regular business of the following corporations under Article 48 of the Act: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
1.An institution which is subject to examination by the Financial Supervisory Service under Article 38 of the Act on the Establishment, etc. of Financial Supervisory Organizations;
2.An affiliated company of the securities company concerned or a company subject to the preparation of consolidated financial statements (hereinafter referred to as a subsidiary company ): Provided, That this shall exclude the following cases:
(a) Where he holds concurrently the office of an officer of a financial institution, which is a subsidiary company located in a foreign country, or serves for such financial institution as a dispatched officer; and
(b) Where he holds concurrently the office of an officer of a subsidiary company or serves for such subsidiary company as a dispatched officer in order to facilitate business rationalization or restructuring of such a subsidiary company;
2-2.An accounting corporation under the Certified Public Accountant Act;
3.A company which is the biggest or major stockholder of the securities company concerned;
4.A company which is given the loan of money or the extension of credit equivalent to 10/100 or more of the equity capital from the securities company concerned; and
5.Other corporations which might impair the sound management of a securities company, as determined by the Ordinance of the Ministry of Finance and Economy.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 35-15 (Credit Extension)
The method and contents of credit extension under Article 49 (2) of the Act shall be as follows: <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18687, Jan. 27, 2005>
1.Advance of the purchase funds of stock certificates within the limit of one-year period pursuant to the public offering or the issuance of new stocks by a stock-listed corporation or a KOSDAQ-listed corporation;
2.Advance of purchase funds for transactions at the securities market or the KOSDAQ market or lending of sale securities;
3.Advance of funds secured on securities for the purpose of purchasing securities; and
4.Advance of funds to a person depositing securities in a securities company, which is secured on the securities.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 35-16 (Securities Savings Business)
The method and contents of securities savings business under Article 50 (2) of the Act shall be as follows: <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
1.Holding by a securities company of securities after selling them in a manner of installment sale;
2.Holding by a securities company of securities after receiving a prior deposit of money from its customers and then selling such securities for such money; and
3.Holding by a securities company of securities after its customers purchase such securities at the securities market or the KOSDAQ market (including the brokerage of securities transactions under Article 52-2 of the Act) within the scope of their deposits previously given.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 36 (Application for Authorization on Engaging Concurrently in Other Business)
(1)When a securities company intends to obtain authorization as provided in Article 51 (1) 2 of the Act, the said company shall submit to the Financial Supervisory Commission an application therefor, wherein matters under each of the following subparagraphs are stated: <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 16323, May 24, 1999; Presidential Decree No. 16966, Sep. 8, 2000>
1.Trade name;
2.Location of the head office;
3.Matters relating to the stated capital;
4.Type and outline of the business in which it intends to engage concurrently;
5.Commencement date of the business concerned; and
6.Reasons for engaging in the business concerned.
(2)The documents under each of the following subparagraphs shall be attached to an application referred to in paragraph (1): <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
1.Articles of association;
2.The minutes of the general meeting of stockholders, if the concurrent engagement in other business is resolved at the said meeting;
3.The latest balance sheet;
4.Business plan related to the concurrent engagement in other business; and
5.Other documents concerning financial matters that are prescribed by the Financial Supervisory Commission as being necessary to confirm matters entered in the application for authorization.

Article 36-2 (Scope of Business of Securities Company)
(1) The term financial business prescribed by the Presidential Decree in Article 51 (1) 2 of the Act means each of the following businesses: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18325, Mar. 22, 2004; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The futures business under the Futures Trading Act (limited to any transaction subject to stock certificates and index based on them);
1-2.Transactions that are executed on the matters falling any one of the following items outside the securities market, the KOSDAQ market and the futures market (referring to the futures market provided for in the Futures Trading Act), which are prescribed by the Ordinance of the Ministry of Finance and Economy (hereinafter referred to as over-the-counter financial derivatives transactions ) and the act of intermediating, arranging or executing transactions by proxy:
(a)The prices of securities and interest rates provided for in each subparagraph of Article 2 (1) of the Act and the numerical values of index number that is based on the former;
(b) The prices of currencies and general goods (referring to the general goods provided for in subparagraph 1 of Article 2 of the Futures Trading Act; hereinafter the same shall apply) and the numerical values of index number that is based on the former; and
(c) The indices of credit risk;
2.The investment consulting business provided for in subparagraph 5 of Article 2 of the Act on Business of Operating Indirect Investment and Assets;
3.The discretionary investment business provided for in subparagraph 6 of Article 2 of the Act on Business of Operating Indirect Investment and Assets; and
4.The trust business provided for in the Trust Business Act.
(2) A securities company competent for conducting a business referred to in paragraph (1) 1-2, 2, and 3 shall be a securities company that falls under any of the following subparagraphs: <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18757, Mar. 28, 2005>
1.For the business of paragraph (1) 1-2, a securities company meeting the following requirements:
(a) It shall be a securities company that runs all of the businesses as referred to in Article 28 (2) 1 through 3 of the Act;
(b) The major investors in the securities company shall satisfy the requirements as referred to in subparagraph 1 (f) ( ) of the attached Table;
(c) It shall maintain the equity capital regulation rate, as referred to in Article 54-2 (1) of the Act, 300/100 or higher and have equity capital of not less than the amount as prescribed by the Ordinance of the Ministry of Finance and Economy;
(c)It shall maintain the equity capital regulation rate of 300/100 or higher, as referred to in Article 54-2 (1) of the Act; Enforcement Date: Mar. 29, 2007
(d) It shall have professional derivatives manpower, including but not limited to full-time officers making a specialty of over-the-counter financial derivatives transaction; and
(e) It shall meet the standards for the risk management and internal control, etc. as determined by the Financial Supervisory Commission; and
2.For the businesses of paragraph (1) 2 and 3, a securities company that conducts all of the businesses as referred to in Article 28 (2) 1 and 2 of the Act.
(3) The Financial Supervisory Commission may set standards for business method and procedure, etc. necessary for a securities company to conduct the business referred to in paragraph (1) 1-2, 2, and 3. <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002>
(4) A securities company shall, in running any business of paragraph (1) 2 and 3, meet the following standards: <Newly Inserted by Presidential Decree No. 17907, Feb. 24, 2003>
1.Deleted; <by Presidential Decree No. 18757, Mar. 28, 2005>
2.It shall manage the accounts of investment advisory customers and discretionary investment customers separately from other accounts of such customers;
3.Deleted; <by Presidential Decree No. 18757, Mar. 28, 2005>
4.It shall not conduct the sale and purchase of securities on its own account, or investment advice, the sale and purchase of property subject to a discretionary investment contract, etc., which are intended to close or facilitate any transaction favorable to itself; and
5.It shall not make any investment of discretionary investment property in any securities issued by itself.
(5) The term ancillary business prescribed by the Presidential Decree in Article 51 (1) 3 of the Act means any of the following businesses: <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The business related to a securities business that falls under any one of the following items:
(a) A business of appraising securities and equities;
(b) A business of intermediating, arranging, or conducting as proxy the purchase and merger of corporations;
(c) The sale or purchase of negotiable certificates of deposit and the brokerage business of such sale or purchase;
(d) A business of receiving the entrustment of bond subscription;
(e) A business of agents relating to the transactions of securities;
(f) A consulting or supporting business for the management, restructuring, and financing of corporations;
(g) A business of lending or borrowing securities, or intermediating, arranging, or conducting as proxy, it;
(h) A business of underwriting securities issued through a method other than the public offering of new securities, and a business of intermediating, arranging, or conducting as proxy, it;
(i) A business of trading claims on credits and other relevant business, and a business of intermediating, arranging, or conducting as proxy, it;
(j) A business of conducting safe deposit of securities;
(k) The business of renting, brokering the transaction of real estate that is owned by enterprises that are customers or offering consulting services in the process of performing the business referred to in item (b) or (f);
(l) The business of selling information pertaining to the analysis of security values, etc. to many and unspecified persons by means of publication, book or electronic document, etc.;
(m)The business of getting any financial institution (referring to the institution subject to the inspection provided for in Article 38 of the Act on the Establishment, etc. of Financial Supervisory Organizations) with which a business partnership is maintained to extend loans to customers by means of brokerage, arrangement or proxy; and
(n) Other businesses equivalent to items (a) through (m), as prescribed by the Ordinance of the Ministry of Finance and Economy; and
2.A business of utilizing manpower, assets, or facilities, etc. held by the securities company concerned, which falls under any of the following items:
(a) A business of renting real estate;
(b) A business of lending safes;
(c) Deleted; <by Presidential Decree No. 17907, Feb. 24, 2003>
(d) A business of performing as proxy the sale of lottery tickets and admission tickets;
(e) A training business relating to securities;
(f) A business of publishing publications and books;
(g) A business of lending or selling computer system or software relating to a securities business;
(h) A trust of a caretaker business and a special purpose company s business under the Asset-Backed Securitization Act;
(i) Advertising agency services rendered by means of publications, books, or electronic documents. In this case, the contents of advertisement shall not include any estimated information on the value of enterprises or any recommendations on purchase; and
(j) Other businesses equivalent to items (a) through (i), as prescribed by the Ordinance of the Ministry of Finance and Economy.
(6) Deleted. <by Presidential Decree No. 18757, Mar. 28, 2005>
(7) The Financial Supervisory Commission may set necessary standards for conducting the ancillary business under paragraph (5). <Amended by Presidential Decree No. 17907, Feb. 24, 2003>
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 36-3 (Acts Which Securities Company, etc. shall not Perform)
The term acts prescribed by the Presidential Decree in subparagraph 3 of Article 52 of the Act means the following acts: <Amended by Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Acts falling under any of the following items in connection with the underwriting of securities:
(a) Acts of not giving due care to prevent an issuer who has entered into a contract for underwriting of securities from making a false entry or indication in the securities registration statement and the prospectus (including the preliminary prospectus and the simple prospectus) or from omitting an entry or indication of any important matters therein;
(b) Acts of demanding or promising the purchase of securities from or to the issuer or seller of the securities or the specially related persons after the public offering of the securities in return for the underwriting of the securities;
(c) Acts of distributing directly or indirectly property interest accrued from the investment in securities to the persons who are given the allotment of underwritten securities, or of demanding the further purchase of securities from such persons, in return for such allotment;
(d) Acts of distributing underwritten securities to subscribers therefor with any unreasonable discrimination; and
(e) Acts of announcing or offering to a particular person research and analysis data on the issuer of stocks (including those under Article 5-4 (3) 5 (b) and (c); hereafter in this item the same shall apply) within 40 days after they are first listed on the securities market or the KOSDAQ market from the day of making arrangements for a public offering, or entering into a contract for arranging or underwriting, of such stocks;
2.Acts of soliciting the sale and purchase or other trading of securities by offering customers any judgment which is conclusive or lacks reasonable grounds on a rise or fall in price of specific securities with respect to such sale and purchase or other trading;
3.Acts of offering customers property interest directly or indirectly with respect to the sale and purchase or other trading of securities in excess of the ceiling that is set by the Financial Supervisory Commission or acts of making up for all or part of loss incurred from such transactions without any justifiable reason;
4.Acts of intermediating, arranging, or conducting as proxy the lending of money by a third party (excluding financial institutions which are subject to inspection under Article 38 of the Act on the Establishment, etc. of Financial Supervisory Organizations and, in the operation of business, tied up with the securities company concerned) to customers;
5.Acts of using information known in connection to one s duties, such as trends of sale or purchase order of customers, for the benefit of himself or a third party;
6.Acts of being entrusted with any sale and purchase or other transactions in violation of Article 188-2 or 188-4 of the Act with knowledge that customers intend to perform such transactions;
7.Acts of employing any unjust means to conceal illegal transactions of customers with respect to the sale and purchase or other trading of securities;
8.Acts of spreading any false fact or other rumors without any reasonable ground;
9.Acts of selling or purchasing securities by soliciting customers to purchase and sell them without making any matters having material influence on the value of securities known to the customers;
10.Acts of soliciting excessively frequent sale and purchase of securities in the light of the purpose and experience, etc. of customers investment;
11.Acts of receiving the entrustment of the sale and purchase or other trading of securities without any justifiable reason though it is obvious that the settlement of accounts will not be made with respect to such sale and purchase or other trading;
12.Deleted; <by Presidential Decree No. 18757, Mar. 28, 2005>
13.Acts of soliciting the purchase or sale of treasury stocks already issued by the securities company concerned;
14.Acts of soliciting the sale and purchase or other trading of specific securities by providing customers with undisclosed information; and
15.In making public research and analysis data containing any assertion or estimate on the value of specific securities (limited to stock certificates, etc. under Article 188 (1) of the Act) or data on solicitation of their purchase or sale, acts of purchasing or selling such securities on its own account not later than 24 hours after they are made public from the time when the contents of such data are virtually established: Provided, That this shall not include any such case as determined by the Ordinance of the Ministry of Finance and Economy.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 36-4 (Business Criteria, etc. for Securities Company Utilizing Electronic Data-Processing Equipment, etc.)
(1) The securities company running the securities business under Article 2 (8) 8 of the Act shall run its business in conformity with the criteria under each of the following subparagraphs (hereafter in this Article, referred to as the business criteria ) under Article 52-2 (1) of the Act: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Securities subject to a mediation of trade shall be the stocks, except for each of the following items of any corporation, which are listed on the securities market or the KOSDAQ market:
(a) Stocks that are designated by the Exchange as items subject to administration and other items corresponding thereto pursuant to the securities listing regulations (including the listing regulations that are separately laid down for the KOSDAQ market; hereinafter referred to as the listing regulations ) under Article 88 of the Act;
(b) Non-voting stocks; and
(c) Stocks as determined by the Financial Supervisory Commission in view of the protection of investors and maintenance of transaction order, such as the stocks for which the results of concluding the trade contracts are sluggish;
2.Where the Exchange suspends the trade or revokes the suspension for the securities subject to a trade mediation, the trade of relevant securities shall be suspended or such a suspension shall be revoked;
3.Trade mediation shall be made concurrently for many people by making them an individual party, and the open criteria for the number of stocks to be purchased or sold and the principle and methods of conclusion of trade contracts for the mediation shall be set forth;
4.The method for making the Depository an agency for settlement and for guaranteeing the settlement shall be determined, such as the accumulation, etc. of the joint funds for compensating the losses incurred from a default of trade contract;
5.Minimum collection rate of the down payment for entrustment for the securities company participating in the trade mediation shall be set forth;
6.Matters for which a consignment is to be refused pursuant to the provisions of the business regulations provided for in Article 94 of the Act (including the business regulations that are separately laid down for the KOSDAQ market; hereinafter referred to as the business regulations ) shall be laid down;
7.Details of the enterprises of the issuers of stocks listed on the securities market or the KOSDAQ market, who are published by the Exchange, shall be made public;
8.Daily prices and trade volumes by item shall be released and reported daily to the Exchange. In such case, the details reported to the Exchange shall contain the trade details by item of the securities company participating in the trade mediation;
9.No trade mediation shall be made during the hours of transaction (including the hours for the receipt of purchase or sale price offered) at the securities market or the KOSDAQ market; and
10.Reasons for suspending the trade mediation and the days of such suspension shall be set forth. In such case, the trade mediation shall be suspended until the time of reopening the securities market or the KOSDAQ market after its suspension due to the causes other than its closure.
(2) The securities company running the securities business under Article 2 (8) 8 of the Act shall, where it sets forth the business criteria under paragraph (1) or alters their contents, notify it to the Financial Supervisory Commission and the Exchange, and publicly announce it so as to make it known to the general public. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001]

Article 36-5 (Measures of Financial Supervisory Commission)
The term other measures prescribed by the Presidential Decree in Article 53 (5) 2 of the Act means those which fall under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17907, Feb. 24, 2003>
1.Order for closure of a branch office and other business office or suspension of all or part of the business;
2.Warning or caution against an institution;
3.Demand for suspension of the performance of duties of, or warning or caution against officers;
4.Demand for dismissal, suspension from duties, deduction of salary, or reprimand of, or warning or caution against employees;
5.Demand for improvement, or recommendation, of manner of operation or business;
6.Demand for restitution or correction;
7.Announcement of sanctions suffered for violation of the Act;
8.Demand for a letter of commitment;
9.In case of contravention of the Act, accusation or report to the investigation agency;
10.In case of contravention of other Acts, report to the related institution or investigation agency; and
11.Other measures which the Financial Supervisory Commission may take under the Act and this Decree and other related Acts and subordinate statutes.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 36-6 (Entrustment of Inspection Authority)
(1)Where the Governor of the Financial Supervisory Service intends to delegate his inspection authority to the Korea Securities Dealers Association (hereinafter referred to as the Association ) that is established pursuant to Article 162 of the Act in accordance with Article 53 (6) of the Act, he shall in advance conclude a contract for the entrustment with the Association. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
(2)The inspection authority which the Governor of the Financial Supervisory Service may entrust to the Association under Article 53 (6) of the Act shall be limited to the inspection authority over the following matters concerning the business activities of a securities company: <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
1.Matters relating to the business (including the business that is run for the concurrent business provided for in Article 51 (1) 1 and 2 of the Act) act performed by professional manpower of a securities company;
2.Matters set forth in the regulations of the Association concerning the underwriting of securities; and
3.Other matters as to whether or not a securities company observes standard contractual clauses.
(3) Where the Association exercises the inspection authority entrusted in accordance with paragraphs (1) and (2), it shall comply with the standards set by the FSS Governor concerning the method and procedures, etc. of exercising the inspection authority, and if the Association completes the inspection, it shall report its results to the FSS Governor without any delay.
[This Article Newly Inserted by Presidential Decree No. 17518, Feb. 9, 2002]

Article 37 (Order against Securities Company)
The Financial Supervisory Commission may, in accordance with Article 54 of the Act, issue to a securities company necessary orders relating to the following matters, under the conditions as prescribed by the Ordinance of the Ministry of Finance and Economy: <Amended by Presidential Decree No. 10823, May 15, 1982; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 17291, Jul. 7, 2001>
1.Operations of assets of a securities company;
2.Custody and management of cash, securities, consignment guarantee money, and guaranty money for margin transaction deposited by customers of a securities company;
3.Management and improvement of business of a securities company;
4.Various kinds of public notification by securities companies;
5.Maintenance of order of business as provided for in Article 28 (2) 3 of the Act;
5-2.Methods of business under Article 28 (2) 4 of the Act; and
6.Such matters as are prescribed by the Ordinance of the Ministry of Finance and Economy other than those prescribed in subparagraphs 1 through 5 and 5-2.

Article 37-2 (Equity Capital Regulation Rate, etc. of Securities Company)
(1) The term rate determined by the Presidential Decree in the main sentence of Article 54-2 (1) of the Act means a rate of 100/100 or more determined by the Financial Supervisory Commission.
(2) The term other amount determined by the Presidential Decree in Article 54-2 (1) 2 of the Act means an amount calculated according to the standards set by the Financial Supervisory Commission with respect to the following matters:
1.Finance lease debts;
2.Profits from appraised assets; and
3.Debts of capital nature and other matters to be added in accordance with such stipulation as the Financial Supervisory Commission may determine.
(3) The term other amount determined by the Presidential Decree in Article 54-2 (1) 3 of the Act means an amount calculated according to the standards set by the Financial Supervisory Commission with respect to the following matters:
1.Prepaid expenses;
2.Prepaid corporate taxes;
3.Losses from appraised assets; and
4.Assets difficult of encashment within a short period and other matters to be deducted in accordance with such stipulation as the Financial Supervisory Commission may determine.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 37-3 (Asset Operation of Securities Company)
(1) The term case prescribed by the Presidential Decree in the main sentence of Article 54-3 (1) of the Act means any of the following cases. In this case, the Financial Supervisory Commission shall set and publicly announce a period during which ownership, etc. is restricted:
1.For the application of Article 54-3 (1) 1 of the Act, it means the following:
(a) Where, in conducting securities savings business under Article 50 of the Act, the securities company holds securities issued by the biggest stockholder or major stockholders of the securities company upon a request by a customer for purchase or sale;
(b)Where, according to the change of the biggest stockholder or major stockholders, the securities already held by the securities company are deemed to be securities issued by the biggest stockholder or major stockholders;
(c) Where, in order to conduct the stabilization or market making under Article 83-8, the securities company holds the securities issued by the biggest stockholder or major stockholders of the securities company;
(d) Where, in order to attain the object of exercise of its rights including security right, the securities company holds the securities issued by the biggest stockholder or major stockholders of the securities company; and
(e) Where the acquisition of the securities concerned does not impair the soundness of asset operation, as determined and publicly announced by the Financial Supervisory Commission;
2.For the application of Article 54-3 (1) 2 of the Act, it means the case where the securities company lends money or extends credit within the scope of a yearly grant or one hundred million won, whichever is less, to its officers who are specially related to the biggest stockholder;
3.For the application of Article 54-3 (1) 3 of the Act, it means the case where the securities company guarantees debts of an overseas on-the-spot corporation determined and publicly announced by the Financial Supervisory Commission; and
4.For the application of Article 54-3 (1) 4 of the Act, it means the following:
(a) Where the securities company acquires stocks, bonds, and corporate bills pursuant to subparagraph 1 (b) through (d); and
(b) Where the acquisition of the stocks, bonds, and corporate bills through investments in other companies, etc. does not impair the soundness of asset operation, as determined and publicly announced by the Financial Supervisory Commission.
(2) The term person determined by the Presidential Decree from among specially related persons in Article 54-3 (1) 2 (a) of the Act means any of the following persons: Provided, That this shall exclude an financial institution determined and publicly announced by the Financial Supervisory Commission: <Amended by Presidential Decree No. 17291, Jul. 7, 2001>
1.An affiliated company;
2.Where the biggest stockholder is an individual, the biggest stockholder and the following persons:
(a) His or her spouse; and
(b) Paternal or maternal blood relative within the third degree; and
3.Deleted. <by Presidential Decree No. 17291, Jul. 7, 2001>
(3) The term person as prescribed by the Presidential Decree in Article 54-3 (1) 2 (c) of the Act means the person falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001>
1.Spouse; and
2.Paternal and maternal blood relative within the third degree.
(4) The term rate determined by the Presidential Decree in Article 54-3 (1) 4 of the Act means 8/100 of the equity capital.
(5) The term act prescribed by the Presidential Decree in Article 54-3 (1) 5 of the Act means any of the following acts:
1.An act of trading with a specially related person on relatively unfavorable conditions to the securities company in comparison with trading with a person other than the specially related person; and
2.An act of collecting blank checks to secure his right as a creditor.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 37-4 (Internal Control Standards)
(1) The internal control standards under Article 54-4 (1) of the Act (hereinafter referred to as the internal control standards ) shall contain the following matters:
1.Matters relating to the division of duties and structure of organization;
2.Matters relating to the control of risk arising in the course of operating assets or conducting business;
3.Matters relating to procedures to be necessarily followed when officers and employees conduct their duties;
4.Matters relating to the building of system to deliver efficiently information necessary for the decision of intention in management;
5.Matters relating to procedures and methods for confirming whether or not the officers and employees observe internal control standards and measures to be taken at the time of violation thereof;
6.Matters relating to procedures or standards for preventing unfair trade such as the report of the description of securities trade by officers and employees;
7.Matters relating to procedures for establishment or alteration of internal control standards;
8.Matters relating to procedures for appointment and dismissal of a compliance officer; and
9.Concrete standards for the matters of subparagraphs 1 through 8, which are determined and publicly announced by the Financial Supervisory Commission.
(2) Where a securities company (excluding a branch office of a foreign securities company) intends to establish or alter internal control standards, it shall be subject to a resolution by the board of directors.
(3) The Financial Supervisory Commission may recommend a securities company, which is found to have violated Acts and subordinate statutes as a result of inspection by the FSS Governor under Article 53 (1) of the Act, to alter the internal control standards to prevent the repetition of such violation.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 37-5 (Compliance Officer)
(1) and (2) Deleted. <by Presidential Decree No. 17291, Jul. 7, 2001>

