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Laws of the Republic of Korea |
The Enforcement Decree of the Financial Investment Services and Capital Market Act
Presidential decree No. 20947, Jul. 29, 2008
Part 1 General Provisions
Article 1 (Purpose)
The purpose of this Decree is to prescribe the matters delegated under the Financial Investment Services and Capital Market Act and the matters necessary for the enforcement thereof. Article 2 (Definition of Terms)
The definition of the terms in this Decree shall be as follows:
1. The term "foreign securities markets" in this Decree shall mean the markets similar to the securities market which are located in foreign countries;
2. The term "soliciting an offer" in this Decree shall mean an activity to solicit a person to acquire securities by informing him/her that such securities are issued or sold, and guiding the procedures for acquiring securities through advertising in newspapers, broadcasts, and magazines, etc., distributing printed materials, such as guides, leaflets, etc., holding road shows, or using telecommunications, etc.: Provided, That the same shall not apply to cases where any or all of the matters falling under each of the following items are simply announced or explained through advertisements, etc. under the conditions prescribed and publicized by the Financial Services Commission, such as excluding the name of an underwriter and the issued amount of securities:
(a) Name of an issuer;
(b) Types of securities to be issued or sold, and prospective amount of the issuance or sales;
(c) General conditions for the issuance and sales of securities; (d) Schedule of the issuance or sales of securities; and The Enforcement Decree of the Financial Investment Services and Capital Market Act (e) Others prescribed and publicized by the Financial Services Commission as unlikely to undermine the protection of investors; and
3. The term "assets denominated in foreign currencies" in this Decree shall mean assets issued, created or distributed in foreign countries and others similar thereto. Article 3 (Scope of Financial Investment Product) (1) The term "amount prescribed by the Presidential Decree, such as sales commission" under the main sentence of Article 3 (1) of the Financial Investment Services and Capital Market Act (hereinafter referred to as "the Act") other than each subparagraph shall mean those falling under each of the following subparagraphs:
1. Commissions under Article 58 (1) of the Act, sales commissions (hereinafter referred to as "sales commission") under Article 76 (4) of the Act or others paid by investors or other customers as consideration for services;
2. Business expenses and risk premium under insurance contracts; and
3. Others prescribed and publicized by the Financial Services Commission. (2) The term "amount prescribed by the Presidential Decree, such as termination commission" under the main sentence of Article 3 (1) of the Act other than each subparagraph shall mean those falling under each of the following subparagraphs:
1. Redemption commissions (hereinafter referred to as "redemption commission") under Article 236 (2) of the Act or termination commissions (including those equivalent thereto) paid by investors or other customers due to an early cancellation;
2. Various taxes;
3. The amount that cannot practically be recovered by investors or other customers because an issuer or a counter-party is unable to pay the predetermined money, etc. due to bankruptcy, debt restructuring, or any other causes equivalent thereto; and
4. Others prescribed and publicized by the Financial Services Commission. Article 4 (Requirements for Commercial Paper)
The term "requirements prescribed by the Presidential Decree" under Article 4 (3) of the Act shall be met by using the form printed with the letters of "commercial paper" distributed by a
person falling under any of the following subparagraphs who is entrusted with the payment by a company:
1. Banks (hereinafter referred to as "bank") under subparagraph 1 of Article 22 of the Act;
2. The Korea Development Bank under the Korea Development Bank Act; or
3. The Industrial Bank of Korea under the Industrial Bank of Korea Act. Article 5 (Foreign Derivatives Transaction)
The term "foreign derivatives prescribed by the Presidential Decree" under Article 5 (2) of the Act shall mean the transactions falling under any of the following subparagraphs:
1. Metal transactions on over-the-counter markets (referring to over-the-counter markets in foreign countries as similar to the derivatives market; hereafter in this Article, the same shall apply) in accordance with regulation of the London Metal Exchange;
2. Bullion transactions in accordance with the regulation of the London Bullion Market Association;
3. Over-the-counter foreign exchange transactions in accordance with the regulation of the U.S. National Futures Association;
4. Over-the-counter foreign exchange transactions under the Commodity Exchange Act of Japan;
5. Vessel freight transactions in accordance with the regulation of the Vessel Freight Leading Dealer Association; or
6. Other transactions prescribed and publicized by the Financial Services Commission which are conducted under internationally standardized conditions or procedures.. Article 6 (Exemption from Collective Investment)
(1) The term "Acts and subordinate statutes prescribed by the Presidential Decree" under Article 6 (5) 1 of the Act shall be as follows:
1. The Real Estate Investment Company Act;
2. The Ship Investment Company Act;
3. The Framework Act on the Promotion of Cultural Industries;
4. The Industrial Development Act;
5. The Support for Small and Medium Enterprise Establishment Act; The Enforcement Decree of the Financial Investment Services and Capital Market Act
6. The Specialized Credit Financial Business Act;
7. The Act on Special Measures for the Promotion of Venture Businesses; and
8. The Act on Special Measures for the Promotion of Specialized Enterprises, etc. for Component and Material.
(2) The term "investors prescribed by the Presidential Decree" under Article 6 (5) 1 of the Act shall mean a person who does not fall under either of the following subparagraphs:
1. A person falling under any of the subparagraphs of Article 10 (1) of this Decree; or
2. A person prescribed and publicized by the Financial Services Commission among the persons under Articles 10 (3) 12 and 10 (3) 13 of this Decree. (3) The term "number prescribed by the Presidential Decree" under Article 6 (5) 1 of the Act shall be 49. In such a case, when another collective investment scheme acquires not less than 10/100 of the total number of outstanding collective investment securities of the collective investment scheme, the number of the investors (referring to the investors under paragraph (2)) in the other collective investment scheme shall be added in calculating the 49 investors. (4) The term "cases prescribed by the Presidential Decree" under Article 6 (5) 3 of the Act shall mean those falling under any of the following subparagraphs:
1. Where a depository institution (hereinafter referred to as "depository institution") under Article 74 (3) of the Act manages and distributes the deposited or entrusted deposits of investors (hereinafter referred to as "investors' deposits") under Article 74 (1) of the Act;
2. Where cases fall under either of the following items when a trust company jointly manages the entrusted money in order to manage the trust property effectively: (a) Where a proportion of money as a pooled property trust under Article 103 (2) of the Act is not more than 40/100; or
(b) Where managing profits generated from trust properties or handling the remaining properties is inevitable due to the cancellation or the redemption of trust.
3. Where a special purpose company (hereinafter referred to as "special purpose company") under Article 271 of the Act carries on its own business;
4. Where a merchant bank (hereinafter referred to as "merchant bank") under Article 336 of the Act performs the business of managing bill management accounts under Article 329 of this Decree;
5. Where a corporation meeting the requirements under Article 51-2 (1) 6 of the Corporate Tax Act collects, manages, and distributes money, etc. (hereinafter referred to as "money, etc.") under the main sentence of Article 3 (1) other than each subparagraph;
6. Where a local company mainly carries on the business of taking another company's business by possessing the equity securities thereof;
7. Where the franchise business under subparagraph 1 of Article 2 of the Fair Franchise Transaction Act is carried on;
8. Where the multilevel sales under subparagraph 5 of Article 2 of the Door-to-door Sales, etc. Act are carried on;
9. Where any person who carries on the business including manufacturing, etc. under the Korean Standard Industrial Classification publicized by the Commissioner of Korea National Statistical Office in accordance with the Statistics Act conducts the business with the money, etc. collected from investors, and distributes the results to them after having officers and employees, business offices and other manpower, and physical facilities necessary for carrying on the business: Provided, That cases where the person specifies the business and distributes the results of the specified business shall be excluded;
10. Mutual financing associations for the purpose of academics, religion, charity, arts, fellowship and other non-profit business;
11. Non-profit business for the members of the families of the same clan or other kinship groups;
12. Where a non-profit corporation under the Civil Act, a public-service corporation under the Act on the Establishment and Operation of Public-Service Corporations, a social services corporation under the Social Welfare Services Act, an employee stock ownership system under the Framework Act on Workers' Welfare, or a non-profit corporation established by obtaining license, authorization, or registration pursuant to other relevant Acts and subordinate statutes conducts any activity for the purpose of its business prescribed in its articles of incorporation;
13. Where the money, etc. collected from investors is managed and distributed upon the consent of all the investors; or
14. Others recognized by the Financial Services Commission after taking into account the matters falling under each of the following items in a comprehensive manner: The Enforcement Decree of the Financial Investment Services and Capital Market Act (a) Whether there is any professional manager who receives fees based on the result of the management;
(b) Whether the motive of investment is based on the knowledge, experience, or ability of a professional manager, or the personal relationship between an investor and the professional manager;
(c) Whether the performance of management is expected to be distributed in proportion to the investment principal within a reasonable period; (d) Whether it is necessary to separate the properties of investors from the professional manager's own properties; and
(e) Whether it is likely to clearly undermine the protection of investors when any case is not regarded as collective investment.
Article 7 (Exemption from Financial Investment Services) (1) The term "derivative-linked securities prescribed by the Presidential Decree" under Article 7 (1) of the Act shall mean those falling under either of the following subparagraphs:
1. Derivative-linked securities based on the price of equity securities (including the securities deposit receipts related thereto) or the fluctuation of the indices based thereon; or
2. Derivative-linked securities other than those under subparagraph 1 which are linked to the prices, interest rates, indicators, or units of the underlying asset or indices based thereon, as well as the proceeds including interest rates on the money, etc. paid by investors at the moment of issuance.
(2) The term "cases prescribed by the Presidential Decree" under Article 7 (4) of the Act" shall mean the cases falling under any of the following subparagraphs where a broker is delegated with all or part of an investment decision (referring to the investment decision under Article 6 (6) of the Act, hereinafter the same shall apply) on financial investment products without extra charge:
1. Where a broker is delegated by an investor with the investment decision on the quantity, price and timing of financial investment products within the designated scope when the investor designates a trading date (limited to one day) of the financial investment products and the total volume or total amount of transactions on the trading date;
2. Where a broker is delegated by an investor with the right to sell financial investment products in advance in accordance with the agreement, etc. when there is any inevitable reason, such as a sharp fall in prices of financial investment products during the period when the investor is absent temporarily due to traveling or sickness, etc.;
3. Where a broker is delegated by an investor with the right (in the case of derivatives, including the right to purchase the derivatives already sold) to sell financial investment products in accordance with the agreement, etc. when the investor fails to make a settlement or to deposit an additional margin subsequent to the purchases, sales and other transactions of financial investment products or fails to comply with an obligation to pay back or an obligation to maintain the rate of collateral related to the credit extension under Article 72 of the Act;
4. Where a broker is delegated by an investor with the right to purchase or sell collective investment securities or the rights to purchase or sell securities in return for the redemption when the investor has already entered into the agreement to purchase or sell collective investment securities of collective investment scheme of short-term finance (hereinafter referred to as "collective investment scheme of short-term finance") under subparagraph 5 of Article 229 of the Act, or to purchase or sell securities in return for the redemption without presenting any intention to deposit money into or withdraw money from an account opened by the broker; or
5. Others prescribed and publicized by the Financial Services Commission as unlikely to undermine the protection of investors and sound trade practice. (3) The term "others prescribed by the Presidential Decree" under Article 7 (6) 3 of the Act shall be as follows:
1. Where the Government or municipal governments purchase or sell financial investment products for public interest in accordance with relevant Acts and subordinate statutes;
2. Where the Bank of Korea makes open market operations pursuant to Article 68 of the Bank of Korea Act;
3. Where there is any sale with repurchase agreement under Article 81 (1) 1 of this Decree or any purchase with repurchase agreement (hereinafter referred to as "transaction with repurchase agreement") under item (b) of subparagraph 3 of Article 85 of this Decree among the persons falling under any of the following items: The Enforcement Decree of the Financial Investment Services and Capital Market Act (a) A person falling under Article 10 (2) of this Decree; (b) A person falling under Articles 10 (3) 1 through 10 (3) 4 and Articles 10 (3) 9 through 10 (3) 13 (including foreigners equivalent thereto) of this Decree; or (c) Others prescribed and publicized by the Financial Services Commission.
4. Where the Korea Financial Investment Association (hereinafter referred to as "the Association") established in accordance with Article 283 of the Act carries on the business under Article 286 (1) 4 of the Act;
5. Where a foreign dealer (referring to the person who conducts business equivalent to dealing in a foreign country in accordance with Acts and subordinate statutes thereof, hereinafter the same shall apply) conducts any activity falling under the following items when a domestic resident makes a public offering, secondary distribution or private placement in a foreign country:
(a) An activity recognized by the Financial Services Commission as making a contract for underwriting with the domestic resident in the Republic of Korea under the conditions prescribed and publicized by the Financial Services Commission; or (b) An activity to make a negotiation only in order to confirm the details of a contract for underwriting with the domestic resident under the conditions prescribed and publicized by the Financial Services Commission and to submit relevant data in advance to the Financial Services Commission.
6. Where a foreign broker or foreign dealer (referring to the person who conducts the business equivalent to brokerage in a foreign country in accordance with the Acts and subordinate statutes thereof; hereinafter the same shall apply) conducts any activity falling under the following items in a foreign country:
(a) Carrying on brokerage or dealing with a broker or dealer as a counter-party; or (b) Receiving purchasing or selling orders from a domestic resident and carrying on brokerage or dealing with the domestic resident (excluding brokers or dealers; hereafter in this item, the same shall apply) as a counter-party without soliciting investment or making investment advertisements (hereinafter referred to as "investment advertisement") under Article 57 of the Act to the domestic resident.
7. Where a foreign discretionary investment advisory company (hereinafter referred to as "foreign discretionary investment advisory company") under the proviso of Article 18 (2) 1
of the Act other than each item or a foreign non-discretionary investment advisory company (hereinafter referred to as "foreign non-discretionary investment advisory company") under the proviso of Article 18 (2) 1 of the Act other than each item provides discretionary investment advisory service or non-discretionary investment advisory service outside the Republic of Korea to a person falling under any of the following items as a counter-party without soliciting investment or making investment advertisements to the person: (a) Government;
(b) The Bank of Korea;
(c) A person falling under Articles 10 (3) 4 and 10 (3) 12 of this Decree; or (d) Others prescribed and publicized by the Financial Services Commission.
8. Where a person provides any investment advisory service on value of financial investment products or an investment decision on financial investment products as incidental to other businesses without charging any extra consideration; or
9. Where an analysis information related to the business concerned is provided by a collective investment scheme appraisal company (hereinafter referred to as "collective investment scheme appraisal company") under Article 258 of the Act, a bond appraisal company (hereinafter referred to as "bond appraisal company") under Article 263 of the Act, a certified public accountant, an appraiser, a person specialized in credit rating, an attorney-at-law, a patent attorney, a certified tax accountant, or any other person (including the group in which the person belongs to) equivalent thereto who provides advisory services pursuant to the relevant Acts and subordinate statutes. (4) Any service falling under the following subparagraphs pursuant to Article 7 (6) of the Act shall not be regarded as financial investment service under each subparagraph:
1. Article 7 (6) 1 of the Act: brokerage;
2. Article 7 (6) 2 of the Act: dealing;
3. Article 7 (6) 3 of the Act: financial investment services falling under each of the following items:
(a) Subparagraphs 1 through 3 and 5 of paragraph (3): dealing; (b) Subparagraph 4 of paragraph (3): brokerage;
(c) Subparagraph 6 of paragraph (3): brokerage or dealing; The Enforcement Decree of the Financial Investment Services and Capital Market Act (d) Subparagraph 7 of paragraph (3): discretionary investment advisory service or non- discretionary investment advisory service; and
(e) Subparagraphs 8 and 9 of paragraph (3): non-discretionary investment advisory service.
Article 8 (Scope of Specially-related Person)
The term "those in a special relationship as prescribed by the Presidential Decree" under Article 9 (1) 1 of the Act shall mean a person (hereinafter referred to as "specially-related person") falling under any of the following subparagraphs:
1. Where the principal is an individual, a person falling under any of the following items: (a) His or her spouse (including the person who is in de facto marriage; hereinafter the same shall apply);
(b) A paternal relative within the sixth degree of relationship and the wife of a paternal relative within the fourth degree of relationship; (c) The husband of a paternal relative within the third degree of relationship; (d) A maternal relative within the third degree of relationship and the spouse and children thereof;
(e) A paternal relative within the second degree of relationship of his/her spouse and the spouse thereof;
(f) A lineal ascendant of the birth parents of an adoptee; (g) An adoptee and his/her spouse and lineal descendants of the adoptive family; (h) The biological mother of a person born out of wedlock; (i) A person who maintains his/her livelihood based on money or other properties, etc. of the principal and those sharing a livelihood with the principal; (j) A corporation or a group and the officers thereof (excluding the officers in cases where confirmation documents prepared by the principal verify that the principal alone or together with related persons falling under items (a) through (i) does not exert substantial influence over the material management of the corporation or the group through the methods of the appointment or dismissal, etc. of an officer) where the principal alone or together with related persons falling under items (a) through (i) contributes not less than 30/100 to the corporation or the group, or exerts substantial
influence over the material management of the corporation or the group, including the appointment and dismissal, etc. of an officer;
(k) A corporation or a group and the officers thereof (excluding the officers in cases where confirmation documents prepared by the principal verify that the principal alone or together with related persons falling under items (a) through (j) does not exert substantial influence over the material management of the corporation or the group through the methods of the appointment or dismissal, etc. of an officer) where the principal alone or together with related persons falling under items (a) through (j) contributes not less than 30/100 to the corporation or the group, or exerts substantial influence over the material management of the corporation or the group, including the appointment and dismissal, etc. of an officer; or
2. Where the principal is a corporation or a group, a person who falls under any of the following items:
(a) Officers;
(b) Affiliates (hereinafter referred to as "affiliates") under the Monopoly Regulation and Fair Trade Act and the officers thereof;
(c) An individual (including the related persons falling under each item of subparagraph 1), corporation (excluding its affiliates; hereafter in this subparagraph, the same shall apply), group or the officers thereof who, individually or together with related persons falling under each item of subparagraph 1, contributes not less than 30/100 to the principal, or has substantial influence over the material management of the principal including the appointment and dismissal, etc. of an officer; or (d) A corporation or a group and the officers thereof (excluding the officers in cases where confirmation documents prepared by the principal verify that the principals alone or together with related persons falling under items (a) through (c) does not exert substantial influence over the material management through the methods of the appointment and dismissal, etc. of an officer) where the principal alone or together with related persons falling under items (a) through (c) contributes not less than 30/100 to the corporation or the group, or exerts substantial influence over the material management of the corporation or the group, including the appointment and dismissal, etc. of an officer. The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 9 (Scope of Major Shareholder)
The term "person designated by the Presidential Decree" under Article 9 (1) 2 (b) of the Act shall mean the person falling under any of the following subparagraphs:
1. A shareholder who has appointed the representative director or the majority of directors on its own or under the agreement or the contract, etc. with other shareholders; or
2. A shareholder prescribed and publicized by the Financial Services Commission as a person who exerts a dominant influence over business operation or important decision- making, such as management strategy, organizational changes, etc. Article 10 (Scope of Professional Investor)
(1) The term "professional investor designated by the Presidential Decree" under the proviso of Article 9 (5) of the Act other than each subparagraph shall mean a professional investor who does not fall under any of the following subparagraphs:
1. Government;
2. The Bank of Korea;
3. Any person falling under subparagraphs 1 through 17 of paragraph (2);
4. Any person falling under subparagraphs 1 through 11 of paragraph (3);
5. Any person falling under items (a) through (c) of subparagraph 18 of paragraph (3); or
6. Any foreigner equivalent to those under subparagraphs 3 and 4; (2) The term "financial institutions designated by the Presidential Decree" under Article 9 (5) 3 of the Act shall mean a financial institution falling under each of the following subparagraphs:
1. Financial institutions under the Banking Act;
2. The Korea Development Bank under the Korea Development Bank Act;
3. The Industrial Bank of Korea under the Industrial Bank of Korea Act;
4. The Export-Import Bank of Korea under the Export-Import Bank of Korea Act;
5. The National Agricultural Cooperative Federation under the Agricultural Cooperatives Act;
6. The National Federation of Fisheries Cooperatives under the Fisheries Cooperatives Act;
7. Insurance companies (hereinafter referred to as "insurance company") under the Insurance Business Act;
8. Financial investment firms [excluding integrated financial investment firms (hereinafter referred to as "integrated financial investment firm") under Article 22 of the Act];
9. Securities finance companies that obtain an authorization (hereinafter referred to as "securities finance company") in accordance with Article 324 (1) of the Act;
10. Merchant banks;
11. Fund brokerage companies that obtain an authorization (hereinafter referred to as "fund brokerage company") in accordance with Article 355 (1) of the Act;
12. Financial holding companies under the Financial Holding Companies Act;
13. Specialized financial business companies under the Specialized Financial Business Act;
14. Mutual savings banks and the National Federation thereof under the Mutual Savings Banks Act;
15. The National Forestry Cooperatives Federation under the Forestry Cooperatives Act;
16. The National Community Credit Federation under the Community Credit Cooperatives Act;
17. The National Credit Union Federation of Korea under the Credit Union Cooperatives Act; and
18. Foreign financial institutions equivalent to the institutions under subparagraphs 1 through 17.
(3) The term "others prescribed by the Presidential Decree" under Article 9 (5) 5 of the Act shall mean a person falling under each of the following subparagraphs;
1. The Korea Deposit Insurance Corporation and financial resolution institutions under the Depositor Protection Act;
2. The Korea Asset Management Corporation under the Act on the Efficient Disposal of Non-performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation;
3. The Korea Housing Finance Corporation under the Korea Housing Finance Corporation Act;
4. The Korea Investment Corporation under the Korea Investment Corporation Act;
5. The Association;
6. The Korea Securities Depository (hereinafter referred to as "the Depository") established in accordance with Article 294 of the Act;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
7. The Exchange (hereinafter referred to as "the Exchange") established in accordance with Article 373 of the Act;
8. The Financial Supervisory Service (hereinafter referred to as "the Financial Supervisory Service") under the Act on the Establishment, etc. of Financial Services Commission;
9. Collective investment schemes (excluding those prescribed and publicized by the Financial Services Commission);
10. Credit guarantee funds under the Credit Guarantee Fund Act;
11. Korea technology credit guarantee funds under the Korea Technology Credit Guarantee Fund Act;
12. Funds established in accordance with the Acts (excluding those under subparagraphs 10 and 11); and corporations operating and managing the funds;
13. Corporations carrying on mutual aid projects in accordance with the Acts;
14. Municipal governments;
15. Local corporations issuing stock certificates listed on foreign securities markets;
16. Corporations or groups (excluding foreign corporations or foreign groups) meeting all the requirements falling under each of the following items: (a) Filing with the Financial Services Commission relevant materials to prove fulfillment of the requirements under item (b);
(b) Maintaining not less than ten billion won in their balance of financial investment products on the date preceding the day when the relevant materials are filed; and (c) Two years having yet to pass from the date on which the relevant materials are filed;
17. Individuals (excluding foreigners who are individuals) meeting all the requirements falling under each of the following items:
(a) Filing with the Financial Services Commission relevant materials to prove fulfillment of all the requirements under items (b) and (c);
(b) Maintaining not less than five billion won in their balance of financial investment products on the date preceding the day when the relevant materials are filed; (c) One year having passed from the date on which the accounts of a financial investment firm is opened; and
(d) Two years having yet to pass from the date on which the relevant materials are filed; and
18. Foreigners falling under any of the following items: (a) Foreign governments;
(b) International organizations established in accordance with treaties; (c) Central banks of foreign countries; or
(d) Foreigners equivalent to those under subparagraphs 1 through 17. Article 11 (Public Offering and Secondary Distribution of Securities) (1) In calculating 50 investors pursuant to Articles 9 (7) and 9 (9) of the Act, the number of persons who have been solicited to subscribe for securities without a public offering or secondary distribution of the same type of securities within the six months preceding the date on which the solicitation for offer is made shall be added, and the number of persons falling under any of the following subparagraphs shall be subtracted:
1. A professional falling under any of the following items: (a) A person falling under Articles 10 (1) 1 through 10 (1) 4 of this Decree; (b) A person prescribed and publicized by the Financial Services Commission among the persons falling under Articles 10 (3) 12 and 10 (3) 13 of this Decree; (c) An accounting firm under the Certified Public Accountant Act; (d) A credit rating agency (hereinafter referred to as "credit rating agency") under the Use and Protection of Credit Information Act;
(e) A person who holds a certificate as a certified public accountant, appraiser, attorney- at-law, patent attorney, tax accountant, etc. and provides services, such as accounting and advisory services to an issuer; or
(f) Others prescribed and publicized by the Financial Services Commission as professionals who understand the financial status or the business operation of the issuer;.
2. A relevant person falling under any of the following items: (a) The largest shareholder (referring to the largest shareholder under Article 9 (1) 1 of the Act; hereinafter the same shall apply) of an issuer and a shareholder who holds not less than 5/100 of the total number of outstanding stocks; (b) An officer (including a person falling under each subparagraph of Article 401-2 (1) of the Commercial Act; hereafter in this subparagraph, the same shall apply) of an issuer The Enforcement Decree of the Financial Investment Services and Capital Market Act and a member of employee stock ownership system under the Framework Act on Worker's Welfare;
(c) An affiliate of the issuer and the officers thereof; (d) Where an issuer is a stock-unlisted corporation (excluding corporations which have made a public offering and secondary distribution of stock certificates), the shareholders thereof;
(e) Where an issuer who is a foreign company established in accordance with foreign Acts and subordinate statutes sells its stocks to employees and officers of its local affiliates pursuant to the stock option system for the welfare of the workers, the employees and officers of the local affiliate;
(f) Where an issuer is a company in the process of establishment, the promoter thereof; or
(g) Others prescribed and publicized by the Financial Services Commission as relevant persons who understand the financial status and business operation of an issuer. (2) Even if the number of investors who receive a solicitation of an offer is less than 50 based on the calculation pursuant to paragraph (1), such conduct shall be regarded as a public offering where the securities can be transferred to not less than 50 investors within one year from the issuance date and where the type of securities and the nature of purchasers meet the resale standards prescribed and publicized by the Financial Services Commission. (3) In the application of paragraph (1), the number of investors shall be calculated based on the persons solicited outside the securities market (excluding cases where the transactions of listed stocks are arranged for pursuant to Article 78 (1) of the Act) with respect to a secondary distribution.
Article 12 (Securities Traded on KOSDAQ Market)
The term "securities prescribed by the Presidential Decree" under Article 9 (13) 2 of the Act shall mean securities falling under each of the following subparagraphs, which are not listed on the securities market:
1. Corporate bonds;
2. Stock certificates;
3. Instruments representing preemptive rights;
4. Beneficiary certificates of exchange-traded funds (hereinafter referred to as "exchange- traded fund") under Article 234 (1) of the Act;
5. Derivative-linked securities under Article 7 (1) 1 of this Decree; and
6. Securities deposit receipts (limited to those issued by the Depository) related to the stock certificates issued by foreign corporations, etc. Article 13 (Scope of Foreign Corporation)
(1) The term "international institution designated by the Presidential Decree" under Article 9 (16) 5 of the Act shall mean an international institution established in accordance with a treaty. (2) The term "corporations located in a foreign country as designated by the Presidential Decree" under Article 9 (16) 6 of the Act shall mean those falling under any of the following subparagraphs:
1. A fund or association established, supervised or managed in accordance with foreign Acts and subordinate statutes;
2. A fund or association established, supervised or managed by a foreign government, foreign municipal government or foreign public organization; or
3. A fund or association established, supervised or managed by an international organization established in accordance with a treaty.
Article 14 (Standards for Private Equity Fund)
(1) The term "investors prescribed by the Presidential Decree" under Article 9 (19) of the Act shall mean investors who do not fall under either of the following subparagraphs:
1. A person falling under any of the subparagraphs of Article 10 (1) of this Decree; or
2. A person prescribed and publicized by the Financial Services Commission among those falling under Articles 10 (3) 12 and 10 (3) 13.
(2) The term "number prescribed by the Presidential Decree" under Article 9 (19) of the Act shall be 49. In such a case, when another collective investment scheme acquires not less than 10/100 of the outstanding collective investment securities of the collective investment scheme, the number of the investors (referring to the investors under paragraph (1)) of the other collective investment scheme shall be added in calculating the 49 investors. The Enforcement Decree of the Financial Investment Services and Capital Market Act Part 2 Financial Investment Services
Chapter 1 Authorization and Registration of Financial Investment Services Section 1 Requirements and Procedures of Authorization Article 15 (Authorized Business Unit)
(1) The term "business unit prescribed by the Presidential Decree" under Article 12 (1) of the Act other than each subparagraph shall be as provided for in Appendix 1 of this Decree. (2) The term "securities prescribed by the Presidential Decree" under Article 12 (1) 2 of the Act among the securities included in the scope of financial investment products shall be as follows:
1. Debt securities;
2. Municipal bonds;
3. Special bonds (hereinafter referred to as "special bonds") under Article 4 (3) of the Act;
4. Equity securities (excluding collective investment securities);
5. Listed stocks;
6. Collective investment securities; and
7. Securities falling under Article181 (1) 1 of this Decree. (3) The term "products prescribed by the Presidential Decree" under Article 12 (1) 2 of the Act among the derivatives included in the scope of financial investment products shall be as follows:
1. Derivatives whose underlying assets are not stock certificates; and
2. Derivatives whose underlying assets are currencies or interest rates. Article 16 (Authorization Requirements)
(1) The term "financial institution prescribed by the Presidential Decree" under Article 12 (2) 1 (a) of the Act shall mean an institution falling under any of the following subparagraphs:
1. The Korea Development Bank under the Korea Development Bank Act;
2. The Industrial Bank of Korea under the Industrial Bank of Korea Act;
3. The Export-Import Bank of Korea under the Export-Import Bank of Korea Act;
4. The National Agricultural Cooperative Federation under the Agricultural Cooperatives Act;
5. The National Federation of Fisheries Cooperatives under the Fisheries Cooperatives Act;
6. Local branches of foreign financial institutions under the Banking Act;
7. Local branches of foreign insurance companies under the Insurance Business Act; or
8. Others prescribed and publicized by the Financial Services Commission. (2) A foreign financial investment firm (hereinafter referred to as "foreign financial investment firm") under Article 12 (2) 1 (b) of the Act shall meet the requirements falling under each of the following subparagraphs:
1. The foreign financial investment firm shall meet the requirements falling under items (b) through (e) of subparagraph 4 of Appendix 2 of this Decree; and
2. The supervision over the foreign financial investment firm conducted by the supervisory authorities in a foreign country shall meet the internationally accepted standards for supervision.
(3) The term "amount prescribed by the Presidential Decree" under Article 12 (2) 2 of the Act shall be as provided for in Appendix 1 of this Decree. (4) The business plan under Article 12 (2) 3 of the Act shall meet the requirements falling under each of the following subparagraphs:
1. The firm shall have appropriate and feasible estimates of revenues and expenditures;
2. The firm shall maintain the standards of prudent management under Article 31 of the Act (in the case of integrated financial investment firms, referring to the standards of prudent management prescribed by the Acts and subordinate statutes concerned);
3. The firm shall establish an appropriate internal control system in order to manage risk and prevent financial accidents;
4. The firm shall have appropriate business methods in order to protect investors; and
5. The firm shall not violate Acts and subordinate statutes and undermine sound trade practice.
(5) The manpower, data-processing equipment, and other physical facilities under Article 12 (2) 4 of the Act shall meet the requirements falling under each of the following subparagraphs:
1. Appropriate manpower shall be provided, including experts who have specialized knowledge and soundness to conduct the financial investment services (referring to the The Enforcement Decree of the Financial Investment Services and Capital Market Act experts under Article 286 (1) 3 of the Act, hereinafter the same shall apply), and computer personnel, etc. to perform the business; and
2. The physical facilities under each of the following items shall be provided (including data-processing equipment):
(a) Data-processing equipment and communication methods necessary to carry on the financial investment services;
(b) Sufficient business space, including offices, etc., and office equipment; (c) Security for protecting physical equipment, such as data-processing equipment, etc.; and
(d) Complementary equipment necessary for maintaining the business even if any accident including blackout, fire, etc. occurs.
(6) Major shareholders (referring to the major shareholders under Article 12 (2) 6 (a) of the Act; hereafter in this Chapter, the same shall apply) shall meet the requirements under Appendix 2 of this Decree: Provided, That the Financial Services Commission may prescribe and publicize other eased requirements in a case falling under any of the following subparagraphs:
1. Where a person falling under any of the subparagraphs of Article 22 of the Act intends to obtain an authorization of financial investment services; or
2. Where a financial investment firm conducts a merger, split-off, or split-and-merger with another company.
(7) The term "person prescribed by the Presidential Decree" under Article 12 (2) 6 of the Act shall be a person falling under any of the following subparagraphs: Provided, That persons falling under subparagraph 1 shall be exempted in cases prescribed and publicized by the Financial Services Commission after taking into account the nature of corporation, etc.:
1. The largest shareholder of the corporation that is the largest shareholder (including a person who virtually controls the corporation which is the largest shareholder where the person is obviously different from the largest shareholder of the corporation); or
2. The representative of the corporation that is the largest shareholder. (8) The system to prevent a conflict of interests under Article 12 (2) 7 of the Act (hereafter in this Section, referred to as "system to prevent a conflict of interests") shall meet the requirements falling under each of the following subparagraphs:
1. The firm shall have appropriate internal control standards to identify, assess, and manage the possibility of a conflict of interests pursuant to Article 44 of the Act; and
2. The firm shall have an appropriate system to prevent any activity falling under each subparagraph of Articles 45 (1) and 45 (2) of the Act. (9) Where a foreign financial investment firm, foreign financial institution under the Banking Act, or foreign insurance company under the Insurance Business Act (hereafter in this paragraph, referred to as "foreign financial investment firm, etc.") establishes branches or other business offices (hereafter in this paragraph, referred to as "branches, etc.") in the Republic of Korea pursuant to Article 12 (3) of the Act, the branches, etc. shall be regarded as one financial investment firm. In such a case, the foreign financial investment firm, etc. shall, when it intends to establish additional branches, etc. in Korea to conduct financial investment services, submit relevant materials to the Financial Services Commission under the conditions prescribed and publicized by the Commission.
(10) Specific standards necessary for the authorization requirements under paragraphs (2), (4) through (6), (8), and (9) shall be prescribed and publicized by the Financial Services Commission.
Article 17 (Methods and Procedures of Authorization) (1) An authorization application submitted to the Financial Services Commission pursuant to Article 13 (1) of the Act shall contain the matters falling under each of the following subparagraphs:
1. Trade name;
2. Locations of the head office, branches and other business offices;
3. Matters on officers;
4. Matters on authorized business units intended to operate (referring to the authorized business units under Article 12 (1) of the Act; hereinafter the same shall apply);
5. Matters on financial status, such as equity capital;
6. Matters on a business plan;
7. Matters on manpower and physical facilities, such as data-processing equipment, etc.;
8. Matters on major shareholders or foreign financial investment firms;
9. Matters on a system to prevent conflict of interests; and The Enforcement Decree of the Financial Investment Services and Capital Market Act
10. Others prescribed and publicized by the Financial Services Commission as necessary for review for authorization..
(2) The authorization application in paragraph (1) shall have the documents falling under each of the following subparagraphs attached:
1. Articles of incorporation (including those equivalent thereto);
2. Documents to prove the decision-making of establishment or application for authorization, including the minutes from a general meeting of promoters, from an inaugural meeting of shareholders, and from board of directors;
3. Documents indicating the locations and names of the head office, branches and other business offices;
4. Curriculum vitae and career certificates of officers;
5. Documents indicating the types of authorized business units and the business methods thereof;
6. Financial statements and the addenda thereof for the latest three business years (in the case of a corporation for which three business years have yet to pass since its establishment, referring to the financial statements and the addenda thereof from its establishment to the latest business year);
7. Business plan (including pro forma financial statement) and estimated income and expense statement for three business years after the commencement of business;
8. Documents to identify the current status of manpower and physical facilities, etc.;
9. Documents indicating the names or titles of shareholders who hold not less than 1/100 of the outstanding stocks and the number of their stocks as of the date of the application for authorization (referring to the end of the latest business year in the case of application for authorization to add authorized business units or application for authorization of integrated financial investment firms);
10. Documents to identify that major shareholders or foreign financial investment firms meet all the requirements falling under each item of Article 12 (2) 6 of the Act;
11. Documents to identify whether any system to prevent a conflict of interests has been established; and
12. Other documents prescribed and publicized by the Financial Services Commission as necessary for review for authorization.
(3) Where a person who intends to obtain an authorization of financial investment services applies for a preliminary authorization under Article 14 of the Act and any matter indicated in a preliminary authorization application and accompanying documents submitted at the time of the application is not changed, the person may omit a part of the matters indicated in the authorization application under paragraph (1) by specifying the reference to the same information, or may skip the submission of the accompanying documents among the accompanying documents under paragraph (2).
(4) The Financial Services Commission which receives an authorization application under paragraph (1) shall verify the certified copy of corporate register through administrative data matching pursuant to Article 21 (1) or 22-2 (1) of the E-Government Act and shall require the applicant to submit the certified copy when the applicant does not consent to the verification in such a way.
(5) The Financial Services Commission shall, when it receives an authorization application under paragraph (1), confirm whether the contents of the application for authorization are true, and then review whether the application meets the authorization requirements under Article 12 (2) of the Act after taking into account the opinions collected from interested persons, etc. (6) The Financial Services Commission may conduct an actual investigation by way of interviewing interested persons, promoters or officers if necessary to confirm the application for authorization of financial investment service pursuant to paragraph (5). (7) The Financial Services Commission shall make a public notice on the applicant, application date, contents of the application, methods and period for presenting opinions in order to collect opinions of interested persons on the application for authorization of financial investment services pursuant to paragraph (5).
(8) The Financial Services Commission shall notify an applicant of the opinions recognized as unfavorable thereto among the opinions collected pursuant to paragraph (7) and allow the applicant to respond to those opinions within the period set by the Commission. (9) The Financial Services Commission may hold a public hearing where it is recognized as necessary that the authorization of financial investment services is likely to have a significant influence on the financial market.
(10) A person who obtains an authorization of financial investment services pursuant to Article 13 (2) of the Act shall commence the operation within six months from the date on which the The Enforcement Decree of the Financial Investment Services and Capital Market Act authorization is obtained: Provided, That where the Financial Services Commission sets a different period or extends the period upon the application of the person who obtains an authorization of financial investment services, the person may commence the authorized business within such period.
(11) The Financial Services Commission shall, when it adds conditions to the authorization of financial investment services, confirm whether such conditions are met. (12) In addition to the maters prescribed under paragraphs (1) through (11), necessary matters on the application for and review of an authorization of financial investment services, the form of authorization application, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 18 (Preliminary Authorization)
(1) A person who intends to apply for a preliminary authorization under Article 14 (1) of the Act shall file a preliminary authorization application indicating the matters falling under each of the subparagraphs of Article 17 (1) of this Decree with the Financial Services Commission. (2) The preliminary authorization application under paragraph (1) shall accompany the documents falling under each of the following subparagraphs:
1. Articles of incorporation or provisional articles of incorporation (including other equivalent matters);
2. Documents to prove the decision-making of establishment or application for authorization, such as minutes from general meetings of promoters, from inaugural meetings of shareholders, and from board of directors, etc.;
3. Curriculum vitae and career certificates of officers (including persons yet to be appointed);
4. Documents indicating types of the authorized business units and the business methods thereof;
5. Financial statements and the addenda thereof for the latest three business years (excluding corporations in the process of establishment and in the case of a corporation for which three business years have yet to pass since its establishment, referring to the financial statements and the addenda thereof from its establishment to the latest business year);
6. Business plan (including pro forma financial statement) and estimated revenues and expenses statement for three business years after the commencement of business;
7. Documents to identify the current status of manpower, physical facilities, etc. (including manpower and physical facilities, etc. scheduled for employment and purchase);
8. Documents indicating the names or titles of shareholders who have not less than 1/100 of the total number of outstanding stocks and the number of their stocks as of the application date for preliminary authorization (in the case of an application for preliminary authorization by integrated financial investment firms, the end of the latest business year);
9. Documents to identify that major shareholders or foreign financial investment firms meet all the requirements falling under each item of Article 12 (2) 6 of the Act;
10. Documents to identify whether any system to prevent the conflict of interests has been established; and
11. Other documents prescribed and publicized by the Financial Services Commission as necessary for review for a preliminary authorization.. (3) Articles 17 (4) through 17 (9) shall apply to the methods and procedures of reviewing a preliminary authorization applied for pursuant to Article 14 (1) of the Act. In such a case, "an authorization of financial investment service" shall be regarded as "a preliminary authorization."
(4) A person who obtains a preliminary authorization pursuant to Article 14 (2) of the Act shall apply for an authorization of financial investment services (hereafter in this paragraph, referred to as "main authorization") under Article 12 of the Act within six months from the date of obtaining the preliminary authorization after fulfilling the matters and conditions of the preliminary authorization: Provided, That where the Financial Services Commission sets a different period for a main authorization when it grants a preliminary authorization, or extends a period for a main authorization upon the request of the person who obtains a preliminary authorization, the person may apply for the main authorization within such period. (5) In addition to matters prescribed in paragraphs (1) through (4), other necessary matters on the application, review, form preparation thereof, etc. with respect to a preliminary authorization shall be prescribed and publicized by the Financial Services Commission. Article 19 (Eased Requirements for Maintaining Authorization) (1) The term "eased requirements prescribed by the Presidential Decree" under Article 15 of the Act shall be as follows:
The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. In the case of Article 12 (2) 2 of the Act: not less than 70/100 of minimum equity capital of each authorized business unit specified in Appendix 1 of this Decree shall be maintained. In such a case, the requirements for maintaining authorization shall be applied based on the end of each fiscal year, and a financial investment firm that fails to meet the requirements for maintaining authorization as of the end of a specific fiscal year shall be regarded as meeting the requirements by the end of the next fiscal year; and
2. In the case of Article 12 (2) 6 of the Act: the requirements under the classification falling under the following items:
(a) Major shareholders falling under any of subparagraphs 1 through 3 of Appendix 2 of this Decree shall maintain the requirements specified in items (d), (e)-1 and (e)-3 of subparagraph 1 of Appendix 2 of this Decree. In such a case, under item (d)-1 of subparagraph 1 of Appendix 2 of this Decree, "during the last five years" shall be deemed "during the last five years, the largest shareholder," and "fine" shall mean "fine of 500 million won;"
(b) Major shareholders falling under subparagraph 4 or item (d) of subparagraph 5 of Appendix 2 of this Decree shall maintain the requirements specified in items (e)-1 and (e)-3 of subparagraph 1 and item (d) of subparagraph 4 of Appendix 2 of this Decree. In such a case, under item (e)-1 of subparagraph 1 of Appendix 2 of this Decree, "during the last five years" shall be deemed "during the last five years, the largest shareholder," and "fine" shall be deemed "fine of 500 million won," under item (d) of subparagraph 4 of Appendix 2 of this Decree, "during the last three years" shall be deemed "during the last three years, the largest shareholder," and "the fact that the financial investment firm has been subject to administrative actions by supervisory authorities in its home country, such as corporate warning or heavier actions or criminal punishment equivalent to fines" shall be deemed "the fact that the financial investment firm has been subject to a fine of 500 million won taken by judicial authorities in its home country;" (c) Major shareholders falling under subparagraph 5 (excluding item (d)) of Appendix 2 of this Decree shall maintain the requirements under items (e)-1 and (e)-3 of subparagraph 1 of Appendix 2 of this Decree. In such a case, under item (e)-1 of subparagraph 1 of Appendix 2 of this Decree, "during the last five years" shall be
deemed "during the last five years, the largest shareholder, " and "fine" shall be deemed "fine of 500 million won;" and
(d) A foreign financial investment firm falling under Article 12 (2) 6 (b) of the Act shall maintain the requirements under item (b) of this subparagraph. In such a case, "the largest shareholder" shall be deemed "a foreign financial investment firm," respectively.
(2) In a case falling under any of the subparagraphs of Article 16 (6) of this Decree, the Financial Services Commission may ease the requirements under each item of subparagraph 2 of paragraph (1) and publicize the eased requirements. Section 2 Requirements and Procedures of Registration Article 20 (Registered Business Unit)
The term "business units prescribed by the Presidential Decree" under Article 18 (1) of the Act other than each subparagraph shall be the same as provided in Appendix 3 of this Decree. Article 21 (Requirements for Registration)
(1) The term "amount prescribed by the Presidential Decree" under Article 18 (2) 2 of the Act shall be as provided for in Appendix 3 of this Decree. (2) The term "number of investment advisors as prescribed by the Presidential Decree" under Article 18 (2) 3 (a) of the Act shall be one full-time employee or officer: Provided, That in the case of merchant banks (limited to the merchant banks which are existing or established through a merger in accordance with the authorization under Article 4 of the Financial Industry Structural Improvement Act), the number shall be four full-time employees or officers. (3) The term "number of fund managers as prescribed by the Presidential Decree" under Article 18 (2) 3 (b) of the Act shall be two full-time employees or officers. (4) The term "social standing prescribed by the Presidential Decree" under Article 18 (2) 5 (a) of the Act shall mean the requirements falling under each of the following subparagraphs:
1. Major shareholders falling under subparagraphs 1 through 3 and 5 (excluding item (d)) of Appendix 2 of this Decree shall meet the requirements specified in item (e) of subparagraph 1 of Appendix 2 of this Decree: Provided, That the Financial Services Commission may The Enforcement Decree of the Financial Investment Services and Capital Market Act prescribe and publicize different requirements when a person who has obtained an authorization of financial investment services under Article 12 of the Act intends to make a registration of financial investment services; and
2. Major shareholders falling under subparagraph 4 or item (d) of subparagraph 5 of Appendix 2 of this Decree shall meet the requirements specified in items (a), (d) and (e) of subparagraph 4 of Appendix 2 of this Decree. In such a case, "authorization" under item (a) of subparagraph 4 of Appendix 2 of this Decree shall be deemed "registration," and "intends to obtain an authorization" shall be deemed "intends to obtain a registration." (5) The term "social credit prescribed by the Presidential Decree" under Article 18 (2) 5 (b) of the Act shall mean the requirements falling under items (a), (d) and (e) of subparagraph 4 of Appendix 2 of this Decree. In such a case, under item (a) of subparagraph 4 of Appendix 2 of this Decree, "authorization" shall be deemed "registration," and "intends to obtain an authorization" shall be deemed "intends to obtain a registration," and under item (d) of subparagraph 4 of Appendix 2 of this Decree, "three years" shall be deemed "two years." (6) The system to a prevent conflict of interests (hereafter, in this Section, referred to as "system to prevent a conflict of interests") under Article 18 (2) 6 of the Act shall meet the requirements falling under each of the following subparagraphs:
1. The system shall have appropriate internal control standards to identify, assess, and manage any possibility of conflict of interests pursuant to Article 44 of the Act; and
2. The firm shall have an appropriate system to prevent any activity falling under each subparagraph of Articles 45 (1) and 45 (2) of the Act. (7) Specific standards necessary for registration requirements under paragraphs (4) through (6) shall be prescribed and publicized by the Financial Services Commission. Article 22 (Methods and Procedures of Registration) (1) A registration application submitted to the Financial Services Commission pursuant to Article 19 (1) of the Act shall include the matters falling under each of the following subparagraphs:
1. Trade name;
2. Location of the head office;
3. Matters on officers;
4. Matters on the registered business units (referring to the registered business units under Article 18 (1) of the Act; hereinafter the same shall apply) that an applicant intends to operate;
5. Matters on the financial status, including equity capital, etc.;
6. Matters on investment advisors (hereinafter referred to as "investment advisor") under Article 286 (1) 3 (a) of the Act or fund managers (hereinafter referred to as "fund manager") under Article 286 (1) 3 (c) of the Act;
7. Matters on a major shareholder, a foreign discretionary investment advisory company or a foreign non-discretionary investment advisory company;
8. Matters on a system to prevent a conflict of interests; and
9. Other matters prescribed and publicized by the Financial Services Commission as necessary for reviewing a registration.
(2) The registration application under paragraph (1) shall accompany the documents falling under each of the following subparagraphs:
1. Articles of incorporation (including those equivalent thereto);
2. Documents indicating the location and name of the head office;
3. Curriculum vitae and career certificates of officers;
4. Documents indicating the type of registered business units and the business methods thereof;
5. Financial statements and the addenda thereof for the latest three business years (excluding corporations in the process of incorporation and in the case of a corporation for which three business years have yet to pass since its establishment). In the case of a corporation for which three business years have yet to pass since its establishment, referring to the financial statements and the addenda thereof from its establishment to the latest business year);
6. Documents to identify the current status of investment advisors or fund managers;
7. Documents indicating the names or titles of shareholders and the number of their stocks as of the application date of the registration (the end of the latest business year in the case of an application for registration to add registered business units or an application for registration by integrated financial investment firms); The Enforcement Decree of the Financial Investment Services and Capital Market Act
8. Documents to identify that a major shareholder, foreign discretionary investment advisory company, or foreign non-discretionary investment advisory company meets all the requirements falling under each item of Article 18 (2) 5 of the Act;
9. Documents to identify whether any system to prevent the conflict of interests has been established; and
10. Other documents prescribed and publicized by the Financial Services Commission as necessary for reviewing a registration.
(3) The Financial Services Commission shall, when it receives a registration application under paragraph (1), verify the certified copy of corporate register through administrative data matching pursuant to Article 21 (1) or 22-2 (1) of the E-Government Act and shall require the applicant to submit the certified copy when the applicant does not consent to the verification in such a way.
(4) The Financial Services Commission shall, when it receives a registration application under paragraph (1), confirm whether the content of the application for the registration of financial investment services is true or not, and then review whether the content meets the registration requirements under Article 18 (2) of the Act.
(5) In addition to the matters prescribed in paragraphs (1) through (4), necessary matters on the application, review, form, preparation thereof, etc. with respect to a registration of financial investment services shall be prescribed and publicized by the Financial Services Commission. Article 23 (Eased Requirements for Maintaining Registration) The term "eased requirements prescribed by the Presidential Decree" under Article 20 of the Act shall be as follows:
1. In the case of Article 18 (2) 2 of the Act: not less than 70/100 of minimum equity capital of each registered business unit specified in Appendix 3 of this Decree shall be maintained. In such a case, the requirements shall be applied based on the end of each fiscal year, and a financial investment firm that fails to meet the requirements at the end of a specific fiscal year shall be regarded as meeting the requirements by the end of the next fiscal year; and
2. In the case of Article 18 (2) 5 of the Act: the requirements under the classification falling the following items shall be maintained:
(a) Major shareholders falling under any of subparagraphs 1 through 3 or subparagraph 5 (excluding item (d)) of Appendix 2 of this Decree shall maintain the requirements specified in items (e)-1 and (e)-3 of subparagraph 1 of Appendix 2 of this Decree. In such a case, under item (e)-1 of subparagraph 1 of Appendix 2 of this Decree, "during the last five years" shall be deemed "during the last five years, the largest shareholder," and "fine" shall mean "fine of 500 million won."
(b) Major shareholders falling under subparagraph 4 or item (d) of subparagraph 5 of Appendix 2 of this Decree shall maintain the requirements specified in items (e)-1 and (e)-3 of subparagraph 1 and item (d) of subparagraph 4 of Appendix 2 of this Decree. In such a case, under item (e)-1 of subparagraph 1 of Appendix 2 of this Decree, "during the last five years" shall be deemed "during the last five years, the largest shareholder," and "fine" shall be deemed "fine of 500 million won," under item (d) of subparagraph 4 of Appendix 2 of this Decree, "during the last three years" shall be deemed "during the last three years, the largest shareholder," and "the fact that the financial investment firm has been subject to administrative actions by supervisory authorities in its home country, such as corporate warning or heavier actions, or criminal punishment equivalent to fines" shall be deemed "the fact that the financial investment firm has been subject to a fine of 500 million won taken by judicial authorities in its home country;" and
(c) A foreign discretionary investment advisory company or foreign non-discretionary investment advisory company falling under Article 18 (2) 5 (b) of the Act shall maintain the requirements under item (b) of this subparagraph. In such a case, "the largest shareholder" shall be deemed "a foreign discretionary investment advisory company or foreign non-discretionary investment advisory company," respectively, and under item (d) of subparagraph 4 of Appendix 2 of this Decree, "three years" shall be deemed "two years."
Chapter 2 Corporate Governance of Financial Investment Firm Article 24 (Scope of Application)
The Enforcement Decree of the Financial Investment Services and Capital Market Act The term "financial institutions, etc. prescribed by the Presidential decree" under subparagraph 3 of Article 22 of the Act shall mean a financial institution falling under any of the following subparagraphs:
1. The Korea Development Bank under the Korea Development Bank Act;
2. The Industrial Bank of Korea under the Industrial Bank of Korea Act;
3. The Export-Import Bank of Korea under the Export-Import Bank of Korea Act;
4. Securities finance companies;
5. Merchant banks;
6. Fund brokerage companies;
7. Companies for brokerage of foreign exchange under the Foreign Exchange Transactions Act;
8. The Korea Housing Finance Corporation under the Korea Housing Finance Corporation Act; or
9. Others prescribed and publicized by the Financial Services Commission. Article 25 (Scope of Person Exempted from Approval of Alteration of Major Shareholder) The term "person prescribed by the Presidential Decree" under Article 23 (1) of the Act shall mean a person falling under any of the following items:
1. Government;
2. The Korea Deposit Insurance Corporation under the Depositor Protection Act; or
3. A person who holds not more than 1/100 of the total number of outstanding stocks with voting rights as a result of acquiring stocks as a shareholder (limited to the shareholder who is not the largest shareholder) who is a specially-related person of the largest shareholder. Article 26 (Requirements for Approval of Alteration of Major Shareholders) (1) The term "requirements prescribed by the Presidential Decree" under Article 23 (1) of the Act shall be as provided for in Appendix 4 of this Decree. (2) A person who intends to obtain an approval pursuant to Article 23 (1) of the Act shall file with the Financial Services Commission a written application for the approval of alteration of major shareholders specifying the matters falling under each of the following subparagraphs:
1. Matters on the applicant;
2. Current status of stocks issued by the financial investment firm targeted by the person who intends to become a major shareholder;
3. Acquisition plan of stocks issued or to be issued by the financial investment firm targeted by the person who intends to become a major shareholder; and
4. Others prescribed and published by the Financial Services Commission as necessary for review for approval.
(3) The written application for the approval of alteration under paragraph (2) shall accompany the documents falling under each of the following subparagraphs:
1. Articles of incorporation (including those equivalent thereto and limited to a corporation);
2. In the case of a foreign company, documents equivalent to the certified copy of corporate register;
3. Financial statements as of the end of the latest business year and semi-annual reports (limited to a corporation) in cases where a half year has passed since the end of the latest business year;
4. Audit reports and examination reports prepared by an accounting auditor (referring to the auditor under Article 3 (1) of the Act on External Audit of Stock Companies; hereinafter the same shall apply) with respect to the financial statements under subparagraph 3;
5. Where a person who intends to become a major shareholder is a financial institution, the financial status calculated by the standards for financial prudence applied to the financial institution, and the examination report thereof prepared by an accounting auditor; and
6. Others prescribed and publicized by the Financial Services Commission as necessary for review for approval.
(4) The Financial Services Commission shall, when it receives an application for the approval of alteration under paragraph (2), verify the administrative information falling under each of the following subparagraphs through administrative data matching under Article 21 (1) or 22-2 (1) of the E-Government Act and shall require the applicant to submit such documents (the documents under subparagraph 2 may be replaced with the business registration certificate) when the applicant does not consent to the verification:
1. Certified copies of corporate register (limited to local corporations);
2. Certified copies of resident registration; and The Enforcement Decree of the Financial Investment Services and Capital Market Act
3. Certified copies of corporate register of the financial investment firm targeted by the person who intends to become a major shareholder. (5) The Financial Services Commission shall, when it receives an application for approval of alteration under paragraph (2), review the application, make a decision on either granting or denying the approval within 60 days, and notify the applicant of the results and the reasons therefor in writing. In such a case, the Commission may, when the application is found to be defective, request that the applicant supplement such application. (6) In calculating the review period referred to in paragraph (5), the period prescribed and publicized by the Financial Services Commission, including the supplementation period for a defective application, shall not be added to the review period. (7) The Financial Services Commission shall, when it orders a disposal pursuant to Article 23 (2) of the Act, issue the order in writing after specifying the number of stocks to be disposed of and the disposal period, etc.
(8) In addition to the matters prescribed in paragraphs (1) through (7), other matters on the methods and procedures of reviewing an approval, and the specific standards for the requirements under paragraph (1) shall be prescribed and publicized by the Financial Services Commission.
Article 27 (Reasons for Disqualification of Officers) (1) The term "finance-related Acts and subordinate statutes prescribed by the Presidential Decree" under subparagraph 3 of Article 24 of the Act shall mean the Acts and subordinate statutes (hereafter in this Article referred to as "finance-related Acts and subordinate statutes") falling under any of the following items:
1. The Bank of Korea Act;
2. The Banking Act;
3. The Korea Development Bank Act;
4. The Industrial Bank of Korea Act;
5. The Export-Import Bank of Korea Act;
6. The Insurance Business Act;
7. The Mutual Saving Banks Act;
8. The Credit Guarantee Fund Act;
9. The Korea Technology Credit Guarantee Fund Act;
10. The Credit Unions Act;
11. The Community Credit Cooperatives Act;
12. The Use and Protection of Credit Information Act;
13. The Foreign Exchange Transactions Act;
14. The Act on the Establishment, etc. of Financial Services Commission;
15. The Asset- Backed Securitization Act;
16. The Act on the Efficient Disposal of Non-performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation;
17. The Act on Real Name Financial Transactions and Guarantee of Secrecy;
18. The Foreign Investment Promotion Act;
19. The Act on the Structural Improvement of the Financial Industry;
20. The Korea Housing Finance Corporation Act;
21. The Public Notice of Values and Appraisal of Real Estate Act;
22. The Housing Act;
23. The Depositor Protection Act;
24. The Special Purpose Companies for Mortgage-Backed Bonds Act;
25. The Secured Debentures Trust Act;
26. The Financial Holding Companies Act;
27. The Guarantee of Workers' Retirement Benefits Act;
28. The Agricultural Cooperatives Act;
29. The Fisheries Cooperatives Act;
30. The Electronic Financial Transaction Act;
31. The Act on Report on Specific Financial Transaction Information and Utilization Thereof, etc.;
32. The Act on External Audit of Stock Companies;
33. The Act on Registration of Credit Business and Protection of Finance Users;
34. The Registration of Bonds and Debentures Act;
35. The Certified Public Accountant Act;
36. The Act on the Regulation of Conducting Fund-raising Business without Permission;
37. The Act on Private Participation in Infrastructure; The Enforcement Decree of the Financial Investment Services and Capital Market Act
38. The Real Estate Investment Company Act;
39. The Ship Investment Company Act;
40. The Framework Act on the Promotion of Cultural Industries;
41. The Industrial Development Act;
42. The Support for Small and Medium Enterprise Establishment Act;
43. The Specialized Credit Financial Business Act;
44. The Act on Special Measures for the Promotion of Venture Businesses;
45. The Act on Special Measures for the Promotion of Specialized Enterprises, etc. for Component and Material; or
46. The Overseas Resources Development Business Act. (2) The term "person prescribed by the Presidential Decree" under subparagraph 5 of Article 24 of the Act shall mean an employee or officer falling under any of the following subparagraphs (in the case of a corporation whose license, authorization, registration, etc. is revoked pursuant to Article 14 (2) of The Act on the Structural Improvement of the Financial Industry, referring to the employee or officer at the time when any grounds for timely corrective measures under Article 10 of the same Act occur) at the time when any grounds for the revocation of license, authorization, registration, etc. occur:
1. An auditor or a member of the audit committee;
2. An officer who is subject to dismissal, suspension, disciplinary warning, cautionary warning, caution, or other measures by the Financial Services Commission [including the Governor of the Financial Supervisory Service (hereinafter referred to as "the Governor of the Financial Supervisory Service"); hereafter in this Article, the same shall apply] due to illegal or unfair activities with respect to the occurrence of the grounds for the revocation of license, authorization, registration, etc.;
3. An employee who is subject to dismissal or suspension by the Financial Services Commission due to illegal or unfair activities with respect to the occurrence of the grounds for the revocation of license, authorization, registration, etc.; or
4. A person who is subject to the measures under subparagraph 2 or 3 and has retired before such measures are taken.
(3) The term "others prescribed by the Presidential Decree" under subparagraph 8 of Article 24 of the Act shall mean those falling under any of the following subparagraphs:
1. An officer who is retired from office after being subject to dismissal, suspension or disciplinary warning by the Financial Services Commission or foreign financial supervisory authorities in accordance with the Act, finance-related Acts and subordinate statutes or foreign finance-related Acts and subordinate statutes (referring to the foreign finance-related Acts and subordinate statutes under subparagraph 3 of Article 24 of the Act; hereafter in this Article, the same shall apply) and for whom the periods prescribed in each of the following items have yet to pass:
(a) Request for dismissal: five years from the date when the request for dismissal is made;
(b) Suspension from office: four years from the date when suspension from office is terminated; and
(c) Disciplinary warning: three years from the date when disciplinary warning is issued;
2. An employee who has been subject to dismissal, suspension from office or salary reduction by the Financial Services Commission or foreign financial supervisory authorities under the Act, finance-related Acts and subordinate statutes or foreign finance-related Acts and subordinate statutes, and for whom the periods prescribed in each of the following items have yet to pass:
(a) Request for dismissal: five years from the date when the request for dismissal is made;
(b) Request for suspension from office: four years from the date when suspension from office is issued; and
(c) Request of salary reduction: three years from the date when the request of salary reduction is made;
3. An officer who is retired from office after being subject to suspension or disciplinary warning by the organization in which the officer is engaged in accordance with the Act, finance-related Acts and subordinate statutes or foreign finance-related Acts and subordinate statutes, or an employee who is subject to suspension from office or salary reduction and for whom the periods prescribed in each of the following items have yet to pass: (a) Suspension or discontinuation from office: four years from the date when suspension or discontinuation from office is terminated; and The Enforcement Decree of the Financial Investment Services and Capital Market Act (b) Disciplinary warning or salary reduction: three years from the date when disciplinary warning or salary reduction is issued; or
4. A retired officer or employee who had been notified that, if the person were in the post or office, he/she would have been subject to measures prescribed in subparagraphs 1 through 3 (excluding the measures under item (a) of subparagraph 1 and item (a) of subparagraph 2) in accordance with the Act, finance-related Acts and subordinate statutes or foreign finance- related Acts and subordinate statutes, and for whom three years have yet to pass from the date of retirement or resignation.
Article 28 (Appointment of Outside Directors)
(1) The term "financial investment firm prescribed by the Presidential Decree" under Article 25 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. A financial investment firm whose total assets are not more than two trillion won as of the end of the latest business year: Provided, That the same shall not apply to cases where the total amount of the collective investment properties, discretionary investment properties (hereinafter referred to as "discretionary investment property") under subparagraph 5 of Article 85 of the Act or trust properties managed by the financial investment firm is not less than six trillion won as of the end of the latest business year;
2. Local branches and other business offices of a foreign financial investment firm;
3. A financial investment firm that is determined to be dissolved due to merger, etc. within six months from the date of a general meeting of shareholders;
4. A financial investment firm whose workout process is initiated in accordance with the Debtor Rehabilitation and Bankruptcy Act or which is declared bankrupt; or
5. A financial investment firm that resolves the dissolution of the entity. (2) The term "corporation that is in an important business relationship prescribed by the Presidential Decree, a competitive relationship or a cooperative relationship with the company concerned" under Article 25 (5) 6 of the Act shall mean the corporations falling under each of the following subparagraphs: Provided, That the same shall not apply to the Bank of Korea, persons falling under any of the subparagraphs of Article 10 (2) of this Decree, persons falling under any of Articles 10 (3) 1 through 10 (3) 13 of this Decree and foreign corporations equivalent thereto:
1. A corporation whose total amount of transaction performance with the financial investment firm concerned is not less than 10/100 of the total amount of assets (referring to the total amount of assets on the balance sheet of the financial investment firm as of the end of the latest business year) or the total amount of sales (referring to the total amount of sales on the income statement of the financial investment firm as of the end of the latest business year; hereafter in this Article, the same shall apply) during the last three business years;
2. A corporation that has entered into a single trading contract with the financial investment firm concerned, of which the contract amount is equivalent to not less than 10/100 of the total amount of sales during the latest business year;
3. A corporation for which the aggregate amount of money and securities lent or borrowed, and debt guarantees including collateral is not less than 10/100 of the equity capital (referring to the equity capital on the balance sheet of the financial investment firm as of the end of the latest business year) during the latest business year;
4. A corporation in which not less than 5/100 of the equity capital (referring to the equity capital of the corporation contributed by the financial investment firm) is invested by the financial investment firm concerned as of the date of a regular general meeting of shareholders of the financial investment company;
5. A corporation that has entered into a technical tie-up contract with the financial investment firm concerned;
6. An accounting firm that is designated as an accounting auditor of the financial investment firm concerned; or
7. A corporation that has entered into an advisory contract with the financial investment firm concerned, such as legal or management consulting, etc. (3) The term "others prescribed by the Presidential Decree" under Article 25 (5) 8 of the Act shall mean a person falling under any of the following subparagraphs:
1. A person who works as an outside director, non-permanent director, or non-permanent auditor of more than two stock-listed corporations in addition to the financial investment firm concerned;
2. A person who provides advisory services as a certified public accountant, certified tax accountant, attorney-at-law, or others equivalent thereto, who carries on the business of accounting audit over the financial investment firm concerned, conducts tax business as The Enforcement Decree of the Financial Investment Services and Capital Market Act proxy for the financial investment firm concerned, or enters into an advisory contract for legal or management consulting, etc. with the financial investment firm concerned;
3. A person who holds (referring to the holding under the main sentence of Article 133 (3) of the Act) not less than 1/100 of the total number of outstanding stocks of the financial investment firm concerned; or
4. A person whose balance of transactions (excluding transactions with the financial investment firm concerned in accordance with the agreements under Article 2 (1) of the Regulation of Standardized Contract Act) with the financial investment firm concerned is not less than 100 million won.
Article 29 (Audit Committee)
(1) The term "financial investment firm prescribed by the Presidential Decree" under Article 26 (1) of the Act shall mean those falling under any of the subparagraphs of Article 28 (1) of this Decree.