(3) A securities company shall, upon the appointment or dismissal of a compliance officer, notify the Financial Supervisory Commission and the Association.
(4) A compliance officer shall perform his duties with the care of good manager and shall not be in charge of the following business:
1.A business of operating the proper property of the securities company;
2.A securities business which the securities company carries out, and a business ancillary thereto; and
3.A financial business which the securities company operates concurrently in accordance with Article 51 (1) 1 and 2 of the Act.
(5) A securities company shall, where a compliance officer requests its officers or employees to submit data or information in connection with the performance of his duties, order the officers or employees to sincerely comply therewith.
(6) A securities company shall not accord an unjust treatment in personal affairs to a person who was previously a compliance officer for a reason related to the performance of his duties.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 37-6 (Outside Directors of Securities Company)
(1) A securities company which is under obligation to have outside directors under Article 54-5 of the Act shall be a securities company of which the total amount of assets is not less than two trillion won as of the end of the latest business year: Provided, That the following securities companies shall be excluded: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.A securities company which is granted permission only for part of businesses as provided in subparagraphs of Article 28 (2) of the Act;
2.A domestic branch office and other business offices of a foreign securities company under Article 28-2 of the Act;
3.A securities company of which the extinguishment is definite due to merger, etc. within six months of the date of the regular general meeting of stockholders;
4.A securities company for which the reorganization procedure is started in accordance with the Company Reorganization Act;
5.A securities company which is declared bankrupt; and
6.A securities company of which the dissolution is resolved.
(2) The term corporation which has important trade connections with the company concerned or competitive or cooperative relations with the company concerned for business as prescribed by the Presidential Decree used in Article 54-5 (4) 7 of the Act means any of the following corporations (excluding institutional investors and foreign financial institutions equivalent thereto):
1.A corporation in which the total amount of trade with the securities company concerned occupies not less than 10/100 of the total amount of its assets (meaning the total amount of assets on the balance sheet of the securities company concerned as of the end of the latest business year) or of the total amount of its sale (meaning the total amount of sale on the income statement of the securities company concerned as of the end of the latest business year; hereafter in this Article the same shall apply) in the latest three business years;
2.A corporation which has entered into a single trade contract with the securities company concerned, of which the price amounts to 10/ 100 or more of the total amount of its sale, during the latest business year;
3.A corporation to which 10/100 or more of the capital of the securities company concerned (meaning the capital on the balance sheet of the company concerned as of the end of the latest business year) is given through the loan or borrowing of money, securities, and other instruments or bills, and debt guarantee such as the furnishing of security during the latest business year;
4.A corporation in which 5/100 or more of the capital (referring to the capital of the corporation invested by the securities company concerned) is invested by the securities company as of the date of the regular general meeting of stockholders of the securities company;
5.A corporation which enters into a technical tie-up contract with the securities company concerned;
6.An accounting corporation which is designated as an external auditor of the securities company concerned; and
7.A corporation which enters into a consulting contract with the securities company concerned for legal and managerial consultation, etc.
(3) The term persons as prescribed by the Presidential Decree in Article 54-5 (4) 9 of the Act means the following persons: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.A person who holds the office of an outside director, non-permanent director, or non-permanent auditor of two or more stock-listed corporations or KOSDAQ-listed corporations other than the securities company concerned;
2.An attorney-at-law, certified public accountant, certified tax accountant, or other consultative service providers who carry on the business of accounting audit over the securities company concerned or conduct tax business as proxy therefor, or enter into a consulting contract with the company for legal and managerial consultation, etc.;
3.A person who retains (referring to retaining under Article 21 (1) of the Act) the stocks equivalent to 1/100 or more of the total number of stocks issued by the securities company concerned; and
4.Aside from the amount under subparagraph 3, the person whose balance of transaction with the securities company concerned (excluding any transaction that is ordinally executed with any securities company pursuant to the terms of the contract provided for in Article 2 (1) of the Regulation of Standardized Contracts Act) is 100 million won or more.
[This Article Newly Inserted by Presidential Decree No. 16745, Mar. 4, 2000]

Article 37-7 (Inspection Committee of Securities Company)
(1) The securities company which is under obligation to establish an inspection committee under Article 54-6 (1) of the Act shall be a securities company under Article 37-6 (1). <Amended by Presidential Decree No. 16966, Sep. 8, 2000>
(2) The term accounting or financial specialist prescribed by the Presidential Decree in Article 54-6 (2) 2 of the Act means the person falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Person who is qualified as a certified public accountant and has worked in the profession related to his qualifications for not less than 5 years;
2.Person who holds a master s degree or higher in the field of finance or accounting and has worked as a researcher or a full-time lecturer or higher in the field of finance or accounting for any research institute or any college for not less than 5 years;
3.Person who has worked as an officer in charge of financial or accounting affairs for not less than 5 years or has worked as an officer and employee in charge of financial or accounting affairs for not less than 10 years for any stock-listed corporation or any KOSDAQ-listed corporation;
4.Person who has worked as a public official in charge of financial or accounting affairs or in charge of overseeing such financial and accounting affairs for the government, any local government, any government-invested institution, the Financial Supervisory Service, the Exchange and any securities-related agency for not less than 5 years; and
5.Person who has worked as an employee in charge of financial or accounting affairs for any institution (including any foreign financial institution) subject to audit provided for in Article 38 of the Act on the Establishment, etc. of Financial Supervisory Organizations for not less than 5 years.
[This Article Newly Inserted by Presidential Decree No. 16745, Mar. 4, 2000]

Article 38 (Request for Information)
Other cases as prescribed by the Presidential Decree under Article 60 (1) of the Act mean the following: <Amended by Presidential Decree No. 10823, May 15, 1982; Presidential Decree No. 12352, Dec. 31, 1987; Presidential Decree No. 13261, Jan. 29, 1991; Presidential Decree No. 13634, Apr. 28, 1992; Presidential Decree No. 14910, Feb. 12, 1996; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
1.Where a tax official presents to a specific business office of a specific securities company which is deemed to have an account of the tax delinquent, a document describing the name of the tax delinquent and the arrears issued by a chief of the competent revenue office or a head of the local government concerned in accordance with Article 27 of the National Tax Collection Act, and asks whether or not the balance of cash and securities (the value of securities is based upon the closing price of the latest day quoted by the Exchange, but the selling price is applied when a sale contract is concluded with respect to the securities; hereafter the same shall apply in this Article) deposited by such delinquent exceeds the amount equivalent to such arrears, and how much the balance is where the balance is less than the amount equivalent to such arrears;
2.Where, in order to examine inherited or donated property in accordance with Article 84 of the Inheritance Tax and Gift Tax Act, a tax official presents a document issued by the chief of the competent revenue office to a specific business office of a specific securities company which is deemed to have an account for a legal predecessor, a donator, a taxpayer, a person deemed to be liable to taxes, a person having a relationship therewith in delivery of property, or a person with the right and liability of delivery of the said property, and investigates the balance of cash and securities deposited thereby and the details of the specific securities;
3.Where a tax official presents a document issued by the chief of the competent revenue office to investigate a specific business office of a specific securities company deemed to have an account for a taxpayer or a person deemed to be liable to taxes in accordance with Article 170 of the Income Tax Act;
4.Where the Governor of the Financial Supervisory Service established under the Act on the Establishment, etc. of Financial Supervisory Organizations (hereinafter referred to as the FSS Governor ), orders a securities company to submit reports and data, or conducts an inspection thereof in accordance with Article 53 of the Act;
5.Where the Exchange asks for the submission of any report or any material needed to examine abnormal trading and oversee its members pursuant to Article 19 of the Korea Securities and Futures Exchange Act;
6.Where it is necessary for a securities finance company to verify whether or not a loan extended to a securities company are used for the purpose of such loan; or
7.Where a necessary investigation is conducted, showing a document issued by a public prosecutor.

Article 38-2 (Trade Name of Securities Company)
Any securities company shall, under Article 62 (1) of the Act, use in its trade name the letters based on the division of each of the following subparagraphs:
1.A securities company under subparagraphs 1, 2, and 6 of Article 14: Securities;
2.A securities company under subparagraph 3 of Article 14: Securities brokerage; and
3.A securities company under subparagraphs 4 and 5 of Article 14: Bonds brokerage.
[This Article Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001]

Article 39 (Exercise of Minority Stockholders Right)
The term securities company prescribed by the Presidential Decree taking into account the size, etc. of its assets used in the former part of Article 64 (1) of the Act means a securities company which is granted permission for the whole of businesses as provided in subparagraphs of Article 28 (2) of the Act and of which the total amount of assets is not less than two trillion won as of the end of the latest business year: Provided, That this shall not include a domestic branch office and other business offices of a foreign securities company under Article 28-2 of the Act.
[This Article Newly Inserted by Presidential Decree No. 16745, Mar. 4, 2000]

Articles 40 and 41 Deleted.
Articles 41-2 through 41-6 Deleted.
CHAPTER V-2 Deleted.

Articles 41-7 through 41-24 Deleted.
CHAPTER VI KOREA SECURITIES AND FUTURES EXCHANGE

Articles 42 through 44-2 Deleted.
<by Presidential Decree No. 18687, Jan. 27, 2005>

Articles 45 through 47 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>

Article 48 (Raising of Joint Fund for Compensating for Losses Incurred from Contravention of Contracts)
The total amount of the joint fund for compensating for losses incurred from contravention of contracts (hereinafter referred to as the compensation fund ) provided for in Article 95 of the Act, the contribution rate for the compensation fund by each of members and methods of raising the compensation fund shall be prescribed based on the member management regulations (hereinafter referred to as the member management regulations ) provided for in Article 16 of the Korea Securities and Futures Exchange Act taking into account the transaction records of securities by members in the securities market (including the KOSDAQ market; hereinafter the same shall apply) and other circumstances.
[This Article Wholly Amended by Presidential Decree No. 18687, Jan. 27, 2005]

Article 49 Deleted.
<by Presidential Decree No. 18687, Jan. 27, 2005>

Article 50 (Management and Operation of Compensation Fund)
(1)The Exchange shall manage the compensation fund by keeping separate accounting by each member who contributes to the fund, as well as by maintaining separate accounting from other properties. <Amended by Presidential Decree No. 12352, Dec. 31, 1987; Presidential Decree No. 18687, Jan. 27, 2005>
(2)The Exchange shall operate the compensation fund in the following methods: <Amended by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
1.Depositing at banks;
2.Lending to a securities finance company or buying corporate bonds issued by a securities finance company;
3.Purchase of government and local government bonds, and corporate bonds for which the payment of their principals and interests are guaranteed;
4.Money trust (limited to any money trust whose principal is guaranteed) at any financial institution that renders the trust service; and
5.Buying Bank of Korea currency stabilization bonds under Article 69 of the Bank of Korea Act.
(3)The Exchange shall proportionally include proceeds accruing from the operation of the compensation fund in principals according to contribution rates of members to the compensation fund. <Newly Inserted by Presidential Decree No. 18687, Jan. 27, 2005>
(4) Other matters necessary for the management and operation of the compensation fund than those referred to in paragraphs (1) through (3), shall be prescribed according to the member management regulations. <Newly Inserted by Presidential Decree No. 18687, Jan. 27, 2005>

Article 51 (Use of Compensation Fund)
(1)In case where the Exchange uses the compensation fund for the compensation of losses in accordance with Article 97 of the Act, the compensation fund set aside by a member who violates the trading contract shall be used first, and then the compensation fund set aside by other members shall be used to make up for the shortage in proportion to the amount set aside by each of such other members. <Amended by Presidential Decree No. 12352, Dec. 31, 1987; Presidential Decree No. 18687, Jan. 27, 2005>
(2)In case where the Exchange has, in accordance with Article 97 (3) of the Act, redeemed the compensation fund which was expended in accordance with paragraph (1), the amount thus redeemed shall be in preference appropriated to make up for the portion of the compensation fund set aside by other members in proportion to the amount used. <Amended by Presidential Decree No. 12352, Dec. 31, 1987; Presidential Decree No. 18687, Jan. 27, 2005>

Article 52 (Refund of Contributions to Compensation Fund)
With respect to any member who secedes from the Exchange, the Exchange shall refund the amount of his contribution to the compensation fund to him under the conditions as prescribed by the member management regulations.
[This Article Wholly Amended by Presidential Decree No. 18687, Jan. 27, 2005]

Articles 53 and 54 Deleted.
<by Presidential Decree No. 18687, Jan. 27, 2005>

Article 55 (Report on Compensation for Losses)
When the Exchange has compensated losses in accordance with Article 97 of the Act, it shall report the fact thereof to the Financial Supervisory Commission. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 16323, May 24, 1999; Presidential Decree No. 18687, Jan. 27, 2005>

Article 56 (Exercise of Right of Indemnity)
When the Exchange exercises its right to indemnification against a member who violates the trading contract in accordance with Article 97 (3) of the Act, it shall resort to such methods as may promptly make up for the compensation fund. <Amended by Presidential Decree No. 12352, Dec. 31, 1987; Presidential Decree No. 18687, Jan. 27, 2005>

Article 57 Deleted.
<by Presidential Decree No. 10823, May 15, 1982>

Article 58 (Publication, etc. of Quotation)
(1)If it is desired to publish the settled price, etc. under Article 103 of the Act, it shall be done by means of any computerized equipment, or inserted in any publication dealing mainly with the information on the securities market, such as quotation, etc. of the securities.
(2)The Exchange may determine detailed matters necessary for the publication of such settled price, etc. as referred to in paragraph (1) and the efficient management of the information thereon. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Wholly Amended by Presidential Decree No. 14229, Apr. 30, 1994]

Articles 59 through 65 Deleted.
Article 66 Deleted.
<by Presidential Decree No. 10823, May 15, 1982>

Article 66-2 (Method of being Entrusted with Transactions)
Where a securities company is entrusted with transactions from a customer, it may be charged through a telephone, telegram, facsimile, computer and other electronic means of communication equivalent thereto other than the method of entrustment through a document under Article 109 (2) of the Act.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 67 Deleted.
<by Presidential Decree No. 16966, Sep. 8, 2000>

Article 67-2 Deleted.
<by Presidential Decree No. 12352, Dec. 31, 1987>

CHAPTER VII Deleted.

Articles 67-3 through 74-2 Deleted.
CHAPTER VIII ORGANIZATIONSCONCERNED WITH SECURITIES

Article 75 (Standards for Permission Examination)
With respect to standards for permission examination of a securities finance company referred to in Article 145 of the Act, the provisions of Article 17-2 shall apply mutatis mutandis. In this case, the term Financial Supervisory Commission shall be deemed Minister of Finance and Economy . <Amended by Presidential Decree No. 16966, Sep. 8, 2000>
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 76 (Scope of Transactions of Bonds)
(1)Such extent as may be prescribed by the Presidential Decree in subparagraph 5 of Article 147 of the Act means the transactions under the conditions to repurchase or resell the bonds under Article 2 (1) 1 through 4 of the Act.
(2)Deleted. <by Presidential Decree No. 14229, Apr. 30, 1994>

Article 77 (Discontinuance of Business and Dissolution)
When a securities finance company intends to obtain authorization with respect to the discontinuance of its business or its dissolution in accordance with Article 158 of the Act, it shall submit to the Minister of Finance and Economy an application therefor, by attaching thereto the proceedings of the general meeting of stockholders concerned, a written reason, balance sheet at the time of resolution, and a document showing the contents of assets and liabilities. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 16367, May 27, 1999>

Article 77-2 (Issuance of Corporate Bonds)
(1)In case where a securities finance company intends to issue corporate bonds under Article 160 of the Act, it shall in advance report the total amount, manner, or condition of issuance to the Financial Supervisory Commission. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
(2)In case where a securities finance company has written, in issuing corporate bonds, in a subscription form for corporate bonds the effect that such corporate bonds will be issued even if the total amount of corporate bonds subscribed for is less than the total amount of corporate bonds stated in the subscription form, the total amount of corporate bonds subscribed for shall be regarded as the total amount of corporate bonds.
(3)In case of issuing corporate bonds by means of direct sale, a securities finance company shall not be required to prepare a subscription form for corporate bonds.
(4)A securities finance company may issue bonds by means of discount issuance.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 77-3 (Registration of Incorporation of Association)
(1)In the registration of incorporation of the Association, matters provided in the following subparagraphs shall be stated: <Amended by Presidential Decree No. 16966, Sep. 8, 2000>
1.Objective;
2.Name;
3.Locations of offices;
4.Names and addresses of officers; and
5.Method of publication.
(2)In making registration of incorporation provided in paragraph (1), the written application for registration shall be accompanied with the documents provided in the following subparagraphs:
1.The articles of association; and
2.A copy of the authorization of the articles of association.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 78 (Matters to be Provided in Articles of Association and Approval of Alteration)
(1)Matters under each of the following subparagraphs shall be provided in the articles of association of the Association in accordance with Article 163 of the Act: <Amended by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 17291, Jul. 7, 2001>
1.Objective;
2.Name;
3.Matters concerning business;
4.Matters concerning offices;
5.Matters concerning the admission or dismissal of members and other sanctions (including advice to members on the sanctions against the officers and employees of the members; hereafter in this Article, the same shall apply);
6.Matters concerning the rights and obligations of members;
7.Matters concerning the membership dues;
8.Matters concerning the assets;
9.Matters concerning the officers;
10.Matters concerning the general meeting and the board of directors;
11.Such matters as are necessary for the protection of investors by assuring the fairness of securities transaction and other trading;
12.Such matters as are necessary for promotion of trust in trading of securities, by preventing an act of manipulating the prices of securities, an act of collecting unfair commissions and expenses, or other acts of acquiring unjust profits;
13.Matters concerning accounting; and
14.Matters concerning publication.
(2)Matters to be provided in the articles of association under paragraph (1) 5 shall contain the particulars under each of the following subparagraphs: <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16323, May 24, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
1.Matters concerning the dismissal or rejection of membership against the persons who are suspended from transaction in securities or other trading by the Financial Supervisory Commission or the Exchange; and
2.Matters concerning the dismissal or other disciplinary actions against the member who has violated Acts and subordinate statutes, orders of administrative authorities, the articles of association of the Association, or other regulations.
(3) Deleted. <by Presidential Decree No. 18687, Jan. 27, 2005>
(4) The term matters prescribed by the Presidential Decree in Article 164 (2) of the Act means matters provided in paragraph (1) 1, 3, 5 through 7, and 9 through 12: Provided, That the same shall not apply where any alteration is made pursuant to the amendment of Acts and subordinate statutes or insignificant. <Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000>

Articles 78-2 and 78-3 Deleted.
<by Presidential Decree No. 18687, Jan. 27, 2005>

Article 78-4 (Registration on Establishment of Depository)
(1)In registering the establishment of the Depository as prescribed in Article 173 (3) of the Act, the following matters shall be registered:
1.Objective;
2.Name;
3.Locations of its principal office and branch offices;
4.Capital;
5.Names and addresses of officers; and
6.Method of the public notice.
(2)In registering the establishment under paragraph (1), the application therefor shall be accompanied by the following documents:
1.Articles of association; and
2.A copy of the authorization on the articles of association.
[This Article Newly Inserted by Presidential Decree No. 14229, Apr. 30, 1994]

Article 78-5 (Restriction on Return of Securities Deposited by Customers)
The term causes prescribed by the Presidential Decree in Article 174-4 (3) of the Act means those falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
1.Bankruptcy of any depositor;
2.Resolution of dissolution of any depositor;
3.Cancellation of business license, or suspension of business, of any depositor; and
4.Other cases equivalent to those under subparagraphs 1 through 3.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 78-6 (Making up for Insufficiency of Deposited Securities)
(1)A person who is responsible for the insufficiency of securities deposited shall without delay make up for the insufficiency under Article 174-5 (1) of the Act.
(2)In case the person as provided in paragraph (1) has not made up for the insufficiency, the Depository and the depositor prescribed in the main sentence of Article 174-2 (1) of the Act shall jointly and severally make up for the insufficiency.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 78-7 (Exercise of Voting Right, etc. by Depository)
(1) Where the Depository exercises its voting right to stock certificates with respect to which the entry in the register is changed in the name of the Depository under Article 174-6 (5) of the Act, it shall exercise its voting right in a manner of not affecting the resolution contents of the number of stocks present at the general meeting of stockholders less the number of stocks to which the voting right is to be exercised by the Depository. In this case, the method of exercising voting right by the Depository and calculating the number of stocks, etc. shall be determined by the Financial Supervisory Commission.
(2) Matters to be notified by the issuing company to the Depository under Article 174-6 (6) of the Act shall be as follows: <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001>
1.The class and issuing sequence of securities;
2.The kind, cause for creation, details, and schedule for exercise, of the rights to securities;
3.In case of any change in the conditions for issuing securities, the details thereof; and
4.Any change in the payment date of the principal and interest, and other matters requested by the Depository as it deems necessary for the exercise of rights to securities.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 78-8 (Provision of Information by Depository)
Subject to the provisions of Article 60 of the Act which are applicable mutatis mutandis under Article 178 of the Act, the Bank of Korea may request the Depository to furnish information on the deposition of securities (limited to those as referred to in Article 2 (1) 1 through 4 of the Act) and account transfer within the limit necessary for formulating and executing monetary and credit policies such as the open market operation under Article 68 of the Bank of Korea Act. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 17518, Feb. 9, 2002]

Article 79 (Application for License for Order Matching Business)
(1)A person who intends to obtain a license for order matching business as prescribed in Article 179 (1) of the Act shall file with the Financial Supervisory Commission an application therefor, wherein matters of the following subparagraphs are described: <Amended by Presidential Decree No. 14229, Apr. 30, 1994; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 16323, May 24, 1999; Presidential Decree No. 16367, May 27, 1999>
1.Trade name;
2.Location of the head office;
3.Matters concerning the stated capital;
4.Matters concerning the promoters and officers;
5.Objective of the business;
6.Expected commencement date of the business; and
7.Reasons for engaging in the business concerned.
(2)Documents of the following subparagraphs shall be attached to an application referred to in paragraph (1): Provided, That in the event that it is possible to confirm information on accompanied documents through the joint use of administrative information provided for in Article 21 (1) of the Act on Promotion of the Digitalization of Administrative Affairs, etc. for Creation of Digital Government, such confirmation may replace the accompanied documents: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Articles of association;
2.A certified copy of corporate register;
3.A business plan and an estimated income statement for the coming two years;
4.Regulations and rules with regard to the business;
5.The latest balance sheet and income statement;
6.Documents showing the names or titles of stockholders and the number of their stockholding; and
7.Other documents for reference.
(3)The Financial Supervisory Commission shall review matters under each of the following subparagraphs, in granting the license referred to in paragraph (1): <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 16323, May 24, 1999; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Financial position and earning prospect of the company concerned;
2.The status of transactions of securities and other economic conditions within the area concerned;
3.Personnel composition of officers and promoters;
4.Degree of contribution to the securities market (including the KOSDAQ market); and
5.Other matters corresponding to those referred to in subparagraphs 1 through 4, which are prescribed by the Financial Supervisory Commission.

Article 79-2 (Registration of Transfer Agent)
(1) A person who intends to register the business of changing entry of securities pursuant to Article 180 (1) of the Act shall meet the following requirements: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.It shall be a financial institution under the Banking Act and have a nationwide network of chain stores;
2.It shall be a company with an amount which is obtained by deducting its liabilities from its assets on the balance sheet on the basis of the immediately preceding business year exceeding its paid-in capital, which shall have business profit; and
3.It shall have concluded a contract of entrusting any change of entry in a register with the Depository for the stocks deposited with the Depository.
(2) A person who intends to register the business of changing entry of securities shall file with the Financial Supervisory Commission an application therefor, wherein matters of the following subparagraphs are described: <Amended by Presidential Decree No. 18325, Mar. 22, 2004>
1.The name and location of his company;
2.Matters concerning his company s capital;
3.Matters concerning officers;
4.Ways of running his business; and
5.Matters that are prescribed by the Financial Supervisory Commission as necessary for the registration with the exception of matters referred to in subparagraphs 1 through 4.
(3) The application referred to in paragraph (2) shall be accompanied by documents falling under each of the following subparagraphs: <Newly Inserted by Presidential Decree No. 18325, Mar. 22, 2004>
1.The articles of association;
2.Documents stating the names or titles of stockholders and the number of stocks held by them;
3.The business plan and the estimated statement of revenues and expenses for the next two business years; and
4.A certified copy of corporate register and the balance sheet and the income statement for the immediately preceding business year.
(4) The Financial Supervisory Commission shall, upon receiving the application for registration referred to in paragraph (2), not reject such application for registration with the exception of the case falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 18325, Mar. 22, 2004>
1.Where the applicant fails to meet the requirements referred to in each subparagraph of paragraph (1); and
2.Where important matters contained in the application for registration or accompanied documents are falsified or omitted.
(5) Deleted. <by Presidential Decree No. 18757, Mar. 28, 2005>
(6) The Financial Supervisory Commission shall, when it rejects the application for registration on the grounds that it falls under any subparagraph of paragraph (4), inform the applicant of its rejection, clearly indicating the grounds thereof. <Newly Inserted by Presidential Decree No. 18325, Mar. 22, 2004>
(7)Necessary matters concerning the registration of transfer agencies other than paragraphs (1) through (4) and (6) shall be determined by the Financial Supervisory Commission. <Newly Inserted by Presidential Decree No. 18757, Mar. 28, 2005>
(8)The provisions of subparagraph 1 (f) of the attached Table shall apply mutatis mutandis to the registration of every title transfer agency. <Newly Inserted by Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 80 (Application for License for Establishment of Organizations Concerned with Securities)
(1)A person who intends to obtain a license for establishment of an organization concerned with securities in accordance with Article 181 (1) of the Act, shall file with the Minister of Finance and Economy an application therefor, wherein matters of the following subparagraphs are described: <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 16367, May 27, 1999>
1.Name;
2.Purpose of establishment;
3.Location of the office; and
4.Matters concerning the promoters and officers.
(2)Documents under each of the following subparagraphs shall be attached to an application referred to in paragraph (1): Provided, That in the event that it is possible to confirm information on accompanied documents through the joint use of administrative information provided for in Article 21 (1) of the Act on Promotion of the Digitalization of Administrative Affairs, etc. for Creation of Digital Government, such confirmation may replace the accompanied documents: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Articles of association or by-law;
2.A business plan and an estimated income statements for the coming two years;
3.Curricula vitae, transcripts of resident registration and certificates of personal reference of promoters; and
4.Documents describing the kind and method of business.
(3)The Minister of Finance and Economy shall review matters of the following subparagraphs, in granting the license referred to in paragraph (1): <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
1.Purport of establishment;
2.Financial position and earning prospect of the organization concerned;
3.Personnel composition of promoters and officers; and
4.Degree of contribution to the securities market (including the KOSDAQ market).

CHAPTER IX CONTROLOFLISTED CORPORATION, ETC.

Articles 81 and 82 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>

Article 83 (Report, etc. of Listed Corporations, etc.)
(1)Any listed corporation or any KOSDAQ-listed corporation which should make a report to the Financial Supervisory Commission and the Exchange under the main sentence of Article 186 (1) of the Act shall, where a cause for a report happens, report the contents in accordance with the method and procedure as prescribed by the Financial Supervisory Commission: Provided, That where it is necessary to make known quickly matters which have influence on the investment judgement of investors in the securities market or the KOSDAQ market, it may make such report on the contents to the Exchange in accordance with the publication regulations (hereinafter referred to as the publication regulations ) provided for in Article 89 of the Act. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
(2)The term other person who is prescribed by the Presidential Decree in Article 186 (1) 12 of the Act means officers or major stockholders who have de facto control over the determination of acquisition or disposal of the treasury stocks.
(3)The term where the fact prescribed by the Presidential Decree has occurred in Article 186 (1) 13 of the Act means a case which falls under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Where the biggest stockholder, a major stockholder, or an affiliated company has changed;
2.Where important transactions, which are prescribed by the Financial Supervisory Commission, with the biggest stockholder and a specially related person of him, a major stockholder, or an affiliated company, have been made;
3.Where a patent right on a new material or new technology has been acquired;
4.Where a resolution of the board of directors on new equipment investment, enlargement of facility or new establishment of separate factory which costs not less than 10/100 of the equity capital [in the case of any stock-listed corporation or any KOSDAQ-listed corporation (hereafter in this Article referred to as a large-scale corporation ) whose total amount of assets is in excess of 2 trillion won as of the end of the latest business year, 5/100] or 100 billion won, has been made;
5.Where the exercise of callback, destruction and so forth of products which are equivalent to not less than 10/100 (in the case of a large-scale corporation, 5/100) or 100 billion won of turnover of the latest business year, has been determined;
6.Where special loss or special profit not less than 10/100 of the equity capital (in the case of a large-scale corporation, 5/100) or 100 billion won has happened;
7.Where a decision on cash dividend is made. In this case, the report concerned shall be made in accordance with the rate of dividend on the basis of market price under the following items and the rate of dividend on the basis of face value shall not be indicated thereon:
(a) The rate of dividend on the basis of market price shall be the percent ratio of a dividend for each stock to the arithmetic average of the daily closing market prices formed at the securities market or the KOSDAQ market published for one week before two business days (based on the days of transactions in securities performed at the Exchange) preceding the closing day of the stockholders list for the convocation of a general stockholders meeting in connection with the dividend; and
(b) The dividend for each stock shall be based on a dividend for each common stock, and if the dividend varies with the class of stocks, it shall be reported by such class; and
8.Where, other than Article 186 (1) 1 through 12 of the Act and subparagraphs 1 through 7 of this Article, facts prescribed by the Financial Supervisory Commission as matters necessary for fair transactions in securities and protection of investors, have happened.
(4)The Financial Supervisory Commission and the Exchange may request any administrative agency or other related agencies to provide necessary information in writing or by facsimile, pursuant to Article 186 (5) of the Act, according to the following standards. In this case, the reason thereof shall be stated: <Newly Inserted by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
1.An agency designated as a clearing house pursuant to Article 83 of the Bills of Exchange and Promissory Notes Act and Article 69 of the Check Act for matters of Article 186 (1) 1 of the Act;
2.The competent court for matters of subparagraphs 3, 6 and 8 of Article 186 of the Act;
3.A correspondent bank for matters of subparagraph 11 of Article 186 of the Act; and
4.An administrative agency or other related agencies which withhold necessary information in question for matters to be confirmed or disclosed referred to in Article 186 (2) of the Act.
[This Article Wholly Amended by Presidential Decree No. 15312, Mar. 22, 1997]

Article 83-2 (Corporation Which is under Obligation to Submit Annual Business Report, etc.)
(1)The term other corporations prescribed by the Presidential Decree in the main sentence of Article 186-2 (1) of the Act means those which fall under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17518, Feb. 9, 2002>
1.An issuer who has listed securities falling under any of the following items:
(a) Unguaranteed bonds;
(b) Convertible bonds, bonds with warrant, participating bonds or exchangeable bonds;
(c) Certificates representing preemptive rights;
(d) Securities provided in Article 2 (1) 7 (limited to stock certificates and those which have the nature of securities or certificates provided in items (a) through (c)) or 8 of the Act; and
(e) Securities provided in any subparagraph of Article 5-2;
2.Other than subparagraph 1, an issuer for whom a report of securities falling under any of the following items has become effective:
(a) Stock certificates; and
(b) Securities falling under any item of subparagraph 1;
3.Other than subparagraphs 1 and 2, a registered corporation of which the number of stockholders (referring to the number of stockholders on the stockholders list and the beneficial owners list, at the end of the latest business year; hereafter in this Article the same shall apply) is not less than 500; and
4.An issuer of securities who has publicly offered new or outstanding securities under each item of subparagraph 2 without submitting a securities registration statement in violation of Article 8 (1) of the Act.
(2)The term case prescribed by the Presidential Decree in the proviso of Article 186-2 (1) of the Act means as follows: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999>
1.Where the number of stockholders of a registered corporation as provided in paragraph (1) 3 has diminished under 300; and
2.Where it is in fact impossible or ineffective to submit an annual business report due to bankruptcy and other causes, as prescribed by the Ordinance of the Ministry of Finance and Economy.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 83-3 (Annual Business Report)
(1) An annual business report under Article 186-2 of the Act shall state the following matters: <Amended by Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18757, Mar. 28, 2005>
1.Signatures affixed by the representative director and directors to matters provided for in each subparagraph of Article 5-8 (2) (referring to the signatures provided for in Article 8 (4) of the Act that is applied mutatis mutandis by the provisions of Article 186-5 of the Act);
2.The outline of the company;
3.Matters concerning organs, including the board of directors, of the company and its affiliates;
4.Matters concerning shareholders;
5.The total amount of remunerations paid to directors and auditors during the business year (including stock options granted to them pursuant to Article 189-4 of the Act);
6.Matters relating to officers and employees;
7.Contents of trade with an interested person;
8.Matters relating to financial affairs and specifications annexed thereto;
9.Audit opinions of the auditor; and
10.In addition to subparagraphs 1 through 9, matters prescribed by the Financial Supervisory Commission as necessary to be known to investors.
(2) Deleted. <by Presidential Decree No. 18757, Mar. 28, 2005>
(3) The entry of matters related to the contents of business and financial affairs among the entries in an annual business report shall be made pursuant to the following standards:
1.Where the turnover, profit and loss of business, or assets of a specific business sector, respectively, is 10/100 or more of the total turnover, profit and loss of business, or assets, the entry of such matters shall be made with the classification of separate business sectors; and
2.Where the turnover or assets in a specific area, respectively, is 10/ 100 or more of the total turnover or assets, the entry of such matters shall be made with the classification of separate areas.
(4)In the case of any corporation that has a subsidiary company from among corporations liable to submit their respective annual business reports, the relevant corporation shall enter matters concerning financial affairs referred to in paragraph (1) 8 and the attached specifications compiled on the basis of the consolidated financial statement in its annual business report and the financial statements of the corporation shall be also included in the annual business report and the audit opinion of the auditor referred to in paragraph (1) 9 shall enter his audit opinion of the consolidated financial statements and the financial statements of the corporation. <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
(5)Notwithstanding the provisions of paragraph (4), any corporation whose total amount of assets is not more than 2 trillion won as of the end of the latest business year shall enter matters concerning financial affairs and the attached specifications based on its financial statements and may submit its annual business report in which the auditor s audit opinion of the financial statements of the corporation is entered on or before the deadline by which the annual business report is required to be submitted. In this case, the corporation shall submit the auditor s audit opinion of matters concerning financial affairs based on the consolidated financial statement, supplementary statements and the consolidated financial statement within 30 days from the date on which 90 days lapse after the business year ends. <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
(6) The provisions of paragraphs (1) and (3) shall apply mutatis mutandis to matters to be entered in a semi-annual report and a quarterly report. In this case, the attached specifications of matters relating to finance from among the matters under paragraph (1) 8 may be omitted; and the matters under subparagraph 9 of the same paragraph shall be governed by the standards as listed in the following subparagraphs: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.In a case of the semi-annual report, it may be substituted by the confirmation and indication of opinion by an auditor; and
2.In a case of the quarterly report, it may be omitted: Provided, That the provisions of subparagraph 1 shall apply to the quarterly reports of the financial institutions liable to submit such report (referring to the agency subject to an inspection under Article 38 of the Act on the Establishment, etc. of Financial Supervisory Organizations), and of a stock-listed corporation or a KOSDAQ-listed corporation whose total sum of assets as of the end of the latest business year is not less than 500 billion won.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 83-4 (Special Treatment for Foreign Corporation, etc.)
(1) The provisions ofArticles 186-2, 186-3 and 186-5 of the Act shall not apply to a foreign corporation, etc. falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
1.A foreign government;
2.A foreign local government; and
3.The foreign public institution and international financial organization prescribed by the Ordinance of the Ministry of Finance and Economy.
(2)Where a foreign corporation, etc. (excluding a foreign corporation, etc. falling under any subparagraph of paragraph (1); hereafter the same shall apply in this Article) submits documents equivalent to an annual report, a semi-annual report or a quarterly report prescribed in Article 186-4 of the Act to the foreign country concerned, it may, within 10 days from the date of such submission, file an annual report, a semi-annual report or a quarterly report, or those documents corresponding to such reports which are submitted to the foreign country concerned along with a summarized translation into Korean thereof. <Amended by Presidential Decree No. 16367, May 27, 1999>
(3)The contents, method, and forms of the translation into Korean as provided in paragraph (2) shall be determined and publicly announced by the Financial Supervisory Commission. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 83-5 (Method of Calculation and Procedure for Return, etc. of Short-Swing Profits)
(1)The term person prescribed by the Presidential Decree in Article 188 (1) of the Act means a stockholder who has material influence on major managerial matters of the corporation such as appointment and dismissal of officers.
(2) The profits as provided in the latter part of Article 188 (2) of the Act, shall be calculated in accordance with the method prescribed in the following subparagraphs:
1.Where the sale or purchase is made within six months (including the first day; hereafter in this Article the same shall apply) after such purchase or sale, a method of calculating profits by subtracting the concerned trading commission and securities transaction tax from an amount calculated by multiplying an amount, obtained by deducting the unit price of purchase from the unit price of sale, by the quantity of purchase or the quantity of sale, whichever is less, (hereafter in this Article referred to as the matching quantity ). In this case, if the amount is not more than zero won, the profits shall be deemed not to exist;
2.Where the sale or purchase is made two times or more within six months after such purchase or sale, a method of calculating profits by the method of subparagraph 1 using the portion of the earliest purchase and the portion of the earliest sale and, with respect to the remaining portions of the purchase and sale, using the same corresponding method until the corresponding portion of sale or purchase ceases to exist. In this case, the excess of matching quantity in the corresponding portion of purchase or sale shall make the object of such correspondence, regarded as purchase or sale separate from such purchase or sale; and
3.Where the purchase or sale is made two times or more on the same day, a method of calculating profits by the method of subparagraph 2, regarded as purchased in the order of the lowest unit price with respect to the purchase and as sold in the order of the highest unit price with respect to the sale.
(3)Where, in calculating profits under paragraph (2) 1 through 3, stock certificates, etc. purchased and those sold are the same in class but different in type, if a profit is realized by sale after purchase, the closing price of the purchased stock certificates, etc. of the date of sale shall be regarded as a sale price of stock certificates, etc. actually sold, and if a profit is realized by purchase after sale, the closing price of the sold stock certificates, etc. of the date of purchase shall be regarded as a purchase price of stock certificates, etc. purchased.
(4)In the case of paragraphs (2) and (3), if there are any ex rights, ex dividends, or ex interests of stock certificates, etc. and other grounds that are prescribed by the Securities and Futures Commission as being corresponding to the former, after purchase or sale, the profits shall be calculated based on the price and quantity converted in consideration thereof. <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
(5) In applying the provisions of paragraphs (2) through (4), necessary detailed matters such as concrete standards and methods for calculation shall be determined by the Securities and Futures Commission.
(6) Where the Securities and Futures Commission deems that officers, employees, or major stockholders (hereafter in this Article referred to as officers, etc. ) of a stock-listed corporation or a KOSDAQ-listed corporation have acquired short-swing profits, it shall notify the officers, etc. of the occurrence of short-swing profits to be returned to the company concerned, and may ask that the corporation concerned exercise the request for return under Article 188 (2) of the Act. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
(7) If there is not made any return within two months from the day of request for return of short-swing profits under paragraph (6), a stock-listed corporation or a KOSDAQ-listed corporation shall report the fact to the Securities and Futures Commission under the conditions as prescribed by the Securities and Futures Commission. <Amended by Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
(8) Where the Securities and Futures Commission deems that the corporation having filed a report under paragraph (7) impairs the interest of stockholders for failure to take procedures necessary for return of short-swing profits such as a judicial request, it may request the Financial Supervisory Commission to take necessary measures under Article 193 of the Act.
(9) Any officer or major stockholder of a stock-listed corporation or a KOSDAQ-listed corporation shall, where he reports on the holding situation of stocks and the change of the number of owned stocks under Article 188 (6) of the Act, record the following matters in a written report: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.A reporter;
2.An issuing company; and
3.Matters relating to the holding situation of stocks by category and the change thereof.
(10) Where an officer or a major stockholder of a stock-listed corporation or a KOSDAQ-listed corporation reports on the holding situation of stocks under Article 188 (6) of the Act, the basic date of the report period shall be as follows: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Where a person, who was not an officer of a stock-listed corporation or a KOSDAQ-listed corporation, is appointed as an officer at the general meeting of stockholders, the date of his appointment;
2.Where, by acquisition, etc. of stocks issued by a stock-listed corporation or a KOSDAQ-listed corporation, a person becomes a major stockholder of such corporation, the date of such acquisition, etc.;
3.Where stock certificates issued by a corporation which is not a stock-listed corporation or a KOSDAQ-listed corporation are listed on the securities market or on the KOSDAQ market, the date on which such stock certificates are listed; and
4.Where any officer or any major stockholder of a corporation, which is not a stock-listed corporation or a KOSDAQ-listed corporation, becomes an officer or a major stockholder of such stock-listed corporation or such KOSDAQ-listed corporation as a result of a merger, the date on which the stock of the corporation is listed as a result of such merger.
(11) Where an officer or major stockholder of a stock-listed corporation or a KOSDAQ-listed corporation is under obligation to report on the change of the number of his own stocks under Article 188 (6) of the Act, the date of such change shall be a day which falls under any of the following subparagraphs: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Where stocks are sold or purchased on the securities market or the KOSDAQ market, the day of the settlement of accounts thereof;
2.Where stocks are purchased on the over-the-counter market, the earlier day of the date of payment of price and the date of delivery of stock certificates;
3.Where stocks are sold on the over-the-counter market, the earlier day of the date of receipt of price and the date of delivery of stock certificates; and
4.Where there is any change due to the increase of capital, dividend of stocks, or other causes than subparagraphs 1 through 3, the day determined by the Securities and Futures Commission.
(12) Deleted. <by Presidential Decree No. 18757, Mar. 28, 2005>
(13)The form of a written report under paragraph (9) and other necessary matters shall be determined by the Securities and Futures Commission.
[This Article Wholly Amended by Presidential Decree No. 16966, Sep. 8, 2000]

Article 83-6 (Exception to Return of Short-Swing Profits)
The term such case as prescribed by the Presidential Decree in Article 188 (8) of the Act means any of the following cases: <Amended by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16745, Mar. 4, 2000; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Where the transaction is made inevitably under Acts and subordinate statutes;
2.Where an enterprise which is designated as an object of industrial rationalization under the former Regulation of Tax Reduction and Exemption Act, makes the transaction in conformity with the criteria for industrial rationalization;
3.Where the transaction is made according to permission, authorization, approval, etc. of the Government, or pursuant to a direction, recommendation, etc. in writing by the Government;
4.Where the transaction is made for stabilization or market making under Article 83-8;
5.Where stocks acquired by the exercise of stock option are sold; and
6.Where it is a transaction under the minimum transaction unit admitted in the securities market or the KOSDAQ market, a transaction through stock-related savings to which the special case of the tax system is applied pursuant to the Section 9 of the Chapter II of the Restriction of Special Taxation Act or a direct acquisition, etc. from an issuer or seller, which is deemed by the Securities and Futures Commission as a transaction not using material information which is not disclosed to the public.
[This Article Newly Inserted by Presidential Decree No. 13634, Apr. 28, 1992]

Article 83-7 (Provisions Applied Mutatis Mutandis to Securities Company)
The provisions applicable mutatis mutandis to a securities company concerning the return of any short-swing profits of insiders prescribed in Article 188 (9) of the Act shall be applicable mutatis mutandis in case where a securities company makes a profit through buying or selling securities within three months after concluding a contract of arranging public offering of new or outstanding securities or of underwriting securities: Provided, That where the transaction is made for a stabilization as prescribed in Article 83-8, the provisions shall be applicable mutatis mutandis in case where any profit is made by buying or selling the securities in the period of such stabilization. <Amended by Presidential Decree No. 15312, Mar. 22, 1997>
[This Article Newly Inserted by Presidential Decree No. 13634, Apr. 28, 1992]