(2) The term "accounting or financial expert prescribed by the Presidential Decree" under Article 26 (2) 2 of the Act shall mean those falling under any of the following subparagraphs:
1. A person who has worked for not less than five years as a certified public accountant in a field related to such qualifications;
2. A person who has worked in total not less than five years as a researcher, or a full-time lecturer or in a higher position in a field related to accounting or finance at research institutes or universities with a master's degree or higher degree in a field related to accounting or finance;
3. A person who has worked not less than five years in total as an officer or not less than ten years in total as an employee, in a field related to accounting or finance in a stock-listed corporation; or
4. A person who has worked in total not less than five years in a field related to finance or accounting or supervision thereof in the institutions falling under any of the following items: (a) Government;
(b) The Bank of Korea;
(c) Institutions falling under any of the items of Article 10 (2) of this Decree; (d) Institutions falling under Articles 10 (3) 1 through 10 (3) 14 of this Decree;
(e) In addition to the institutions under items (c) and (d), institutions subject to inspection under Article 38 of the Act on the Establishment, etc. of Financial Services Commission; (f) Public agencies (excluding the institutions prescribed and publicized by the Financial Services Commission) under the Act on the Management of Public Agencies other than the institutions under items (b) through (e);
(g) Accounting firms under the Certified Public Accountant Act; or (h) Foreign corporations, etc. equivalent to items (a) through (g). (3) The term "others prescribed by the Presidential Decree" under Article 26 (3) 3 of the Act shall mean those falling under any of the following subparagraphs:
1. Spouses and lineal ascendants and descendants of major shareholders;
2. Spouses and lineal ascendants and descendants of full-time officers; or
3. Full-time officers or employees of an affiliate or former full-time officers or employees who worked for an affiliate within the last two years. Article 30 (Full-time Auditor)
The term "financial investment firm prescribed by the Presidential Decree" under the main sentence of Article 27 (1) of the Act shall mean a person falling under any of the following subparagraphs:
1. A financial investment firm whose total amount of assets is not more than 100 billion won as of the end of the latest business year: Provided, That the same shall not apply to cases where the total amount of collective investment property, discretionary investment property and trust property managed by the financial investment firm is not less than three trillion won as of the end of the latest business year; or
2. A person falling under any of Articles 28 (1) 2 through 28 (1) 5 of this Decree. Article 31 (Internal Control Standards)
(1) The internal control standards (hereinafter referred to as "internal control standard") under Article 28 (1) of the Act shall include the matters falling under each of the following subparagraphs:
1. Matters on the allocation of duties and the organizational structure; The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Matters on the guidance on risk management occurring in the process of managing and conducting proprietary property and investors' property;
3. Matters on the procedures that the officers and employees are required to comply with in performing their duties;
4. Matters on the establishment of a system to efficiently deliver the information necessary for decision-making on management;
5. Matters on the methods and procedures to identify whether the officers and employees comply with the internal control standards and the measures taken against the officers and employees who violate the internal control standards;
6. Matters on the procedures and standards for preventing unfair trades under the Act, such as reporting related to the purchase and sale of financial investment products by the officers and employees;
7. Matters on the procedures to establish or amend internal control standards;
8. Matters on the procedures of appointing and dismissing compliance officers (hereinafter referred to as "compliance officer") under Article 28 (2) of the Act;
9. Matters on the identification, assessment and management of the conflict of interests;
10. Mattes on the compliance with Acts and subordinate statutes and internal guidance related to the exercise of voting rights on the stocks belonging to the collective investment properties or trust properties;
11. Matters on the standards for selecting a broker who is entrusted with the purchase and sale of the assets belonging to the collective investment properties or trust properties; and
12. Others prescribed and publicized by the Financial Services Commission as necessary for internal control standards.
(2) A financial investment firm (excluding branches and other business offices of foreign financial investment firms) shall, when it intends to establish or amend internal control standards, go through the resolution made by the board of directors. (3) Where the Governor of the Financial Supervisory Service finds that a financial investment firm violates any Acts and subordinate statues, the Financial Services Commission may recommend that the financial investment firm amend its internal control standards in order to prevent other violations of the Acts and subordinate statutes.
(4) Specific standards related to the internal control standards shall be prescribed and publicized by the Financial Services Commission.
Article 32 (Compliance Officer)
(1) The term "discretionary investment advisory company or non-discretionary investment advisory company prescribed by the Presidential Decree" under Article 28 (2) of the Act shall mean those who do not provide financial investment services other than discretionary investment advisory service or non-discretionary investment advisory service and manage not more than 500 billion won of discretionary investment properties as of the end of the latest business year.
(2) The term "finance-related Acts and subordinate statutes prescribed by the Presidential Decree" under Article 28 (4) 3 of the Act shall mean those falling under the subparagraphs of Article 27 (1) of this Decree.
(3) The term "institutions prescribed by the Presidential Decree" under Article 28 (4) 3 of the Act shall mean those falling under any of the following subparagraphs:
1. An organization in which the employee concerned is engaged; or
2. A person (excluding the Financial Services Commission and the Governor of the Financial Supervisory Service) who has the authority to take measures in accordance with the finance-related Acts and subordinate statutes under paragraph (2) including the Minister of Land, Transport and Maritime Affairs.
Article 33 (Exercise of Minority Shareholders' Rights) (1) The term "financial investment firm prescribed by the Presidential Decree" under Article 29 (1) of the Act shall mean those falling under Articles 28 (1) 1 and 28 (1) 2 of the Act. (2) The term "financial investment firm prescribed by the Presidential Decree" under Articles 29 (2) through 29 (6) of the Act shall mean financial investment firms whose capital is not less than 100 billion won as of the end of the latest business year, respectively. Chapter 3 Maintenance of Prudent Management
Section 1 Supervision of Prudent Management
The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 34 (Maintenance of Financial Prudence)
(1) The term "financial investment firm prescribed by the Presidential Decree" under Article 30 (1) of the Act other than each subparagraph shall mean a financial investment firm which provides only one of the financial investment services falling under the following subparagraphs:
1. Non-discretionary investment advisory service;
2. Discretionary investment advisory service; or
3. Both discretionary investment advisory service and non-discretionary investment advisory service.
(2) The term "period prescribed by the Presidential Decree" under Article 30 (3) of the Act shall be one month.
Article 35 (Standards of Prudent Management)
The term "others prescribed by the Presidential Decree" under Article 31 (1) 4 of the Act shall mean the matters falling under each of the following subparagraphs:
1. Matters on risk management;
2. Matters on prudence of foreign exchanges; and
3. Others prescribed and publicized by the Financial Services Commission as necessary to secure prudent management.
Article 36 (Time Limit for Submission of Business Report) (1) The term "period prescribed by the Presidential Decree" under Article 33 (1) of the Act shall be one month.
(2) The term "where any matter prescribed by the Presidential Decree occurs" under Article 33 (3) of the Act shall be as follows:
1. In the case of brokerage or dealing: (a) Where massive bad debts, losses or other financial accidents occur; (b) Where any timely corrective measure under Article 10 of the Act on the Structural Improvement of the Financial Industry is issued;
(c) Cases falling under any of the subparagraphs of Article 161 (1) of the Act (limited to financial investment firms which are not reporting corporations under Article 159 (1) of the Act);
(d) Where the corporation concerned or the officers and employees thereof are subject to criminal punishment with respect to carrying on brokerage or dealing; (e) Where any settlement is not executed on the securities market and derivatives market, etc.; or
(f) Others prescribed and publicized by the Financial Services Commission;
2. In the case of collective investment scheme service: (a) Cases falling under any of items (a) through (c) of subparagraph 1; (b) Where the corporation concerned or the officers and employees thereof are subject to criminal punishment with respect to providing collective investment scheme service; or (c) Others prescribed and publicized by the Financial Services Commission;
3. In the case of discretionary investment advisory service or non-discretionary investment advisory service:
(a) Cases falling under any of items (a) through (c) of subparagraph 1; (b) Where the corporation concerned or the officers and employees thereof are subject to criminal punishment with respect to providing discretionary investment advisory service or non-discretionary investment advisory service; or (c) Others prescribed and publicized by the Financial Services Commission; and
4. In the case of trust service: (a) Cases falling under any of items (a) through (c) of subparagraph 1; (b) Where the corporation concerned or the officers and employees thereof are subject to criminal punishment with respect to providing trust service; (c) Where any bill or check issued by a constructor or entruster is dishonored, or any transaction with a bank is suspended or prohibited; or (d) Others prescribed and publicized by the Financial Services Commission. (3) The business reports under Article 33 (1) of the Act shall include the matters falling under each of the following subparagraphs:
1. Outline of the financial investment firm;
2. Matters on the contents of the business carried on by the financial investment firm; The Enforcement Decree of the Financial Investment Services and Capital Market Act
3. Current financial status;
4. Matters on the operation;
5. Matters on the largest shareholder (including specially-related persons thereof) and major shareholders;
6. Matters on transactions with specially-related persons;
7. Matters on the management of branches, other business offices and manpower;
8. Matters on the current status of investors' properties and the protection thereof;
9. Matters on the business related to the purchase, sale, and other transactions of over-the- counter derivatives, and the current status of transactions and profit and loss appraised (including appraised profit and loss of the related transactions to avoid the risk of over-the- counter derivatives);
10. Where the financial investment firm and the officers and employees thereof are subject to any measure by the Financial Services Commission and the Governor of the Financial Supervisory Service, etc. for the last five years, the details thereof; and
11. Others prescribed and publicized by the Financial Services Commission as related to the operation or management of the financial investment firm. (4) The disclosure documents under Article 33 (2) of the Act shall be as follows:
1. Matters falling under subparagraphs 1 through 7 of paragraph (3); and
2. Others prescribed and publicized by the Financial Services Commission as necessary to notify investors.
(5) A financial investment firm shall, when any matter falling under the subparagraphs of paragraph (2) occurs, report the fact to the Financial Services Commission and publicize it through the Internet website, etc. until the day following the date when such fact occurs. (6) Where a financial investment firm fails to make a faithful disclosure under Article 33 (2) or 33 (3) of the Act, including a misstatement or an omission of material matters (hereinafter referred to as "material matter") under Article 47 (3) of the Act, the Financial Services Commission may require the financial investment firm to correct such disclosure or to make a disclosure again.
(7) In addition to the matters prescribed in paragraphs (1) through (6), other specific standards for the form, contents, preparation, etc. with respect to business reports, disclosure documents,
and disclosure of business circumstances shall be prescribed and publicized by the Financial Services Commission.
Section 2 Restrictions on Transactions with Major Shareholders Article 37 (Restriction on Transactions with Major Shareholders) (1) The term "otherwise prescribed by the Presidential Decree" under the proviso of Article 34 (1) of the Act other than each subparagraph shall mean the matters falling under any of the following subparagraphs. In such a case, the Financial Services Commission shall prescribe and publicize the holding period for each of the following items, respectively:
1. In the application of Article 34 (1) 1 of the Act, cases falling under any of the following items:
(a) Where the securities already held by a financial investment firm are deemed to be the securities issued by a major shareholder as a result of changes in major shareholders; (b) Where the securities concerned are acquired for underwriting; (c) Where corporate bonds are acquired, whose payments of principal and interest are guaranteed by the financial institutions, etc. which are permitted to conduct the business of guaranteeing corporate bonds according to relevant Acts and subordinate statutes; (d) Where special bonds are acquired; or
(e) Other cases prescribed and publicized by the Financial Services Commission as unlikely to undermine prudent management of a financial investment firm; and
2. In the application of Article 34 (1) 2 of the Act, cases falling under any of the following items:
(a) Where the stocks, bonds, and promissory notes (hereafter in this subparagraph, referred to as "promissory note") under Article 34 (1) 2 of the Act already held by a financial investment firm are deemed to be the securities, bonds and promissory notes issued by a specially-related person as a result of changes in specially-related persons; (b) Cases falling under any of items (b) through (e) of subparagraph 1; (c) Where stocks are acquired using the contributions prescribed and publicized by the Financial Services Commission including cases where a financial investment firm acquires equity for the purpose of participating in management; The Enforcement Decree of the Financial Investment Services and Capital Market Act (d) Where stocks, bonds and promissory notes are held for the purpose of executing transactions prescribed and publicized by the Financial Services Commission as a transaction to avoid arbitrage transactions or investment risks; (e) Where the ratio prescribed under paragraph (3) is exceeded as a result of changes in the equity capital under paragraph (3) or the price fluctuation of stocks, bonds or promissory notes issued by specially-related persons; or (f) Others prescribed and publicized by the Financial Services Commission as unlikely to undermine prudent management of a financial investment firm. (2) The term "who are prescribed by the Presidential Decree" under the main sentence of Article 34 (1) 2 of the Act shall mean an affiliate. (3) The term "ratio prescribed by the Presidential Decree" under the proviso of Article 34 (1) 2 of the Act shall be 8/100 of the equity capital prescribed and publicized by the Financial Services Commission.
(4) The term "others prescribed by the Presidential Decree" under Article 34 (1) 3 of the Act shall mean those falling under any of the following subparagraphs:
1. Making transactions with major shareholders or specially-related persons under conditions unfavorable to the financial investment firm concerned as compared with transactions with persons other than the major shareholders or specially-related persons; or
2. Conducting any activity falling under the following items for the purpose of avoiding the restriction under Article 34 (1) 1 or 34 (1) 2 of the Act, or subparagraph 1 of this paragraph: (a) Making transactions by crossholding through contracts or collusion with a third party; or
(b) Using over-the-counter derivatives transactions, trust contracts, linked transactions, etc.
Article 38 (Scope of Credit Extension)
(1) The term "transactions as prescribed by the Presidential Decree" under the main sentence of Article 34 (2) of the Act shall be as follows:
1. Transactions to provide collateral for major shareholders (including the specially-related persons thereof; hereafter in this Article, the same shall apply);
2. Transactions to endorse notes (excluding the notes which have no collateral effect under Article 15 (1) of the Bills of Exchange and Promissory Notes Act) for major shareholders;
3. Transactions to promise to make contributions on behalf of major shareholders;
4. Transactions falling under any of the following items for avoiding the restrictions of lending properties with economic value, including money, securities, etc., guaranteeing the repayment of debts, purchasing securities for financial support, or any transaction falling under any of subparagraphs 1 through 3:
(a) Transactions conducted by crossholding through contracts or collusion with a third party; or
(b) Transactions using over-the-counter derivatives transactions, trust contracts, and linked transactions, etc.; and
5. Others prescribed and publicized by the Financial Services Commission as transactions carrying credit risks, such as transfer of debts, etc. (2) The term "credit extension prescribed by the Presidential Decree" under the proviso of Article 34 (2) of the Act shall mean those falling under any of the following subparagraphs:
1. Credit extension provided to officers within the extent of the smaller amount between annual salary (referring to the taxable income paid by the financial investment firm during the working period) and 100 million won;
2. Debt guarantee for foreign subsidiaries prescribed and publicized by the Financial Services Commission; or
3. Where cases falling under any of the following subparagraphs fall under the credit extension under the main sentence of Article 34 (2) of the Act, the credit extension: (a) Conducting any activity under each subparagraph of Article 34 (1) of the Act as necessary to exercise rights including collateral rights, etc.; (b) Conducting any activity under each subparagraph of Article 34 (1) of the Act as stabilization under Article 176 (3) 1 of the Act or market making under Article 176 (3) 2 of the Act;
(c) Cases under Article 37 (1) of this Decree; or (d) Holding stocks, bonds and promissory notes (referring to the promissory notes under Article 34 (1) 2 of the Act; hereafter in Article 39, the same shall apply) with the ratio under Article 37 (3) of this Decree.
The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 39 (Transactions not Requiring Resolution of Board of Directors) (1) The term "those prescribed by the Presidential Decree" under the former part of Article 34 (3) and Article 34 (4) of the Act shall mean activities possessing money or extending credits of a single transaction amount prescribed and publicized by the Financial Services Commission within the scope of the smaller amount between the amount equivalent to 10/10,000 of equity capital (referring to equity capital under Article 37 (3) of this Decree) and one billion won: Provided, That the single transaction amount shall not include the transaction amount based on the agreement under Article 2 (1) of the Regulation of Standardized Contract Act as ordinary transactions by the financial investment firm.
(2) The term "matters prescribed by the Presidential Decree" under Article 34 (5) of the Act shall be as follows:
1. Holding stocks, bonds and promissory notes pursuant to the proviso of Article 34 (1) 2 of the Act:
(a) Volume of stocks, bonds and promissory notes held as of the end of a quarter; (b) Increase and decrease in stocks, bonds and promissory notes during a quarter; (c) Acquisition or disposal prices; and
(d) Other matters prescribed and publicized by the Financial Services Commission; and
2. Extending credits pursuant to the proviso of Article 34 (2) of the Act: (a) Volume of credit extensions as of the end of a quarter; (b) Increase and decrease in credit extensions during a quarter; (c) Trading conditions for credit extension; and
(d) Other matters prescribed and publicized by the Financial Services Commission. Article 40 (Restriction on Transactions with Major Shareholders) The term "cases prescribed by the Presidential Decree" under Article 34 (7) of the Act shall mean cases falling under either of the following subparagraphs:
1. Where the liabilities of major shareholders (referring to companies only and including specially-related persons who are companies; hereafter in this Article, the same shall apply) exceed the assets thereof; or
2. Where more than two credit rating agencies assign below-investment grades for a major shareholder.
Article 41 (Scope of Unjust Influence)
The term "others prescribed by the Presidential Decree" under subparagraph 3 of Article 35 of the Act shall mean those falling under any of the following subparagraphs:
1. Asking financial investment firms to commit violations;
2. Demanding transactions with major shareholders themselves or a third party under trading conditions that are different from commonly accepted conditions with respect to interest rates, commissions, collateral, etc.; or
3. Exerting influence in the process of preparing research and analysis documents (hereinafter referred to as "research and analysis document") under subparagraph 2 of Article 71 of the Act.
Chapter 4 Regulations on Conduct of Business
Section 1 Common Regulations on Conduct of Business Subsection 1 Duty of Good Faith
Article 42 (Restrictions on Trade Name)
(1) The term "letters prescribed by the Presidential Decree" under the main sentence and proviso of Article 38 (1) of the Act shall mean securities (including their phonetic spelling in Korean) or other foreign letters with the same meaning (including their phonetic spelling in Korean), respectively.
(2) The term "letters prescribed by the Presidential Decree" under Article 38 (2) of the Act shall mean derivatives or futures (including their phonetic spelling in Korean) or other foreign letters with the same meaning (including their phonetic spelling in Korean). (3) The term "letters prescribed by the Presidential Decree" under the main sentence of Article 38 (3) of the Act shall mean collective investment, pooled investment, investment trust, unit trust or asset management (including their phonetic spelling in Korean) or other foreign The Enforcement Decree of the Financial Investment Services and Capital Market Act letters with the same meaning (including their phonetic spelling in Korean), and the term "letters as prescribed by the Presidential Decree" under the proviso of Article 38 (3) of the Act shall mean investment trust (including their phonetic spelling in Korean) or other foreign letters with the same meaning (including their phonetic spelling in Korean). (4) The term "letters prescribed by the Presidential Decree" under the main sentence and proviso of Article 38 (4) of the Act shall mean investment advisory (including their phonetic spelling in Korean) or other foreign letters with the same meaning (including their phonetic spelling in Korean), respectively.
(5) The term "letters prescribed by the Presidential Decree" under Article 38 (5) of the Act shall mean discretionary investment (including their phonetic spelling in Korean) or other foreign letters with the same meaning (including their phonetic spelling in Korean). (6) The term "letters prescribed by the Presidential Decree" under the main sentence and proviso of Article 38 (6) of the Act shall mean trust (including their phonetic spelling in Korean) or other foreign letters with the same meaning (including their phonetic spelling in Korean), respectively.
Article 43 (Scope of Business of Financial Investment Firms) (1) The term "financial investment firm prescribed by the Presidential Decree" under the former part of Article 40 of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs:
1. In the application of subparagraphs 3 and 4 of Article 40 of the Act, a financial investment firm which does not carry on brokerage or dealing;
2. In the application of subparagraph 5 of Article 40 of the Act, a financial investment firm conducting only the financial investment service falling under any of the following subparagraphs:
(a) Non-discretionary investment advisory service; (b) Discretionary investment advisory service; or (c) Both discretionary investment advisory service and non-discretionary investment advisory service; or
3. Other financial investment firms prescribed and publicized by the Financial Services Commission.
(2) The term "finance-related Acts and subordinate statutes prescribed by the Presidential Decree" under subparagraph 1 of Article 40 of the Act shall mean those falling under each subparagraph of Article 27 (1) of this Decree.
(3) The term "financial businesses prescribed by the Presidential Decree" under subparagraph 1 of Article 40 of the Act shall mean those falling under any of the following subparagraphs:
1. Businesses of a general fund administrator (hereinafter referred to as "general fund administrator") under Article 254 (8) of the Act;
2. Foreign exchange business and brokerage of foreign exchange under the Foreign Exchange Transactions Act;
3. Electronic funds transfer under the Electronic Finance Transaction Act (limited to electronic funds transfer by becoming a participant of the payment gateway system under subparagraph 6 of Article 2 of the Electronic Finance Transaction Act, or via representative participants under Article 15 (2) 2 of the Enforcement Decree of the Electronic Finance Transaction Act);
4. Businesses of an operator of retirement pension funds under the Guarantee of Workers' Retirement Benefits Act;
5. Trust services for secured debentures under the Secured Debentures Trust Act;
6. Businesses of an asset management company under the Real Estate Investment Company Act;
7. Businesses of a corporate restructuring specialized company under the Industrial Development Act;
8. Businesses of a small or medium enterprise start-up investment company under the Support for Small and Medium Enterprise Establishment Act;
9. Financing businesses for new technology projects under the Specialized Credit Financial Business Act; or
10. Other financial businesses prescribed and publicized by the Financial Services Commissions as unlikely to undermine the protection of investors or sound trade practice. (4) The term "finance-related Acts and subordinate statutes prescribed by the Presidential Decree" under subparagraph 2 of Article 40 of the Act shall mean those falling under each subparagraph of Article 27 (1) of this Decree.
The Enforcement Decree of the Financial Investment Services and Capital Market Act (5) The term "financial businesses prescribed by the Presidential Decree" under subparagraph 5 of Article 40 of the Act shall mean those falling under each of the following subparagraphs: Provided, That the business under subparagraph 4 shall be limited to conducting dealing of securities, the business under subparagraph 5 shall be limited to conducting brokerage or dealing of the securities concerned, the business under subparagraph 6 shall be limited to conducting dealing of securities and over-the-counter derivatives, and the businesses under subparagraphs 7 and 8 shall be limited to conducting brokerage or dealing of debt securities:
1. Business of an asset manager under the Asset-Backed Securitization Act and trust business of a special purpose company for asset securitization;
2. Business of managing collateral rights of a third party to securities, money, etc. belonging to investors' accounts;
3. Trust business of public offering of corporate bonds under Article 484 (1) of the Commercial Act;
4. Corporate financing business under subparagraph 3 of Article 71 of the Act, and loan business related to other businesses prescribed and publicized by the Financial Services Commission;
5. Business of conducting loan transaction of securities, or arranging for and intermediating the loan transaction, or acting as an agent for that purpose;
6. Business of guaranteeing payment;
7. Business of purchasing or selling certificates of deposit denominated in Korean won, arranging for or intermediating such business or acting as an agent for that purpose;
8. Business of purchasing or selling loans and other bonds, arranging for or intermediating such business, or acting as an agent for that purpose;
9. Business of arranging for or intermediating lending, or acting as an agent for that purpose; and
10. Other financial businesses prescribed and publicized by the Financial Services Commissions as unlikely to undermine the protection of investors or sound trade practice. Article 44 (Publication of Incidental Business)
(1) Where a financial investment firm reports the incidental business that it intends to carry on, the Financial Services Commission shall disclose the matters falling under each of the
following subparagraphs through the Internet website, etc. within seven days from the reporting date pursuant to Article 41 (4) of the Act:
1. Name of the financial investment firm;
2. Reporting date of the incidental business;
3. Expected date of commencing the incidental business;
4. Contents of the incidental business; and
5. Others prescribed and publicized by the Financial Services Commission. (2) The Financial Services Commission shall, when it issues a restriction order or correction order under Article 41 (2) of the Act, disclose the contents thereof and the reasons therefor through the Internet website, etc.
Article 45 (Scope of Businesses Prohibited from Delegation) The term "businesses prescribed by the Presidential Decree" under the proviso of Article 42 (1) of the Act shall be as follows:
1. Businesses (limited to cases where the right of decision-making on the businesses concerned is delegated) falling under each of the following items: (a) Business of a compliance officer excluding businesses prescribed and publicized by the Financial Services Commission;
(b) Business of performing internal auditing;
(c) Business of managing risk; and
(d) Business of analyzing and assessing credit risk; and
2. Businesses falling under each of the following items pursuant to the classification of financial investment services:
(a) In the case of dealing, businesses falling under Articles 47 (1) 1 (a) (excluding simple businesses, such as opening accounts and verifying real names), 47 (1) 1 (b), and 47 (1) 1 (d) of this Decree;
(b) In the case of brokerage, businesses falling under Articles 47 (1) 2 (a) (excluding simple businesses, such as opening accounts and verifying real names) and 47 (1) 2 (c) of this Decree;
(c) In the case of collective investment scheme service, businesses falling under each item of Article 47 (1) 3 of this Decree: Provided, That the same shall not apply to the The Enforcement Decree of the Financial Investment Services and Capital Market Act business of managing or instructing to manage [including the exercise of voting rights of equity securities (including the securities deposit receipts related thereto) belonging to the collective investment properties; hereafter in this item, the same shall apply] assets denominated in foreign currencies among the collective investment property, the business of managing or instructing to manage (limited to the delegation to financial investment firms) collective investment properties which are the assets denominated in Korean won (referring to the assets that are not assets denominated in foreign currencies; hereafter in this subparagraph, the same shall apply) within 20/100 of the total amount thereof, the business of conducting research and analysis related to the management or management instruction, the business of placing simple orders of purchasing or selling securities, derivative-linked securities or overseas payment methods under the Foreign Exchange Transactions Act, and the business of assessing collective investment properties whose rights to decision-making are not entrusted; (d) In the case of non-discretionary investment advisory service, businesses falling under Articles 47 (1) 4 (a) and 47 (1) 4 (b) of this Decree: Provided, That the same shall not apply to the business of providing investment decisions on assets denominated in foreign currencies among the assets subject to the contract for non-discretionary investment advisory service and the business (limited to the delegation to financial investment firms) of providing investment decisions within 20/100 of the total amount of the assets subject to the contract for non-discretionary investment advisory service, which are the assets denominated in Korean won;
(e) In the case of discretionary investment advisory service, businesses falling under Articles 47 (1) 5 (a) and 47 (1) 5 (b) of this Decree: Provided, That the same shall not apply to the business of managing assets denominated in foreign currencies among the discretionary investment properties, the business (limited to the delegation to financial investment firms) of managing 20/100 of the total amount of discretionary investment properties which are the assets denominated in Korean won, the business of conducting research and analysis related to the management, and the business of placing simple orders of purchasing or selling securities, derivative-linked securities or overseas payment methods under the Foreign Exchange Transactions Act; and
(f) In the case of trust service, businesses falling under Articles 47 (1) 6 (a) through 47 (1) 6 (d) of this Decree: Provided, That the same shall not apply to the business of the custody and management (including the business of managing collective investment properties that are the assets denominated in foreign currencies and executing management instruction thereof) of the securities to be deposited under Article 308 of the Act, or collective investment properties and trust properties that are the assets denominated in foreign currencies, the business [including the exercise of voting rights of equity securities (including the securities deposit receipts related to the equity securities) belonging to the trust properties; hereafter in this item, the same shall apply] of managing assets denominated in foreign currencies among the trust properties, the business (limited to the delegation to financial investment firms) of managing 20/100 of the total amount of the trust properties that are the assets denominated in Korean won, the business of conducting research and analysis related to the management or management instruction, and the business of placing simple orders of purchasing or selling securities, derivative-linked securities or overseas payment methods under the Foreign Exchange Transactions Act.
Article 46 (Reporting on Delegation)
(1) A financial investment firm shall report the business delegated pursuant to Article 42 (1) of the Act to the Financial Services Commission with accompanying documents falling under each of the following subparagraphs within the seven days preceding the date on which the person who is delegated with the business intends to commence such business:
1. Copies of the delegation contract;
2. Operating standards for delegation (hereafter in this paragraph, referred to as "operating standards for delegation") under Article 42 (7) of the Act;
3. Review opinions prepared by a compliance officer (where there is no compliance officer, referring to those equivalent thereto, such as an auditor, etc.) that the delegation contract does not fall under any of the subparagraphs of Article 42 (3) of the Act and does not violate any operating standards for the delegation, and the data related thereto;
4. Where the financial investment firm delegates its principal business (referring to the principal business under Article 42 (4) of the Act) to a foreign financial investment firm The Enforcement Decree of the Financial Investment Services and Capital Market Act pursuant to the latter part of Article 42 (4) of the Act, documents to prove that the foreign financial investment firm meets the requirements under Article 47 (2) of this Decree; and
5. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors and sound trade practice. (2) The term "others prescribed by the Presidential Decree" under Article 42 (2) 4 of the Act shall mean matters falling under any of the following subparagraphs:
1. Matters on the cancellation of a delegation contract;
2. Matters on delegation fees, etc.; or
3. Others prescribed and publicized by the Financial Services Commission, such as a system to prevent a conflict of interests caused by delegation. (3) The Financial Services Commission shall, when it issues a restriction order or correction order pursuant to Article 42 (3) of the Act, use the documents specifying the contents thereof and the reasons therefor.
Article 47 (Scope of Principal Businesses)
(1) The term "businesses prescribed by the Presidential Decree" under the former part of Article 42 (4) of the Act shall mean those falling under each of the following subparagraphs pursuant to the classification by the type of financial investment services:
1. In the case of dealing, businesses falling under each of the following items: (a) Business of entering into and canceling a contract for dealing; (b) Business of publishing quotations for the transactions of financial investment products;
(c) Business of accepting, delivering, executing and confirming transaction orders; (d) Business of underwriting securities;
(e) Business of assessing the value of securities subject to underwriting; and (f) Business of determining the price of underwritten securities, handling affairs for subscription, and performing distribution;
2. In the case of brokerage, businesses falling under each of the following items: (a) Business of entering into and canceling a contract for brokerage; (b) Business of conducting daily marking-to-market; (c) Business of handling deposit money and closing transactions; and
(d) Business of accepting, delivering, executing and confirming transaction orders;
3. In the case of collective investment scheme service, businesses falling under each of the following items:
(a) Business of entering into and canceling a trust contract for establishing an investment trust under Article 9 (18) 1 of the Act (hereinafter referred to as "investment trust"), and business of establishing an investment limited liability company under Article 9 (18) 3 of the Act (hereinafter referred to as "investment limited liability company"), investment limited partnership company under Article 9 (18) 4 of the Act (hereinafter referred to as "investment limited partnership company"), investment limited partnership under Article 9 (18) 5 of the Act (hereinafter referred to as "investment limited partnership"), and investment undisclosed association under Article 9 (18) 6 of the Act (hereinafter referred to as "investment undisclosed association");
(b) Business of managing or instructing to manage [including the exercise of voting rights of equity securities (including the securities deposit receipts related thereto) belonging to the collective investment properties] collective investment properties; and (c) Business of assessing collective investment properties;
4. In the case of non-discretionary investment advisory service, businesses falling under each of the following items:
(a) Business of entering into and canceling a contract for non-discretionary investment advisory service; and
(b) Business of providing investment decisions upon the request for advisory consulting on investment;
5. In the case of discretionary investment advisory service, businesses falling under each of the following items:
(a) Business of entering into and canceling a contract for discretionary investment advisory service; and
(b) Business of managing discretionary investment properties; and
6. In the case of trust service, businesses falling under each of the following items: (a) Business of entering into and canceling a trust contract (including the trust contract for establishing an investment trust) and a contract for the custody and management of collective investment properties (excluding investment trust properties); The Enforcement Decree of the Financial Investment Services and Capital Market Act (b) Business of providing the custody and management of trust properties (excluding investment trust properties; hereafter in this subparagraph, the same shall apply); (c) Business of providing the custody and management (including the business of managing and executing the management instruction) of collective investment properties; and
(d) Business of managing [including the exercise of voting rights of equity securities (including the securities deposit receipts related thereto) belonging to the trust properties] trust properties.
(2) The term "requirements prescribed by the Presidential Decree" under the latter part of Article 42 (4) of the Act shall mean that a foreign financial investment firm shall provide financial investment services to be delegated after obtaining a license, authorization or registration from foreign financial supervisory authorities in a country where the firm is located, or shall operate businesses equivalent to the financial services specified in subparagraph 1 of Article 40 of the Act.
Article 48 (Scope of Re-delegation)
The term "cases prescribed by the Presidential Decree" under the proviso of Article 42 (5) of the Act shall mean cases where businesses falling under each of the following subparagraphs are delegated:
1. Businesses falling under any of the following items as part of the delegated business: (a) Management and operation of a data-processing system; (b) Delivery of notices, etc.;
(c) Custody (excluding the custody falling under trust service); (d) Research analysis;
(e) Legal review;
(f) Accounting management;
(g) Receipt of documents, etc.;
(h) Bonds collection; or
(i) Other simple businesses prescribed and publicized by the Financial Services Commission;
2. Business of managing or instructing to manage [including the exercise of voting rights of equity securities (including the securities depository receipts related thereto) belonging to the collective investment properties] collective investment properties that are assets denominated in foreign currencies among the businesses under Article 47 (1) 3 (b) of this Decree and business (limited to the business of assessing assets denominated in foreign currencies whose right of decision-making is not delegated) under Article 47 (1) 3 (c) of this Decree; and
3. Business of providing the custody and administration (including the business of the management and the execution of the management instruction) of the securities, etc. to be deposited under Article 308 of the Act and assets denominated in foreign currencies among the businesses under Articles 47 (1) 6 (b) and 47 (1) 6 (c) of this Decree, and business of the management of trust properties [including the exercise of voting rights of equity securities (including the securities depository receipts related thereto) belonging to the trust property] that are assets denominated in foreign currencies among the businesses under Article 47 (1) 6 (d) of this Decree.
Article 49 (Standards for Providing Information on Delegation) (1) The term "conditions prescribed by the Presidential Decree" under Article 42 (6) of the Act shall be as follows:
1. Provided information shall be related to the delegated business;
2. Records related to the provided information shall be maintained; and
3. A delegatee shall be managed and supervised when he/she uses the provided information. (2) A financial investment firm shall include the matters falling under each of the following subparagraphs in operating standards for the delegation under Article 42 (7) of the Act:
1. Matters on managing and assessing risks incurred from delegation;
2. Matters on the procedures to decide or terminate delegation;
3. Matters on managing and supervising a delegatee;
4. Matters on protecting investors' information;
5. Matters on preparing for contingencies, such as bankruptcy of a delegatee;
6. Matters on obtaining measures to request the data related to delegation; and
7. Others prescribed and publicized by the Financial Services Commission. The Enforcement Decree of the Financial Investment Services and Capital Market Act (3) Articles 42 (2) and 42 (3) of the Act shall apply to the amendment of a delegation contract. (4) Articles 42 (2) through 42 (4), the main sentence of Article 42 (5), Articles 42 (6) through (10), and Article 43 of the Act and paragraphs (2), (3), and (5) of this Article shall apply to re- delegations. In such a case, in the application of Articles 42 (2), 42 (7) and 42 (8) of the Act, the financial investment firm which has delegated business in the beginning shall be the person who is required to report re-delegation to the Financial Services Commission, shall be the person who is required to establish operating standards for re-delegation and shall be the person who is required to indicate the delegation in contract documents and report thereon to an investor.
(5) In addition to the matters prescribed in paragraphs (1) through (4), other necessary matters on the form of the report on delegation, the preparation thereof, accompanying documents, etc. shall be prescribed and publicized by the Financial Services Commission. (6) The term "others prescribed by the Presidential Decree" under subparagraph 312 of Appendix 1 of the Act under Article 43 (2) 4 of the Act shall mean those falling under any of the subparagraphs of Appendix 5 of this Decree.
Article 50 (Information Barrier of Financial Investment Firm) (1) The term "cases prescribed by the Presidential Decree" under Article 45 (1) of the Act other than each subparagraph shall mean those falling under either of the following subparagraphs:
1. Information sharing between management of its own properties (excluding the management pursuant to the methods prescribed and publicized by the Financial Services Commission including the deposit in financial institutions), brokerage, or dealing and collective investment scheme service or trust service: Provided, That the same shall not apply to the information sharing between corporate financing business (referring to the corporate financing business under subparagraph 3 of Article 71 of the Act; hereafter in this Article, the same shall apply) of brokerage or dealing and corporate financing business of collective investment scheme service; or
2. Information sharing between corporate financing business and the management of its own properties or financial investment services (excluding corporate financing business).
(2) The term "information on the purchase and sale of financial investment products and any other information prescribed by the Presidential Decree" under Article 45 (1) 1 of the Act shall mean those falling under any of the following subparagraphs: Provided, That the same shall not apply to the information provided under the conditions prescribed and publicized by the Financial Services Commission where there is little possibility of a conflict of interests:
1. Information on the purchase and sale of financial investment products;
2. Information on current status of the possession of financial investment products: Provided, That the same shall not apply to cases where an investor provides information on the total amount of deposited securities and the total amount of the securities by type, and others prescribed and publicized by the Financial Services Commission;
3. Information on the portfolio and management of collective investment properties, discretionary investment properties and trust properties: Provided, That the same shall not apply to cases where the information which is two months old is provided with respect to the portfolio and management of collective investment properties, discretionary investment properties and trust properties in accordance with the methods and procedures prescribed and publicized by the Financial Services Commission; or
4. Undisclosed material information under Article 174 (1) of the Act other than each subparagraph, which is gathered in the course of carrying on corporate financing business. (3) The term "ways prescribed by the Presidential Decree" under Article 45 (1) 3 of the Act shall be as follows:
1. The way that offices are not separated by a wall or partition, or a gate is shared; and
2. The way that data-processed materials on the information under Article 45 (1) 1 of the Act are not stored, managed, or accessed in an independent manner to prevent information sharing.
(4) The term "others prescribed by the Presidential Decree" under Article 45 (1) 4 of the Act shall mean cases falling under either of the following subparagraphs:
1. Where the divisions in charge of the businesses under each subparagraph of paragraph (1) are not separated as independent divisions or the division in charge of the businesses fails to carry on the businesses concerned in an independent manner: Provided, That the same shall not apply to cases where there is little possibility of a conflict of interests, including the The Enforcement Decree of the Financial Investment Services and Capital Market Act information provided under the conditions prescribed and publicized by the Financial Services Commission; or
2. Where officers or employees who carry out the business under each subparagraph of paragraph (1) fail to keep records and to receive confirmation from a compliance officer (where there is no compliance officer, referring to those equivalent thereto, such as an auditor, etc.) at least once a month when they have held a meeting or communicated with each other with respect to the business.
Article 51 (Information Barrier between Financial Investment Firm and Its Affiliate) (1) The term "company prescribed by the Presidential Decree" under Article 45 (2) of the Act other than each subparagraph shall mean those falling under both of the following subparagraphs:
1. Where a financial investment firm provides collective investment scheme service, the broker or dealer (hereafter in this Article, referred to as "company distributing collective investment securities") who sells collective investment securities of a collective investment scheme managed by the financial investment firm; and
2. Where a financial investment firm is a branch or any other business office of a foreign financial investment firm, the foreign financial investment firm. (2) The term "cases prescribed by the Presidential Decree" under Article 45 (2) of the Act other than each subparagraph shall mean the cases that do not fall under any of the following subparagraphs:
1. In the application of Article 45 (2) 1 of the Act, cases falling under either of the following subparagraphs:
(a) Where a financial investment firm provides information to its affiliates (including those under subparagraph 2 of paragraph (1); hereafter in this subparagraph, the same shall apply) after obtaining a confirmation from the Financial Services Commission in order to fulfill the duty to report and disclose holding stocks in accordance with domestic and foreign Acts and subordinate statutes;
(b) Where, in addition to the compliance officer (where there is no compliance officer, referring to those equivalent thereto, such as auditor, etc.; hereafter in this Article, the same shall apply) of a financial investment firm, affiliates of the financial investment
firm inspect the compliance with internal control standards and the financial investment firm provides its affiliates with the information on the purchase and sale of financial investment products and other information prescribed and publicized by the Financial Services Commission as necessary for inspection following the methods and procedures prescribed and publicized by the Financial Services Commission; (c) Where a financial investment firm carrying on brokerage or dealing provides its affiliates with the information on the total amount of the securities deposited by investors and the total amount of the securities by type and other information prescribed and publicized by the Financial Services Commission;
(d) Where a financial investment firm delegates its affiliates with the business of placing simple orders of selling or purchasing securities belonging to collective investment properties, investment discretionary properties or trust properties, exchange-traded derivative and overseas payment methods under the Foreign Exchange Transactions Act, and the financial investment firm provides its affiliates with the information prescribed and publicized by the Financial Services Commission including the type, price and quantity, etc. of the securities and exchange-traded derivatives necessary for the business of placing purchasing and selling orders pursuant to the methods and procedures prescribed and publicized by the Financial Services Commission; (e) Where a financial investment firm providing collective investments scheme service provides companies distributing collective investment securities with the information which is two months old among information on the portfolio and management of collective investment properties following the methods and procedures prescribed and publicized by the Financial Services Commission; or (f) Where a financial investment firm delegates its affiliates with a part of the businesses conducted by the financial investment firm pursuant to Article 42 (1) of the Act and provides its affiliates with the information under Article 42 (6) of the Act; or
2. In the application of Article 45 (2) 2 of the Act, cases falling under any of the following subparagraphs while obtaining a confirmation from the Financial Services Commission: (a) Where a full-time officer of a financial investment firm (in the case of integrated financial investment firms, limited to the officers or employees who perform duties of financial investment services; hereafter in this subparagraph, the same shall apply) The Enforcement Decree of the Financial Investment Services and Capital Market Act concurrently holds the post of a non-standing officer or employee of a person under subparagraph 2 of paragraph (1) or a financial investment firm (including foreign financial investment firms; hereafter in this subparagraph, the same shall apply) which is an affiliate, or where a non-standing officer or employee concurrently holds the post of an officer or employee of a person under subparagraph 2 of paragraph (1) or another financial investment firm which is an affiliate of the financial investment firm as prescribed and publicized by the Financial Services Commission; (b) Where a full-time officer or employee of a financial investment firm concurrently holds the post of a non-standing officer or employee of a financial holding company (referring to the financial holding company under the Financial Holding Company Act and including a company similar thereto which is established under foreign Acts and subordinate statutes; hereafter in this subparagraph, the same shall apply) which is an affiliate of the financial investment firm, or where a non-standing officer or employee of the financial investment firm concurrently holds the post of an officer or employee of a financial holding company which is an affiliate of the financial investment firm; (c) Where a financial investment firm sends an officer or employee thereof to work for a person under subparagraph 2 of paragraph (1) or a financial investment firm or financial holding company which is an affiliate or where an officer or employee of the affiliate or the person under subparagraph 2 of paragraph (1) is sent to the financial investment firm as prescribed and publicized by the Financial Services Commission; (d) Where an officer or employee of a financial investment firm concurrently holds the post of a non-standing officer or employee of the company (limited to the company in compliance with the investment purpose of a private equity company) invested by a private equity company (referring to the private equity company under Article 9 (18) 7 of the Act; hereinafter the same shall apply) whose executive officer is the financial investment firm concerned or where the financial investment firm sends its officer or employee to the company;
(e) Where a financial investment firm establishes or incorporates a foreign collective investment scheme (hereinafter referred to as "foreign collective investment scheme") under Article 279 (1) of the Act in a foreign country in accordance with foreign Acts and subordinate statutes and an officer or employee of the financial investment firm
concurrently holds the post of a non-standing officer of the foreign collective investment scheme; or
(f) Others prescribed and publicized by the Financial Services Commission as equivalent to the provisions under items (a) through (e).
(3) The term "information on the purchase and sale of financial investment products and any other information prescribed by the Presidential Decree" under Article 45 (2) 1 of the Act shall mean the information falling under any of the following subparagraphs: Provided, That the same shall not apply to the information provided under the conditions prescribed and publicized by the Financial Services Commission as unlikely to cause a conflict of interests:
1. Information on the purchase and sale of financial investment products;
2. Information on the current status of the possession of financial investment products;
3. Information on the portfolio and management of collective investment properties, discretionary investment properties and trust properties; or
4. Undisclosed material information under Article 174 (1) of the Act other than each subparagraph, which is gathered in the course of carrying on corporate financing business. (4) The term "way prescribed by the Presidential Decree" under Article 45 (2) 3 of the Act shall mean those falling under each subparagraph of Article 50 (3) of this Decree. (5) The term "others prescribed by the Presidential Decree" under Article 45 (2) 4 of the Act shall mean cases where an officer or employee who carries out financial investment services in a financial investment firm fails to keep records or fails to receive confirmation from a compliance officer at least once a month when they have held a meeting or made communication on the business of the financial investment firm with the officers or employees of its affiliates (including those under subparagraph 2 of paragraph (1)) or a company distributing collective investment securities.
Subsection 2 Investment Solicitation
Article 52 (Methods of Confirming Investment Objective) The term "others prescribed by the Presidential Decree" under Article 46 (2) of the Act shall mean methods falling under any of the following subparagraphs:
1. Emails and other electronic communications similar thereto; The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Letters; or
3. ARS. Article 53 (Duty to Provide Product Guidelines to Investor) (1) The term "details prescribed by the Presidential Decree" under Article 47 (1) of the Act shall be as follows:
1. Structure and nature of investment components (referring to investment components under the main sentence of Article 3 (1) of the Act other than each subparagraph; hereinafter the same shall apply) of financial investment products;
2. Matters on commissions under Article 58 (1) of the Act;
3. Where there is any condition of early repayment, the details thereof; and
4. Matters on the cancellation and termination of a contract. (2) The term "measure prescribed by the Presidential Decree" under Article 47 (2) of the Act shall mean those falling under any of the subparagraphs of Article 52 of this Decree. Article 54 (Exemption from Prohibition of Investment Solicitation Without Request) (1) The term "cases prescribed by the Presidential Decree" under the proviso of subparagraph 3 of Article 49 of the Act shall mean activities to solicit investment with respect to securities and exchange-traded derivatives.
(2) The term "cases prescribed by the Presidential Decree" under the proviso of subparagraph 4 of Article 49 of the Act shall mean activities falling under any of the following subparagraphs:
1. Soliciting investment with respect to insurance contracts with investment components;
2. Re-soliciting investment after the period prescribed and publicized by the Financial Services Commission has passed since an investor has rejected investment solicitation; or
3. Soliciting investment with respect to other types of financial investment products. In such a case, specific matters on the other types shall be prescribed and publicized by the Financial Services Commission.
Article 55 (Prohibition of Unfair Solicitation)
The term "matters prescribed by the Presidential Decree" under subparagraph 5 of Article 49 of the Act shall mean activities to solicit investment under the conditions on lending money, intermediating or arranging for such lending, or acting as an agent for that purpose without accepting the requests from investors (excluding professional investors and non-professional investors who have investment experience by accepting credit extension under Article 72 (1) of the Act).
Article 56 (Qualifications for Introducing Broker) The term "qualification requirements prescribed by the Presidential Decree" under Article 51 (1) 2 of the Act shall mean cases where all the requirements falling under each of the following subparagraphs are met:
1. A person falling under any of the following items: (a) Those who have passed an examination to test qualifications as an investment advisor, which is supervised by the Association pursuant to Article 286 (1) 3 (a) of the Act; (b) Those who have passed an examination to test qualifications as a fund manager, which is supervised by the Association pursuant to Article 286 (1) 3 (c) of the Act; or (c) The individuals who meet the registration requirements for an insurance planner, insurance agency, or certified insurance broker under Appendix 3 of the Enforcement Decree of the Insurance Business Act, and carry out insurance solicitation (limited to cases where the person solicits investment of collective investment securities as an agent); and
2. A person who has completed the training prescribed by the Association. Article 57 (Delegation of Registration)
The Financial Services Commission shall, when it delegates the registration to the Association pursuant to the latter part of Article 51 (3) of the Act, enter into a delegation contract containing the provisions falling under each of the following subparagraphs with the Association in advance:
1. The provision that the Association shall comply with Articles 51 (5) through 51 (8) of the Act and Articles 58 (3) and 58 (4) of this Decree when it conducts the delegated registration The Enforcement Decree of the Financial Investment Services and Capital Market Act service. In such a case, "the Financial Services Commission" shall be regarded as "the Association;"
2. The provision that the Association shall report the current status of registration to the Financial Services Commission on a quarterly basis. Article 58 (Methods and Procedures of Registration) (1) A registration application under Article 51 (4) of the Act shall include the matters falling under each of the following subparagraphs:
1. Trade name of the financial investment firm;
2. Personal information of a person who intends to register himself/herself as an introducing broker (hereinafter referred to as "introducing broker") under Article 51 (9) of the Act;
3. Financial investment products for which investment solicitation is to be entrusted and the scope of contracts; and
4. Others prescribed and publicized by the Financial Services Commission as necessary for review for registration.
(2) The registration application under paragraph (1) shall accompany the documents falling under each of the following subparagraphs:
1. Certified copies of resident registration (including those equivalent thereto) of a person who intends to register himself/herself as an introducing broker;
2. Copies of contracts;
3. Documents to identify the qualifications under Article 51 (1) 2 of the Act; and
4. Others prescribed and publicized by the Financial Services Commission as necessary for review for registration.
(3) The Financial Services Commission shall confirm whether the content of the application for registration under Article 51 of the Act is true or not, and then review whether the content meets the registration requirements under Article 51 (1) of the Act. (4) When the Financial Services Commission receives a registration application and recognizes that the registration requirements are met, the Commission shall issue a certificate of introducing broker to the applicant.
(5) In addition to the matters prescribed in paragraphs (1) through (4), others necessary for the application for and review for registration, the form of a registration application and the
preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 59 (Prohibited Activities of Introducing Broker) (1) The term "others prescribed by the Presidential Decree" under Article 52 (2) 4 of the Act shall mean those falling under any of the following subparagraphs:
1. Concluding contracts on behalf of investors;
2. Being delegated with the right to purchase or sell financial investment products from investors;
3. Intermediating, arranging for or acting as an agent for making third persons lend money to investors;
4. Soliciting investment or running investment advertisements on the conclusion of a contract for discretionary investment advisory or trust contract as if investment discretionary properties or trust properties are managed collectively without separating them for each investor or each trust property;
5. Entering into a delegation contract for investment solicitation with more than two financial investment firms;
6. Entering into a delegation contract for investment solicitation between an insurance planner under item (c) of subparagraph 1 of Article 56 of this Decree and an insurance company other than the company in which the insurance planner is engaged; or
7. Others prescribed and publicized by the Financial Services Commission as likely to undermine the protection of investors or sound trade practice; (2) The term "others prescribed by the Presidential Decree" under Article 52 (3) 4 of the Act shall mean those falling under any of the following subparagraphs:
1. The effect that an introducing broker is not entitled to enter into a contract on behalf of investors;
2. The effect that an introducing broker is unable to be delegated with the right to purchase or sell financial investment products by investors; or
3. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors or sound trade practice. The Enforcement Decree of the Financial Investment Services and Capital Market Act Subsection 3 Prohibitions of Using Information on Duties Article 60 (Investment Advertisement)
(1) The term "matters prescribed by the Presidential Decree" under Article 57 (2) of the Act shall mean the matters falling under each of the following subparagraphs:
1. The effect that a financial investment firm under Article 57 (2) of the Act (hereafter in this Article, referred to as "financial investment firm") has an obligation to provide sufficient guidelines on financial investment products;
2. The recommendation that investment shall be made after a financial investment firm provides the guidelines under subparagraph 1;
3. Matters on commissions under Article 58 (1) of the Act; and
4. Others prescribed and publicized by the Financial Services Commission after taking into account the person who runs an investment advertisement, the contents thereof, the media, the size, time, etc. of the investment advertisement. (2) The term "matters prescribed by the Presidential Decree" under Article 57 (3) of the Act other than each subparagraph shall be as follows:
1. Matters on the details, such as trade name, etc. of the collective investment manager, the trust company in charge of the custody and management of collective investment properties, and the broker or dealer (where a general fund administrator exists, including the general fund administrator) who sells collective investment securities;
2. Matters on the fees or commissions paid to the person falling under subparagraph 1;
3. Matters on the fund managers of the collective investment scheme concerned;
4. Where there is any past management performance, the management performance;
5. Matters on the redemption of collective investment securities; and
6. Other matters prescribed and publicized by the Financial Services Commission recognized as unlikely to undermine the protection of investors even if they are included in the investment advertisement.
(3) A financial investment firm shall, when it runs investment advertisements, comply with the matters falling under each of the following subparagraphs:
1. Where any profit or performance is indicated, the financial investment firm shall not show only the profit or performance for a certain period when the financial investment firm has performed well;
2. Where any comparative advertisement of financial investment products is made, the financial investment firm shall not indicate that the financial investment products of other firms are inferior or disadvantageous without any clear grounds; and
3. The financial investment firm shall follow the methods prescribed and publicized by the Financial Services Commission, including a prior confirmation from its compliance officer (where there is no compliance officer, referring to those equivalent thereto, such as an auditor, etc.).
Article 61 (Distribution of Contract Document and Cancellation of Contract) (1) The term "cases prescribed by the Presidential Decree" in the proviso of Article 59 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. Where a financial investment firm enters into a framework contract for trading financial investment products, such as establishing transaction accounts and then conducts transactions pursuant to the contents of the contract continuously or repeatedly;
2. Where an investor gives notice, in writing, that he/she refuses to receive contract documents;
3. Where an investor gives notice, in writing, that he/she receives contract documents through mail or e-mail and a financial investment firm provides the contract documents in such a way; or
4. Others prescribed and publicized by the Financial Services Commission as unlikely to undermine the protection of investors.
(2) The term "contracts prescribed by the Presidential Decree" under Article 59 (2) of the Act shall mean a contract for non-discretionary investment advisory service. (3) The term "amount prescribed by the Presidential Decree" under Article 59 (4) and the proviso of Article 59 (5) of the Act shall mean the amount under the classification falling under each of the following subparagraphs:
The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Where a financial investment firm refuses to provide advisory services under a contract for non-discretionary investment advisory service: The amount equivalent to the socially accepted costs to conclude a contract for non-discretionary investment advisory service;
2. Where a contract for non-discretionary investment advisory service prescribes that commissions are calculated based on the number of times advisory service is provided: The amount (where the amount exceeds the amount socially accepted as commissions for providing advisory service, the amount subtracting such excessive portion) equivalent to the commissions calculated based on the number of times advisory service has been provided by the time when the contract is cancelled; and
3. Cases other than those under subparagraphs 1 and 2: The amount (where the amount exceeds the amount socially accepted as commissions for providing advisory service, the amount subtracting such excessive portion) calculated by multiplying the number of days from the date on which the contract documents under Article 59 (1) of the Act are sent to the date on which the contract is terminated by the amount calculated by dividing the commissions during the whole period of the contract as agreed in the contract for non- discretionary investment advisory service by the total number of days of the contract period. Article 62 (Recordkeeping)
(1) A financial investment firm shall record and keep data falling under each of the following subparagraphs for the period falling under each of the following subparagraphs pursuant to Article 60 (1) of the Act: Provided, That the Financial Services Commission may publicize a shortened period in cases where it is unlikely to undermine the protection of investors:
1. Data on the operation: (a) Data on investment solicitation: ten years;
(b) Data on the purchases, sales and other transactions of financial investment products, including record of orders and details of transactions, etc.: ten years; (c) Data on the management of collective investment properties, discretionary investment properties and trust properties, etc.: ten years; (d) Data on the contracts entered into with investors, including the establishment and agreement for transaction accounts: ten years;
(e) Data on the delegation: five years;
(f) Data on incidental business: five years; and
(g) Other data on the operation: five years;
2. Data on the financial status: ten years;
3. Data on the business: (a) Data on resolutions of general meetings of shareholders or the board of directors: ten years;
(b) Data on matters indicated in the report on material change (hereinafter referred to as "report on material change") under Article 161 of the Act: five years; (c) Data on management of proprietary properties: three years; and (d) Other data on business, including the acquisition and disposal of assets: three years;
4. Data on internal control: (a) Data on compliance, including internal control standards and risk management, etc.: five years;
(b) Data on qualifications of officers, major shareholders and experts and details of transactions with any stakeholder, etc.: five years; and (c) Other data on internal control: three years; and
5. Other books and documents required to be prepared and kept pursuant to related Acts and subordinate statutes: the period prescribed by the Acts and subordinate statutes (where the period is not prescribed by the Acts and subordinate statutes, referring to the period prescribed and publicized by the Financial Services Commission after taking into account the period falling under subparagraphs 1 through 4). (2) Specific standards for the type and classification of data under paragraph (1) shall be prescribed and publicized by the Financial Services Commission. Article 63 (Depository of Securities Held)
(1) The term "those prescribed by the Presidential Decree" under the main sentence of Article 61 of the Act shall be as follows:
1. Certificates of deposit denominated in Korean won; and
2. Others prescribed and publicized by the Financial Services Commission. (2) The term "cases prescribed by the Presidential Decree" under the proviso of Article 61 of the Act shall mean those falling under either of the following subparagraphs: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Where a financial investment firm opens an account to deposit securities denominated in foreign currencies (hereinafter referred to as "securities denominated in foreign currencies") under Article 3 (1) 8 of the Foreign Exchange Transactions Act in the Depository and makes a centralized deposit in the foreign custodians appointed by the Depository among the foreign custodians prescribed and publicized by the Financial Services Commission; or
2. Where a financial investment firm makes a centralized deposit in the foreign custodians prescribed and publicized by the Financial Services Commission when the Depository is unable to designate foreign custodians due to foreign Acts, subordinate statutes, practices, etc.
(3) Where a broker or dealer comes into custody of certificates or securities other than securities to be deposited under Article 308 of the Act through lock-up business or any other way, such certificates or securities shall be regarded as deposited pursuant to Article 61 of the Act.
Article 64 (Transaction of Financial Investment Products by Officer or Employee) (1) The term "financial investment firm prescribed by the Presidential Decree" under Article 63 (1) of the Act other than each subparagraph shall mean a financial investment firm falling under either of the following subparagraphs:
1. A person falling under subparagraphs 1 and 2 of Article 22 of the Act; or
2. A person falling under subparagraphs 1 through 3 and subparagraphs 5 through 9 of Article 24 of this Decree.
(2) The term "financial investment products prescribed by the Presidential Decree" under Article 63 (1) of the Act other than each subparagraph shall mean a financial investment product falling under any of the following subparagraphs:
1. Equity securities [including stock certificates traded through the over-the-counter transactions under Article 178 of this Decree, and excluding stock certificates of investment companies (hereinafter referred to as "investment company") under Article 9 (18) 2 of the Act, equity securities of an investment limited liability company, investment limited partnership company, investment limited partnership, or investment undisclosed association] listed on the securities market;
2. Securities deposit receipts (limited to the securities deposit receipts related to the equity securities under subparagraph (1); hereafter in this paragraph, the same shall apply) listed on the securities market;
3. Stock-linked debentures under subparagraph 4 of Article 71 of the Act which are related to the equity securities under subparagraph 1 or securities deposit receipts under subparagraph 2;
4. Derivatives-linked securities linked to the fluctuation of the equity securities under subparagraph 1, the securities deposit receipt under subparagraph 2 or the index based thereon;
5. Exchange-traded derivatives; or
6. Over-the-counter derivatives linked to the fluctuation of the equity securities under subparagraph 1, the securities deposit receipts under subparagraph 2 or the index based thereon.
(3) The term "cases prescribed by the Presidential Decree" under the proviso of Article 63 (1) 2 shall mean those falling under any of the following subparagraphs:
1. Where any transaction may be conducted through more than two companies, cases falling under any of the following items:
(a) Where a broker who trades with an officer or employee of the financial investment firm does not provide financial investment products that the officer or employee intends to purchase or sell;
(b) Where an officer or employee subscribes for securities issued or traded through public offering or secondary distribution of securities; or (c) Others prescribed and publicized by the Financial Services Commission.
2. Where any transaction may be conducted through two or more accounts, cases falling under any of the following items:
(a) Where a broker opens two or more accounts because it shall classify and establish accounts by type of financial investment products; (b) Where a separate account is opened to receive special taxation pursuant to the Restriction of Special Taxation Act; or
(c) Others prescribed and publicized by the Financial Services Commission. The Enforcement Decree of the Financial Investment Services and Capital Market Act (4) An officer or employee of a financial investment firm shall, when he/she purchases or sells financial investment products falling under any of the subparagraphs of paragraph (2) for his/her own account, comply with the methods and procedures falling under each of the subparagraphs pursuant to Article 63 (1) 4 of the Act:
1. In the case of opening an account to purchase or sell financial investment products, the officer or employee shall report thereon to the compliance officer (where there is no compliance officer, referring to those equivalent thereto, such as an auditor, etc.; hereafter in this paragraph, the same shall apply) of the financial investment firm;
2. Where the compliance officer of the financial investment firm requires the officer or employee to provide evidence on the purchases, sales, or other transactions, the officer or employee shall comply with the requirement;
3. The officer or employee shall comply with the matters prescribed by the internal control standards of the financial investment firm; and
4. The officer or employee shall comply with other methods and procedures prescribed and publicized by the Financial Services Commission.
Article 65 (Business Fund of Foreign Financial Investment Firm) (1) The term "business fund prescribed by the Presidential Decree" under the Article 65 (1) of the Act shall be as follows:
1. A business fund denominated in Korean won provided by a foreign financial investment firm in order to establish branches and other business offices or conduct businesses;
2. A business fund transferred from the reserves of branches and other business offices of a foreign financial investment firm; and
3. A business fund transferred by a foreign financial investment firm from retained earnings of branches and other business offices thereof in the Republic of Korea in order to establish additional branches and other business offices.
(2) Branches or other business offices of a foreign financial investment firm shall secure assets in the Republic of Korea following the methods falling under each of the following subparagraphs pursuant to Article 65 (2) of the Act:
1. Cash or deposits, installment deposits or installments deposited in financial institutions in the Republic of Korea;
2. Securities deposited or kept in the Republic of Korea;
3. Loans or other debts to a Korean resident;
4. Fixed assets in the Republic of Korea; and
5. Other assets prescribed and publicized by the Financial Services Commission among the assets that may be subject to compulsory execution under the domestic laws. (3) Branches and other business offices of a foreign financial investment firm shall comply with the matters falling under both of the following subparagraphs:
1. The branches and other business offices shall make an accounting settlement independent of the head office; and
2. Where the total amount of the assets secured in the Republic of Korea following the methods falling under each of the subparagraphs of paragraph (2) falls short of the aggregate amount of the business fund under Article 65 (1) of the Act and the liabilities after accounting settlement, the branches and other business offices of a foreign financial investment firm shall compensate for the shortage within 60 days from the date when the settlement is completed.
Article 66 (Representative and Proxy Representative of Branch) (1) Where branches and other business offices of a foreign financial investment firm have no representative or where a representative is unable to perform his/her duties, a person who has interests in the branches and other business offices of the foreign financial investment firm may require the Financial Services Commission to designate a person (hereafter in this Article, referred to as "proxy representative") to perform the duties by proxy temporarily when a representative is not newly appointed or a person acting for the representative is not designated. (2) The Financial Services Commission shall, when it receives the request from the interested person pursuant to paragraph (1), require the branches and business offices of a foreign financial investment firm to appoint a representative or designate a proxy representative within ten days.
Section 2 Conduct of Business Regulations by Type of Financial Investment Firms Subsection 1 Conduct of Business Regulations of Broker and Dealer The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 67 (Disposal Period of Treasury Stocks)
The term "period as prescribed by the Presidential Decree" under the latter part of Article 69 of the Act shall be three months from the date of acquisition. Article 68 (Prohibition on Unfair Business Practice) (1) The term "cases prescribed by the Presidential Decree" under the proviso of Article 71 of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs:
1. In the application of subparagraph 1 of Article 71 of the Act, cases falling under either of the following items:
(a) Where it is proved that any information on the purchasing or selling orders of investors is not used; or
(b) Where it is objectively clear that the information of investors is not used intentionally for arbitrage trade taking advantage of the price differences between the securities market and the derivatives market and other transactions equivalent thereto.
2. In the application of subparagraph 2 of Article 71 of the Act, cases falling under any of the following items:
(a) Where the contents of research and analysis documents do not induce the purchase or sale of specific financial investment products directly or indirectly; (b) Where the transactions and price fluctuation caused by the publication of research and analysis documents are not used intentionally; (c) Where it is proved that the transactions are made without using the published research and analysis documents; or
(d) Where the research and analysis documents do not include new contents as compared with the previous research and analysis documents; or
3. In the application of subparagraph 3 of Article 71 of the Act, cases where the research and analysis documents have been prepared for the purpose of carrying out the business within the financial investment firm and have not been published or provided to investors. (2) The term "corporate financing business prescribed by the Presidential Decree" under subparagraph 3 of Article 71 shall mean the business falling under any of the following subparagraphs:
1. Underwriting business;
2. Business of arranging for public offerings, secondary distribution or private placement of securities;
3. Business of arranging for and intermediating the merger and acquisition of companies, or acting as an agent for that purpose;
4. Business of providing advisory services on the merger and acquisition of companies; or
5. Business of managing properties of a private equity company. (3) The term "stock-linked debentures prescribed by the Presidential Decree" under subparagraph 4 of Article 71 of the Act shall mean convertible bonds, instruments representing preemptive rights, and exchangeable bonds (limited to exchangeable bonds with claims to exchange with stock certificates, convertible bonds, or instruments representing preemptive rights).
(4) The term "period prescribed by the Presidential Decree" under subparagraph 4 of Article 71 of the Act shall be 40 days.
(5) The term "activities prescribed by the Presidential Decree" under subparagraph 7 of Article 71 of the Act shall mean activities falling under each of the following subparagraphs:
1. Disagreeing with the request of a professional investor (excluding any person falling under each subparagraph of Article 10 (1) of this Decree), without any justifiable cause, that he/she be treated as a non-professional investor pursuant to the proviso of Article 9 (5) of the Act;
2. Soliciting a non-professional investor too frequently without taking into account their investment objective, financial status, and investment experiences, etc.;
3. Providing investors (where an investor is a corporation and any other group, including the officers thereof) or counter-parties (where a counter party is a corporation and any other group including the officers thereof) with benefits that have a property value or receiving such benefits from investors or counter parties directly or indirectly in violation of the standards prescribed and publicized by the Financial Services Commission with respect to the business;
4. Conducting activities falling under any of the following items with respect to the business of underwriting securities or arranging for public offerings, secondary distribution or private placement of securities:
The Enforcement Decree of the Financial Investment Services and Capital Market Act (a) Failing to take reasonable care necessary to prevent an issuer from making any misstatement or omission of material matters in any registration statement (including the amendment statement and the additional documents thereof under Article 122 (1) of the Act) under Article 119 (3) of the Act or any prospectus (including the preliminary prospectus under Article 124 (1) 2 of the Act and the simple prospectus under Article 124 (2) 3 of the Act) under Article 123 (1) of the Act; (b) Demanding or promising, in advance, the purchase of securities to a person who makes a public offering, secondary distribution of securities or the specially-related persons thereof in return for the underwriting of the securities after the public offering, secondary distribution or private placement of securities; (c) Receiving benefits with property value that are gained from the investment in securities subject to underwriting (including the arrangement for private placement, public offering or secondary distribution of securities; hereafter in this subparagraph, the same shall apply) directly or indirectly in return for the allocation thereof, or requiring additional purchases of the securities;
(d) Distributing securities subject to underwriting to subscribers therefor with any unreasonable discrimination; or
(e) Others prescribed and publicized by the Financial Services Commission as likely to undermine the protection of investors or sound trade practice.