Article 83-8 (Restriction on Stabilization and Market Making)
(1)The act of effecting, entrusting or being entrusted with, transactions on the securities market or the KOSDAQ market for the purpose of pegging or stabilizing the price of securities under Article 188-4 (3) of the Act, shall be limited to such acts of stabilizing the price of securities for a certain period of time and thereby making smooth the public offering (hereinafter referred to as stabilization ), and acts of creating supply and demand of securities publicly offered during a definite period after listing the securities concerned (hereinafter referred to as market making ). <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
(2)A person who is allowed to conduct stabilization or market making for either his own account or other person s account, shall be limited to a securities company which has concluded an underwriting agreement with an issuer or owner of the securities concerned and which is recorded in the registration statement as provided for in Article 8 (1) of the Act: Provided, That where no registration statement under the main sentence of Article 8 (1) of the Act is submitted, it shall be limited to a securities company which is recorded in an underwriting agreement, allowed to conduct stabilization or market making. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
(3)A person who is eligible to entrust the sale and purchase of securities for the purpose of stabilization shall be limited to a person falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
1.An officer of the issuer of the securities concerned which are publicly offered;
2.An owner of the outstanding securities concerned which are publicly offered: Provided, That in case of a person who has acquired the securities concerned on the ground of an underwriting agreement, a person who has transferred the said securities in accordance with the underwriting agreement shall be regarded as the owner in lieu of the acquirer;
3.A company or an officer thereof who is under such special relationship as prescribed by the Ordinance of the Ministry of Finance and Economy with the issuer of the securities publicly offered; and
4.A person whom the issuer of the securities publicly offered has designated as one who is eligible to entrust stabilization and of whom such issuer has notified the Financial Supervisory Commission and the Exchange in advance.
(4)A person who may entrust the sale and purchase of securities for the purpose of market making shall be limited to the underwriter of the securities concerned.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 83-9 (Description in Prospectus)
Stabilization or market making may be permitted only where the following matters are recorded in the prospectus of the securities concerned: Provided, That for the proviso of Article 83-8 (2), it shall be recorded in an underwriting agreement: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18687, Jan. 27, 2005>
1.The fact that stabilization or market making may be conducted; and
2.The name of the securities market or the KOSDAQ market where stabilization or market making may be conducted.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 83-10 (Place and Period of Stabilization and Market Making)
(1)The place where stabilization and market making may be conducted shall be limited to the securities market or the KOSDAQ market which is recorded in the prospectus or underwriting agreement under subparagraph 2 of Article 83-9. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18687, Jan. 27, 2005>
(2)The period during which stabilization or market making may be conducted, shall be such a period as prescribed in each of the following subparagraphs: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
1.In case of stabilization, the period from the date of twenty days before the expiration of the period for an offer to buy publicly offered securities concerned to the date of expiration of that period; and
2.In case of market making, the period as determined by the issuer and underwriter up to the limit of six months from the date on which the relevant securities are listed on the securities market or the KOSDAQ market. In such case, the said period shall not be shorter than the period as determined by the Ordinance of the Ministry of Finance and Economy.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 83-11 (Statement of Stabilization and Market Making)
(1)Where a securities company has conducted the first stabilization during the period in which stabilization may be conducted under Article 83-10 (2) (hereinafter referred to as the period of stabilization ), it shall without delay file with the Financial Supervisory Commission and the Exchange, a stabilization statement in which the trade name of the securities company concerned, type and executed price of the securities which are related to the stabilization (hereinafter referred to as the starting price of stabilization ) and other matters prescribed by the Financial Supervisory Commission are recorded. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
(2)A securities company which intends to conduct market making shall, before market making, file a market making statement prescribed by the Financial Supervisory Commission with the Financial Supervisory Commission and the Exchange. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 83-12 (Restriction on Price of Stabilization or Market Making)
(1)A securities company which conducts stabilization, shall not purchase the securities which are the object of stabilization (hereinafter referred to as securities subject to stabilization ) with a higher price than the price prescribed in the following subparagraphs: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.On the starting date of stabilization, in case of the first stabilization, the lower of the immediately previous transaction price of the securities concerned transacted on the securities market or the KOSDAQ market before the starting date of stabilization and the average transaction price on the securities market or the KOSDAQ (with respect to the method of calculation of the average transaction price, the provision of Article 84-9 (2) shall apply mutatis mutandis) for past twenty days before the first day of the period of stabilization, and in case of the subsequent stabilization after the first stabilization, the starting price at the time of stabilization of the securities company; and
2.On and after the day following the starting date of stabilization, the lower of the starting price of stabilization (in case two or more securities companies have participated in stabilization on the same day, the lowest price out of the starting prices of stabilization of the securities companies) and immediately previous transaction price of the securities concerned transacted on the securities market or the KOSDAQ market before conducting the stabilization.
(2)A securities company which conducts market making shall neither purchase securities at a higher price than the price of public offering of the securities concerned (in case of a bid, the price determined by the Financial Supervisory Commission) nor sell securities at a lower price than the price of public offering of the securities concerned (in case of a bid, the price determined by the Financial Supervisory Commission): Provided, That if there are ex rights, ex dividends or ex interests, this shall be taken into account in calculating the price. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 83-13 (Submission of Report on Stabilization or Market Making)
(1)A securities company which has conducted stabilization shall submit to the Financial Supervisory Commission and the Exchange a report on stabilization in which the contents of the sale and purchase of securities subject to stabilization conducted from the starting date of stabilization to the termination date thereof on every securities market or the KOSDAQ market where such stabilization has been conducted and other matters prescribed by the Financial Supervisory Commission are recorded, not later than the day following the day on which the sale and purchase concerned have been made. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
(2)The provisions of paragraph (1) shall apply mutatis mutandis to market making. In this case, a report on stabilization shall be deemed to be a report on market making .
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 83-14 (Disclosure of Report, etc. on Stabilization and Market Making)
The Financial Supervisory Commission and the Exchange respectively shall keep the reports submitted under Articles 83-11 and 83-13 and make them available for public inspection for one month from the date which is prescribed in each of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18687, Jan. 27, 2005>
1.In case of a stabilization statement or market making statement, the date of receipt thereof; and
2.In case of a report on stabilization or market making, the date following the date on which the period of stabilization or market making expires.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 83-15 (Report on Act of Unfair Trade, etc)
(1) Any person who intends to report or tip off the fact that he has been coerced or urged to commit the act of violating this Act or the act of unfair trade, etc. (hereafter in this Article referred to as the act of unfair trade, etc. ) to the Securities and Futures Commission in accordance with the provisions of Article 188-6 (1) of the Act shall report and tip off such fact according to standards falling under each of the following subparagraphs:
1.Contents of the report and tipoff are required to be related to the act of unfair trade, etc. committed by any specific person;
2.It is required to explicitly indicate the specific fact of violation, including the violator, date and place; and
3.It is required to identify the person who makes such report or such tipoff.
(2) The Securities and Futures Commission may, if the report or the tipoff referred to in paragraph (1) is recognized to be helpful for uncovering the act of unfair trade, etc. and taking measures against it, ask the Governor of the Financial Supervisory Service to pay a bounty to any person who has made the report and tipoff within limits of budget of the Financial Supervisory Service according to the standards set by the Securities and Futures Commission.
(3) Necessary matters concerning the report or the tipoff on the act of unfair trade, etc. and the payment of bounty therefor, etc., which are not specified in paragraphs (1) and (2), shall be prescribed by the Securities and Futures Commission.
[This Article Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004]

Article 84 (Period and Method, etc. of Acquisition of Stocks for Their Retirement)
(1)The term standards prescribed by the Presidential Decree in the latter part of Article 189 (3) 1 of the Act means those falling under the following subparagraphs: <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
1.The acquisition period of stocks shall be within 3 months from the date on which 3 days elapsed since the resolution of the board of directors on the stock retirement, and shall not overlap with the period falling under one of the following items:
(a)The period of Article 84-3 (2) 1 through 5;
(b)Three months after the disposal of treasury stocks (including the termination of a trust contract, etc. and the issuance of exchangeable bonds subject to exchange with treasury stocks, but excluding the case falling under the proviso of Article 84-3 (2) 6); and
(c) A period for the acquisition or disposal of treasury stocks under Article 189-2 of the Act; and
2.Where acquiring stocks at the securities market or the KOSDAQ market, it shall be governed by the method as determined by the Financial Supervisory Commission.
(2) The term amount prescribed by the Presidential Decree in Article 189 (3) 2 of the Act means the amount obtained by subtracting the amount of the following subparagraphs from the limit of allowing any dividend under Article 462 (1) of the Commercial Act: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Revaluation reserves under Article 28 of the Assets Revaluation Act;
2.Business rationalization reserves under Article 145 of the Restriction of Special Taxation Act; and
3.The amount determined by the Financial Supervisory Commission, such as reserves, etc. accumulated under the provisions of the Act, this Decree and other Acts and subordinate statutes.
[This Article Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001]

Article 84-2 (Acquisition Limit of Treasury Stocks)
(1) Deleted. <by Presidential Decree No. 16367, May 27, 1999>
(2)Deleted. <by Presidential Decree No. 17291, Jul. 7, 2001>
(3)The term money trust contract, etc. as determined by the Presidential Decree in Article 189-2 (2) of the Act means any of the following contracts which a stock-listed corporation or a KOSDAQ-listed corporation has concluded for the purpose of acquiring treasury stocks: <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.A trust contract that is concluded between any trust company incorporated under the Trust Business Act and any asset operation company incorporated under the Act on Business of Operating Indirect Investment and Assets; and
2.An acquisition contract concluded to acquire shares issued by any investment company incorporated under the Act on Business of Operating Indirect Investment and Assets.
(4)The term amount calculated according to what is prescribed by the Presidential Decree in Article 189-2 (2) of the Act means an amount determined under trust contract, etc. <Amended by Presidential Decree No. 16745, Mar. 4, 2000>
[This Article Newly Inserted by Presidential Decree No. 14229, Apr. 30, 1994]

Article 84-3 (Criteria for Acquisition and Disposal of Treasury Stocks)
(1)Where a stock-listed corporation or a KOSDAQ-listed corporation intends to acquire or dispose of treasury stocks or to conclude or terminate a trust contract, etc. under Article 189-2 of the Act, it shall be subject to the resolution of the board of directors with respect to matters falling under any of the following subparagraphs: Provided, That this shall not apply where it delivers its treasury stocks in response to the exercise of a stock option or the duration period of a trust contract, etc. terminates: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18687, Jan. 27, 2005>
1.Where it intends to acquire or dispose of treasury stocks under Article 189-2 (1) of the Act, the purpose, amount and methods of acquisition or disposal, the class and number of stocks, and other matters as prescribed by the Financial Supervisory Commission; and
2.Where it intends to conclude or cancel a trust contract, etc. referred to in Article 189-2 (2) of the Act, the purpose of conclusion or cancellation, the amount, the term of contract, and other matters as prescribed by the Financial Supervisory Commission.
(2)A stock-listed corporation or a KOSDAQ-listed corporation shall not acquire or dispose of treasury stocks under Article 189-2 of the Act and conclude or cancel a trust contract, etc. during the period prescribed in each of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16745, Mar. 4, 2000; Presidential Decree No. 16773, Apr. 1, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18687, Jan. 27, 2005>
1.For one month before the date on which the board of directors adopts the resolution on merger with other corporations;
2.During the period from one month before the record date (the date of subscription for capital increase by means of public offering) for allotment of new stocks issued in capital increase for value to the date of subscription;
3.During the period from the date of resolution of the board of directors on the capitalization of a surplus to the record date for allotment of new stocks;
4.During the period for which market making is scheduled in accordance with Article 6 (2);
5.In case there is material information referred to in Article 188-2 (2) of the Act, by the time that the information is disclosed; and
6.For three months after such disposal (including the cancellation of a trust contract, etc.) or for six months after such acquisition (including the conclusion of a trust contract, etc.): Provided, That to the case prescribed by the Ordinance of the Ministry of Finance and Economy, such as the case that treasury stocks are delivered in place of a bonus or in compliance with the exercise of stock option, or other cases equivalent to it, the same shall not apply.
(3)Where a stock-listed corporation or a KOSDAQ-listed corporation intends to acquire treasury stocks under Article 189-2 (1) of the Act, it shall purchase them at the securities market or the KOSDAQ market within three months from the date on which three days have passed after the submission of a statement thereof according to the manner prescribed by the Financial Supervisory Commission. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
(4)Matters to be recorded in, the time of submission of, a statement for acquisition or disposal of treasury stocks, and matters necessary in relation thereto shall be prescribed by the Financial Supervisory Commission. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
(5)In applying the provisions of this Article, where a stock-listed corporation or a KOSDAQ-listed corporation has issued exchangeable bonds subject to exchange with treasury stocks under Article 84-13 (1), the treasury stocks shall be deemed to have been disposed of at the time of issuing the relevant bonds. <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-4 (Period for Disposal of Portion Exceeding Limit)
For the purpose of Article 189-2 (4) of the Act, the term such period as determined by the Presidential Decree means three years. <Amended by Presidential Decree No. 14910, Feb. 12, 1996; Presidential Decree No. 15687, Feb. 24, 1998>
[This Article Newly Inserted by Presidential Decree No. 14229, Apr. 30, 1994]

Article 84-5 (Capital Increase by Public Offering)
(1)The term manner of capital increase by public offering prescribed by the Presidential Decree in Article 189-3 (1) of the Act means, to the exclusion of preemptive rights of stockholders, the manner of conducting a public offering of new stocks with regard to many and unspecified persons (including stockholders of the corporation concerned).
(2)The issue price of new stocks as provided in Article 189-3 (2) of the Act, shall not be less than 70/100 of the highest price among the prices calculated in accordance with the method provided in each of the following subparagraphs: <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
1.The average daily closing price at the securities market or the KOSDAQ market which is published for the past one month from the fifth transaction day before the date of subscription;
2.The average daily closing price at the securities market or the KOSDAQ market which is published for the past one week from the fifth transaction day before the date of subscription; and
3.The closing price at the securities market or the KOSDAQ market on the fifth transaction day before the date of subscription.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-6 (Stock Option)
(1) The term such company affiliated with a corporation as prescribed by the Presidential Decree in Article 189-4 (1) of the Act means any of the following corporations: Provided, That the corporations of subparagraphs 1 and 2 shall be limited to those which carry on production or sale business having an influence on the export record of stock option granting corporations: <Newly Inserted by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
1.A foreign corporation in which the corporation concerned invests not less than 30/100 of the capital and is a biggest investor;
2.A foreign corporation in which a foreign corporation provided in subparagraph 1 invests not less than 30/100 of the capital and is the biggest investor, and a foreign corporation in which such foreign corporation invests not less than 30/100 of the capital and is the biggest investor;
3.A foreign research institute in which the corporation concerned invests not less than 30/100 of the capital or the total amount of investment and is the biggest investor, and which conducts research and development activities for the technical innovation of the corporation concerned; and
4.If the corporation concerned is a financial holding company, its subsidiary or sub-subsidiary that is neither a stock-listed corporation nor a KOSDAQ-listed corporation.
(2)The term persons prescribed by the Presidential Decree in Article 189-4 (1) of the Act means those who are prescribed in the following subparagraphs: Provided, That this shall not apply to those who come under specially related persons by becoming officers of the corporation concerned or a corporation having relation with the corporation concerned as provided in any subparagraph of paragraph (1) (including where the officers are part-time service officers of an affiliated company): <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16745, Mar. 4, 2000; Presidential Decree No. 17518, Feb. 9, 2002>
1.The biggest stockholder and specially related persons with him; and
2.The major stockholders and specially related persons with them.
(3)The term delivery of new stocks and other method as prescribed by the Presidential Decree provided in Article 189-4 (1) of the Act means the method which falls under any of the following subparagraphs: <Amended by Presidential Decree No. 16745, Mar. 4, 2000>
1.The method that newly issued stocks or treasury stocks are delivered at the price of exercise of stock option; and
2.The method that cash or treasury stocks corresponding to the difference between the price of exercise of stock option and the market price (this refers to the case where the price of exercise of stock option is lower than the market price) are delivered.
(4)The price of exercise of stock option under paragraph (3) 1 and 2 shall not be less than the following value (the same shall also apply where the price of exercise of the stock option is adjusted after it is granted), and the market price under paragraph (3) 2 shall be the market price of the stocks appraised under subparagraph 1 (a) as of the day of exercise of stock option: <Amended by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17907, Feb. 24, 2003>
1.Where new stocks are issued and delivered, the higher amount of the following:
(a)The market price of the stocks appraised by applying mutatis mutandis Article 84-9 (2) as of the date of granting stock option; and
(b)The face value of the stocks; and
2.Where cash or treasury stocks are delivered, the market price of the stocks appraised under subparagraph 1 (a).
(5)The term the limit prescribed by the Presidential Decree in the main sentence of Article 189-4 (3) of the Act means the number of stocks corresponding to 15/100 of the total number of issued and outstanding stocks (in a case of paragraph (2) 2, referring to the number of stocks which functions as the criteria for calculation of the difference; hereafter in this Article the same shall apply). In this case, in computing the total limit of stocks eligible for being granted a stock option, it shall be calculated by including the number of stocks granted a stock option under the proviso of Article 189-4 (3) of the Act, but from among the stock options granted before the date of resolution under Article 189-4 (1) or (3) (proviso) of the Act, shall be calculated by including the number of stocks to be delivered in case of the exercise of the stock option which has not been exercised as of the date of relevant resolution. <Amended by Presidential Decree No. 17291, Jul. 7, 2001>
(6) The term the limit prescribed by the Presidential Decree in the proviso of Article 189-4 (3) of the Act means the number of stocks under such divisions as listed in any of the following subparagraphs: <Amended by Presidential Decree No. 17291, Jul. 7, 2001>
1.For a corporation whose equity capital as of the end of the latest business year is not less than 300 billion won: the number of stocks corresponding to 1/100 of the total number of issued and outstanding stocks;
2.For a corporation whose equity capital as of the end of the latest business year is not less than 100 billion won but less than 300 billion won: either the number of stocks corresponding to 3/100 of the total number of issued and outstanding stocks or 600 thousand stocks (they shall be calculated on the basis of the face value of 5 thousand won), whichever is smaller; and
3.For a corporation whose equity capital as of the end of the latest business year is less than 100 billion won: the number of stocks corresponding to 3/100 of the total number of issued and outstanding stocks.
(7)A stock option granting corporation shall, when adopting a special resolution at the general meeting of stockholders for granting stock options under Article 189-4 (1) of the Act or a resolution at the board of directors under the proviso of paragraph (3) of the same Article, report the contents, without any delay, to the Financial Supervisory Commission and the Exchange. <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16745, Mar. 4, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
(8)Where stock option granting corporation falls under any of the following subparagraphs, it may cancel the grant of stock options through a resolution of the board of directors under the conditions as prescribed by the articles of association: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16745, Mar. 4, 2000>
1.Where any officer or employee who has been granted stock options resigns or retires from office of his own will;
2.Where any officer or employee who has been granted stock options causes serious damage to the corporation intentionally or by gross negligence;
3.Where the corporation is unable to comply with the exercise of stock options due to its bankruptcy or dissolution, etc.; and
4.Where there occur reasons for cancellation as prescribed by the stock option contract concluded between the corporation and a person who has been granted stock options.
(9)Except as otherwise provided in this Article, matters necessary for the operation of stock options shall be determined by the Ordinance of the Ministry of Finance and Economy. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16745, Mar. 4, 2000>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-7 (Requirements and Procedure of Merger)
(1)Where any stock-listed corporation or any KOSDAQ-listed corporation intends to merge with other corporations, it shall do so on the basis of the price of merger calculated by the method provided in the following subparagraphs. In such case, the price under subparagraph 2 (b) shall govern in case where the stock-listed corporation or the KOSDAQ-listed corporation is incapable of computing prices under the provisions of subparagraph 1 or the main sentence of subparagraph 2 (a): <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
1.In case of a merger between stock-listed corporations, between KOSDAQ-listed corporations, or between stock-listed corporations and KOSDAQ-listed corporations, the price calculated in accordance with the method prescribed by the Ordinance of the Ministry of Finance and Economy on the basis of the latest transaction price at the securities market or the KOSDAQ market; and
2.In case of a merger between a stock-listed corporation or a KOSDAQ-listed corporation and a corporation which is neither a stock-listed corporation nor a KOSDAQ-listed corporation, the price determined pursuant to the following items:
(a) In case of a stock-listed corporation or a KOSDAQ-listed corporation, the price of subparagraph 1: Provided, That in the case determined by the Ordinance of the Ministry of Finance and Economy, it may be substituted by asset value; and
(b) In case of a corporation which is neither a stock-listed corporation nor a KOSDAQ-listed corporation, the price calculated in accordance with the method prescribed by the Ordinance of the Ministry of Finance and Economy on the basis of asset value, earnings value, and relative value.
(2)Where a stock-listed corporation becomes a stock-listed corporation by a merger with a stock-unlisted corporation, the requirements prescribed in the following subparagraphs shall be satisfied: Provided, That the provisions of subparagraph 1 shall not apply where a stock-unlisted corporation is a KOSDAQ-listed corporation and the amount of a merger is calculated pursuant to paragraph (1) 1: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
1.The propriety of merger ratio shall be appraised by the outside appraisal organization which is determined by the Ordinance of the Ministry of Finance and Economy;
2.and 3.Deleted; and <by Presidential Decree No. 16367, May 27, 1999>

4.Where, judging by the financial statements of the business year immediately preceding the business year to which the date on which a stock-unlisted corporation submits a merger statement belongs, two or more from among the total amount of assets, capital, and turnover, are larger than those of a stock-listed corporation, the stock-unlisted corporation shall meet requirements provided in the following items:
(a) Requirement which the Listing Regulations prescribe with respect to profit ratio of treasury capital, debt ratio, asset value and earnings value: Provided, That the requirements for profit ratio of treasury capital may be substituted by the requirements for operating profit, ordinary profit, or current net income under the conditions as prescribed by the Listing Regulations; and
(b) Requirement which the Listing Regulations prescribe with respect to auditing opinion, entering a lawsuit and other matters necessary for fair merger.
(3) Where any KOSDAQ-listed corporation becomes a KOSDAQ-listed corporation by a merger with a corporation which is not a KOSDAQ-listed corporation, the following requirements shall be satisfied: Provided, That where a corporation which is not a KOSDAQ-listed corporation is a stock-listed corporation and the merger price is calculated in accordance with paragraph (1) 1, the provisions of subparagraph 1 shall not apply: <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The propriety of merger ratio shall be appraised by the outside appraisal organization as referred to in paragraph (2) 1; and
2.In case where any corporation that is not a KOSDAQ-listed corporation is larger than the KOSDAQ-listed corporation in terms of not less than two from among the total amount of assets, the capital and the sales amount that are based on the financial statements in the immediately preceding business year to which the date on which a merger report is submitted belongs, the corporation that is not a KOSDAQ-listed corporation is required to meet the requirements stipulated by listing regulations that are laid down otherwise with respect to matters concerning changes in capital, the audit opinions of auditors, pending lawsuits, fair mergers, etc. concerning the KOSDAQ market.
(4) Where a stock-listed corporation or a KOSDAQ-listed corporation becomes a corporation which is neither a stock-listed corporation nor a KOSDAQ-listed corporation by a merger with another corporation, it shall undergo an appraisal by the outside appraisal organization under paragraph (2) 1: Provided, That this shall not apply to the case where all companies subject to the merger compute a merger price under paragraph (1) 1. <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
(5)The provisions of paragraphs (1) through (4) shall not apply to the merger pursuant to approval, guidance, or advice, etc. which is based on the provisions of any Act or documents of the Government: Provided, That where corporations subject to a merger are in relation of affiliated companies and the value of a merger is not calculated under paragraph (1) 1, the appropriateness of the merger ratio shall be appraised by an outside appraisal organization under paragraph (2) 1. <Amended by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001>
(6)Matters which shall be recorded in, the time of submission of, a merger statement, and other matters necessary for the report of merger shall be determined by the Financial Supervisory Commission. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-8 (Requirements, Procedure, etc. of Transfer and Acquisition, etc. of Business)
(1) The term acquisition by transfer or transfer of the important business or assets prescribed by the Presidential Decree in Article 190-2 (2) 1 of the Act means what falls under any of the following subparagraphs: <Amended by Presidential Decree No. 18350, Apr. 1, 2004>
1.The acquisition by transfer or transfer in which the amount of assets of business part to transfer or obtain by transfer is not less than 10/ 100 of that as of the end of the latest business year;
2.The acquisition by transfer or transfer in which the turnover of business part to transfer or obtain by transfer is not less than 10/100 of that as of the end of the latest business year;
3.The acquisition by transfer in which the amount of debt to be shouldered on the ground of the acquisition by transfer of business is not less than 10/100 of the total amount of debt as of the end of the latest business year;
4.The acquisition by transfer of business in full; and
5.The acquisition by transfer or transfer in which the amount of assets to be acquired by transfer or transferred is not less than 10/100 of the total amount of assets as of the end of the latest business year: Provided, That the acquisition by transfer and transfer of assets, including the act of selling and buying commodities, manufactured goods and raw materials, etc., which are prescribed as daily business activities by the Financial Supervisory Commission, shall be excluded.
(2) The provisions of Article 84-7 (1) shall apply mutatis mutandis to all-inclusive exchange of stocks, all-inclusive transfer of stocks or division and merger of stocks provided for in Article 190-2 (2) of the Act: Provided, That the same shall not apply to a case where any stock-listed corporation or any KOSDAQ-listed corporation is made a complete subsidiary on its own as a result of all-inclusive transfer of stocks. <Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
(3) In the event that the acquisition by transfer and the transfer of business or assets, all-inclusive exchange and all-inclusive transfer of stocks (limited to a case where a corporation that is neither a stock-listed corporation nor a KOSDAQ-listed corporation is included from among corporations that become complete subsidiaries under Articles 360-2 and 360-15 of the Commercial Act and any complete parent company becomes a corporation that is neither a stock-listed corporation nor a KOSDAQ-listed corporation) or the division or the merger of stocks (limited to a case where any corporation subject to the division or merger of stocks is neither a stock-listed corporation nor a KOSDAQ-listed corporation) is intended under Article 190-2 (2) of the Act, the appropriateness of the value of such acquisition by transfer and such transfer of business or assets, the ratio of such all-inclusive exchange of stocks and the ratio of all-inclusive transfer of stocks or the ratio of such division or merger of shares shall be appraised by any external appraisal organization provided for in Article 84-7 (2) 1. <Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
(4)The provisons of Article 84-7 (5) and (6) shall apply mutatis mutandis to the acquisition by transfer and the transfer of business or assets, all-inclusive exchange of stocks, all-inclusive transfer and all-inclusive division of stocks and the division and merger of stocks under Article 190-2 (2) of the Act. <Amended by Presidential Decree No. 18350, Apr. 1, 2004>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-9 (Appraisal Rights of Stockholders)
(1)Deleted. <by Presidential Decree No. 13634, Apr. 28, 1992>
(2)The term amount calculated through the methods as determined by the Presidential Decree in the proviso of Article 191 (3) of the Act shall be the following amount: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
1.In case of stocks which are traded on the securities market or the KOSDAQ market, the arithmetic average of prices calculated through the following methods:
(a) The weighted arithmetic average of price, which is weighted by actual trading volume, of the daily closing market prices at the securities market or the KOSDAQ market published for two months before the date on which a resolution of a board of directors has been made (where there is an adjustment of a base price for purchase and sale due to ex dividend or ex rights during the said period and the period between the date there is such ex dividend or ex rights and a day preceding the date the resolution of the board of directors has been made is not less than seven days, for the corresponding period);
(b) The weighted arithmetic average of price, which is weighted by actual trading volume, of the daily closing market prices at the securities market or the KOSDAQ market published for one month before the date on which the resolution of a board of directors has been made (where there is an adjustment of a base price for purchase and sale due to ex dividend or ex rights during the said period and the period between the date there is such ex dividend or ex rights and a day preceding the date the resolution of the board of directors has been made is not less than seven days, for the corresponding period); and
(c) The weighted arithmetic average of price, which is weighted by actual trading volume, of the daily closing market prices at the securities market or the KOSDAQ market published for one week before the date on which the resolution of a board of directors has been made; and
2.In case of stocks which are not traded on the securities market or the KOSDAQ market, the price determined by the Financial Supervisory Commission, taking into consideration the asset status, profitability, and other conditions of the corporation concerned.
(3) The term period prescribed by the Presidential Decree in Article 191 (4) of the Act shall be three years from the purchase date of the stocks concerned. <Amended by Presidential Decree No. 14910, Feb. 12, 1996>
[This Article Newly Inserted by Presidential Decree No. 10823, May 15, 1982]

Article 84-10 (Corporation Which may Issue Non-Voting Stocks)
(1) The term corporation which falls under the criteria prescribed by the Presidential Decree in Article 191-2 (1) 2 of the Act means the corporation which falls under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999>
1.The corporation of which 15/100 or more of stocks or shares is held by the Government (including the Bank of Korea, the Korea Development Bank, and a government-invested institution); and
2.The corporation which runs any business in which acquisition of stocks or shares is restricted under other Acts than the Act.
(2) The method of issuing non-voting stocks under Article 191-2 (3) of the Act shall be as follows: <Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000>
1.The exercise of preemptive rights or convertible rights, etc. by stockholders or bondholders;
2.The capitalization of reserve fund;
3.The dividend of stocks; and
4.The exercise of stock option and other methods determined by the Ordinance of the Ministry of Finance and Economy.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-11 (Method of Calculating Price)
In case a dividend is paid with stocks under Article 191-3 of the Act, the lesser of the average of the daily closing price at the securities market or the KOSDAQ market which is published during the period from the commencement day of the business year in which the general meeting of stockholders adopts the resolution of the stock dividend to the day immediately preceding the date of the general meeting of stock-holders concerned and the closing price at the securities market or the KOSDAQ market on the day immediately preceding the date of the general meeting of stockholders concerned, shall be regarded as the price of the stocks concerned. <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-12 (Issuance of Participating Bonds)
(1)A stock-listed corporation or a KOSDAQ-listed corporation may, under Article 191-4 of the Act, issue bonds by which the bondholder may participate in dividend (hereafter in this Article referred to as participating bonds ) in addition to receiving interest pursuant to the rate of interest. <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
(2)In case of paragraph (1), the following matters which are not prescribed in the article of association shall be determined by a board of directors: Provided, That in case it is prescribed in the articles of association that a general meeting of stockholders determines the matters, the same shall not apply:
1.The total amount of participating bonds;
2.The condition and contents of participation in dividend; and
3.The purport that stockholders are granted the right to subscribe for participating bonds and the price of participating bonds which are the object of the right of subscription.
(3)In case, at the time of issuing participating bonds to a person other than a stockholder, the price of participating bonds which may be issued and the contents of participation in dividend are not prescribed in the articles of association, they shall be determined by the special resolution of a general meeting of stockholders as provided in Article 434 of the Commercial Act. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
(4)In the resolution as provided in paragraph (3), the main point of the proposed subject matter on issuance of participating bonds shall be recorded in the notification and public notice as provided in Article 363 of the Commercial Act. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
(5)The provisions of Articles 513-2 and 513-3 of the Commercial Act, shall apply mutatis mutandis to the case where a stockholder has the right to subscribe for participating bonds. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
(6)The provisions of Articles 424 and 424-2 of the Commercial Act shall apply mutatis mutandis to the case where participating bonds are issued. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
(7)With regard to participating bonds, matters provided in the following subparagraphs shall be recorded in a subscription form, certificates, and a register, of bonds:
1.The purport that it is possible to participate in dividend; and
2.The condition and contents of participation in dividend.
(8)When a stock-listed corporation or a KOSDAQ-listed corporation has issued participating bonds, it shall register matters provided for in the following subparagraphs at location of the head office within two weeks from the date on which the payment as provided in Article 476 of the Commercial Act is completed: <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
1.The total amount of participating bonds;
2.The amount of each participating bond;
3.The amount paid in for each participating bond; and
4.Matters prescribed in each subparagraph of paragraph (7).
(9)The provisions of Article 514-2 (3) and (4) of the Commercial Act shall apply mutatis mutandis to the registration as provided in paragraph (8). <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-13 (Issuance of Exchangeable Bonds)
(1)A stock-listed corporation or a KOSDAQ-listed corporation may, by the resolution of the board of directors, issue the bonds which are granted the right to demand an exchange of them for listed securities or KOSDAQ-listed securities (including treasury stocks acquired under the provisions of Article 189-2 or 191 of the Act; hereafter in this Article, the same shall apply) that the corporation concerned owns (hereafter in this Article referred to as exchangeable bonds ). <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
(2)With regard to exchangeable bonds, matters provided in the following subparagraphs shall be written in a subscription form, certificates, and a register of bonds: <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
1.The purport that the right to demand an exchange of them for listed securities or KOSDAQ-listed securities is granted;
2.The contents of listed securities or KOSDAQ-listed securities to be exchanged;
3.The condition of exchange; and
4.The period during which the exchange may be demanded.
(3)A stock-listed corporation or a KOSDAQ-listed corporation issuing exchangeable bonds shall deposit listed securities or KOSDAQ-listed securities necessary for the exchange with the Depository until the time when a bondholder demands the exchange or when the period for the demand of exchange of the bonds concerned expires. In this case, the Depository may, specifying that they are trust property, manage them. <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
(4)The provisions of Articles 349 (1) and 350 of the Commercial Act shall apply mutatis mutandis to the exchange of exchangeable bonds for listed securities or KOSDAQ-listed securities. <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-14 (Special Treatment on Dividend, etc. by Public Corporation)
(1)A public corporation, where it is necessary to pay the dividend of profit or interest as provided in Article 191-6 (1) of the Act, shall do it in proportion to the number of stocks which a person falling under any subparagraph of Article 191-6 (1) of the Act directly purchased from the Government (in case the Bank of Korea, the Korea Development Bank or government-invested institutions as prescribed by the Minister of Finance and Economy have sold issued and outstanding stocks of a public corporation which they own, the institutions concerned shall be included; hereafter in this Article the same shall apply) and has been holding. <Amended by Presidential Decree No. 16367, May 27, 1999>
(2)The term persons falling under the criteria prescribed by the Presidential Decree provided in Article 191-6 (1) 2 of the Act means those who fall under any of the following subparagraphs: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Workers as provided in Article 2 (1) of the Enforcement Decree of the Act on the Assistance to Residential Stability and Lump Sum-Raising Savings of Workers;
2.Farmers and fishermen as provided in Article 2 (1) of the Enforcement Decree of the Act on Lump Sum-Raising Savings of Farming and Fishing Households; and
3.Persons whose yearly income amount is not exceeding 7,200,000 won.
(3)A public corporation, if it is necessary to issue stocks as provided in Article 191-6 (2) of the Act, shall allocate them in proportion to the number of stocks which a person falling under any subparagraph of Article 191-6 (1) of the Act directly purchased from the Government and has been holding.
(4)A person who has purchased stocks under Article 191-6 (2) of the Act, shall deposit the stocks concerned for five years from the date of purchase as prescribed by the Minister of Finance and Economy. <Amended by Presidential Decree No. 16367, May 27, 1999>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-15 (Exception, etc. to Preferential Allocation to Members of Employee Stock Ownership Association)
(1)The term case prescribed by the Presidential Decree provided in Article 191-7 (1) 2 of the Act means a case which is stipulated in any of the following subparagraphs:
1.Where a stock-listed corporation conducts a public offering of stocks, the case where the sum of the total subscription amount of members of employee stock ownership association and the total acquisition amount (in case the acquisition price is less than a par value, the total par value; hereafter in this Article the same shall apply) of stocks of the corporation concerned which have been acquired for 12 months immediately preceding the subscription under the main sentence of Article 191-7 (1) of the Act exceeds that of salaries (this refers to salaries with are subject to taxation of income tax) which have been paid by the corporation concerned for 12 months immediately preceding the subscription; and
2.The case where the sum of the total subscription amount of members of employee stock ownership association and the total cumulative acquisition amount of stocks which they have acquired under the main sentence of Article 191-7 (1) of the Act before the subscription concerned, exceeds the lesser of an amount corresponding to 1/100 of the total amount of issued and outstanding stocks of or contributions to the corporation concerned and three hundred million won.
(2)In the application of paragraph (1) 2, the cumulative acquisition amount of stocks which members of employee stock ownership association have acquired under the main sentence of Article 191-7 (1) of the Act shall be calculated by including the acquisition amount of stocks which they have acquired under the main sentence of Article 191-7 (1) of the Act as employees of other corporations which belong to the same industry category prescribed by the Minister of Finance and Economy. <Amended by Presidential Decree No. 16367, May 27, 1999>
(3)The calculation of the number of stocks which members of employee stock ownership association hold as provided in Article 191-7 (2) of the Act, shall be made by the stocks of which entry of a change of holders is effected in the name of the representative of employee stock ownership association recorded in a register of stockholders on the day immediately preceding the date on which a registration statement on the public offering of securities has been filed with the Financial Supervisory Commission under the main sentence of Article 8 (1) of the Act (where a registration statement is not filed under the proviso of Article 8 (1) of the Act, the date on which the resolution of a general meeting of stockholders or the board of directors is adopted): Provided, That in case of the stocks which a securities finance company has deposited with the Depository under Article 2-7 (2), the calculation shall be made by a depositors account book as provided in Article 174 (3) of the Act. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17518, Feb. 9, 2002>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-16 (Payment of Deposit, etc. by Listed Securities)
(1)The term deposit or deposit money as prescribed by the Presidential Decree in Article 191-8 (1) of the Act means as follows:
1.Bid bond;
2.Contract deposit;
3.Deposit for repair of defects; and
4.Deposit money in accordance with Acts and subordinate statutes.
(2)The listed securities (including any KOSDAQ-listed securities; hereafter in this Article the same shall apply) with which deposit or deposit money may be paid under Article 191-8 of the Act shall be the securities under Article 2 (1) 1 through 6 of the Act which are listed on the securities market or the KOSDAQ market. In this case, where the securities concerned are the deposited securities, they may be replaced with certificates of deposit issued by the Depository under the conditions as prescribed by the Ordinance of the Ministry of Finance and Economy (hereinafter referred to as certificates of deposit ). <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
(3)The certificates of deposit shall not be used unless they are paid for deposit or deposit money. <Newly Inserted by Presidential Decree No. 15687, Feb. 24, 1998>
(4)A person who receives the deposited securities as deposit or deposit money may apply to the Depository for the transfer of the securities concerned to his own account in a customer account or depositor account book. <Newly Inserted by Presidential Decree No. 15687, Feb. 24, 1998>
(5)The price of listed securities by which deposit or deposit money may be paid under Article 191-8 (3) of the Act, shall be that which is prescribed by the Exchange. <Amended by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-17 (Publication of Convocation of General Meeting of Stockholders)
(1)The term stocks not more than the number as prescribed by the Presidential Decree in Article 191-10 (1) of the Act means those which are 1/100 or less of the total number of issued and outstanding voting stocks.
(2) The term matters concerning candidates prescribed by the Presidential Decree in Article 191-10 (2) of the Act means matters falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001>
1.Relations between the candidate and the biggest stockholder; and
2.Details of transactions between the candidate and relevant corporation during the latest 3 years.
(3) The term matters prescribed by the Presidential Decree from among details of transactions with the biggest stockholder, etc. in Article 191-10 (3) 2 of the Act means the details of transactions under the provisions of each subparagraph of Article 191-19 (1) of the Act. <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001>
(4)The term management reference matters prescribed by the Presidential Decree in Article 191-10 (3) 3 of the Act means the outline of business, such as current business situation and so forth, and the reference documents made out in accordance with the manner determined by the Financial Supervisory Commission by subject matter of a general meeting of stockholders. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291, Jul. 7, 2001>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-18 (Restriction on Voting Right in Case of Appointment or Dismissal of Auditor)
The term other persons as prescribed by the Presidential Decree provided in Article 191-11 (1) of the Act means those who are stipulated in any of the following subparagraphs: <Amended by Presidential Decree No. 16745, Mar. 4, 2000>
1.Any person who holds stocks for the account of the biggest stockholder or the specially related person; and
2.Any person who has entrusted (limited to the entrusted portion concerned) voting rights (including the rights to give instructions as to the exercise of voting rights) to the biggest stockholder or the specially related person.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-19 (Qualification, etc. for Standing Auditor)
(1)The term corporation prescribed by the Presidential Decree in Article 191-12 (1) of the Act means that of which the total amount of assets at the end of the latest business year is not less than one hundred billion won.
(2)Deleted. <by Presidential Decree No. 16367, May 27, 1999>
(3)The term persons prescribed by the Presidential Decree as having an influence over the management of the corporation concerned in Article 191-12 (3) 7 of the Act means those who fall under any of the following subparagraphs: <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 17518, Feb. 9, 2002>
1.Spouses and lineal ascendants and descendants of major stockholders;
2.Spouses and lineal ascendants and descendants of full-time officers; and
3.Full-time officers and employees in active service of an affiliated company or persons who were such full-time officers or employees in the last two years.
(4)Where a stock-listed corporation or a KOSDAQ-listed corporation has appointed or removed a standing auditor, or he has resigned for a reason other than the expiration of term of office, it shall make a report to the Financial Supervisory Commission and the Exchange by the day following the date of appointment, removal, or resignation. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-20 (Corporation, etc. Which is Object of Relaxation of Condition for Exercise of Minority Stockholders Rights)
(1)The term corporation as prescribed by the Presidential Decree in Article 191-13 (2) through (5) of the Act means that whose capital at the end of the latest business year is not less than one hundred billion won. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291, Jul. 7, 2001>
(2)The term person who has been holding outstanding stocks under the conditions as prescribed by the Presidential Decree in Article 191-13 (1) through (5) of the Act means any person who has been holding outstanding stocks by the manner falling under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291, Jul. 7, 2001>
1.Owning of outstanding stocks;
2.Acquiring of a proxy on the exercise of stockholders right; and
3.Joint exercise of stockholders right by two or more stockholders.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-21 (Corporation, etc. Which is Object of Relaxation of Condition for Exercise of Stockholders Proposal Right)
(1)The provisions of Article 84-20 (1) and (2) shall respectively apply mutatis mutandis to the corporation prescribed by the Presidential Decree and the person who has been holding issued and outstanding stocks under the Presidential Decree in Article 191-14 (1) of the Act.
(2)A person who intends to make a stockholders proposal under Article 191-14 (1) and (2) of the Act shall make it in writing by six weeks before the date of a general meeting of stockholders (in the case of the regular general meeting of stockholders, the date of the current year which corresponds to the date of the regular general meeting of stockholders of the immediately previous year). <Amended by Presidential Decree No. 16745, Mar. 4, 2000>
(3)The term cases prescribed by the Presidential Decree in Article 191-14 (3) of the Act means those where the contents of stockholders proposal fall under any of the following subparagraphs: <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16745, Mar. 4, 2000>
1.Deleted; <by Presidential Decree No. 16745, Mar. 4, 2000>
2.Where a proposed subject matter which is identical in contents with one rejected in a general meeting of stockholders, is proposed again within 3 years from the date on which it was voted down;
3.Matters concerning personal predicament of a stockholder;
4.Deleted; <by Presidential Decree No. 16745, Mar. 4, 2000>
5.Matters concerning the minority stockholders right stipulated in Article 191-13 of the Act;
6.Matters concerning the removal of officers who are under their terms of office; and
7.Matters which a corporation may not actualize, which is not profitable or appropriate to make as a subject matter of a general meeting of stockholders, or of which the reason for proposal is obviously false or impairs a specific person s honor.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-22 (Minimum Issue Price of Stocks to be Issued below Par Value)
The term price calculated according to the methods as determined by the Presidential Decree in the latter part of Article 191-15 (2) of the Act means 70/100 of the highest of any prices calculated through the following methods: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
1.The average daily closing price at the securities market or the KOSDAQ market which is published for one month before the day preceding the date on which a resolution of a board of directors has been made to decide upon the convocation of the general meeting of the stockholders (hereafter in this Article referred to as the board of directors for convoking the general meeting of stockholders ) for issuing stocks below par value;
2.The average daily closing price at the securities market or the KOSDAQ market which is published for one week before the day preceding the date on which the resolution of the board of directors for convoking the general meeting of stockholders has been made; and
3.The closing price at the securities market or the KOSDAQ market as of a day preceding the date on which the resolution of the board of directors has been made for convoking of the general meeting of stockholders.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 84-23 (Outside Directors, etc. of Stock-Listed Corporation, etc.)
(1)The term any KOSDAQ-listed corporation prescribed by the Presidential Decree in the main sentence of Article 191-16 (1) of the Act means an KOSDAQ-listed corporation except for venture businesses whose total amount of assets is less than 100 billion won as of the end of the latest business year, from among venture businesses under the Act on Special Measures for the Promotion of Venture Businesses. <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
(2) The term other stock-listed corporation or other KOSDAQ-listed corporation prescribed by the Presidential Decree in the proviso of Article 191-16 (1) of the Act means a stock-listed corporation or an KOSDAQ-listed corporation of which the total amount of assets is not less than two trillion won as of the end of the latest business year. <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
(3)The term stock-listed corporations or KOSDAQ-listed corporations prescribed by the Presidential Decree in Article 191-16 (2) of the Act means the following corporations: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18687, Jan. 27, 2005>
1.A stock-listed corporation or a KOSDAQ-listed corporation for which the reorganization procedure is started in accordance with the Company Reorganization Act;
2.A stock-listed corporation or a KOSDAQ-listed corporation of which the stock certificates are newly listed on the securities market or the KOSDAQ market (this shall apply only until the date preceding the date of the regular general meeting of stockholders which is first convoked after the new listing of stock certificates): Provided, That this shall not apply to the case where a stock-listed corporation or a KOSDAQ-listed corporation liable for appointing outside directors becomes a KOSDAQ-listed corporation or a stock-listed corporation;
3.A stock-listed corporation or a KOSDAQ-listed corporation which is a corporate restructuring real estate investment company under Article 49-2 of the Real Estate Investment Company Act; and
4.The Industrial Bank of Korea under the Industrial Bank of Korea Act.
(4) In the mutatis mutandis application of the provisions of Article 37-6 (3) 4 to the outside directors of any stock-listed corporation or any KOSDAQ-listed corporation, the transaction that is ordinally executed with the securities company shall be deemed transaction that is ordinally executed with the financial institution . <Newly Inserted by Presidential Decree No. 18757, Mar. 28, 2005>
(5) Any corporation that is required to establish an audit committee in accordance with Article 191-17 (1) of the Act shall be any stock-listed corporation or any KOSDAQ-listed corporation whose total amount of assets as of the end of the latest business year is not less than 2 trillion won: Provided, That the corporations of the following subparagraphs shall be excluded: <Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Any stock-listed corporation or any KOSDAQ-listed corporation that is incorporated as an investment company under the Act on Business of Operating Indirect Investment and Assets;
2.Any stock-listed corporation or any KOSDAQ-listed corporation that is incorporated as a real estate investment company under the Real Estate Investment Company Act;
3.Any stock-listed corporation or any KOSDAQ-listed corporation that is subject to the application of the Framework Act on the Management of Government-Invested Institutions and the Act on the Improvement of Managerial Structure and Privatization of Public Enterprises; and
4.Any stock-listed corporation and any KOSDAQ-listed corporation referred to in each subparagraph of paragraph (3).
[This Article Newly Inserted by Presidential Decree No. 16745, Mar. 4, 2000]