5. Purchasing or selling the financial investment products concerned by soliciting investors to purchase and sell them without notifying the investors in advance of the matters which materially affect the value of the financial investment products;
6. Being entrusted with purchases, sales or other transactions after the knowledge that the investors have an intention to execute the purchase, sale and other transactions in violation of Articles 174, 176, and 178 of the Act;
7. Using unfair methods in order to hide illegal transactions of investors with respect to the purchases, sales or other transactions of financial investment products;
8. Being entrusted with the purchase, sale, or other transactions of financial investment products without any justifiable cause even after recognizing that it is unlikely to execute settlement for the purchases, sales, or other transactions of financial investment products;
9. Soliciting investors to purchase or sell the treasury stocks issued by the broker or dealer concerned;
10. Purchasing collective investment securities (excluding the collective investment securities listed on the securities market) from investors, or arranging for or intermediating such activities, or acting as an agent for that purpose: Provided, That the same shall not apply to the purchase pursuant to the proviso of Article 235 (6) of the Act;
11. Using over-the-counter derivative transactions, trust contracts, linked transactions, etc. for the purpose of avoiding any prohibition or restriction under Articles 55 and 71 of the Act;
12. Receiving any blank check or blank bill in order to secure rights as a creditor; and
13. Others prescribed and publicized by the Financial Services Commission as likely to undermine the protection of investors or sound trade practice. Article 69 (Credit Extension)
(1) A broker or dealer may extend credit to investors in a way falling under either of the following subparagraphs pursuant to Article 72 (1) of the Act:
1. Loaning money to purchase securities or lending the securities to be purchased to a person who has opened a securities transaction account in the broker or dealer; or
2. Loaning money to a person who deposits securities in the broker or dealer by taking the securities as collateral.
(2) The specific standards for credit extension under paragraph (1), the ratio of collateral, and the methods of collecting collateral shall be prescribed and publicized by the Financial Services Commission.
Article 70 (Notification of Details of Transaction) (1) A broker or dealer shall, when he/she notifies investors pursuant to Article 73 of the Act, follow the methods falling under both of the following subparagraphs:
1. Notify investors of the type, item, quantity, price, all the costs including commissions, and other details of transactions without delay after the transactions are concluded, and notify the details of monthly transactions, monthly profits and losses, and current status of balance and outstanding contracts, etc. as of the end of the month by the 20th day of the month following the date when the transactions are concluded; and The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Notify investors through the methods (in the case of the transactions that are not managed or recorded on accounting books, limited to item (a)) that have been agreed on in advance between the broker or dealer and the investors among the methods falling under any of the following items: Provided, That where an investor does not want to be notified, the notification may be replaced with the furnishing of the information at branches and other business offices, or posting it on the Internet website, etc. to enable the access at any time: (a) Notification in writing;
(b) Telephone call, telegram, or FAX;
(c) E-mail, and other electronic communications similar thereto; or (d) Others prescribed and publicized by the Financial Services Commission. (2) Specific matters necessary for the notification under paragraph (1) shall be prescribed and publicized by the Financial Services Commission.
Article 71 (Exceptions of Deposit in Securities Finance Company) The term "broker or dealer designated by the Presidential Decree" under the former part of Article 74 (2) of the Act shall be as follows:
1. Banks;
2. The Korea Development Bank under the Korea Development Bank Act;
3. The Industrial Bank of Korea under the Industrial Bank of Korea Act; and
4. Insurance companies. Article 72 (Exceptional Transfer of Investors' Deposit) The term "cases prescribed by the Presidential Decree" under Article 74 (4) of the Act shall mean cases falling under any of the following subparagraphs:
1. Where a depositing financial investment firm under Article 74 (4) of the Act (hereinafter referred to as "depositing financial investment firm") transfers investors' deposits deposited or entrusted in a depository institution to a surviving or established company after the merger with another company or the merger by absorption to another company;
2. Where a depositing financial investment firm transfers investors' deposits deposited or entrusted in a depository institution to a transferee in accordance with the contents of the transfer when it transfers all or part of its financial investment services;
3. Where a depositing financial investment firm provides a bank with investors' deposits deposited or entrusted in a depository institution as collateral within the limit prescribed and publicized by the Financial Services Commission under the conditions prescribed and publicized by the Financial Services Commission with respect to the business of transferring money under subparagraph 4 of Article 40 of the Act; or
4. Others prescribed and publicized by the Financial Services Commission as unlikely to undermine the protection of investors.
Article 73 (Notification Period of Investors' Deposit) The term "period determined by the Presidential Decree" under the latter part of Article 74 (5) other than each subparagraph shall mean two months from the date when any cause specified in each subparagraph of Article 74 (5) of the Act occurs: Provided, That where it is impractical to make a notification and publication within such period due to the occurrence of inevitable causes, the period may be extended up to one month under the confirmation of the Financial Services Commission.
Article 74 (Management of Investors' Deposit)
(1) The term "financial institutions prescribed by the Presidential Decree" under Article 74 (7) 2 of the Act shall mean a financial institution falling under any of the following subparagraphs:
1. Banks;
2. The Korea Development Bank under the Korea Development Bank Act;
3. The Industrial Bank of Korea under the Industrial Bank of Korea Act;
4. Insurance companies;
5. Brokers or dealers;
6. Securities finance companies;
7. Merchant banks;
8. Credit guarantee funds under the Credit Guarantee Fund Act; or
9. Technology credit guarantee funds under the Korea Technology Credit Guarantee Fund Act.
The Enforcement Decree of the Financial Investment Services and Capital Market Act (2) The term "others prescribed by the Presidential Decree" under Article 74 (7) 3 of the Act shall mean a method falling under any of the following subparagraphs:
1. Loans taking securities or certificates of deposit denominated in Korean won as collateral;
2. Deposits in the Bank of Korea or postal service offices under the Postal Savings and Insurance Act;
3. Purchases of special bonds; or
4. Others prescribed and publicized by the Financial Services Commission as likely to manage investors' deposits in a safe manner.
Article 75 (Scope of Investors' Deposit)
(1) The scope of investors' deposit to be deposited or entrusted in a depository institution by a broker or dealer pursuant to Articles 74 (1) and 74 (2) of the Act shall be the amount calculated by deducting the amount under subparagraph 2 from the amount under subparagraph 1:
1. The aggregate amount of the following items: (a) The amount deposited by investors for the purchase, sale and other transactions of financial investment products;
(b) The amount paid to investors by the broker or dealer as interest on investors' deposit; and
(c) The profits earned from daily marking-to-market of exchange-traded derivatives held by investors;
2. The aggregate amount of the following items: (a) The amount that the broker or dealer deposits in the Exchange (including those prescribed and publicized by the Financial Services Commission) or other brokers or dealers for the purchase, sale, and other transactions of financial investment products conducted by investors on the securities market or the derivatives market; (b) The amount that the broker or dealer deposits in foreign securities markets (including the settlement institutions thereof) or foreign derivatives markets (referring to foreign derivatives markets under Article 5 (2) of the Act and including the settlement institutions thereof) and foreign brokers or dealers for the purchase, sale, and other transactions conducted by investors outside the Republic of Korea;
(c) All the expenses related to the purchase, sale, and other transactions of financial investment products conducted by investors, including brokerage commissions; (d) Money under Articles 3 (3) 1 through 3 (3) 4 of the Enforcement Decree of The Depositor Protection Act; and
(e) Losses incurred from daily marking-to-market of exchanged-traded derivatives held by investors.
(2) A broker or dealer shall deposit or entrust not less than 100/100 of the amount calculated pursuant to paragraph (1) in a depository institution. (3) A depositing financial investment firm may withdraw investors' deposits deposited or entrusted in depository institutions under the conditions falling under each of the following subparagraphs:
1. Where investors' deposits already deposited or entrusted exceed the investors' deposits that are required to be deposited or entrusted, the amount calculated by deducting the investors' deposits to be deposited or entrusted from the investors' deposits already deposited or entrusted;
2. Where any reason for a preferential payment occurs in accordance with each subparagraph of Article 74 (5) of the Act, the investors' deposits deposited or entrusted; and
3. Where the Financial Services Commission recognizes that it is necessary to withdraw investors' deposits, including cases where massive claims for the investors' deposits are filed, the recognized amount.
(4) A depository institution shall manage investors' deposits deposited or entrusted separately from its own properties under the principle of good faith. (5) The scope of investors' deposits under paragraph (1) and the details necessary for the period, interval, ratio, methods, withdrawal, management, etc. of deposit and entrustment shall be prescribed and publicized by the Financial Services Commission. Article 76 (Deposit of Investors' Deposit Receipts) (1) The term "those prescribed by the Presidential Decree" under the main sentence of Article 75 of the Act shall be as follows:
1. Certificates of deposit denominated in Korean won; and The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Others prescribed and publicized by the Financial Services Commission. (2) The term "cases prescribed by the Presidential Decree" under the proviso of Article 75 of the Act shall mean those falling under any of the subparagraphs of Article 63 (2) of this Decree. (3) Where a broker or dealer comes into custody of securities or certificates other than the securities to be deposited under Article 308 of the Act to the Depository through lock-up business or any other way, such securities or certificates shall be regarded as deposited pursuant to Article 75 of the Act.
Article 77 (Special Cases for Sales of Collective Investment Securities) (1) The term "cases prescribed by the Presidential Decree" under the proviso of Article 76 (1) of the Act shall be as follows:
1. Where an investor pays money, etc. to a broker or dealer after the base point of time for the purpose of fixing the date for claims to purchase collective investment securities prescribed in a collective investment agreement;
2. Cases falling under any of the following subparagraphs where a broker or dealer sells collective investment securities of a collective investment scheme of short-term finance: (a) Where an investor makes a contract in advance with a broker or dealer who sells collective investment securities in order to purchase collective investment securities of a collective investment scheme of short-term finance using the settlement funds earned from the sales or redemption of financial investment products on a settlement date; or (b) Where an investor makes a contract in advance with a broker or dealer who sells collective investment securities in order to purchase collective investment securities of a collective investment scheme of short-term finance using the money, etc. received on a regular basis such as salaries, etc. on the date when such money, etc. is received; and
3. Where collective investment securities of a collective investment scheme of short-term finance are sold to a person falling under either of the following items: (a) Foreign exchange equalization fund under Article 13 of the Foreign Exchange Transactions Act; or
(b) A collective investment scheme of short-term finance which comprehensively manages surplus funds under Article 81 of the Finance Act.
(2) The term "standard price determined by the Presidential Decree" under the proviso of Article 76 (1) of the Act shall be as follows:
1. Subparagraph 1 of paragraph (1): the standard price publicized after three business days from the payment date of money, etc.; and
2. Subparagraphs 2 and 3 of paragraph (1): the standard price publicized on the payment date of money, etc.
(3) The term "cases prescribed by the Presidential Decree" under the proviso of Article 76 (3) of the Act shall mean cases where general advertisements of the collective investment scheme are unlikely to undermine the interests of investors because the sales of a new type of collective investment securities are already scheduled in accordance with the amendment of relevant Acts and subordinate statutes. In such a case, when the amendment is not determined, such advertisements shall indicate that the contents thereof may be changed after the amendment of relevant Acts and subordinate statutes is determined. (4) Sales commissions or sales fees (hereinafter referred to as "sales fees") under Article 76 (4) of the Act paid to a broker and dealer shall not exceed the limit falling under each of the following subparagraphs: Provided, That the same shall not apply to private equity funds:
1. Sales commissions: 5/100 of the money paid or the redemption money; and
2. Sales fees: 5/100 of the annual average of collective investment properties. (5) A broker or dealer may receive sales commissions or sales fees through the methods falling under both of the following subparagraphs in accordance with a collective investment agreement:
1. Sales commissions: receiving sales commissions from investors in a lump sum at the time of the sales or redemption or in installments during an investment period; and
2. Sales fees: receiving sales fees from a collective investment scheme in proportion to the size of collective investment properties on a daily basis. (6) Sales commissions may be imposed differentially based on sales methods, brokers or dealers, sales amount, investment period, etc.
(7) The base point of time under subparagraph 1 of paragraph (1), the standards for calculating the specific limit of sales commissions and sales fees under paragraphs (4) and (5), and other necessary details shall be prescribed and publicized by the Financial Services Commission. The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 78 (Business Standards for Electronic Securities Brokerage) The term "standards prescribed by the Presidential Decree" under Article 78 (1) of the Act other than each subparagraph shall mean the standards falling under each of the following subparagraphs:
1. The listed stocks subject to the brokerage transactions shall be listed stocks other than those falling under each of the following items:
(a) Listed stocks designated by the Exchange as items subject to administration and those equivalent thereto pursuant to the Listing Regulations under Article 390 of the Act; (b) Listed stocks without voting rights; and
(c) Listed stocks prescribed and publicized by the Financial Services Commission when taking into account the protection of investors and sound trade practice, including the listed stocks, etc. with poor records of purchase and sale contracts;
2. Where the Exchange suspends the trade of the listed stocks subject to the brokerage transactions or revokes the suspension, the trade of the listed stocks shall be suspended, or the suspension shall be revoked;
3. Brokerage transactions shall be targeted at many people at the same time, and the disclosure standards for the quantity to be purchased and sold and the principles or methods of concluding contracts on brokerage for purchase and sale shall be established;
4. The Depository shall be a settlement institution and the methods of guaranteeing the execution of settlement shall be prescribed, including the reserve of joint funds for compensating for losses caused by a breach of the contracts for transactions;
5. The minimum collection rate of consignment guarantee money for the broker or dealer who participates in the brokerage transactions shall be set forth;
6. Matters for which a consignment is to be refused pursuant to the Securities Market Regulations under Article 393 (1) of the Act shall be set forth;
7. Details of the companies of issuers of the listed stocks (excluding each item of subparagraph 1) disclosed by the Exchange shall be publicized;
8. Daily prices and trading volumes for each item shall be published and be reported to the Exchange within one day. In such a case, the contents of the reports shall include trading details for each item of the broker or dealer participating in the brokerage transactions;
9. No brokerage transaction shall be made during the hours of transactions (including the hours for the receipt of quotations) on the securities market;
10. Reasons for suspending the brokerage transactions and the days of such suspension shall be set forth. In such a case, the brokerage transactions shall be suspended until the securities market reopens after its suspension due to the causes other than its closure.
11. Business standards containing the matters falling under subparagraphs 1 through 10 shall be set forth; and
12. Where any business standard under subparagraph 11 is established or amended, such establishment or amendment shall be reported to the Financial Services Commission and the Exchange, and shall be disclosed through the Internet websites, etc. Subsection 2 Conduct of Business Regulations of Collective Investment Managers Article 79 (Instructions on Asset Management)
(1) The term "conditions prescribed by the Presidential Decree" under the main sentence of Article 80 (1) of the Act shall mean the conditions in which the instructions can be objectively and accurately managed through an electronic system. (2) The term "cases prescribed by the Presidential Decree" under the proviso of Article 80 (1) of the Act shall mean cases where the investment assets are managed by ways falling under any of the following subparagraphs as agreed on in a trust contract:
1. Purchase and sale of securities listed on the securities market or foreign securities markets;
2. Purchase and sale of exchange-traded derivatives;
3. Short-term loans under Article 83 (4) of the Act;
4. Loans under Article 251 (4) of the Act;
5. Purchase and sale of the bills issued, discounted, traded, intermediated, underwritten or guaranteed by financial institutions falling under any of the following items: (a) Banks;
(b) The Korea Development Bank under the Korea Development Bank Act; (c) The Industrial Bank of Korea under the Industrial Bank of Korea Act; (d) The Export-Import Bank of Korea under the Export-Import Bank of Korea Act; The Enforcement Decree of the Financial Investment Services and Capital Market Act (e) Brokers or dealers;
(f) Securities finance companies;
(g) Merchant banks; or
(h) Mutual saving banks under the Mutual Savings Banks Act.
6. Purchase and sale of certificates of deposit;
7. Purchase and sale of overseas payment methods under the Foreign Exchange Transactions Act;
8. Purchase and sale of over-the-counter derivatives for the purpose of avoiding investment risk, or conclusion of contracts under Article 5 (1) 3 of the Act pursuant to the standards prescribed and publicized by the Financial Services Commission; or
9. Others prescribed and publicized by the Financial Services Commission as necessary for effective management of investment trust property. (3) Paragraph (1) shall apply to cases where a collective investment manager of a collective investment scheme other than an investment trust gives necessary instructions on the custody and management of properties acquired or disposed of to a trust company of the collective investment scheme concerned.
Article 80 (Exceptions to Restrictions on Asset Management) (1) The term "cases prescribed by the Presidential Decree" under the proviso of Article 81 (1) of the Act other than each subparagraph shall mean conducting activities falling under any of the following subparagraphs:
1. In the application of Article 81 (1) 1 (a) of the Act, investing in the investment assets falling under any of the following items up to 100/100 of the total amount of assets of each collective investment scheme [in the case of items (d) through (g), referring to collective investment schemes of real estate (hereinafter referred as "collective investment scheme of real estate") under subparagraph 2 of Article 229 of the Act and in the case of items (h) through (j), referring to collective investment schemes of special assets (hereinafter referred to as "collective investment scheme of special asset") under subparagraph 3 of Article 229 of the Act and limited to cases where the agreements of each collective investment scheme prescribe the contents]:
(a) Government bonds;
(b) Monetary stabilization bonds of the Bank of Korea under Article 69 of the Bank of Korea Act;
(c) Bonds whose repayment of the principal and interest are guaranteed by the Government or municipal governments;
(d) Securities issued by a company (hereinafter referred to as "real estate development company") established for a certain development of real estate after setting forth its existence period;
(e) Asset-backed securities (hereinafter referred to as "asset-backed securities") issued based on real estate or assets related to the real estate prescribed and publicized by the Financial Services Commission pursuant to subparagraph 4 of Article 2 of the Asset- Backed Securitization Act, whose total amount of the underlying assets is not less than 70/100 of the value of the securitization assets (hereinafter referred to as "securitization asset") under subparagraph 3 of Article 2 of the Asset-Backed Securitization Act; (f) Mortgage-backed bonds or mortgage-backed securities under the Special Purpose Companies for Mortgage-Backed Bonds Act or the Korea Housing Finance Corporation Act, whose payment is guaranteed by a special purpose company for mortgage securitization under the Special Purpose Companies for Mortgage-Backed Bonds Act or a financial institution falling under Articles 79 (2) 5 (a) through 79 (2) 5 (g) of this Decree;
(g) Equity securities issued by a company (hereinafter referred to as "special purpose company for real estate") meeting the following requirements: 1) The company shall be established for the purpose of investing in real estate or investment securities of other special purpose companies for real estate; and 2) The aggregate amount of real estate and assets under Article 240 (4) 4 of this Decree shall be not less than 90/100 of the aggregate amount of the assets held by the special purpose company and its subsidiaries (referring to the companies equivalent to the subsidiaries under the Act on External Audit of Stock Companies). (h) Stocks and bonds issued by a corporation aimed at carrying out infrastructure projects under the Act on Private Participation in Infrastructure; The Enforcement Decree of the Financial Investment Services and Capital Market Act (i) Loans to a corporation aimed at carrying out infrastructure projects under the Act on Private Participation in Infrastructure; or
(j) Equity securities of a corporation (excluding investment and loan companies for infrastructure under the Act on Private Participation in Infrastructure) established for the investment through the methods of acquiring stocks and bonds issued by a corporation aimed at carrying out one infrastructure project under the Act on Private Participation in Infrastructure or acquiring loans extended to the corporation;
2. In the application of Article 81 (1) 1 (a) of the Act, investing in the investment assets falling under any of the following items up to 30/100 of the total amount of assets of each collective investment scheme:
(a) Municipal bonds;
(b) Special bonds (excluding items (b) and (c) of subparagraph 1) and bonds issued by a corporation which is directly established in accordance with Acts [limited to commercial papers (hereinafter referred to as "commercial paper") under Article 4 (3) of the Act and bills discounted, traded, intermediated or underwritten by a financial institution falling under each item of Article 79 (2) 5 of this Decree]; (c) Derivative-linked securities;
(d) Bills or certificates of deposit issued by a financial institution falling under Articles 79 (2) 5 (a) through 79 (2) 5 (g) of this Decree and bonds issued by a financial institution falling under Articles 79 (2) 5 (a) and 79 (2) 5 (e) through 79 (2) 5 (g) of this Decree; (e) Bonds or bills (limited to the bonds issued by public offerings) whose payments are guaranteed by a financial institution falling under Articles 79 (2) 5 (a) through 79 (2) 5 (g) of this Decree;
(f) Bonds issued by a government that is a member state of the Organization for Economic Cooperation and Development;
(g) Subordinate bonds among the corporate bonds under Article 31 of the Asset-Backed Securitization Act or subordinate beneficiary certificates among the beneficiary certificates (limited to the collective investment schemes prescribed in the collective investment agreement as determined to make investment in subordinate bonds or subordinate beneficiary certificates above the ratio prescribed and publicized by the Financial Services Commission) under Article 32 of the same Act; or
(h) Mortgage-backed bonds or mortgage-backed securities under the Special Purpose Companies for Mortgage-Backed Bonds Act or the Korea Housing Finance Corporation Act, whose payment is guaranteed by a special purpose company for mortgage securitization under the Special Purpose Companies for Mortgage-Backed Bonds Act or a financial institution falling under Articles 79 (2) 5 (a) through 79 (2) 5 (g) of this Decree;
3. In the application of Article 81 (1) 1 (a) of the Act, where the market capitalization weight of equity securities (including securities deposit receipts related to the equity securities issued by the corporation, etc.: hereinafter the same shall apply) issued by the same corporation, etc. exceeds 10/100, investing up to the market capitalization weight. In such a case, the market capitalization weight shall be calculated by the securities market, the KOSDAQ market or other securities markets in foreign countries and other necessary matters for the methods of calculation, the base date thereof, application periods, etc. shall be prescribed and publicized by the Financial Services Commission;
4. In the application of Article 81 (1) 1 (b) or 81 (1) 1 (c) of the Act, investing in the equity securities falling under either of the following items up to 100/100 of the total number of equity securities using the total amount of assets of all the collective investment schemes for real estate managed by each collective investment scheme or the total amount of assets of each collective investment scheme for real estate: (a) Equity securities issued by a real estate development company; or (b) Equity securities issued by a special purpose company for real estate;
5. In the application of Article 81 (1) 1 (b) or 81 (1) 1 (c) of the Act, investing in the equity securities falling under either of the following items up to 100/100 of the total number of equity securities using the total amount of assets of all the collective investment schemes of special asset managed by each collective investment scheme or the total amount of assets of each collective investment scheme of special asset: (a) Stocks issued by a corporation aimed at carrying out infrastructure projects under the Act on Private Participation in Infrastructure; or (b) Equity securities of a corporation (excluding investment and loan companies for infrastructure under the Act on Private Participation in Infrastructure) established to make investments through the methods of acquiring stocks and bonds issued by a The Enforcement Decree of the Financial Investment Services and Capital Market Act corporation aimed at carrying out one infrastructure project under the Act on Private Participation in Infrastructure or acquiring loans extended to the corporation;
6. In the application on Article 81 (1) 3 (a) or 81 (1) 3 (b) of the Act, investing in the collective investment securities falling under any of the following items up to 100/100 of the total amount of assets of each collective investment scheme (limited to collective investment schemes that are permitted to invest in excess of 40/100 of the total amount of assets): (a) Where collective investment properties of a collective investment scheme (including foreign collective investment schemes under Article 279 (1) of the Act; hereafter in this paragraph, the same shall apply) managed by a collective investment manager (including foreign collective investment managers under Article 279 (1) of the Act; hereafter in this paragraph, the same shall apply) are invested only in assets denominated in foreign currencies, collective investment securities of such collective investment scheme; (b) Collective investment securities (including foreign collective investment securities under Article 279 (1) of the Act; hereafter in this paragraph, the same shall apply) of an exchange-traded fund (including foreign exchange-traded funds similar to the exchange- traded fund; hereafter in this paragraph, the same shall apply) prescribed and publicized by the Financial Services Commission; or
(c) Where the management of collective investment properties of a collective investment scheme (including foreign collective investment schemes under Article 279 (1) of the Act; hereafter in this item, the same shall apply) managed by the same collective investment manager is entrusted to more than two other collective investment managers (including foreign collective investment managers under Article 279 (1) of the Act), collective investment securities (limited to cases where not less than 90/100 of the total amount of assets of a collective investment scheme managed by the same collective investment manager) of such collective investment scheme;
7. In the application of Article 81 (1) 3 (b) of the Act, investing in the collective investment securities (excluding the collective investment securities under item (b) of subparagraph 6) of an exchange-traded fund up to 30/100 of the total amount of assets of each collective investment scheme;
8. In the application of Article 81 (1) 3 (a) or 81 (1) 3 (b) of the Act, investing in the same collective investment manager (including foreign collective investment schemes) up to
100/100 of the total amount of assets of each investment trust established by an insurance company pursuant to Article 251 (1) of the Act;
9. In the application of Article 81 (1) 3 (e) of the Act, investing up to 100/100 of the total number of collective investment securities of the same collective investment scheme (including foreign collective investment schemes) using the investment trust property established by an insurance company pursuant to Article 251 (1) of the Act;
10. In the application of Article 81 (1) 3 (f) of the Act, investing in excess of the limit under Article 81 (1) 3 (f) of the Act using the investment trust property established by an insurance company pursuant to Article 251 (1) of the Act; or
11. Others prescribed and publicized by the Financial Services Commission as unlikely to undermine the protection of investors or the stable management of collective investment properties.
(2) The term "securities prescribed by the Presidential Decree" under Article 81 (1) 1 of the Act other than each item shall mean foreign collective investment securities under Article 279 (1) of the Act.
(3) The term "investment assets prescribed by the Presidential Decree" under Article 81 (1) 1 of the Act other than each item shall mean investment assets falling under any of the following subparagraphs:
1. Certificates of deposit denominated in Korean won;
2. Bills other than commercial papers; or
3. In addition to those falling under subparagraphs 1 and 2, loans, deposits, and other bonds prescribed and publicized by the Financial Services Commission. (4) The term "ratio prescribed by the Presidential Decree" under the former part of Article 81 (1) 1 (a) of the Act shall be 10/100.
(5) The term "qualifying requirements prescribed by the Presidential Decree" under Article 81 (1) 1 (d) of the Act shall mean cases where both of the requirements are met:
1. A person shall fall under any of the subparagraphs of Article 10 (1) of this Decree; and
2. A person shall have been assessed by a credit rating agency (including a person conducting business equivalent to the business of assessing credit in a foreign country in accordance with foreign Acts and subordinate statutes) above the investment grade. The Enforcement Decree of the Financial Investment Services and Capital Market Act (6) The term "standard prescribed by the Presidential Decree" under Article 81 (1) 1 (e) of the Act shall be 100/100 of the value calculated by deducting the total amount of liabilities of each collective investment scheme from the total amount of assets. (7) The term "period prescribed by the Presidential Decree" under the main sentence of Article 81 (1) 2 (a) of the Act shall be as follows:
1. Real estate in the Republic of Korea: three years; and
2. Real estate in foreign countries: the period prescribed in a collective investment agreement.
(8) The term "cases prescribed by the Presidential Decree" under the proviso of Article 81 (1) 2 (a) of the Act shall mean the merger, termination, or dissolution of a collective investment scheme.
(9) The term "cases prescribed by the Presidential Decree" under the proviso of Article 81 (1) 2 (b) of the Act shall mean cases where it has proven that the real estate project is difficult to carry out and that disposal of the land is inevitable because the business feasibility has been significantly undermined by the enactment, amendment, or repeal of related Acts and subordinate statutes after acquiring the land for the real estate project. (10) The term "limit prescribed by the Presidential Decree" under Article 81 (1) 3 (f) of the Act shall mean the limit prescribed under Article 77 (4) of this Decree. Article 81 (Exceptions from Limits on Asset Management) (1) The term "activity prescribed by the Presidential Decree" under Article 81 (1) 4 of the Act shall mean those falling under any of the following subparagraphs:
1. Conducting purchases with repurchase agreement (referring to cases where securities are sold with a commitment to repurchase the securities later at a specified time: hereinafter the same shall apply) in excess of the ratio prescribed and publicized by the Financial Services Commission within the total amount of the securities belonging to each collective investment scheme;
2. Lending securities in excess of the ratio prescribed and publicized by the Financial Services Commission within the amount of securities belonging to each collective investment scheme; or
3. Borrowing securities in excess of the ratio prescribed and publicized by the Financial Services Commission within the total amount of assets of each collective investment scheme. (2) The term "grounds prescribed by the Presidential Decree" under Article 81 (3) of the Act shall mean those falling under any of the following subparagraphs:
1. Price fluctuation of the investment assets belonging to collective investment properties;
2. Termination of part of investment trust or partial retirement of collective investment securities of an investment company, investment limited liability company, investment limited partnership company, investment limited partnership and investment undisclosed association;
3. Exercise of rights such as collateral rights, etc.;
4. Merger or split-and-merger of a corporation which has issued the securities belonging to collective investment properties; or
5. Other cases where the investment limits under Article 81 (1) of the Act are exceeded without acquiring additional investment assets.
(3) The term "period prescribed by the Presidential Decree" under Article 81 (3) of the Act shall be three months (in the case of the investment assets which are unable to be disposed of due to bankruptcy, etc., referring to the period when the assets concerned are able to be disposed of).
(4) The term "period prescribed by the Presidential Decree" under Article 81 (4) of the Act shall be one month.
Article 82 (Disposal of Treasury Collective Investment Securities) A collective investment manager of an investment trust or investment undisclosed association shall dispose of collective investment securities which are acquired pursuant to the former part of subparagraph 1 of Article 82 of the Act within one month of the acquisition date through the methods falling under either of the following subparagraphs:
1. Retirement; or
2. Sales through a broker or dealer. Article 83 (Restrictions on Monetary Borrowing)
The Enforcement Decree of the Financial Investment Services and Capital Market Act (1) A collective investment manager may borrow money for the account of a collective investment scheme pursuant to the proviso of Article 83 (1) of the Act from a financial institution falling under any of the following subparagraphs:
1. Financial institutions falling under any of the items of Article 79 (2) 5 of this Decree;
2. Insurance companies; or
3. Foreign financial institutions equivalent to those falling under subparagraph 1 or 2. (2) A collective investment manager shall not, when it borrows money pursuant to paragraph (1), acquire additional investment assets (excluding the resale and redemption of derivatives) until the total amount of the borrowed money is repaid. (3) The term "financial institution prescribed by the Presidential Decree" under Article 83 (4) of the Act shall mean a financial institution falling under any of the subparagraphs of Article 345 (1) of this Decree.
Article 84 (Scope of Interested Persons)
The term "interested persons prescribed by the Presidential Decree" under the main sentence of Article 84 (1) of the Act other than each subparagraph shall mean a person falling under any of the following subparagraphs:
1. Officers or employees of the collective investment manager, and their spouses;
2. Major shareholders of the collective investment manager, and their spouses;
3. Affiliates of the collective investment manager, officers and employees of the affiliates, and their spouses;
4. Brokers or dealers (hereafter in this Subsection, referred to as "affiliated broker or dealer") who has sold or has been entrusted to sell not less than 30/100 of collective investment securities of all the collective investment schemes managed by a collective investment manager;
5. Trust companies in charge of the custody and management of not less than 30/100 of collective investment properties of all the collective investment schemes managed by a collective investment manager; or
6. Supervisory directors of an investment company whose corporate director is a collective investment manager.
Article 85 (Exceptions from Restrictions on Transaction with Interested Persons) The term "transactions prescribed by the Presidential Decree" under Article 84 (1) 4 of the Act shall mean those falling under any of the following subparagraphs:
1. Purchase and sale of investment assets with persons other than interested persons in accordance with the methods prescribed and publicized by the Financial Services Commission through an interested person who arranges for or intermediates such transactions, or acts as an agent for that purpose;
2. Purchase and sale of the investment assets falling under any of the following items with interested persons through brokerage service (referring to the brokerage in the form of transactions prescribed and publicized by the Financial Services Commission) by the interested persons concerned:
(a) Debt securities;
(b) Certificates of deposit denominated in Korean won; or (c) Notes (excluding commercial papers);
3. Transactions with the interested persons (excluding major shareholders or affiliates of the collective investment manager) to manage collective investment properties within the ratio of 10/100 of the total amount of assets of each collective investment scheme through the methods falling under either of the following items: (a) Short-term loans under Article 83 (4) of the Act; or (b) Purchase with repurchase agreement (referring to cases where securities are purchased with a commitment to resell the securities after a certain period; hereinafter the same shall apply);
4. Deposit in a financial institution (limited to the financial institutions under Article 83 (1) 1 of this Decree and foreign financial institutions equivalent thereto; hereafter in this subparagraph, the same shall apply) which is an interested person. In such a case, the amount deposited in a financial institution which is an interested person out of the total amount of collective investment properties managed by a collective investment manager shall not exceed 10/100 of the total amount deposited in all the financial institutions;
5. Purchase and sale of foreign currencies under the Foreign Exchange Transactions Act with a trust company which is an interested person; or The Enforcement Decree of the Financial Investment Services and Capital Market Act
6. Other transactions confirmed by the Financial Services Commission as unlikely to be in a conflict of interest with collective investment schemes when taking into account the type, condition and method of transaction.
Article 86 (Restrictions on Acquisition of Securities by Affiliates) (1) The term "limit prescribed by the Presidential Decree" under Article 84 (4) of the Act shall be as follows:
1. Where equity securities (including the securities deposit receipts related to the equity securities; hereafter in this Article, the same shall apply) issued by any affiliate are acquired with collective investment properties of all the collective investment schemes managed by a collective investment manager, the acquisition amount of the entire equity securities issued by the affiliate shall not exceed 10/100 of the amount available to invest in equity securities among the total amount of assets of all the collective investment schemes managed by the collective investment manager and shall not exceed 50/100 of the total amount of assets of each collective investment scheme managed by the collective investment manager: Provided, That cases falling under any of the following items shall be excluded: (a) Where the aggregate of the market capitalization weight of the entire equity securities issued by the affiliate (referring to the market capitalization weight calculated pursuant to the latter part of Article 80 (1) 3 of this Decree; hereafter in this subparagraph, the same shall apply) exceeds 10/100 of the amount available to invest in equity securities among the total amount of assets of all the collective investment schemes managed by the collective investment manager, and where the entire equity securities issued by the affiliate are acquired to the extent of the market capitalization weight; or (b) Where equity securities issued by an affiliate are acquired to the extent of the weight in indices using collective investment properties of a collective investment scheme whose purpose is to manage the properties by linking to fluctuations in the indices prescribed and publicized by the Financial Services Commission among the indices presenting the price levels of many items in a comprehensive manner; and
2. Where an investment is made in the securities (excluding equity securities among the securities falling under Article 84 (4) of the Act) issued by the affiliate (excluding corporations established directly under the Acts and subordinate statutes; hereafter in this
subparagraph, the same shall apply) using collective investment properties of all the collective investment schemes managed by each collective investment manager, the amount equivalent to the ratio contributed to the collective investment manager by all affiliates. In such a case, the amount equivalent to the ratio contributed to the collective investment manager by all affiliates shall be the amount calculated by multiplying the equity capital (where the equity capital is below the capital, referring to the capital) of the collective investment manager by the rate calculated by dividing the number of stocks with voting rights of the collective investment manager held by all affiliates by the total number of outstanding stocks with voting rights of the collective investment manager; (2) The term "securities prescribed by the Presidential Decree" under Article 84 (4) of the Act shall mean securities falling under any of the following subparagraphs:
1. Collective investment securities (excluding beneficiary certificate of an investment trust) and foreign collective investment securities under Article 279 (1) of the Act;
2. Derivative-linked securities; or
3. Beneficiary certificates under Article 110 of the Act. (3) The term "investment assets prescribed by the Presidential Decree" under Article 84 (4) of the Act shall mean the investment assets falling under any of the following subparagraphs:
1. Certificates of deposit denominated in Korean won;
2. Bills other than commercial papers; or
3. In addition to those falling under subparagraphs 1 and 2, loans, deposits and other bonds prescribed and publicized by the Financial Services Commission. (4) Where a collective investment manager acquires the entire stocks of its affiliates in excess of 10/100 of the total amount of assets of each collective investment scheme pursuant to each item of subparagraph 1 of paragraph (1), the collective investment manager shall exercise voting rights to the stocks of the affiliates pursuant to the main sentence of Article 87 (1) of the Act other than each subparagraph with respect to the stocks of the affiliates which exceed the weight of the stocks held by each affiliate belonging to the collective investment properties, based on 10/100 of the total amount of assets of the collective investment scheme. (5) Where the limit falling under each subparagraph of paragraph (1) is exceeded due to the causes prescribed and publicized by the Financial Services Commission, even if a collective investment manager does not acquire additional securities under Article 84 (4) of the Act, the The Enforcement Decree of the Financial Investment Services and Capital Market Act collective investment manager shall manage to comply with the limit under each subparagraph of paragraph (1) within three months of the date when such causes occur. Article 87 (Prohibition of Unfair Business Practice) (1) The term "cases prescribed by the Presidential Decree" under the proviso of Article 85 of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs:
1. In the application of subparagraph 1 of Article 85 of the Act, cases falling under either of the following items:
(a) Where it is proven that any information on the management of collective investment properties is not used; or
(b) Where arbitrage transactions taking advantage of the price differences between the securities market and the derivatives market and other transactions equivalent thereto are conducted and where it is objectively clear that the information on the management of collective investment properties is not used intentionally;
2. In the application of subparagraph 2 of Article 85 of the Act, cases where securities, etc. are purchased three months from the date of underwriting; or
3. In the application of subparagraph 5 of Article 85 of the Act, cases falling under any of the following items where any purchase or sale of the investment assets falling under each of the items of subparagraph 2 of Article 85 of this Decree is conducted through the brokerage service under subparagraph 2 of Article 85 of this Decree, or where one party sells assets (including debt payable under Article 224 (4) of this Decree) and the other party purchases the same assets at the same time among the collective investment schemes managed by the collective investment manager. In such a case, trading prices, procedures and methods of transactions and other necessary matters for the transactions among the collective investment schemes shall be prescribed and publicized by the Financial Services Commission:
(a) Where it is inevitable to comply with the investment limits prescribed in the collective investment agreement of the initially incorporated or established collective investment schemes (limited to the period of up to one month from the date of initial establishment or incorporation of a collective investment scheme);
(b) Where it is inevitable to meet the claims of the redemption of collective investment securities;
(c) Where it is inevitable to pay cancellation fees, etc. due to the termination or dissolution of collective investment schemes; or
(d) Others recognized by the Financial Services Commission as unlikely to undermine the interest of investors.
(2) The term "relevant underwriter prescribed by the Presidential Decree" under subparagraph 2 of Article 85 of the Act shall mean an underwriter falling under either of the following subparagraphs:
1. An underwriter who is in the same business group (referring to the business group under subparagraph 2 of Article 2 of the Monopoly Regulation and Fair Trade Act; hereinafter the same shall apply) with a collective investment manager; or
2. An underwriter who has sold collective investment securities of all the collective investment schemes managed by a collective investment manager exceeding the ratio prescribed and publicized by the Financial Services Commission. (3) The term "underwriting business prescribed by the Presidential Decree" under subparagraph 3 of Article 85 of the Act shall mean the business of determining underwriting conditions upon the request for underwriting directly from issuers or secondary distributors. (4) The term "others prescribed by the Presidential Decree" under subparagraph 8 of Article 85 of the Act shall mean those falling under any of the following subparagraphs:
1. Managing collective investment properties in violation of a collective investment agreement or prospectus;
2. Purchasing or selling financial investment products too frequently using collective investment properties without taking into account the management directions or strategies of a collective investment scheme;
3. Directly or indirectly providing benefit which has a property value to a broker or dealer (including the officers, employees, and introducing brokers thereof) who sells collective investment securities of a collective investment scheme managed by a collective investment manager with respect to the business in violation of the standards prescribed and publicized by the Financial Services Commission;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Directly or indirectly gaining benefit which has a property value from a broker or dealer (including the officers and employees thereof) with respect to the business in violation of the standards prescribed and publicized by the Financial Services Commission;
5. Managing collective investment properties upon the order, instruction and request from an investor under a side agreement, etc. with the investor;
6. Managing collective investment properties upon the order, instruction and request from a broker or dealer who sells collective investment securities of a collective investment scheme managed by a collective investment manager under a side agreement, etc. with such broker or dealer;
7. Using over-the-counter derivatives transactions, trust contracts, and linked transactions, etc. for the purpose of avoiding any prohibition or restriction under Articles 55, 81, 84 and 85 of the Act;
8. Receiving any blank check or blank note to secure rights as a creditor; or
9. Others prescribed and publicized by the Financial Services Commission as likely to undermine the protection of investors or sound trade practice. Article 88 (Restrictions on Bonus)
(1) The term "cases prescribed by the Presidential Decree" under Article 86 (1) 2 of the Act shall mean cases where all the requirements falling under each of the following subparagraphs are met. In such a case, necessary matters on the methods of calculating a bonus, the payment date, etc. shall be prescribed and publicized by the Financial Services Commission:
1. The bonus shall be calculated based on the reference (hereafter in this Article, referred to as "reference") which meets the requirements prescribed and publicized by the Financial Services Commission;
2. A collective investment manager shall establish a remuneration system that determines lower management fees than the bonus calculated based on the performance when the management performance of a collective investment scheme is lower than that of the reference;
3. No bonus shall be paid where the management performance of a collective investment scheme represents negative profits even if such performance exceeds those of the reference
or where the management performance falls short of the standards prescribed and publicized by the Financial Services Commission;
4. A collective investment scheme shall be composed of only the investors who make an investment above the minimum investment limit prescribed and publicized by the Financial Services Commission; and
5. A collective investment scheme shall be established or incorporated in the form of a closed-end collective investment scheme (hereinafter referred to as "closed-end collective investment scheme") under Article 230 of the Act with the existence period not less than one year, and shall not issue additional collective investment securities. (2) The term "matters prescribed by the Presidential Decree" under Article 86 (2) of the Act shall be as follows:
1. The intention that bonus will be paid and the limit thereof;
2. The fact that the exposure to investment risk is likely to be higher than that of the collective investment scheme that does not require the payment of bonus;
3. Matters on all the remunerations, including bonus;
4. Reference;
5. Payment period of bonus;
6. Matters on cases where the bonus is not paid; and
7. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
Article 89 (Restrictions on Exercising Voting Rights) (1) The term "person prescribed by the Presidential Decree" under Article 87 (1) 1 (a) of the Act shall mean specially-related persons and co-owners under Article 141 (2) of this Decree. (2) The term "person prescribed by the Presidential Decree" under Article 87 (1) 1 (b) of the Act shall mean those falling under either of the following subparagraphs:
1. Affiliated brokers or dealers, and the affiliates thereof; or
2. Major shareholders (including shareholders who are specially-related persons of the largest shareholder) of a collective investment manager (referring to the collective investment manager under Article 87 (1) of the Act). The Enforcement Decree of the Financial Investment Services and Capital Market Act (3) The term "relation prescribed by the Presidential Decree" under Article 87 (1) 2 (b) of the Act shall mean a relation where a person becomes those falling under any of the subparagraphs of paragraph (2).
Article 90 (Recordkeeping of Exercise of Voting rights) (1) The term "amount or ratio prescribed by the Presidential Decree" under Article 87 (7) of the Act shall be 5/100 of the total amount of assets of each collective investment scheme or ten billion won.
(2) The term "methods prescribed by the Presidential Decree" under Article 87 (7) of the Act shall be indicating whether a corporation subject to the disclosure of voting rights under Article 87 (7) of the Act exercises its voting rights, and the details thereof (where the voting rights are not exercised, the reasons therefor) on the asset management reports under Article 88 of the Act (hereinafter referred to as "asset management report") and the business reports under Article 90 of the Act.
Article 91 (Disclosure of Exercise of Voting Rights) (1) The disclosure of the exercise of voting rights under Article 87 (8) of the Act shall follow the methods falling under either of the following subparagraphs:
1. A collective investment manager shall, when it intends to exercise voting rights of the stocks issued by a corporation that is a stock-listed corporation, disclose details on the exercise of the voting rights through the securities market within the five days preceding the date of a general meeting of shareholders; or
2. A collective investment manager shall, when it intends to exercise voting rights of the stocks issued by a corporation that is not a stock-listed corporation, disclose details on the exercise of the voting rights under the methods falling under each of the subparagraphs of Article 93 (1) of this Decree, and make them available to the public. (2) Where it is difficult to make a disclosure under paragraph (1) within the five days preceding the date of a general meeting of shareholders, including cases where specific contents of subject matter at the general meeting of shareholders are not determined within the five days preceding the date of the general meeting of shareholders, a collective investment manager (referring to the collective investment manager under Article 87 (1) of the Act; hereafter in this
Article, the same shall apply) shall disclose such circumstances before the date of the general meeting of shareholders, and disclose the exercise of the voting rights at the general meeting of shareholders within the five days preceding the date of the general meeting of shareholders through the method falling under each subparagraph of paragraph (1). (3) The term "documents prescribed by the Presidential Decree" under Article 87 (9) of the Act shall be as follows:
1. Internal directives of a collective investment manager on the exercise of the voting rights;
2. The number of stocks held by a collective investment manager for each collective investment scheme with respect to the exercise of the voting rights; and
3. Documents indicating whether the relation between a collective investment manager and a corporation subject to the exercise of voting rights fit the relation specified under Article 89 (1) or 89 (2) of this Decree.
Article 92 (Asset Management Report)
(1) The term "cases prescribed by the Presidential Decree" under the proviso of Article 88 (1) of the Act shall mean cases falling under any of the following subparagraphs:
1. Where an investor proclaims, in writing, that he/she refuses to receive asset management reports;
2. Where a collective investment manager establishes or incorporates a collective investment scheme of short-term finance and discloses asset management reports through the methods prescribed and publicized by the Financial Services Commission more than once in a month;
3. Where a collective investment manager establishes or incorporates a closed-end collective investment scheme (limited to cases where the collective investment securities are listed pursuant to Article 230 (3) of the Act) and discloses asset management reports through the methods prescribed and publicized by the Financial Services Commission more than once every three months; or
4. Where the value of the collective investment securities held by an investor is not more than 100,000 won and the collective investment agreement prescribes that no asset management report is provided in such a case.
(2) The term "turnover rate of the trading prescribed by the Presidential Decree" under Article 88 (2) 4 of the Act shall mean the rate calculated by dividing the total amount of the The Enforcement Decree of the Financial Investment Services and Capital Market Act value of stocks sold during the management period concerned (referring to the management period under Article 88 (2) 2 of the Act) by the average value of the stocks held during the same period.
(3) The term "others prescribed by the Presidential Decree" under Article 88 (2) 5 of the Act shall be as follows:
1. Details of the investment assets belonging to collective investment properties as of the reference date (referring to the reference date under Article 88 (2) 1 of the Act; hereafter in this Article, the same shall apply);
2. Matters on the fund managers of a collective investment scheme;
3. Traded amount, commissions and weights of transactions conducted by each broker classified by type of stocks, securities other than stocks and exchange-traded derivatives on a monthly basis;
4. Matters on transactions with interested persons;
5. Whether the voting rights to a corporation subject to the disclosure of voting rights under Article 87 (7) of the Act are exercised and the details thereof (where the voting rights are not exercised, including the reasons therefor);
6. Matters on the details of transactions of securities issued by an affiliate under Article 86 (1) of this Decree; and
7. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(4) A collective investment manager shall, when it provides asset management reports to investors, provide the reports in person or by mail within two months of the reference date through a broker or dealer who has sold the collective investment securities: Provided, That when an investor presents his/her intention to receive such reports by e-mail, the collective investment manager may provide them in such a way. (5) The cost for preparing and providing asset management reports shall be imposed on a collective investment manager.
(6) The form of asset management reports, the preparation thereof, and other necessary matters shall be prescribed and publicized by the Financial Services Commission. Article 93 (Methods of Ongoing Disclosure)
(1) The term "conditions prescribed by the Presidential Decree" under Article 89 of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs:
1. Making a disclosure through the Internet websites, etc. of a collective investment manager, a broker or dealer who has sold collective investment securities, and the Association;
2. Making a publication at the head office, branches or other business offices of a collective investment manager and a broker or dealer who has sold collective investment securities; or
3. Notifying investors via e-mail. (2) The term "non-performing asset prescribed by the Presidential Decree" under subparagraph 3 of Article 89 of the Act shall mean assets prescribed and publicized by the Financial Services Commission as non-performing assets incurred from causes including bankruptcy of issuers and the application for workout process under the Debtor Rehabilitation and Bankruptcy Act.
(3) The term "matters prescribed by the Presidential Decree" under subparagraph 5 of Article 89 of the Act shall mean those falling under any of the following subparagraphs:
1. Changes in a prospectus: Provided, That cases falling under any of the following items are excluded:
(a) Where the prospectus is changed upon the amendment of the Act and this Decree, or the order from the Financial Services Commission; (b) Where the prospectus is changed upon the change of a collective investment agreement; or
(c) Where there are minor changes in the prospectus such as correction of simple words and phrases;
2. Merger, split-off and split-and-merger, or transfer and acquisition of business of a collective investment manager;
3. Where a collective investment manager or a general fund administrator corrects any calculation error of base price, the details thereof (limited to cases where a public notice or a publication is made pursuant to the latter part of Article 262 (1) of this Decree); or
4. Others prescribed and publicized by the Financial Services Commission as materially affecting investment decisions of investors.
The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 94 (Report and Disclosure on Collective Investment Property) (1) A collective investment manager (referring to the collective investment manager under Article 90 (1) of the Act; hereafter in this Article, the same shall apply) shall prepare a business report on collective investment properties (limited to the properties of an investment trust or investment undisclosed association; hereafter in this Article, the same shall apply) pursuant to Article 90 (1) of the Act after classifying the report into the documents falling under each of the following subparagraphs under the conditions prescribed and publicized by the Financial Services Commission:
1. Current status of the establishment of the investment trust and current status of changes in contributions to the investment undisclosed association;
2. Current status of management of collective investment properties and the list of base prices of collective investment securities (limited to the beneficiary certificates of an investment trust and equity securities of an investment undisclosed association);
3. Documents indicating whether the voting rights to a corporation subject to the disclosure of voting rights under Article 87 (7) of the Act are exercised, and the details thereof (where the voting rights are not exercised, including the reasons therefor); and
4. Turnover rate of trading (referring to the turnover rate of trading under Article 88 (2) 4 of the Act) of stocks which are the assets belonging to collective investment properties and traded amount, commissions and weights related to the consigned purchase and sale of the assets by each broker.
(2) The Association shall compare the management performances of each collective investment property and disclose the results thereof pursuant to Article 90 (4) of the Act under the conditions prescribed and publicized by the Financial Services Commission after classifying the performances into the matters falling under each of the following subparagraphs:
1. Collective investment managers;
2. Brokers or dealers;
3. Type of collective investment scheme;
4. Major investment assets (hereinafter referred to as "major investment asset") prescribed and publicized by the Financial Services Commission;
5. Bonus;
6. Sales commissions and fees; and
7. Others prescribed and publicized by the Financial Services Commission. (3) The Association may request that a collective investment manager of an investment trust or undisclosed investment association, or an investment company, etc. under Article 182 (1) of the Act (hereinafter referred to as "investment company, etc.") submit data on the collective investment agreement, prospectus, reference price, etc. of each collective investment scheme to the extent that it is necessary to compare and disclose the management performances of collective investment schemes.
Article 95 (Access and Disclosure of Books and Documents) (1) The term "reasonable grounds prescribed by the Presidential Decree" under the latter part of Article 91 (1) of the Act shall mean those falling under any of the following subparagraphs. In such a case, a collective investment manager (referring to the collective investment manager under Article 91 (1) of the Act) shall notify the investors in writing of the fact that the access to and distribution of the books and documents are unavailable, and the reasons therefor:
1. Where it is likely that a person who is provided with the books and documents containing the details of transaction orders of collective investment properties will use such information in transactions or business or provide such information to another person;
2. Where it is clearly recognized that providing the books and documents containing details of transaction orders of collective investment properties causes damages to other investors; or
3. Where it is impractical to meet the request of investors for access to the books and documents on a terminated or dissolved collective investment scheme for reasons, including the expiration of the period to keep the books and documents under Article 62 (1) of this Decree.
(2) Books and documents that an investor is entitled to request for access to and distribution of certified copies or abridged copies thereof pursuant to Article 91 (1) of the Act shall be as follows:
1. List of collective investment properties;
2. Ledger of collective investment securities;
3. Financial statements and the addenda thereof; and
4. Details of the management of collective investment properties. The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 96 (Special Cases for Management of Derivatives) (1) The term "limit prescribed by the Presidential Decree" under the former part of Article 93 (1) of the Act shall be 10/100 of the total amount of assets of a collective investment scheme. (2) The term "risk-related indices prescribed by the Presidential Decree" under the former part of Article 93 (1) of the Act shall be as follows: Provided, That subparagraph 2 shall not apply to the derivatives prescribed and publicized by the Financial Services Commission as difficult to calculate the indices because of insufficient data for calculating risk-related indices:
1. Structure of profits and losses in transactions of derivatives at maturity;
2. Where the structure of profits and losses of collective investment properties is changed in the wake of changes in the market situation, or the fluctuation of market prices adversely affects the collective investment scheme within a certain confidence interval during a certain holding period, the maximum amount of estimated losses incurred from the transactions of derivatives; or
3. Other indices prescribed and publicized by the Financial Services Commission as important standards for investment decision of investors. (3) Specific methods of calculating risk-related indices under paragraph (2) and other necessary matters shall be prescribed and publicized by the Financial Services Commission. (4) The term "limit prescribed by the Presidential Decree" under Article 93 (2) of the Act shall be 10/100 of the total amount of assets of a collective investment scheme. Article 97 (Special Cases for Management of Real Estate) (1) The term "conditions prescribed by the Presidential Decree" under Article 94 (1) of the Act shall mean that a collective investment manager borrows money by providing real estate as collateral to financial institutions falling under any of the following subparagraphs, or through other methods prescribed and publicized by the Financial Services Commission: Provided, That where a general meeting of collective investors resolves to adopt other conditions, the collective investment manager may borrow money in accordance with such resolution:
1. Financial institutions falling under each item of Article 79 (2) 5 of this Decree;
2. Insurance companies;
3. Funds under the Finance Act;
4. Other collective investment schemes of real estate; or
5. Foreign financial institutions, etc. equivalent to those referred to under subparagraphs 1 through 4.
(2) The term "others prescribed by the Presidential Decree" under Article 94 (2) of the Act shall mean real estate investment companies under the Real Estate Investment Company Act or other collective investment schemes.
(3) The term "conditions prescribed by the Presidential Decree" under Article 94 (2) of the Act shall mean those satisfying both of the following requirements:
1. Matters on lending money shall be prescribed by a collective investment agreement; and
2. A collective investment manager shall secure appropriate measures to collect loans, including the creation of collateral rights to real estate or the payment guarantee from a constructor.
(4) Where a collective investment manager lends money pursuant to Article 94 (2) of the Act, the limits of loan shall be 100/100 of the value calculated by deducting the total amount of liabilities from the total amount of assets of the collective investment scheme concerned. (5) The term "matters prescribed by the Presidential Decree" under Article 94 (3) of the Act shall be as follows:
1. Transaction costs of real estate;
2. Financial materials related to real estate;
3. Matters affecting profits of real estate; and
4. Others prescribed and publicized by the Financial Services Commission as necessary for a decision on transactions of real estate.
(6) The term "others prescribed by the Presidential Decree" under Article 94 (4) of the Act shall be as follows:
1. Matters on business plan containing construction schedules, etc.;
2. Matters on raising, investing and collecting funds;
3. Matters on estimated profit and loss;
4. Matters on risks of business;
5. Matters on outsourcing, such as construction, etc.; and
6. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
The Enforcement Decree of the Financial Investment Services and Capital Market Act (7) Where a collective investment manager borrows money pursuant to Article 94 (1) of the Act, the limits of the borrowed money shall be as follows:
1. Where money is borrowed for the account of a collective investment scheme of real estate, 200/100 of the value calculated by deducting the total amount of liabilities from the total amount of assets of the collective investment scheme of real estate: Provided, That where a general meetings of collective investors resolves otherwise, the resolved limits thereof;
2. Where money is borrowed for the account of a collective investment scheme other than a collective investment scheme of real estate, the ratio prescribed and publicized by the Financial Services Commission within the scope of 100/100 of the value of the real estate belonging to the collective investment scheme concerned. In such a case, the appraisal of the value of real estate shall be the value determined by the appraisal committee under Article 238 (2) of the Act (hereinafter referred to as "collective investment property appraisal committee") in accordance with the standards for appraising collective investment property under Article 238 (3) of the Act.
(8) A collective investment manager shall not manage the money borrowed pursuant to Article 94 (1) of the Act by methods other than investing in real estate: Provided, That the same shall not apply to cases prescribed and publicized by the Financial Services Commission when taking into account the type of collective investment schemes. (9) Notwithstanding item (c) of subparagraph 2 of Article 45 of this Decree, a collective investment manager of a collective investment scheme of real estate may delegate a third party with the businesses falling under Articles 240 (4) 1 through 240 (4) 3 of this Decree and other businesses incidental thereto.
Subsection 3 Conduct of Business Regulations of Discretionary Investment Advisory Company and Non-discretionary Investment Advisory Company Article 98 (Making Contract)
The term "matters prescribed by the Presidential Decree" under Article 97 (1) 8 of the Act shall be as follows:
1. Matters on officers and major shareholders;
2. In the case of contracts for discretionary investment advisory service, the type of discretionary investment properties to be held by investors at the time of commencing the contracts and the type of the discretionary investment properties to be held by the investors at the time of terminating the contracts;
3. Matters on investment methods applied in managing discretionary investment properties;
4. Period for the preparation of a discretionary investment advisory report under Article 99 (1) of the Act (hereinafter referred to as "discretionary investment advisory report"); and
5. Others prescribed and publicized by the Financial Services Commission as important standards for determining whether an investor enters into a contract. Article 99 (Prohibition of Unfair Business Practice) (1) The term "cases prescribed by the Presidential Decree" under the proviso of Article 98 (1) of the Act other than each subparagraph shall mean cases, in the application of Article 98 (1) 1 and 98 (1) 2 of the Act, where a discretionary investment advisory company or non- discretionary investment advisory company provides other financial investment services or other financial services concurrently and the relevant Acts and subordinate statutes thereof do not prohibit activities falling under Articles 98 (1) 1 and 98 (1) 2 of the Act. (2) The term "cases prescribed by the Presidential Decree" under the proviso of Article 98 (2) of the Act other than each subparagraph shall be as follows:
1. In the application of Article 98 (2) 1 of the Act, cases falling under either of the following items:
(a) Where it is proven that any information on the management of discretionary investment properties is not used; or
(b) Where it is objectively clear that the information on the management of discretionary investment properties, including arbitrage transactions, etc. is intentionally not used.
2. In the application of Article 98 (2) 2 of the Act, cases where securities, etc. are purchased three months from the date of underwriting;
3. In the application of Article 98 (2) 6 of the Act, cases falling under any of the following items:
(a) Transactions under a contract that has been entered into six months before the counter-party becomes an interested person;
The Enforcement Decree of the Financial Investment Services and Capital Market Act (b) Transactions on the open market including the securities market which is open to the public;
(c) Transactions which are in favor of collective investment schemes when taking into account common transaction conditions;
(d) Purchase and sale with repurchase agreement;
(e) Purchase and sale of discretionary investment properties with persons other than discretionary investment advisory companies or interested persons under the conditions prescribed and publicized by the Financial Services Commission through a discretionary investment advisory company or an interested person who arranges for or intermediates such transactions, or acts as an agent for that purpose; (f) Purchase and sale of debt securities, certificates of deposit denominated in Korean won or notes (excluding commercial papers) with interested persons through brokerage service (referring to the brokerage in the form of transactions prescribed and publicized by the Financial Services Commission) by the interested person concerned; (g) Transactions to sell collective investment securities of an exchange-traded fund in order to avoid risks associated with the investment after borrowing them with discretionary investment properties; or
(h) Others recognized by the Financial Services Commission as unlikely to undermine the interests of investors;
4. In the application of Article 98 (2) 8 of the Act, where transaction orders of investment assets are collectively executed and the results of the execution are distributed in a fair manner based on the predetermined details of the asset distribution for each discretionary investment property in order to effectively manage each discretionary investment property; and
5. In the application of Article 98 (2) 9 (c) of the Act, cases falling under any of the following items:
(a) Exercising the rights to make claims for the purchase of stocks; (b) Making a tender offer;
(c) Subscribing for capital increase with consideration; (d) Exercising the conversion rights of convertible bonds; (e) Exercising the preemptive rights of bonds with warrant;
(f) Requesting an exchange of exchangeable bonds; (g) Exercising the rights of derivative-linked securities; or (h) Exercising the rights under Article 5 (1) 2 of the Act. (3) The term "underwriting business prescribed by the Presidential Decree" under Article 98 (2) 3 of the Act shall mean the business that determines the conditions of underwriting upon the request for underwriting securities directly from issuers or secondary distributors. (4) The term "activities prescribed by the Presidential Decree" under Article 98 (2) 10 of the Act shall mean those falling under any of the following subparagraphs:
1. Disagreeing with the request of a professional investor (excluding persons falling under each subparagraph of Article 10 (1) of this Decree), without any justifiable cause, that he/she should be treated as a non-professional investor pursuant to the proviso of Article 9 (5) of the Act;
2. Managing discretionary investment properties in violation of a contract for discretionary investment advisory service;
3. Purchasing or selling financial investment products too frequently using discretionary investment properties without taking into account the scope of discretionary investment, the purpose of investment, etc.;
4. Providing an investor (where an investor is a corporation or other organization, including officers and employees thereof) or a counter party (where a counter party is a corporation or other organization, including officers and employees thereof) with benefit which has a property value or receiving such benefit from an investor or counter party directly or indirectly from investors in violation of the standards prescribed and publicized by the Financial Services Commission with respect to the business;
5. Using over-the-counter derivative transactions, trust contracts, linked transactions, etc. for the purpose of avoiding any prohibition or restriction under Articles 55 and 98 of the Act;
6. Receiving any blank check or blank bill in order to secure the rights as a creditor; or
7. Others prescribed and publicized by the Financial Services Commission as likely to undermine the protection of investors or sound trade practice. Article 100 (Distribution of Discretionary Investment Advisory Report) The Enforcement Decree of the Financial Investment Services and Capital Market Act (1) A discretionary investment advisory report under Article 99 (1) of the Act shall include the matters falling under each of the following subparagraphs during the period for the preparation of the discretionary investment advisory report:
1. Outline of management performance and current status of profits and losses;
2. Current management status of discretionary investment properties such as trading dates, traded prices, consignment commissions, various taxes, etc.;
3. Current status of balance, acquisition value, market value, and appraised profit and loss by type of assets belonging to discretionary investment properties;
4. Where commissions for discretionary investment advisory service are charged, the time and amount thereof; and
5. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) A discretionary investment advisory company shall distribute a discretionary investment advisory report to investors in person, by mail, etc. within two months after the period for the preparation of the discretionary investment advisory report: Provided, That when a non- professional investor presents his/her intention that he/she receive a discretionary investment advisory report by e-mail, the discretionary investment advisory report may be distributed in such a way.
(3) The form of a discretionary investment advisory report, the preparation and distribution thereof, and other necessary matters shall be prescribed and publicized by the Financial Services Commission.
Article 101 (Special Cases for Offshore Non-discretionary Investment Advisory Company) (1) An offshore discretionary investment advisory company under Article 100 (1) (hereafter in this Article, referred to as "discretionary investment advisory company") of the Act or an offshore non-discretionary investment advisory company under Article 100 (1) of the Act (hereafter in this Article, referred to as "non-discretionary investment advisory company") shall prepare each business report pursuant to Article 100 (5) of the Act for three months, six months, nine months and twelve months, respectively, from the date of the commencement of every business year in accordance with the standards prescribed and publicized by the
Financial Services Commission and file such business reports with the Financial Services Commission within the period up to one month after the expiration of each reporting period. (2) The term "person who is designated by the Presidential Decree" under Article 100 (6) of the Act shall mean those falling under any of the following subparagraphs:
1. Government;
2. The Bank of Korea;
3. A person falling under any of Articles 10 (2) 1 through 10 (2) 17 of this Decree; or
4. A person falling under Articles 10 (3) 1 through 10 (3) 14 of this Decree; (3) The term "foreign custodian designated by the Presidential Decree" under Article 100 (7) of the Act shall mean foreign custodians specified in each subparagraph of Article 63 (2) of this Decree.
(4) An offshore discretionary investment advisory company shall distribute discretionary investment advisory reports prepared pursuant to the standards prescribed and publicized by the Financial Services Commission to its investors in person or by mail at least once a month: Provided, That when an investor presents his/her intention to receive the discretionary investment advisory reports by e-mail, the reports concerned may be distributed in such a way. (5) In addition to the matters prescribed in paragraphs (1) through (4), other necessary matters on the business methods and procedures of offshore discretionary investment advisory companies or offshore non-discretionary investment advisory companies shall be prescribed and publicized by the Financial Services Commission. Article 102 (Report of Like-kind Services of Non-discretionary Investment Advisory) The term "business prescribed by the Presidential Decree" under Article 101 (1) of the Act shall mean an investment advisory service to be provided by a person other than non- discretionary investment advisory companies in return for a certain compensation using periodicals, publications, correspondence, or broadcasting that are available for the public to purchase or receive at any time.
Subsection 4 Conduct of Business Regulations of Trust Company Article 103 (Type of Trust)
The Enforcement Decree of the Financial Investment Services and Capital Market Act A money trust shall be classified as each of the following subparagraphs pursuant to Article 103 (3) of the Act:
1. A money trust whose management is ordered by an entruster and whose property is money (hereinafter referred to as "specified money trust"); and
2. A money trust whose management is not ordered by an entruster and whose property is money (hereinafter referred to as "unspecified money trust"). Article 104 (Methods of Providing Trust Service)
(1) A trust company shall not compensate any loss or guarantee any profit with respect to the property entrusted: Provided, That the same shall not apply to the trust service for paying pension or retirement benefits prescribed and publicized by the Financial Services Commission. (2) Where any loss is compensated or any profit is guaranteed pursuant to the proviso of paragraph (1) with respect to the entrusted property and the management performance falls short of those prescribed in a trust contract, a trust company shall compensate for such shortage in the order of special reserve (referring to the amount deposited for compensation or guarantee of trust with agreements of compensation for damage or guarantee of profit), trust fees and proprietary property.
(3) A trust company shall, when the period of a trust contract is terminated, return the trust property based on the management performances except for cases where any loss is compensated or any profit is guaranteed pursuant to the proviso of paragraph (1). (4) Where an entruster cancels a trust contract before the termination of the contract period, a trust company shall return the amount calculated by deducting cancellation commissions provided for in the trust contract from the management performance under paragraph (3): Provided, That the trust company shall not deduct cancellation commission in cases prescribed and publicized by the Financial Services Commission. (5) A trust company may receive trust fees as provided for in a trust contract. (6) The term "project funds prescribed by the Presidential Decree" under Article 103 (4) of the Act shall mean the amount calculated by deducting the acquisition value of the real estate, registration cost, and other incidental expenses related to the acquisition of the real estate from the entire costs for real estate development projects such as construction costs, advertisement costs, distribution costs, etc.