Article 84-24 (Transactions with Major Shareholders, etc.)
(1) The term act prescribed by the Presidential Decree in Article 191-19 (1) 2 (a) of the Act means the act of loaning money within the amount of 50 million won for the purpose of the welfare that includes school fees, housing funds and medical expenses under the conditions as prescribed by the relevant corporation. <Amended by Presidential Decree No. 18350, Apr. 1, 2004>
(2) The term act prescribed by the Presidential Decree in Article 191-19 (1) 2 (c) of the Act means the necessary act that is performed in the course of carrying out normal management activities with major shareholders (including their specially related persons) of any corporation that is a stock-listed corporation or a KOSDAQ-listed corporation. <Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
(3) The term any corporation prescribed by the Presidential Decree in the main sentence of Article 191-19 (2) of the Act means a stock-listed corporation or a KOSDAQ-listed corporation whose total amount of assets is not less than two trillion won as of the end of the latest business year. <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
(4) The term matters prescribed by the Presidential Decree in the main sentence of Article 191-19 (2) of the Act means matters of the following subparagraphs: <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18350, Apr. 1, 2004>
1.Purpose of transactions;
2.Counterpart of transactions;
3.Details, date, period and conditions of transactions; and
4.Total amount and balance of transactions by trade type with the counterpart of transactions during the relevant business year.
(5) The term scale prescribed by the Presidential Decree in Article 191-19 (2) 1 of the Act means 1/100 of the total assets value or the total turn-over as of the end of the latest business year of the relevant corporation. <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18350, Apr. 1, 2004>
(6) The term scale prescribed by the Presidential Decree in Article 191-19 (2) 2 of the Act means 5/100 of the total amount of assets or turn-over as of the end of the latest business year of the relevant corporation. <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18350, Apr. 1, 2004>
(7) The term transaction in conformity with the standards prescribed by the Presidential Decree in Article 191-19 (3) 1 of the Act means the transaction in conformity with the standards falling under each subparagraph of Article 17-8 (4) of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act. <Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 16745, Mar. 4, 2000]

Article 84-25 (Standards, etc. for Financial Management of Stock-Listed Corporations and KOSDAQ-Listed Corporations)
(1)Standards for financial management under the main sentence of Article 192 (1) of the Act shall include the following matters:
1.Matters relating to the issue price of new stocks pursuant to capital increase for value;
2.Matters relating to limits and methods of accumulation, and restrictions on use, of a financial structure improvement reserve;
3.Matters relating to standards and pre-notice method for dividend;
4.Matters relating to the methods of disposing of deficits;
5.Matters relating to the requirements and method for issuing overseas securities; and
6.Matters relating to the requirements and limits of issuing convertible bonds, bonds with warrant, participating bonds, or exchangeable bonds. In this case, convertible rights or preemptive rights to convertible bonds and bonds with warrants shall, except as otherwise provided by the Financial Supervisory Commission, be prescribed to be exercised one year after the date of issuance of such bonds.
(2)The term overseas securities prescribed by the Presidential Decree in Article 192 (1) 4 of the Act means stock certificates, convertible bonds, bonds with warrant, participating bonds, exchangeable bonds, stock depository receipts or their equivalents which are issued overseas by a stock-listed corporation or a KOSDAQ-listed corporation and determined by the Ordinance of the Ministry of Finance and Economy. <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
(3)The term matters prescribed by the Presidential Decree in Article 192 (1) 5 of the Act means those which are stipulated in the following subparagraphs:
1.Matters relating to the issuance of convertible bonds, bonds with warrant, participating bonds and exchangeable bonds which are issued in the Republic of Korea;
2.Matters relating to deficits;
3.Matters relating to the method of reporting and announcing publicly account documents and financial affairs; and
4.Matters relating to finance management standards, which are prescribed by the Ordinance of the Ministry of Finance and Economy, for sound handling of financial affairs, other than subparagraphs 1 through 3.
[This Article Wholly Amended by Presidential Decree No. 16966, Sep. 8, 2000]

Article 84-26 (Measures of Financial Supervisory Commission)
The term other measures prescribed by the Presidential Decree in Article 193 of the Act means those which are stipulated in subparagraphs 2 through 6 of Article 9-3. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16966, Sep. 8, 2000>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

CHAPTER X SUPPLEMENTARYPROVISIONS

Article 84-27 (Over-the-Counter Transactions)
(1)Sale transactions on the over-the-counter market under Article 194 of the Act shall be made in a manner of sale and purchase between one seller and one buyer.
(2) Deleted. <by Presidential Decree No. 17518, Feb. 9, 2002>
(3) A person who is not given business permission under Article 28 (2) 1 of the Act shall be prohibited from selling on the over-the-counter market bonds which he does not hold.
(4) Listed stock certificates and KOSDAQ-listed stock certificates less than a unit sale and purchase quantity, which is determined by the business regulations, shall be sold and purchased on the over-the-counter market: Provided, That the same shall not apply to the case as otherwise provided by the Financial Supervisory Commission. <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
(5) Where the Association conducts the brokerage business of selling or purchasing stock certificates other than listed stock certificates and KOSDAQ-listed stock certificates on the over-the-counter market pursuant to subparagraph 2-2 of Article 162-2 of the Act, notwithstanding the provisions of Article 28 (1) of the Act, it shall do so in conformity with the following standards: <Amended by Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The price which parties offer for purchase (hereinafter referred to as the purchase price offered ) or for sale (hereinafter referred to as the sale price offered ) and the quantity shall be publicly announced with making plural persons each party at the same time;
2.In case where the single price that is fixed by the standards set by the Ordinance of the Ministry of Finance and Economy, the sale price and the purchase price that are offered by parties are identical, the relevant transaction shall be concluded at the price;
2-2.Business standards for designating securities subject to the brokerage of their selling and purchase, cancelling such designation, laying down the methods of performing transactions and settlement methods, etc. shall be set and notified to the Financial Supervisory Commission and published in a manner that makes it possible for the general public to easily understand them; and
3.The current standing of an issuer such as financial conditions, business records, or change of capital shall be publicly announced under the conditions as prescribed by the Financial Supervisory Commission.
(6) A securities company under subparagraph 5 of Article 14 shall, where it conducts the brokerage business of selling or purchasing securities on the over-the-counter market, do so in conformity with the following standards: <Amended by Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.The brokerage of selling or purchasing securities shall be made for sale and purchase between parties who fall under any of the following items with respect to securities subject to such brokerage:
(a) Persons falling under any subparagraph of Article 61 (2) of the Enforcement Decree of the Corporate Tax Act;
(b) Funds subject to the provisions of the Framework Act on Fund Management;
(c) Corporations operating mutual aid projects under the provisions of Acts;
(d) Postal insurance reserves under the Act on Special Accounts for Postal Insurance;
(e) Asset operation companies under the Act on Business of Operating Indirect Investment and Assets; and
(f) Such other persons as determined by the Ordinance of the Ministry of Finance and Economy;
2.The items of securities which the parties intend to purchase or to sell, the purchase price offered or sale price offered thereof, and the quantity thereof shall be publicly announced with making plural persons each party at the same time; and
3.The conclusion of sale transactions shall be limited to sale between parties whose purchase price offered and sale price offered correspond in each item.
(7) A person other than the Association, shall be prohibited from conducting the brokerage business of selling or purchasing securities on the over-the-counter market in a manner as provided in paragraph (5). <Amended by Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18687, Jan. 27, 2005>
(8) Other than matters as provided in paragraphs (1) through (7), the method of settlement of accounts pursuant to sale transactions of securities on the over-the-counter market and other necessary matters shall be prescribed by the Financial Supervisory Commission in consideration of the type of securities and form of sale transactions thereof.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]

Article 84-28 (Transactions of Over-the-Counter Financial Derivatives)
Where a securities company conducts any transaction of over-the-counter financial derivatives under Article 36-2 (1) 1-2, it shall meet the following requirements: <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
1.The transaction shall be made between the parties any of which is single, excluding the transaction made on a foreign exchange market as prescribed by the Ordinance of the Ministry of Finance and Economy;
2.The other party to the transaction shall be limited to a person as determined by the Ordinance of the Ministry of Finance and Economy;
3.The total amount of risk arising in the course of transacting over-the-counter financial derivatives (referring to the total amount of risk as determined by the Financial Supervisory Commission including the amount of risk in the market following the transaction of over-the-counter financial derivatives) shall not exceed the limit as prescribed by the Ordinance of the Ministry of Finance and Economy;
3-2.In the case of the transaction of over-the-counter financial derivatives that involves credit risk, the risk amount for the other party (including any specially related person) to such transaction is required not to exceed the limit that is set by the Ordinance of the Ministry of Finance and Economy;
4.Where the securities company concerned fails to meet the equity capital regulation rate or the equity capital requirements as referred to in Article 36-2 (2) 1 (c), it shall suspend a new transaction of over-the-counter financial derivatives and conduct only a business related to the completion of pending transaction or the escape of risk until it satisfies such rate or requirements;
4.Where the securities company concerned fails to meet the equity capital regulation rate requirements as referred to in Article 36-2 (2) 1 (c), it shall suspend a new transaction of over-the-counter financial derivatives and conduct only a business related to the completion of pending transaction or the escape of risk until it satisfies such requirements; Enforcement Date: Mar. 29, 2007
5.The explanatory note of over-the-counter financial derivatives shall be submitted to the FSS Governor in advance (excluding the case where the other party to transaction is a person as prescribed by the Ordinance of the Ministry of Finance and Economy;
6.Every transaction of over-the-counter financial derivatives shall be subject to approval of the competent full-time officer;
7.The securities company shall establish the identity of the other party to transaction and fully notify in writing the other party of such a risk, etc. as may arise following the transaction of the over-the-counter financial derivatives;
8.The securities company shall report to the FSS Governor on the monthly transaction records of over-the-counter financial derivatives not later than the 10th day of the following month; and
9.The securities company shall abide by such other matters as determined by the Financial Supervisory Commission concerning the management of any risk arising in the course of transacting over-the-counter financial derivatives.
[This Article Newly Inserted by Presidential Decree No. 17518, Feb. 9, 2002]

Article 84-29 (Report, etc. by Electronic Documents)
(1)A person who submits a registration statement, report and other documents or data, etc. (hereinafter referred to as a registration statement, etc. ) to the Financial Supervisory Commission, the Securities and Futures Commission or the Exchange under the Act and this Decree and other Acts and subordinate statutes may use the method of presenting electronic documents through information and communications networks (referring to that as referred to in the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc.; hereinafter the same shall apply) under Article 194-2 of the Act. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16456, Jun. 30, 1999; Presidential Decree No. 17344, Aug. 25, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
(2)The term electronic documents in paragraph (1) means data, in written form and standardized, which are transmitted, managed or kept through information and communications networks. <Amended by Presidential Decree No. 16456, Jun. 30, 1999>
(3)The Financial Supervisory Commission may prescribe standardized form, methods, and procedures, etc. which are necessary for the submission of a registration statement, etc. in a manner of presenting electronic documents. In this case, the Financial Supervisory Commission may, when the registration statement, etc. must be submitted to the Exchange and the Financial Supervisory Commission, seek in advance opinions of the Exchange in establishing or changing the standardized form, methods, and procedures, etc. <Amended by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
(4) Notwithstanding the provisions of the main sentence of paragraph (3), the Exchange may prescribe reports, etc. that are required to be submitted to the Exchange pursuant to the listing regulations, the publication regulations, the business regulations, the provisions of Article 186 (2) of the Act, the member management regulations, and the market overseeing regulations provided for in Article 18 of the Korea Securities and Futures Exchange Act. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
(5)In case a person who submits a registration statement, etc. uses the method of presenting electronic documents, matters concerning electronic documents, such as effect, and time of arrival, etc. of the electronic documents, shall be pursuant to the provisions of the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc. <Amended by Presidential Decree No. 16456, Jun. 30, 1999; Presidential Decree No. 17344, Aug. 25, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-30 (Audit Certification by External Auditors)
(1) A person falling under any of the following subparagraphs shall be subject to accounting audit by external auditors under Article 194-3 (1) of the Act: Provided, That the same shall not apply to the case where the corporation provided in subparagraphs 1 and 3 conducts a public offering of or lists the securities as prescribed in Article 3 (1): <Amended by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18325, Mar. 22, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.A corporation which files a securities registration statement under Article 8 (1) of the Act (excluding a corporation incorporated through public offering of new stocks);
1-2.A registered corporation which makes a public offering without filing a registration statement under Article 18-2 of the Act;
2.A corporation which submits an annual report on business under Articles 186-2 and 186-4 of the Act;
3.A corporation that intends to list itself on the securities market or the KOSDAQ market (excluding an issuer of securities prescribed in Article 2 (1) 1 through 3, 5 and 9 of the Act);
4.A securities company which submits a business report under Article 47 of the Act; and
5.An investment advisory company which submits a business report under Article 148 of the Act on Business of Operating Indirect Investment and Assets.
(2)Cases which may be exempted from accounting audit by external auditors under the proviso of Article 194-3 (1) of the Act shall be as follows: <Newly Inserted by Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17907, Feb. 24, 2003>
1.Entries under each subparagraph of Article 7 in documents concerning financial affairs; and
2.Semiannual reports and quarterly reports prescribed in Article 186-3 of the Act concerning financial affairs: Provided, That with respect to semiannual reports and the quarterly reports submitted by corporations falling under the proviso of Article 83-3 (6) 2, this shall be limited to those which are confirmed by external auditors and on which the opinion of external auditors is expressed.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 84-31 (Special Treatment on Accounting Audit of Foreign Corporation, etc.)
(1)The case where a foreign corporation, etc. is deemed to have been audited under Article 194-3 (3) of the Act with regard to financial accounting under paragraph (1) of the same Article shall be as follows: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999>
1.The case where a foreign government, a foreign local government, and a foreign public institution and an international financial organization prescribed by the Ordinance of the Prime Minister have been audited under Acts and subordinate statutes of the State concerned or under treaties, articles of association, or by-laws, etc. which are the grounds of establishment thereof; and
2.The case where a foreign enterprise established under foreign Acts and subordinate statutes and other persons prescribed by the Ordinance of the Ministry of Finance and Economy have gone through external audit under Acts and subordinate statutes of the State concerned which are the grounds of establishment thereof.
(2)Where, in case of paragraph (1) 2, the accounting principles which a foreign enterprise adopts are different from those as provided in the Act on External Audit of Stock Companies, documents in which matters determined and publicly announced by the Financial Supervisory Commission are stated shall be submitted together with the audit report concerned. <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 85 (Solicitation as to Proxy Exercise of Voting Rights)
(1)A person who makes solicitation for the exercise as proxy of voting rights (including the stock-listed corporation or the KOSDAQ-listed corporation concerned which sends a proxy form at the time of making notification of convocation of a general meeting of stockholders; hereinafter referred to as a solicitor ) with respect to listed stocks or KOSDAQ-listed stocks either by himself or by a third person shall, concurrently with or prior to the solicitation, send a person who is so solicited (hereinafter referred to as a solicitee ) a proxy statement prepared in a manner prescribed by the Financial Supervisory Commission with respect to the exercise as proxy of the voting rights and keep it at the place designated by the Ordinance of the Ministry of Finance and Economy. <Amended by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005>
(2)A proxy form which a solicitor gives to a solicitee shall be in such format as may enable the solicitee to clearly state his pros and cons with respect to every item to be discussed and resolved at the general meeting of stockholders.
(3)A solicitor shall forward the proxy statement and the proxy form to the solicitee, and submit the copy thereof to the Financial Supervisory Commission by two days before the date on which it is kept at the place provided for in paragraph (1). <Amended by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998>
(4)A solicitor shall not make solicitation by making use of the documents falling under any of the following subparagraphs:
1.A document containing false facts;
2.A document containing descriptions which have possibility to mislead the solicitee with regard to material facts; and
3.A document which has any omission of descriptions of facts necessary not to mislead the solicitee with regard to material facts.
(5)The Financial Supervisory Commission, if it deems that the cause falling under any subparagraph of paragraph (4) exists in the proxy statement or the proxy form which has been submitted under paragraph (3), may order the solicitor to correct it. <Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998>
(6)A solicitor shall exercise voting rights in accordance with the intention of the solicitee indicated in the proxy form. <Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997>
(7)The provisions of paragraphs (1) through (3) and (6) shall not apply to the case falling under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 14910, Feb. 12, 1996; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Where a person other than an issuing company of listed stocks or KOSDAQ-listed stocks or officers thereof (including any persons having special relation with the company or officers), solicits for the exercise of voting rights as proxy of the stocks concerned from less than 10 persons;
2.Deleted; and <by Presidential Decree No. 15312, Mar. 22, 1997>
3.Where a person who holds stocks in the name of other person due to trust or any other legal relationship, solicits for the exercise of voting rights as proxy of the stocks concerned from such other person.
(8)The provisions of paragraphs (1) through (7) shall apply mutatis mutandis to solicitation for the exercise of voting rights as proxy of a public corporation s stocks prescribed by Article 85-2. <Newly Inserted by Presidential Decree No. 12352, Dec. 31, 1987; Presidential Decree No. 14910, Feb. 12, 1996; Presidential Decree No. 15312, Mar. 22, 1997>

Article 85-2 (Scope of Public Corporation)
(1)A public corporation as prescribed in Article 199 (2) of the Act shall be one to be designated by the Minister of Finance and Economy through a consultation with the relevant Ministers from among corporations satisfying the following requirements: <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15513, Nov. 29, 1997; Presidential Decree No. 15537, Dec. 9, 1997; Presidential Decree No. 16367, May 27, 1999>
1.Deleted; <by Presidential Decree No. 16367, May 27, 1999>
2.Their operational bases shall be settled, and they shall have a prospect of continuous development;
3.Their financial structure shall be sound and steady, and high profits shall be expected; and
4.The amount of their capital shall be so large that their stocks may be held dispersedly and broadly by citizens in all sections and classes.
(2)Where the Minister of Finance and Economy desires to make a designation under paragraph (1), he shall report it in advance to the State Council. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 16367, May 27, 1999>
[This Article Newly Inserted by Presidential Decree No. 12352, Dec. 31, 1987]

Article 86 Deleted.
<by Presidential Decree No. 14229, Apr. 30, 1994>

Article 86-2 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>

Article 86-3 (Person Exempted from Duty to Report Holding, etc.)
(1) The term person who is prescribed by the Presidential Decree in the former part of Article 200-2 (1) of the Act means any of the following persons: <Amended by Presidential Decree No. 13940, Jul. 28, 1993; Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 14910, Feb. 12, 1996; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The State, local governments, and the fund of the Government as prescribed in Article 7 of the Budget and Accounts Act;
2.Securities finance company;
3.Deleted; <by Presidential Decree No. 14910, Feb. 12, 1996>
4.Partnership as prescribed in Article 17 (1) 6 of the Enforcement Decree of the Corporate Tax Act (limited to the case where members of the partnership hold jointly stocks issued by stock-listed corporations, or the number of stocks which they hold is changed); and
5.Persons prescribed by the Ordinance of the Ministry of Finance and Economy, the disclosure of whose stockholding is deemed unnecessary taking into consideration the conditions of stockholding and change therein.
(2) The term days prescribed by the Presidential Decree in the main sentence of Article 200-2 (1) of the Act means holidays prescribed in subparagraphs of Article 2 of the Regulations on Holidays of Public Offices and other days determined and publicly announced by the Financial Supervisory Commission. <Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Newly Inserted by Presidential Decree No. 13634, Apr. 28, 1992]

Article 86-4 (Contents of Report on Holding, etc.)
(1)Any person who makes a report on his holding and the purposes of his holding of stocks, etc. or the change therein according to the former part of Article 200-2 (1) of the Act shall submit a report in which matters prescribed in the following subparagraphs are stated: <Amended by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18757, Mar. 28, 2005>
1.Matters concerning a holder of large number of stocks and a specially related person of him;
2.Matters concerning an issuer of stocks, etc. which are held;
3.Purposes of holding stocks;
3-2.Grounds of changes in the holding of stocks;
4.Class and number of stocks, etc. which are held or changed;
5.Date, price and manner of acquisition or disposal;
6.Type of holding;
7.Particulars of formation of funds necessary for acquisition or of the thing which is an object of exchange (in case of borrowing funds, the source from which money is borrowed shall be included);
8.Contents of trust contract, security contract and other principal contracts concerning holding stocks, etc.; and
9.Detailed matters concerning those provided for in subparagraphs 1 through 8 which are prescribed by the Financial Supervisory Commission.
(2)Where the person who holds stocks, etc. in large quantities is to report the situation of his holdings or any change therein in accordance with the former part of Article 200-2 (1) of the Act, the reference date for such report shall be the date which falls under any of the following subparagraphs: <Newly Inserted by Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.If the stock certificates issued by any corporation, other than a stock-listed corporation or a KOSDAQ-listed corporation, are listed on the securities market or the KOSDAQ market, the date on which such stock certificates are listed thereon;
2.If a merger is made, the date on which such merger is made and if a consolidation is effected, the date on which such consolidation is listed;
3.If the stocks, etc. are sold or purchased on the securities market or the KOSDAQ market, the date of settlement;
4.If the stocks, etc. are acquired on the over-the-counter market, the date of conclusion of the contract concerned;
5.If the stocks, etc. are disposed of on the over-the-counter market, the date of receipt of the price or the date of delivery of the stocks, etc., whichever comes earlier; and
6.If, otherwise, a report is to be made due to any other causes than those as provided in subparagraphs 1 through 5, the date as fixed by the Financial Supervisory Commission.
(3) The forms of the report under paragraph (1) and other necessary matters for reporting shall be determined by the Financial Supervisory Commission. <Amended by Presidential Decree No. 17907, Feb. 24, 2003>
[This Article Newly Inserted by Presidential Decree No. 14229, Apr. 30, 1994]

Article 86-5 (Exemption from Liability for Report on Change)
For the purpose of the former part of Article 200-2 (1) of the Act, the term case as prescribed by the Presidential Decree means: <Amended by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18757, Mar. 28, 2005>
1.Where there is no increase or decrease in the number of stocks, etc. which are held;
2.Where stockholders acquire only the allocated stocks at the time of the issue of new stocks which are allocated in proportion to the number of their holdings of stocks;
3.Where there is an increase in the number of stocks only by adjustment of the issue price of stocks issued or exchanged by the exercise of rights granted to deeds representing preemptive rights, bonds with warrant, convertible bonds, or exchangeable bonds;
4.Where there is an increase in the number of stocks, etc. only by acquiring deeds with preemptive rights issued by preemptive rights allocated in proportion to the number of stocks held by stockholders; and
5.Where there is any change in the ratio of stocks due to acquisition or disposal of treasury stocks referred to in Article 189-2 of the Act.
[This Article Newly Inserted by Presidential Decree No. 14229, Apr. 30, 1994]

Article 86-6 (Method of Report by Specially Related Persons)
In making the report as prescribed in Article 200-2 (1) of the Act, if the person concerned and specially related persons submit jointly the report, the report may be made in their joint names after selecting as a representative the person having the largest number of stocks, etc. among them. <Amended by Presidential Decree No. 15312, Mar. 22, 1997>
[This Article Newly Inserted by Presidential Decree No. 14229, Apr. 30, 1994]

Article 86-7 (Act Aimed at Influencing Management Right)
The term what prescribed by the Presidential Decree in the latter part of Article 200-2 (1) of the Act means the influence that is actually exerted on any company or its officers for the purpose falling under any of the following subparagraphs [including a case where the rights provided for in Article 191-13 (5) of the Act (limited to the rights provided for in Article 366 of the Commercial Act), Article 191-14 of the Act, and Articles 363-2 and 366 of the Commercial Act are exercised or any third party is urged to exercise such rights]:
1.The selections, appointments and dismissals of directors and auditors or the suspension of their duties;
2.Any change in the articles of incorporation, which involves organs, including the board of directors, of any company;
3.Any change in the company s capital;
4.Decision made on the company s dividends;
5.The merger (including the simplified merger and the small-scale merger) and division of the company;
6.All-inclusive exchange and transfer of stocks;
7.The acquisition by transfer or transfer of the whole or major part of the business;
8.The disposal of the whole or major part of assets;
9.The rent of the whole or major part of the business, the management of business on commission, a contract by which the whole of the business profit and loss are shared by any other person and the conclusion, change and cancellation of any other contract corresponding to the former; and
10.The dissolution of the company.
[This Article Newly Inserted by Presidential Decree No. 18757, Mar. 28, 2005]

Article 86-8 (Scope of Institutional Investors, etc.)
The term institutional investors, etc. prescribed by the Presidential Decree in the latter part of Article 200-2 (1) of the Act means institutional investors who hold stocks, etc. not for the purpose of influencing the management right.
[This Article Wholly Amended by Presidential Decree No. 18757, Mar. 28, 2005]

Article 86-9 (Contents, etc. of Report Made by Person with No Intention of Influencing Management Right)
(1) In the case of anyone who holds any stock with no intention of influencing the management right provided for in the latter part of Article 200-2 (1) of the Act and any institutional investor provided for in Article 86-8 of this Decree, he may enter his intention in the report in which the matters falling under each of the following subparagraphs are entered when he makes a report on his current holding of stocks and any change in his holding of stocks pursuant to the former part of Article 200-2 (1) of the Act or he makes a report pursuant to paragraph (4) of the same Article:
1.Matters provided for in Article 86-4 (1) 1, 2, 4 and 5; and
2.The confirmation that he does not perform any act of influencing the management right provided for in Article 86-7 during the period in which he holds stocks, etc.
(2)Pursuant to the latter part of Article 200-2 (1) of the Act, any institutional investor provided for in Article 86-8 of this Decree may make a report on his holding of stocks or any change in his holding of stocks on or before 10 days of the month following the month during which he holds the stocks or any change accrues in his holding of stocks.
[This Article Newly Inserted by Presidential Decree No. 18757, Mar. 28, 2005]

Article 86-10 (Period during Which Exercise of Voting Rights is Restricted)
The term period prescribed by the Presidential Decree in Article 200-3 (1) of the Act means what falls under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Where, on purpose, the report as provided for in Article 200-2 (1) or (3) of the Act has not been made or the report of correction as provided for in Article 200-4 of the Act has not been made (including the case that false report or omission of statement of material facts has been made), the period from the date on which purchase, etc. of the stocks, etc. concerned was made to the date on which six months have passed after the report concerned or the report of correction concerned has been made; and
2.Where, by some mistake, the report or report of correction provided for in subparagraph 1 has been delayed, such as the case that the mass holding of stocks, etc. and the change therein has already been reported to the Financial Supervisory Commission and the Exchange under the Act and this Decree and other Acts and subordinate statutes, or that stocks, etc. have been acquired or disposed of in accordance with approval, guidance, recommendation, etc. of the Government, the period from the date on which purchase, etc. of the stocks, etc. concerned was made to the date on which the report concerned or the report of correction concerned has been made.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]

Article 87 Deleted.
<by Presidential Decree No. 14229, Apr. 30, 1994>

Article 87-2 (Restrictions on Acquisition of Securities by Foreigners or Foreign Corporations, etc.)
(1)Deleted. <by Presidential Decree No. 15312, Mar. 22, 1997>
(2)Where a foreigner (referring to an individual who does not have domicile or residence in Korea for six months or more; hereinafter the same shall apply) or a foreign corporation, etc. acquires securities under Article 203 (1) of the Act, the Financial Supervisory Commission may impose a necessary restriction on types of such securities and limits by category of business or item. <Amended by Presidential Decree No. 12352, Dec. 31, 1987; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998>
(3)When a foreigner or a foreign corporation, etc. intends to make a transaction in listed securities or KOSDAQ-listed securities, such a transaction shall be made on the securities market or the KOSDAQ market: Provided, That the same shall not apply to cases approved by the Financial Supervisory Commission. <Amended by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18687, Jan. 27, 2005>
(4)Where a foreigner or a foreign corporation, etc. makes a transaction in securities through a securities company, such a securities company shall report the contents of such transaction to the Financial Supervisory Commission, as determined by the Financial Supervisory Commission. <Amended by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998>
[This Article Newly Inserted by Presidential Decree No. 10823, May 15, 1982]

Articles 88 through 90 Deleted.
<by Presidential Decree No. 15687, Feb. 24, 1998>

Article 90-2 (Delegation of Authority)
(1) The Financial Supervisory Commission shall delegate the Securities and Futures Commission with the following authority under Article 206-2 (1) of the Act: <Newly Inserted by Presidential Decree No. 17518, Feb. 9, 2002>
1.Among the investigation authority under Article 206-3 of the Act, an investigation into a violation of Articles 8, 11, 12, 21-2, 22, 23-2, 24, 186 (1), 186-2 (1), 186-3, 189-2 (3), 190-2, and 200-2 (1) and (3) of the Act; and
2.A measure under the Act or this Decree against a violation of subparagraph 1: Provided, That this shall not include any measure of the following items:
(a) Imposition of surcharges the amount of which exceeds five hundred million won;
(b) An order for the closure of a branch office or other business office; and
(c) Suspension of the total business for not less than one month.
(2)The scope of matters of urgency which can be delegated to the Chairman of the Financial Supervisory Commission or the Chairman of the Securities and Futures Commission among the authority of the Financial Supervisory Commission or the Securities and Futures Commission pursuant to Article 206-2 (5) of the Act shall be as follows:
1.Matters of urgency in its management where it is difficult to hold a meeting of the Financial Supervisory Commission or the Securities and Futures Commission for a considerably long period of time due to any incident provided for in Article 117 (2) of the Act; and
2.Matters which require immediate action to protect investors and maintain fair trade order, where it is deemed that efficiency will be diminished by holding a meeting of the Financial Supervisory Commission or the Securities and Futures Commission.
(3)The scope of minor matters which can be entrusted to the Governor of the Financial Supervisory Service among the authority of the Financial Supervisory Commission or the Securities and Futures Commission pursuant to Article 206-2 (5) of the Act shall be as follows: <Amended by Presidential Decree No. 18350, Apr. 1, 2004>
1.Matters on the procedures and methods necessary to execute a decision taken by the Financial Supervisory Commission or the Securities and Futures Commission;
2.Matters on the management and registration of declaration or report whose processing standards are definite by the regulations determined or an order issued by the Financial Supervisory Commission or the Securities and Futures Commission without requiring any separate decision-making process;
3.Matters on the execution of the investigation work required according to the standards where the Financial Supervisory Commission or the Securities and Futures Commission determines the specific processing standards in investigating persons concerned pursuant to Articles 19 (1) (including cases applied mutatis mutandis under Article 27-2, 186-5, 189-2 (5) or 190-2 (3) of the Act), 200-2 (5) and 206-3 of the Act, such as a request for the submission of a statement, books, documents or other materials, or a request for attendance to take the witness stand;
3-2.Matters concerning the receipt of reports and tip-offs on the act of unfair trade, etc. and the payment of bounties by the Securities and Futures Commission according to the specifically set standards in accordance with the provisions of Article 188-6 (1) and (3) of the Act;
4.Matters on the prosecution of legal proceedings by the Financial Supervisory Commission or the Securities and Futures Commission; and
5.Other matters on the execution of simple business.
(4)The results of the execution of the delegated business referred to in paragraph (2) shall be reported to the Financial Supervisory Commission or the Securities and Futures Commission convened first after the conduct of the delegated business. <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
[This Article Newly Inserted by Presidential Decree No. 15687, Feb. 24, 1998]

Article 90-3 (Request for Submission of Data to Securities-Related Institutions)
Where the Financial Supervisory Commission or the Securities and Futures Commission requests any securities-related institution to submit data pursuant to Article 206-3 (4) of the Act, it shall do so through a document stating the purpose of use thereof and the class, item, and transaction period of securities to be investigated. <Amended by Presidential Decree No. 17518, Feb. 9, 2002>
[This Article Newly Inserted by Presidential Decree No. 15687, Feb. 24, 1998]

Article 90-4 (Measures, etc. Pursuant to Result of Investigation)
(1) The term other measures as determined by the Presidential Decree in Article 206-3 (5) of the Act means: <Amended by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002>
1.Measures listed in each subparagraph of Article 36-5 against any securities-related institution or its officers and employees subject to inspection by the Governor of the Financial Supervisory Service; and
2.Measures listed in subparagraphs 7 through 11 of Article 36-5 against those to whom subparagraph 1 is not applied.
(2) The term person as determined by the Presidential Decree in Article 206-3 (7) of the Act means a person as designated by the Prosecutor General of the Public Prosecutor s Office upon recommendation of the Chairman of the Securities and Futures Commission among public officials under the control of the Financial Supervisory Commission. <Newly Inserted by Presidential Decree No. 17518, Feb. 9, 2002>
[This Article Newly Inserted by Presidential Decree No. 15687, Feb. 24, 1998]

Article 90-5 (Information Exchange not Subject to Consultations)
The term cases as determined by the Presidential Decree in the proviso of Article 206-4 (2) of the Act means as follows: <Amended by Presidential Decree No. 16367, May 27, 1999>
1.Where day-to-day information on securities system and its current situations is exchanged;
2.Where any record or other information acquired by the Financial Supervisory Commission, under the Act and this Decree or other related Acts and subordinate statutes or regulations, whose disclosure is obligatory or which is open to the public is exchanged;
3.Where the Financial Supervisory Commission exchanges information on the result of measures taken under the Act and this Decree or other related Acts and subordinate statutes or regulations; and
4.Where information which is identical with or similar to that exchanged in prior consultations with the Minister of Finance and Economy pursuant to Article 206-4 of the Act is exchanged.
[This Article Newly Inserted by Presidential Decree No. 15687, Feb. 24, 1998]

Article 90-6 (Contributions)
(1)The sharing ratio of contributions under Article 206-8 (1) 1 of the Act shall be determined by the Financial Supervisory Commission within the limit of 1/100 of commission fees which a securities company receives from a customer.
(2) The sharing ratio of contributions under Article 206-8 (1) 2 of the Act shall be determined by the Financial Supervisory Commission within the ratio specified in any of the following subparagraphs. In this case, it shall be based on the changed total issue value where the total issue value is changed after the receipt of a registration statement of securities: <Amended by Presidential Decree No. 17291, Jul. 7, 2001>
1.2/10000 of the total issue value for issue of stocks; and
2.1/1000 of the total issue value for issue of bonds or other securities: Provided, That in the case of issuing securities by submitting a shelf registration statement, it shall be 4/10,000 of the total issue value.
(3)The limit of contributions under Article 206-8 (1) 1 and 2 of the Act shall be the amount which is obtained by deducting the Financial Supervisory Service s own earning from the expense actually required for the operation of the Financial Supervisory Service, within the limits of the budget for the fiscal year concerned of the Financial Supervisory Service approved by the Financial Supervisory Commission under Article 45 (1) of the Act on the Establishment, etc. of Financial Supervisory Organizations. <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
(4)The Financial Supervisory Service shall return contributions which it collected in excess of the limit of contributions under paragraph (3) by fiscal year to the payers of contributions in proportion to their rates of paid amount.
(5)The matters necessary for the methods for collecting contributions under paragraphs (1) and (2) and the return of contributions under paragraph (4) shall be determined by the Financial Supervisory Commission.
[This Article Newly Inserted by Presidential Decree No. 15687, Feb. 24, 1998]

Article 91 (Imposition of Penalties)
(1) In imposing penalties under Article 206-11 of the Act, the Financial Supervisory Commission shall follow the following criteria under Article 206-12 (1) of the Act:
1.Where a violation has been committed in connection with public notice such as any false entry or indication, the contents of such violation shall be divided into measurable violations and non-measurable violations, and the severity of such violation shall be determined in overall consideration of the influence which it has on net profits for the current term or on equity capital, etc. and of whether or not it falls under any item of subparagraph 2;
2.Where a violation falls under any of the following items, 50/100 or more (in the case of any violation under subparagraphs of Article 206-11 (3) of the Act, 10/100 or more) of the statutory maximum amount of the penalty shall be imposed:
(a)Where the violation has been committed three times or more and repeatedly;
(b)Where the amount of profits obtained unjustly from the violation is one hundred million won or more (in the case of any violation under subparagraphs of Article 206-11 (3) of the Act, fifty million won or more); and
(c)Where the violation has been committed in connection with any unfair trade practice such as insider dealing and manipulation; and
3.Where a violation falls under any of the following items, the penalty thereon shall be reduced or exempted:
(a)Where it is deemed that the contents of the violation are not important;
(b)Where any other published documents are submitted by the violator in question, through which the investors concerned are deemed able to identify the true contents;
(c)Where any immediate correction is made for the violation; and
(d)Where compensation for any damage which the investors concerned incurred from the violation is made.
(2) In calculating the statutory maximum amount under paragraph (1) 2, where a registration statement has neither been submitted nor has a report been made under Article 8, 21-2, or 190-2 of the Act, it shall be made based on the amount of public offering of new or outstanding securities or the total amount of tender offer which has been put into practice, or the total amount of the book value of stocks to be actually issued and of the debt to be assumed.
(3) In imposing any penalty under Article 206-11 of the Act, the Financial Supervisory Commission shall notify the concerned person in a written statement specifying the classification of the violation concerned and the amount of the penalty to be paid, under the conditions as prescribed by the Ordinance of the Ministry of Finance and Economy.
(4) Any person who is notified under paragraph (3) (hereinafter referred to as the person who is subject to the imposition of penalty ) shall pay the penalty concerned in the receiving institution as prescribed by the Financial Supervisory Commission not later than 60 days after he is notified. <Amended by Presidential Decree No. 17291, Jul. 7, 2001>
(5) The Exchange shall submit a written opinion on the following matters to the Financial Supervisory Commission within seven days after it receives any request from the Financial Supervisory Commission for the submission of opinions under Article 206-12 (2) of the Act. In this case, any reference materials may be appended as necessary for judging whether an act is subject to the imposition of penalty: <Amended by Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
1.Reasons for the imposition of penalty; and
2.Amount of the estimated penalty.
[This Article Wholly Amended by Presidential Decree No. 16367, May 27, 1999]

Article 92 (Extension of Time Limit for Payment and Payment in Installments)
(1) The extension of the time limit for payment under Article 206-15 (1) of the Act shall not exceed one year beginning on the following day of the time limit.
(2) In permitting payment in installments under Article 206-15 (1) of the Act, the interval between the respective time limits for payment in installments shall be within six months and the frequency of payment in installments shall be three times or less.
(3) Any application for the extension of time limit for payment or for the payment in installments under Article 206-15 (2) of the Act shall follow the Ordinance of the Ministry of Finance and Economy.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 93 (Additional Dues)
The term additional dues as determined by the Presidential Decree in Article 206-16 (1) of the Act means any amount obtained by applying 6/100 per year to the amount of the penalty in arrears.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]

Article 93-2 (Penal Provisions)
The term important matters prescribed by the Presidential Decree in subparagraphs 2 and 2-2 of Article 207-3 of the Act means the matters provided for in Article 5-8 (1).
[This Article Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004]

Article 94 (Imposition and Collection of Fine for Negligence)
(1)If the Financial Supervisory Commission desires to impose the fine for negligence under Article 213 (3) of the Act, it shall notify the person who is subject to the disposition of the fine for negligence, of the fact of offense, method and period of objection, amount of fine for negligence, etc. specified in writing. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15687, Feb. 24, 1998>
(2)The Financial Supervisory Commission shall, upon imposing the fine for negligence under paragraph (1), give in advance the person who is subject to the disposition of fine for negligence an opportunity to state orally or in writing (including electronic documents) his opinion, with a period of ten days or more fixed. In this case, if no opinion is stated by the designated date, it shall be considered that there is no opinion to state. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18312, Mar. 17, 2004>
(3)In determining the amount of the fine for negligence, the Financial Supervisory Commission shall take into consideration the motive and consequence, etc. of such offense. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15687, Feb. 24, 1998>
(4)The collection procedure of the fine for negligence shall be determined by the Ordinance of the Ministry of Finance and Economy. <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 16367, May 27, 1999>
[This Article Newly Inserted by Presidential Decree No. 14229, Apr. 30, 1994]

ADDENDA

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Article 2 (Transitional Measures on Amount of Net Working Capital)
The amount of net working capital of a securities company shall be, notwithstanding the provisions of Article 32, governed by the previous provisions for three years from the enforcement date of this Decree.

Article 3 (Transitional Measures on Restrictions of Securities Transaction)
The securities owned by officers or employees of a securities company at the time of the entry into force of this Decree shall be regarded to be the securities purchased pursuant to subparagraph 4 of Article 35.

Article 4 (Transitional Measures on Qualification of Registered Representative)
(1)A registered representative registered with the Ministry of Finance at the time of the entry into force of this Decree shall be regarded to qualify himself for a registered representative, notwithstanding the provisions of Article 41: Provided, That he shall lose his qualification unless he passes the examination referred to in subparagraph 2 of Article 41 within three years from the enforcement date of this Decree.
(2)The provisions of subparagraph 3 of Article 41 shall not apply to a person who has worked at a securities company for one year or more by December 31, 1978.

Article 5 (Cancellation through Purchase of Certificates of Contribution to Stock Exchange)
(1)When the Stock Exchange intends to cancel its certificates of contribution pursuant to Article 11 of the Addenda of the Act, the Stock Exchange shall do so, obtaining approval of the Minister of Finance, by purchasing them with its retained earnings (including a reserve) during the period as is designated by the president of the Stock Exchange.
(2) The purchase price per certificate of contribution for the purpose of cancellation referred to in paragraph (1) shall be the amount derived from dividing by the total number of certificates of contribution issued, the total amount of the paid-in capital and reserves shown on the balance sheet after appropriation of profit through settlement of accounts for the fiscal year of 1976.
(3) In case of making cancellation pursuant to paragraph (1), the president of the Stock Exchange shall give a public notice thereof for not less than one month and notify this to each of contributors and pledgers recorded on the contributor register.
(4) With regard to the certificates of contribution not cancelled during the period designated by the president of the Stock Exchange pursuant to paragraph (1), the purchase money shall be deposited with a court deposit official within one month from the expiration date of the said period. In this case, the certificates of contribution concerned shall be regarded to have been cancelled on the date of deposit of the purchase money.

ADDENDA<Presidential Decree No. 10823, May 15, 1982>

(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) (Transitional Measures) Reports submitted to the Minister of Finance prior to the enforcement of this Decree in accordance with the previous provisions of Article 21 (3) shall be regarded to have been submitted to the Commission in accordance with the provisions of this Decree.

ADDENDUM<Presidential Decree No. 11312, Dec. 31, 1983>

This Decree shall enter into force on the date of its promulgation.

ADDENDA<Presidential Decree No. 12352, Dec. 31, 1987>

Article 1 (Enforcement Date)
(1) This Decree shall enter into force on January 1, 1988, but the amendments to Article 44 shall enter into force on the day on which the Government sells all the certificates of contribution of the Stock Exchange, which the Government holds.
(2) If the Government does not sell all of its holding certificates of contribution of the Stock Exchange until January 1, 1988, the amendments to subparagraph 5 of Article 38 and the amendments to those included in Chapter VI of this Decree shall enter into force on the day the certificates are sold.

Article 2 (Transitional Measures concerning Securities Transaction Reserve)
The securities transaction reserve accumulated pursuant to the previous provisions at the time of the entry into force of this Decree shall be divided into the securities sale loss reserve and the securities transaction liability reserve under the conditions as prescribed by the Commission.

ADDENDA<Presidential Decree No. 12979, Apr. 14, 1990>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 and 3 Omitted.

ADDENDUM<Presidential Decree No. 13015, Jun. 4, 1990>

This Decree shall enter into force on the date of its promulgation.

ADDENDUM<Presidential Decree No. 13261, Jan. 29, 1991>

This Decree shall enter into force on the date of its promulgation.

ADDENDA<Presidential Decree No. 13534, Apr. 28, 1992>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Article 2 Omitted.

ADDENDA<Presidential Decree No. 13940, Jul. 28, 1993>

(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) (Applicable Cases concerning Exemption from Duty to Report) The exemption from the duty to report the holding situation, etc. pursuant to the revised provisions of Articles 86-2 and 86-3 shall be applicable beginning with the portion of any report on the quarter in which the enforcement day of this Decree is included.

ADDENDUM<Presidential Decree No. 14229, Apr. 30, 1994>

This Decree shall enter into force on the date of its promulgation: Provided, That the amendments to Article 15-2 shall enter into force on July 1, 1994, and those of Article 86, on January 1, 1997, respectively.

ADDENDA<Presidential Decree No. 14438, Dec. 23, 1994>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 through 5 Omitted.

ADDENDA<Presidential Decree No. 14447, Dec. 23, 1994>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 through 5 Omitted.

ADDENDA<Presidential Decree No. 14910, Feb. 12, 1996>

(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) (Applicable Cases concerning Duty to Report on Holding of Listed Stocks on Large Scale) The person who is liable to report on the holding of stocks under the amendments to subparagraph 3 of Article 86-3 shall make the first report thereof not later than April 10, 1996.

ADDENDA<Presidential Decree No. 15312, Mar. 22, 1997>

Article 1 (Enforcement Date)
This Decree shall enter into force on April 1, 1997: Provided, That the amendments to Articles 34 and 84-6 shall enter into force on the date of its promulgation; those of Article 41-24 (limited to the case that a foreign investment advisory businessman directly conducts an investment advisory business or discretionary investment business within the Republic of Korea), on December 1, 1998; those of subparagraph 3 of Article 14, on April 1, 1999; and those of Articles 78-2 and 78-3, on the date on which the Korea Securities Dealers Association is organized; respectively.