Article 105 (Acquisition of Trust Property Using Proprietary Property) The term "cases prescribed by the Presidential Decree" under Article 104 (2) 2 of the Act shall mean cases recognized by the Financial Services Commission as meeting all the requirements falling under the following subparagraphs:
1. The remaining period until the termination of a trust contract shall be not more than three months;
2. Trust property shall be difficult to dispose of by methods other than acquiring the trust property as its own property; and
3. The acquisition value shall be calculated in a fair manner. Article 106 (Methods of Managing Trust Property)
(1) The term "securities prescribed by the Presidential Decree" under Article 105 (1) 1 of the Act shall mean securities falling under any of the following subparagraphs:
1. Debt securities;
2. Equity securities;
3. Beneficiary certificates;
4. Investment contract securities;
5. Derivative-linked securities; or
6. Securities deposit receipts. (2) The term "financial institutions prescribed by the Presidential Decree" under Article 105 (1) 3 of the Act shall mean institutions falling under any of the following subparagraphs:
1. Banks;
2. The Korea Development Bank under the Korea Development Bank Act;
3. The Industrial Bank of Korea under the Industrial Bank of Korea Act;
4. Securities finance company;
5. Merchant banks;
6. Mutual savings banks under the Mutual Savings Banks Act;
7. Agricultural cooperatives under the Agricultural Cooperatives Act;
8. Fisheries cooperatives under the Fisheries Cooperatives Act;
9. Credit union cooperatives under the Credit Union Cooperatives Act; The Enforcement Decree of the Financial Investment Services and Capital Market Act
10. Postal service office under the Postal Savings and Insurance Act; or
11. Foreign financial institutions equivalent to those falling under subparagraphs 1 through
10. (3) The term "methods prescribed by the Presidential Decree" under Article 105 (1) 10 of the Act shall mean methods falling under any of the following subparagraphs:
1. Purchase of certificates of deposit denominated in Korean won;
2. Management of surface rights, chonsegwon (rights to registered lease on a deposit basis), leasehold rights, rights to claim the registration of transfer of real estate, and other rights related to real estate;
3. Purchase with repurchase agreement;
4. Borrowing or lending of securities;
5. Where retirement pension fund reserves are invested in accordance with a trust contract under Article 16 (2) of the Guarantee of Workers' Retirement Benefits Act, investment in the rights to claim insurance benefits under Article 16 (2) of the same Act; or
6. Others prescribed and publicized by the Financial Services Commission after taking into account the stability and profitability of trust property. (4) The term "cases prescribed by the Presidential Decree" under Article 105 (2) of the Act shall mean cases falling under either of the following subparagraphs; 1.Where a trust contract for real estate development is entered into pursuant to Article 103 (4) of the Act and a trust company is entrusted with money within 15/100 of the project funds of each real estate development project (referring to the project funds under Article 104 (6) of this Decree) in accordance with the trust contract; or
2. Cases recognized by the Financial Services Commission as satisfying both of the following requirements:
(a) Where it is difficult to dispose of part of the trust property when the partial cancellation of a trust contract is requested; and (b) Where the borrowing interest rate is reasonable. (5) A trust company shall, when it manages money belonging to the trust property, comply with the standards falling under each of the following subparagraphs:
1. In the case of specified money trust (limited to acquisition and disposal of treasury stocks issued by the entruster concerned using the trust property):
(a) The trust company shall acquire treasury stocks through the securities market or tender offer under Article 133 of the Act;
(b) The trust company shall not dispose of the treasury stocks within one month after it has acquired them, or shall not acquire the stocks within one month after it has disposed of them; and
(c) The trust company shall not manage surplus funds remaining after acquiring the treasury stocks through the methods other than those prescribed and publicized by the Financial Services Commission;
2. In the case of unspecified money trust: (a) The trust company shall not exceed 3/100 of each trust property when investing in private bonds (excluding private bonds and secured bonds whose payments of principal and interest are guaranteed by the person prescribed and publicized by the Financial Services Commission);
(b) The trust company shall not exceed 50/100 of each trust property when investing in equity securities (including securities deposit receipts related thereto) and exchange- traded derivatives. In such a case, the trust company shall calculate the scope based on the risk-assessed amount (referring to the risk-assessed amount under Article 81 (2) of the Act; hereafter in this Article, the same shall apply) incurred from the transactions thereof;
(c) The trust company shall not invest in over-the-counter derivatives to the extent that the risk-assessed amount incurred from the transactions exceeds 10/100 of each trust property;
(d) The trust company shall not exceed 15/100 of the total number of outstanding equity securities when investing in equity securities (including securities deposit receipts related thereto) issued by the same corporation, etc.; and (e) The trust company shall comply with other management methods for trust property as prescribed and publicized by the Financial Services Commission; and
3. The trust other than subparagraphs 1 and 2 shall meet the conditions prescribed and publicized by the Financial Services Commission in order to protect beneficiaries or to maintain sound trade practice.
Article 107 (Management of Surplus Fund)
The Enforcement Decree of the Financial Investment Services and Capital Market Act (1) The term "financial institutions designated by the Presidential Decree" under subparagraphs 1 and 3 of Article 106 of the Act shall mean those falling under each subparagraph of Article 106 (2) of this Decree.
(2) The term "methods prescribed by the Presidential Decree" under subparagraph 4 of Article 106 of the Act shall mean those falling under any of the following subparagraphs:
1. Short-term loans under Article 83 (4) of the Act;
2. Purchase of bonds (excluding special bonds) issued by the financial institutions falling under each subparagraph of Article 106 (2) of this Decree; or
3. Other methods prescribed and publicized by the Financial Services Commission as unlikely to undermine the stability and profitability of trust property. Article 108 (Duty to Deposit)
(1) The term "trust company prescribed by the Presidential Decree" under the proviso of Article 107 (1) of the Act shall mean a trust company whose capital is not less than 100 billion won as of the end of the latest business year.
(2) A trust company shall deposit the larger amount between the amount equivalent to 1/100 of capital and the amount equivalent to 10/100 of net profit within 20 days of the date of a regular general meeting of shareholders to the extent that the deposited amount under Article 107 (1) of the Act reaches the limit under Article 107 (1) of the Act: Provided, That the trust company under paragraph (1) shall deposit the amount equivalent to 1/5,000 of its capital. (3) A trust company shall deposit the amount under paragraph (2) at the location of its head office.
(4) Where securities other than money are deposited, the methods of calculating the value thereof shall be prescribed and publicized by the Financial Services Commission. (5) A trust company shall, when it deposits the amount under paragraph (2), file the documents indicating the details of the deposit and the ratio to the capital with the Financial Services Commission accompanying the copies of deposit receipts. Article 109 (Prohibition of Unfair Business Practice)
(1) The term "cases prescribed by the Presidential Decree" under the proviso of Article 108 of the Act other than each subparagraph shall mean those falling under either of the following subparagraphs:
1. In the application of subparagraph 1 of Article 108 of the Act, cases falling under any of the following items:
(a) Where it is proven that any information on the management of trust property is not used; or
(b) Where arbitrage transactions taking advantage of the price differences between the securities market and the derivatives market and other transactions equivalent thereto are conducted and where it is objectively clear that the information on the management of trust property is intentionally not used;
2. In the application of subparagraph 2 of Article 108 of the Act, cases where securities are purchased three months after the underwriting date;
3. In the application of subparagraph 5 of Article 108 of the Act, cases falling under either of the following subparagraphs where one party sells assets among the trust property managed by the same trust company and another party purchases the same assets at the same time. In such a case, the trading prices, the methods and procedures of the transactions, and other necessary matters shall be prescribed and publicized by the Financial Services Commission: (a) Where it is inevitable to pay the termination commissions caused by the termination (including partial terminations) of trust contracts; or (b) Other cases recognized by the Financial Services Commission as unlikely to undermine the interests of beneficiaries;
4. In the application of subparagraph 6 of Article 108 of the Act, cases falling under any of the following items:
(a) Transactions under a contract which has been entered into not more than six months before the counter-party becomes an interested person; (b) Transactions through the open market including the securities market which is open to the public;
(c) Transactions which are in favor of a trust property when taking into account common transaction conditions;
(d) Transactions with repurchase agreement;
The Enforcement Decree of the Financial Investment Services and Capital Market Act (e) Purchase and sale of investment assets with trust companies and persons other than interested persons under the conditions prescribed and publicized by the Financial Services Commission through a trust company or an interested person who arranges for or intermediates such transactions or act as an agent for that purpose; or (f) Purchase and sale of debt securities, certificates of deposit denominated in Korean won, or notes (excluding commercial papers) with trust companies and interested persons through brokerage (referring to the brokerage in the form of transactions as prescribed and publicized by the Financial Services Commission) by a trust company and its interested person;
(g) Transactions under Article 104 (2) or 105 (2) of the Act; (h) Deposit transactions (in the case of specified money trusts whose entrusted amount is not less than 300 million won or specified money trusts under the Act on Guarantee of Retirement Pay for Workers, limited to cases where it is necessary to guarantee the payment of principal and interest);
(i) Temporary lending of funds (limited to cases where funds are lent to the trust company which manages the trust property) where other management methods are unavailable due to the restriction of time or the size of the amount; or (j) Other transactions recognized by the Financial Services Commission as unlikely to be in a conflict of interests with the trust property when taking into account of the type, condition, and method of transaction; or
5. In the application of subparagraph 5 of paragraph (3), where, in order to manage each trust property effectively, the transaction orders of investment assets are collectively executed and the results of the execution are distributed in a fair manner based on the predetermined details of the asset distribution.
(2) The term "underwriting business prescribed by the Presidential Decree" under subparagraph 3 of Article 108 the Act shall mean the business that determines the conditions of underwriting upon the request for underwriting directly from issuers or secondary distributors. (3) The term "activities prescribed by the Presidential Decree" under subparagraph 9 of Article 108 of the Act shall mean those falling under any of the following subparagraphs:
1. Disagreeing with the request of a professional investor (excluding persons falling under each subparagraphs of Article 10 (1) of this Decree), without any justifiable cause, that
he/she be treated as a non-professional investor pursuant to the proviso of Article 9 (5) of the Act other than each subparagraph;
2. Managing trust property in violation of a trust contract;
3. Purchasing or selling financial investment products too frequently using trust property without taking into account the management instruction or strategies of a trust contract;
4. Providing beneficiaries (where a beneficiary is a corporation and other groups, etc., including the officers and employees thereof) or counter-parties (where a counter-party is a corporation and other groups, etc., including the officers and employees thereof) with benefit that has a property value or to receive such benefit from beneficiaries or counter- parties directly or indirectly in violation of the standards prescribed and publicized by the Financial Services Commission;
5. Managing trust property by collecting assets under several trust contracts, rather than managing them for each trust in accordance with each trust contract: Provided, That the same shall not apply to cases falling under Article 6 (4) 2 of this Decree;
6. Carrying out investment solicitation or running investment advertisement on the completion of trust contracts after informing that several trust property are collectively managed;
7. Making a cross-investment in specific assets using trust property through a contract with a third party or collusion, etc.;
8. Using over-the-counter derivative transactions, trust contracts, linked transactions, etc. for the purpose of avoiding any prohibition or restriction under Articles 55, 105, 106, 108 of the Act, and Article 104 (1) of this Decree;
9. Receiving any blank check or blank bill in order to secure the rights as a creditor; or
10. Others prescribed and publicized by the Financial Services Commission as likely to undermine the protection of beneficiaries or sound trade practice. Article 110 (Trust Contract)
The term "matters prescribed by the Presidential Decree" under subparagraph 10 of Article 109 shall be as follows:
1. Where a beneficiary is not decided, matters on the scope and qualifications of the person to be a beneficiary and other matters necessary for determining a beneficiary; The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Where a beneficiary is required to indicate its intention to receive the benefits of trust, the details thereof;
3. Matters on the record and registration under Article 3 (1) of the Trust Act or the presentation and indication of the trust property under Article 3 (2) of the same Act;
4. Type of the trust property to be allocated to a beneficiary and methods and time of the allocation;
5. Matters on utility bills, repair costs and other expenses necessary for managing trust property;
6. Matters on the final calculation at the termination of a trust contract; and
7. Others prescribed and publicized by the Financial Services Commission as necessary for maintaining sound trade practice.
Article 111 (Report on Issuance of Beneficiary Certificates) (1) The term "documents prescribed by the Presidential Decree" under Article 110 (2) of the Act shall be as follows:
1. Issuance plan of beneficiary certificates;
2. Fund management plan; and
3. Trust agreement or trust deed. (2) The term "others prescribed by the Presidential Decree" under Article 110 (5) 9 of the Act shall be as follows:
1. Issuance date of beneficiary certificates; and
2. Symbol and number of beneficiary certificates. Article 112 (Purchase of Beneficiary Certificates) A trust company shall, when it purchases beneficiary certificates with its own properties pursuant to Article 111 of the Act, purchase them at the value calculated pursuant to Article 104 (2) of the Act.
Article 113 (Restrictions on Exercising Voting Rights)
(1) The term "person prescribed by the Presidential Decree as specially related to the trust company" under Article 112 (2) 1 (a) of the Act shall mean a specially-related person and co- holder under Article 141 (2) of this Decree.
(2) The term "person prescribed by the Presidential Decree" under Article 112 (2) 1 (b) of the Act shall mean a major shareholder (including a shareholder who is a specially-related person of the largest shareholder; hereafter in this Article, the same shall apply) of a trust company. (3) The term "relation prescribed by the Presidential Decree" under Article 112 (2) 2 (b) of the Act shall mean the relation as a major shareholder of a trust company. Article 114 (Disclosure of Exercise of Voting Rights) (1) Disclosure of exercise of voting rights under Article 112 (7) of the Act shall be made through methods falling under either of the following subparagraphs:
1. A trust company shall, when it intends to exercise voting rights of the stocks issued by a corporation that is a stock-listed corporation, disclose the exercise of voting rights through the securities market five days preceeding the date of a general meeting of shareholders; or
2. A trust company shall, when it intends to exercise voting rights of the stocks issued by a corporation that is not a stock-listed corporation, disclose the exercise of voting rights through the methods falling under each subparagraph of Article 93 (1) of this Decree in order to make it available to the public.
(2) Where it is difficult to make a disclosure under paragraph (1) five days preceding the date of a general meeting of shareholders, including cases where specific contents of subject matter at a general meeting of shareholders are not determined five days preceding the date of a general meeting of shareholders, a trust company shall disclose such circumstance preceding the date of a general meeting of shareholders and disclose the exercise of voting rights at the general meeting of shareholders within five days of the date of the general meeting of shareholders through the methods under paragraph (1). Article 115 (Access to and Disclosure of Books and Documents) (1) The term "reasonable ground to do so as prescribed by the Presidential Decree" under the latter part of Article 113 (1) of the Act shall mean those falling under any of the following subparagraphs. In this case, a trust company shall notify its beneficiaries in writing of the fact The Enforcement Decree of the Financial Investment Services and Capital Market Act that the access to and disclosure of books and documents are unavailable, and the reasons therefor:
1. Where it is likely that a person who is provided with the books and documents containing details of the management of trust property will use such information in transactions or business, or provide such information to another person;
2. Where it is clearly recognized that providing the books and documents containing details of the management of trust property causes damages to other beneficiaries; or
3. Where it is impractical to meet the request of beneficiaries for accessing the books and documents on the trust property under a trust contract due to causes such as the expiration of the period to keep the books and documents under Article 62 (1) of this Decree. (2) A beneficiary may request access to or receipt of the certified or abridged copies of the books and documents falling under each of the following subparagraphs:
1. List of trust properties;
2. Financial statements and the addenda thereof; and
3. Details of the management of trust property. Article 116 (Delegation of Establishing Accounting Standards) The term "civilian corporation or group as prescribed by the Presidential Decree" under the former part of Article 114 (2) of the Act shall be the Korea Accounting Institute (hereinafter referred to as "Korea Accounting Institute") under Article 7-2 (1) of the Enforcement Decree of the Act on External Audit of Stock Companies, which is an incorporated association. Article 117 (Exemption from Accounting Audit)
The term "cases prescribed by the Presidential Decree" under the proviso of Article 114 (3) of the Act shall mean those falling under either of the following subparagraphs:
1. A money trust falling under any of the following items: (a) A specified money trust;
(b) A money trust guaranteeing profits (excluding money trusts guaranteeing only the compensation for losses); or
(c) A money trust whose entrusted principal is not more than 30 billion won as of the reference date of accounting audit; or
2. A trust of the properties falling under Articles 103 (1) 2 through 103 (1) 7 of the Act. Article 118 (Appointment of Accounting Auditor)
(1) A trust company shall, when it intends to appoint or dismiss an accounting auditor, obtain an approval (where an audit committee is established, referring to the resolution made by the audit committee) from an auditor.
(2) Accounting principles for trust property shall be prescribed and publicized by the Financial Services Commission after the consultation of the Securities and Futures Commission. (3) The authority of accounting auditors with respect to the accounting audit of trust property shall be as provided for in the Act and in the Act on External Audit of Stock Companies. (4) An accounting auditor shall, when it completes an accounting audit of a trust property, prepare accounting audit reports containing the matters falling under each of the following subparagraphs, and submit them to the trust company without delay:
1. Balance sheet of the trust property;
2. Income statement of the trust property;
3. Profit calculation sheet of the trust property; and
4. Details of transactions between the trust company and its specially-related persons. (5) A trust company shall, when it receives accounting audit reports from an accounting auditor, file them with the Financial Services Commission without delay. (6) A trust company shall allow beneficiaries to access accounting audit reports through the methods prescribed and publicized by the Financial Services Commission. (7) Costs of accounting audit shall be paid from the trust property subject to the accounting audit.
Part 3 Issuance and Distribution of Securities
Chapter 1 Registration Statement
Article 119 (Securities Exempted from Application of Chapter 1 of Part 3 of the Act) (1) The term "Acts prescribed by the Presidential Decree" under Article 118 of the Act shall mean those falling under each of the following subparagraphs:
1. The Bank of Korea Act; The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. The Korea Development Bank Act;
3. The Industrial Bank of Korea Act;
4. The Export-Import Bank of Korea Act;
5. The Agricultural Cooperative Federation Act (limited to the National Agricultural Cooperative Federation);
6. The Fisheries Cooperatives Act (limited to the National Federation of Fisheries Cooperatives);
7. The Depositor Protection Act;
8. The Act on the Efficient Disposal of Non-performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation;
9. The Korea Land Corporation Act;
10. The Korea Highway Corporation Act;
11. The Korea Housing Finance Corporation Act;
12. The Korea National Housing Corporation Act;
13. The Korea Electric Power Corporation Act;
14. The Korea Petroleum Development Corporation Act;
15. The Korea Gas Corporation Act;
16. The Korea Coal Corporation Act;
17. The Korea Water Resources Corporation Act;
18. The Korea Agricultural and Rural Infrastructure Corporation and Farmland Management Fund Act;
19. The Agricultural and Fishery Marketing Corporation Act;
20. The Korea Airports Corporation Act;
21. The Incheon International Airport Corporation Act;
22. The Port Authority Act;
23. The Korea Container Terminal Authority;
24. The Korea National Tourism Organization Act;
25. The Korea Railroad Corporation Act;
26. The Korea Rail Network Authority Act;
27. The Korea Environmental and Resources Corporation Act;
28. The Environmental Management Corporation Act;
29. The Act on the Establishment and Management of Sudokwon Landfill Site Management Corporation; and
30. The Promotion of Small and Medium Enterprises and Encouragement of Purchase of Their Products Act.
(2) The term "securities recognized by the Presidential Decree" under Article 118 of the Act shall mean those falling under each of the following subparagraphs:
1. Debt securities whose payments of principal and interest are guaranteed by the Government or municipal governments;
2. Where the Government or municipal governments sell the securities held through secondary distribution after consulting with the Financial Services Commission in advance, the securities thereof; and
3. Bonds issued by local public enterprises established for the purpose of building and operating an urban railway and developing houses among the bonds issued pursuant to Articles 68 (1) through 68 (6) of the Local Public Enterprises Act. Article 120 (Regulated Activities on Public Offering or Secondary Distribution) (1) A registration statement of public offering or secondary distribution shall be filed in cases falling under each of the following subparagraphs pursuant to Article 119 (1) of the Act:
1. Where the aggregate amount of the value of securities subject to a public offering and the value of the same type of securities subject to public offerings which have been made without filing any registration statement for the past one year (where reports for the public offering or secondary distribution of the same type of securities have been made during the same period, referring to the period after such reports have been made) or the aggregate amount of the value of securities subject to a secondary distribution and the value of the same type of securities subject to the secondary distributions [where a minority contributor (excluding the issuer or underwriter of such securities) makes a secondary distribution through over-the-counter transactions under Article 178 of this Decree, excluding the value of such secondary distribution] which have been made without filing any registration statement for the last one year is not less than one billion won, respectively; and
2. Where the aggregate amount of each offer is not less than one billion won when the amount is calculated pursuant to Article 11 (1) of this Decree. The Enforcement Decree of the Financial Investment Services and Capital Market Act (2) The term "minority contributor" under subparagraph 1 of paragraph (1) shall mean a person who holds the smaller amount of equity securities between the amount equivalent to 1/100 of the total number of equity securities issued by the corporation concerned and 300 million won: Provided, That the largest shareholder of the corporation and his/her specially- related persons shall not be regarded as a minority contributor. Article 121 (Shelf Registration Statement)
(1) The securities that are subject to filling a shelf registration statement (hereinafter referred to as "shelf registration statement") under Article 119 (2) of the Act shall mean those falling under each of the following subparagraphs:
1. Corporate bonds (excluding convertible bonds, bonds with warrants, participating bonds and exchangeable bonds which are entitled to claim for the exchange with stock certificates);
2. Derivative-linked securities; and
3. Collective investment securities (hereafter in this Chapter, referred to as "open-end collective investment securities") falling under either of the following items: (a) Collective investment securities of a collective investment scheme which is not a closed-end collective investment scheme; or
(b) Foreign collective investment securities under Article 279 (1) of the Act as equivalent to those falling under item (a).
(2) The prospective period for the issuance of a shelf registration statement shall be not less than two months and up to one year from the date when the shelf registration statement has taken effect: Provided, That in the case of open-end collective investment securities, the existence period prescribed in the collective investment agreement concerned (where an existence period is not prescribed in the collective investment agreement, the period shall be indefinite) shall be regarded as the prospective period for the issuance. (3) A person who has filed a shelf registration statement shall issue the securities at least three times during a prospective period.
(4) A person who is permitted to file a shelf registration statement shall be a person meeting all the requirements falling under either of the following subparagraphs: Provided, That the same shall not apply to the issuance of open-end collective investment securities:
1. A person falling under any of the following items shall have the record of making a public offering or secondary distribution for the securities belonging to the same type among the securities under subparagraph 1 or 2 of paragraph (1) during the last one year: (a) A person who has filed annual reports or semi-annual reports under Article 160 of the Act (hereinafter referred to as "semi-annual report") during the last one year; or (b) A financial investment firm who has filed business reports under Article 33 (1) of the Act during the last one year;
2. The auditor's opinion on the financial statements of the latest business year shall be a qualified or unqualified opinion; and
3. A person shall not have any record of being subject to the measures to restrict issuance of securities taken by the Financial Services Commission during the last one year. (5) Notwithstanding paragraph (4), a corporation established or surviving as a result of a split- off or split-and-merger may file a shelf registration statement when it meets both of the following requirements:
1. A corporation before the split-off or split-and-merger shall meet the requirements under paragraph (4); and
2. The auditor's opinion on the financial statements of a corporation established as a result of split-off or split-and-merger shall be a qualified or unqualified opinion during the latest business year.
Article 122 (Additional Documents of Shelf Registration Statement) (1) The term "securities prescribed by the Presidential Decree" under the latter part of Article 119 (2) of the Act shall be open-end collective investment securities. (2) Additional documents of shelf registration statement under the latter part of Article 119 (2) of the Act (hereinafter referred to as "additional documents of shelf registration statement") shall include the matters falling under each of the following subparagraphs:
1. Signatures of the representative director and directors in charge of the registration under Article 119 (5) of the Act on the matters falling under each of the subparagraphs of Article 124 of this Decree: Provided, That the signatures may be omitted in cases prescribed by the Financial Services Commission as unlikely to undermine the protection of investors;
2. Outline of the public offering or secondary distribution;
3. Prospective period and amount for issuance on the shelf registration statement; The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. The records of the public offering or secondary distribution during the prospective period for issuance;
5. Underwriter's opinion (limited to cases where there is any underwriter) on securities subject to the public offering or secondary distribution; and
6. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(3) Indication on additional documents of shelf registration statement shall not change any indication on the main documents of shelf registration statement (including the amendment statement under Article 122 (1) of the Act).
(4) In addition to the matters prescribed in paragraphs (1) through (3), others necessary for the form of additional documents of shelf registration statement, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission. Article 123 (Scope of Forward-looking Information) The term "others prescribed by the Presidential Decree" under Article 119 (3) 4 of the Act shall mean the evaluation on the suitability of forward-looking information by a person who receives the request for assessing the forward-looking information under Articles 119 (3) 1 through 119 (3) 3 of the Act.
Article 124 (Confirmation and Review by Representative Director on Registration Statement)
The term "matters prescribed by the Presidential Decree" under Article 119 (5) of the Act shall be as follows:
1. The fact that a registration statement under Article 119 (3) of the Act (hereinafter referred to as "registration statement") does not contain any misstatement or omission of material matters;
2. The fact that any registration statement is not made to mislead a person who uses information in the registration statement;
3. The fact that the information in the registration statement is confirmed and reviewed with due diligence; and
4. In the case of a company subject to external audit under Article 2 of the Act on External Audit of Stock Companies, the fact that the internal accounting management system is operated pursuant to Articles 2-2 and 2-3 of the same Act. Article 125 (Entries and Accompanying Documents of Registration Statement) (1) A registration statement (excluding collective investment securities and asset-backed securities) under Article 119 (1) of the Act shall include the matters falling under each of the following subparagraphs:
1. Signatures of the representative director and directors in charge of the registration under Article 119 (5) of the Act on the matters of each subparagraph of Article 124 of this Decree;
2. Matters on the public offering or secondary distribution: (a) General matters on the public offering or secondary distribution; (b) Matters on the rights of the securities subject to the public offering or secondary distribution;
(c) Matters on the investment risks accompanied by the securities subject to the public offering or secondary distribution;
(d) Matters on the underlying assets of the securities (limited to derivative-linked securities) subject to the public offering or secondary distribution; (e) Opinions of the underwriters (limited to cases where any underwriter exists) on the securities subject to the public offering or secondary distribution; (f) Assessment opinion prepared by analysis institutions (hereafter in this Article, referred to as "securities analysis institutions") that meet the requirements prescribed and publicized by the Financial Services Commission in the case where a stock-unlisted corporation (including those in the process of establishment) files a registration statement on public offering or secondary distribution (hereinafter referred to as "direct public offering") of equity securities (including securities deposit receipts related thereto) without going through underwriting conducted by an underwriter: Provided, That the assessment opinion may be excluded in cases prescribed and publicized by the Financial Services Commission;
(g) Purpose of funds; and
The Enforcement Decree of the Financial Investment Services and Capital Market Act (h) Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors; and
3. Matters on the issuer (in the case of a corporation in the process of establishment, referring to the matters prescribed and publicized by the Financial Services Commission): (a) Outline of corporations;
(b) Contents of business;
(c) Matters on the financial status;
(d) Auditor's opinion prepared by an accounting auditor; (e) Matters on the affiliates and organizations of the corporation, such as board of directors, etc.;
(f) Matters on shareholders;
(g) Matters on officers and employees;
(h) Matters on the contents of transactions with interested persons; and (i) Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) The registration statement under paragraph (1) shall accompany documents falling under each of the following subparagraphs: Provided, That where the information of the accompanying documents can be verified through administrative data matching under Article 21 (1) or 22-2 (1) of the E-Government Act, the accompanying documents may be replaced with such verification:
1. Articles of incorporation or those equivalent thereto, which provide for the operation of organization and the rights and obligations of investors;
2. Copies of minutes (where the securities are issued in accordance with Article 418 (2) of the Commercial Act, including specific managerial purpose with respect to the issuance of securities, relations between an underwriter and persons other than the shareholders, and grounds for selecting persons other than the shareholders) from a general meeting of shareholders (referring to general meetings of promoters in the case of a corporation in the process of establishment) or a board of directors meeting that resolves to issue securities, or other documents proving the resolution on issuance;
3. Certified copies of corporate register or those equivalent thereto, proving the establishment of the corporation concerned;
4. Where it is necessary to obtain any permission, authorization, or approval from an administrative agency with respect to the issuance of securities, documents proving that such permission, authorization, or approval has been obtained;
5. Where any underwriting contract of securities is entered into, copies of the contract;
6. Where the issuer intends to list securities falling under any of the following items on the securities market, results from the Exchange of the preliminary listing review that such securities meet listing standards:
(a) Equity securities (excluding collective investment securities); (b) Securities deposit receipts (limited to those related to equity securities); and (c) Derivative-linked securities (limited to those indicating the right to make transactions of purchasing or selling securities under item (a) or (b) or giving and receiving money in accordance with the predetermined methods by linking with the prices of the securities under item (a) or (b) traded on the securities market or foreign securities markets, or the fluctuation of the index based thereon);
7. Where the issuer intends to use a preliminary prospectus (hereinafter referred to as "preliminary prospectus") under Article 124 (2) 2 of the Act, the preliminary prospectus;
8. Where the issuer intends to use a simple prospectus (hereinafter referred to as "simple prospectus") under Article 124 (2) 3 of the Act, the simple prospectus;
9. In the case of direct public offering, documents falling under each of the following items: (a) Assessment opinion prepared by securities analysis institutions; (b) A memorandum from the representative of the securities analysis institutions stating that he/she shall not divulge any secret regarding the assessment under item (a); and (c) Copies of bankbooks of brokers or dealers to receive deposits for subscription; and
10. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(3) In addition to the matters prescribed in paragraphs (1) and (2), other necessary matters on the form of a registration statement, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 126 (Entries and Accompanying Documents of Shelf Registration Statement) The Enforcement Decree of the Financial Investment Services and Capital Market Act (1) A shelf registration statement (excluding collective investment securities) shall include the matters falling under each of the following subparagraphs:
1. Signatures of the representative director and directors in charge of the registration under Article 119 (5) of the Act on the matters falling under each of the subparagraphs of Article 124 of this Decree;
2. Prospective period for the issuance;
3. Prospective amount of the issuance;
4. Matters on the issuer under Article 125 (1) 3 of this Decree; and
5. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) The shelf registration statement under paragraph (1) shall accompany the documents falling under each of the following subparagraphs: Provided, That where the information of the accompanying documents can be verified through administrative data matching under Article 21 (1) or 22-2 (1) of the E-Government Act, the accompanying documents may be replaced with such verification:
1. Articles of incorporation or those equivalent thereto, which prescribe the operation of the organization and the rights and obligations of investors;
2. Minutes from a board of directors meeting that resolves to report securities using a shelf registration statement, or copies of the documents proving such resolution;
3. Certified copies of corporate register, or those equivalent thereto, which prove the establishment of the corporation concerned;
4. Audit reports prepared by an accounting auditor;
5. Where there is an obligation to prepare consolidated financial statements under subparagraph 2 of Article 1-2 of the Act on External Audit of Stock Companies (hereinafter referred to as "consolidated financial statements"), audit reports on the consolidated financial statements prepared by an accounting auditor; and
6. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(3) In addition to the matters prescribed in paragraphs (1) and (2), other matters necessary for the form of a shelf registration statement, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 127 (Entry of Registration Statement of Collective Investment Securities) (1) A registration statement of collective investment securities shall include the matters falling under each of the following subparagraphs pursuant to Article 119 (6) of the Act:
1. Signatures of representative director and directors in charge of the registration under Article 119 (5) of the Act on the matters falling under each subparagraph of Article 124 of this Decree;
2. Matters falling under each of the following subparagraphs with respect to the public offering or secondary distribution:
(a) General matters on the public offering or secondary distribution; (b) Matters on the rights of the collective investment securities subject to the public offering or secondary distribution;
(c) Matters on the investment risks incurred from the acquisition of the collective investment securities subject to the public offering or secondary distribution; (d) Opinions of underwriters (limited to cases where any underwriter exists) on the collective investment securities subject to the public offering or secondary distribution; and
(e) Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors; and
3. Matters on collective investment scheme: (a) Name of the collective investment scheme;
(b) Matters on the objective, direction and strategy of investment; (c) Matters on bonuses, sales commissions, sales fees and other costs; (d) Matters on contributions (excluding investment trusts); (e) Matters on financial status;
(f) Matters on the collective investment manager (in the case of investment companies, including the matters on promoters and supervisory directors); (g) Matters on fund managers;
(h) Matters on the management of collective investment properties; (i) Matters on the sale and redemption of collective investment securities; (j) Matters on the appraisal and disclosure of collective investment properties; (k) Matters on the distribution of profit and loss and the taxation; The Enforcement Decree of the Financial Investment Services and Capital Market Act (l) Matters on the trust company and general fund administrator (limited to cases where a general fund administrator exists);
(m) Matters on the delegation under Article 42 of the Act (limited to cases where any delegation is made); and
(n) Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) The registration statement of collective investment securities under paragraph (1) shall accompany documents falling under each of the following subparagraphs: Provided, That where the information of the accompanying documents can be verified through administrative data matching under Article 21 (1) or 22-2 (1) of the E-Government Act, the accompanying documents may be replaced with such verification:
1. A collective investment agreement (including the addenda thereof);
2. Certified copies of corporation register, or those equivalent thereto, which prove the establishment of the corporation concerned (excluding investment trusts, investment limited partnerships and investment undisclosed associations);
3. Copies of documents proving the payment of contributions (excluding investment trusts);
4. Copies of the delegation contract (including the addenda thereof) that is entered into with a person falling under each of the following items: (a) A collective investment manager (excluding investment trusts and investment undisclosed association);
(b) A trust company;
(c) A general fund administrator (limited to cases where delegation contracts are entered into with a general fund administrator); and
(d) A delegatee under Article 42 of the Act (limited to cases where a delegation contract is entered into with the delegatee);
5. Where any sales contract or entrustment sales contract is entered into with a broker or dealer, the copies thereof (including the addenda thereof);
6. Where any underwriting contract for collective investment securities is entered into, the copies thereof; and
7. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) In addition to the matters prescribed in paragraphs (1) and (2), other necessary matters on the form of a registration statement of collective investment securities, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission. Article 128 (Entry and Accompanying Document of Registration Statement of Asset- backed Securities)
(1) A registration statement of asset-backed securities shall include the matters falling under each of the following subparagraphs pursuant to Article 119 (6) of the Act:
1. Signatures of the representative director and directors under Article 119 (5) of the Act on the matters falling under each of the subparagraphs of Article 124 of this Decree;
2. Matters falling under each of the following items with respect to the public offering or secondary distribution:
(a) General matters on the public offering or secondary distribution; (b) Contents of the rights of asset-backed securities subject to the public offering or secondary distribution;
(c) Investment risks incurred from the acquisition of asset-backed securities subject to the public offering or secondary distribution;
(d) Opinions of the issuers (limited to cases where there is any issuer) on the asset- backed securities subject to the public offering or secondary distribution); and (e) Purpose of funds;
3. Matters falling under each of the following items with respect to the issuer: (a) Outline of the company;
(b) Matters on officers; and
(c) Matters on delegation;
4. Matters falling under each of the following items with respect to originators under subparagraph 2 of Article 2 of the Asset-Backed Securitization Act (hereinafter referred to as "originator"):
(a) Outline of originators;
(b) Contents of the business;
(c) Matters on financial status; and
(d) Matters on officers;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
5. Matters falling under each of the following subparagraphs with respect to securitization assets:
(a) Detailed list of securitization assets by type; (b) Assessment of securitization assets; and
(c) Methods and detailed plans including transferring securitization assets, etc.;
6. Matters falling under each of the following subparagraphs with respect to the asset- backed securitization plans under Article 3 of the Asset-Backed Securitization Act (hereinafter referred to as "asset-backed securitization plan"): (a) Specific structure of asset-backed securitization plans; (b) Plans, etc. to issue and repay asset-backed securities; (c) Caretaker under Article 10 of the Asset-Backed Securitization Act (hereinafter referred to as "caretaker") and methods of managing assets; and (d) Plans to borrow and manage funds; and
7. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) The registration statement of asset-backed securities under paragraph (1) shall include the documents falling under each of the following subparagraphs. Provided, That where the information of the accompanying documents can be verified through administrative data matching under Article 21 (1) or 22-2 (1) of the E-Government Act, the accompanying documents may be replaced with such verification:
1. Documents falling under Articles 125 (2) 1 through 125 (2) 4 of this Decree;
2. Copies of the delegation contract of asset management;
3. Copies of delegation contract; and
4. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(3) In addition to the matters prescribed in paragraphs (1) through (2), others necessary for the form of a registration statement of asset-backed securities, the preparation thereof, etc. shall prescribed and publicized by the Financial Services Commission. Article 129 (Entry of Registration Statement of Securities and Special Rules Governing Accompanying Document)
Notwithstanding Articles 125 through 128 of this Decree, the Financial Services Commission may, when it recognizes that it is necessary for the protection of investors, prescribe and publicize different entries of a registration statement and accompanying documents after taking into account the nature of the issuers including foreign corporations, etc. and the classification and type of securities falling under each subparagraph of Article 4 (2) of the Act. Article 130 (Amendment of Entries of Registration Statement) (1) The term "material matters prescribed by the Presidential Decree" under the latter part of Article 122 (3) of the Act shall mean matters falling under either of the following subparagraphs:
1. In the case of securities other than collective investment securities, matters falling under any of the following items:
(a) Conditions for issuance including value of public offering or secondary distribution and issue rate, etc.;
(b) Reference date of allocation, subscription period or date of payment; (c) Purpose of funds;
(d) Underwriter, guarantee institution, or trustee company; or (e) Others prescribed and publicized by the Financial Services Commission as likely to significantly affect reasonable investment decisions of investors or the value of the securities concerned, etc.;
2. In the case of collective investment securities, matters falling under any of the following items:
(a) Conditions for issuance including value of public offering or secondary distribution, prospective period and amount for issuance, etc.; (b) Underwriter (limited to cases where there is any underwriter); (c) Where any matter registered pursuant to Article 182 (1) of the Act is changed; or (d) Others prescribed and publicized by the Financial Services Commission as likely to significantly affect reasonable investment decisions of investors or the value of the securities concerned, etc.
(2) The term "cases prescribed by the Presidential Decree" under the latter part of Article 122 (3) of the Act shall mean those falling under any of the following subparagraphs: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Where any entry or indication of a registration statement is unclear and therefore likely to materially mislead any person who uses such entry or indication;
2. Where any entry or indication is exaggerated by omitting information which is unfavorable to the issuer (in the case of beneficiary certificates of an investment trust and equity securities of an investment undisclosed association, referring to the investment trust and the investment undisclosed association) or emphasizing information which is favorable to the issuer;
3. In the case of securities other than collective investment securities, cases where a fact falling under any of the following items occurs:
(a) Where financial statements or semi-annual reports and quarterly reports under Article 160 of the Act (hereinafter referred to as "quarterly reports") are established; (b) Where any business objective of the issuer is changed; (c) Where any contract for the transfer, takeover or merger of business is entered into; (d) Where an issuer becomes a party to any lawsuit that has a significant impact on the management or properties, etc. of the issuer;
(e) Where any outstanding note or check is dishonored or any current account transaction with a bank is suspended or prohibited;
(f) Where all or an important part of business operation is suspended; (g) Where the workout process is applied for in accordance with the Debtor Rehabilitation and Bankruptcy Act; or
(h) Where any reason for dissolution in accordance with this Act, the Commercial Act, and other Acts occurs; or
4. In the case of collective investment securities, cases where a fact falling under any of the following items occurs:
(a) Where the financial statements of the latest fiscal year are established; (b) Where any contract for merger between collective investment schemes is entered into; or
(c) Where any claim that significantly affects collective investment properties, etc. is made.
(3) The term "securities prescribed by the Presidential Decree" under the latter part of Article 122 (4) of the Act shall mean open-end collective investment securities.
Article 131 (Preparation and Disclosure of Prospectus) (1) A prospectus (hereinafter referred to as "prospectus") under Article 123 (1) of the Act shall be prepared with title and text, respectively. (2) The title of a prospectus shall contain matters falling under each of the following subparagraphs:
1. Effective date of the registration of securities under Articles 119 (1) and 119 (2) of the Act (hereinafter referred to as "registration of securities");
2. Amount of public offering or secondary distribution;
3. Subscription period;
4. Payment period;
5. Place to access copies of the registration statement of securities and the prospectus;
6. Where the stabilization under Article 176 (3) 1 of the Act (hereinafter referred to as "stabilization") or the market making under Article 176 (3) 2 of the Act (hereinafter referred to as "market making") is conducted, the effect that such stabilization or the market making may be conducted on the securities market;
7. The effect that part of the entries in the registration statement of securities may be altered until a date preceding the subscription date (in the case of open-end collective investment securities, such alteration is permitted even after the subscription date);
8. The effect that the Government does not recognize the entries in a registration statement of securities as true or correct, or does not guarantee or approve the value of the securities concerned; and
9. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(3) The text of a prospectus shall contain matters falling under each of the following subparagraphs:
1. Where a registration statement is filed pursuant to Article 125 (1) of this Decree, the matters falling under each subparagraph of Article 125 (1) of this Decree;
2. Where additional documents of a shelf registration statement are filed pursuant to the latter part of Article 119 (2) of the Act, the matters falling under each subparagraph of Article 122 (2) and Article 126 (1) 4 of this Decree; The Enforcement Decree of the Financial Investment Services and Capital Market Act
3. Where a registration statement is filed pursuant to Article 127 (1) of this Decree, the matters falling under each subparagraph of Article 127 (1) of this Decree;
4. Where a registration statement is filed pursuant to Article 128 (1) of this Decree, the matters falling under each subparagraph of Article 128 (1) of this Decree; and
5. Where a registration statement is filed pursuant to Article 129 of this Decree, the matters prescribed and publicized by the Financial Services Commission. (4) Where any entry of a registration statement is not amended until the registration of securities takes effect, a preliminary prospectus filed pursuant to Article 125 (2) 7 of this Decree may be substituted for a prospectus after the registration of securities comes into effect. In such a case, the title of the preliminary prospectus shall be changed to the title of the prospectus containing the matters specified in each subparagraph of paragraph (2). (5) The term "entries prescribed by the Presidential Decree" under the proviso of Article 123 (2) of the Act shall mean those falling under either of the following subparagraphs:
1. Matters on a military secret under Article 2 of the Military Secrets Protection Act; or
2. Matters confirmed by the Financial Services Commission as related to the business and operation of an issuer.
(6) The term "collective investment securities prescribed by the Presidential Decree" under the main sentence of Article 123 (3) of the Act other than each subparagraph shall mean open- end collective investment securities.
(7) In addition to the matters prescribed in paragraphs (1) through (6), other necessary matters on the form of a prospectus, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 132 (Person Exempted from Distributing Prospectus) The term "others prescribed by the Presidential Decree" under the former part of Article 124 (1) of the Act other than each subparagraph shall mean persons falling under either of the following subparagraphs:
1. A person falling under Articles 11 (1) 1 (c) through 11 (1) 1 (f) of this Decree and each item of Article 11 (1) 2 of this Decree; or
2. A person who gives notice, in writing, that he/she refuses to receive a prospectus. Article 133 (Preparation of Preliminary Prospectus)
(1) The title of a preliminary prospectus shall contain the matters falling under each of the following subparagraphs pursuant to Article 124 (2) 2 of the Act:
1. Matters falling under Articles 131 (2) 2 through 131 (2) 6 of this Decree;
2. The effect that the registration statement of securities filed with the Financial Services Commission has yet to take effect, and that part of the entries of the statement may be altered by the date when the registration comes into force; and
3. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) Article 123 (2) of the Act and Articles 131 (1) and 131 (3) of this Decree shall apply to preparation of a preliminary prospectus. In such a case, a "prospectus" shall be deemed a "preliminary prospectus."
(3) In addition to the matters prescribed in paragraphs (1) and (2), other necessary matters on the form of a preliminary prospectus, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 134 (Preparation of Simple Prospectus)
(1) A simple prospectus shall enter or indicate the matters under the classifications falling under each of the following subparagraphs pursuant to Article 124 (2) 3 of the Act:
1. Where a registration statement has yet to come into force, matters falling under each of the following items:
(a) Matters falling under Articles 131 (2) 2 through 131 (2) 6 of this Decree; (b) The effect that the registration statement filed with the Financial Services Commission has yet to take effect, and that part of the entries may be changed by the date when the registration comes into force;
(c) Where an issuer intends to list securities falling under each item of Article 125 (2) 6 of this Decree, results from the Exchange of the preliminary listing review that such securities meet listing standards;
(d) Matters to be indicated in the text of a prospectus pursuant to Article 131 (3) of this Decree, which are prescribed and publicized by the Financial Services Commission as necessary for the protection of investors; and
The Enforcement Decree of the Financial Investment Services and Capital Market Act (e) The effect that a prospectus or simple prospectus provides the specific matters on the issuer (in the case of beneficiary certificates of an investment trust and equity securities of an investment undisclosed association, referring to the investment trust and the investment undisclosed association) and the public offering or secondary distribution as reference; and
2. After a registration statement comes into force, matters falling under both of the following items:
(a) Matters falling under Articles 131 (2) 1 through 131 (2) 8 of this Decree; and (b) Matters falling under items (c) through (e) of subparagraph 1. (2) An issuer (in the case of beneficiary certificates of an investment trust and equity securities of an investment undisclosed association, referring to the investment trust and the investment undisclosed association) shall not, when it enters or indicates the matters falling under each subparagraph of paragraph (1), omit any information unfavorable to the issuer or shall not extract only information favorable to the issuer. (3) In addition to the matters prescribed in paragraphs (1) and (2), other necessary matters on the form of a simple prospectus, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 135 (Persons Liable for Damages Incurred from Misstatement) (1) The term "person prescribed by the Presidential Decree" under Article 125 (1) 3 of the Act shall mean a person who holds a certificate of qualification (including any organization to which he/she belongs) such as a certified public accountant, appraiser, credit-rating specialist, attorney-at-law, patent attorney, tax accountant, etc. (2) The term "person prescribed by the Presidential Decree" under Article 125 (1) 5 of the Act shall mean an underwriter who determines the conditions, etc. of underwriting, etc. upon the request for underwriting of securities directly from issuers or secondary distributors. Article 136 (Exemption from Disclosure)
The term "details prescribed by the Presidential Decree" under the latter part of Article 129 of the Act other than each subparagraph shall mean those falling under either of the following subparagraphs:
1. Matters on a military secret under Article 2 of the Military Secret Protection Act; or
2. Matters confirmed by the Financial Services Commission as related to the business or operation of an issuer.
Article 137 (Public Offering and Secondary Distribution without Filing Registration Statement)
(1) The term "measures prescribed by the Presidential Decree" under Article 130 of the Act shall mean those falling under each of the following subparagraphs:
1. An issuer (in the case of beneficiary certificates of an investment trust and equity securities of an investment undisclosed association, referring to the investment trust and the investment undisclosed association) shall submit documents indicating its financial status and business performance to the Financial Services Commission prior to the public offering or secondary distribution. In such a case, such documents (excluding collective investment securities) shall be audited by an accounting audit or shall receive confirmation and indication of opinion by a certified public accountant under the conditions prescribed and publicized by the Financial Services Commission;
2. In the case of soliciting an offer, an issuer shall enter or indicate the matters falling under both of the following items in printed materials, etc. In such a case, the issuer shall not enter or indicate any false statement or any matter that is inconsistent with the contents of documents submitted pursuant to paragraph (1) with respect to the financial status and business performance:
(a) Matters falling under Articles 125 (1) 2 and 125 (1) 3 of this Decree (in the case of collective investment securities, referring to the matters falling under Articles 127 (1) 2 and 127 (1) 3 of this Decree, and in the case of asset-backed securities, referring to the matters falling under Articles 128 (1) 2 through 128 (1) 7 of this Decree); and (b) Matters falling under Articles 131 (2) 2 through 131 (2) 4 of this Decree;
3. An issuer shall, when it commences a public offering or secondary distribution, submit the method of soliciting an offer and matters entered or indicated in printed materials, etc. pursuant to paragraph (2) to the Financial Services Commission without delay. The same shall apply to cases where any method of soliciting an offer or any entry or indication on the The Enforcement Decree of the Financial Investment Services and Capital Market Act printed materials, etc. is changed after the commencement of the public offering or secondary distribution; and
4. An issuer shall, when the public offering or secondary distribution is completed, notify the Financial Services Commission of the results without delay. (2) Where an issuer (in the case of beneficiary certificates of an investment trust and equity securities of undisclosed association, referring to the investment trust and the investment undisclosed association; hereafter in this paragraph, the same shall apply) is required to submit documents on its financial status and business performance to the Financial Services Commission pursuant to subparagraph 1 of paragraph (1) and the issuer has submitted documents for a previous public offering or secondary distribution, the documents on its financial status and business performance may be replaced with a written document specifying the reference when the contents of the documents already submitted have not changed. (3) Where a secondary distribution of securities meets all the requirements falling under the following subparagraphs, an issuer of the securities shall be deemed to have complied with the measures under paragraph (1):
1. The secondary distribution of the securities concerned shall be carried out through over- the-counter transactions under Article 178 of this Decree;
2. The secondary distribution shall be made by minority contributors (excluding the issuer and underwriter of the securities concerned) under Article 120 (2) of this Decree; and
3. The issuer of the securities concerned shall disclose matters falling under both of the following items under the conditions prescribed and publicized by the Financial Services Commission:
(a) Matters on the issuer; and
(b) Documents indicating the matters related to the financial status and business performance of the issuer.
(4) The Financial Services Commission may prescribe and publicize specific standards for measures under paragraph (1).
Article 138 (Measures of Financial Services Commission)
The term "measures as prescribed by the Presidential Decree" under the former part of Article 132 of the Act other than each subparagraph shall mean measures falling under any of the following subparagraphs:
1. Restricting the issuance of securities up to one year;
2. Recommending the dismissal of officers;
3. Where there is any violation of the Act, reporting it or notifying investigating authorities;
4. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
5. Warning or caution. Chapter 2 Corporate Merger and Acquisition
Section 1 Tender Offer
Article 139 (Securities Subject to Tender Offer)
The term "stocks with voting rights or other securities prescribed by the Presidential Decree" under Article 133 (1) of the Act shall mean securities (hereinafter referred to as "stocks, etc.") falling under any of the following subparagraphs, which are related to stocks with voting rights:
1. Securities falling under any of the following items, which are issued by a stock-listed corporation:
(a) Stock certificates;
(b) Instruments representing preemptive rights;
(c) Convertible bonds;
(d) Bonds with warrants;
(e) Exchangeable bonds which are entitled to claim the exchange with the securities falling under items (a) through (d); or
(f) Derivative-linked securities whose underlying assets are the securities falling under items (a) through (e) (limited to securities which are entitled to acquire the underlying assets by exercising rights); or
The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Securities falling under any of the following items, which are issued by a person other than stock-listed corporations under subparagraph 1: (a) Securities deposit receipts related to securities under subparagraph 1; (b) Exchangeable bonds which are entitled to claim the exchange with the securities under subparagraph 1 or securities under item (a); or (c) Derivative-linked securities (limited to securities which are entitled to acquire underlying assets by exercising rights) whose underlying assets are securities falling under subparagraph 1, or securities under item (a) or (b). Article 140 (Criteria for Calculating Number of Counter-parties of Tender Offer) (1) The term "period prescribed by the Presidential Decree" under the main sentence of Article 133 (3) of the Act shall mean the six months prior to the date on which the stocks, etc. concerned are purchased, etc. (referring to the purchase, etc. under Article 133 (2) of the Act; hereafter in this Section, the same shall apply). (2) The term "persons in excess of the number prescribed by the Presidential Decree" under the main sentence of Article 133 (3) of the Act shall mean not less than ten persons, to be calculated by adding the number of the counter-parties who purchase, etc. the stocks concerned and the number of the counter-parties who purchase, etc. the stocks concerned during the period under paragraph (1).
Article 141 (Scope of Specially-related Persons)
(1) The term "person who has a special relation prescribed by the Presidential Decree" under the main sentence of Article 133 (3) of the Act shall mean specially-related persons and joint holders.
(2) The term "joint holder" under paragraph (1) shall mean a person who agrees to conduct activities falling under any of the following subparagraphs in accordance with an agreement or contract with the principal:
1. Jointly acquiring or disposing of stocks, etc.;
2. Mutually transferring or take over stocks, etc. after acquiring such stocks, etc. jointly or separately; or
3. Jointly exercising voting rights (the rights to instruct the exercise of the voting rights).
(3) Where a specially-related person proves that the specially-related person holds less than 1,000 stocks, etc. or does not fall under paragraph (2), the specially-related person shall not be regarded as a specially-related person in the application of this Section and Section 2 of chapter 2 of Part 3.
Article 142 (Holding Equivalent to Owning)
The term "cases prescribed by the Presidential Decree as owning or its equivalent" under the main sentence of Article 133 (3) of the Act shall mean cases falling under any of the following subparagraphs:
1. Where stocks, etc. are owned for their own account regardless of the title;
2. Where any claim for the delivery of the stocks, etc. is granted in accordance with the provisions of Acts or contracts for the purchase, sale and other transactions;
3. Where voting rights (including the rights to instruct the exercise of the voting rights) of the stocks, etc. are held in accordance with the provisions of Acts or trust contracts of money, collateral contracts, and other contracts;
4. Where any right to acquire or dispose of the stocks, etc. is granted in accordance with the provisions of Acts or trust contracts of money, collateral contracts, contracts for discretionary investment advisory and other contracts;
5. Where any right to complete the purchase and sale of the stocks, etc. is obtained by entering into a unilateral promise and qualification as a purchaser is granted upon the exercise of the right;
6. Where any right whose underlying assets are stocks, etc. is obtained under the contracts under Article 5 (1) 2 of the Act and qualification as a purchaser is granted upon the exercise of the right; or
7. Where stock options are granted and the stock options grant a right to become a purchaser upon the exercise of such stock options.
Article 143 (Purchase Not Requiring Tender Offer) The term "purchase, etc. prescribed by the Presidential Decree" under the proviso of Article 133 (3) of the Act shall mean those falling under any of the following subparagraphs:
1. Purchase, etc. of stocks, etc. for the purpose of retirement; The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Purchase of stocks upon the claims for the purchase of stocks;
3. Purchase of stocks, etc. upon the exercise of the rights of instruments representing preemptive rights, convertible bonds, bonds with warrants, or exchangeable bonds;
4. Purchase of stocks, etc. upon the exercise of the rights of derivative-linked securities;
5. Purchase of stocks, etc. from specially-related persons;
6. Purchase of stocks using the method of intermediating securities transactions in accordance with Article 78 (1) of the Act; or
7. Other purchases, etc. of stocks, etc. prescribed and publicized by the Financial Services Commission as unlikely to undermine the interest of other investors. Article 144 (Purchase Not Deemed as Purchase on Securities Market) The term "purchase prescribed by the Presidential Decree" under Article 133 (4) of the Act shall mean the purchase of stocks, etc. through the method of executing purchase or sale and settlement via the securities market after determining the item, price and quantity thereof in accordance with a contract and other agreements between a purchaser and seller. Article 145 (Publication of Tender Offer)
(1) A person shall, when it intends to publish its tender offer (hereinafter referred to as "publication of tender offer") under Article 134 (1) of the Act, make a public notice thereon in two or more nationwide newspapers among the general daily newspapers or daily newspapers specialized in economy under the Act on the Freedom of Newspapers, etc. and Guarantee of Their Functions under the conditions prescribed and publicized by the Financial Services Commission.
(2) The term "stocks, etc. prescribed by the Presidential Decree" under Article 134 (1) 2 of the Act shall mean exchangeable bonds and derivative-linked securities. (3) The term "person designated by the Presidential Decree" under Article 134 (1) 2 of the Act shall mean those falling under each of the following subparagraphs:
1. In the case of securities deposit receipts, the issuer of stocks, etc. which are the underlying assets thereof;
2. In the case of exchangeable bonds, the issuer of stocks, etc. which are subject to the exchange; and
3. In the case of derivative-linked securities, the issuer of stocks, etc. which are the underlying assets thereof.
(4) The term "others prescribed by the Presidential Decree" under Article 134 (1) 6 of the Act shall mean those falling under each of the following subparagraphs:
1. Current status of a tender offeror (hereinafter referred to as "tender offeror") under Article 134 (2) of the Act and the specially-related persons thereof (referring to the specially-related persons under Article 133 (3) of the Act; hereinafter the same shall apply);
2. Matters on a person handling tender offer affairs (hereinafter referred to as "person handling tender offer affairs") under Article 133 (2) of the Act;
3. Methods of tender offer;
4. Whether there has been any prior consultation with the officers or the largest shareholder of the issuer (referring to the issuer of stocks, etc. subject to tender offer under Article 134 (1) 2 of the Act; hereinafter referred to as "company subject to tender offer") of the stocks, etc. subject to tender offer and, if any, the details thereof;
5. Future plan for the company subject to tender offer after the completion of tender offer;
6. Where any contract for the purchase, etc. of the stocks, etc. concerned is concluded prior to the publication of tender offer, the fact and the contents thereof; and
7. Place to access tender offer statements (hereinafter referred to as "tender offer statement") under Article 134 (2) of the Act and tender offer prospectus (hereinafter referred to as "tender offer prospectus") under Article 137 (1) of the Act. Article 146 (Tender Offer Statement)
(1) A tender offer statement shall not contain any matter which is different from the entries in the publication of tender offer, or shall not omit any entry indicated in the publication of tender offer.
(2) The term "others prescribed by the Presidential Decree" under Article 134 (2) 7 of the Act shall be as follows:
1. Matters on the persons handling tender offer affairs;
2. Current status of the company subject to tender offer;
3. Methods of tender offer; The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Details of raising funds necessary for tender offer or collecting securities for exchange (in the case of borrowings, including details of creditors);
5. Status of holding and trading the stocks, etc. of the company subject to tender offer by the tender offeror and the specially-related person thereof for the last one year;
6. Whether there has been any pre-agreement with officers of the company subject to tender offer or the largest shareholder, and, if any, the contents of the agreement;
7. Future plan for the company subject to tender offer after the completion of the tender offer;
8. Where there is any broker or intermediary for tender offer, the details thereof; and
9. Place to access the tender offer statement and tender offer prospectus. (3) The term "period prescribed by the Presidential Decree" under Article 134 (3) of the Act shall be not less than 20 days and not more than 60 days. (4) A tender offer statement shall accompany the documents falling under each of the following subparagraphs: Provided, That where the information of the accompanying documents can be verified through administrative data matching under Article 21 (1) or 22-2 (1) of the E-Government Act, the accompanying documents may be replaced with such verification:
1. Where a tender offeror is an individual, the certified copies of resident registration (in the case of foreigners, documents equivalent thereto);
2. Where a tender offeror is a corporation or other group, articles of incorporation and certified copies of corporation register or documents equivalent thereto;
3. Copies of the contract for the affairs related to the tender offer;
4. Balance of the account of a financial institution which is not less than the amount necessary for tender offer and other documents to prove the secured funds;
5. Where a tender offer is made through the exchange with other securities, documents to prove that the tender offeror secures the securities to be transferred in return for the exchange: Provided, That where a tender offer is made to receive contributions in kind for the purpose of not falling under the standards under Article 8-2 (2) 2 of the Monopoly Regulation and Fair Trade Act, documents to prove the issuance of new stocks;
6. Where any registration statement under Article 119 (1) or 119 (2) of the Act is required to be filed with respect to the tender offer made by the exchange with other securities, documents indicating the contents that are the same as those in the registration statement;
7. Where it is necessary to obtain a permission, authorization or approval from the administrative authorities on the purchase, etc. of stocks, etc., documents to prove that such permission, authorization, or approval has been obtained;
8. Contents of the publication of tender offer;
9. Where any contract for the purchase of stocks, etc. is concluded prior to the publication of the tender offer, copies of the contract; and
10. Others prescribed and publicized by the Financial Services Commission as necessary for confirmation of the entries of the tender offer statement. (5) In addition to the matters prescribed in paragraphs (1) through (4), other necessary matters on the form of a tender offer statement, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 147 (Prohibition on Modification of Tender Offer Conditions) The term "tender offer conditions prescribed by the Presidential Decree" under the proviso of Article 136 (3) of the Act shall mean those falling under any of the following subparagraphs:
1. Reduction of tender offer period;
2. Alteration of the type of compensation to be paid to tendering shareholders (hereafter in this subparagraph, referred to as "tendering shareholder") under Article 139 (4) of the Act: Provided, That the same shall not apply to cases where any type of compensation is added which the tendering shareholders are able to select; or
3. Modification of tender offer conditions leading to an extension of the payment period of purchase amount: Provided, That the same shall not apply to cases falling under any of the following items:
(a) Where the arithmetic average of prices (based on closing prices) of the specific stocks, etc. formed in the securities markets for three days before the submission of the amendment statements under Article 136 (1) of the Act exceeds 90/100 of tender offer prices, or where there is a competing tender offer (hereinafter referred to as "competing tender offer") under Article 139 (1) of the Act, the increase of purchase price; The Enforcement Decree of the Financial Investment Services and Capital Market Act (b) Where there is any change in the total number of stocks, etc. concerned after the publication of tender offer, or where there is a competing tender offer, the increase of the number of stocks, etc. to be purchased; or
(c) Where there is a competing tender offer, the extension of tender offer period (limited to the date on which the competing tender offer period expires). Article 148 (Preparation of Tender Offer Prospectus) (1) A tender offer prospectus shall contain the matters falling under each subparagraph of Article 134 (2) of the Act pursuant to Article 137 (1) of the Act: Provided, That where the tender offeror is a stock-listed corporation, the matters prescribed and publicized by the Financial Services Commission may be excluded.
Article 149 (Presentation of Opinion on Tender Offer) (1) An issuer of stocks, etc. whose tender offer statement is filed shall, when it presents its opinion on the tender offer pursuant to Article 138 (1) of the Act, present its opinion by means of advertisements, letters (including e-mail messages) and other documents. (2) The presentation of opinion under paragraph (1) shall contain the position of an issuer such as proposition, opposition or neutrality to a tender offer and the reasons therefor, and where there is any material change in the opinion after presenting the opinion, the issuer shall publish the fact under the conditions prescribed in paragraph (1) without delay. Article 150 (Exceptional Withdrawal of Tender Offer) The term "cases prescribed by the Presidential Decree" under the proviso of Article 139 (1) of the Act shall mean those falling under either of the following subparagraphs:
1. Where any bill or check issued by a tender offeror is dishonored, or any current account transaction with a bank is suspended or prohibited; or
2. Where, as a condition in the tender offer registration statement, it is publicly announced at the time of the publication of the tender offer that the tender offer may be withdrawn when any cause falling under the following subparagraphs occurs to the company subject to the tender offer, and where such cause occurs:
(a) Merger, split-off, split-and-merger, comprehensive transfer or exchange of stocks;
(b) Transfer or takeover of important business or assets falling under any of the subparagraphs of Article 171 (1) of this Decree;
(c) Dissolution;
(d) Bankruptcy;
(e) Dishonor of bills or checks issued;
(f) Suspension or prohibition of current account transaction with a bank; (g) De-listing of stocks, etc; or
(h) Where damages equivalent to not less than 10/100 of the total assets in the latest business year occur due to natural disasters, calamities, wars, accidents, fire or others disasters.
Article 151 (Acquisition of Stocks through Methods Other Than Tender Offer) The term "cases prescribed by the Presidential Decree" under the proviso of Article 140 of the Act shall mean those falling under either of the following subparagraphs:
1. Where a contract to the purchase, etc. of the stocks, etc. concerned is concluded prior to the publication of tender offer and the contract is not subject to tender offer under Article 133 (1) of the Act when concluding the contract, and the content of the contract is indicated in the publication of tender offer and tender offer statement; or
2. Where a person handling tender offer affairs is delegated with the purchase, etc. of stocks, etc. by a person other than the tender offeror and the specially-related persons thereof. Article 152 (Measures of Financial Services Commission) The term "measures prescribed by the Presidential Decree" under the former part of Article 146 (2) of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs:
1. Restricting tender offer up to one year (limited to tender offeror or the specially-related persons thereof);
2. Restricting the handling of tender offer affairs up to one year (limited to persons handling tender offer affairs);
3. Recommending the dismissal of officers;
4. Where there is any violation of the Act, reporting it or notifying investigating authorities; The Enforcement Decree of the Financial Investment Services and Capital Market Act
5. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
6. Warning or caution. Section 2 Reports on Substantial Shareholding of Stocks Article 153 (Report on Substantial Shareholding of Stocks) (1) The term "days prescribed by the Presidential Decree" under the former part of Article 147 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. Holidays;
2. Workers' days under the Designation of Workers' Day Act; and
3. Saturdays. (2) The term "matters prescribed by the Presidential Decree" under the former part of Article 147 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. Matters on a person (hereinafter referred to as "holder of a substantial number of stocks") who comes to hold substantial number of stocks, etc. (referring to substantial shareholding under Article 147 (1) of the Act) and the specially-related persons thereof;
2. Matters on the issuer (referring to the issuer under Article 148 of the Act) of the stocks, etc. held;
3. Reasons for changes;
4. Date, price and method of acquisition or disposal;
5. Type of holding;
6. Details of raising money or materials subject to exchange necessary for the acquisition (in the case of borrowings, including creditors); and
7. Others prescribed and publicized by the Financial Services Commission as details with respect to the matters falling under subparagraphs 1 through 6. (3) Where a holder of a substantial number of stocks, etc. is required to report the current status or changes in shareholdings, the reference date for reporting shall be a date falling under any of the following subparagraphs:
1.Where stock certificates issued by a stock-unlisted corporation are listed on the securities market, the date of listing;
2. In the case of merger by absorption, the date of merger, and in the case of consolidation, the date of listing;
3. Where the holder of a substantial number of stocks, etc. purchases or sells stocks, etc. on the securities market, the date of entering into the contract;
4. Where the holder of a substantial number of stocks, etc. acquires stocks, etc. outside the securities market, the date of entering into the contract;
5. Where the holder of a substantial number of stocks, etc. disposes of stocks, etc. outside the securities market, the earlier date between the date of payment and the date on which the stocks, etc. are delivered;
6. Where the holder of a substantial number of stocks, etc. acquires the new stocks allocated through the issuance of new shares, the day following the date on which the subscription payment is made;
7. Where the holder of a substantial number of stocks, etc. borrows stocks, etc., the date when a borrowing contract is entered into, and where the holder of a substantial number of stocks, etc. repays stocks, etc., the date when the stocks, etc. are delivered;
8. Where the holder of a substantial number of stocks, etc. receives stocks, etc. as gift, the effective date under the Civil Act, and where the holder of a substantial number of stocks, etc. gives stocks, etc. as donation, the date when the stocks, etc. are delivered;
9. Where the holder of a substantial number of stocks, etc. acquires stocks, etc. through succession, the date on which the succession is confirmed in accordance with absolute acceptance or limited acceptance in succession when the successor is one person, or the date on which the distribution of property related to the stocks, etc. is completed when the successors are not less than two persons; or
10. Where any report is made due to reasons other than those under subparagraphs 1 through 9, the date on which the legal activities concerned take effect in accordance with relevant Acts including the Civil Act and the Commercial Act. (4) Where a person himself/herself and the specially-related persons thereof jointly submit a report under Article 147 (1) of the Act, the report may be made under the joint names thereof after designating the person who holds the largest number of stocks, etc. as a representative. (5) The term "cases prescribed by the Presidential Decree" under the former part of Article 147 (1) of the Act shall mean those falling under any of the following subparagraphs: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Where shareholders acquire only the allocated stocks when new stocks are issued and allocated in proportion to the number of stocks held by shareholders;
2. Where there is any increase in the number of stocks held only by acquiring deeds representing preemptive rights issued based on preemptive rights which are allocated in proportion to the number of stocks held by shareholders;
3. Where there is any change in the ratio of stocks, etc. due to the acquisition or disposal of treasury stocks;
4. Where there is any change in the ratio of stocks, etc. as a result of the decrease in capital; or
5. Where there is any increase in the number of stocks, etc. only by adjusting issue price or exchange price of the stocks, etc. issued or exchanged by the exercise of rights granted to instruments representing preemptive rights (excluding deeds representing preemptive rights), bonds with warrants, convertible bonds, or exchangeable bonds. (6) Other necessary matters on the form of the report, the preparation thereof, etc. under Articles 147 (1) and 147 (4) of the Act shall be prescribed and publicized by the Financial Services Commission.
Article 154 (Special Cases of Report on Substantial Shareholding) (1) The term "cases prescribed by the Presidential Decree" under the latter part of Article 147 (1) of the Act shall mean cases of exerting a substantial influence (including cases of exercising rights prescribed in Article 363-2 and 366 of the Commercial Act in accordance with the Commercial Act and other Acts or having a third party exercise them) over the company or the officers thereof for the cases falling under any of the following subparagraphs:
1. Appointment and dismissal of officers and the suspension of their duties;
2. Changes in the articles of incorporation related to institutions of the company, such as the board of directors;
3. Change in the capital of the company;
4. Decision on dividend of the company;
5. Merger, split-off or split-and-merger of the company;
6. Comprehensive transfers or exchanges of stocks;
7. Transfer or takeover of the entire business or an important part of business prescribed and publicized by the Financial Services Commission;
8. Disposal of all or an important part of the assets prescribed and publicized by the Financial Services Commission;
9. Conclusion, modification or cancellation of a contract regarding the lease of the entire business or delegation of management, a contract under which profits and losses are shared with other parties, and others equivalent thereto; or
10. Dissolution of the company. (2) The term "professional investor prescribed by the Presidential Decree" under the latter part of Article 147 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. Government;
2. Municipal governments;
3. The Bank of Korea; and
4. Others whose content and time of reports need to be set separately as prescribed and publicized by the Financial Services Commission.
(3) Where the shareholding is not intended to affect the management of an issuer (referring to the issuer under Article 148 of the Act) pursuant to the latter part of Article 147 (1) of the Act and where the person is a professional investor under paragraph (2), the report containing the matters falling under each of the following subparagraphs may replace the reports on the status and changes of shareholding under Article 147 (1) of the Act or the reports under Article 147 (4) of the Act:
1. Status of shareholding;
2. Matters under Articles 153 (2) 1, 153 (2) 2, and 153 (2) 4 of this Decree; and
3. Confirmation (limited to cases where a person falling under any of the subparagraphs of paragraph (2) makes a report) that any activity to affect the management under paragraph (1) shall not be conducted while holding stocks, etc. (4) A person who has an obligation to make a report pursuant to paragraph (3) may report by the 10th day of the month following the shareholding or the changes pursuant to the latter part of Article 147 (1) of the Act.
The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 155 (Report on Changes of Material Matter) The term "changes prescribed by the Presidential Decree including the purpose of substantial shareholding and the key contents of the contract" under Article 147 (4) of the Act shall mean those falling under any of the following subparagraphs:
1. Purpose of substantial shareholding;
2. Contents of trust contracts, collateral contracts, and other material contracts on the stocks, etc. held; or
3. Type of shareholding (limited to cases where there is any change between holding and owning other than holding).
Article 156 (Delivery of Report on Substantial Shareholding to Issuer) The term "person prescribed by the Presidential Decree in the case of the stocks, etc. prescribed by the Presidential Decree" under Article 148 of the Act shall mean those falling under each of the following subparagraphs:
1. In the case of exchangeable bonds, the issuer of stocks, etc. that are subject to the exchange;
2. In the case of derivative-linked securities, the issuer of stocks, etc. that are the underlying assets; and
3. In the case of securities deposit receipts, the issuer of underlying stocks, etc. Article 157 (Scope of Material Matters)
The term "material matters prescribed by the Presidential Decree" under Article 150 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. Matters on holders of a substantial number of stocks, etc. and the specially-related persons thereof;
2. Purposes of shareholding;
3. Type and number of stocks, etc. held or changed;
4. Date of acquisition or disposal; or
5. Contents of trust contracts, collateral contracts, and other material contracts on the stocks, etc. held.
Article 158 (Period for Restriction on Exercising Voting Rights) The term "period prescribed by the Presidential Decree" under Article 150 (1) of the Act shall mean the period falling under any of the following subparagraphs:
1. Where a report under Article 147 (1), 147 (3), or 147 (4) of the Act is purposely not made or is made with gross negligence, or where any misstatement or omission on the matters falling under each subparagraph of Article 157 of the Act is made, the period from the date on which the stocks, etc. have been purchased, etc. to the date on which six months have passed since the report (including reports on an amendment thereof; hereafter in this paragraph, the same shall apply) has been made; or
2. Where the status of substantial shareholding of the stocks, etc. or the changes therein have already been reported to the Financial Services Commission and the Exchange in accordance with the Act, this Decree, or other Acts and subordinate statutes or where the report under Article 147 (1), 147 (3), or 147 (4) of the Act has been delayed by some mistake caused by acquisition or disposal pursuant to the approval, guidance, and recommendation, etc. of the Government, the period from the date on which the stocks, etc. have been purchased, etc. to the date on which the report has been made. Article 159 (Measures of the Financial Services Commission) The term "measures prescribed by the Presidential Decree" in Article 151 (2) of the Act shall mean those falling under any of the following subparagraphs:
1. Recommending the dismissal of officers;
2. Where there is any violation of the Act, reporting it or notifying investigating authorities;
3. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
4. Warning or caution. Section 3 Proxy Solicitation
Article 160 (Distribution of Form of Proxy)
A solicitor under Article 152 (1) of the Act (hereinafter referred to as "solicitor") shall distribute the form of proxy and materials to a person solicited under the same paragraph The Enforcement Decree of the Financial Investment Services and Capital Market Act (hereinafter referred to as "person solicited") before or when the solicitation is made in a way falling under any of the following subparagraphs:
1. Distribution in person by the solicitor to the person solicited;
2. Distribution by mail or FAX;
3. Distribution by e-mail (limited to cases where the person solicited notifies its intention to receive the form of proxy and material by e-mail); or
4. Distribution with the notice of the convocation of a general meeting of shareholders [limited to cases where the solicitor is the issuer of the listed stock certificates concerned (including securities deposit receipts related thereto; hereafter in this Section, the same shall apply)].
Article 161 (Case Exempted from Proxy Solicitation) The term "cases prescribed by the Presidential Decree" under the proviso of Article 152 (2) of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs:
1. Where a person (including his/her specially-related persons) other than the issuer of the listed stock certificates concerned and the officers thereof (including his/her specially- related persons) solicits a proxy to less than ten persons;
2. Where a person who holds stocks under the name of another person in accordance with trust and other legal relations solicits a proxy relating to the stocks to the other person; or
3. Where an activity falling under any of the subparagraphs of Article 152 (2) of the Act is conducted using advertisements to the public including newspapers, broadcasts, magazines, etc., and where the advertisements contain only the name of the issuer of the listed stock certificates concerned, the reasons for the advertisements, the subject matter of a general meeting of shareholders, and the place distributing a form of proxy and materials. Article 162 (Scope of Public Service Corporation) A public service corporation under Article 152 (3) of the Act (hereinafter referred to as "public service corporation") shall mean a corporation designated by the Financial Services Commission after consulting with relevant ministers and reporting to the State Council among corporations that meet the requirements falling under each of the following subparagraphs:
1. The corporation shall have a firm management foundation and the possibility of sustainable development;
2. The corporation shall have a sound financial structure and the possibility of high profit; and
3. The corporation shall have a large amount of capital to the extent that permits the public to broadly hold the stocks of the corporation concerned. Article 163 (Entries of Form of Proxy and Materials) (1) The form of proxy shall be prepared in a format that enables a person solicited to clearly state the matters falling under each of the following subparagraphs pursuant to Article 152 (6) of the Act:
1.The effect that voting rights are delegated for proxy;
2. A person delegated with voting rights, including a solicitor, etc.;
3. Number of stocks with voting rights held by the persons solicited;
4. Number of stocks to be entrusted;
5. Each subject of the general meeting of shareholders and the approval or disapproval thereof;
6. Whether the proxy is exercised on a newly-raised agenda or changed or amended agenda at a general meeting of shareholders, and the details of the proxy;
7. Date and time of delegation; and
8. Name and resident registration number of a delegator (in the case of a corporation, referring to the trade name and business registration number of the corporation). (2) Materials under Article 152 (1) of the Act shall contain the matters falling under each of the following subparagraphs:
1. Matters falling under each of the following items on proxy solicitation: (a) Name or title of a solicitor, the type and number of stocks held by the solicitor and his/her specially-related persons thereof;
(b) Name or title of an agent of a solicitor, the type and number of stocks held by the agent (limited to cases where there is any agent); and (c) Relations between a solicitor or the agent thereof, and the stock-listed corporation concerned;
2. Subject matter of a general meeting of shareholders; and The Enforcement Decree of the Financial Investment Services and Capital Market Act
3. Intention to solicit a proxy. (3) Necessary matters on the specific entries, form, the preparation of a form of proxy, etc. under paragraph (1) and the materials under paragraph (2) shall be prescribed and publicized by the Financial Services Commission.
Article 164 (Date of Submission of Form of Proxy and Materials) The term "days prescribed by the Presidential Decree" under Article 153 of the Act shall mean days falling under each subparagraph of Article 153 (1) of this Decree. Article 165 (Requirements for Amendment)
(1) The term "days prescribed by the Presidential Decree" under the former part of Article 156 (3) of the Act shall mean those falling under each subparagraph of Article 153 (1) of this Decree.
(2) The term "material matters prescribed by the Presidential Decree" under the latter part of Article 156 (3) of the Act shall mean those falling under either of the following subparagraphs:
1. Matters falling under Article 163 (1) 2 of this Decree; or
2. Matters falling under Article 163 (2) 1 (excluding the name or title of solicitors among the matters referred to under item (a)) or Article 163 (2) 2 of this Decree. (3) The term "cases prescribed by the Presidential Decree" under the latter part of Article 156 (3) of the Act shall mean cases where the entries under Article 163 (2) 3 of this Decree fall under either of the following subparagraphs:
1. Where any unclear entry or indication is likely to materially mislead a person solicited; or
2. Where any entry or indication is exaggerated by omitting information that is unfavorable to the solicitor or emphasizing information that is favorable to the solicitor. Article 166 (Measures of the Financial Services Commission) The term "measures prescribed by the Presidential Decree" under the former part of Article 158 (2) of the Act other than each subparagraph shall mean measures falling under any of the following subparagraphs:
1. Restricting proxy solicitation up to one year;
2. Recommending the dismissal of officers;
3. Where there is any violation of the Act, reporting it or notifying investigating authorities;
4. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
5. Warning or caution. Chapter 3 Annual Report of Stock-listed Corporations Article 167 (Corporations Subject to Submission of Annual Report) (1) The term "corporations prescribed by the Presidential Decree" under the main sentence of Article 159 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. An issuer who lists securities falling under any of the following items on the securities market:
(a) Equity securities other than stock certificates [excluding collective investment securities and invested equity issued by special purpose companies, etc. (referring to a special purpose company under Article 3 of the Asset-Backed Securitization Act) in accordance with asset-backed securitization plans]; (b) Debentures (referring to corporate bonds excluding secured bonds and guaranteed bonds pursuant to Article 362 (8) of this Decree); (c) Convertible bonds, bonds with warrants, participating bonds, or exchangeable bonds; (d) Instruments representing preemptive rights;
(e) Securities deposit receipts (limited to stock certificates or securities deposit receipts related to the securities falling under items (a) through (d)); or (f) Derivative-linked securities;
2. An issuer (including stock-listed corporations and the issuer under subparagraph 1 whose securities are delisted) who makes a public offering or secondary distribution (excluding the public offering or secondary distribution under Article 130 of the Act) falling under either of the following items other than subparagraph 1:
(a) Stock certificates; or
(b) Securities falling under any of the items of subparagraph 1; or
3. An issuer (including the issuers that do not fall under subparagraph 5 of paragraph 2 when the number of securities holders has decreased from not less than 500 to less than 500) which is a corporation subject to external audit under Article 2 of the Act on External Audit The Enforcement Decree of the Financial Investment Services and Capital Market Act of Stock Companies other than those under subparagraphs 1 and 2 and has not less than 500 securities holders (referring to the number calculated under the conditions prescribed and publicized by the Financial Services Commission; hereafter in this Article, the same shall apply) for each security falling under the items of subparagraph 2. (2) The term "cases prescribed by the Presidential Decree" under the proviso of Article 159 (1) of the Act shall mean cases falling under any of the following subparagraphs:
1. Where it is impractical to submit an annual report due to bankruptcy;
2. Where it is impractical to submit an annual report of the latest business year when any reason for dissolution occurs to a corporation in accordance with Article 517 of the Commercial Act and other Acts;
3. Where a stock-listed corporation or an issuer under subparagraph 1 of paragraph (1) falls under the de-listing requirements and has obtained a confirmation from the Financial Services Commission that it is impractical to file an annual report due to causes that the corporation concerned is not responsible for;
4. Where an issuer under subparagraph 2 of paragraph (1) has been recognized by the Financial Services Commission as having less than 25 holders for each security which falls under the items of subparagraph 2 of paragraph (1): Provided, That the issuer shall submit an annual report for the business year which includes the date on which the number of the holders decreases to not more than 25; or
5. Where an issuer under subparagraph 3 of paragraph (1) has been recognized by the Financial Services Commission as having less than 300 holders for each security which falls under the items of subparagraph 3 of paragraph (1): Provided, That the issuer shall submit an annual report for the business year which includes the date on which the number of the holders decreases to less than 300.
Article 168 (Entries and Accompanying Documents in Annual Reports) (1) The term "those prescribed by the Presidential Decree" under Article 159 (2) of the Act shall mean the total amount of remunerations paid to all officers during the business year. (2) The term "those prescribed by the Presidential Decree" under Article 159 (2) of the Act shall mean matters falling under each of the following subparagraphs:
1. Signatures of the representative director and directors under Article 159 (7) of the Act on the matters provided for in each subparagraph of Article 169 of this Decree;
2. Outline of the company;
3. Matters on organizations including the board of directors and affiliates of the company;
4. Matters on shareholders;
5. Matters on officers and employees;
6. Contents of transactions with major shareholder (including the specially-related persons thereof) or officers and employees of the company;
7. Matters on the financial status and the addenda thereof;
8. Audit opinions prepared by an accounting auditor; and 9 Matters prescribed and publicized by the Financial Services Commission as necessary for notifying investors of.
(3) Matters on the business and financial status among the entries in an annual report shall follow standards falling under each of the following subparagraphs:
1. Where the turnover, profit and loss, or assets of a specific business sector is not less than 10/100 of the total turnover, profit and loss, or assets, the specific business sector shall be classified separately; and
or assets, respectively, the specific area shall be classified separately. (4) A corporation (hereinafter referred to as "reporting corporation of consolidated financial statements") which has a subsidiary company under Article 1-3 (1) of the Enforcement Decree of the Act on External Audit of Stock Companies among the corporations that are required to submit an annual report shall enter matters on the financial status referred to in subparagraph 7 of paragraph (2) and the addenda thereof and others prescribed and publicized by the Financial Services Commission based on the consolidated financial statements while accompanying the financial statements of the corporation, and the audit opinions under subparagraph 8 of paragraph (2) prepared by an accounting auditor shall indicate audit opinions in the consolidated financial statements and financial statements of the corporation. (5) Notwithstanding paragraph (4), among corporations whose total amount of assets is less than two trillion won at the end of the latest business year, a corporation which does not adopt the standards set forth by International Accounting Standards as established by the Korea The Enforcement Decree of the Financial Investment Services and Capital Market Act Accounting Institute (hereinafter referred to as "Korean International Financial Reporting Standards") pursuant to Article 7 (2) 1 of the Enforcement Decree of the Act on External Audit of Stock Companies may disclose the matters on the financial status, and the addenda thereof based on the financial statements of the corporation and the matters prescribed and publicized by the Financial Services Commission, and may submit its annual report including the audit opinions on the financial statements of the corporation prepared by an accounting auditor by the deadline under Article 159 (1) of the Act. In such a case, the corporation shall supplement the matters on the financial status and the addenda thereof based on the consolidated financial statements, and others prescribed and publicized by the Financial Services Commission as well as audit opinions on the consolidated financial statements prepared by an accounting auditor and submit them within 30 days of the date when 90 days have passed since the end of the business year.
(6) An annual report shall accompany documents falling under each of the following subparagraphs pursuant to Article 159 (2) of the Act: Provided, That an audit report on the consolidated financial statements under subparagraph 1 may be submitted within the period prescribed by paragraph (5) (limited to corporations that submit annual reports pursuant to paragraph (5)), and documents under subparagraph 4 may be submitted within the period prescribed by Article 159 (5) of the Act:
1. Audit reports (referring to audit reports on the financial statement and consolidated financial statements of the corporation) prepared by an accounting auditor;
2. Audit reports prepared by an auditor (referring to the audit report under Article 447-4 of the Commercial Act);
3. Assessment opinions prepared by an auditor on the current status of the operation of the internal monitoring system [referring to the authority to supervise the performance of directors of the board of directors, the authority of an auditor (where the audit committee is established, referring to the audit committee; hereafter in this subparagraph, the same shall apply) and other internal monitoring systems of the corporation] of the corporation;
4. Consolidated financial statements under Article 159 (5) of the Act (hereinafter referred to as "consolidated financial statements"); and
5. Other documents prescribed and publicized by the Financial Services Commission.
Article 169 (Confirmation and Review of Annual Reports by Representative Director) The term "matters prescribed by the Presidential Decree" under Article 159 (7) of the Act shall mean those falling under each of the following subparagraphs:
1. The fact that an annual report does not contain any misstatement or omission of material matters;
2. The fact that an annual report does not contain any entry or indication that materially misleads a person who uses the entries or indications in the annual report;
3. The fact that entries of an annual report are confirmed and reviewed with due diligence; and
4. In the case of a company subject to external audit under Article 2 of the Act on External Audit of Stock Companies, the fact that an internal accounting control system is under operation pursuant to Articles 2-2 and 2-3 of the same Act. Article 170 (Contents and Accompanying Documents of Semi-annual and Quarterly Reports)
(1) Articles 168 (1) through 168 (4) of this Decree (in the case of paragraph (4), limited to reporting corporations of consolidated financial statements which adopt Korean International Financial Reporting Standards) shall apply to the matters to be indicated in semi-annual and quarterly reports. In such a case, the same shall not apply to the addenda under Article 168 (2) 7 of this Decree, and audit opinions prepared by an accounting auditor pursuant to Article 168 (2) 8 of this Decree shall comply with the standards falling under both of the following subparagraphs:
1. In the case of semi-annual reports, the audit opinions prepared by an accounting auditor may be replaced with the accounting auditor's verification and opinion falling under both of the following items:
(a) In the case of reporting corporations of consolidated financial statements adopting Korean International Financial Reporting Standards: the accounting auditor's verification or opinion about the financial statements and consolidated financial statements of the corporation; and
(b) Corporations other than those under item (a): the accounting auditor's verification or opinion about the financial statements of the corporation; and The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. In the case of quarterly reports, the audit opinions prepared by the accounting auditor may be omitted: Provided, That subparagraph 1 shall apply to quarterly reports of financial institutions (referring to the institution subject to examination under Article 38 of the Act on the establishment, etc. of the Financial Services Commission) or stock-listed corporations whose total amount of assets is not less than 500 billion won as of the end of the latest business year.
(2) Semi-annual and quarterly reports shall accompany documents falling under both of the following subparagraphs:
1. In the case of semi-annual reports, semi-annual audit reports or semi-annual reviews prepared by an accounting auditor: Provided, That a reporting corporation of consolidated financial statements adopting Korean International Financial Reporting Standards shall accompany semi-annual audit reports or semi-annual reviews on the consolidated financial statements prepared by an accounting auditor at the same time; and
2. In the case of quarterly reports, quarterly audit reports or quarterly reviews (limited to corporations under the proviso of subparagraph 2 of paragraph (1)) prepared by an accounting auditor: Provided, That a reporting corporation of consolidated financial statements adopting Korean International Financial Reporting Standards shall accompany quarterly audit reports or quarterly reviews on the consolidated financial statements prepared by an accounting auditor at the same time.
Article 171 (Reasons for Submission of Report on Material Change) (1) The term "where any transfer or takeover of material businesses or assets prescribed by the Presidential Decree is resolved" under Article 161 (1) 7 of the Act shall mean cases where those falling under any of the following subparagraphs are resolved:
1. Transfer or takeover of a business sector whose amount of assets is not less than 10/100 of the total amount of the assets at the end of the latest business year;
2. Transfer or takeover of a business sector whose amount of sales is not less than 10/100 of the amount of sales as of the end of the latest business year;
3. Takeover where the liability to be transferred after the takeover is not less than 10/100 of the total amount of liabilities as of the end of the latest business year;
4. Transfer of the entire business; or
5. Transfer or takeover of a business sector whose amount of assets is not less than 10/100 of the total amount of the assets at the end of the latest business year: Provided, That the transfer or takeover of assets prescribed and publicized by the Financial Services Commission as ordinary business operation, including purchase and sale of commodities, products, and raw materials, is excluded.
(2) The term "where any case prescribed by the Presidential Decree occurs" under Article 161 (1) 9 of the Act shall mean those falling under any of the following subparagraphs:
1. Where any measure under Article 7 (1) or 7 (2) of the Corporate Restructuring Promotion Act is taken by a principal creditor bank (hereinafter referred to as "principal creditor bank") under subparagraph 3 of Article 2 of the same Act;
2. Where any lawsuit that is likely to have a material impact on the securities falling under any of the items of Article 167 (1) 2 of this Decree is filed;
3. Where stock certificates are, or are decided to be, listed or de-listed on foreign securities markets, or where de-listing of stock certificates, suspension of transactions and other measures are taken by foreign financial supervisory agencies (hereinafter referred to as "foreign financial supervisory agency") under Article 437 (1) of the Act or foreign exchanges (hereinafter referred to as "foreign exchanges") under Article 406 (1) 2 of the Act; or
4. Where other cases prescribed by the Presidential Decree as materially affecting the management and properties of the corporation occur. (3) The term "documents prescribed by the Presidential Decree" under Article 161 (2) of the Act shall mean the documents falling under each of the following subparagraphs or the copies thereof:
1. Where any bill or check is dishonored under Article 161 (1) 1 of the Act, documents proving such fact including a bankruptcy certificate issued by a bank;
2. Where any current account transaction with a bank is suspended or prohibited under Article 161 (1) 1 of the Act, documents proving such fact including a certificate of the suspension of current account transaction issued by a bank;
3. In the case of subparagraph 2 of Article 161 of the Act, documents proving the suspension of business including minutes from the board of directors and an order for business suspension issued by an administrative agency;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. In the case of subparagraph 3 of Article 161 of the Act, documents proving such case including an application for the initiation of workout process submitted to the court;
5. In the case of subparagraph 4 of Article 161 of the Act, documents proving such case including minutes from the board of directors and a decision of bankruptcy;
6. In the case of subparagraphs 5 through 8 of Article 161 of the Act, documents proving such case including minutes from the board of directors; and
7. In the case of subparagraph 9 of Article 161 of the Act, documents proving such fact including a notice and a petition, etc.
Article 172 (Agency subject to Providing Information) The Financial Services Commission may request that agencies falling under each of the following subparagraphs provide necessary information pursuant to Article 161 (4) of the Act by mailing documents containing the reason for requesting such information (including electronic documents) or by FAX:
1. With respect to the matters in Article 161 (1) 1 of the Act, agencies designated as clearing house under Article 38 of the Bills of Exchange and Promissory Notes Act or Article 31 of the Check Act;
2. With respect to the matters in Articles 161 (1) 3, 161 (1) 4, and 171 (2) 2 of the Act, competent courts;
3. With respect to the matters in Article 171 (2) 1 of this Decree, principal creditor banks; and
4. With respect to other matters, administrative agencies or other related agencies that have the information concerned.
Article 173 (Scope of Securities Liable for Damage) (1) The term "securities prescribed by the Presidential Decree" under the main sentence of Article 162 (1) of the Act other than each subparagraph shall mean those falling under each of the following subparagraphs:
1. Exchangeable bonds which are entitled to claim for the exchange with the securities concerned (including securities deposit receipts related thereto; hereafter in this paragraph, the same shall apply); and
2. Derivative-linked securities whose underlying assets are only the securities concerned and exchangeable bonds under subparagraph 1.
(2) The term "person designated by the Presidential Decree" under Article 162 (1) 3 of the Act shall mean a person who holds a certificate of qualification (including any organization to which each of them belongs) such as a certified public accountant, appraiser, credit-rating specialist, attorney-at-law, patent attorney, or tax accountant. Article 174 (Exemption from Disclosing Annual Report) The term "cases prescribed by the Presidential Decree" under the latter part of the Article 163 of the Act shall mean cases falling under either of the following subparagraphs:
1. Matters on a military secret under Article 2 of the Military Secrets Protection Act; or
2. Matters confirmed by the Financial Services Commission as related to the business and operation of a reporting corporation under Article 159 (1) of the Act (hereinafter referred to as "reporting corporation").
Article 175 (Measures of the Financial Services Commission) The term "measures prescribed by the Presidential Decree" under the former part of Article 164 (2) of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs;
1. Restricting the issuance of securities within the period up to one year;
2. Recommending the dismissal of officers;
3. Where there is any violation of the Act, reporting it or notifying investigating authorities;
4. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
5. Warning or caution. Article 176 (Special Cases for Foreign Corporation) (1) Articles 159 through 161 of the Act shall not apply to foreign corporations falling under any of the following subparagraphs:
1. Foreign governments;
2. Foreign municipal governments; The Enforcement Decree of the Financial Investment Services and Capital Market Act
3. Foreign public organizations whose equity is held by a foreign government or foreign municipal governments which are established in accordance with foreign Acts and subordinate statutes in order to carry out public business; or
4. International financial institutions falling under any of the subparagraphs of Article 2 (1) of the Act on the Measures for the Admission to International Financial Institutions. (2) Foreign corporations, etc. (excluding foreign corporations, etc. falling under any of the subparagraphs of paragraph (1); hereafter in this Article, the same shall apply) may submit annual reports within 30 days after the period prescribed by the main sentence of Article 159 (1) of the Act, and may submit semi-annual and quarterly reports within 15 days after the period prescribed by the former part of Article 160 of the Act. (3) Notwithstanding paragraph (2), where foreign corporations, etc. have submitted documents equivalent to annual reports, etc. under Article 162 (1) of the Act (hereinafter referred to as "annual reports, etc.") to their countries, such foreign corporations, etc. may submit annual reports, etc. or documents equivalent to annual reports, etc. with the summary thereto translated into Korean prescribed and publicized by the Financial Services Commission within ten days (in the case of material change reports, referring to five days) from the date when such documents have been submitted in the foreign countries. (4) Notwithstanding Articles 168 and 170 of this Decree, where foreign corporations, etc. subject to annual, semi-annual and quarterly reports pursuant to paragraph (2) or (3) submit documents equivalent to consolidated financial statements, such foreign corporations, etc. may omit their financial statements when causes prescribed and publicized by the Financial Services Commission occur. In such a case, the foreign corporations, etc. may omit the matters falling under both of the following subparagraphs in their annual, semi-annual and quarterly reports:
1. In the case of annual reports, matters falling under both of the following items: (a) Matters on the financial status based on the financial statements of the foreign corporations, etc. and the addenda thereof; and
(b) Audit opinions prepared by an accounting auditor on the financial statements of the foreign corporations, etc.; and
2. In the case of semi-annual or quarterly reports, matters falling under both of the following subparagraphs:
(a) Matters on the financial status based on the financial statements of the foreign corporations, etc. and the addenda thereof; and
(b) Audit opinions, confirmation or opinions prepared by an accounting auditor on the financial statements of the foreign corporations, etc. (5) Foreign corporations, etc. which have listed equity securities on the securities market shall submit a report on material change to the Financial Services Commission by the date prescribed and publicized by the Financial Services Commission when they fall under any of the following subparagraphs [in the case of a foreign holding company (referring to a company established in accordance with foreign Acts and subordinate statutes, whose main business is to control other company's business through the ownership of equity securities; hereinafter the same shall apply), including the cases where affiliates (referring to a company which is subject to consolidated financial statements in accordance with accounting standards adopted by the foreign holding company) of the foreign holing company fall under any of the following subparagraphs] other than the cases falling under any of the subparagraphs of Article 161 (1) of the Act:
1. When any foreign Acts and subordinate statutes that have material effects on the foreign corporations, etc. or the contributors thereof are changed, including restriction on the transfer of equity securities and nationalization of a foreign corporation, etc.;
2. When tender offer, stabilization, or market making is made in foreign countries with respect to the stocks, etc. of the foreign corporations, etc.;
3. When any measure is taken by foreign financial supervisory agencies or foreign exchanges due to the violation of relevant laws; or
4. When suspension of transactions and the revocation thereof or de-listing is taken by foreign exchanges.
(6) The Financial Services Commission shall prescribe and publicize specific entries, accompanying documents and forms of annual reports, etc. of foreign corporations, etc. when taking into account the type, nature of the foreign corporations, etc., foreign Acts, subordinate statutes, etc.
Chapter 4 Over-the-counter Transactions
Article 177 (Methods of Over-the-counter Transactions) The Enforcement Decree of the Financial Investment Services and Capital Market Act Where securities or over-the-counter derivatives are traded outside the securities market or the derivatives market pursuant to Article 166 of the Act, such transactions shall be conducted between a single purchaser and a single seller excluding transactions under Articles 178 (1) and 179 of this Decree.
Article 178 (Over-the-counter Transactions through the Association) (1) The Association shall comply with the standards falling under each of the following subparagraphs when it carries on business with respect to over-the-counter transactions of stock certificates which are not listed on the securities market pursuant to Article 286 (1) 4 of the Act:
1. The Association shall publish items, prices declared for purchase (hereinafter referred to as "bid price") or prices declared for sale (hereinafter referred to as "asked price") and the quantity thereof with respect to the stock certificates that a party intends to trade with the public at the same time;
2. Where a single price prescribed and publicized by the Financial Services Commission or an asked price between parties is the same as the bid price for each item of stock certificates, the Association shall conclude the transactions at such price;
3. The Association shall establish business standards related to the standards for the designation of stock certificates for transactions and the revocation thereof, the methods of transactions and settlement, etc., and shall report them to the Financial Services Commission and make them available to the public; and
4. The Association shall disclose the current status of the issuer, including financial status, business performance, or changes in capital, etc. as prescribed and publicized by the Financial Services Commission.
(2) A person other than the Association shall not carry on brokerage transactions of stock certificates following the method under paragraph (1) outside the securities market. Article 179 (Over-the-counter Transactions through Bond Broker) A broker (hereinafter referred to as "bond broker") who obtains an authorization of 2i-11-2i among the authorized business units under Appendix 1 of this Decree shall, when he/she conducts the brokerage business of purchasing and selling debt securities outside the securities
market pursuant to Article 166 of the Act, comply with the standards falling under each of the following subparagraphs:
1. The bond broker shall conduct brokerage of purchasing and selling debt securities among persons falling under any of the following subparagraphs: (a) Persons falling under Articles 10 (2) 1 through 10 (2) 17 of this Decree and persons falling under Articles 10 (3) 1 through 10 (3) 13 of this Decree; (b) Communications office under the Postal Savings and Insurance Act; or (c) Others prescribed and publicized by the Financial Services Commission;
2. The bond broker shall publish items, bid prices or asked prices, and the quantity thereof with respect to the debt securities that a party intends to trade with the public at the same time;
3. The bond broker shall conclude transactions for each item of debt securities at the price where the bid price is identical to the asked price; and
4. The bond broker shall comply with the standards prescribed and publicized by the Financial Services Commission, including business methods, etc. Article 180 (Over-the-counter Transaction through Specialized Bond Dealers) (1) With respect to bonds held by a person who carries on dealing of bonds in accordance with Article 160 of the Act, a person (hereafter in this Article, referred to as "specialized bond dealer") designated by the Financial Services Commission as capable of facilitating the transactions of the bonds concerned by offering bid price and asked price at the same time shall execute transaction orders within the limit prescribed by the specialized bond dealer for each investor when he/she receives transactions orders for bonds falling under either of the following subparagraphs from investors:
1. Bonds whose bid price and asked price are offered at the same time; or
2. Bonds that the specialized bond dealer has sold to the investors. (2) Standards for the designation of specialized bond dealers and the revocation thereof, the obligations of and supports for specialized bond dealers, and other necessary matters on specialized bond dealers shall be prescribed and publicized by the Financial Services Commission.
The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 181 (Repurchase Agreement)
(1) A dealer shall comply with the standards falling under the following subparagraphs when he/she conducts transactions with a repurchase agreement with a person (hereafter in this Article, referred to as "non-professional investor, etc.") who does not fall under any item of Article 7 (3) 3 of this Decree pursuant to Article 166 of the Act:
1. The securities to be purchased or sold shall be government bonds, municipal bonds, special bonds and other securities prescribed and publicized by the Financial Services Commission;
2. The dealer shall conduct the transactions at transaction prices prescribed and publicized by the Financial Services Commission;
3. The dealer shall specify the dates for the repurchase or resale. In such a case, when a dealer intends to resell the securities purchased with the repurchase agreement, the date of repurchasing securities sold with the repurchase agreement shall precede the date of reselling securities purchased with the repurchase agreement; and
4. The dealer shall comply with the standards prescribed and publicized by the Financial Services Commission with respect to the custody and replacement of securities purchased with repurchase agreement.
(2) An integrated financial investment firm (excluding those prescribed and publicized by the Financial Services Commission) who has obtained an authorization of 11r-1r-1 among the authorized business units under Appendix 1 of this Decree shall not conduct transactions with repurchase agreements with non-professional investors, etc. (3) A person falling under any item of Article 7 (3) 3 of this Decree shall, when he/she conducts transactions with repurchase agreements through a broker, settle the payment of the securities to be traded at the same time under the conditions prescribed and publicized by the Financial Services Commission: Provided, That the same shall not apply to cases prescribed and publicized by the Financial Services Commission. Article 182 (Loan Transactions of Securities)
(1) A broker or dealer shall comply with the standards falling under each of the following subparagraphs when he/she conducts loan transactions of securities, arranges for or
intermediates the loan transactions, or acts as an agent for that purpose pursuant to Article 166 of the Act:
1. The broker or dealer shall receive collateral from a borrower under the conditions prescribed and publicized by the Financial Services Commission;
2. The broker or dealer shall deliver the securities concerned and receive collateral at the same time under the conditions prescribed and publicized by the Financial Services Commission: Provided, That the same shall not apply to the loan transactions between foreigners; and
3. The broker or dealer shall disclose the details of loan transactions of securities through the Association on the day when the transactions are made. (2) A broker or dealer may arrange for loan transactions through brokerage of loan transactions (referring to the brokerage in the form of loan transactions as prescribed and publicized by the Financial Services Commission).
(3) Necessary matters on the rate and management of collateral and the method of disclosing loan transaction, etc. shall be prescribed and publicized by the Financial Services Commission. (4) Paragraphs (1) through (3) shall apply to cases where a person other than brokers or dealers who is established or authorized in accordance with the Act conducts loan transactions of securities, arranges for or intermediates the loan transactions, or acts as an agent for that purpose.
Article 183 (Over-the-counter Transactions of Commercial Paper) (1) A broker or dealer shall comply with the standards falling under each of the following subparagraphs when he/she purchases or sells commercial papers, arranges for or intermediates such transactions, or acts as an agent for that purpose pursuant to Article 166 of the Act:
1. The commercial papers shall be assessed by not less than two credit-rating agencies; and
2. The broker or dealer shall not guarantee any payment of the commercial papers directly or indirectly.
(2) Necessary matters on the methods of trading commercial papers or evaluating credit rating shall be prescribed and publicized by the Financial Services Commission. Article 184 (Transactions on Foreign markets)
The Enforcement Decree of the Financial Investment Services and Capital Market Act (1) A non-professional investor (including professional investors prescribed and publicized by the Financial Services Commission) shall make transactions through a broker pursuant to Article 166 of the Act when he/she intends to trade securities denominated in foreign currencies and exchange-traded derivatives on foreign securities markets or foreign derivatives markets (hereinafter referred to as "foreign derivatives market") under Article 5 (2) of the Act. (2) A broker shall, when he/she is entrusted with transactions on foreign securities markets or foreign derivatives markets from non-professional investors under paragraph (1), open a transaction account at a foreign broker, etc., separated from the transaction account under the name of the broker.
(3) Necessary matters on the notification of the entrustment, settlement and conclusion of purchasing or selling orders and the exercise of rights on foreign securities markets or foreign derivatives markets, and the exchange and other domestic transactions of securities denominated in foreign currencies or exchange-traded derivatives by a broker or dealer shall be prescribed and publicized by the Financial Services Commission. Article 185 (Other Over-the-counter Transactions of Securities) (1) A person other than a dealer may not sell bonds that are not held by the person himself/herself outside the securities market pursuant to Article 166 of the Act. (2) Where a dealer receives transaction orders of listed stock certificates less than the minimum trading unit of the securities markets from investors outside the securities market, the dealer shall accept them: Provided, That the same shall not apply to cases where the dealer receives purchasing orders of listed stock certificates which are not held by the dealer. (3) In addition to the matters prescribed in paragraphs (1) and (2), methods of transaction and settlement of securities, etc. outside the securities market and other necessary matters shall be prescribed and publicized by the Financial Services Commission based on kind of securities and type of purchase, sale and other transactions. Article 186 (Transactions of Over-the-counter Derivatives) (1) A broker or dealer shall comply with the standards falling under each of the following subparagraphs pursuant to Article 166 of the Act when he/she carries on brokerage or dealing of over-the-counter derivatives:
1. Where a counter-party of the broker or dealer is a non-professional investor when the broker or dealer purchases or sells over-the-counter derivatives, arranges for or intermediates such transactions, or acts as an agent for that purpose, such activities shall be conducted for the sole purpose of avoiding risks by the non-professional investor;
2. The risk amount (referring to the risk amount prescribed and publicized by the Financial Services Commission) incurred from transactions of over-the-counter derivatives shall not exceed the limit prescribed and publicized by the Financial Services Commission;
3. Where the net operating capital under Article 30 (1) of the Act (hereinafter referred to as "net operating capital") is less than the twofold of the total risk amount (hereinafter referred to as "total risk amount") in Article 30 (1) of the Act (in the case of integrated financial investment firms, referring to the cases prescribed and publicized by the Financial Services Commission), the broker or dealer shall suspend the transactions of new over-the-counter derivatives, and settle outstanding transactions or carry out only the business related to risk avoidance until such shortage is resolved;
4. The broker or dealer shall obtain an approval from a full-time officer in charge of the business concerned in every transaction of over-the-counter derivatives: Provided, That the same shall not apply to transactions of over-the-counter derivatives conducted in accordance with pre-determined conditions of the contract meeting the standards prescribed and publicized by the Financial Services Commission between parties; and
5. The broker or dealer shall report the details of transactions of over-the-counter derivatives or the arrangement or intermediary thereof, or acting as an agent to the Financial Services Commission on a monthly basis beginning by the tenth day of the following month. (2) The management of the risks incurred from the transactions of over-the-counter derivatives and other matters necessary for the protection of investors shall be prescribed and publicized by the Financial Services Commission.
Article 187 (Limits on Acquisition of Securities or Exchange-traded Derivatives by Foreigners)
(1) Foreigners under Article 168 (1) of the Act (hereafter in this Chapter, referred to as "foreigner") or foreign corporations, etc. shall not acquire equity securities issued by public corporations in excess of the acquisition limit prescribed in both of the following The Enforcement Decree of the Financial Investment Services and Capital Market Act subparagraphs for their own accounts, regardless of the title, excluding the cases prescribed and publicized by the Financial Services Commission. In such a case, necessary matters on the disposal of the excessive portion, the standards for calculating the acquisition limit and the management thereof, etc. shall be prescribed and publicized by the Financial Services Commission:
1. The acquisition limit per person by item on foreigners or foreign corporations, etc.: the limit prescribed in the articles of incorporation of the public corporation concerned; and
2. The acquisition limit on all the foreigners or foreign corporations, etc. by item: 40/100 of the total number of equity securities of the item concerned. (2) The Financial Services Commission may prescribe and publicize acquisition limits by industry, type, kind or item of securities or exchange-traded derivatives (limited to those traded on the derivatives market) in addition to the acquisition limits under paragraph (1) when it is necessary for the stability of the securities market and the derivatives market or for the protection of investors.
(3) Where a foreign securities depository (hereinafter referred to as "foreign securities depository") under subparagraph 5 of Article 296 of the Act intends to acquire equity securities issued by a corporation in the Republic of Korea for the purpose of issuing securities deposit receipts in foreign countries, the foreign securities depository shall obtain an approval in advance from the local corporation which has issued the securities concerned: Provided, That the same shall not apply to cases where the equity securities are newly issued or other cases prescribed and publicized by the Financial Services Commission. Article 188 (Investment Registration by Foreigners) (1) Foreigners or foreign corporations, etc. shall register their personal details with the Financial Services Commission (hereinafter referred to as "investment registration") in advance when they intend to acquire or dispose of securities listed on the securities market (hereinafter referred to as "listed securities") or securities to be listed, including the securities subject to a public offering or secondary distribution for the listing on the securities market. In such a case, necessary matters on the requirements, methods, and procedures of the investment registration, and the revocation thereof shall be prescribed and publicized by the Financial Services Commission.
(2) Foreigners or foreign corporations, etc. shall comply with the standards falling under each of the following subparagraphs when they intend to trade listed securities or exchange-traded derivatives (limited to those traded on the derivatives market; hereafter in this paragraph, the same shall apply):
1. In the case of trading listed securities: (a) The listed securities shall be traded through the securities market except for cases prescribed and publicized by the Financial Services Commission; and (b) The foreigners or foreign corporations, etc. shall meet the standards prescribed and publicized by the Financial Services Commission with respect to the opening of transaction accounts, the custody of purchased securities, the appointment of an agent in the Republic of Korea, and the reports on the details of transactions, etc.; and
2. In the case of trading exchange-trade derivatives, the foreigner or foreign corporation, etc. shall meet the standards prescribed and publicized by the Financial Services Commission with respect to the opening of transaction accounts and the reports on the details of transactions, etc.
Article 189 (Attestation by Accounting Auditor)
(1) The term "person prescribed by the Presidential Decree" under the main sentence of Article 169 (1) of the Act shall mean those falling under either of the following subparagraphs:
1. A reporting corporation; or
2. A corporation which makes a public offering or secondary distribution without filing a registration statement pursuant to Article 130 of the Act with respect to the securities falling under any of the items of Article 167 (1) 2 of this Decree. (2) The term "cases prescribed by the Presidential Decree" under the proviso of Article 169 (1) of the Act shall mean those falling under either of the following subparagraphs:
1. Documents indicating the matters falling under any of the subparagraphs of Article 131 (5) of this Decree among the documents related to the financial status; or
2. Documents related to the financial status in semi-annual reports and quarterly reports: Provided, That in the case of semi-annual reports and quarterly reports submitted by a corporation falling under the proviso of Article 170 (1) 2 of this Decree, the documents shall be limited to those with the confirmation and opinions of an accounting auditor. The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 190 (Special Cases of Accounting Audit of Foreign Corporation) Foreign corporations, etc. shall, when they fall under either of the following subparagraphs, be deemed to have been audited pursuant to the main sentence of Article 169 (1) of the Act in accordance with the former part of Article 169 (3) of the Act:
1. Where a foreign corporation, etc. falling under any of the subparagraphs of Article 176 (1) of this Decree has been audited in accordance with foreign Acts and subordinate statutes or treaties, articles of incorporation, rules, etc. which are the basis of the incorporation; or
2. Where a foreign company which is established in accordance with foreign Acts and subordinate statutes has been audited by an external auditor in accordance with foreign Acts and subordinate statutes: Provided, That where the accounting standards adopted by the foreign company are inconsistent with the accounting standards under the Act on External Audit of Stock Companies, the foreign company shall submit the audit report concerned accompanying the documents prescribed and publicized by the Financial Services Commission.
Article 191 (Scope of Securities Liable for Damages) The term "securities prescribed by the Presidential Decree" under Article 170 (2) of the Act other than each subparagraph shall be as follows:
1. Exchangeable bonds which are entitled to claim the exchange with the securities (including securities deposit receipts related thereto; hereafter in this Article, the same shall apply) issued by a corporation that is audited by an accounting auditor; and
2. Derivative-linked securities whose underlying assets are only the securities issued by a corporation that is audited by an accounting auditor and the exchangeable bonds under paragraph (1).
Article 192 (Payment of Deposit by Listed Securities) (1) The term "deposit or deposit money prescribed by the Presidential Decree" under Article 171 (1) of the Act shall mean the deposit or deposit money falling under each of the following subparagraphs:
1. Bid deposit;
2. Contract deposit;
3. Deposit for repair of defect; and
4. Deposit money under Acts and subordinate statutes. (2) Listed securities which are eligible for the payment of deposit or deposited money pursuant to the Article 171 (1) of the Act shall be as follows:
1. Debt securities (excluding commercial papers); and
2. Equity securities. (3) The value of listed securities which are eligible for the payment of deposit or deposited money shall be the price of substitute securities prescribed by the Exchange. Article 193 (Deposit Certificates)
(1) The Depository shall, when it issues deposit certificates (hereafter in this Article, referred to as "deposit certificates") under Article 171 (4) of the Act, issue deposit certificates for the portion owned by a depositor (hereinafter referred to as "depositor") under Article 171 (5) of the Act based on the depository account book and issue deposit certificates for the portion deposited by an investor based on the investor account book for which notice is given to the Depository by the depositor concerned.
(2) The deposit certificate under paragraph (1) shall contain the matters falling under each of the following subparagraphs:
1. Name or title and address of the beneficial owner of the depositor account book or investor account book;
2. Type and number of deposited securities, etc. (hereinafter referred to as "deposited securities, etc.") under Article 309 (3) 2 of the Act;
3. Purposes of deposit certificates;
4. The effect that deposit certificates shall be used only for the payment of deposit or deposit money under Article 192 (1) of this Decree;
5. The effect that a person who has received deposit certificates instead of the deposit or deposit money under Article 192 (1) of this Decree may apply for replacing the deposited securities, etc. with his/her own account on the investor account book or depositor account book;
6. The effect that the person under subparagraph 5 shall, when he/she applies for an account replacement pursuant to subparagraph 5, return the deposit certificates concerned to the The Enforcement Decree of the Financial Investment Services and Capital Market Act Depository or the depositor, and in such a case, the Depository or the depositor shall lift the restriction on the disposal under Article 171 (5) of the Act; and
7. The effect that the depositor shall, when he/she receives the deposit certificates pursuant to subparagraph 6, return the deposit certificates to the Depository without delay. Part 4 Regulation on Unfair Trade
Chapter 1 Insider Trading
Article 194 (Scope of Employees Subject to Disgorgement of Short-term Sales Margin) The term "person prescribed by the Presidential Decree" under the former part of Article 172 (1) of the Act other than each subparagraph shall mean a person falling under either of the following subparagraphs who is recognized by the Securities and Futures Commission as having access to undisclosed material information under Article 174 (1) of the Act (hereinafter referred to as "undisclosed material information"):
1. Employees engaging in the establishment, modification, promotion and disclosure of the matters falling any of the subparagraphs of Article 161 (1) of the Act and others related thereto in the corporation; or
2. Employees engaging in the business related to finance, accounting, planning and research and development in the corporation.
Article 195 (Calculation Methods of Short-term Sales Margin) (1) The profit under Article 172 (1) of the Act shall be calculated under the methods falling under each of the following subparagraphs:
1. Where any sale or purchase is made within six months (including the first day; hereafter in this Article, the same shall apply) after such purchase [including the sale of specific securities, etc. (referring to the specific securities, etc. under the former part of Article 172 (1) of the Act; hereinafter, the same shall apply) which gives a position as purchaser while becoming a counter party in exercising rights; hereafter in this Article to Article 199 of this Decree, the same shall apply] or sale (including the purchase of specific securities, etc. which gives a position as seller while granting exercise of rights; hereinafter to Article 199 of the Decree, the same shall apply), a method of calculating profits by subtracting the
trading commissions and securities transaction tax and special tax for agricultural districts and fishing villages from the amount calculated by multiplying the amount deducting the unit price of purchase from the unit price of sale by the smaller quantity between the quantity of purchase and the quantity of sale (hereafter in this Article, referred to as the "matching quantity.") In such a case, when the amount is not more than zero, the profits shall be deemed not to exist; and
2. Where any sale or purchase is made two times or more within six months of such purchase or sale, a method of calculating profits by the method under 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 such a case, the excess of matching quantity in the corresponding portion of purchase or sale shall render the object of such correspondence regarded as purchase or sale separated from such purchase or sale. (2) In the case of calculating profits pursuant to subparagraphs 1 and 2 of paragraph (1), the purchase price and sale price shall be those prescribed under both of the following subparagraphs by type and item of specific securities, etc.:
1. Where specific securities, etc. purchased and 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 specific securities, etc. at the date of sale shall be regarded as the sale price of specific securities, etc., and if a profit is realized by purchase after sale, the closing price of the sold specific securities, etc. at the date of purchase shall be regarded as the purchase price of specific securities, etc.; and
2. Where specific securities, etc. purchased and sold are different in class, the price of specific securities, etc. other than equity securities shall be the price calculated by converting those into equity securities under the conditions prescribed and publicized by the Financial Services Commission after consultation with the Securities and Futures Commission.
(3) Where specific securities, etc. purchased and sold are different in class, the quantity thereof shall be calculated under the conditions prescribed and publicized by the Financial Services Commission after consultation with the Securities and Futures Commission. The Enforcement Decree of the Financial Investment Services and Capital Market Act (4) In the case of calculating profits pursuant to paragraphs (1) through (3), if there are any ex- rights, ex-dividends, or ex-interests of the specific securities, etc. after purchase or sale, and other grounds that are prescribed by the Financial Services Commission after consultation with the Securities and Futures Commission, the profits shall be calculated based on the price and quantity converted in consideration thereof.
(5) Where a stock-listed corporation is notified of the occurrence of a short-term sales margin (hereinafter referred to as "short-term sales margin") under Article 172 (1) of the Act from the Securities and Futures Commission pursuant to the former part of Article 172 (3) of the Act, the corporation shall report whether such short-term sales margin is returned within two months of the notification date to the Securities and Futures Commission under the conditions prescribed and publicized by the Financial Services Commission after consultation with the Securities and Futures Commission.
(6) In addition to the matters prescribed in paragraphs (1) through (5), other necessary matters on the specific standards and methods, etc. of calculating short-term sales margins shall be prescribed and publicized by the Financial Services commission after consultation with the Securities and Futures Commission.
Article 196 (Securities Exempted from Disgorgement of Short-term Sales Margin) The term "securities prescribed by the Presidential Decree" under Article 172 (1) 1 of the Act shall be as follows:
1. Debt securities: Provided, That the securities falling under any of the following items shall be exempted:
(a) Convertible bonds;
(b) Bonds with warrants;
(c) Participating bonds; or
(d) Equity securities (including securities deposit receipts related thereto) issued by the corporation or exchangeable bonds which are entitled to claim the exchange with the securities (including securities deposit receipts related thereto) under items (a) through (c);
2. Beneficiary certificates; and
3. Derivative-linked securities (excluding the derivative-linked securities falling under Article 172 (1) 4 of the Act).
Article 197 (Disclosure of Short-term Sales Margin) The term "conditions prescribed by the Presidential Decree" under the latter part of Article 172 (3) of the Act shall mean disclosure of the matters falling under each of the following subparagraphs without delay:
1. Position of a person subject to the disgorgement of a short-term sales margin [referring to officers (including persons falling under each subparagraph of Article 401-2 (1) of the Commercial Act; hereafter in this Article, the same shall apply), employees or major shareholders];
2. Amount of the short-term sales margin (referring to the sum of short-term sales margins by officer, employee or major shareholder);
3. Date on which the Securities and Futures Commission gives notice of the occurrence of the short-term sales margin;
4. Plan of the corporation concerned to claim the return of the short-term sales margin; and
5. The effect that a shareholder (including a person who holds equity securities other than stock certificates or securities deposit receipts; hereafter in this subparagraph, the same shall apply) of the corporation concerned may request that the corporation claim that the person who has gained the short-term sales margin return the short-term sales margin, and such shareholder may make the claim by subrogating the corporation unless the corporation makes the claim within two months of the date on which the request is made. Article 198 (Exceptions in Disgorgement of Short-term Sales Margin) The term "cases prescribed by the Presidential Decree" under Article 172 (6) of the Act shall mean those falling any of the following subparagraphs:
1. Where any purchase or sale is conducted inevitably in accordance with Acts and subordinate statutes;
2. Where any purchase or sale is conducted in accordance with the permission, authorization and approval, etc. or the instruction and recommendation in wring by the Government;
3. Where any transaction is made for stabilization or market making; The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Where specific securities, etc. acquired or underwritten through the underwriting of the specific securities, etc. subject to public offering, secondary distribution, or private placement are disposed of;
5. Where stocks are acquired by the exercise of stock options;
6. Where stocks are acquired by exercising the right of equity securities, instruments representing preemptive rights, convertible bonds or bonds with warrant that have already been owned;
7. Where securities under Article 172 (1) 1 of the Act are acquired in accordance with the termination of the deposit agreement of securities deposit receipts under Article 172 (1) 2 of the Act;
8. Where securities are acquired by exercising the right of the convertible bonds under item (d) of subparagraph 1 of Article 196 of this Decree among the securities under Article 172 (1) 1 of the Act or the convertible bonds under Article 172 (1) 3 of the Act;
9. Where a short-term sales margin is acquired through the subscription of the specific securities, etc. subject to public offering or secondary distribution;
10. Where a short-term sales margin is acquired through the subscription of stocks which are allocated first to the members of the Employee Ownership Association pursuant to Article 32 of the Basic Act for Workers' Welfare;
11. Where stocks are disposed of by exercising claims to request the purchase of stocks;
12. Where stocks, etc are disposed of by subscribing for the tender offer; or
13. Others recognized by the Securities and Futures commission as unlikely to use undisclosed material information.
Article 199 (Applicable Period to Dealers)
The applicable provisions to dealers with respect to the disgorgement of a short-term sales margin by insiders as prescribed in Article 172 (7) of the Act shall apply to cases (excluding the case under subparagraph 4 of Article 198 of this Decree) where a dealer conducts a purchase or sale within three months of the date when an underwriting contract is entered into and then conducts any purchase or sale within six months of the date when the previous purchase or sale has been made: Provided, That when the dealer conducts any purchase or sale for stabilization or market making, such provisions shall apply to cases (excluding the case
under subparagraph 3 of Article 198 of this Decree) where the dealer conducts a purchase or sale during the period for the stabilization or market making and conducts any purchase or sale within six months of the date when the previous purchase or sale has been made. Article 200 (Reporting on Ownership of Specific Securities by Officer) (1) The term "days prescribed by the Presidential Decree" under Article 173 (1) of the Act shall mean the days falling under each subparagraph of Article 153 (1) of this Decree. (2) An officer (including persons falling under each subparagraph of Article 401-2 (1) of the Commercial Act) or major shareholder of a stock-listed corporation shall, when he/she reports the ownership status of specific securities, etc. or the change therein pursuant to Article 173 (1) of the Act, include the matters falling under each of the following subparagraphs in such report:
1. The reporter;
2. The stock-listed corporation concerned; and
3. Matters on the ownership status of specific securities, etc. by kind and the changes therein. (3) Where an officer (including persons falling under each subparagraph of Article 401-2 (1) of the Commercial Act) or major shareholder of a stock-listed corporation reports on the ownership status of specific securities, etc., the reference date of the reporting period shall be as follows:
1. Where a person who has not been an officer of a stock-listed corporation is appointed as an officer at a general meeting of stockholders, the date of such appointment;
2. In the case of a person falling under each subparagraph of Article 401-2 (1) of the Commercial Act, the date on which such position is acquired;
3. Where a person becomes a major shareholder of a stock-listed corporation through the acquisition of the stocks issued by the corporation concerned, the date of such acquisition, etc.;
4. Where stock certificates issued by a stock-unlisted corporation are listed on the securities market, the date on which such stock certificates are listed; and
5. Where an officer (including persons falling under each subparagraph of Article 401-2 (1) of the Commercial Act; hereafter in this Article, the same shall apply) or major shareholder of a stock-unlisted corporation becomes an officer or major shareholder of a stock-listed The Enforcement Decree of the Financial Investment Services and Capital Market Act corporation as a result of a merger, split-and-merger or collective exchange or transfer of stocks, the date of listing the stocks issued as a result of the merger, split-and-merger, or collective exchange or transfer of stocks.
(4) Where an officer or major shareholder of a stock-listed corporation is required to report on changes in the ownership status of the specific securities, etc., the date when such changes are made shall be as follows:
1. Where the officer or major shareholder purchases or sells specific securities, etc. on the securities market or the derivatives market, the date of settlement thereof;
2. Where the officer or major shareholder purchases specific securities, etc. outside the securities market or the derivatives market, the earlier date between the date on which the officer or major shareholder makes a payment and the date on which the specific securities, etc. are delivered;
3. Where the officer or major shareholder sells specific securities, etc. outside the securities market or the derivatives market, the earlier date between the date on which the officer or major shareholder receives a payment and the date on which the specific securities, etc. are delivered;
4. Where the officer or major shareholder acquires new stocks allocated by issuing new stocks, the day following the date on which the subscription money is paid;
5. Where the officer or major shareholder borrows specific securities, etc., the date on which the specific securities, etc. are delivered, and where the specific securities, etc. are repaid, the date on which the specific securities, etc. are delivered;
6. Where the officer or major shareholder receives specific securities, etc. as gift, the date on which the specific securities, etc. are delivered, and where the officer or major shareholder gives specific securities, etc. as donation, the date on which the specific securities, etc. are delivered;
7. Where the officer or major shareholder acquires specific securities, etc. through succession, the date on which the succession is confirmed in accordance with absolute acceptance or limited acceptance in succession when the successor is one person, or the date on which the distribution of property related to the specific securities, etc. is completed when the successors are not less than two persons; and
8. In cases other than those prescribed in subparagraphs 1 through 7, the date on which the legal activities, etc. take effect in accordance with relevant Acts including the Civil Act and the Commercial Act, etc.
(5) In addition to the matters prescribed under paragraph (2) through (4), other necessary matters on the form of a report under paragraph (2), the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission after consultation with the Securities and Futures Commission.
Article 201 (Disclosure of Information)
(1) The term "conditions prescribed by the Presidential Decree" under Article 174 (1) of the Act other than each subparagraph shall mean that the corporation concerned (including a person delegated with the authority of disclosure from the corporation concerned) or its subsidiaries (referring to the subsidiary under Article 342-2 (1) of the Commercial Act, and including a person delegated with the authority of disclosure from the subsidiary concerned) discloses information through the method falling under any of the following subparagraphs and the period or time prescribed under each subparagraph expires:
1. In the case of information which is indicated in the documents that have been registered with or reported to the Financial Services Commission or the Exchange in accordance with Acts and subordinate statutes, one day from the date on which such documents have been placed under the conditions prescribed and publicized by the Financial Services Commission or the Exchange;
2. In the case of information which is publicized through electronically transferable media established and operated by the Financial Services Commission or the Exchange, 24 hours from the time when such information is publicized;
3. In the case of information which is published through not less than two nationwide newspapers among general daily newspapers or daily newspapers specialized in economy under the Act on the Freedom of Newspapers, etc. and Guarantee of Their Functions, one day from the date on which such information is published; or
4. In the case of information which is aired nationwide through terrestrial broadcasting among the broadcast networks under the Broadcasting Act, 12 hours from the time when such information is aired.
The Enforcement Decree of the Financial Investment Services and Capital Market Act (2) The term "conditions prescribed by the Presidential Decree" under Article 174 (2) of the Act other than each subparagraph shall mean that a tender offeror (including a person delegated with the authority of disclosure from the tender offeror) discloses information through the method falling under each subparagraph of paragraph (1) and the period or time prescribed under each subparagraph expires.
(3) The term "acquisition and disposal prescribed by the Presidential Decree" under Article 174 (3) of the Act other than each subparagraph shall mean the acquisition and disposal meeting all the requirements falling under each of the following subparagraphs:
1. The acquisition and disposal shall aim at those falling under Article 154 (1) of this Decree (limited to the case of acquisition);
2. The acquisition and disposal shall be a substantial acquisition and disposal exceeding the ratio prescribed and publicized by the Financial Services Commission; and
3. The acquisition and disposal shall be subject to reporting under Article 147 (1) of the Act. (4) The term "conditions prescribed by the Presidential Decree" under Article 174 (3) of the Act other than each subparagraph shall mean that a person (including a person delegated with the authority of disclosure from the person) who intends to conduct a substantial acquisition and disposal discloses information through the method falling under any of the subparagraphs of paragraph (1) and the period or time prescribed under each subparagraph expires.
Article 202 (Prices Subject to Market Manipulation) The term "prices prescribed by the Presidential Decree" under Article 176 (2) 1 of the Act shall mean the first price formed on the securities market on the securities subject to listing (including the listing prescribed and publicized by the Financial Services Commission). Article 203 (Persons Qualified for Conducting Stabilization and Market-making) The term "dealer prescribed by the Presidential Decree" under Article 176 (3) 1 of the Act shall mean those falling under either of the following subparagraphs:
1. Where a registration statement under Article 119 (1) of the Act is submitted, a dealer who is designated in the registration statement as qualified for conducting stabilization or market making; or
2. Where a registration statement under Article 119 (1) of the Act is not submitted, a dealer who is designated in the underwriting contract as qualified for conducting stabilization or market making.
Article 204 (Methods of Stabilization)
(1) A dealer under Article 203 of this Decree may conduct stabilization only when he/she enters all matters falling under the following subparagraphs in a prospectus of the securities concerned pursuant to Article 176 (3) 1 of the Act: Provided, That in cases falling under subparagraph 2 of Article 203 of this Decree, such matters shall be indicated in the contents of the underwriting contract:
1. The effect that the dealer is permitted to conduct stabilization; and
2. Name of a securities market which permits stabilization. (2) A dealer under Article 203 of this Decree shall not conduct stabilization outside the securities market referred to in a prospectus or an underwriting contract. (3) Where a dealer under Article 203 of this Decree conducts the first stabilization during the period (hereinafter referred to as the "period of stabilization") in which stabilization is permitted, the dealer shall file a statement of stabilization (hereinafter referred to as "statement of stabilization") containing the matters falling under each of the following subparagraphs with the Financial Services Commission and the Exchange without delay:
1. Trade name of the dealer who has conducted stabilization;
2. Where the dealer conducts stabilization jointly with another dealer, the trade name of the other dealer;
3. Items and quotations of the securities subject to stabilization;
4. Starting date and time of stabilization;
5. Period of stabilization;
6. Prices of public offering or secondary distribution of securities through stabilization for facilitating the public offering or secondary distribution, and the total amount thereof; and
7. Name of securities market in which stabilization has been conducted. (4) A dealer under Article 203 of this Decree shall not purchase the securities (hereinafter referred to as "stabilization securities") subject to stabilization at a price that exceeds the prices prescribed in each of the following subparagraphs: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. In the case of the starting date of stabilization: (a) With respect to the first stabilization, the lower price between the immediately previous transaction price of the securities concerned traded on the securities market before the starting date of stabilization and the average transaction price on the securities market for the 20 days prior to the first day of the period of stabilization. In such a case, the method of calculating the average transaction price shall be prescribed and publicized by the Financial Services Commission; and (b) With respect to the subsequent stabilization after the first stabilization, the starting price of stabilization by the dealer; and
2. In the case of days following the starting date of stabilization, the lower price between the starting price of stabilization (where two or more dealers have participated in stabilization on the same day, the lowest price out of the starting prices of stabilization of the dealers) and the immediately previous transaction price of the securities concerned traded on the securities market before conducting the stabilization. (5) A dealer under Article 203 of this Decree who has conducted stabilization shall file a report on stabilization (hereinafter referred to as "stabilization report") containing the matters falling under the following subparagraphs for each securities market where such stabilization has been conducted with the Financial Services Commission and the Exchange not later than the day following the date on which the purchase and sale concerned have been made with respect to the purchase and sale of stabilization securities during the period from the starting date of stabilization to the termination date thereof:
1. Items of the securities that have been subject to stabilization;
2. Details of transactions; and
3. Trade name of the dealer who has conducted stabilization. (6) The Financial Services Commission and the Exchange shall keep a stabilization statement and a stabilization report for three years from the date set by either of the following subparagraphs and make them available to the public through the Internet website, etc.:
1. In the case of a stabilization statement, the date of receipts of such statement; and
2. In the case of a stabilization report, the day following the date on which the period of stabilization expires.
(7) The term "date prescribed by the Presidential Decree" under Article 176 (3) 1 of the Act shall mean the 20th
day before the date on which a subscription period expires with respect to the securities subject to public offering or secondary distribution: Provided, That where the value of public offering or secondary distribution is confirmed between the 20th day and the
subscription date, such date shall mean the date following the date on which the value is confirmed.
(8) In addition to the matters prescribed under paragraph (1) through paragraph (7), other necessary matters on the form of a stabilization statement and a stabilization report, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 205 (Methods of Market Making)
(1) A dealer under Article 203 of this Decree shall, when it intends to conduct market making pursuant to Article 176 (3) 2 of the Act, file a statement of market making containing the matters falling under each of the following subparagraphs with the Financial Services Commission and the Exchange in advance:
1. Trade name of the dealer who intends to conduct market making;
2. Where the dealer conducts market making jointly with another dealer, trade name of the other dealer;
3. Items of securities subject to market making;
4. Starting date and time of market making;
5. Period of market making; and
6. Name of the securities market in which market making is to be conducted. (2) A dealer under Article 203 of this Decree shall not purchase securities subject to market making in excess of the price of public offering or secondary distribution, or shall not sell them below the price of public offering or secondary distribution: Provided, That where any ex-right, ex-dividend, or ex-interest occurs, the price shall be calculated when taking into account such cause.
(3) Articles 204 (1), 204 (2), 204 (5), and 204 (6) of this Decree shall apply to market making. In such a case, "stabilization" shall be deemed "market making." The Enforcement Decree of the Financial Investment Services and Capital Market Act (4) The term "period prescribed by the Presidential Decree" under Article 176 (3) 2 of the Act shall mean the period from the date on which the securities subject to public offering or secondary distribution are listed to the date prescribed by an underwriting contract from one month up to six months.