Article 2 (Repeal of Other Acts and Subordinate Statutes)
The Enforcement Decree of the Capital Market Promotion Act shall be hereby repealed.

Article 3 (Time Limit for Application of Provisions concerning Securities Option)
Matters concerning securities option from among those prescribed in the amendments to subparagraph 5 of Articles 2-3 (previous Article 2-2), Article 3 (2) 6, Article 34 (1) 1, subparagraph 3 of Article 41, and Article 48, shall be effective until the day prescribed in the proviso of Article 1 of the Addenda of the Futures Trading Act, Act No. 5041.

Article 4 (Applicable Cases concerning License for Securities Business)
The amendments to Article 15-2 (including the cases where it shall apply mutatis mutandis under Article 41-9), Article 15-3 (including the cases where it shall apply mutatis mutandis under Article 41-24 (2)) and Article 17-5 (including the cases where it shall apply mutatis mutandis under Article 41-7 (2) and Article 41-8 (2)) shall also apply to the cases where the application for license has been made to the Minister of Finance and Economy before the enforcement of this Decree.

Article 5 (Applicable Cases concerning Registration of Investment Advisory Business)
The amendments to Article 41-7 (including the cases where it shall apply mutatis mutandis under Article 41-24 (2)) shall also apply to the cases where the application for license for an investment advisory business has been made to the Minister of Finance and Economy before the enforcement of this Decree.

Article 6 (Applicable Cases concerning Fees)
The amendments to Article 74-2 (4) and (5) shall apply to the fees which are regarded as fees under Article 15 of the Addenda of the Act.

Article 7 (Applicable Cases concerning Stock Option)
(1) The amendments to Article 84-6 shall also apply to the case where, at the time of the promulgation of this Decree, stock option has been granted by the special resolution of a general meeting of stockholders.
(2) The special resolution of a general meeting of stockholders as provided for in paragraph (1) shall be limited to the case which is in accordance with the amendments to Article 84-6.
(3) The corporation which has granted stock option under paragraph (1) shall make the registration as provided for in subparagraph 6 of Article 3 of the Act and the report as prescribed in Article 189-4 (8) of the Act without delay after the promulgation of this Decree.

Article 8 (Transitional Measures concerning Reserve for Securities Transaction)
In case appropriation of the reserve for securities transactions, which has been accumulated at the time of the promulgation of this Decree, in profits is intended under the amendments to the proviso of Article 34 (3), it shall be made by equal amount over three business years.

ADDENDA<Presidential Decree No. 15513, Nov. 29, 1997>

(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) Omitted.

ADDENDA <Presidential Decree No. 15516, Nov. 29, 1997>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 through 4 Omitted.

ADDENDA<Presidential Decree No. 15526, Dec. 5, 1997>

(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) (Special Cases concerning Amount of Reserves for Protection Fund) As to the calculation of annual reserves for the business year to which the enforcement date of this Decree belongs, the calculation shall be done in daily basis according to the provisions of the previous Article 41-2 (1) 2 for the portions falling within November 18, 1997, and to the amendments to Article 41-2 (1) 2 for the portions beginning with November 19, 1997.
(3) (Special Cases concerning Payment Limit of Protection Fund) In case where any cause for the payment of the Protection Fund under Article 69-3 (1) of the Act arises from November 19, 1997 to December 31, 2000, the deposit under Article 41-4 (2) shall be paid in full, notwithstanding the provisions of Article 41-5.

ADDENDUM<Presidential Decree No. 15537, Dec. 9, 1997>

This Decree shall enter into force on the date of its promulgation.

ADDENDA<Presidential Decree No. 15604, Dec. 31, 1997>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 through 10 Omitted.

ADDENDA<Presidential Decree No. 15687, Feb. 24, 1998>

(1)(Enforcement Date) This Decree shall enter into force on April 1, 1998: Provided, That the amendments to Articles 10-3 (4), 11-2, 11-3, and 12, subparagraph 1 of Article 12-3, and Articles 12-4, 13-2, 13-3, and 84-2 (1) shall enter into force on the date of its promulgation.
(2)(Applicable Cases concerning Licensing Standards for Discretionary Investment Business)The amendments to Article 41-8 (3) shall apply to a discretionary investment business licensed on or after the entry into force of this Decree.
(3)(Applicable Cases concerning Cancellation of Trust Contracts for Acquisition of Treasury Stocks) The amendments to Article 84-3 (2) (limited to matters relating to the cancellation of trust contracts) shall apply to any trust contract concluded after the entry into force of this Decree.
(4)(Transitional Measures on Excess of Acquisition Limit of Treasury Stocks) Where an acquired amount of treasury stocks combined under the amendments to Article 84-2 (4) at the time of the entry into force of this Decree exceeds the acquisition limit listed in Article 189-2 (1) 2 of the Act, the excess shall be disposed of by the expiration of a trust contract under the amendments to Article 84-2 (3).

ADDENDA<Presidential Decree No. 16323, May 24, 1999>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 through 4 Omitted.

ADDENDA<Presidential Decree No. 16367, May 27, 1999>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amendments to Article 83-3 (2) shall enter into force on January 1, 2000.

Article 2 (Applicable Cases for Minimum Issue Price of Stocks to be Issued below Par Value)
The amendments to Article 84-22 shall apply to the minimum issue price determined at the general meeting of stockholders which is convoked on or after the date when this Decree takes effect.

Article 3 (Special Cases for Deposition of Customer Deposits)
Notwithstanding the amendments to Article 35-3 (3), any securities company shall deposit consumer deposits with a depositing institution under the conditions as prescribed by the Financial Supervisory Commission until June 30, 1999.

Article 4 (Transitional Measures concerning Security of Fund Managers)
(1) An investment advisory company, which is registered pursuant to the previous provisions at the time this Decree enters into force, shall satisfy the requirements under the amendments to Article 41-7 (1) 2 within one year after this Decree enters into force (an investment advisory company, which runs concurrently a discretionary investment business after obtaining permission therefor pursuant to the previous provisions at the time this Decree enters into force, shall satisfy the requirements, in addition to those aforesaid, under the amendments to paragraph (2) 2 of the same Article).
(2) Notwithstanding the requirements for qualification of fund managers under the amendments to Article 41-7, an application for the registration of an investment advisory business or discretionary investment business within six months after this Decree enters into force may be filed upon satisfaction of manpower which falls under the requirements for qualification of professional investment advisory manpower under the previous provisions of any item of Article 41-7 (1) 2. In this case, the requirements under the amendments to Article 41-7 (1) 2 or (2) 2 shall be satisfied within one year after this Decree enters into force.
(3) Any person who is reported as professional investment advisory manpower to the Financial Supervisory Commission under the previous provisions at the time this Decree enters into force or any professional investment advisory manpower at the time of registration of an investment advisory company or discretionary investment business effected under the former part of paragraph (2), shall be deemed to meet the requirements for qualification of fund managers under the amendments to Article 41-7 for one year after this Decree enters into force.

Article 5 (Transitional Measures concerning Purchase Price of Stocks)
With respect to the price of stocks to be purchased by a corporation within the purchase period of stocks upon request of stockholders at the time this Decree enters into force, the previous provisions shall apply, notwithstanding the amendments to Article 84-9 (2).

Article 6 (Transitional Measures concerning Requirements for Qualification of Standing Auditor)
Notwithstanding the amendments to Article 84-19 (3), with respect to the qualification of a standing auditor in active service at the time this Decree enters into force, the previous provisions shall apply until his term of office terminates.

ADDENDA<Presidential Decree No. 16456, Jun. 30, 1999>

Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 1999. (Proviso Omitted.)

Articles 2 and 3 Omitted.

ADDENDA<Presidential Decree No. 16520, Aug. 7, 1999>

(1)(Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) (Special Cases for Restriction on Period of Withdrawal of Stocks by Members of Employee Stock Ownership Association) Notwithstanding the amendments to Article 2-7 (1) 2 (b), the members of an employee stock ownership association shall not be allowed to withdraw stocks for which three years has not passed since the deposition, until December 31, 1999: Provided, That this shall not apply where the members retire or any compelling cause occurs as prescribed by the Minister of Finance and Economy.
(3) (Transitional Measures concerning Articles of Employee Stock Ownership Association) Any employee stock ownership association, which was organized prior to the enforcement of this Decree, shall amend its articles to conform to the amendments to Article 2-7 and the provisions of paragraph (2) of these Addenda within one month after this Decree enters into force.

ADDENDA<Presidential Decree No. 16709, Feb. 14, 2000>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Article 2 Omitted.

ADDENDUM<Presidential Decree No. 16745, Mar. 4, 2000>

This Decree shall enter into force on the date of its promulgation.

ADDENDUM<Presidential Decree No. 16773, Apr. 1, 2000>

This Decree shall enter into force on the date of its promulgation.

ADDENDA<Presidential Decree No. 16966, Sep. 8, 2000>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Article 2 (Applicable Cases)
(1) The amendments to Article 83-5 (2) through (4) shall apply to the portion of purchase or sale on and after the enforcement date of this Decree. In this case, the period of six months shall be reckoned from the time of the first purchase or sale after the enforcement of this Decree.
(2) The amendments to Article 84-7 shall apply to the registration statement of a merger filed on and after the enforcement date of this Decree.

Article 3 (Applicable Cases concerning Time of Application of Equity Capital Regulation Rate)
The term day determined by the Presidential Decree in the main sentence of Article 3 of the Addenda of the Amendments to the Securities and Exchange Act, Act No. 6176, means the day determined pursuant to the following standards:
1.In case of subparagraph 1 of Article 3 of the Addenda of the same Act: The day determined and publicly announced by the Financial Supervisory Commission within the scope of seven years from the registration date of a change in articles of association concerning the change of business type or from the registration date of a merger; and
2.In case of subparagraph 2 of Article 3 of the Addenda of the same Act: The day preceding the day on which the Financial Supervisory Commission decides that the securities company fails to execute the implementation plan or is not able to execute it.

Article 4 (Transitional Measures concerning Permission of Business for Securities Company)
A securities company which has been given permission for the brokerage business of securities sale transactions among persons permitted to conduct business under Article 28 (2) 1 of the Act at an over-the-counter market under the previous provisions at the time of the entry into force of this Decree shall be deemed to have obtained permission for securities business under the amendments to subparagraph 5 of Article 14.

Article 5 (Transitional Measures concerning Qualifications for Officers of Securities Company)
Where any officer in active service at a securities company at the time of the entry into force of this Decree falls under the amendments to Article 35-14 due to any cause which occurred prior to the enforcement of this Decree, he shall be governed by the previous provisions until his term of office terminates, notwithstanding the amended provisions.

Article 6 (Transitional Measures concerning Concurrent Operation of Business by Securities Company)
A business which is conducted by a securities company with authorization by the Financial Supervisory Commission under the previous provisions at the time of the entry into force of this Decree but does not belong to the business of such securities company under the amendments to Article 36-2 (1) may be carried out until the period determined by the Financial Supervisory Commission.

ADDENDA<Presidential Decree No. 17291, Jul. 7, 2001>

(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) (Applicable Cases concerning Restrictions on Purchase and Sale Transactions of Officers, etc.) The amendments to the proviso of subparagraph 5 of Article 35 shall apply to the portion of acquiring stocks, convertible bonds, bonds with warrant, or exchangeable bonds on or after the enforcement date of this Decree.
(3) (Transitional Measures on Qualifications of Outside Directors) Notwithstanding the amendments to Article 37-6 (3) 3 and 4, persons holding office of the outside directors at the time of enforcement of this Decree shall be considered not falling under the disqualification conditions under the relevant amended provisions until the time of expiration of their terms of office, in case where they have not acquired any stocks additionally or have had no trade relations after the enforcement of this Decree.
(4) (Transitional Measures on Requirements, Procedures, etc. for Merger) The previous provisions shall, notwithstanding the amendments to Article 84-7, govern with respect to the corporation which has submitted a report on merger at the time of enforcement of this Decree.
(5) Omitted.

ADDENDA<Presidential Decree No. 17344, Aug. 25, 2001>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 and 3 Omitted.

ADDENDA<Presidential Decree No. 17518, Feb. 9, 2002>

(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation: Provided, That the amendments to subparagraphs 4 and 7-2 of Article 35-13, Article 36-2 (1) through (3), and Article 84-28 shall enter into force on July 1, 2002.
(2) (Enforcement Date of Amendments to Securities and Exchange Act) The term date as prescribed by the Presidential Decree in the proviso of Article 1 of the Addenda of the amendments to the Securities and Exchange Act, Act No. 6423, means the date on which this Decree is promulgated.
(3) (Applicable Cases concerning Standards for Public Offering) The amendments to Article 2-4 (3) 4-2 shall also apply to an offer to sell outstanding securities or a solicitation of an offer to acquire or buy those, which is made before the enforcement of this Decree.
(4) (Transitional Measures concerning Requirements and Procedures, etc. for Merger) With respect to any corporation that has submitted a merger statement at the time of the entry into force of this Decree, the previous provisions shall apply, notwithstanding the amendments to Article 84-7.

ADDENDA<Presidential Decree No. 17791, Dec. 5, 2002>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 and 3 Omitted.

ADDENDA<Presidential Decree No. 17907, Feb. 24, 2003>

(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) (Applicable Cases concerning Establishment Permission for Branch Offices and Other Business Offices of Foreign Securities Companies) The amendments to Article 17-3 (1) shall apply with respect to applications for establishment permission for branch offices and other business offices of foreign securities companies which are filed on and after the enforcement date of this Decree.

ADDENDA<Presidential Decree No. 18146, Nov. 29, 2003>

Article 1 (Enforcement Date)
This Decree shall enter into force on November 30, 2003. (Proviso Omitted.)

Articles 2 through 15 Omitted.

ADDENDA<Presidential Decree No. 18297, Feb. 28, 2004>

Article 1 (Enforcement Date)
This Decree shall enter into force on March 1, 2004.

Articles 2 through 5 Omitted.

ADDENDUM<Presidential Decree No. 18312, Mar. 17, 2004>

This Decree shall enter into force on the date of its promulgation.

ADDENDA<Presidential Decree No. 18325, Mar. 22, 2004>

Article 1 (Enforcement Date)
(1) This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
(2) Omitted.

Articles 2 through 13 Omitted.
ADDENDA<Presidential Decree No. 18350, Apr. 1, 2004>

(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 83-15 shall enter into force on July 1, 2004.
(2) (Application Example concerning All-Inclusive Exchanges and Transfers of Stocks, etc.) The amended provisons of Article 84-8 (2) through (4) of this Decree shall apply, starting with the portion of the acquisition by transfer and the transfer of business or assets, the all-inclusive exchanges, all-inclusive transfer, division and division-merger of stocks provided for in Article 190-2 (2) of the Act, on which the board of directors first resolves (in the event that any contract is concluded without going through a resolution thereon of the board of directors, the conclusion of such contract), after the enforcement of this Decree: Provided, That the previous provisions of Article 84-8 (2) shall apply to any corporation that already concludes a contract on the acquisition by transfer, the transfer, the division and the division by merger of the business on which the board of directors of such corporation resolves at the time of enforcement of this Decree.

ADDENDA<Presidential Decree No. 18596, Dec. 3, 2004>

Article 1 (Enforcement Date)
This Decree shall enter into force on December 6, 2004.

Articles 2 through 5 Omitted.

ADDENDA<Presidential Decree No. 18687, Jan. 27, 2005>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date on which the Exchange has its incorporation registered pursuant to the provisions of Article 11 of the Addenda of the Korea Securities and Futures Exchange Act whose Act No. is 7112.
[This Decree takes effect on January 27, 2005 pursuant to the Korea Securities and Futures Exchange Act, Act No. 7112, which is amended on January 29, 2004]

Article 2 (Transitional Measures concerning Securities Subject to Transactions on KOSDAQ Market)
Any securities that are issued by any corporation registered with the Association at the time of enforcement of this Decree shall be deemed the securities subject to transactions on the KOSDAQ market under this Decree.

Article 3 (Transitional Measures concerning Reports, etc.)
(1)Any report that is made to the Korea Securities Dealers Association in order to register securities with the Korea Securities Dealers Association at the time of enforcement of this Decree shall be deemed the report made to the Exchange in order to list securities on the KOSDAQ market.
(2)Any report, etc. that are made by any corporation that is registered with the Association to the Korea Securities Dealers Association pursuant to Acts and subordinate statutes at the time of enforcement of this Decree shall be deemed the report, etc. that are made to the Exchange.

ADDENDA<Presidential Decree No. 18736, Mar. 8, 2005>

Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.

Articles 2 through 5 Omitted.

ADDENDA <Presidential Decree No. 18757, Mar. 28, 2005>

Article 1 (Enforcement Date)
This Decree shall enter into force on March 29, 2005: Provided, That the amended provisions of Article 36-2 (2) 1 (c) and subparagraph 4 of Article 84-28 shall enter into force on March 29, 2007.

Article 2 (Term of Validity)
The amended provisions of subparagraph 3-2 of Article 84-28 shall be valid until March 28, 2008.

Article 3 (Application Example concerning Securities)
The amended provisions of Article 2-3 (1) 3-5 shall apply, starting with the securities that are first issued after the enforcement of this Decree.

Article 4 (Application Example concerning Business Report, etc.)
(1)The amended provisions of Article 83-3 (4) and (5) shall apply, starting with the business year that begins after January 1, 2007.
(2)The amended provisions of Article 83-3 (6) shall apply, starting with the quarterly report on the quarter that begins on the date on which one year lapses after the enforcement of this Decree.

Article 5 Omitted.

[Table] <Amended by Presidential Decree No. 17907, Feb. 24, 2003>
Requirements for Major Investors (Related to Article 17-2 (5))

Category
Requirements

1. Where a major investor is an institution subject to an inspection of the Financial Supervisory Commission under the provisions of Article 38 of the Act on the Establishment, etc. of Financial Supervisory Organizations (hereafter in this Table referred to as the "financial institution") (a) Securities business shall not be the major business;
(b) Equity capital as of the end of the latest business year shall be more than three times the amount intended to invest, and satisfy the standards determined by the Financial Supervisory Commission;
(c) Standards for financial soundness applied to the relevant financial institution shall satisfy the standards determined by the Financial Supervisory Commission;
(d) In case where the relevant financial institution is a company belonging to an affiliated company of a large enterprise group under the Monopoly Regulation and Fair Trade Act (hereinafter referred to as the "large enterprise group") or a company belonging to an enterprise group of major liabilities (referring to an enterprise group ranking from the 1st to the 60th in the scale of credit offered by the financial institutions based on the standards determined by the Financial Supervisory Commission,which is an enterprise group under the Monopoly Regulation and Fair Trade Act; hereinafter the same shall apply), the debt ratio (referring to the ratio obtained by dividing the total amount of liabilities on the balance sheet as of the end of the latest business year of the relevant large enterprise group or the enterprise group of major liabilities by the equity capital; hereinafter the same shall apply) shall be not more than 300/100 satisfying the standards determined by the Financial Supervisory Commission;
(e) Investment amount may not be a fund composed of loans as determined by the Financial Supervisory Commission; and
(f) Following requirements shall be satisfied: Provided, That the same shall not apply in case where the degree of relevant violation, etc. is deemed minor; and
(i) There shall be no fact of punishment in violation of the Act, this Decree, the Acts and subordinate statutes related to finance (referring to the acts and subordinate statutes related to finance under the provisions of Article 18-2 (2)), the Monopoly Regulation and Fair Trade Act, and the Punishment of Tax Evaders Act during the latest five years;
(ii) There shall be no fact obstructing the healthy credit order by defaulting on obligation in the latest five years;
(iii) He may not be the biggest stock holder, major stock holder, or specially related person thereof of the financial institution designated as an insolvent financial institution under the Act on the Structural Improvement of the Financial Industry: Provided, That the same shall not apply in case where he has been recognized as having neither direct nor indirect responsibility with respect to insolvent management, the obligation to bear economical responsibility in accordance with the responsibility standards on the part of the major stock holder of the insolvent financial institution determined by the Financial Supervisory Commission has been implemented, or the obligation thereof has been exempted; and
(ix) There shall be no fact of other obstruction to the healthy order of financial trade.

2. In case where a major stock holder is a domestic juristic person other than those under subparagraph 1 (a) Equity capital as of the end of the latest business year shall be not less than three times the amount intended to invest satisfying the standards determined by the Financial Supervisory Commission;
(b) Ratio of liability as of the end of the latest business year shall be not more than 300/100 satisfying the standards determined by the Financial Supervisory Commission;
(c) In case where the relevant corporation is an affiliated company of a large enterprise group, or a company belonging to an enterprise group of major liabilities, the ratio of liability of the relevant large enterprise group or the enterprise group of major liabilities shall be not more than 300/100 satisfying the standards determined by the Financial Supervisory Commission; and
(d) Requirements referred to in subparagraph (1) (e) and (f) shall be satisfied.

3. In case where a major investor is an individual national (a) He shall not fall under any subparagraph of Article 33 (2) of the Act; and
(b) Requirements referred to in subparagraph 1 (e) and (f) shall be satisfied.

4. In case where a major investor is a foreign enterprise established under the foreign Acts and subordinate statutes (a) It shall run a securities business in a foreign country as of the date of license application;
(b) Its equity capital as of the end of the latest business year shall be not less than three times the amount intended to invest satisfying the standards set by the Financial Supervisory Commission;
(c) Credit rating by an internationally recognized credit assessment institution shall be not lower than the rating suitable for investment, or the fact that it satisfies the standards with regard to the financial soundness set by the supervisory agency of its home country shall be verified;
(d) It shall not have a fact that it has been taken to an administrative disposition equivalent to a corporate warning by a domestic supervisory institution of its home country or Korea. or that it has undergone a criminal punishment equivalent to a fine in connection with the operation of financial business in the latest three years; and
(e) It shall satisfy the requirements referred to in subparagraph 1 (f) (iii).

Remarks:
1. In applying the requirements for a major investor to a major stock holder, the relevant main stock holder shall be limited to a domestic juridical person referred to in subparagraph 2;
2. To a person falling under any of subparagraphs of Article 17-2 (4), the requirements for a major investor referred to in subparagraphs 1 (f) and 4 (d) shall apply respectively;
3. The requirements for major investors referred to in subparagraph 1 (a) shall not apply in case where a securities company intends to obtain a license for the securities business run by itself under the provisions of subparagraph 3, 5 or 6 of Article 14;
4. The calculation of equity capital may be done by including capital increments (limited to those that have increased the equity capital) from the end of the latest business year end to the date of license application; and
5. In applying subparagraph 4, where the relevant foreign enterprise is a holding company and if a company (limited to a company for which the relevant holding company controls management in reality) designated by the said holding company at the time of license application satisfies the requirements referred to in subparagraph 4 (a) through (d), the relevant holding company shall be deemed to have satisfied the requirements thereof.

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