(5) In addition to the matters prescribed under paragraphs (1) through (4), other necessary matters on the form of a statement of market making and a market making report, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 206 (Persons Entitled to Entrust Stabilization) The term "person designated by the Presidential Decree such as an officer of the issuer" under Article 176 (3) 3 of the Act shall mean those falling any of the following subparagraphs:
1. The director of an issuer of securities subject to public offering or secondary distribution;
2. The owner of securities subject to secondary distribution: Provided, That where securities are transferred under an underwriting contract, the person who transfers the securities shall be deemed as an owner;
3. Where the issuer of securities subject to public offering or secondary distribution is in a relation falling under any of the following subparagraphs with another company, or another company is in such relation with the issuer, the company or the director thereof: (a) In a relation of holding equity securities in excess of 30/100 of the total number of the equity securities; or
(b) In a relation falling under each of the subparagraphs of Article 9 of this Decree as holding equity securities in excess of 10/100 of the total number of the equity securities; or
4. A person who is designated as entitled to entrust stabilization and is reported to the Financial Services Commission and the Exchange in advance by the issuer or the owner of securities subject to public offering or secondary distribution. Article 207 (Scope of Linked Securities)
The term "securities prescribed by the Presidential Decree" under Article 176 (4) 3 of the Act shall be as follows:
1. Where convertible bonds or bonds with warrants are purchased or sold for the purpose of gaining unjust profits or having a third person gain unjust profits, securities falling under any of the following items which are linked to such convertible bonds or bonds with warrants:
(a) Exchangeable bonds which are entitled to claim the exchange with the convertible bonds or bonds with warrants;
(b) Equity securities;
(c) Derivative-linked securities whose underlying assets are the convertible bonds or bonds with warrants; or
(d) Securities deposit receipts related to the convertible bonds or bonds with warrants;
2. Where exchangeable bonds are purchased or sold for the purpose of gaining unjust profits or having a third person gain unjust profits, securities falling under any of the following items which are subject to the exchange with the exchangeable bonds: (a) Convertible bonds or bonds with warrants;
(b) Equity securities;
(c) Derivative-linked securities; or
(d) Securities deposit receipts;
3. Where equity securities are purchased or sold for the purpose of gaining unjust profits or having a third person gain unjust profits, securities falling under any of the following items which are linked to the equity securities:
(a) Convertible bonds or bonds with warrants;
(b) Exchangeable bonds which are entitled to claim the exchange with the equity securities;
(c) Derivative-linked securities whose underlying assets are the equity securities; or (d) Securities deposit receipts related to the equity securities;
4. Where derivative-linked securities are purchased or sold for the purpose of gaining unjust profits or having a third person gain unjust profits, securities falling under any of the following items which are the underlying assets of the derivative-linked securities: (a) Convertible bonds or bonds with warrants;
(b) Exchangeable bonds (limited to those which are entitled to claim the exchange with the securities falling under item (a), (c), or (d)); The Enforcement Decree of the Financial Investment Services and Capital Market Act (c) Equity securities; or
(d) Securities deposit receipts; and
5. Where securities deposit receipts are purchased or sold for the purpose of gaining unjust profits or having a third person gain unjust profits, securities falling under any of the following items which are the basis of the securities deposit receipts: (a) Convertible bonds or bonds with warrants;
(b) Exchangeable bonds (limited to those which are entitled to claim the exchange with the securities falling under item (a), (c), or (d)); (c) Equity securities; or
(d) Derivative-linked securities.
Article 208 (Restrictions on Short Sale)
(1) The term "securities prescribed by the Presidential Decree" under Article 180 (1) of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs:
1. Convertible bonds, bonds with warrants, participating bonds, or exchangeable bonds;
2. Equity securities;
3. Derivative-linked securities; or
4. Securities deposit receipts (limited to the securities deposit receipts related to the securities prescribed under subparagraphs 1 through 4). (2) The term "methods prescribed by the Presidential Decree" under the proviso of Article 180 (1) of the Act other than each subparagraph shall mean conducting activities through the methods falling under each of the following subparagraphs at the price provided for in the Securities Market Business Regulation under Article 393 (1) of the Act with respect to short sale (limited to the short sale under Article 180 (1) 2 of the Act: hereafter in this Article, the same shall apply):
1. Where an investor (including a broker or dealer who is not a member of the Exchange; hereafter in this subparagraph, the same shall apply) entrusts a broker who is a member of the Exchange with placing a selling order:
(a) An investor who entrusts the sales of securities shall notify a broker of whether such sales are short sale. In such a case, when the investor is an officer or employee of the listed corporation, the investor shall give notification of the fact as well; (b) Where an investor entrusts the broker with the sales of securities, the broker shall determine whether such sales are short sale and whether there is any possibility of a settlement as a result of the short sale;
(c) Where the broker recognizes that it is unlikely to be settled as a result of the short sale, the broker shall not be entrusted with the short sale or shall not place any order for short sale on the securities market; and
(d) Where the broker is entrusted with short sale from an investor, the broker shall notify the Exchange of the fact that the sale is short sale; and
2. Where a broker or dealer who is a member of the Exchange places a selling order, the broker or dealer shall notify the Exchange of the fact that the sale is short sale. (3) The term "others prescribed by the Presidential Decree" under Article 180 (2) 3 of the Act shall mean sales falling under any of the following subparagraphs which are likely to be settled by the settlement date:
1. Sales of listed securities that are found to be kept at custodians other than the broker who is entrusted with placing a selling order, or to be owned otherwise;
2. Sales of collective investment securities to be allocated in accordance with the additional issuance of listed collective investment securities;
3. Sales of listed securities to be allocated in accordance with the request for redemption of collective investment securities of an exchange-traded fund under Article 234 of the Act;
4. Sales of listed securities to be acquired as a result of the cancellation of a deposit contract for securities deposit receipts;
5. Sales of securities that are confirmed to be returned among the leased listed securities;
6. Sales of listed securities to be transferred in accordance with transactions outside the securities market and other contracts; or
7. Sales of securities deposit receipts to deposit and acquire the securities under subparagraphs 1 through 4 of paragraph (1).
Part 5 Collective Investment Scheme
The Enforcement Decree of the Financial Investment Services and Capital Market Act Chapter 1 General Provisions
Article 209 (Registration Requirements of Collective Investment Schemes) The term "requirements prescribed by the Presidential Decree" under Article 182 (2) 4 of the Act shall be as follows:
1. In the case of an investment company, requirements falling under both of the following items:
(a) A supervisory director shall not fall under any of the subparagraphs of Article 24 of the Act; and
(b) The capital shall be not less than 100 million won at the time of applying for a registration and shall exceed the minimum amount prescribed and publicized by the Financial Services Commission; and
2. In the case of an investment limited liability company, investment limited partnership company, investment limited partnership, and investment undisclosed association, the capital or contribution shall be not less than 100 million won at the time of applying for a registration and shall exceed the minimum amount prescribed and publicized by the Financial Services Commission.
Article 210 (Exemptions from Registration of Changes) The term "case prescribed by the Presidential Decree" under the former part of Article 182 (8) of the Act shall mean cases falling either of the following subparagraphs:
1. Where any registered matter is changed in accordance with the amendment of the Act and this Decree or the orders issued by the Financial Services Commission; or
2. Where there are minor changes prescribed and publicized by the Financial Services Commission, such as correction of simple wording. Article 211 (Methods and Procedures of Registration) (1) A registration application under Article 182 (3) of the Act shall contain the matters falling under each of the following subparagraphs:
1. Name of the collective investment scheme;
2. Matters on the objective, direction and strategy of the investment;
3. Matters on the contents of rights and investment risks;
4. Matters on bonuses, sales commissions, sales fees and other costs;
5. Matters on contributions (excluding an investment trust);
6. Matters on financial status;
7. Matters on the collective investment manager (in the case of an investment company, including promoters and supervisory directors);
8. Matters on fund managers;
9. Matters on the management of collective investment properties;
10. Matters on the sale and redemption of collective investment securities;
11. Matters on the appraisal, disclosure, etc. of collective investment properties;
12. Matters on the distribution of profit and loss and taxation;
13. Matters on the trust company and general fund administrator (limited to cases where any general fund administrator exists);
14. Matters on the delegation under Article 42 of the Act (limited to cases where any delegation is made); and
15. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) The registration application under paragraph (1) shall accompany documents falling under each of the following subparagraphs: Provided, That where the information of the accompanying documents can be verified through administrative data matching under Article 21 (1) or 22-2 (1) of the E-Government Act, the accompanying documents may be replaced with such verification:
1. A collective investment agreement (including the addenda thereof);
2. Certified copies of corporate register or documents (excluding an investment trust, investment limited partnership, and investment undisclosed association) equivalent thereto which prove the establishment of the corporation concerned;
3. Documents to prove the payment of contributions (excluding an investment trust);
4. Copies of a delegation contract (including the addendum thereof) that is entered into with a person falling under each of the following items: (a) A collective investment manager (excluding an investment trust and investment undisclosed association);
The Enforcement Decree of the Financial Investment Services and Capital Market Act (b) A trust company;
(c) A general fund administrator (limited to cases where a delegation contract is concluded with the general fund administrator); and (d) A delegatee under Article 42 of the Act (limited to cases where the delegation contract is concluded with the delegatee);
5. Where any sales contract or delegation contract is entered into with a broker or dealer, the copies of the contract (including the addenda thereof); and
6. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(3) A registration amendment under Article 182 (8) of the Act shall contain the reasons for and contents of changes, and shall accompany documents to prove the changes, including the copies of minutes from a general meeting of collective investors or the board of directors at which the resolution for the changes is made, the collective investment agreement, the certified copy of corporate register, and copies of major contracts. (4) The Financial Services Commission shall verify whether the contents of the registration under Article 182 (1) of the Act and the registration of change under Article 182 (8) of the Act are true, and review whether such contents meet the requirements for registration under Article 182 (2) of the Act (including cases applied to Article 182 (8) of the Act) and registration of change.
(5) When a collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. submits a registration application under Article 182 (3) of the Act along with a registration statement of securities, it shall be deemed that the collective investment scheme is registered at the time when the registration statement takes effect.
(6) When a collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. submits an amendment statement under Article 122 (1) of the Act, it shall be deemed that the registration amendment under Article 182 (8) of the Act is submitted. In such a case, it shall be deemed that the change of registration of collective investment scheme concerned is made when the amendment statement takes effect. (7) The entries under paragraph (1) or (3) may be otherwise prescribed and publicized by the Financial Services Commission for the registration of a private equity fund.
(8) In addition to the matters prescribed under paragraphs (1) through (7), other necessary matters on the application and review of a registration, the application form, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission. Article 212 (Business of General Fund Administrators) The term "business prescribed by the Presidential Decree" under Article 184 (6) 5 of the Act shall be as follows:
1. Entrusted businesses pursuant to Article 238 (8) of the Act; and
2. Business of operating an investment company. Article 213 (Disposal of Treasury Collective Investment Securities by Trust Company) A trust company, etc. shall dispose of treasury collective investment securities acquired pursuant to the former part of Article 186 (1) 1 of the Act within one month of the date of acquisition in the methods falling under either of the following subparagraphs:
1. Retirement; or
2. Sales through a broker or dealer. Article 214 (Recordkeeping of Materials by Investment Companies) (1) An investment company, etc. shall keep and maintain the records for a period falling under each of the following subparagraphs pursuant to Article 187 (1) of the Act: Provided, That the Financial Services Commission may shorten the period, and prescribe and publicize such period:
1. List of collective investment properties: ten years;
2. Ledger of base prices of collective investment properties: ten years;
3. Details of the management of collective investment properties: ten years;
4. Minutes from a general meeting of collective investors and a board of directors meeting: ten years; and
5. Books and documents subject to be prepared and kept in accordance with Acts and subordinate statutes: the period prescribed by the Acts and subordinate statutes (where such period is not prescribed, referring to the period prescribed and publicized by the Financial Services Commission when taking into account the keeping period under subparagraphs 1 through 4).
The Enforcement Decree of the Financial Investment Services and Capital Market Act (2) Specific standards for type, classification, etc. of materials under paragraph (1) shall be prescribed and publicized by the Financial Services Commission. Chapter 2 Composition of Collective Investment Schemes Section 1 Investment Trust
Article 215 (Entries of Trust Contract)
The term "others prescribed by the Presidential Decree" under Article 188 (1) 8 of the Act shall be as follows:
1. Type of the investment trust (referring to the type under the classification under Article 229 of the Act);
2. Name of the investment trust;
3. Investment assets (principal investment assets shall be specified separately);
4. Matters on the business of the collective investment manager and the trust company;
5. Matters on the additional issuance and retirement of beneficiary certificates;
6. Where the period of a trust contract is set forth, the period thereof;
7. Matters on the appraisal of investment trust property and the calculation of base price;
8. Matters on the distribution of assets, etc. other than profits;
9. Matters on the change in the collective investment manager or the trust company;
10. Matters on the alteration and termination of the trust contract;
11. Fiscal term of the investment trust; and
12. Other matters prescribed and publicized by the Financial Services Commission as necessary for the protection of beneficiaries.
Article 216 (Reasons for Exemption of General Meetings of Beneficiaries) The term "reason prescribed by the Presidential Decree" under Article 188 (2) 2 of the Act shall mean cases falling under any of the following subparagraphs:
1. Where the entire trust contract is transferred due to a business transfer, etc.;
2. Where a part of the trust contract is transferred inevitably in order to comply with relevant Acts and subordinate statutes, including Articles 184 (4) and 246 (1) of the Act;
3. Where the trust company is changed pursuant to the measures taken by the Financial Services Commission under Articles 420 (3) 1 and 420 (3) 2 of the Act; and
4. Where the trust company is changed pursuant to the orders issued by the Financial Services Commission under Articles 10 (1) 6 through 10 (1) 8 of the Act on the Structural Improvement of the Financial Industry.
Article 217 (Resolution of General Meetings of Beneficiaries) The term "others prescribed by the Presidential Decree" under Article 188 (2) 4 of the Act shall mean those falling under any of the following subparagraphs:
1. Changes in the type (referring to the type under the classification under Article 229 of the Act) of the investment trust: Provided, That the same shall not apply to cases where the conversion into another type of an investment trust is scheduled from the establishment thereof and such condition is indicated in the trust contract:
2. Changes in principal investment assets;
3. Changes of the collective investment manager: Provided, That the same shall not apply to the cases falling under any of the following items: (a) Merger, split-off, or split-and-merger;
(b) Where the collective investment manager is changed pursuant to the measures taken by the Financial Service Commission under Articles 420 (3) 1 and 420 (3) 2 of the Act; and
(c) Where the collective investment manager is changed pursuant to the orders issued by the Financial Service Commission under Articles 10 (1) 6 through 10 (1) 8 of the Act on the Structural Improvement of the Financial Industry;
4. Changes of an investment trust other than a closed-end investment trust (referring to the investment trust whose existence period is prescribed and which has no right to request the redemption of beneficiary certificates; hereinafter the same shall apply) into a closed-end investment trust;
5. Extension of payment period of redemption money; and
6. Other matters prescribed and publicized by the Financial Services Commission for the protection of beneficiaries.
Article 218 (Entries of Beneficiary Certificates) The Enforcement Decree of the Financial Investment Services and Capital Market Act The term "matters prescribed by the Presidential Decree" under Article 189 (5) 5 of the Act shall be as follows:
1. Name of the investment trust;
2. Symbol and number;
3. Timing of distributing profits, etc;
4. Conditions on the redemption of beneficiary certificates (referring to the effect that the redemption is not permitted in the case of beneficiary certificates of a closed-end investment trust);
5. Where a period of a trust contract is set forth, the period thereof; and
6. Name of the broker or dealer who sells the beneficiary certificates concerned. Article 219 (Exceptions from Prohibition on Information Provision) The term "cases prescribed by the Presidential Decree" under the proviso of Article 189 (8) of the Act shall mean cases where information is provided pursuant to the proviso of Article 4 (1) of the Act on Real Name Financial Transactions and Guarantee of Secrecy. Article 220 (Convocation for General Meetings of Beneficiaries) (1) A collective investment manager (including trust companies that convene a general meeting of beneficiaries or beneficiaries holding not less than 5/100 of the total number of accounts of outstanding beneficiary certificates pursuant to the latter part of Article 190 (3) of the Act; hereafter in this Article, the same shall apply) shall entrust the Depository with the convocation notice of a general meeting of beneficiaries.
(2) The Depository shall send the form necessary to exercise voting rights under Article 190 (6) of the Act in writing when it notifies the convocation of a general meeting of beneficiaries pursuant to paragraph (1) or receives requests from beneficiaries. (3) Where the Depository sends the form necessary to exercise voting rights in writing pursuant to paragraph (2), the Depository shall ensure that beneficiaries clearly present their intention by indicating yes or no, and deliver reference data for the exercise of voting rights submitted by a collective investment manager as prescribed by the Ordinance of the Prime Minister. (4) A collective investment manager shall, when it intends to convene a deferred general meeting of beneficiaries under the latter part of Article 190 (7) of the Act (hereafter in this
paragraph, referred to as "deferred general meeting of beneficiaries"), give notification of the deferred general meeting of beneficiaries pursuant to paragraph (1) with a statement containing the matters under Article 190 (8) of the Act at least one week before the date of the deferred general meeting of beneficiaries.
Article 221 (Exercise of Voting Rights in Writing) (1) A beneficiary who intends to exercise voting rights in writing pursuant to Article 190 (6) of the Act shall submit the form under Article 220 (2) of this Decree to the collective investment manager (including a trust company which convenes a general meeting of beneficiaries or the beneficiaries holding not less than 5/100 of the total number of accounts of outstanding beneficiary certificates pursuant to the latter part of Article 190 (3) of the Act) by the day preceding the date of a general meeting of beneficiaries after indicating the exercise of voting rights in writing.
(2) The number of voting rights exercised in writing pursuant to Article 190 (6) of the Act shall be added to the number of voting rights exercised by attending a general meeting of beneficiaries.
(3) A collective investment manager shall keep the forms for the exercise of voting rights submitted by beneficiaries pursuant to paragraph (1) and reference data for the exercise of voting rights at the head office for six months of the date of a general meeting of beneficiaries. (4) A beneficiary may request that the collective investment manager provide access to the forms and reference data under paragraph (3) and the copies thereof at any time during the business hours of the collective investment manager. (5) A chairman of a general meeting of beneficiaries shall be elected among beneficiaries at a general meeting of beneficiaries.
Article 222 (Methods of Purchasing Beneficiary Certificates by Dissident Beneficiaries) Where a collective investment manager purchases beneficiary certificates using the investment trust property pursuant to the main sentence of Article 191 (3) of the Act, the collective investment manager shall be deemed to have filed a redemption claim on the date when the period of requesting the purchase expires, and shall purchase such beneficiary certificates as prescribed in the trust agreement.
The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 223 (Reasons for Termination Exempted from Approval) The term "cases prescribed by the Presidential Decree" under the proviso of Article 192 (1) of the Act shall mean those falling under any of the following subparagraphs. In such a case, the requirements prescribed and publicized by the Financial Services Commission shall be met:
1. Where consent from all the beneficiaries is obtained;
2. Where a collective investment manager intends to terminate a trust contract upon the request for redemption of the entire beneficiary certificates of the investment trust concerned; or
3. Where the principal of the investment trust falls short of the amount prescribed and publicized by the Financial Services Commission for one month continuously. Article 224 (Methods and Procedures for Approval of Termination) (1) A person who intends to apply for an approval of termination of an investment trust pursuant to Article 192 (1) of the Act shall file with the Financial Services Commission an application for termination containing the matters falling under each of the following subparagraphs:
1. Matters on the investment trust subject to termination;
2. Reasons for terminating the investment trust;
3. Matters on the collective investment manager, trust company and broker or dealer of the investment trust subject to termination;
4. Matters on beneficiaries; and
5. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of beneficiaries.
(2) The application for termination under paragraph (1) shall accompany the documents falling under each of the following subparagraphs:
1. Documents to prove the termination decision of the collective investment manager;
2. List of collective investment properties on the day preceding the application date for termination; and
3. Others prescribed and publicized by the Financial Services Commission as necessary for examination of termination.
(3) Where a collective investment manager terminates an investment trust pursuant to Article 192 (1) or 192 (2) of the Act, the collective investment manager shall, when there are accrued receivables, acquire such accrued receivables by transfer at the market price prescribed and publicized by the Financial Services Commission on the termination date of the investment trust: Provided, That if the accrued receivables are traded pursuant to Article 87 (1) 3 of this Decree, such transaction may be replaced with the acquisition by transfer. (4) Where a collective investment manager terminates an investment trust pursuant to Article 192 (1) or 192 (2) of the Act, the collective investment manager shall, when there are bonds payable, acquire such bonds payable by transfer at the market price prescribed and publicized by the Financial Services Commission on the termination date of the investment trust: Provided, That if the bonds payable are traded pursuant to Article 87 (1) 3 of this Decree, such transaction may be replaced with the acquisition by transfer. (5) In addition to the matters prescribed under paragraph (1) through (4), other necessary matters on the termination of an investment trust, including the form of an application for termination, the preparation thereof, etc., shall be prescribed and publicized by the Financial Services Commission.
Article 225 (Reasons for Partial Termination)
The term "cases prescribed by the Presidential Decree" under the proviso of Article 192 (5) of the Act shall mean those falling under any of the following subparagraphs:
1. Where beneficiary certificates issued are not sold;
2. Where a beneficiary files a claim for the redemption of beneficiary certificates; or
3. Where a beneficiary files a claim for purchase of his/her own beneficiary certificates pursuant to Article 191 (1) of the Act.
Article 226 (Merger of Investment Trust)
(1) The term "matters prescribed by the Presidential Decree" under Article 193 (2) 7 of the Act shall be as follows:
1. Where earnings are distributed as a result of a merger of investment trusts, the maximum amount of distribution;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Where the contract period of the investment trust or the fiscal term of the investment trust is amended as a result of a merger of investment trusts, the details thereof;
3. Where remunerations, redemption fees, etc. are changed, the details thereof;
4. Matters on the appraisal of investment trust property for calculating the merger value of beneficiary certificates; and
5. Where beneficiary certificates are issued as a result of a merger, matters on the treatment of an odd lot less than one account.
(2) Where investment trusts are merged, the merger value of beneficiary certificates under Article 193 (8) of the Act shall be calculated based on the amount calculated by subtracting the total liabilities from the total assets appearing on the balance sheet as of the day immediately preceding the date on which the investment trusts are merged. (3) The convocation notice of a general meeting of beneficiaries shall contain material matters on a merger plan.
(4) Where a collective investment manager obtains an approval of the matters specified under Articles 193 (2) 1 through 193 (2) 6 of the Act and the matters falling under each subparagraph of paragraph (1) of this Article from a general meeting of beneficiaries, the collective investment manager shall notify beneficiaries thereof without delay. (5) A collective investment manager shall, when it notifies beneficiaries pursuant to paragraph (4), entrust the notification to the Depository.
(6) In addition to the matters prescribed under paragraphs (1) through (5), other necessary matters on the merger of investment trusts, including the form of a merger plan of investment trusts, the preparation thereof, etc., shall be prescribed and publicized by the Financial Services Commission.
Section 2 Corporate-type Collective Investment Schemes Article 227 (Entries of Articles of Incorporation) (1) The term "matters prescribed by the Presidential Decree" under of Article 194 (2) 11 of the Act shall be as follows:
1. Type of the investment company (referring to the type under the classification under Article 229 of the Act);
2. Investment assets (principal investment assets shall be specified separately);
3. Matters on the additional issuance and retirement of stocks;
4. Where the existence period or reasons for dissolution are set forth, the details thereof;
5. Matters on the appraisal of the properties of the investment company and the calculation of base prices;
6. Matters on the distribution of assets, etc. other than profits;
7. Outline (including the matters on the methods of calculating remunerations and other commissions and the time and methods of payment) of a delegation contract to be entered into with a collective investment manager, trust company, and general fund administrator;
8. Matters on the changes of the collective investment manager or trust company;
9. Matters on the alteration in the articles of incorporation;
10. Standards for the remunerations of supervisory directors;
11. Fiscal term of the investment company;
12. Date on which the articles of incorporation is prepared; and
13. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of shareholders.
(2) The term "amount prescribed by the Presidential Decree" under Article 194 (5) of the Act shall be one billion won.
Article 228 (Accompanying Documents for Registration of Incorporation) The term "documents prescribed by the Presidential Decree" under Article 194 (10) of the Act other than each subparagraph shall be as follows:
1. Articles of incorporation;
2. A written statement to certify the underwriting (referring to the underwriting under Article 293 of the Commercial Act) of stocks;
3. An inspection report prepared by directors;
4. A written statement to certify the consent to the inauguration of directors;
5. A written statement to certify the entrustment of administrative affairs for stock transfer; and
6. Certificates of the payment and custody of such payments for stocks issued by banks and other financial institutions responsible for the receipt of payments for stocks. The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 229 (Alteration of Articles of Incorporation) (1) The term "others prescribed by the Presidential Decree" under Article 195 (1) 4 of the Act shall be as follows:
1. Changes in the type (referring to the type under the classification under Article 229 of the Act) of the investment company: Provided, That the same shall not apply to cases where the investment company is scheduled to be converted into another type of an investment company and such condition is indicated in the articles of incorporation;
2. Changes in principal investment assets;
3. Changes of an open-end investment company (hereinafter referred to as "open-end investment company") under Article 196 (4) of the Act into a closed-end investment company (referring to an investment company whose existence period is prescribed and which has no right to request the redemption of stocks; hereinafter the same shall apply);
4. Extension of payment period of redemption money; and
5. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of shareholders.
(2) The term "reason prescribed by the Presidential Decree" under Article 195 (2) of the Act shall mean those falling under either of the following subparagraphs:
1. In the case of a collective investment manager, cases falling under any of the following items:
(a) Where a collective investment manager is changed pursuant to the measures taken by the Financial Services Commission under Articles 420 (3) 1 and 420 (3) 2 of the Act; or (b) Where a collective investment manager is changed pursuant to the orders issued by the Financial Services Commission under Articles 10 (1) 6 through 10 (1) 8 of the Act on the Structural Improvement of the Financial Industry; or
2. In the case of a trust company, cases falling under any of the following items: (a) Where the entire contract on the custody and management of the property of an investment company is transferred as a result of business transfer, etc.; (b) Where a part of the contract on the custody and management of the property of an investment company is inevitably transferred in order to comply with relevant Acts and subordinate statutes including Articles 184 (4) and 246 (1) of the Act;
(c) Where a trust company is changed pursuant to the measures taken by the Financial Services Commission under Articles 420 (3) 1 and 420 (3) 2 of the Act; or (d) Where a trust company is changed pursuant to the orders issued by the Financial Services Commission under Articles 10 (1) 6 through 10 (1) 8 of the Act on the Structural Improvement of the Financial Industry. Article 230 (Condition for Issuing New Stocks)
The term "conditions prescribed by the Presidential Decree" under the latter part of Article 196 (5) of the Act shall mean the calculation method of base price (hereinafter referred to as "base price") under Article 238 (6) of the Act: Provided, That a closed-end investment company may set forth issue prices of new stocks after taking into account the amount calculated in accordance with the calculation method of base price and the price traded on the securities market.
Article 231 (Reason for Disqualification of Supervisory Director) The term "persons prescribed by the Presidential Decree" under Article 199 (4) 7 of the Act shall mean those falling under any of the following subparagraphs:
1. Officers and employees of a general fund administrator of the investment company concerned;
2. Officers and employees of a collective investment scheme appraisal company that appraises the investment company concerned;
3. Officers and employees of a bond appraisal company that appraises the value of the property of the investment company concerned;
4. Officers and employees of a broker or dealer who sells the stocks of the investment company concerned; or
5. Accounting auditors (where an accounting auditor is a corporation, referring to certified public accountants belonging to the corporation) of the investment company concerned. Article 232 (Registration of Liquidator)
(1) The term "documents prescribed by the Presidential Decree" under Article 202 (2) of the Act other than each subparagraph shall be as follows: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Where a corporate director becomes a liquidator, the articles of incorporation;
2. Where a person who is designated by the articles of incorporation becomes a liquidator, the articles of incorporation;
3. Where a liquidator is appointed at a general meeting of shareholders, copies of the minutes from the general meeting of shareholders and a written statement to certify the approval of inauguration; and
4. Where the Financial Services Commission appoints a liquidator, a written statement to certify the appointment.
(2) The term "documents prescribed by the Presidential Decree" under Article 202 (3) of the Act shall be as follows:
1. Where a corporate director becomes a liquidation supervisor, the articles of incorporation;
2. Where a person prescribed by the articles of incorporation becomes a liquidation supervisor, the articles of incorporation;
3. Where a liquidation supervisory is appointed at a general meeting of shareholders, copies of the minutes from the general meeting of shareholders and a written statement to certify the approval of inauguration; and
4. Where the Financial Services Commission appoints a liquidation supervisor, a written statement to certify the appointment.
Article 233 (Omission of Preemptive Notices to Creditor) (1) An investment company shall, when it intends to omit the preemptive notice to the creditors pursuant to the main sentence of Article 203 (4) of the Act, publish its intention and the matters on debts, including the details, repayment methods thereof, etc., through not less than two nationwide newspapers at least twice, and shall report the fact to the Financial Services Commission without delay.
(2) The term "cases prescribed by the Presidential Decree" under the proviso of Article 203 (4) of the Act shall mean those falling under any of the following subparagraphs:
1. Where an investment company is liable to execute the contract for the transaction of exchange-traded derivatives or over-the-counter derivatives;
2. Where any lawsuit likely to materially affect the property of an investment company is pending; or
3. Where there is any residual debt as a result of the borrowings, etc. under the proviso of Article 83 (1) of the Act.
Article 234 (Entry of Articles of Incorporation)
(1) The term "matters prescribed by the Presidential Decree" under Article 207 (1) 8 of the Act shall be as follows:
1. Type of investment limited liability company (referring to the type under the classification under Article 229 of the Act);
2. Investment assets (principal investment assets shall be separately indicated);
3. Matters on additional issuance and retirement of equity securities;
4. Where an existence period or reason for dissolution is set forth, the details thereof;
5. Matters on appraisal of the properties of an investment limited liability company and the calculation of base prices;
6. Matters on distribution of assets, etc. other than profits;
7. Outline (including matters on the calculation methods of remunerations and other commissions, and the payment and time thereof) of the delegation contract to be entered into with a collective investment manager, trust company and general fund administrator;
8. Matters on changes in a collective investment manager and trust company;
9. Matters on changes in articles of incorporation;
10. Fiscal term of an investment limited liability company;
11. Date on which an articles of incorporation are established; and
12. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of partners.
(2) The term "documents prescribed by the Presidential Decree" under Article 207 (3) of the Act other than each subparagraph shall be as follows:
1. Articles of incorporation; and
2. Certificates on the receipt and custody of contributions by banks and other financial institutions that are in charge of the receipt of contributions. Article 235 (Equity Securities)
The Enforcement Decree of the Financial Investment Services and Capital Market Act The term "others prescribed by the Presidential Decree" under Article 208 (2) 5 of the Act shall be as follows:
1. Symbol and number;
2. Time of the distribution of profits, etc.;
3. Conditions on the redemption of equity securities (in the case of the equity securities whose redemption is not permitted, referring to the effect that any claim for redemption shall not be made);
4. Where an existence period is set forth, the period; and
5. Name of the broker or dealer who has sold the equity securities. Article 236 (Entry of Articles of Incorporation)
(1) The term "matters prescribed by the Presidential Decree" under Article 213 (1) 8 of the Act shall be as follows:
1. Type of investment limited partnership company (referring to the type under the classification under Article 229 of the Act);
2. Investment assets (principal investment assets shall be separately indicated);
3. Matters on additional issuance and retirement of equity securities;
4. Where an existence period or reasons for dissolution are set forth, the details;
5. Matters on appraisal of the properties of the investment limited partnership company and the calculation of base prices;
6. Matters on distribution of assets, etc. other than profits;
7. Outline (including matters on the calculation methods of remunerations and other commissions, and the payment and time thereof) of the delegation contract to be entered into with a collective investment manager, trust company, and general fund administrator;
8. Matters on changes in the collective investment manager and trust company;
9. Matters on changes in articles of incorporation;
10. Fiscal term of an investment limited partnership company;
11. Date on which an articles of incorporation are established; and
12. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of partners.
(2) The term "documents prescribed by the Presidential Decree" under Article 213 (3) of the Act other than each subparagraph shall be as follows:
1. Articles of incorporation; and
2. Certificates on the receipt and custody of contributions by banks and other financial institutions that are in charge of the receipt of contributions. Section 3 Partnership-type Collective Investment Scheme Article 237 (Entry in Partnership Contract)
The term "others prescribed by the Presidential Decree" under Article 218 (1) 9 of the Act shall be as follows:
1. Type of investment limited partnership (referring to the type under the classification under Article 229 of the Act);
2. Investment assets (principal investment assets shall be separately indicated);
3. Matters on additional issuance and retirement of equity securities;
4. Matters on appraisal of the properties of investment limited partnership and the calculation of base price;
5. Matters on distribution of assets, etc. other than profits;
6. Outline (including the matters on the methods of calculating remunerations and other commissions, and the time and methods of payment) of a delegation contract to be entered into with a collective investment manager, trust company, and general fund administrator;
7. Matters on change in the collective investment manager and trust company;
8. Matters on alteration of the partnership contract;
9. Fiscal term of an investment limited partnership;
10. Date on which a partnership contract is prepared; and
11. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of partners.
Article 238 (Report on Dissolution)
A liquidator shall report to the Financial Services Commission the matters falling under each of the following subparagraphs within 30 days of the date of dissolution pursuant to the latter part of Article 221 (1) of the Act other than each subparagraph: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Reasons for dissolution and the date of dissolution; and
2. Name and resident registration number of the liquidator (where a liquidation is a corporation, the name and business registration number thereof). Article 239 (Entry in Contract for Investment Undisclosed Association) The term "others prescribed by the Presidential Decree" under Article 224 (1) 9 of the Act shall be as follows:
1. Type of investment undisclosed association (referring to the type under the classification under Article 229 of the Act);
2. Investment assets (principal investment assets shall be specified separately);
3. Matters on additional issuance and retirement of equity securities;
4. Matters on appraisal of the properties of the investment undisclosed association and the calculation of base prices;
5. Matters on distribution of assets, etc. other than profits;
6. Outline of the delegation contract to be entered into with a collective investment manager, trust company, and general fund administrator (including the matters on the methods of calculating remunerations and other commissions and the time and methods of payment);
7. Matters on change in the collective investment manager and trust company;
8. Matters on alteration of the contract for investment undisclosed association;
9. Fiscal term of an investment undisclosed association;
10. Date on which a contract for the investment undisclosed association is prepared; and
11. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of partners of undisclosed association. Chapter 3 Form of Collective Investment Scheme
Section 1 Form of Collective Investment Scheme
Article 240 (Minimum Investment Ratio of Collective Investment Scheme by Form) (1) The term "ratio prescribed by the Presidential Decree" under subparagraph 1 of Article 229 of the Act shall be 50/100.
(2) The term "securities prescribed by the Presidential Decree" under subparagraph 1 of Article 229 of the Act shall mean those falling under any of the following subparagraphs:
1. Where the assets falling under any of the following items account for not less than 50/100 of trust properties, collective investment properties or securitization assets, the beneficiary certificates, collective investment securities, or asset-backed securities: (a) Real estate;
(b) Rights related to real estate such as surface rights, easement, chonsegwon (rights to registered lease on a deposit basis), leasehold rights, rights to purchase condominium, etc.;
(c) Money receivables (limited to offering real estate as collateral) whose creditor is a creditor financial institution (including the corporations in the procedure of liquidation or bankruptcy in accordance with the Debtor Rehabilitation and Bankruptcy Act which have been financial institutions under the Act on the Structural Improvement of the Financial Industry) under subparagraph 1 of Article 2 of the Act on the Structural Improvement of the Financial Industry; and
(d) Special assets under subparagraph 3 of Article 229 of the Act (hereinafter referred to as "special assets");
2. Stocks issued by real estate investment companies under the Real Estate Investment and Trust Company Act;
3. Stocks issued by ship investment companies under the Ship Investment Company Act;
4. Stocks and bonds issued by a corporation aimed at carrying out infrastructure projects under the Act on Private Participation in Infrastructure; or
5. Equity securities of a corporation (excluding investment and loan companies for infrastructure under the Act on Private Participation in Infrastructure) established for investment through the methods of acquiring stocks and bonds issued by a corporation aimed at carrying out one infrastructure project under the Act on Private Participation in Infrastructure or acquiring loans extended to such corporation; or
6. Securities falling under items (d) through (g) of subparagraph 1 of Article 80 (1) of this Decree;
(3) The term "ratio prescribed by the Presidential Decree" under subparagraph 2 of Article 229 of the Act shall be 50/100.
The Enforcement Decree of the Financial Investment Services and Capital Market Act (4) The term "conditions prescribed by the Presidential Decree" under subparagraph 2 of Article 229 of the Act shall mean those falling under any of the following subparagraphs:
1. Development of real estate;
2. Management and improvement of real estate;
3. Lease of real estate;
4. Acquisition of the rights related to real estate such as surface rights, easement, chonsegwon (rights to registered lease on a deposit basis), leasehold rights, rights to purchase condominium, etc.; or
5. Acquisition of the money receivables (limited to offering real estate as collateral) whose creditor is a creditor financial institution (including corporations in the procedure of liquidation or bankruptcy in accordance with the Debtor Rehabilitation and Bankruptcy Act which have been financial institutions under the Act on the Structural Improvement of the Financial Industry) under subparagraph 1 of Article 2 of the Act on the Structural Improvement of the Financial Industry.
(5) The term "securities related to real estate prescribed by the Presidential Decree" under subparagraph 2 of Article 229 of the Act shall mean those falling any of the following subparagraphs:
1. Securities under subparagraph 1 of paragraph (2) (excluding item (d));
2. Stocks under subparagraph 2 of paragraph (2); or
3. Securities under subparagraph 6 of paragraph (2). (6) The term "ratio prescribed by the Presidential Decree" under Article 229 (3) of the Act shall be 50/100.
Article 241 (Collective Investment Scheme of Short-term Finance) (1) The term "short-term financial products prescribed by the Presidential Decree" under subparagraph 5 of Article 229 of the Act shall mean assets falling under any of the following subparagraph, which are denominated in Korean won:
1. Certificates of deposit whose remaining maturity is not more than six months;
2. Government bonds, municipal bonds, special bonds, corporate bonds (excluding stock- linked debentures under subparagraph 4 of Article 71 of the Act and corporate bonds issued
through private placement) and commercial papers: Provided, That the restriction of remaining maturities shall not apply to purchases of securities with repurchase agreement;
3. Notes (excluding commercial papers) under Article 79 (2) 5 of this Decree whose remaining maturity is not more than one year;
4. Short-term loans under Article 83 (4) of the Act;
5. Deposits in the financial institutions falling under each item of Article 79 (2) 5 of this Decree with maturity of up to six months; or
6. Collective investment securities of other collective investment schemes of short-term finance.
(2) The term "methods prescribed by the Presidential Decree" under subparagraph 5 of Article 229 of the Act shall mean those falling under any of the following subparagraphs:
1. Management with the methods of borrowing or lending securities shall be prohibited;
2. Sales of securities with repurchase agreement shall be made within the scope prescribed and publicized by the Financial Services Commission;
3. Weighted average remaining maturities of the collective investment properties of each collective investment scheme of short-term finance shall be within the scope prescribed and publicized by the Financial Services Commission;
4. Where collective investment properties of each collective investment scheme of short- term finance (excluding collective investment schemes of short-term finance whose sales are restricted pursuant to Article 76 (2) of the Act, or whose redemption is deferred pursuant to Article 237 of the Act) fail to meet the standards falling under either of the following items, the collective investment schemes of short-term finance shall not establish or incorporate another collective investment scheme of short-term finance, and shall not be entrusted with the management of business from other collective investment schemes of short-term finance: Provided, that the standards falling under each of the following items shall not apply to cases where the collective investment schemes of short-term finance establish or incorporate a collective investment scheme of short-term finance which comprehensively manages surplus funds under Article 81 of the Finance Act and a collective investment scheme of short-term finance invested by such collective investment schemes of short-term finance, or where the collective investment schemes of short-term finance are entrusted with the management business:
The Enforcement Decree of the Financial Investment Services and Capital Market Act (a) In the case of collective investment schemes of short-term finance whose investors are composed of individuals only: not less than 300 billion won; or (b) In the case of collective investment schemes of short-term finance whose investors are composed of business entities only: not less than 500 billion won; or
5. A collective investment scheme of short-term finance shall comply with the conditions prescribed and publicized by the Financial Services Commission with respect to the credit ratings of investment assets and the investment limit by credit rate, the methods of calculating weighted average remaining maturity, and other matters on maintaining stability of the management of assets.
Section 2 Collective Investment Scheme in Special Form Article 242 (Closed-end Collective Investment Scheme) (1) The term "cases prescribed by the Presidential Decree" under Article 230 (2) of the Act shall mean cases falling under any of the following subparagraphs where collective investment securities are issued at the price calculated when taking into account the base price and the price on the securities market:
1. Where collective investment securities of a closed-end collective investment scheme are additionally issued within the scope of the profit sharing provided by the closed-end collective investment scheme;
2. Where a trust company confirms that it is unlikely to undermine the interests of existing investors; or
3. Where consent from all existing investors is obtained. (2) The term "cases prescribed by the Presidential Decree" under Article 230 (5) of the Act shall mean those falling under any of the following subparagraphs:
1. In the case of establishing or incorporating a collective investment scheme of real estate;
2. In the case of establishing or incorporating a collective investment scheme of special asset;
3. In the case of establishing or incorporating a collective investment scheme of mixed assets under subparagraph 4 of Article 229 of the Act; or
4. In the case of establishing or incorporating a collective investment scheme that is permitted to make an investment in unmarketable assets prescribed and publicized by the Financial Services Commission in excess of the ratio prescribed and publicized by the Financial Services Commission within 20/100 of the total assets of each collective investment scheme.
Article 243 (Multi-class Collective Investment Scheme) (1) Where a multi-class collective investment scheme (hereinafter referred to as "multi-class collective investment scheme") under Article 231 (1) of the Act is established or incorporated, a collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall include the matters falling under each of the following items in a registration statement under Article 211 (1) of this Decree:
1. Matters on sales commission and sales fee of collective investment securities by type;
2. Where a right to convert into other types of collective investment securities is granted to investors, matters on conversion of collective investment securities;
3. Matters on costs imposed on each type of collective investment properties; and
4. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) In the case of the conversion under subparagraph 2 of paragraph (1), the conversion price shall be the base price of each type of collective investment securities. In such a case, a collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall not impose any commission for redemption on the investors who make a claim for the conversion.
(3) A broker or dealer shall, when he/she sells collective investment securities of a multi-class collective investment scheme, inform investors that there are various types of collective investment securities with different sales commissions or sales fees, and shall explain the differences of each collective investment securities by type. (4) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall, when it changes to a multi-class collective investment scheme, make a registration of changes containing the matters falling under each subparagraph of paragraph (1) pursuant to Article 211 (3) of this Decree. The Enforcement Decree of the Financial Investment Services and Capital Market Act (5) In addition to the matters prescribed under paragraphs (1) through (4), other matters necessary for the protection of investors with respect to a multi-class collective investment scheme shall be prescribed and publicized by the Financial Services Commission. Article 244 (Umbrella Fund)
(1) Where an umbrella fund (hereinafter referred to as "umbrella fund") under Article 232 (1) of the Act is established or incorporated, a collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall include the matters on the collective investment schemes which are eligible for conversion in a registration statement under Article 211 (1) of this Decree.
(2) Where collective investment securities of an umbrella fund are converted into collective investment securities of another collective investment scheme pursuant to Article 232 (1) of the Act, the conversion price shall be the base price of the collective investment securities of each collective investment scheme. In such a case, a collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall not impose any commission for redemption on the investors who make a claim for the conversion. (3) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall, when it intends to convert into an umbrella fund, make a registration of changes containing the matters on the collective investment schemes which are eligible for conversion under paragraph (1) in a registration statement pursuant to Article 211 (3) of the Act.
(4) In addition to the matters prescribed under paragraphs (1) through (3), other matters necessary for the protection of investors with respect to an umbrella fund shall be prescribed and publicized by the Financial Services Commission. Article 245 (Master-feeder Collective Investment Scheme) (1) Where a master-feeder collective investment scheme (hereinafter referred to as "master- feeder collective investment scheme") under Article 233 (3) of the Act is established or incorporated, a collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall include the matters on the collective investment securities of the master-type collective investment scheme (hereinafter referred to as "master-
type collective investment scheme") under Article 233 (1) of the Act to be acquired by a feeder-type collective investment scheme (hereinafter referred to as "feeder-type collective investment scheme") under Article 233 (1) of the Act in a registration statement under Article 211 (1) of this Decree.
(2) A broker or dealer shall not sell collective investment securities of a master-type collective investment scheme to investors.
(3) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall, when it intends to convert into a master-feeder collective investment scheme, make a registration of changes containing the matters on the collective investment securities of the master-type collective investment scheme to be acquired by a feeder-type collective investment scheme pursuant to Article 211 (3) of this Decree. (4) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall, when it converts into a master-feeder collective investment scheme pursuant to paragraph (3), transfer the entire assets of a collective investment scheme to a master-type collective investment scheme which is newly established or incorporated and shall deliver the collective investment securities of the master-type collective investment scheme equivalent to the transferred assets to a feeder-type collective investment scheme. In such a case, the collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall not transfer the combined assets of not less than two collective investment schemes to one master-type collective investment scheme, and shall not transfer the divided assets of a collective investment scheme to not less than two master-type collective investment schemes. (5) In addition to the matters prescribed under paragraphs (1) through (4), other matters necessary for the protection of investors with respect to a master-feeder collective investment scheme shall be prescribed and publicized by the Financial Services Commission. Article 246 (Requirements for Exchange-traded Fund) The term "requirements prescribed by the Presidential Decree" under Article 234 (1) 1 of the Act shall mean cases meeting all the requirements falling under the following subparagraphs: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. The index shall comprehensively represent the price level of items of the securities traded on the exchange, foreign exchanges or markets established by persons prescribed and publicized by the Financial Services Commission;
2. The index under paragraph (1) shall be appropriately publicized to investors through the market established by the persons under paragraph (1); and
3. The portfolio of the index, the weight of each item composing the index and the methods of management necessary for linking to changes in the index shall comply with the requirements prescribed and publicized by the Financial Services Commission. Article 247 (Designated Participant)
The term "broker or dealer prescribed by the Presidential Decree" under Article 234 (2) of the Act shall mean those (hereinafter referred to as "designated participant") designated by a collective investment manager to conduct the businesses falling under each of the following subparagraphs as a person who carries on brokerage (limited to consigned transactions) or dealing (excluding underwriting business) of securities:
1. Business of requesting that a collective investment manager establish a new or an additional exchange-traded fund, incorporate an additional exchange-traded fund, or issue new stocks;
2. Business of requesting that a collective investment manager terminate all or part of an exchange-traded fund, dissolve an exchange-trade fund, or retire part of stocks;
3. Business of purchasing or selling securities, or the brokerage service thereof in order to convert money or securities (hereafter in this Section, referred to as "paid money, etc.") paid by investors into the assets equivalent to a certain unit (hereinafter referred to as "establishment unit") prescribed and publicized by the Financial Services Commission;
4. Business (limited to designated participants prescribed and publicized by the Financial Services Commission) of facilitating the trading of collective investment securities of an exchange-traded fund on the securities market, and matching the trading prices to the net asset values of each account or stock of the collective investment securities. Article 248 (Establishment or Incorporation)
(1) Where a designated participant requests the establishment and additional establishment or the incorporation of an exchange-traded fund or the issuance of new stocks, a collective investment manager may establish, additionally establish or incorporate an exchange-traded fund or issue new stocks under the conditions prescribed by a trust contract or articles of incorporation of an investment company.
(2) A designated participant shall, when it intends to request the establishment and additional establishment or the incorporation of an exchange-traded fund or the issuance of new stocks pursuant to subparagraph 1 of Article 247 of this Decree, convert the paid money, etc. by investors directly or through a broker or dealer into the assets equivalent to the establishment unit.
(3) In addition to the matters prescribed under paragraphs (1) and (2), other necessary matters on the payment methods of the paid money, etc. and the establishment, additional establishment or in corporation of an exchange-traded fund, or the issuance of new stocks, etc. shall be prescribed and publicized by the Financial Services Commission. Article 249 (Redemption of Collective Investment Securities by Exchange-traded Fund) (1) An investor of an exchange-traded fund may file claims for the redemption of collective investment securities by an establishment unit against a broker or dealer (excluding the designated participant; hereafter in this Article, the same shall apply) who sells the collective investment securities, or a designated participant (limited to cases where a broker or dealer who sells the collective investment securities is a designated participant) of the collective investment securities: Provided, That where the broker or dealer who sells the collective investment securities cannot meet such claims for redemption because of dissolution, revocation of authorization, suspension of the business, or other grounds prescribed and publicized by the Financial Services Commission (hereafter in this Chapter, referred to as "dissolution, etc."), the investor may file such claims against the designated participant. (2) A broker or dealer who receives the claims for redemption of collective investment securities of an exchange-traded fund pursuant to the main sentence of paragraph (1) shall request that the designated participant meet such claims for the redemption of the collective investment securities: Provided, That where the designated participant cannot conduct the business related to the redemption of the collective investment securities, the broker or dealer The Enforcement Decree of the Financial Investment Services and Capital Market Act may directly request that the collective investment manager meet such claims for the redemption of the collective investment securities. (3) Where an investor of an exchange-trade fund intends to claim redemption of collective investment securities from a designated participant pursuant to the proviso of paragraph (1), and the designated participant cannot conduct the business related to the redemption of the collective investment securities due to dissolution, etc., the investor may file claims for the redemption of the collective investment securities directly against the collective investment manager.
(4) A designated participant who receives the claims for redemption of collective investment securities pursuant to the main sentences of paragraphs (1) and (2) shall request that the collective investment manager of an exchange-traded trust or exchange-traded investment company meet such claims without delay.
(5) An investor, broker or dealer, or designated participant of collective investment securities of an exchange-traded fund may file claims for redemption directly against a trust company where the collective investment manager cannot meet the claims when the investor, the broker or dealer, or the designated participant files claims for redemption or requests for redemption pursuant to the proviso of paragraph (2), (3) or (4) (limited to cases where any request that a collective investment manager of an exchange-traded trust meet the claims for redemption is made).
(6) A collective investment manager and trust company of an exchange-traded trust that receives the claims for redemption pursuant to the proviso of paragraph (2), or paragraphs (3) through (5) shall meet such claims without delay, and the collective investment manager and trust company of an exchange-traded investment company shall request that an exchange- traded investment company meet such claims without delay. (7) A collective investment manager, trust company, or exchange-traded investment company that is required to meet claims for redemption pursuant to the proviso of paragraph (2) or paragraphs (3) through (6) shall meet such claims using the assets (excluding the cases prescribed and publicized by the Financial Services Commission) falling under the establishment unit through partial cancellation of an exchange-traded trust or partial retirement of stocks of an exchange-traded investment company based on the collective investment
properties of the exchange-traded fund after completing the management of the collective investment properties on the date on which the claims for redemption are filed. (8) A broker or dealer, designated participant, collective investment manager or trust company that receives the claims or requests for redemption pursuant to paragraphs (1) through (6) shall, when it fails to make a redemption of collective investment securities by the date prescribed by the collective investment agreement due to dissolution, etc., defer the redemption pursuant to Article 237 of the Act and inform investors of the fact without delay. Article 250 (Listing and De-listing of Exchange-traded Fund) (1) Listing of collective investment securities of an exchange-traded fund shall comply with the Listing Regulations of securities under Article 390 (1) of the Act. (2) The Exchange may de-list collective investment securities of an exchange-traded fund when any reason prescribed and publicized by the Financial Services Commission occurs to the collective investment securities.
(3) The collective investment manager and exchange-traded investment company of an exchange-traded trust shall, when collective investment securities of an exchange-traded fund are de-listed pursuant to paragraph (2), terminate or dissolve the exchange-traded fund within the period prescribed and publicized by the Ordinance of the Prime Minister after the date of de-listing. In such a case, Article 192 (1) of the Act shall not apply to an exchange-traded trust. (4) Where an exchange-trade fund is terminated or dissolved pursuant to paragraph (3), a collective investment manager shall report the fact to the Financial Services Commission within seven days of the date of termination or dissolution. Article 251 (Public Notice of Assets Held)
(1) A collective investment manager or exchange-traded investment company of an exchange- traded trust shall publicly announce the details (including details of composition of assets by establishment unit for new or additional establishment, new incorporation, or issuance of new stocks) of composition of paid assets of the exchange-traded fund through the securities market as of the day preceding the publication date on a daily basis. (2) The exchange shall publicly announce the net asset values and the tracking errors (referring to the difference between the fluctuation rate of net asset values of collective investment The Enforcement Decree of the Financial Investment Services and Capital Market Act securities of an exchange-traded fund per account or per stock, and the fluctuation rate of index which is the target of the exchange-traded fund) of an exchange-traded fund al least once a day. Article 252 (Special Cases for Management of Exchange-traded Fund) (1) Notwithstanding Articles 80 (4) and 86 (1) of this Decree, a collective investment manager may manage collective investment properties of an exchange-traded fund through the methods falling under each of the following subparagraphs pursuant to the proviso of Article 81 (1) and Article 234 (4) of the Act:
1. Investing up to 30/100 of the total assets of each exchange-traded fund in the securities of the same item. In such a case, the equity securities (including securities deposit receipts related to those issued by the corporation, etc.; hereafter in this paragraph, the same shall apply) and the securities other than equity securities among the securities issued by the same corporation, etc. shall be regarded as the same item, respectively; and
2. Investing up to 20/100 of the total number of the equity securities issued by the same corporation, etc. using the total amount of assets of each exchange-traded fund. (2) Notwithstanding the main sentence of Article 84 (1) of the Act, a collective investment manager may conduct purchases, sales and other transactions of securities with interested persons (referring to the interested persons under Article 84 (1) of the Act) for the purpose of the establishment and additional establishment or incorporation of an exchange-traded fund, or the issuance of new stocks.
Chapter 4 Redemption of Collective Investment Securities Article 253 (Reason for Denial of Claims for Redemption) The term "grounds prescribed by the Presidential Decree" under the proviso of Article 235 (2) of the Act shall mean cases where the Financial Services Commission recognizes that it is difficult for a broker or dealer who has sold collective investment securities to conduct ordinary businesses due to electronic errors caused by natural disasters or calamities, and other reasons equivalent thereto.
Article 254 (Exception to Redemption Method)
(1) The term "cases prescribed by the Presidential Decree" under Article 235 (4) of the Act shall mean those falling under either of the following subparagraphs where the date of redemption is designated by the collective investment agreement exceeding 15 days from the date on which the claims for redemption are filed:
1. In the case of investing in unmarketable assets prescribed and published by the Financial Services Commission in excess of the ratio prescribed and published by the Financial Services Commission within 10/100 of the total assets of each collective investment scheme; or
2. In the case of investing in assets denominated in foreign currencies in excess of 50/100 of the total assets of each collective investment scheme. (2) The term "cases prescribed by the Presidential Decree" under the proviso of Article 235 (6) of the Act shall mean those falling under either of the following subparagraphs:
1. Where a broker or dealer who has sold collective investment securities of a collective investment scheme of short-term finance purchases collective investment securities from individual investors at the base price publicized on the date on which the claim for redemption is filed within the range of the larger amount between the amount equivalent to 5/100 of the sales of collective investment securities of each collective investment scheme of short-term finance and the amount prescribed and publicized by the Financial Services Commission; or
2. Where a broker or dealer who has sold collective investment securities purchases part of the collective investment securities inevitably at the redemption price prescribed by the collective investment agreement of the collective investment scheme concerned on the date of redemption prescribed by the collective investment agreement upon the request for the redemption of collective investment securities (excluding collective investment securities of a collective investment scheme of short-term finance) from investors based on the amount. Article 255 (Redemption Price and Commission)
(1) The term "grounds prescribed by the Presidential Decree" under the proviso of Article 236 (1) of the Act shall mean cases falling under any of the following subparagraphs as prescribed by a collective investment agreement that the redemption shall be made at the base price which is publicized on the date when the claim for redemption is filed: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Cases falling under either of the following items where a broker or dealer has sold collective investment securities of a collective investment scheme of short-term finance: (a) Where an investor makes a contract for the redemption of collective investment securities of a collective investment scheme of short-term finance with the broker or dealer in advance in order to pay settlement incurred from the purchases of financial investment products, etc.; or
(b) Where an investor makes a contract for the redemption of collective investment securities of a collective investment scheme of short-term finance with the broker of dealer, in advance, in order to repay debts incurred on a regular basis, including the payment of utility charges, etc.;
2. Where a broker or dearer sells collective investment securities of a collective investment scheme of short-term finance to a person falling under either of the following items and then makes a redemption of such collective investment securities: (a) Foreign exchange equalization funds under Article 13 of the Foreign Exchange Transactions Act; or
(b) Collective investment schemes of short-term finance that collectively manage surplus funds under 5Article 81 of the Finance Act.
(2) Redemption commissions of collective investment securities shall be imposed pursuant to Article 236 (2) of the Act when the redemption is made during the period prescribed by a collective investment agreement. In such a case, the redemption commissions may be imposed based on the redemption amount or profits, etc.
(3) A base price calculated after the date on which the claims for redemption are filed under the main sentence of Article 236 (1) of the Act shall be the base price which is calculated from the date on which the claims for redemption are filed and publicized after two business days (referring to three business days where an investor files a claim for redemption after the base point of time for the purpose of fixing the date on which the claim for redemption is filed with respect to the collective investment securities prescribed by the collective investment agreement) as prescribed by the collective investment agreement. (4) Other necessary matters for the protection of investors with respect to paragraphs (2) and (3) shall be prescribed and publicized by the Financial Services Commission. Article 256 (Grounds for Deferral of Redemption)
The term "grounds prescribed by the Presidential Decree" under the former part of Article 237 (1) of the Act shall mean cases falling under any of the following subparagraphs:
1. Cases falling under any of the following items where a collective investment scheme cannot make redemptions on the grounds of impracticality to dispose of collective investment properties:
(a) Where it is impractical to dispose of collective investment properties due to significant impairment in trading;
(b) Where it is impractical to dispose of collective investment properties due to closing, temporary closing, or suspension of trading in the securities market or foreign securities market, and other grounds equivalent thereto; or
(c) Where natural disasters, calamities and other grounds equivalent thereto occur;
2. Cases falling under any of the following items where it is likely to undermine fairness to investors:
(a) Where the disposal of collective investment properties is likely to undermine the interests of other investors due to occurrence of default, etc.; (b) Where the acceptance of a request for redemption is likely to undermine the interests of other investors because the assets belonging to the collective investment properties have no market prices; or
(c) Where the acceptance of a request claim for mass redemption is likely to undermine fairness to investors;
3. Where a broker or dealer, collective investment manager, trust company, investment company, etc. that receives the claims or requests for redemption is unable to redeem collective investment securities due to dissolution, etc.; or
4. Other grounds equivalent to those under subparagraphs 1 through 3, which are recognized by the Financial Services Commission as deferral of redemption is necessary. Article 257 (Resolution of General Meeting for Deferral of Redemption) (1) The term "matters prescribed by the Presidential Decree" under the latter part of Article 237 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. Where the resumption of redemption is intended, the time and method for the payment of redemption money;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Where continuous deferral of redemption is intended, the redemption deferral period and the time and method for the payment of redemption money when the redemption is resumed; or
3. Where partial redemption is conducted pursuant to Article 237 (5) of the Act, the method of disposing of assets that have caused the deferral of redemption. (2) The term "others prescribed by the Presidential Decree" under Article 237 (3) 1 (b) of the Act shall be as follows:
1. Redemption prices and
2. In the case of partial redemption, the intention and size thereof. (3) The term "others prescribed by the Presidential Decree" under Article 237 (3) 2 (d) of the Act shall be as follows:
1. Where the redemption is resumed, redemption prices and the time of the payment of redemption money; and
2. In the case of partial redemption, the intention and size thereof. Article 258 (Redemption Method for Resumption of Redemption) Where any or all reasons for the deferral of redemption are completely or partially dissolved after a general meeting of collective investors for the deferral of redemption, a collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall make redemptions in accordance with the resolution made at the general meeting of collective investors pursuant to Article 237 (4) of the Act: Provided, That the collective investment manager of an investment trust or investment undisclosed association, the investment company, etc. may make redemptions without holding a general meeting of collective investors where the reasons for the deferral of redemption are resolved before a general meeting of collective investors for the deferral of redemption. Article 259 (Partial Redemption)
(1) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall, when it redeems part of collective investment securities or adopts a resolution for partial redemption at a general meeting of collective investors for the deferral of redemption, separate the assets that have caused the deferral of
redemption from the remaining assets (hereinafter referred to as "normal assets") pursuant to Article 237 (7) of the Act as of a day preceding the date on which such partial redemption is resolved.
(2) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall calculate a base price for normal assets in accordance with the methods prescribed by a collective investment agreement and then pay redemption money based on the proportion of the collective investment securities held by investors.
(3) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. may, when it establishes or incorporates a separate collective investment scheme pursuant to Article 237 (6) of the Act, continuously issue, sell and redeem collective investment securities of the collective investment scheme composed of normal assets.
(4) In addition to the matters prescribed in paragraphs (1) through (3), other matters necessary for the methods and procedures of partial redemption shall be prescribed and publicized by the Financial Services Commission.
Chapter 5 Appraisal and Accounting
Article 260 (Appraisal Method of Collective Investment Property) (1) The term "conditions prescribed by the Presidential Decree" under Article 238 (1) of the Act shall mean the final market price traded on the securities market (including foreign securities markets) or the price publicized in the derivatives market (including foreign derivatives markets) on which exchange-traded derivatives are traded: Provided, That in cases falling under each of the following subparagraphs, the price prescribed by each subparagraph may be used in appraising collective investment properties:
1. Where a private equity company invests in equity securities pursuant to Article 270 (1) 1 or 270 (1) 2 of the Act, the acquisition price of the equity securities;
2. Where a market price for debt securities is formed on the securities market for more than ten days a month for three consecutive months immediately preceding the month in which the appraisal reference day falls, the price based on the price information provided by not The Enforcement Decree of the Financial Investment Services and Capital Market Act less than two bond appraisal companies based on the final market price traded on the securities market on the appraisal reference day; and
3. Where a market price for debt securities is formed on foreign securities markets, the price based on the price information provided by not less than two bond appraisal companies. (2) The term "fair value prescribed by the Presidential Decree" under Article 238 (1) of the Act shall mean the price appraised by the collective investment property appraisal committee (in the case of private equity companies, referring to executive officers; hereafter in this paragraph, the same shall apply) on the assets belonging to collective investment properties by type when taking into account the matters falling under each of the following subparagraphs while complying with the duty of care under Article 79 (2) of the Act and maintaining the consistency of appraisal. In such a case, the collective investment property appraisal committee shall appraise non-performing assets such as defaulted bonds that belong to the collective investment properties under the standards prescribed and publicized by the Financial Services Commission:
1. Acquisition price of investment assets;
2. Trading price of investment assets;
3. Price of investment assets provided by a person falling under each of the following items: (a) A bond appraisal company;
(b) An accounting firm under the Certified Public Accountant Act; (c) A credit rating company;
(d) An appraiser under the Public Notice of Values and Appraisal of Real Estate Act; (e) A dealer conducting underwriting business;
(f) A person who has obtained a permission, authorization and registration in accordance with relevant Acts and subordinate statutes as equivalent to those referred to in items (a) through (e); and
(g) A foreigner equivalent to those referred in items (a) through (f);
4. Exchange rate; and
5. Base price of collective investment securities. (3) The term "conditions prescribed by the Presidential Decree" under the proviso of Article 238 (1) of the Act shall mean the collective investment properties of a collective investment scheme of short-term finance, and the term "value prescribed by the Presidential Decree"
under the same paragraph shall mean the book value (hereafter referred to as "book value" under this paragraph) prescribed and publicized by the Financial Services Commission. In such a case, a collective investment manager shall check the difference between the base price appraised based on the book value and the base price appraised pursuant to paragraphs (1) and (2) from time to time, and shall take necessary measures as prescribed by the collective investment agreement when the difference exceeds or is likely to exceed the rate prescribed and publicized by the Financial Services Commission. Article 261 (Collective Investment Property Appraisal Committee) (1) A collective investment manager shall create a collective investment property appraisal committee with the persons falling under each of the following subparagraphs:
1. An officer in charge of appraising collective investment properties;
2. An officer in charge of managing collective investment properties;
3. A compliance officer; and
4. Others recognized by the Financial Services Commission as necessary for the fair appraisal of collective investment properties.
(2) The collective investment property appraisal committee shall report to the board of directors of a collective investment manager (in the case of banks providing collective investment scheme service under Article 250 (1) of the Act, referring to the management committee for the collective investment property under Article 250 (2) of the Act) the matters on the appraisal of collective investment properties on a semi-annual basis, including whether standards for appraising collective investment property (hereinafter referred to as "standards for appraising collective investment property") under Article 238 (3) of the Act are applied. (3) The term "others prescribed by the Presidential Decree" under Article 238 (3) 4 of the Act shall be as follows:
1. Matters on specific standards applied to the classification and appraisal of non-performing assets, including defaulted bonds prescribed and publicized by the Financial Services Commission;
2. Matters on the correction of errors in appraising collective investment properties;
3. Matters on the standards for appraising assets belonging to collective investment properties by type; and
The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Matters on the methods of appraising uncollected balance and amount payable under Article 192 (4) of the Act.
Article 262 (Calculation and Publication of Base Price) (1) The term "conditions prescribed by the Presidential Decree" under Article 238 (6) of the Act shall mean the calculation by dividing the amount calculated by subtracting the total liabilities from the total assets (referring to the total amount of assets calculated in the method pursuant to Article 238 (1) of the Act) appearing on the balance sheet as of the day preceding the publication date of base price under Article 238 (7) of the Act by the total number of collective investment securities as of the day preceding the publication date. In such a case, when the published base price is wrongly calculated in accordance with the correction of appraisal errors under Article 261 (3) 2 of this Decree, a collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall change the base price without delay and then re-publish the changed base price (the same shall not apply to cases where the difference between the initial base price and the changed base price does not exceed 1/1,000 of the initial base price). (2) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall, when it intends to change a base price pursuant to the latter part of paragraph (1), obtain a confirmation from the compliance officer and the trust company of the collective investment manager. (3) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall, when it changes a base price pursuant to the latter part of paragraph (1), report the fact to the Financial Services Commission as prescribed and published by the Financial Services Commission. (4) Specific matters necessary for the proceedings on the changes of a base price, the reports thereof, etc. shall be prescribed and publicized by the Financial Services Commission. (5) The term "conditions prescribed by the Presidential Decree" under the proviso of Article 238 (7) of the Act shall mean cases where it is difficult to publish base prices on a daily basis when investing collective investment properties in assets denominated in foreign currencies. Article 263 (Delegation of Establishment of Accounting Standards)
The term "person prescribed by the Presidential Decree" under the former part of Article 240 (2) of the Act shall mean the Korea Accounting Standards Board. Article 264 (Exemption from Accounting Audit)
The term "cases prescribed by the Presidential Decree" under the proviso of Article 240 (3) of the Act other than each subparagraph shall mean those falling under either of the following subparagraphs based on the end of the fiscal term or the date falling under any of the subparagraphs of Article 240 (3) of the Act:
1. Where the total amount of assets of a collective investment scheme is not more than five billion won; or
2. Where the total amount of assets of a collective investment scheme is not less than five billion won and up to ten billion won and no collective investment securities are issued additionally for six months before the end of the fiscal term and the date falling under any subparagraph of Article 240 (3) of the Act.
Article 265 (Appointment of Accounting Auditor)
(1) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. (excluding an investment company) shall, when it intends to appoint or replace an accounting auditor of a collective investment scheme, obtain consent from the auditors (where the audit committee is established, referring to the resolution made by the audit committee) of the collective investment manager managing collective investment properties of the collective investment scheme pursuant to Article 240 (4) of the Act, and an investment company shall, when it intends to appoint or replace an accounting auditor, obtain consent from supervisory auditors. (2) Accounting standards for collective investment properties shall be prescribed and publicized by the Financial Services Commission after consultation with the Securities and Futures Commission.
(3) The authorities of an accounting auditor with respect to the accounting audit over collective investment properties shall be as provided for in the Act and Article 6 of the Act on External Audit of Stock Companies.
The Enforcement Decree of the Financial Investment Services and Capital Market Act (4) An accounting auditor shall, when he/she completes an accounting audit over collective investment properties, prepare audit reports, and then submit them to a collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. without delay:
1. Balance sheets of collective investment properties;
2. Income statements of collective investment properties;
3. Base price calculation sheets of collective investment properties; and
4. Details of transactions between the collective investment manager and the interested persons thereof (referring to the interested persons under Article 84 (1) of the Act). (5) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall, when it receives audit reports from an accounting auditor, submit them to the Financial Services Commission, the Association, the broker or dealer who sells the collective investment securities, and the trust company in charge of the custody and management of the collective investment properties without delay. (6) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall allow the investors concerned to access the audit reports under the conditions prescribed and publicized by the Financial Services Commission. (7) The cost for an accounting audit shall be imposed to a collective investment scheme subject to the accounting audit.
Article 266 (Distribution of Profits)
(1) The term "collective investment scheme prescribed by the Presidential Decree" under Article 242 (1) of the Act shall mean closed-end collective investment schemes and private equity companies.
(2) The time and methods of the distribution of profits shall be as provided for in the collective investment agreement pursuant to Article 242 (1) of the Act. (3) An investment company shall, when it intends to distribute the entire amount of its profits by issuing new stocks, obtain a resolution made by the board of directors concerning the matters necessary to issue stocks, such as the number of stocks to be issued and the time of issuance, as prescribed by the articles of incorporation.
(4) A collective investment manager of an investment trust or investment undisclosed association, an investment company, etc. shall, when it intends to distribute dividends in cash in excess of its profits, indicate its intention in a collective investment agreement, and shall prescribe the time and methods of distributing profits and other necessary matters in advance. Article 267 (Methods of Reporting of Insufficient Net Asset Amount to Meet Minimum Standard)
(1) An investment company shall, when the net asset amount falls short of the minimum net asset amount under Article 194 (2) 7 of the Act, report thereon to the Financial Services Commission accompanying the documents to prove the grounds of insufficiency pursuant to Article 243 (1) of the Act.
(2) Other matters necessary for the form of the reports under paragraph (1), the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission. Chapter 6 Custody and Management of Collective Investment Property Article 268 (Deposit of Securities)
(1) The term "property prescribed by the Presidential Decree" under Article 246 (3) of the Act shall be as follows:
1. Certificates of deposit denominated in Korean won; and
2. Others prescribed and publicized by the Financial Services Commission. (2) Where a trust company receives instructions on the acquisition, disposal, etc. of securities (including those falling under each of the subparagraphs of paragraph (1); hereafter in this paragraph, the same shall apply), or the custody and management thereof from a collective investment manager, the trust company shall implement such instructions by delivering the securities and paying and receiving the price simultaneously pursuant to Article 246 (4) of the Act.
Article 269 (Supervising Obligation of Trust Companies) (1) Where a trust company implements instructions on the acquisition, disposal, etc. or the custody and management of assets pursuant to Articles 247 (1) and 247 (2) of the Act, the trust company shall confirm whether such instructions are in violation of the standards prescribed The Enforcement Decree of the Financial Investment Services and Capital Market Act and publicized by the Financial Services Commission, including those falling under each of the following subparagraphs:
1. Matters prescribed under Articles 80 through 85 of the Act: Provided, That in cases where it is impractical to confirm whether matters are in violation based only on the information of the collective investment properties kept and managed by a specific trust company because there are more than two trust companies in charge of the custody and management of collective investment properties of all the collective investment schemes managed by the collective investment manager, such cases may be excluded;
2. Investment limits by investment assets as prescribed by a collective investment agreement; and
3. Others prescribed and publicized by the Financial Services Commission as necessary for the supervision of asset management.
(2) A trust company in charge of the custody and management of collective investment properties (excluding property of an investment company) or a supervisory director of an investment company shall allow investors to access the matters falling under each of the following subparagraphs by placing them at the head office, branches, and other business offices of a broker or dealer who sells the collective investment securities, or by disclosing them through the Internet website, etc. pursuant to the main sentence of Article 247 (3) of the Act:
1. Instructions from the collective investment manager;
2. Matters in violation of Acts and subordinate statutes, a collective investment agreement, prospectus, etc. among the instructions of the collective investment manager; and
3. Where the collective investment manager raises objections to the Financial Services Commission pursuant to Article 247 (4) of the Act, the details thereof and the decisions made by the Commission.
(3) The term "standards prescribed by the Presidential Decree" under the latter part of Article 247 (4) of the Act shall mean those falling under either of the following subparagraphs:
1. The Financial Services Commission shall make a decision on whether the instruction of a collective investment manager is in violation of Acts and subordinate statutes, a collective investment agreement, prospectus, etc. within 30 days of the date when the collective investment manager raises an objection to the Commission: Provided, That where it is
impractical for the Financial Services Commission to make a decision within such period due to any inevitable cause, the Commission shall make a decision within 60 days of the date when the objection is raised; and
2. The Financial Services Commission shall decide the methods and period for correcting matters in violation, and notify the collective investment manager of them. (4) The term "others prescribed by the Presidential Decree" under Article 247 (5) 7 of the Act shall mean whether an additional issuance of collective investment securities under Article 242 (1) 2 of this Decree undermines the interest of existing investors. Article 270 (Reports on Custody and Management of Assets) (1) The term "cases prescribed by the Presidential decree" under the proviso of Article 248 (1) of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs:
1. Where an investor proclaims, in writing, that he/she refuses to receive reports on custody and management of assets;
2. Where a trust company discloses reports on custody and management of assets prepared by a collective investment scheme falling under any of the following items under the conditions prescribed and publicized by the Financial Services Commission: (a) A collective investment scheme of short-term finance; (b) A closed-end collective investment scheme (limited to cases where the collective investment securities concerned are listed pursuant to Article 230 (3) of the Act); or (c) An exchange-traded fund; and
3. Where the value of collective investment securities held by an investor is not more than 100,000 won and the collective investment agreement prescribes that no report on custody and management of assets is provided in such a case. (2) The term "others prescribed by the Presidential Decree" under Article 248 (1) 5 of the Act shall be as follows:
1. Where the eligibility of transactions with the interested persons under Article 84 (1) of the Act is confirmed, the details thereof;
2. Matters on the appointment, replacement and dismissal of an accounting auditor; and The Enforcement Decree of the Financial Investment Services and Capital Market Act
3. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(3) A trust company shall, when it provides reports on custody and management of assets to investors, provide the reports in person or by mail through a broker or dealer who has sold collective investment securities: Provided, That when an investor presents his/her intention to receive such reports by e-mail, the trust company may provide them in such a way. (4) The cost for preparing and providing reports on custody and management of assets shall be imposed on a trust company.
(5) The form of reports on custody and management of assets, the preparation thereof and other necessary matters shall be prescribed and publicized by the Financial Services Commission. Chapter 7 Special Cases for Private Equity Funds
Article 271 (Special Cases for Private Equity Funds) (1) The term "cases prescribed by the Presidential Decree" under Article 249 (1) of the Act shall mean those falling under the proviso of Article 81 (1) of the Act (excluding Article 80 (1) 6 of this Decree), Article 81 (1) 1 of the Act (excluding items (d) and (e)), Article 81 (1) 3 of the Act (excluding items (a) and (b)), and Article 81 (1) 4 of the Act. (2) The term "methods prescribed by the Presidential Decree" under Article 249 (3) of the Act shall mean those meeting both of the following requirements:
1. Consent from all the other investors shall be obtained: Provided, That the same shall not apply to investment trusts established for the purpose of concluding a blind trust contract for stocks in accordance with the Public Service Ethics Act; and
2. The contributions shall be made at the price determined by the collective investment property appraisal committee based on the price prescribed under Article 238 (1) of the Act. (3) In the application of Article 80 (6) of this Decree to private equity funds, "100/100" shall be deemed "400/100," and in the application of Article 81 (1) 3 (b) of the Act, "20/100" shall be deemed "50/100."
(4) Article 97 (3) 2 of this Decree shall not apply to private equity funds. Article 272 (Special Rules Governing Banks)
(1) The management committee for the collective investment property under the former part of Article 250 (2) of the Act shall conduct the businesses falling under each of the following subparagraphs: Provided, That matters on the operation of a management committee for the collective investment property in addition to those specified under subparagraphs 1 through 3 shall be prescribed and publicized by the Financial Services Commission:
1. Establishment of the business plans and budget for collective investment scheme service;
2. Establishment of the strategies for the management of investment trust property; and
3. Consultation on the matters falling under each of the following items: (a) Decision on the deferral of redemption;
(b) Convocation (excluding the cases under Article 190 (3) of the Act) and deferral of a general meeting of beneficiaries;
(c) Decision on the purchase of beneficiary certificates through the rights to claim for purchase of beneficiary certificates;
(d) Appointment and dismissal of a member of the collective investment property appraisal committee;
(e) Establishment and amendment of the standards for appraising collective investment property; and
(f) Merger of an investment trust.
(2) The term "persons prescribed by the Presidential Decree" under the main sentence of Article 250 (7) of the Act other than each subparagraph shall mean those falling under any of the subparagraphs of Article 401-2 (1) of the Commercial Act. (3) A bank shall establish a system to prevent a conflict of interests, including the matters falling under the following subparagraphs pursuant to the main sentence of Article 250 (7) of the Act:
1. Business process and reporting shall be conducted in an independent manner by separating the two as independent divisions;
2. Where persons in charge of the business falling under each subparagraph of Article 250 (7) of the Act have held meetings or communicated with each other with respect to the business, the persons shall keep the records thereof and receive the confirmation from a compliance officer (referring to the compliance officer under the Banking Act) at least once a month;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
3. No employee shall be transferred between the businesses falling under each subparagraph of Article 250 (7) of the Act, and no employee shall be dispatched from the businesses falling under Articles 250 (7) 2 through 250 (7) 4 of the Act to another business within the period prescribed and publicized by the Financial Services Commission;
4. N0 employee in charge of selling collective investment collective investment securities shall perform any business falling under Articles 250 (7) 2 through 250 (7) 4 of the Act;
5. Office space shall be separated by different entrances or other means so that information sharing is cut off;
6. Data-processing materials on the business falling under each subparagraph of Article 250 (7) of the Act shall be kept, managed and accessed in an independent manner in order to prevent the sharing the information; and
7. Others prescribed and publicized by the Financial Services Commission as necessary to prevent a conflict of interests.
(4) The term "business prescribed by the Presidential Decree" under the proviso of Article 250 (7) of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs:
1. Businesses under subparagraph 3 of Article 18-2 of the Enforcement Decree of the Banking Act;
2. Businesses prescribed and publicized by the Financial Services Commission as unlikely to have a direct relation with the businesses under Articles 250 (7) 2 through 250 (7) 4 of the Act among the businesses under subparagraph 4 of Article 18-2 of the Enforcement Decree of the Banking Act;
3. Businesses under subparagraph 2 of Article 18-3 of the Enforcement Decree of the Banking Act; and
4. Businesses prescribed and publicized by the Financial Services Commission as unlikely to have a direct relation with the businesses under Articles 250 (7) 2 through 250 (7) 4 of the Act among the businesses under subparagraph 4 of Article 18-3 of the Enforcement Decree of the Banking Act.
Article 273 (Special Rules for Insurance Companies)
(1) The term "conditions prescribed by the Presidential Decree" under the main sentence of Article 251 (3) of the Act other than each subparagraph shall mean cases where an insurance company manages investment trust property in a method falling under any of the following subparagraphs:
1. Entrusting all the businesses of management and management instruction to another collective investment manager;
2. Managing the entire investment trust property in the method of discretionary investment advisory service; or
3. Investing the entire investment trust property in other collective investment securities. (2) The term "persons prescribed by the Presidential Decree" under the main sentence of Article 251 (3) of the Act other than each subparagraph shall mean those falling under any of the subparagraphs of Article 401-2 (1) of the Commercial Act. (3) An insurance company shall establish a system to prevent a conflict of interests including those falling under each of the following subparagraphs pursuant to the main sentence of Article 251 (3) of the Act:
1. Business process and reporting shall be conducted in an independent manner by separating the two as independent divisions;
2. Where persons in charge of the business falling under each subparagraph of Article 251 (3) of the Act have held meetings or communicated with each other with respect to the business, the persons shall keep the records thereof and receive the confirmation from a compliance officer (referring to the compliance officer under the Insurance Business Act) at least once a month;
3. No employee shall be transferred between the businesses falling under each subparagraph of Article 251 (3) of the Act, and no employee shall be dispatched from the businesses falling under Articles 251 (3) 2 through 251 (3) 4 of the Act to another business within the period prescribed and publicized by the Financial Services Commission;
4. No employee in charge of selling collective investment securities shall perform any business falling under Articles 251 (3) 2 through 251 (3) 4 of the Act;
5. Office space shall be separated by different entrances or other means so that information sharing is cut off;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
6. Data-processing materials on the business falling under each subparagraph of Article 251 (3) of the Act shall be kept, managed, and accessed in an independent manner in order to prevent the sharing the information; and
7. Others prescribed and publicized by the Financial Services Commission as necessary for the prevention of a conflict of interests.
(4) The term "business prescribed by the Presidential Decree" under the proviso of Article 251 (3) of the Act other than each subparagraph shall mean those falling under either of the following subparagraphs:
1. Businesses under Articles 16 (1) and 16 (3) (excluding subparagraph 3) of the Enforcement Decree of the Insurance Business Act; or
2. Businesses unlikely to have a direct relation with those under Articles 251 (3) 2 through 251 (3) 4 of the Act in addition to the businesses under subparagraph 1. (5) The term "methods prescribed by the Presidential Decree" under Article 251 (5) of the Act shall mean those falling under any of the subparagraphs of paragraph (1). Chapter 8 Supervision and Inspection
Article 274 (Supervision of Investment Companies) The term "matters prescribed by the Presidential Decree" under Article 252 (1) 3 of the Act shall be as follows:
1. Matters on the redemption of collective investment securities;
2. Matters on the appraisal and accounting of collective investment properties;
3. Matters on the dissolution and merger of a collective investment scheme; and
4. Matters on the businesses falling under each subparagraph of Article 184 (6) of the Act. Article 275 (Measures against Investment Companies) (1) The term "cases prescribed by the Presidential Decree" under Article 253 (1) 7 of the Act shall mean those falling under any of the following subparagraphs:
1. Cases falling under subparagraph 2 of Appendix 2 of the Act where an investment company manages collective investment properties in violation of Article 81 (1) or Article 84 (1) of the Act;
2. Cases falling under subparagraph 4 of Appendix 2 of the Act where an investment company conducts any activity falling under each subparagraph of Article 85 of the Act in violation of Article 85 of the Act (excluding subparagraph 8);
3. Cases falling under subparagraph 6 of Appendix 2 of the Act where an investment company exercises voting rights in violation of Articles 87 (1) through 87 (5) of the Act (including cases which are applied to Article 186 (2) of the Act);
4. Cases falling under subparagraph 3 of Appendix 6 of this Decree where an investment company violates an obligation to prohibit using undisclosed material information under Article 174 of the Act;
5. Cases falling under subparagraph 4 of Appendix 6 of this Decree where an investment company violates an obligation to prohibit market manipulation, etc. under Article 176 of the Act; and
6. Cases falling under subparagraph 5 of Appendix 6 of this Decree where an investment company violates an obligation to prohibit unfair trading, etc. under Article 178 of the Act. (2) The term "finance-related Acts, subordinate statutes, etc. prescribed by the Presidential Decree" under Article 253 (1) 8 of the Act shall mean those falling under each subparagraph of Article 373 (2) of this Decree.
(3) The term "cases prescribed by the Presidential Decree" under Article 253 (1) 8 of the Act shall mean those falling under each subparagraph of Article 373 (3) of this Decree. (4) The term "others prescribed by the Presidential Decree" under Article 253 (1) 9 of the Act shall mean those falling under any of the following subparagraphs:
1. Where an investment company fails to commence the management of collective investment properties within six months of the date of registration;
2. Where an investment company receives any money, etc. from anther person or acquires the money, etc. to be distributed to another person in an unfair manner with respect to the business;
3. Where an investment company fails to correct the conditions concerned within one month (where any correction period exceeding one month is set forth when the suspension of business is issued, referring to such correction period) of the date when the suspension of business under Article 253 (2) 1 of the Act is issued, or continues to carry on the business during the suspension period; or
The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Where the same or similar activities in violation are committed continuously or repeatedly. (5) The term "measures prescribed by the Presidential Decree" under Article 253 (2) 7 of the Act shall mean those falling under each of the following subparagraphs:
1. Requesting or recommending the improvement of management or business methods;
2. Requesting compensation;
3. Where there is any violation of the Act, reporting it or notifying investigating authorities;
4. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
5. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (6) The term "measures prescribed by the Presidential Decree" under the main sentence of Article 253 (3) of the Act other than each subparagraph shall mean those falling under subparagraphs 3 through 5 of paragraph (5).
(7) The term "others prescribed by the Presidential Decree" under Article 253 (3) 5 of the Act shall mean those falling under any of the subparagraphs of Appendix 6 of this Decree. (8) The term "others prescribed by the Presidential Decree" under subparagraph 89 of Appendix 2 of the Act shall mean those falling under any of the subparagraphs of Appendix 6 of this Decree.
Chapter 9 Related Companies of Collective Investment Schemes Article 276 (Registration Requirements of General Fund Administrators) (1) The term "financial institutions prescribed by the Presidential Decree" under Article 254 (2) 1 (c) of the Act shall mean those under Articles 16 (1) 1 through 16 (1) 5 of this Decree. (2) The term "amount prescribed by the Presidential Decree" under Article 254 (2) 2 of the Act shall be two billion won.
(3) The term "experts satisfying the standards prescribed by the Presidential Decree" under Article 254 (2) 3 of the Act shall mean more than two experts in calculating collective investment properties with more than two years of experience in calculating the value of assets, such as securities, etc., or storing and managing collective investment properties at the institutions falling under each of the following subparagraphs:
1. Institutions subject to inspection under Article 38 of the Act on the Establishment, etc. of Financial Services Commission;
2. Foreign financial investment firms;
3. Departments in charge of managing assets, which are established by a fund manager under Article 8 (1) of the Finance Act pursuant to Article 77 (1) of the same Act, pension corporations, etc. entrusted with the management and operation of funds in accordance with the Acts authorizing the establishment of such funds pursuant to Appendix 2 of the Finance Act; and
4. General fund administrators. (4) The term "physical facilities prescribed by the Presidential Decree" under Article 254 (2) 4 of the Act shall be as follows:
1. Data-processing equipment, office space and office equipment necessary to conduct the business of a general fund administrator; and
2. Supplementary facilities necessary for the business process to continue without interruption even if power outages, fire, etc. occur. (5) The term "system to prevent a conflict of interests prescribed by the Presidential Decree" under Article 254 (2) 6 of the Act shall be as follows:
1. Business process and reporting shall be conducted in an independent manner by separating the business of a general fund administrator from other businesses;
2. No employee shall hold posts concurrently or be transferred between the department of a general fund administrator and other departments;
3. The offices of a general fund administrator and other offices shall be separated so that information sharing is cut off; and
4. Data-processed materials on the business of a general fund administrator and other businesses shall be kept, managed and accessed in an independent manner in order to prevent the sharing of such materials.
(6) The term "financial business prescribed by the Presidential Decree" under Article 254 (2) 6 of the Act shall be as follows:
1. Banking business under the Banking Act;
2. Insurance business under the Insurance Business Act;
3. Financial investment services; and The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Business of merchant banks. (7) The term "eased requirement prescribed by the Presidential Decree" under Article 254 (8) of the Act shall be not less than 70/100 of the minimum capital requirements. In such a case, the requirements shall be applied at the end of every fiscal year and a general fund administrator that fails to meet the requirements at the end of a specific fiscal year shall be regarded as meeting the requirements by the end of the next fiscal year. Article 277 (Methods and Procedures of Registration) (1) A registration application under Article 254 (3) of the Act shall contain the matters falling under each of the following subparagraphs:
1. Trade name;
2. Location of the head office;
3. Matters on the financial status including equity capital, etc.;
4. Matters on officers;
5. Matters on experts under Article 276 (3) of this Decree;
6. Matters on physical facilities under Article 276 (4) of this Decree;
7. Matters on a system to prevent a conflict of interests under Article 276 (5) of this Decree; and
8. Others prescribed and publicized by the Financial Service Commission as necessary for the protection of investors.
(2) The registration application under paragraph (1) shall accompany documents falling under each of the following subparagraphs:
1. Articles of incorporation;
2. Documents indicating the names or titles of shareholders and the number of stocks held by such shareholders;
3. Financial statements and the addenda thereof for the latest three business years (excluding corporations in the process of incorporation, and in the case of a corporation for which three business years have yet to pass since its establishment, referring to the financial statements and the addenda thereof from the establishment to the latest business year);
4. Curriculum vitae and career certificates of officers;
5. Documents to prove the current status of experts, physical facilities, etc.;
6. Documents to confirm whether a system to prevent a conflict of interests is established under Article 276 (5) of this Decree; and
7. Others prescribed and publicized by the Financial Services Commission as necessary for review for a registration application.
(3) The Financial Services Commission shall, when it receives an application under paragraph (1), verify the certified copy of corporate register through administrative data matching pursuant to Article 21 (1) or 22-2 (1) of the E-Government Act and shall require the applicant to submit the certified copy, when the applicant does not consent to the verification in such a way.
(4) The Financial Services Commission shall, when it receives an application under paragraph (1), confirm whether the contents of the application for registration under Article 254 (1) of the Act are true, and then review whether the application meets the registration requirements under Article 254 (2) of the Act.
(5) In addition to the matters prescribed under paragraphs (1) through (4), other necessary matters on the registration application and review of a general fund administrator, the form of a registration application, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 278 (Supervision of General Fund Administrators) The term "matters prescribed by the Presidential Decree" under Article 256 (1) 4 of the Act shall be as follows:
1. Matters on the prevention of a conflict of interests;
2. Matters on the consignment of business; and
3. Matters on the establishment of internal standards equivalent to self-regulation conducted by the Association with respect to non-member general fund administrators in order to maintain sound trade practice and protect investors. Article 279 (Measures against General Fund Administrators) (1) The term "measures prescribed by the Presidential Decree" under Article 257 (2) 7 of the Act shall mean those falling under any of the following subparagraphs: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Discontinuing any or all businesses of branches and other business offices or closing branches and other business offices;
2. Requesting or recommending the improvement of management or business methods;
3. Requesting compensation;
4. Where there is any violation of the Act, reporting it or notifying investigating authorities;
5. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
6. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (2) The term "measures prescribed by the Presidential Decree" under Articles 257 (3) 6 and 257 (4) 7 of the Act shall mean those falling under subparagraphs 4 through 6 of paragraph (1). (3) The term "others prescribed by the Presidential Decree" under subparagraph 19 of Appendix 3 of the Act shall mean those falling under any of the subparagraphs of Appendix 7 of this Decree.
Article 280 (Registration Requirements of Collective Investment Scheme Appraisal Companies)
(1) The term "amount prescribed by the Presidential Decree" under Article 258 (2) 3 of the Act shall be 500 million won.
(2) The term "experts satisfying the standards prescribed by the Presidential Decree" under Article 258 (2) 4 of the Act shall mean more than three experts in appraising a collective investment scheme with more than two years of experience in the appraisal and analysis of securities or collective investment schemes or corporate financing businesses (referring to the financing business under subparagraph 3 Article 71 of the Act) at the institutions referred to under Articles 276 (3) 1 through 276 (3) 3 of this Decree or collective investment scheme appraisal companies.
(3) The term "physical facilities prescribed by the Presidential Decree" under Article 258 (2) 5 of the Act shall be as follows:
1. Data-processing equipment, office space and office equipment necessary to conduct the business of a collective investment scheme appraisal company; and
2. Supplementary facilities necessary for the business process to continue without interruption even if power outages, fire, etc. occur. (4) The term "system for appraising a collective investment scheme prescribed by the Presidential Decree" under Article 258 (2) 7 of the Act shall mean a system for appraising a collective investment scheme on matters falling under each of the following subparagraphs:
1. Matters on collective investment schemes subject to appraisal;
2. Matters on the classification standards for collective investment schemes and the standard index classified by type;
3. Matters on the calculation of rate of return or risk measure;
4. Matters on the ranking of collective investment schemes; and
5. Matters on the provision or publication of data. (5) The term "system to prevent a conflict of interests prescribed by the Presidential Decree" under Article 258 (1) 8 of the Act shall mean those falling under each of the following subparagraphs:
1. Business process and reporting shall be conducted in an independent manner by separating the business of a collective investment scheme appraisal company from other businesses;
2. No employee shall hold posts concurrently or be transferred between the department of a collective investment scheme appraisal company and other departments;
3. The offices of a collective investment scheme appraisal company and other offices shall be separated so that information sharing is cut off; and
4. Data-processed materials on the business of a collective investment scheme appraisal company and other businesses shall be kept, managed and accessed in an independent manner in order to prevent the sharing of such materials. (6) The term "financial business prescribed by the Presidential Decree" under Article 258 (2) 8 of the Act shall be as follows:
1. Banking business under the Banking Act;
2. Insurance business under the Insurance Business Act;
3. Financial investment services; and
4. Merchant banking business. The Enforcement Decree of the Financial Investment Services and Capital Market Act (7) The term "eased requirement prescribed by the Presidential Decree" under Article 258 (8) of the Act shall be not less than 70/100 of the minimum capital requirements. In such a case, the requirements shall be applied at the end of every fiscal year and a collective investment scheme appraisal company that fails to meet the requirements at the end of a specific fiscal year shall be regarded as meeting the requirements by the end of the next fiscal year. Article 281 (Methods and Procedures of Registration) (1) A registration application under Article 258 (3) of the Act shall contain the matters falling under each of the following subparagraphs:
1. Trade name;
2. Location of the head office;
3. Matters on the financial status including equity capital;
4. Matters on officers;
5. Matters on experts under Article 280 (2) of this Decree;
6. Matters on physical facilities under Article 280 (3) of this Decree;
7. Matters on a system to prevent a conflict of interests under Article 280 (5) of this Decree;
8. Matters on a system to appraise a collective investment scheme; and
9. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) The registration application under paragraph (1) shall accompany documents falling under each of the following subparagraphs:
1. Articles of incorporation;
2. Documents indicating the names or titles of shareholders and the number of stocks held by such shareholders;
3. Financial statements and the addenda thereof for the latest three business years (excluding corporations in the process of incorporation, and in the case of a corporation for which three business years have yet to pass since its establishment, referring to the financial statements and the addenda thereof from the establishment to the latest business year);
4. Curriculum vitae and career certificates of officers;
5. Documents to prove the current status of experts, physical facilities, etc.;
6. Documents to confirm whether a system to prevent a conflict of interests is established under Article 280 (5) of this Decree;
7. Documents to confirm a system to appraise a collective investment scheme; and
8. Others prescribed and publicized by the Financial Services Commission as necessary for review for a registration application.
(3) The Financial Services Commission shall, when it receives an application under paragraph (1), verify the certified copy of corporate register through administrative data matching pursuant to Article 21 (1) or 22-2 (1) of the E-Government Act and shall require the applicant to submit such documents when the applicant does not consent to the verification in such a way. (4) The Financial Services Commission shall, when it receives an application under paragraph (1), confirm whether the contents of the application for registration under Article 258 (1) of the Act are true, and then review whether the application meets the registration requirements under Article 258 (2) of the Act.
(5) In addition to the matters prescribed under paragraphs (1) through (4), other necessary matters on the registration application and review of a collective investment scheme appraisal company, the form of a registration application, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission. Article 282 (Working Rules governing Conduct of Business) (1) The term "matters prescribed by the Presidential Decree" under Article 259 (1) of the Act shall mean those falling under each of the following subparagraphs:
1. Matters to maintain the consistency in appraising a collective investment scheme in accordance with reasonable and fair standards;
2. Matters to prohibit the use of undisclosed information; and
3. Matters to prohibit the use of information acquired from appraising a collective investment scheme for the purpose of conducting other businesses. (2) A collective investment manager may provide the details of collective investment properties to a collective investment scheme appraisal company in person or through the Association within the scope necessary for appraisal pursuant to Article 259 (2) of the Act. (3) A collective investment scheme appraisal company shall disclose the appraisal standards for a collective investment scheme through the Internet websites, etc. of the Association or the appraisal company.
The Enforcement Decree of the Financial Investment Services and Capital Market Act (4) Where a collective investment scheme appraisal company discloses or provides the comparison of performances among collective investment schemes, among collective investment managers, and among brokers or dealers who sell collective investment securities, the collective investment scheme appraisal company shall disclose the standards for such comparison.
(5) A collective investment scheme appraisal company shall, when it amends the contents already disclosed or provided pursuant to paragraph (3) or (4), disclose or provide the amended contents without delay.
Article 283 (Supervision on Collective Investment Scheme Appraisal Companies) The term "matters prescribed by the Presidential Decree" under Article 261 (1) 4 of the Act shall mean those falling under either of the following subparagraphs:
1. Matters on the prevention of a conflict of interests; and
2. Matters on the establishment of internal standards equivalent to the self-regulation conducted by the Association with respect to non-member collective investment scheme appraisal companies in order to maintain sound trade practice and protect investors. Article 284 (Measures against Collective Investment Scheme Appraisal Companies) (1) The term "measures prescribed by the Presidential Decree" under Article 262 (2) 7 of the Act shall mean the measures falling under any of the following subparagraphs:
1. Discontinuing any or all businesses of branches and other business offices or closing branches and other business offices;
2. Requesting or recommending the improvement of management or business methods;
3. Requesting compensation;
4. Where there is any violation of the Act, reporting it or notifying investigating authorities;
5. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
6. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes.
(2) The term "measures prescribed by the Presidential Decree" under Article 262 (3) 6 and Article 262 (4) 7 of the Act shall mean those falling under subparagraphs 4 through 6 of paragraph (1).
(3) The term "others prescribed by the Presidential Decree" under subparagraph 18 of Appendix 4 of the Act shall mean those falling under any subparagraph of Appendix 8 of this Decree.
Article 285 (Registration Requirements of Bond Appraisal Companies) (1) The term "minimum amount prescribed by the Presidential Decree" under Article 263 (2) 2 of the Act shall be three billion won.
(2) The term "financial institutions prescribed by the Presidential Decree" under Article 263 (2) 3 of the Act shall mean those falling under each of the following subparagraphs;
1. Banks;
2. The Korea Development Bank under the Korea Development Bank Act;
3. The Industrial Bank of Korea under the Industrial Bank of Korea Act;
4. Credit guarantee funds under the Credit Guarantee Fund Act;
5. Technology credit guarantee funds under the Korea Technology Credit Guarantee Fund Act;
6. Insurance companies;
7. Financial investment firms; and
8. Merchant banks. (3) The term "experts satisfying the standards prescribed by the Presidential Decree" under Article 263 (2) 4 of the Act shall mean not less than ten full-time analysts in appraising collective investment properties who appraise and analyze securities, including not less than three securities analysts falling under any of the following subparagraphs: 1.Any person who has passed an examination to test qualification as an analyst which is supervised by the Association; or
2. Any person who has experience in appraising and analyzing securities at the institutions falling under Articles 276 (3) 1 through 276 (3) 3 of this Decree or bond appraisal companies for not less than three years.
The Enforcement Decree of the Financial Investment Services and Capital Market Act (4) The term "physical facilities prescribed by the Presidential Decree" under Article 263 (2) 5 of the Act shall mean those falling under either of the following subparagraphs:
1. Data-processing equipment, office space and office equipment necessary to conduct the business of a bond appraisal company; and
2. Supplementary facilities necessary for the business process to continue without interruption even if power outages, fire, etc. occur. (5) The term "price appraisal system of bonds, etc. prescribed by the Presidential Decree" under Article 263 (2) 7 of the Act shall mean a system as to the matters falling under each of the following subparagraphs:
1. Matters on bonds, etc. subject to appraisal;
2. Matters on the standards for classification of bonds, etc.;
3. Methods of calculating rates of return; and
4. Matters on providing and disclosing data. (6) The term "system to prevent a conflict of interests prescribed by the Presidential Decree" under Article 263 (2) 8 of the Act shall mean those falling under each of the following subparagraphs:
1. Business process and reporting shall be conducted in an independent manner by separating the business of a bond appraisal company from other businesses;
2. No employee shall hold posts concurrently or be transferred between the department of a bond appraisal company and other departments;
3. The offices of a bond appraisal company and other offices shall be separated so that information sharing is cut off; and
4. Data-processed materials on the business of a bond appraisal company and other businesses shall be kept, managed, and accessed in an independent manner in order to prevent the sharing of such materials.
(7) The term "financial service prescribed by the Presidential Decree" under Article 263 (2) 8 of the Act shall mean those falling under each of the following subparagraphs:
1. Banking business under the Banking Act;
2. Insurance business under the Insurance Business Act;
3. Financial investment services; and
4. Merchant banking business.
(8) The term "eased requirement prescribed by the Presidential Decree" under Article 263 (8) of the Act shall be not less than 70/100 of the minimum capital requirements. In such a case, the requirements shall be applied at the end of every fiscal year and a bond appraisal company that fails to meet the requirements at the end of a specific fiscal year shall be regarded as meeting the requirements by the end of the next fiscal year. Article 286 (Registration Methods and Procedures) (1) A registration application pursuant to Article 263 (3) of the Act shall contain the matters falling under each of the following subparagraphs:
1. Trade name;
2. Location of the head office;
3. Matters on the financial status including equity capital;
4. Matters on officers;
5. Matters on experts under Article 285 (3) of this Decree;
6. Matters on physical facilities under Article 285 (4) of this Decree;
7. Matters on a system to prevent a conflict of interests under Article 285 (6) of this Decree;
8. Matters on a price appraisal system of bonds, etc.; and
9. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) The registration application under paragraph (1) shall accompany documents falling under each of the following subparagraphs:
1. Articles of incorporation;
2. Documents indicating the names or titles of shareholders and the number of stocks held by such shareholders;
3. Financial statements and the addenda thereof for the latest three business years (excluding corporations in the process of incorporation, and in the case of a corporation for which three business years have yet to pass since its establishment, referring to the financial statements and the addenda thereof from the establishment to the latest business year);
4. Curriculum vitae and career certificates of officers; 5.Documents to prove the current status of experts, physical facilities, etc.; The Enforcement Decree of the Financial Investment Services and Capital Market Act
6. Documents to confirm whether a system to prevent a conflict of interests is established under Article 285 (6) of this Decree;
7. Documents to confirm a price appraisal system of bonds, etc.; and
8. Others prescribed and publicized by the Financial Services Commission as necessary for review for a registration application.
(3) The Financial Services Commission shall, when it receives an application under paragraph (1), verify the certified copy of corporate register through administrative data matching pursuant to Article 21 (1) or 22-2 (1) of the E-Government Act and, shall require the applicant to submit such documents when the applicant does not consent to the verification in such a way. (4) The Financial Services Commission shall, when it receives an application under paragraph (1), confirm whether the contents of the application for registration under Article 263 (1) of the Act are true, and then review whether the application meets the registration requirements under Article 263 (2) of the Act.
(5) In addition to the matters prescribed under paragraphs (1) through (4), other necessary matters on the registration application and review of the registration, the form of a registration application, the preparation thereof, etc., shall be prescribed and publicized by the Financial Services Commission.
Article 287 (Working Rules)
(1) The term "matters prescribed by the Presidential Decree" under Article 264 (1) of the Act shall mean those falling under each of the following subparagraphs:
1. Matters to maintain the consistency in appraising the price of assets including bonds, etc. in accordance with reasonable and fair standards;
2. Matters to prohibit the use of undisclosed information; and
3. Matters to prohibit the use of information acquired from appraising the price of assets, including bonds, etc. for the purpose of conducting other businesses. (2) A bond appraisal company shall disclose appraisal standards through the Internet websites, etc. of the Association or the company pursuant to Article 264 (2) of the Act. (3) A bond appraisal company shall, when it amends the contents disclosed pursuant to paragraph (2), disclose the amended contents without delay.
(4) A collective investment manager may provide the details of collective investment properties to a bond appraisal company in person or through the Association within the scope necessary for the appraisal of collective investment properties. Article 288 (Supervision of Bond Appraisal Companies) The term "matters prescribed by the Presidential Decree" under Article 266 (1) 4 of the Act shall mean those falling under either of the following subparagraphs:
1. Matters on the prevention of a conflict of interests; and
2. Matters on the establishment of internal standards equivalent to self-regulation conducted by the Association with respect to non-member bond appraisal companies in order to maintain sound trade practice and protect investors. Article 289 (Measures against Bond Appraisal Companies) (1) The term "measures prescribed by the Presidential Decree" under Article 267 (2) 7 of the Act shall mean those falling under any of the following subparagraphs:
1. Discontinuing any or all businesses of branches and other business offices or closing branches and other business offices;
2. Requesting or recommending the improvement of management or business methods;
3. Requesting compensation;
4. Where there is any violation of the Act, reporting it or notifying investigating authorities;
5. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
6. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (2) The term "measures prescribed by the Presidential Decree" under Articles 267 (3) 6 and 267 (4) 7 of the Act shall mean those falling under subparagraphs 4 through 6 of paragraph (1). (3) The term "others prescribed by the Presidential Decree" under subparagraph 19 of Appendix 5 of the Act shall mean those falling under any of the subparagraphs of Appendix 9 of this Decree.
Chapter 10 Special Cases for Private Equity Companies The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 290 (Registration of Private Equity Companies) (1) A registration application pursuant to Article 268 (5) of the Act shall contain matters falling under the following subparagraphs:
1. Registration matters under Article 268 (2) of the Act;
2. Matters on executive officers;
3. Matters on the management of properties of a private equity company; and
4. Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) The registration application under paragraph (1) shall accompany documents falling under the following subparagraphs:
1. Articles of incorporation (excluding Articles 268 (1) 4, 268 (1) 7 and 268 (1) 8 of the Act);
2. Trade name of the company whose major shareholder (including the shareholder who is the specially-related person of the largest shareholder; hereafter in this paragraph, the same shall apply) is an executive officer or the specially-related persons thereof, and the written statement indicating the details of their contributions;
3. Where an executive officer is a corporation, documents falling under each of the following items:
(a) Financial statements for the latest three business years; and (b) Details of the major shareholder including the name, resident registration numbers (where a major shareholder is a corporation, the trade name and business registration number thereof) and the number of stocks held by each major shareholder;
4. Where the business of a private equity company is delegated to a third party, the delegation contract entered into with the third party; and
5. Others prescribed and publicized by the Financial Services Commission as necessary to protect the interests of partners of a private equity company. (3) The Financial Services Commission shall, when it receives an application under paragraph (1), verify the certified copy of corporate register of the private equity company concerned and the executive officers thereof (limited to cases where an executive officer is a corporation) through administrative data matching pursuant to Article 21 (1) or 22-2 (1) of the E-
Government Act and shall require the applicant to submit the certified copy when the applicant does not consent to the verification in such a way. (4) The Financial Services Commission shall, when it receives an application under paragraph (1), confirm whether the contents of the application for registration under Article 268 (3) of the Act are true, and then review whether the application meets the registration requirements under Article 268 (4) of the Act.
(5) In addition to the matters prescribed under paragraphs (1) through (4), other necessary matters on the registration application and review of a private equity company, the form of a registration application, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 291 (Partners and Contributions)
(1) The term "professional investor prescribed by the Presidential Decree" under Article 269 (3) of the Act shall mean those falling under any of the following subparagraphs:
1. Any person falling under any of the subparagraphs of Article 10 (1) of this Decree; or
2. Any person prescribed and publicized by the Financial Services Commission among those falling under subparagraph 12 or 13 of Article 10 (3) of this Decree. (2) The term "amount prescribed by the Presidential Decree" under Article 269 (6) of the Act shall be two billion won when partners are corporations or other groups (including funds prescribed under Appendix 2 of the Finance Act and collective investment schemes), and one billion won when partners are individuals.
(3) When financial institutions belonging to the same business group subject to the limitations on cross-shareholding (referring to the business group subject to the limitations on cross- shareholding under Article 9 (1) of Monopoly Regulation and Fair Trade Act) make contributions to a private equity company, the contributions shall not exceed 30/100 of the total equity of the private equity company.
(4) A limited partner may make contributions by the method of entering into a contract to make contributions upon the request of an executive officer. (5) In addition to the matters prescribed under paragraphs (1) through (4), other necessary matters on the methods and procedures of contributions by partners shall be prescribed and publicized by the Financial Services Commission.
The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 292 (Methods of Managing Property of Private Equity Companies) (1) The term "conditions prescribed by the Presidential Decree" under Article 270 (1) of the Act other than each subparagraph shall mean the agreement between a private equity company and another private equity company to conduct any activity falling under the following subparagraphs:
1. Jointly acquiring or disposing equity securities, instruments representing preemptive rights (including other rights to underwrite newly-issued equity securities), convertible bonds, bonds with warrants or exchangeable bonds (hereafter in this paragraph, referred to as "equity securities, etc.");
2. Jointly or individually acquiring equity securities, etc. and then transferring or taking over equity securities, etc. between each other; or
3. Jointly exercising voting rights (including the rights to instruct the exercise of voting rights).
(2) The term "companies prescribed by the Presidential Decree" under Article 270 (1) 1 of the Act shall mean the companies falling under any of the following subparagraphs:
1. Special purpose companies under the Asset-Backed Securitization Act;
2. Real estate investment companies under the Real Estate Investment and Trust Company Act;
3. Ship investment companies under the Ship Investment Company Act;
4. Culture industry specialized companies under the Framework Act on the Promotion of Culture Industries;
5. Where the total amount of assets falling under each of the following items is not less than 5/100 of the total amount of the assets owned by a foreign company and its subsidiaries (referring to foreign companies equivalent to subsidiaries under the Act on External Audit of Stock Companies), the foreign company:
(a) Securities issued by corporations established in the Republic of Korea; (b) Money receivables related to corporations established in the Republic of Korea; (c) Real estate or special assets under subparagraph 3 of Article 229 of the Act, located in the Republic of Korea; and
(d) Derivative-linked securities or derivatives (limited to cases where the underlying assets may be acquired upon the exercise of rights, etc.) based on the assets referred to under items (a) through (c) and the index thereon; and
6. Other companies prescribed and publicized by the Financial Services Commission as similar to those falling under subparagraphs 1 through 5. (3) The term "exchange-traded derivatives or over-the-counter derivatives prescribed by the Presidential Decree" under Article 270 (1) 4 of the Act shall mean the exchange-traded derivatives or over-the-counter derivatives whose underlying assets are the securities issued by a company invested (hereinafter referred to as "a company invested") under Article 270 (1) 4 of the Act, the price thereof, or the index thereon. (4) The term "investments prescribed by the Presidential Decree" under Article 270 (1) 7 of the Act shall mean the investments falling under either of the following subparagraphs:
1. Investment in money receivables held by a company invested (limited to cases intending investment under subparagraph 1 or 2 of Article 270 (1) of the Act); or
2. Investment in money receivables or real estate (including the rights to use real estate such as surface right, easement, chonsegwon (rights to registered lease on a deposit basis), leasehold right, right to purchase condominium, etc.) disposed of during the course of improving the business structure or governance of a company invested by the private equity company.
Article 293 (Methods of Management of Extra Money) (1) The term "short-term loan prescribed by the Presidential Decree" under Article 270 (2) 1 of the Act shall mean the short-term loan under Article 83 (4) of the Act. (2) The term "financial institutions prescribed by the Presidential Decree" under Article 270 (2) 2 of the Act shall mean the financial institutions falling under any of the items of Article 79 (2) 5 of this Decree or foreign financial institutions equivalent thereto. (3) The term "ratio prescribed by the Presidential Decree" under Article 270 (2) 3 of the Act shall be 5/100.
(4) The term "others prescribed by the Presidential Decree" under Article 270 (2) 4 of the Act shall mean the methods falling under either of the following subparagraphs: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Certificates of deposit denominated in Korean won; or
2. Notes (excluding commercial papers) under Article 79 (2) 5 of this Decree. Article 294 (Restrictions on Managing Property of Private Equity Companies) (1) The term "period prescribed by the Presidential Decree" under the main sentence of Article 270 (3) of the Act shall be two years, and the term "ratio prescribed by the Presidential Decree" shall be 50/100.
(2) The term "cases prescribed by the Presidential Decree" under the proviso of Article 270 (3) of the Act shall mean cases falling under either of the following subparagraphs:
1. Where the property of private equity companies falls short of acquiring equity securities of a company invested by the private equity company pursuant to Article 270 (1) 1 or 270 (1) 2 of the Act; or
2. Where inevitable causes exist as prescribed and publicized by the Financial Services Commission.
(3) The term "cases prescribed by the Presidential Decree" under the proviso of Article 270 (4) of the Act shall mean cases falling under any of the following subparagraphs:
1. Where the business of a company invested by the private equity company is suspended;
2. Where the operation of a company invested by the private equity company is suspended for more than three months; or
3. Where inevitable causes exist as prescribed and publicized by the Financial Services Commission.
(4) The term "cases prescribed by the Presidential Decree" under the proviso of Article 270 (5) of the Act shall mean cases falling under any of the subparagraphs of paragraph (3). (5) The term "period prescribed by the Presidential Decree" under the main sentence of Article 270 (6) of the Act shall be one month.
(6) The term "cases prescribed by the Presidential Decree" under the proviso of Article 270 (6) of the Act shall mean cases falling under either of the following subparagraphs:
1. Where any transaction of the equity securities of a company invested by the private equity company is suspended or interrupted on the securities market or other foreign securities markets; or
2. Where inevitable causes exist as prescribed and publicized by the Financial Services Commission.
(7) The term "period prescribed by the Presidential Decree" under the proviso of Article 270 (6) of the Act shall mean the period confirmed by the Financial Services Commission, during which equity securities of a company invested by the private equity company are disposable. Article 295 (Methods of Calculating Investment Ratio) (1) An investment ratio under Article 270 (1) 1 and Article 270 (2) 3 of the Act shall be calculated as of the date on which the investment is made. (2) An investment ratio under the main sentence of Article 270 (2) 3 and 270 (3) of the Act may be calculated by methods falling under either of the following subparagraphs where the contributions are made in a method other than the predetermined contract to make contributions upon request pursuant to Article 291 (4) of this Decree when the funds under the Acts prescribed under Appendix 2 of the Finance Act become partners of a private equity company:
1. In the case of calculating the investment ratio under Article 270 (2) 3 of the Act: where the securities are acquired within the scope of the contributions of the fund, the amount of contributions and the amount of securities acquired shall not be included in the calculation; or
2. In the case of calculating the investment ratio under the main sentence of Article 270 (3) of the Act: the amount of contributions of the fund shall be deducted from the properties of a private equity company.
(3) An executive officer of a private equity company shall not entrust businesses falling under any of the following subparagraphs to a third person:
1. Selection of a company invested by the private equity fund, or establishment or selection of a special purpose company;
2. Where equity securities of a company invested by the private equity fund or a special purpose company are traded, the decision on the price, time and methods thereof;
3. Exercise of voting rights to equity securities belonging to properties of a private equity company or special purpose company; or
The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Business equivalent to those under subparagraphs 1 through 3 among the business prescribed and publicized by the Financial Services Commission as necessary for the protection of the interests of partners.
(4) Necessary matters on the approval under the provisos of Articles 270 (3), 270 (4), 270 (5), and 270 (6) of the Act shall be prescribed and publicized by the Financial Services Commission.
Article 296 (Special Purpose Companies)
(1) The term "ratio prescribed by the Presidential Decree" under Article 271 (1) 3 the Act other than each item of that subparagraph shall be 50/100. (2) The term "persons prescribed by the Presidential Decree" under Article 271 (1) 3 (c) of the Act shall mean financial institutions (referring to institutions subject to inspection provided for under Article 38 of the Act on the Establishment, etc. of Financial Services Commission) that extend credit (referring to the credit extension under Article 34 (2) of the Act) to special purpose companies and convert the credit into contribution for investment. (3) The term "limit prescribed by the Presidential Decree" under the latter part of Article 271 (3) of the Act shall be 200/100 of equity capital calculated as of the date on which a special purpose company borrows money or guarantees repayment of debt. (4) A special purpose company shall entrust the management of its properties to an executive officer of a private equity company who is a shareholder or employee of the company pursuant to Article 270 (8) of the Act, which is applied to Article 271 (4) of the Act. (5) A special purpose company may manage the remaining properties of the special purpose company after managing the properties with the purposes under Article 271 (1) 2 of the Act by methods falling under any of the subparagraphs of Article 270 (2) of the Act. (6) Where a special purpose company invests in equity securities pursuant to Article 270 (1) 1 or 270 (1) 2 of the Act, the equity securities shall be assessed under the method of assessing the property of the private equity company pursuant to Article 260 (1) 1 of this Decree. Article 297 (Executive Officers)
(1) The term "finance-related Acts and subordinate statutes prescribed by the Presidential Decree" under the former part of Article 272 (2) of the Act shall mean the Act, this Decree and those falling under each of the following subparagraphs:
1. The Banking Act;
2. The Korea Development Bank Act;
3. The Korea Industrial Bank Act;
4. The Export-Import Bank of Korea Act;
5. The Insurance Business Act;
6. The Mutual Saving Banks Act;
7. The Specialized Credit Financial Business Act;
8. The Credit Guarantee Fund Act;
9. The Korea Technology Credit Guarantee Fund Act;
10. The Credit Unions Act;
11. The Community Credit Cooperatives Act;
12. The Use and Protection of Credit Information Act;
13. The Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation;
14. The Korea Housing Finance Corporation Act;
15. The Real Estate Investment Company Act;
16. The Ship Investment Company Act;
17. The Industrial Development Act; and
18. The Support for Small and Medium Enterprise Establishment Act. (2) The term "others prescribed by the Presidential Decree" under Article 272 (6) 4 of the Act shall mean those falling under any of the following subparagraphs:
1. Managing properties of a private equity company in violation of the articles of incorporation;
2. Conducting transactions under unfair conditions considering common trading customs without any justifiable cause with respect to managing properties of a private equity company;
3. Using the information on the properties of a private equity company for the purpose of managing executive officer's own properties; or
The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Pursuing his/her own or a third party's interest at the expense of specific private equity companies or special purpose companies; or
5. Using over-the-counter derivative transactions, trust contracts, linked transactions, etc. for the purpose of avoiding any prohibition or restriction under Articles 269 through 274 of the Act.
(3) The term "period prescribed by the Presidential Decree" under Article 272 (8) of the Act shall be six months.
Article 298 (Methods of Reporting Acquisition of Stocks of Banks) The term "measures prescribed by the Presidential Decree" under Article 275 (3) of the Act other than each subparagraph, Article 275 (4) other than each subparagraph, and Article 275 (5) of the Act other than each subparagraph shall mean the methods of accompanying relevant documentary evidence in accordance with the form prescribed and publicized by the Financial Services Commission.
Article 299 (Special Cases for Regulating Holding Companies) (1) The term "conditions prescribed by the Presidential Decree" under Article 276 (2) of the Act shall mean the methods of accompanying documentary evidence in accordance with the form prescribed and publicized by the Financial Services Commission. (2) The term "more than one financial institution prescribed by the Presidential Decree" under the proviso of Article 276 (3) of the Act shall mean more than one financial institution under Article 2 (1) 1 of the Financial Holding Companies Act: Provided, That Articles 45-2 through 45-4 of the Financial Holding Companies Act shall not apply to cases where a private equity company or a special purpose company controls financial institutions other than those under the Banking Act.
(3) Article 13 (1) 4 of the Enforcement Decree of the Financial Holding Companies Act shall not apply to cases where a subsidiary of a financial holding company under the Financial Holding Companies Act becomes an executive officer of a private equity company. Article 300 (Measures against Private Equity Companies)
(1) The term "cases prescribed by the Presidential Decree" under Article 278 (1) 6 of the Act shall mean cases falling under any of the following subparagraphs:
1. Cases falling under subparagraph 3 of Appendix 10 of this Decree where a private equity company violates an obligation to prohibit using undisclosed material information under Article 174 of the Act;
2. Cases falling under subparagraph 4 of Appendix 10 of this Decree where a private equity company violates an obligation to prohibit market manipulation, etc. under Article 176 of the Act; or
3. Cases falling under subparagraph 5 of Appendix 10 of this Decree where a private equity company violates an obligation to prohibit unfair trading, etc. under Article 178 of the Act. (2) The term "finance-related Acts and subordinate statutes prescribed by the Presidential Decree" under Article 278 (1) 7 of the Act shall mean the Acts and subordinate statutes falling under each of the subparagraphs of Article 373 (2) of this Decree. (3) The term "cases prescribed by the Presidential Decree" under Article 278 (1) 7 of the Act shall mean cases falling under any subparagraphs of Article 373 (3) of this Decree. (4) The term "cases prescribed by the Presidential Decree" under Article 278 (1) 8 of the Act shall mean cases falling under any of the following subparagraphs:
1. Where a private equity company fails to commence the management of the properties of the private equity company within six months of the date of registration;
2. Where a private equity company receives any money, etc. from another person or acquires the money, etc. to be distributed to another person in an unfair manner with respect to the business;
3. Where a private equity company fails to correct the imposed conditions within one month (where any correction period exceeding one month is set forth when the suspension of business is issued, referring to such correction period) of the date when the suspension of business under Article 278 (3) 1 of the Act is issued, or continues to carry on the business during the suspension period; or
4. Where the same or similar activities in violation are committed continuously or repeatedly. (5) The term "measures prescribed by the Presidential Decree" under Article 278 (3) 7 of the Act shall mean the measures falling under any of the following subparagraphs:
1. Requesting or recommending the improvement of management or business methods; The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Requesting compensation;
3. Where there is any violation of the Act, reporting it or notifying investigating authorities;
4. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
5. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (6) The term "measures prescribed by the Presidential Decree" under Article 278 (4) 1 (e) of the Act shall mean the measures falling under any of the subparagraphs of paragraph (5). (7) The term "measures prescribed by the Presidential Decree" under Article 278 (4) 2 (e) shall mean the measures falling under either of the following subparagraphs:
1. Caution; or
2. Measures under subparagraphs 3 through 5 of paragraph (5). (8) The term "measures prescribed by the Presidential Decree" under Article 278 (4) 3 (f) shall mean the measures falling under either of the following subparagraphs:
1. Warning; or
2. Measures under subparagraphs 3 through 5 of paragraph (5). (9) The term "measures prescribed by the Presidential Decree" under Article 278 (5) 5 shall mean the measures falling under any of the subparagraphs of paragraph (7). (10) The term "cases prescribed by the Presidential Decree" under subparagraph 27 of Appendix 6 of the Act shall mean cases falling under any of the subparagraphs of Appendix 10 of this Decree.
Chapter 11 Special Cases for Foreign Collective Investment Securities Article 301 (Qualification Requirements of Foreign Collective Investment Managers) (1) The term "qualification requirements prescribed by the Presidential Decree in order to become a foreign collective investment manager or to sell foreign collective investment securities" under the former part of Article 279 (2) of the Act shall be as follows:
1. Qualification requirements for becoming a foreign collective investment manager: (a) The size of assets under management (referring to those calculated under the method prescribed and publicized by the Financial Services Commission) as of the end of the
latest business year shall be not less than one trillion won. In such a case, when a foreign collective investment manager delegates all of the management business for assets under management to another foreign collective investment manager, the size of assets under management of the other foreign collective investment manager shall be not less than one trillion won;
(b) Equity capital shall be not less than the minimum equity capital per authorization business unit of collective investment scheme service under Appendix 1 of this Decree in accordance with the form (referring to the form under Article 229 of the Act) of foreign collective investment schemes intended to be sold in the Republic of Korea; (c) A foreign collective investment manager shall not have been subject to administrative actions by supervisory authorities in the Republic of Korea or its home country such as suspension of business or heavier actions or criminal punishment equivalent to a fine with respect to the operation of the business equivalent to financial businesses for the latest three years; and
(d) A foreign collective investment manager shall name a contact person meeting the requirements prescribed and publicized by the Financial Services Commission in the Republic of Korea in order to protect investors; and
2. Qualification requirements for selling foreign collective investment securities: (a) Foreign collective investment securities shall be issued, or planned to be issued, in accordance with the Acts of member countries (excluding subject states) of the Organization for Economic Cooperation and Development, Hong Kong or Singapore; (b) Matters on costs paid by investors, including commissions, fees, etc. shall be clearly prescribed, and the amount of such costs shall not be excessively high in light of international practices;
(c) The collection of investment amount shall be available through direct or indirect redemption upon the request of investors; and
(d) Others prescribed and publicized by the Financial Services Commission as necessary for the protection of investors.
(2) The term "professional investors prescribed by the Presidential Decree" under the latter part of Article 279 (2) of the Act shall mean those falling under any of the following subparagraphs:
The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Government;
2. The Bank of Korea;
3. A person falling under any of Articles 10 (2) 1 through 10 (2) 17 of this Decree; or
4. A person falling under any of Articles 10 (3) 1 through 10 (3) 14 of this Decree. (3) Where a foreign collective investment manager intends to sell collective investment securities only to persons under paragraph (2), the qualification requirements of foreign collective investment managers and the qualification requirements for selling foreign collective investment securities shall be limited to item (c) of subparagraph 1 of paragraph (1) and item (c) of subparagraph 2 of paragraph (1) in accordance with the latter part of Article 279 (2) of the Act.
Article 302 (Access to Books and Documents)
(1) The term "books and documents prescribed by the Presidential Decree" under Article 280 (3) of the Act shall be as follows:
1. Documents equivalent to the list of collective investment properties;
2. Documents equivalent to the ledger of collective investment securities;
3. Financial statements and the addenda thereof; and
4. Documents equivalent to the details of the management of collective investment properties.
(2) The term "justifiable causes prescribed by the Presidential Decree" under Article 280 (3) of the Act shall mean cases falling under any of the following subparagraphs. In such a case, a foreign collective investment manager of a foreign investment trust under Article 279 (1) of the Act (hereinafter referred to as "foreign investment trust") or foreign investment undisclosed association under Article 279 (1) of the Act (hereinafter referred to as "foreign investment undisclosed association"), a foreign investment company, etc. under Article 279 (1) of the Act (hereinafter referred to as "foreign investment company, etc."), or a broker or dealer who has sold foreign collective investment securities shall notify the investors in writing of the fact that access to and distribution of the books and documents are unavailable, and the reasons therefor:
1. Where it is likely that a person who is provided with the books and documents containing details of transaction orders of collective investment properties of the foreign collective
investment manager will use such information in transactions or business or provide such information to another person;
2. Where it is clearly recognized that providing the books and documents containing details of transaction orders of collective investment properties of the foreign collective investment manager causes damages to other investors; or
3. Where it is impractical to comply with the request of investors for access to the books and documents on a terminated or dissolved foreign collective investment scheme for reasons, including the expiration of the period to keep the books and documents under Article 239 (4) of the Act.
(3) The term "cases prescribed by the Presidential Decree" under the proviso of Article 280 (4) of the Act shall mean cases falling under any of the following subparagraphs:
1. Where it is difficult to publish base prices on a daily basis when investing collective investment properties in assets denominated in foreign currencies;
2. In the case of foreign closed-end collective investment schemes equivalent to closed-end collective investment schemes; or
3. Where a foreign collective investment scheme is permitted not to disclose and publish base prices on a daily basis in accordance with the Acts and subordinate statutes of the country where such foreign collective investment scheme is established or incorporated. Article 303 (Methods of Selling Foreign Collective Investment Securities) (1) A foreign collective investment manager of a foreign investment trust or foreign investment undisclosed association, a foreign investment company, etc., or a broker or dealer who has sold foreign collective investment securities shall not sell the foreign collective investment securities or advertise for sales of the securities in the Republic of Korea until a foreign collective investment scheme is registered pursuant to Article 279 (1) of the Act. (2) Article 57 (2) of the Act shall not apply to the investment advertisement of foreign collective investment securities.
(3) Article 57 (3) of the Act and Articles 87 (4) 3 and 87 (4) 4 of this Decree shall apply to foreign collective investment securities and foreign collective investment managers. In such a case, under Article 87 (4) 3 of this Decree, "collective investment manager" shall be deemed "foreign collective investment manager," "collective investment scheme" shall be deemed The Enforcement Decree of the Financial Investment Services and Capital Market Act "foreign collective investment scheme," and "collective investment securities" shall be deemed "foreign collective investment securities," and under Article 57 (3) of the Act, "financial investment firm" shall be deemed "financial investment firm or foreign collective investment manager," "collective investment securities" shall be deemed "foreign collective investment securities," and "collective investment scheme" shall be deemed "foreign collective investment scheme."
(4) A foreign collective investment manager may, when it prepares and provides an asset management report under Article 280 (2) of the Act, prepare and provide such asset management report as prescribed by the foreign collective investment agreement (referring to those equivalent to collective investment agreement; hereinafter the same shall apply), notwithstanding Article 88 of the Act.
(5) A broker or dealer shall, when it sells foreign collective investment securities, comply with the methods falling under each of the following subparagraphs:
1. The base price of foreign collective investment securities sold shall be disclosed and published at the head office, branches, and other business offices of the broker or dealer in accordance with the foreign collective investment agreement of the foreign collective investment securities;
2. The broker or dealer shall place all documents, such as an asset management report recognized as necessary for the investment decision by investors, at the head office, branches and other business offices of the broker or dealer; and
3. All documents under subparagraph 2 shall be prepared in Korean and shall be distributed to investors: Provided, That in the case of foreign exchange-traded funds whose foreign collective investment securities are listed on the securities market as similar to exchange- traded funds, a foreign collective investment manager may replace the provision of an asset management report with the publication of the portfolio of its paid assets through the securities market on a daily basis.
(6) Matters on the investment solicitation of foreign collective investment securities, the report on the current status of sales of foreign collective investment securities in the Republic of Korea, and other necessary matters for the protection of investors shall be prescribed and publicized by the Financial Services Commission.
Article 304 (Revocation of Registration of Foreign Collective Investment Schemes) The term "cases prescribed by the Presidential Decree" under Article 282 (1) 7 of the Act shall mean cases falling under either of the following subparagraphs:
1. Where a foreign collective investment scheme is terminated or dissolved; or
2. Where a foreign collective investment scheme rejects, interferes with, or evades the inspection under Article 419 (1) of the Act, which is applied to Article 281 (2) of the Act. Part 6 Financial Services-related Institutions
Chapter 1 Korea Financial Investment Association
Article 305 (Registration of Incorporation)
(1) The registration of incorporation of the Association shall contain the matters falling under each of the following subparagraphs pursuant to Article 283 (3) of the Act:
1. Purpose of incorporation;
2. Name;
3. Locations of the head office and local branches;
4. Names and addresses of officers; and
5. Methods of publication. (2) The application for registration of incorporation under paragraph (1) shall accompany documents falling under each of the following subparagraphs:
1. Articles of incorporation;
2. Copies of the approval of the articles of incorporation under Article 3 of Addenda of the Act;
3. Copies of the approval of merger under Article 3 of Addenda of the Act;
4. Merger contract under Article 3 of Addenda of the Act;
5. Minutes from a general meeting for the approval of the merger of the associations subject to merger (referring to the association subject to merger under Article 3 (1) of Addenda of the Act; hereafter in this paragraph, the same shall apply) prior to the merger under Article 3 of Addenda of the Act;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
6. Written documents proving the fact that public notice and notification under Article 3 (6) of Addenda of the Act have been made, and if there is any creditor who raises an objection, the fact that the repayment, provision of collateral, or trust is made to the creditor and that any damage to the creditor is unlikely to occur as a result of the merger:
7. Written documents proving net asset amount of the associations subject to merger prior to the merger; and
8. Written documents indicating the fact that officers of the Association approve their appointments.
Article 306 (Membership)
The term "persons prescribed by the Presidential Decree" under Article 285 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. General fund administrators;
2. Collective investment scheme appraisal companies;
3. Bond appraisal companies; and
4. Others prescribed by the articles of incorporation of the Association as members. Article 307 (Business)
(1) The term "others prescribed by the Presidential Decree" under Article 286 (1) 3 (d) of the Act shall mean those falling under any of the following subparagraphs:
1. Experts in managing investment advisors (referring to the person in charge of managing investment advisors);
2. Experts in calculating collective investment properties under Article 276 (3) of this Decree;
3. Experts in appraising collective investment schemes under Article 280 (2) of this Decree;
4. Securities analysts and experts in appraising collective investment properties under Article 285 (3) of this Decree; and
5. Others prescribed and publicized by the Financial Services Commission as necessary to be subject to the registration and supervision for the protection of investors and sound trade practice.
(2) The term "business prescribed by the Presidential Decree" under Article 286 (1) 9 of the Act shall be as follows:
1. Business of maintaining and managing disciplinary records of officers and employees of financial investment firms;
2. Business of providing comparative disclosure of net operating capital and total risk amount of financial investment firms;
3. Business of managing and disclosing the information on the transactions (limited only to transactions outside of the securities market) of debt securities;
4. Business of providing job training and ethics education for officers and employees of financial investment firms;
5. Business on self-review of investment advertisements; and
6. Others prescribed in the articles of incorporation. Article 308 (Organization and Articles of Incorporation) (1) The organization of the Association shall be classified and operated in accordance with the standards falling under each of the following subparagraphs pursuant to the latter part of Article 287 (1) 3 of the Act:
1. Complying with the classification falling under the following items based on the type of financial investment services:
(a) Brokerage or dealing; and
(b) Collective investment scheme service, discretionary investment advisory service, non-discretionary investment advisory service, or trust service; and
2. In the case of the brokerage or dealing under item (a) of subparagraph 1, complying with the classification falling under the following items based on the scope of financial investment products:
(a) Securities (excluding collective investment securities); (b) Collective investment securities; and
(c) Derivatives.
(2) The term "matters prescribed by the Presidential Decree" under Article 287 (1) 10 of the Act shall be as follows:
1. Matters on assets; The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Matters on officers;
3. Matters on general meetings and board of directors;
4. Matters on accounting; and
5. Matters on delegation (including the entrustment of business related to a trust company that is entrusted only with the properties under Articles 103 (1) 4 through 103 (1) 6 of the Act).
(3) The term "matters prescribed by the Presidential Decree" under Article 287 (2) of the Act shall mean the matters falling under Articles 287 (1) 1, 287 (1) 2, 287 (1) 5 through 287 (1) 8 of the Act and Articles 287 (2) 2, 287 (2) 3 and 287 (2) 5 of the Act: Provided, That the same shall not apply to cases where the changes occur due to the amendment of Acts and subordinate statutes or to minor changes such as correction of simple wording. Article 309 (Measures against the Association)
(1) The term "measures prescribed by the Presidential Decree" under Article 293 (1) 7 of the Act shall mean those falling under any of the following subparagraphs:
1. Requesting or recommending the improvement of management or business methods;
2. Requesting compensation;
3. Where there is any violation of the Act, reporting it or notifying investigating authorities;
4. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
5. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (2) The term "measures prescribed by the Presidential Decree" under Articles 293 (2) 6 and 293 (3) 7 of the Act shall mean those falling under subparagraphs 3 through 5 of paragraph (1), respectively.
(3) The term "others prescribed by the Presidential Decree" under subparagraph 22 of Appendix 7 of the Act shall mean those falling under any of the subparagraphs of Appendix 11 of this Decree.
Chapter 2 Korea Securities Depository
Article 310 (Securities to be Deposited)
The term "securities prescribed by the Presidential Decree" under Article 294 (1) of the Act shall mean those falling under either of the following subparagraphs:
1. Certificates of deposit denominated in Korean won; or
2. Others prescribed and publicized by the Financial Services Commission. Article 311 (Registration of Incorporation)
(1) The registration of incorporation of the Depository shall contain the matters falling under each of the following subparagraphs pursuant to Article 294 (3) of the Act:
1. Purpose of incorporation;
2. Name;
3. Locations of the main office and local branches;
4. Capital;
5. Names and addresses of officers; and
6. Methods of publication. (2) The application for registration of incorporation under paragraph (1) shall accompany the following documents:
1. Articles of incorporation; and
2. Copies of the certificate of the articles of incorporation. Article 312 (Special Interests)
The term "special interests prescribed by the Financial Services Commission" under Article 301 (5) of the Act shall mean those falling under any of the following subparagraphs:
1. Debt-repayment guarantee;
2. Offering of collateral; or
3. Special interests that may not be regarded as necessary activities in the course of conducting normal transactions (referring to those recognized as socially-accepted common transactions in terms of transaction conditions where such activities are related to the business operation of the counter party or incidental to the business achievement of the counter party).
The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 313 (Measures against the Depository)
(1) The term "measures prescribed by the Presidential Decree" under Article 307 (1) 7 of the Act shall mean those falling under any of the following subparagraphs:
1. Requesting or recommending the improvement of management or business methods;
2. Requesting compensation;
3. Where there is any violation of the Act, reporting it or notifying investigating authorities;
4. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
5. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (2) The term "measures prescribed by the Presidential Decree" under Articles 307 (2) 6 and 307 (3) 7 of the Act shall mean those falling under subparagraphs 3 through 5 of paragraph (1), respectively.
(3) The term "others prescribed by the Presidential Decree" under subparagraph 29 of Appendix 8 of the Act shall mean those falling under any of the subparagraphs of Appendix 12 of this Decree.
Article 314 (Restrictions on Return of Investors' Deposited Securities) The term "cause prescribed by the Presidential Decree" under Article 312 (3) of the Act shall mean those falling under any of the following subparagraphs:
1. Revocation of the authorization, license, registration, etc., or the suspension of business against a depositor; or
2. Bankruptcy or dissolution of a depositor, or cases equivalent to those under subparagraph
1. Article 315 (Compensation for Insufficiency of Deposited Securities) (1) Where the deposited securities become insufficient, the person who is liable for the insufficiency shall make up for the insufficiency without delay pursuant to Article 313 (1) of the Act.
(2) Where the person under paragraph (1) fails to make up for the insufficiency, the Depository and a depositor under Article 310 (1) of the Act shall jointly make up for the insufficiency.
Article 316 (Notifications by Issuer)
An issuer shall notify the Depository of the matters falling under each of the following subparagraphs pursuant to Article 314 (6) of the Act:
1. Type of securities, etc. under Article 294 (1) of the Act (hereafter in this Article, referred to as "securities, etc.") and round of issuance of securities, etc.;
2. Type, grounds of occurrence, and detail of the right on securities, etc. and schedule of exercising the right;
3. Where any condition for issuing securities, etc. is changed, the details thereof;
4. Details of distribution of rights, including preemptive rights, etc. when summing up the number of securities pursuant to Article 316 (3) of the Act; and
5. Others requested by the Depository as necessary matters on the change of payment date for principal and interests and others related to the exercise of the rights on securities, etc. Article 317 (Exercise of Voting Rights by the Depository) (1) The Depository shall, when it exercises voting rights of the stock certificates whose entry is changed in the name of the Depository, exercise the voting rights in proportion to the ratio of affirmative votes and negative votes (including abstention and nullity; hereafter in this paragraph, the same shall apply) in a manner not affecting the resolution of the number of stocks calculated by deducting the number of stocks with voting rights to be exercised by the Depository from the number of stocks (including the number of stocks whose voting rights are exercised in writing) present at the general meeting of shareholders. In such a case, when an odd lot less than one share (hereafter in this paragraph, referred to as "odd lot") occurs, the odd lot in affirmative votes shall be rounded down and the odd lot in negative votes shall be rounded up.
(2) Where the Depository exercises voting rights pursuant to paragraph (1), the number of stocks whose voting rights are exercised shall be the number of stocks requested from the Depository by an issuer as the number of stocks necessary for the resolution of a general meeting of shareholders among the number of deposited stocks of local beneficial shareholders (referring to the persons excluding shareholders who are foreigners among the beneficial shareholders pursuant to Article 315 (1) of the Act; hereafter in this Article, the same shall The Enforcement Decree of the Financial Investment Services and Capital Market Act apply): Provided, That, where the number of stocks requested by the issuer is larger than the number of stocks calculated by deducting the number of stocks for which local beneficial shareholders have expressed their intention (hereafter in this Article, referred to as "expression of intention") of direct exercise, exercise by proxy, or non-exercise of voting rights from the number of the deposited stocks of local beneficial shareholders within the five days preceding the date of a general meeting of shareholders, the number of stocks calculated by deducting the number of stocks for which the intention is expressed from the deposited stocks . (3) The Depository may directly exercise voting rights or have an agent exercise voting rights. (4) An agent who exercises voting rights pursuant to paragraph (3) shall notify the Depository of the results thereof without delay after closing the general meeting of shareholders concerned. (5) An issuer shall, when he/she makes a notification or public notice on the convocation of a general meeting of shareholders under Article 314 (4) of the Act, notify or publicize the convocation to local beneficial shareholders accompanied with the following matters:
1. Matters prescribed under paragraph (1); and
2. Methods of expressing the intention of local beneficial shareholders. (6) Matters on the period and methods of requesting the Depository for the exercise of a voting right by an issuer, the methods of expressing the intention of local beneficial shareholders, and other necessary matters on the exercise of voting rights of deposited stocks under the name of the Depository shall be prescribed and publicized by the Financial Services Commission. Article 318 (Persons Included in Issuers of Securities) (1) The term "stocks, etc. prescribed by the Presidential Decree" under Article 315 (5) of the Act other than each subparagraph shall mean exchangeable bonds and derivative-linked securities.
(2) The term "persons prescribed by the Presidential Decree" under Article 315 (5) of the Act other than each subparagraph shall mean those falling under the following subparagraphs:
1. In the case of securities deposit receipts, the issuer of stocks, etc. which are the basis of such securities deposit receipts;
2. In the case of exchangeable bonds, the issuer of stocks, etc. subject to exchange; and
3. In the case of derivative-linked securities, the issuer of stocks, etc. which are the underlying assets of such derivative-linked securities.
Chapter 3 Securities Finance Company
Article 319 (Authorization)
(1) The term "minimum amount prescribed by the Presidential Decree" under Article 324 (2) 2 of the Act shall be 50 billion won.
(2) The term "eased requirements prescribed by the Presidential Decree" under Article 324 (9) of the Act shall be as follows:
1. In the application of the requirements under Article 324 (2) 2 of the Act, the securities finance company shall maintain not less than 70/100 of the minimum capital under paragraph (1). In such a case, the requirements for maintaining authorization shall be applied at the end of every fiscal year and a securities finance company that fails to meet the requirements at the end of a specific fiscal year shall be regarded as meeting the requirements by the end of the next fiscal year; and
2. In the application of the requirements under Article 324 (2) 6 of the Act, the securities finance company shall maintain the requirements under Articles 19 (1) 2 (a) through 19 (1) 2 (c) of this Decree.
(3) Articles 16 (4), 16 (5), 16 (6) (excluding subparagraph 1), 16 (8) 1, 16 (10), and 17 (excluding subparagraph 4 of paragraph 1, subparagraph 5 of paragraph 2, and paragraph 3) of this Decree shall apply to the authorization requirements of a securities finance company. Article 320 (Business)
The term "businesses prescribed by the Presidential Decree" under Article 326 (2) 1 of the Act shall mean those falling under the following subparagraphs:
1. Purchasing and selling securities with repurchase agreements;
2. Intermediating and arranging for purchases and sales of securities with repurchase agreement, or acting as an agent for that purpose; and
3. Carrying on brokerage or dealing of collective investment securities. Article 321 (Special Interest)
The Enforcement Decree of the Financial Investment Services and Capital Market Act The term "special interest prescribed by the Presidential Decree" under Article 327 (3) of the Act shall mean those falling under any of the following subparagraphs:
1. Debt-repayment guarantee;
2. Offering of collateral; or
3. Special interests that may not be regarded as necessary activities in the course of conducting normal transactions (referring to those recognized as socially-accepted common transactions in terms of transaction conditions where such activities are related to the business operation of the counter party or incidental to the business achievement of the counter party).
Article 322 (Issuance of Corporate Bonds)
(1) Where a securities finance company has indicated in a subscription form for corporate bonds or registration statement of securities that when issuing corporate bonds, the securities finance company shall issue the corporate bonds even if the total amount of corporate bonds subscribed for is less than the total amount of corporate bonds stated in the subscription form or registration statement of securities, the total amount of corporate bonds subscribed for shall be regarded as the total amount of corporate bonds issued. (2) A securities finance company may issue corporate bonds through secondary distribution by determining the distribution period in advance, and in such a case the securities finance company may not prepare a subscription form for corporate bonds. (3) A securities finance company shall enter the matters falling under each of the following subparagraphs in the corporate bonds that are issued through secondary distribution:
1. Trade name of a company;
2. Face value of corporate bonds;
3. Interest rates of corporate bonds;
4. Method and period of interest payment;
5. Method and period of the redemption of corporate bonds; and
6. Serial numbers of corporate bonds. (4) A securities finance company may issue corporate bonds by means of discount issuance. (5) A securities finance company may not, when it issues corporate bonds with a maturity of five years or more by means of discount issuance, include the discount on bonds from the
performance of bond issuance in the application of the issue amount of bonds under Article 329 of the Act.
Article 323 (Approval of Discontinuation of Business) Articles 370 (2) through 370 (6) of this Decree shall apply to the approval, by the Financial Services Commission, of the discontinuation or dissolution of business of a securities finance company pursuant to Article 332 (1) of the Act.
Article 324 (Measures against Securities Finance Companies) (1) The term "cases prescribed by the Presidential Decree" under Article 335 (1) 6 of the Act shall mean those falling under any of the following subparagraphs:
1. Cases falling under subparagraph 3 of Appendix 13 of this Decree where a securities finance company violates an obligation to prohibit using undisclosed material information under Article 174 of the Act;
2. Cases falling under subparagraph 4 of Appendix 13 of this Decree where a securities finance company violates an obligation to prohibit market manipulation, etc. under Article 178 of the Act; and
3. Cases falling under subparagraph 5 of Appendix 13 of this Decree where a securities finance company violates an obligation to prohibit unfair trading, etc. under Article 178 of the Act.
(2) The term "finance-related Acts and subordinates statutes prescribed by the Presidential Decree" under Article 335 (1) 7 of the Act shall mean the Acts and subordinates statutes falling under each of the subparagraphs of Article 373 (2) of this Decree. (3) The term "cases prescribed by the Presidential Decree" under Article 335 (1) 7 of the Act shall mean cases falling under each of the subparagraphs of Article 373 (3) of this Decree. (4) The term "cases prescribed by the Presidential Decree" under Article 335 (1) 8 of the Act shall mean those falling under any of the following subparagraphs:
1. Where a securities finance company fails to commence the operation within six months of the date on which the authorization is obtained, or fails to carry on the authorized business without any reasonable cause for more than six months after the operation is commenced; The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Where a securities finance company receives any money, etc. from another person or acquires the money, etc. to be distributed to another person in an unfair manner with respect to the business;
3. Where a securities finance company fails to correct the imposed conditions within one month (where any correction period exceeding one month is set forth when the suspension of business is issued, referring to such correction period) of the date when the suspension of business under Article 335 (2) 1 of the Act is issued; or
4. Where the same or similar activities in violation are committed continuously or repeatedly. (5) The term "measures prescribed by the Presidential Decree" under Article 335 (2) 7 of the Act shall mean the measures falling under any of the following subparagraphs:
1. Discontinuing any or all businesses of branches and other business offices or closing branches and other business offices;
2. Requesting or recommending the improvement of management or business methods;
3. Requesting compensation;
4. Where there is any violation of the Act, reporting it or notifying investigating authorities;
5. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
6. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (6) The term "measures prescribed by the Presidential Decree" under Article 335 (3) 6 and Article 335 (4) 7 of the Act shall mean those falling under subparagraphs 4 through 6 of paragraph (5), respectively.
(7) The term "cases prescribed by the Presidential Decree" under subparagraph 26 of Appendix 9 of the Act shall mean cases falling under any subparagraph of Appendix 13 of this Decree.
Chapter 4 Merchant Bank
Article 325 (Business of Merchant Banks)
(1) The term "period prescribed by the Presidential Decree" under Article 336 (1) 1 of the Act shall be one year.
(2) The term "business prescribed by the Presidential Decree" under Article 336 (1) 8 of the Act shall be as follows:
1. Business of bill management accounts (referring to accounts opened by a merchant bank for the purpose of distributing the profits earned by the investment in the bills under Article 336 (1) 1 of the Act after pooling the funds deposited by customers; hereafter in this Chapter, the same shall apply);
2. Factoring (referring to the purchase and collection of sales debentures of companies and the relevant businesses thereof);
3. Brokerage or dealing of exchange-traded derivatives traded in the derivatives market whose underlying assets are stock indices;
4. Purchases and sales of certificates of deposit, the intermediary and arrangement thereof, and acting as an agent for that purpose;
5. Purchases and sales of securities subject to open market operation (hereafter in this Chapter, referred to as "securities subject to open market operation") under Article 68 of the Bank of Korea Act, the intermediary and arrangement thereof, and acting as an agent for that purpose;
6. Loans whose collateral is bills issued by the merchant bank concerned or loans to individuals holding bills on bill management accounts of the merchant bank concerned whose collateral is the bills;
7. Business of pre-shipment trade bills (referring to the purchase and collection order of export bills for discounting, trading, intermediating, underwriting, or guaranteeing pre- shipment trade bills and settling pre-shipment trade bills); and
8. Rent of real estate for business purposes under Article 347 (4) of the Act. (3) The term "others prescribed by the Presidential Decree" under Article 336 (2) 6 of the Act shall be as follows:
1. Brokerage or dealing (excluding those falling under subparagraph 3 of paragraph (2)) of exchange-traded derivatives;
2. Business of managing credit information under the Use and Protection of Credit Information Act;
3. Business of managing securitization assets under the Asset-Backed Securitization Act; The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Mortgage securitization under the Special Purpose Companies for Mortgage-Backed Bonds Act;
5. Non-discretionary investment advisory service; and
6. Electronic funds transfer under the Electronic Financial Commerce Act (excluding electronic funds transfer by becoming a participant of the payment gateway system under subparagraph 6 of Article 2 of the Electronic Financial Commerce Act, or via a representative participant under Article 15 (2) 2 of the Enforcement Decree of the Electronic Financial Commerce Act).
Article 326 (Issuance of Cover Bills)
(1) A merchant bank may issue new bills by pooling or dividing factoring bills and bonds (referring to bills and bonds related to factoring business; hereafter in this Chapter, the same shall apply), or trade bills (hereafter in this Chapter, referred to as "Won currency bills, etc.") owned by discount and purchase pursuant to Article 336 (3) of the Act. (2) A merchant bank shall, when it issues cover bills pursuant to paragraph (1), issue such bills within the range of balance and the final maturity date of Won currency bills, etc., and shall not purchase the Won currency bills, etc. which underlie the issuance of cover bills, shall not include them in bill management accounts, and shall not provide them as collateral. Article 327 (Selection of Qualified Companies)
(1) A merchant bank shall select a qualified company to carry out the business of discounting, trading, intermediating, underwriting, or guaranteeing bills for companies: Provided, That the same shall not apply to cases where a merchant bank carries out the business of discounting, trading, intermediating, underwriting, or guaranteeing bills which are guaranteed by another financial institution (referring to the institutions subject to inspection carrying on the business of managing bills among the institutions subject to inspection under Article 38 of the Act on the Establishment, etc. of Financial Services Commission). (2) Methods of selecting a qualified company under paragraph (1), limitations on discount of bills by a qualified company and other necessary matters on a qualified company shall be prescribed and publicized by the Financial Services Commission. Article 328 (Handling of Clean Bills)
(1) Where a merchant bank sells clean bills, the payment thereof shall not be guaranteed by the merchant bank itself or another person directly or indirectly: Provided, That the same shall not apply to cases where small and medium enterprises under Article 2 of the Framework Act on Small and Medium Enterprises sell bills issued based on the guarantee for payment by banks, credit guarantee funds under the Credit Guarantee Fund Act, technology credit guarantee funds under the Technology Credit Guarantee Fund Act or other merchant banks. (2) Where a merchant bank sells clean bills, the clean bills shall meet both of the following requirements:
1. Credit ratings shall be assigned by more than two credit-rating agencies: Provided, That where the immediately preceding credit rating falls under the rating prescribed and publicized by the Financial Services Commission, the credit ratings shall be assigned by one credit rating agency or more; and
2. The lowest rating among the credit ratings assigned by credit rating agencies shall be equal to or higher than the rating prescribed and publicized by the Financial Services Commission: Provided, That such credit rating requirements shall not apply to the bills under the proviso of paragraph (1) and the bills issued by companies prescribed and publicized by the Financial Services Commission.
(3) A merchant bank may arrange for or intermediate transactions of clean bills or act as an agent for that purpose only when the lowest rating of the clean bills among the credit ratings assigned by credit rating agencies is equal to or higher than the rating prescribed and publicized by the Financial Services Commission: Provided, That the same shall not apply to the bills issued by companies prescribed and publicized by the Financial Services Commission. (4) Credit rating standards for credit rating agencies, the application period of credit ratings, the disclosure of credit ratings and other necessary matters on the credit assessment of clean bills shall be prescribed and publicized by the Financial Services Commission. Article 329 (Bill Management Accounts)
(1) A merchant bank shall set the trust period of bill management accounts to less than one year.
(2) A merchant bank may invest the deposit of bill management accounts in the following assets excluding the assets required for reserve under Article 346 of the Act: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Discounted bills issued by companies which have transactions with the merchant bank concerned;
2. Pre-shipment trade bills;
3. Factoring bills and bonds;
4. Cover bills issued by financial institutions (referring to the institutions subject to inspection carrying on the business of managing bills among the institutions subject to inspection under Article 38 of the Act on the Establishment, etc. of Financial Services Commission);
5. Government bonds, municipal bond or special bonds;
6. Bonds whose payments of principal and interest are guaranteed by the Government;
7. Bonds issued by financial institutions (referring to the institutions subject to inspection under Article 38 of the Act on the Establishment, etc. of Financial Services Commission);
8. Bonds listed on the securities market; and
9. Certificates of deposits. (3) A merchant bank shall transfer not less than 50/100 of the total assets under management of the deposit of bill management accounts into the assets under subparagraphs 1 through 3 of paragraph (2): Provided, That where the management requirement for the deposit of bill management accounts fails to be met due to inevitable causes, including the deposit of massive funds in a lump sum, a merchant bank shall be regarded as meeting the requirements by the next day.
(4) A merchant bank shall manage the deposit of bill management accounts separately from its own property.
(5) The methods of trading bill management accounts and the methods of management of the deposit of bill management accounts and other matters necessary for bill management accounts shall be prescribed and publicized by the Financial Services Commission. Article 330 (Other Conduct of Business Regulations) (1) A merchant bank shall not lend money directly or indirectly to the person who intends to purchase stocks issued by the merchant bank itself. (2) A merchant bank shall not provide financial support directly or indirectly to the lenders of debt financing such as subordinate bonds and subordinate debts by lending money or issuing a letter of guarantee for payment.
(3) A merchant bank shall not conduct any activity falling under the following subparagraphs with respect to dealing with credit:
1. Forcing to subscribe to depository products which limit the borrower's use of funds or add financial expenses in violation of the standards prescribed and publicized by the Financial Services Commission;
2. Illegally transferring credit risks born by a merchant bank to clients directly or indirectly; or
3. Others to make profits illegally or incur damages to the interests of clients by using a superior position as a merchant bank.
(4) A merchant bank shall assign more than 25/100 of the total amount of bills, factoring finance, payment guarantee for bills and mid-and-long-term loans against companies (excluding public and non-for-profit organizations under the Act on Operation of Public Agency) to small and medium enterprises.
(5) Other matters necessary to protect clients or maintain sound trade practice may be prescribed and publicized by the Financial Services Commission. Article 331 (Authorization of Branches)
(1) The Financial Services Commission shall, when it intends to grant an authorization of the establishment of branches, etc. pursuant to Article 337 of the Act (referring to the branches, etc. under Article 337 of the Act; hereafter in this Article, the same shall apply), review the requirements falling under each of the following subparagraphs:
1. Standards for prudent management under Article 31 of the Act that are applied to Article 350 of the Act shall be met;
2. Net incomes shall be generated for more than one business year during the latest two business years; and
3. A merchant bank shall not be subject to institutional warning or heavier measures taken by the Financial Services Commission for the latest two years from the date when the application for an authorization of branches, etc. was filed. (2) Subparagraphs 2 and 3 of paragraph (1) shall not apply to a merchant bank which intends to obtain an authorization of the establishment of branches, etc in a metropolitan city or province where the head office and branches of the merchant bank does not exist. The Enforcement Decree of the Financial Investment Services and Capital Market Act (3) In addition to the matters prescribed under paragraphs (1) and (2), other specific matters necessary for the application for and review of the authorization of branches, etc., the form of the application, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 332 (Issuance of Bonds)
(1) Where a merchant bank has indicated in a subscription form for bonds or registration statement of securities that, when issuing corporate bonds, the merchant bank issues the bonds even if the total amount of bonds subscribed for is less than the total amount of bonds stated in the subscription form or registration statement of securities, the total amount of bonds subscribed for shall be regarded as the total amount of bonds issued. (2) A merchant bank shall, when it issues bonds in excess of the limit pursuant to Article 340 (2) of the Act, comply with the limit under Article 340 (1) of the Act within one month of the issuance.
(3) A merchant bank may issue bonds through secondary distribution by determining the distribution period in advance, and in such a case the merchant bank may not prepare a subscription form for bonds.
(4) A merchant bank shall enter the matters falling under each of the following subparagraphs in the bonds that are issued through secondary distribution:
1. Trade name of a company;
2. Face value of bonds;
3. Interest rates of bonds;
4. Method and period of the payment of interest;
5. Method and period of the redemption of bonds; and
6. Serial numbers of bonds. (5) A merchant bank may issue bonds by means of discount issuance. (6) A merchant bank may not, when it issues bonds with a maturity of five years or more by means of discount issuance, include the discount on bonds in the application of the issue amount of bonds under Article 340 of the Act.
Article 333 (Special Cases for Collective Investment Scheme Services)
(1) The term "persons prescribed by the Presidential Decree" under the main sentence of Article 341 (2) of the Act other than each subparagraph shall mean those falling under any of the subparagraphs of Article 401-2 (1) of the Commercial Act. (2) A merchant bank shall establish a system to prevent a conflict of interests, including the matters falling under each of the following subparagraphs pursuant to the main sentence of Article 341 (2) of the Act:
1. Business process and reporting shall be conducted in an independent manner by separating each division;
2. Where persons in charge of the business falling under each subparagraph of Article 341 (2) of the Act have held meetings or communicated with each other with respect to the business, the persons shall keep the records thereof and receive the confirmation from a compliance officer at least once a month;
3. No employee shall be transferred between the businesses falling under each subparagraph of Article 341 (2) of the Act, and no employee shall be dispatched from the business under Articles 341 (2) 2 of the Act to another business within the period prescribed and publicized by the Financial Services Commission;
4. No employee in charge of selling collective investment securities shall perform concurrently the business under Article 341 (2) 2 of the Act;
5. Office space shall be separated by different entrances or other means so that information sharing is cut off;
6. Data-processing materials on the business falling under each subparagraph of Article 341 (2) of the Act shall be kept, managed, and accessed in an independent manner in order to prevent the sharing of such materials; and
7. Others prescribed and publicized by the Financial Services Commission as necessary for the prevention of a conflict of interests.
(3) The term "business prescribed by the Presidential Decree" under the proviso of Article 341 (2) of the Act other than each subparagraph shall mean those falling under any of the following subparagraphs:
1. Businesses prescribed and publicized by the Financial Services Commission as unlikely to be in direct relation to the business under Article 341 (2) 2 of the Act among the businesses under Article 336 (1) 8 of the Act;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Businesses falling under Article 336 (2) 1 of the Act;
3. Businesses falling under Article 336 (2) 5 of the Act; and
4. Businesses prescribed and publicized by the Financial Services Commission as unlikely to be in direct relation to the business under Article 341 (2) 2 of the Act among the businesses under Article 336 (2) 6 of the Act.
Article 334 (Credit limit on Same Borrower)
(1) The term "limit prescribed by the Presidential Decree" under Article 342 (2) of the Act shall be 15/100 of the equity capital of a merchant bank. (2) The term "cases prescribed by the Presidential Decree" under Article 342 (5) of the Act other than each subparagraph shall mean those falling under either of the following subparagraphs:
1. Cases falling under any of the following items while falling under Article 342 (5) 1 of the Act:
(a) Where a merchant bank extends credit under Article 342 (1) of the Act (hereafter in this Chapter, referred to as "credit extension") to a corporation, etc. prescribed and publicized by the Financial Services Commission as corporations, etc. directly established in accordance with the Government, municipal governments, or other Acts; (b) Where a merchant bank lends extra money to other financial institutions through a fund brokerage company within a period of up to three business days; (c) Where a merchant bank extends credit additionally to companies under the workout process under the Debtor Rehabilitation and Bankruptcy Act or under the joint management process by a creditor financial institution or creditor bank under the Corporate Restructuring Promotion Act; or
(d) Where a merchant bank extends credit additionally to the person who acquires the company falling under item (c) in accordance with an acquisition agreement; or
2. Cases falling under any of the following items while falling under Article 342 (5) 2 of the Act:
(a) Where the equity capital of the merchant bank concerned is reduced;
(b) Where there is any change in the composition of the same borrowers due to a merger, transfer and acquisition by transfer of business between companies that have accepted credit extension;
(c) Where the amount converted into Korean won is increased due to changes in the exchange rate; or
(d) Others recognized by the Financial Services Commission where the merchant bank concerned extends credit in excess of the limit on credit extension without any cause attributable to the merchant bank due to inevitable causes such as drastic changes in economic condition.
(3) A merchant bank shall, when it intends to exceed the limit on credit extension under Articles 342 (1) through 342 (4) of the Act due to the causes prescribed under subparagraph 1 of paragraph (2), receive confirmation from the Financial Services Commission that the merchant bank falls under the causes prescribed under subparagraph 1 of paragraph (2) In such a case, the merchant bank shall file an application for confirmation with the Financial Services Commission within the seven days preceding the expected date of handling. (4) A merchant bank shall, when it exceeds the limit on credit extension due to the causes under subparagraph 2 of paragraph (2), file a plan necessary to correct the situation with the Financial Services Commission within one month of the date on which such causes occur. (5) The term "inevitable cases prescribed by the Presidential Decree" under the proviso of Article 342 (6) shall mean those falling under either of the following subparagraphs where the resolution of exceeded limit on credit extension undermines the financial soundness of the merchant bank:
1. Where it is difficult to make recollection within the prescribed period because the time limit of the credit extension has yet to expire; or
2. Where the recollection of the credit extension may significantly undermine the managerial stability of the person who has accepted the credit extension. (6) In addition to the matters prescribed under paragraphs (1) through (5), other necessary matters for the application for confirmation of exceeded limit on credit extension and the confirmation thereof, the form of the application, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission. The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 335 (Scope of Equity Capital)
The equity capital under Article 342 (1) of the Act shall be classified into core capital and supplementary capital, and shall be prescribed and publicized by the Financial Services Commission pursuant to the standards falling under each of the following subparagraphs:
1. Core capital shall be real net assets of a merchant bank with permanent characteristics, including capital and reserve;
2. Supplementary capital shall be capital equivalent to those under subparagraph 1, including subordinate bonds which may compensate for losses incurred from business activities of a merchant bank; and
3. Core capital and supplementary capital shall not contain capital that does not contribute to capital adequacy, such as treasury stocks held by the merchant bank concerned. Article 336 (Scope of Credit Extension)
The scope of credit extension under Article 342 (1) of the Act shall be as follows and the specific scope shall be prescribed and publicized by the Financial Services Commission:
1. Lending;
2. Discounting bills;
3. Guaranteeing the payment;
4. Purchasing securities for financial supports;
5. Purchasing bills;
6. Giving substitute payments resulting from payment guarantee;
7. Renting facilities;
8. Making transactions that may cause losses to a merchant bank due to the insolvency of the counter party; and
9. Making transactions that may bring about an effect equivalent to those under subparagraphs 1 through 7, even if the merchant bank has not made such transactions. Article 337 (Scope of Same Borrower and Related Persons) (1) The specific scope of the same borrower under Article 342 (1) of the Act shall mean the same individuals or corporations, and persons in the following relations with the same individuals and corporations:
1. Persons in the relations falling under any subparagraph of Article 3 of the Monopoly Regulation and Fair Trade Act; and
2. Other individuals or corporations recognized as likely to be insolvent without any special cause due to the insolvency of the same individuals and corporations. (2) The specific scope of related persons under Article 342 (2) of the Act shall be as follows:
1. Officers of the merchant bank concerned;
2. Subsidiaries (referring to a company of which the merchant bank concerned holds not less than 15/100 of stocks with voting rights; hereafter in this Chapter, the same shall apply) of the merchant bank concerned;
3. Specially-related persons of an officer of the merchant bank concerned; and
4. Persons in the relations falling under each subparagraph of paragraph (1) with a subsidiary of the merchant bank concerned.
Article 338 (Restrictions on Transactions with Major Shareholders) (1) The term "limit prescribed by the Presidential Decree" under Article 343 (1) of the Act shall mean the smaller amount between 15/100 of the equity capital and the amount calculated by multiplying the amount of the equity capital of the merchant bank concerned by the rate calculated by dividing the number of stocks with voting rights of the merchant bank concerned held by the major shareholders (including the specially-related persons thereof; hereafter in this Article, the same shall apply) into the total number of outstanding stocks with voting rights of the merchant bank.
(2) The term "amount prescribed by the Presidential Decree" under the former part of Article 343 (2) and Article 343 (3) of the Act shall mean the smaller amount between one billion won and the amount whose single transaction prescribed and publicized by the Financial Services commission is equivalent to 10/10,000 of the equity capital: Provided, That the transaction amount based on the standardized agreement under Article 2 of the Regulation of Standardized Contract Act as a normal transaction of the merchant bank concerned shall be excluded from the amount of the single transaction.
(3) The term "transactions prescribed by the Presidential Decree" under the former part of Article 343 (2) of the Act shall mean transactions that acquire corporate bonds issued by major shareholders through public offering or secondary distribution. The Enforcement Decree of the Financial Investment Services and Capital Market Act (4) The term "matters prescribed by the Presidential Decree" under Article 343 (4) of the Act shall be as follows:
1. Where a merchant bank extends credit pursuant to Article 343 (3) of the Act, the matters falling under each of the following items:
(a) Size of extended credit as of the end of a quarter; (b) Increased or decreased amount of credit extension during a quarter; (c) Terms of transaction of credit extension; and (d) Others prescribed and publicized by the Financial Services Commission; and
2. Where a merchant bank acquires stocks issued by major shareholders pursuant to Article 343 (3) of the Act, the matters falling under each of the following items: (a) Size of acquired stocks as of the end of a quarter; (b) Increased or decreased amount during a quarter; (c) Acquisition or disposal prices; and
(d) Others prescribed and publicized by the Financial Services Commission. (5) The term "period prescribed by the Presidential Decree" under Article 343 (5) of the Act shall be one year.
(6) The term "cases prescribed by the Presidential Decree" under Article 343 (9) of the Act other than each subparagraph shall mean cases where a major shareholder falls under either of the following subparagraphs:
1. Where liabilities of major shareholders (referring to only companies and including specially-related persons who are companies; hereafter in this Article, the same shall apply) exceed the assets thereof; or
2. Where more than two credit rating agencies assign below-investment grades for a major shareholder.
(7) The term "measures prescribed by the Presidential Decree" under Article 343 (9) 3 of the Act shall mean the prohibition on the new acquisition of financial investment products falling under any of the following subparagraphs:
1. Securities deposit receipts related to securities issued by major shareholders;
2. Exchangeable bonds that are issued by a person other than major shareholders and are entitled to claim for the exchange with the securities issued by major shareholders or the securities under subparagraph 1; or
3. Financial investment products (limited to cases only where the underlying assets are purchasable by the exercise of rights) whose underlying assets are only the securities issued by the major shareholder, or the securities under subparagraph 1 or 2. Article 339 (Investment Limit of Securities)
(1) The term "cases prescribed by the Presidential Decree" under the former part of Article 344 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. Where securities are held by conducting business under Articles 336 (1) 1, 336 (1) 3, 336 (2) 2, and 336 (2) 3 and brokerage or dealing of collective investment securities;
2. Where bonds whose payments of principal and interest rate are guaranteed by the Government are held;
3. Where securities are held by the exercise of shareholder's rights and collateral rights (excluding cases where the period of holding securities exceeds one year);
4. Where corporate bonds whose remaining maturities are not more than three years are held;
5. Where securities which are acquired by debt-equity swap of the existing amount of credit extension (including convertible bonds) as prescribed and publicized by the Financial Services Commission are held;
6. Where asset-backed securities whose underlying assets are the assets owned by the merchant bank concerned pursuant to the Asset-Backed Securitization Act are held; or
7. Where collective investment securities which are prescribed and publicized by the Financial Services Commission are held.
(2) The term "conditions prescribed by the Presidential Decree" under Article 344 (2) of the Act shall mean the method setting separate investment limits for the securities falling under each of the following subparagraphs:
1. Securities (including securities deposit receipts related thereto) issued by the same company;
2. Securities (including securities deposit receipts related thereto) issued by a major shareholder of a merchant bank or the specially-related person thereof;
3. Unlisted securities (including securities deposit receipts related thereto) sold by a major shareholder of a merchant bank and the specially-related person thereof; and The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Derivative-linked securities and other securities prescribed and publicized by the Financial Services Commission.
Article 340 (Prohibitions of Fund Support)
The term "activities prescribed by the Presidential Decree" under Article 345 (1) 3 of the Act shall mean activities using the transactions of over-the-counter derivatives, trust contracts, linked transactions, etc. for the purpose of avoiding the limits under the provisions of Articles 342 through Article 344 of the Act.
Article 341 (Holding of Assets Required for Reserve) (1) A merchant bank shall hold assets required for reserve not less than the amount equivalent to 5/100 of the aggregate amount of those prescribed under each of the following subparagraphs in accordance with Article 346 of the Act:
1. Amount of issued bills (referring to bills issued upon the request of investors after the merchant bank concerned designates the merchant bank itself as an issuer and payer) and issued debt instruments;
2. Deposited amount on bill management accounts; and
3. Par value of commercial papers sold with the guarantee of collateral. (2) The assets required for reserve under paragraph (1) shall be assets falling under each of the following subparagraphs which are not provided as collateral for another person:
1. Cash;
2. Government bonds, municipal bonds or special bonds; and
3. Bonds whose payments of principal and interest are guaranteed by the Government. (3) Matters on the methods of calculating assets required for reserve shall be prescribed and publicized by the Financial Services Commission.
Article 342 (Restrictions on Acquisition of Real Restate) (1) A merchant bank shall dispose of real estate acquired other than for business purposes or acquired pursuant to the proviso of Article 347 (1) of the Act within one year of the acquisition thereof pursuant to Article 347 (3) of the Act, or request that the Korea Asset Management Corporation established in accordance with the Efficient Disposal of Non-performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation
sell such real estate: Provided, That the same shall not apply to cases where there are inevitable causes for being unable to dispose of the real estate or to request its sale as prescribed and publicized by the Financial Services Commission.
(2) The scope of real estate for business purposes under Article 347 (1) of the Act shall be real estate other than the real estate under Article 49 (1) 1 of the Enforcement Decree of the Corporate Tax Act.
Article 343 (Corporations Subject to Prohibition on Holding Concurrent Positions) The term "profit-making corporation prescribed by the Presidential Decree" under Article 348 of the Act shall mean those falling under each of the following subparagraphs:
1. Financial institutions falling under subparagraph 1 of Article 2 of the Act on the Structural Improvement of the Financial Industry;
2. Corporations of which consolidated financial statements under subparagraph 2 of Article 1-2 of the Act on External Audit of Stock Companies are required to be prepared by the merchant bank concerned as the subsidiary of the merchant bank: Provided, That the following items shall be excluded:
(a) Where any employee of the corporations concurrently holds the post of officer in, or is dispatched to, a subsidiary financial institution which is located in a foreign country; and
(b) Where any employee of the corporations holds the post of officer in, or is dispatched to, a subsidiary in order to facilitate the rationalization of management or restructuring of the subsidiary;
3. An accounting firm under the Certified Public Accountant Act;
4. Major shareholders of the merchant bank concerned and a corporation in the relations falling under each subparagraph of Article 337 (1) of this Decree with the major shareholders;
5. Corporations which accept credit extension from the merchant bank in excess of 10/100 of equity capital of the merchant bank; and
6. Other profit-making corporations not falling under subparagraphs 1 through 5 which are prescribed and publicized by the Financial Services Commission as likely to have the The Enforcement Decree of the Financial Investment Services and Capital Market Act possibility of a conflict of interests because a full-time officer of a merchant bank is engaged in full-time work of other profit-making corporations. Article 344 (Measures against Merchant Banks)
(1) The term "cases prescribed by the Presidential Decree" under Article 354 (1) 4 of the Act shall mean cases falling under any of the following subparagraphs:
1. Cases falling under subparagraph 10 of Appendix 10 of the Act where a merchant bank extends credit to major shareholders in violation of Article 343 (1) of the Act;
2. Cases falling under subparagraph 21 of Appendix 10 of the Act where a merchant bank conducts any activity falling under any subparagraph of Article 35 of the Act in violation of Article 35 of the Act which is applied to Article 350 of the Act;
3. Cases falling under subparagraph 3 of Appendix 14 of this Decree where a merchant bank violates an obligation to prohibit using undisclosed material information under Article 174 of the Act;
4. Cases falling under subparagraph 4 of Appendix 14 of this Decree where a merchant bank violates an obligation to prohibit market manipulation, etc. under Article 176 of the Act; or
5. Cases falling under subparagraph 5 of Appendix 14 of this Decree where a merchant bank violates an obligation to prohibit unfair trading, etc. under Article 178 of the Act. (2) The term "finance-related Acts and subordinates statutes prescribed by the Presidential Decree" under Article 354 (1) 5 of the Act shall mean the Acts and subordinates statutes falling under each of the subparagraphs of Article 373 (2) of this Decree. (3) The term "case prescribed by the Presidential Decree" under Article 354 (1) 5 of the Act shall mean cases falling under each of the subparagraphs of Article 373 (3) of this Decree. (4) The term "others prescribed by the Presidential Decree" under Article 354 (1) 6 of the Act shall mean cases falling under any of the following subparagraphs:
1. Where a merchant bank fails to carry on the authorized business for more than six months continuously without any justifiable cause;
2. Where a merchant bank receives any money, etc. from another person or acquires the money, etc. to be distributed to another person in an unfair manner with respect to the business;
3. Where a merchant bank fails to correct the imposed conditions within one month (where any correction period exceeding one month is set forth when the suspension of business is issued, referring to such correction period) of the date when the suspension of business under Article 354 (2) 1 of the Act is issued; or
4. Where the same or similar activities in violation are committed continuously or repeatedly. (5) The term "measures prescribed by the Presidential Decree" under Article 354 (2) 7 of the Act shall mean those falling under any of the following subparagraphs:
1. Discontinuing any or all businesses of branches and other business offices or closing branches and other business offices;
2. Requesting or recommending the improvement of management or business methods;
3. Requesting compensation;
4. Where there is any violation of the Act, reporting it or notifying investigating authorities;
5. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
6. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (6) The term "measures prescribed by the Presidential Decree" under Article 354 (3) 6 and Article 354 (4) 7 of the Act shall mean those falling under subparagraphs 4 through 6 of paragraph (5), respectively.
(7) The term "others prescribed by the Presidential Decree" under subparagraph 32 of Appendix 10 of the Act shall mean those falling under any of the subparagraphs of Appendix
14. Chapter 5 Fund Brokerage Company
Article 345 (Authorization of Fund Brokerage Companies) (1) The term "financial institutions, etc. prescribed by the Presidential Decree" under Article 355 (1) of the Act shall be as follows:
1. A person under Articles 10 (2) 1 through 10 (2) 7, 10 (2) 9 through 10 (2) 11, 10 (2) 13, 10 (2) 14, 10 (2) 16, and 10 (2) 17 of this Decree;
2. A person under Article 10 (3) 2; and The Enforcement Decree of the Financial Investment Services and Capital Market Act
3. Others prescribed and publicized by the Financial Services Commission as equivalent to those under subparagraphs 1 and 2.
(2) The term "minimum amount prescribed by the Presidential Decree" under Article 355 (2) 2 of the Act shall be two billion won.
(3) The term "eased requirements prescribed by the Presidential Decree" under Article 355 (9) of the Act shall be as follows:
1. In the application of the requirements under Article 355 (2) 2 of the Act, the fund brokerage company shall maintain not less than 70/100 of the minimum capital under paragraph (2). In such a case, the requirements shall be applied at the end of every fiscal year and a fund brokerage company that fails to meet the requirements at the end of a specific fiscal year shall be regarded as meeting the requirements by the end of the next fiscal year; and
2. In the application of the requirements under Article 355 (2) 6 of the Act, the fund brokerage company shall maintain the requirements under Articles 19 (1) 2 (a) through 19 (1) 2 (c) of this Decree.
(4) Articles 16 (4), 16 (5), 16 (6) (excluding subparagraph 1), 16 (10), and Article 17 (excluding subparagraphs 4 and 9 of paragraph (1), subparagraphs 5 and 11 of paragraph (2), and paragraph (3)) of this Decree shall apply to the authorization requirements for a fund brokerage company.
Article 346 (Restrictions on Activities of Fund Brokerage Companies) (1) The term "financial investment services prescribed by the Presidential Decree" under Article 357 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. Intermediating or arranging for certificates of deposit denominated in Korean won or acting as an agent for that purpose;
2. Intermediating or arranging for purchases and sales of securities with repurchase agreement, or acting as an agent for that purpose;
3. Intermediating or arranging for commercial papers, or acting as an agent for that purpose;
4. Intermediating or arranging for over-the-counter derivatives whose underlying assets are foreign currencies or interest rates, or acting as an agent for that purpose; or
5. Brokerage under 2i-11-2i among the authorized business units under Appendix 1 of this Decree.
(2) Where financial institutions, etc. prescribed and publicized by the Financial Services Commission borrow money for call transactions (referring to short-term trading of funds among financial institutions within 90 days; hereafter in this Chapter, the same shall apply), a fund brokerage company shall not arrange for or intermediate such borrowings, or act as an agent for that purpose.
(3) A fund brokerage company shall, in the case of fund brokerage, carry on simple brokerage (referring to the work that a fund brokerage company does to intermediate the transactions between a lender and a borrower in return for a certain commissions): Provided, That in the case of the intermediary of call transactions, the fund brokerage company may carry on brokerage service (referring to the brokerage in the form of transactions prescribed and publicized by the Financial Services Commission) within the minimum scope prescribed and publicized by the Financial Services Commission in order to facilitate such call transactions. (4) A fund brokerage company shall report the details of brokerage business to the Financial Services Commission on a monthly basis under the conditions prescribed and publicized by the Financial Services Commission.
Article 347 (Measures against Fund Brokerage Companies) (1) The term "case prescribed by the Presidential Decree" under Article 359 (1) 6 of the Act shall mean those falling under any of the following subparagraphs:
1. Cases falling under subparagraph 1 of Appendix 11 of the Act where a fund brokerage company provides financial investment services in violation of Article 357 (1) of the Act;
2. Cases falling under subparagraph 3 of Appendix 15 of this Decree where a fund brokerage company violates an obligation to prohibit using undisclosed material information under Article 174 of the Act;
3. Cases falling under subparagraph 4 of Appendix 15 of this Decree where a fund brokerage company violates an obligation to prohibit market manipulation, etc. under Article 176 of the Act; or
The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Cases falling under subparagraph 5 of Appendix 15 of this Decree where a fund brokerage company violates an obligation to prohibit unfair trading, etc. under Article 178 of the Act.
(2) The term "finance-related Acts and subordinate statutes, etc. prescribed by the Presidential Decree" under Article 359 (1) 7 of the Act shall mean those falling under any subparagraph of Article 373 (2) of this Decree.
(3) The term "case prescribed by the Presidential Decree" under Article 359 (1) 7 of the Act shall mean those falling under any subparagraph of Article 373 (3) of this Decree. (4) The term "others prescribed by the Presidential Decree" under Article 359 (1) 8 of the Act shall mean those falling under any of the following subparagraphs:
1. Where a fund brokerage company fails to commence the operation within six months of the date on which the authorization is obtained, or fails to carry on the authorized business without any reasonable cause for more than six months after the operation is commenced;
2. Where a fund brokerage company receives any money, etc. from another person or acquires the money, etc. to be distributed to another person in an unfair manner with respect to the business;
3. Where a fund brokerage company fails to correct the imposed conditions within one month (where any correction period exceeding one month is set forth when the suspension of business is issued, referring to such correction period) of the date when the suspension of business under Article 359 (2) 1 of the Act is issued; or
4. Where the same or similar activities in violation are committed continuously or repeatedly. (5) The term "measures prescribed by the Presidential Decree" under Article 359 (2) 7 of the Act shall mean those falling under any of the following subparagraphs:
1. Discontinuing any or all businesses of branches and other business offices or closing branches and other business offices;
2. Requesting or recommending the improvement of management or business methods;
3. Requesting compensation;
4. Where there is any violation of the Act, reporting it or notifying investigating authorities;
5. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
6. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (6) The term "measures prescribed by the Presidential Decree" under Article 359 (3) 6 and Article 359 (4) 7 of the Act shall mean those falling under subparagraphs 4 through 6 of paragraph (5), respectively.
(7) The term "others prescribed by the Presidential Decree" under subparagraph 22 of Appendix 11 of the Act shall mean those falling under any of the subparagraphs of Appendix 15 of this Decree.
Chapter 6 Short-term Finance Company
Article 348 (Businesses of Short-term Finance Companies) (1) The term "period prescribed by the Presidential Decree" under Article 360 (1) of the Act shall be one year.
(2) The term "business prescribed by the Presidential Decree" under Article 360 (1) of the Act shall mean the business of lending money in return for taking securities as collateral. (3) The term "financial institution prescribed by the Presidential Decree" under Article 360 (2) 1 of the Act shall be as follows:
1. The Industrial Bank of Korea established in accordance with the Industrial Bank of Korea Act;
2. A financial institution which merges with a merchant bank among those falling under subparagraph 1 of Article 2 of the Act on the Structural Improvement of the Financial Industry; and
3. Where a merchant bank is converted into another financial institution pursuant to Article 3 of the Act on the Structural Improvement of the Financial Industry, the financial institution. (4) The term "amount prescribed by the Presidential Decree" under Article 360 (2) 2 of the Act shall be 30 billion won.
(5) The term "eased requirements prescribed by the Presidential Decree" under Article 360 (9) of the Act shall be as follows:
1. In the application of the requirements under Article 360 (2) 2 of the Act, the short-term finance company shall maintain not less than 70/100 of the minimum capital under The Enforcement Decree of the Financial Investment Services and Capital Market Act paragraph (4). In such a case, the requirements shall be applied at the end of every fiscal year and a short-term finance company that fails to meet the requirements at the end of a specific fiscal year shall be regarded as meeting the requirements by the end of the next fiscal year; and
2. In the application of the requirements under Article 360 (2) 5 of the Act, the fund brokerage company shall maintain the requirements under Articles 19 (1) 2 (a) through 19 (1) 2 (c) of this Decree. In such a case, Article 19 (2) of this Decree shall apply. (6) Articles 16 (4) (excluding subparagraph 2), 16 (5), 16 (6) and 16 (10) and Article 17 (excluding subparagraphs 4 and 9 of paragraph (1), subparagraphs 5 and 11 of paragraph (2) and paragraph (3)) shall apply to the authorization requirements of a short-term finance company.
Article 349 (Measures against Short-term Finance Companies) (1) The term "case prescribed by the Presidential Decree" under Article 364 (1) 6 of the Act shall mean cases falling under any of the following subparagraphs:
1. Cases falling under subparagraph 3 of Appendix 16 of this Decree where a short-term finance company violates an obligation to prohibit using undisclosed material information under Article 174 of the Act;
2. Cases falling under subparagraph 4 of Appendix 16 of this Decree where a short-term finance company violates an obligation to prohibit market manipulation, etc. under Article 176 of the Act; or
3. Cases falling under subparagraph 5 of Appendix 16 of this Decree where a short-term finance company violates an obligation to prohibit unfair trading, etc. under Article 178 of the Act;
(2) The term "finance-related Acts and subordinate statutes, etc. prescribed by the Presidential Decree" under Article 364 (1) 7 of the Act shall mean those falling under each subparagraph of Article 373 (2) of this Decree.
(3) The term "case prescribed by the Presidential Decree" under Article 364 (1) 7 of the Act shall mean those falling under any subparagraph of Article 373 (3) of this Decree. (4) The term "others prescribed by the Presidential Decree" under Article 364 (1) 8 of the Act shall mean those falling under any of the following subparagraphs:
1. Where a short-term finance company fails to commence the operation within six months of the date on which the authorization is obtained, or fails to carry on the authorized business without any reasonable cause for more than six months after the operation is commenced;
2. Where a short-term finance company receives any money, etc. from another person or acquires the money, etc. to be distributed to another person in an unfair manner with respect to the business;
3. Where a short-term finance company fails to correct the imposed conditions within one month (where any correction period exceeding one month is set forth when the suspension of business is issued, referring to such correction period) of the date when the suspension of business under Article 364 (2) 1 of the Act is issued; or
4. Where the same or similar activities in violation are committed continuously or repeatedly. (5) The term "measures prescribed by the Presidential Decree" under Article 364 (2) 7 of the Act shall mean those falling under each of the following subparagraphs:
1. Discontinuing any or all businesses of branches and other business offices or closing branches and other business offices;
2. Requesting or recommending the improvement of management or business methods;
3. Requesting compensation;
4. Where there is any violation of the Act, reporting it or notifying investigating authorities;
5. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
6. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (6) The term "measures prescribed by the Presidential Decree" under Article 364 (3) 6 and Article 364 (4) 7 of the Act shall mean those falling under subparagraphs 4 through 6 of paragraph (5), respectively.
(7) The term "others prescribed by the Presidential Decree" under subparagraph 19 of Appendix 12 of the Act shall mean those falling under any of the subparagraphs of Appendix 16 of this Decree.
Chapter 7 Transfer Agent
The Enforcement Decree of the Financial Investment Services and Capital Market Act Article 350 (Registration Requirements)
(1) The term "physical facilities prescribed by the Presidential Decree" under Article 365 (2) 2 of the Act shall mean those falling under the following subparagraphs:
1. Data-processing equipment, office space and office equipment necessary for making changes of entries in a register as an agent; and
2. Supplementary facilities necessary for the business process to continue without interruption even if power outages, fire, etc. occur. (2) The term "system to prevent a conflict of interests prescribed by the Presidential Decree" under Article 365 (2) 3 of the Act shall be as follows:
1. Business process and reporting shall be conducted in an independent manner by separating the business of making changes of entries in a register as an agent;
2. The offices for the business of making changes of entries in a register as an agent and other offices shall be separated so that information sharing is cut off; and
3. Data-processed materials on the business of making changes of entries in a register as an agent and other businesses shall be kept, managed, and accessed in an independent manner in order to prevent the sharing of such materials. Article 351 (Procedures of Registration)
(1) A registration application under Article 365 (3) of the Act shall contain those falling under each of the following subparagraphs:
1. Trade name and location of a company;
2. Matters on capital;
3. Matters on officers;
4. Methods of conducting business;
5. Matters on physical facilities under Article 350 (1) of this Decree;
6. Matters on a system to prevent a conflict of interests under Article 350 (2) of this Decree; and
7. Others prescribed and publicized by the Financial Services Commission as necessary for review for a registration.
(2) The application under paragraph (1) shall accompany documents falling under each of the following subparagraphs. In such a case, the Financial Services Commission shall verify the certified copy of corporate register through administrative data matching pursuant to Article 21 (1) or 22-2 (1) of the E-Government Act and shall require the applicant to submit the certified copy when the applicant does not consent to the verification in such a way:
1. Articles of incorporation;
2. Documents indicating the names or titles of shareholders and the number of stocks held by such shareholders;
3. Financial statements and the addenda thereof for the latest three business years (in the case of a corporation for which three business years have yet to pass since its establishment, referring to the financial statements and the addenda thereof from the establishment to the latest business year);
4. Documents indicating the current status of physical facilities;
5. Documents to confirm whether a system to prevent a conflict of interests under Article 350 (2) of this Decree is established; and
6. Others prescribed and publicized by the Financial Services Commission as necessary for review for a registration.
(3) The Financial Services Commission shall, when it receives an application under paragraph (1), confirm whether the contents of the application for registration under Article 365 (3) of the Act are true, and then review whether the application meets the registration requirements under Article 365 (2) of the Act.
(4) In addition to the matters prescribed under paragraphs (1) through (3), other necessary matters on the application for and review of the registration of a transfer agent, the form of the application, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 352 (Measures against Transfer Agents)
(1) The term "cases prescribed by the Presidential Decree" under Article 369 (1) 5 of the Act shall mean those falling under any of the following subparagraphs: The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Cases falling under subparagraph 3 of Appendix 17 of this Decree where a transfer agent violates an obligation to prohibit using undisclosed material information under Article 174 of the Act;
2. Cases falling under subparagraph 4 of Appendix 17 of this Decree where a transfer agent violates an obligation to prohibit market manipulation, etc. under Article 176 of the Act; or
3. Cases falling under subparagraph 5 of Appendix 17 of this Decree where a transfer agent violates an obligation to prohibit unfair trading, etc. under Article 178 of the Act. (2) The term "finance-related Acts and subordinate statutes prescribed by the Presidential Decree" under Article 369 (1) 6 of the Act shall mean the Acts and subordinate statutes falling under each of the subparagraphs of Article 373 (2) of this Decree. (3) The term "cases prescribed by the Presidential Decree" under Article 369 (1) 6 of the Act shall mean cases falling under each of the subparagraphs of Article 373 (3) of this Decree. (4) The term "cases prescribed by the Presidential Decree" under Article 369 (1) 7 of the Act shall mean cases falling under any of the following subparagraphs:
1. Where a transfer agent fails to commence the operation within six months of the date on which the authorization is obtained, or fails to carry on the authorized business without any reasonable cause for more than six months after the operation is commenced;
2. Where a transfer agent receives any money, etc. from another person or acquires the money, etc. to be distributed to another person in an unfair manner with respect to the business;
3. Where a transfer agent fails to correct the imposed conditions within one month (where any correction period exceeding one month is set forth when the suspension of business is issued, referring to such correction period) of the date when the suspension of business under Article 369 (2) 1 of the Act is issued; or
4. Where the same or similar activities in violation are committed continuously or repeatedly. (5) The term "measures prescribed by the Presidential Decree" under Article 369 (2) 7 of the Act shall mean those falling under any of the following subparagraphs:
1. Discontinuing any or all businesses of branches and other business offices or closing branches and other business offices;
2. Requesting or recommending the improvement of management or business methods;
3. Requesting compensation;
4. Where there is any violation of the Act, reporting it or notifying investigating authorities;
5. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
6. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (6) The term "measures prescribed by the Presidential Decree" under Article 369 (3) 6 and Article 369 (4) 7 of the Act shall mean those falling under subparagraphs 4 through 6 of paragraph (5), respectively.
(7) The term "others prescribed by the Presidential Decree" under subparagraph 18 of Appendix 13 of the Act shall mean those falling under any of the subparagraphs of Appendix 17 of this Decree.
Chapter 8 Financial Services-related Organization Article 353 (Establishment of Financial Services-related Organizations) (1) The term "persons prescribed by the Presidential Decree" under Article 370 (1) of the Act shall mean those falling under either of the following subparagraphs:
1. Introducing brokers; or
2. Experts. (2) A person who intends to obtain permission for the establishment of a financial services- related organization shall file an application containing the matters falling under each of the following subparagraphs with the Financial Services Commission pursuant to Article 370 (3) of the Act:
1. Name;
2. Purpose of establishment;
3. Location of business offices;
4. Matters on the status of properties and the prospect of earnings and expenses; and
5. Matters on promoters and officers. (3) The application under paragraph (2) shall accompany documents falling under each of the following subparagraphs. In such a case, the Financial Services Commission shall verify the certified copy of corporate register through administrative data matching pursuant to Article 21 The Enforcement Decree of the Financial Investment Services and Capital Market Act (1) or 22-2 (1) of the E-Government Act and shall require the applicant to submit the certified copy when the applicant does not consent to the verification in such a way:
1. Articles of incorporation or regulations;
2. Business plans and estimated revenues and expenses statement for the next two years;
3. Curriculum vitae and personal identification documents of a promoter; and
4. Documents indicating the types and methods of business. Article 354 (Measures against Financial Services-related Organizations) The term "cases prescribed by the Presidential Decree" under Article 372 (1) 4 of the Act shall mean cases falling under any of the following subparagraphs:
1. Where a financial services-related organization violates an obligation to prohibit using undisclosed material information under Article 174 of the Act;
2. Where a financial services-related organization violates an obligation to prohibit market manipulation, etc. under Article 176 of the Act;
3. Where a financial services-related organization violates an obligation to prohibit unfair trading, etc. under Article 178 of the Act;
4. Where a financial services-related organization rejects, interferes with, or evades an inspection under Article 419 (1) of the Act, which is applied to Article 371 of the Act; or
5. Where a financial services-related organization fails to comply with the request for reports, etc. under Article 419 (5) of the Act, which is applied to Article 371 of the Act. Part 7 The Korea Exchange
Article 355 (Abnormal Trading)
The term "abnormalities in trading prescribed by the Presidential Decree" under subparagraph 8 of Article 377 of the Act shall mean trading or activities falling under any of the following subparagraphs as likely to violate Article 174, 176, 178 or 180 of the Act in the securities market (including cases where brokerage of purchasing and selling listed stocks is conducted pursuant to Article 78 of the Act; hereafter in this Article, the same shall apply) or the derivatives market. In such a case, the trading or activity found in the course of the investigation of abnormal trading or supervision under Article 404 of the Act as likely to violate Articles 147, 172, or 173 of the Act shall be deemed abnormal trading:
1. Where there is any significant fluctuation in prices or trading volumes of traded items of securities or exchange-traded derivatives;
2. Where there is any disclosure, rumor or news which is likely to affect prices, etc. of traded items of securities or exchange-traded derivatives; or
3. Where it is likely to undermine sound trade practice on the securities market or the derivatives market.
Article 356 (Qualifications of Officers)
(1) The term "persons who have experience and knowledge of finance as prescribed by the Presidential Decree and who are unlikely to undermine the sound management of the Exchange and fair trade order" under Article 380 (3) of the Act shall mean the persons who meet the requirements falling under any of the following subparagraphs:
1. A person who has worked in total not less than 15 years at the Bank of Korea or the institutions subject to inspection (including foreign financial institutions equivalent thereto) provided for under Article 38 of the Act on the Establishment, etc. of Financial Services Commission;
2. A person who has worked as a senior public officer in a field related to finance or economy or as a second grade public officer or in a higher position;
3. A person who has worked in total not less than 15 years as vice professor or in a higher position, or other positions equivalent thereto at research institutes or universities in a field related to finance or economy in the Republic of Korea or foreign countries; or
4. A person who has the experience and knowledge equivalent to the persons under subparagraphs 1 through 3.
(2) The term "cases prescribed by the Presidential Decree" under the former part of Article 380 (4) of the Act shall mean cases where a chief executive officer appointed is found to be unable to perform his/her duties as a result of reviewing eligibility when taking into account capabilities to perform the duties, expertise, career, etc. in a comprehensive manner. (3) The term "persons prescribed by the Presidential Decree" under the latter part of Article 380 (5) of the Act shall be as follows:
The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. A person who holds stocks (limited to stocks held for the account of the largest shareholder or the specially related person thereof) for the account of the largest shareholder or the specially-related person thereof; and
2. A person (limited to the delegated rights) who delegates the exercise of voting rights (including the right to instruct the exercise of voting rights) to the largest shareholder or the specially-related person thereof.
Article 357 (Special Interests)
The term "special interest prescribed by the Presidential decree" under Article 383 (2) of the Act shall mean those falling under any of the following subparagraphs:
1. Debt-repayment guarantee;
2. Offering of collateral; or
3. Special interests that may not be regarded as necessary activities in the course of conducting normal transactions (referring to those recognized as socially-accepted common transactions in terms of transaction conditions where such activities are related to the business operation of the counter party or incidental to the business achievement of the counter party).
Article 358 (Members of Director Nomination Committee) (1) The term "stock-listed corporations on the securities market as prescribed by the Presidential Decree" under Article 385 (2) 3 of the Act shall mean a stock-listed corporation recommended by an organization whose members are stock-listed corporations on the securities market.
(2) The term "stock-listed corporations on the KOSDAQ as prescribed by the Presidential Decree" under Article 385 (2) 4 of the Act shall mean a stock-listed corporation recommended by an organization whose members are stock-listed corporations on the KOSDAQ. Article 359 (Classification of Members)
The term "members prescribed by the Presidential Decree" under Article 387 (2) 3 of the Act shall mean those falling under any of the following subparagraphs:
1. Securities trading members;
2. Derivatives trading members;
3. Members participating in settling or trading a part of items or a part of the securities market;
4. Members participating in settling or trading a part of items or a part of the derivatives market; or
5. Other members prescribed by the Membership Regulations under Article 387 (1) of the Act (hereinafter referred to as "Membership Regulations"). Article 360 (Securities Subject to Disclosure Regulations) The term "securities prescribed by the Presidential Decree" under the former part of Article 391 (1) of the Act shall mean those falling under any of the following subparagraphs:
1. Corporate bonds;
2. Derivative-linked securities;
3. Securities deposit receipts; or
4. Others prescribed by the Disclosure Regulations under Article 391 (1) of the Act. Article 361 (Request for Providing Information)
The Exchange may request that any administrative agency or any other related agency provide necessary information pursuant to Article 392 (2) of the Act by using documents (including electronic documents) or FAX under the conditions falling under each of the following subparagraphs. In such a case, the request shall contain the reasons for requesting the information:
1. Agencies designated as a clearing house under Article 38 of the Bills of Exchange and Promissory Notes Act or Article 31 of the Check Act with respect to the default of bills or checks or the suspension or prohibition of current account transactions;
2. The competent court with respect to the application for or decision on workout process under the Debtor Rehabilitation and Bankruptcy Act, the filing of lawsuits likely to have material impact on listed securities, or the occurrence of reasons for dissolution;
3. The bank with respect to the commencement of supervising the corporation concerned by a bank; and
The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Administrative agencies or other related agencies that hold the information concerned with respect to the request for report or confirmation under Article 391 (2) 1 or 391 (2) 3 of the Act.
Article 362 (Accumulation and Management of Joint Compensation Fund for Damages) (1) The amount of the total reserve of the joint compensation fund (hereinafter referred to as "joint fund") under Article 394 (1) of the Act, the rate of the reserve for each member, and the method of accumulating the reserve, shall be prescribed by the Membership Regulations of the Exchange, when taking into account settlement risks of each securities market and derivatives market, settlement risks of each member, and other circumstances. (2) Where the Exchange appropriates the joint fund for compensating the damages pursuant to Article 399 (2) of the Act, the joint fund set aside by a member who has violated the transaction contract shall be used in preference, and then the joint fund set aside by other members shall be used in order to make up for the shortage in proportion to the reserve of such members.
(3) The Exchange shall manage the joint fund set aside by members by keeping separate accounts for each member, and shall manage such accounts separately from other properties. (4) Where any member withdraws from the Exchange, the Exchange shall refund the joint fund set aside by such a member under the conditions prescribed by the Membership Regulations of the Exchange.
(5) The Exchange shall manage the joint fund in a way falling under any of the following subparagraphs:
1. Purchasing Government bonds, municipal bonds, or monetary stabilization bonds issued by the Bank of Korea under Article 69 of The Bank of Korea Act;
2. Purchasing guaranteed corporate bonds;
3. Lending or depositing the joint fund to securities finance companies, or purchasing corporate bonds issued by securities finance companies; or
4. Depositing the joint fund in banks. (6) The Exchange shall include any proceeds incurred from managing the joint fund pursuant to paragraph (5) in the principal of the joint fund as prescribed by the Membership Regulations of the Exchange.
(7) In addition to the matters prescribed under paragraphs (1) through (6), other necessary matters on the reserve, management and operation of the joint fund shall be prescribed by the Membership Regulations of the Exchange.
(8) The term "guaranteed corporate bonds" under subparagraph 2 of paragraph (5) shall mean the corporate bonds whose payments of principal and interest are guaranteed by financial institutions falling under any of the following subparagraphs:
1. Banks;
2. The Korea Development Bank under the Korea Development Bank Act;
3. The Industrial Bank of Korea under the Industrial Bank of Korea Act;
4. Insurance companies;
5. Dealers;
6. Securities finance companies;
7. Merchant banks;
8. Credit guarantee funds (in the case of guaranteed corporate bonds whose payment is guaranteed by credit guarantee funds, including the corporate bonds guaranteed at the expense of credit guarantee funds for infrastructure pursuant to the Act on Private Participation in Infrastructure) under the Credit Guarantee Fund Act; or
9. Technology credit guarantee funds under the Technology Credit Guarantee Fund Act. Article 363 (Exercise of Right to Indemnification) (1) The Exchange shall, when it compensates for damages pursuant to Article 399 (1) of the Act, report the fact to the Financial Services Commission, and exercise the right to indemnification against a member who has violated a transaction contract in a method of making up for the joint fund promptly.
(2) Where a member who has violated a transaction contract indemnifies damages, the Exchange shall make up for the used portion in the joint fund set aside by other members in proportion to the ratio in preference, and, if there is any remainder, make up for the used portion in the joint fund set aside by the member who has violated a transaction contract. Article 364 (Publication of Quotations)
The Enforcement Decree of the Financial Investment Services and Capital Market Act (1) The term "conditions prescribed by the Presidential Decree" under Article 401 of the Act other than each subparagraph shall mean the publication methods of using data-processing equipment or publishing periodicals mainly dealing with the information on the securities market and the derivatives market, including the quotations of securities and exchange-traded derivatives.
(2) The Exchange may prescribe the details necessary for the publication of quotations under Article 401 of the Act and the effective management of the information thereof. (3) The term "quotations prescribed by the Presidential Decree" under subparagraph 3 of Article 401 of the Act shall mean the substitute price under Article 192 (3) of this Decree. Article 365 (Qualifications of Chairman of Market Supervision Committee) (1) The term "persons who have experience and knowledge of finance and who are unlikely to undermine the sound management of the Exchange and fair trade order" under Article 402 (4) of the Act shall mean the persons who meet the requirements falling under any of the following subparagraphs:
1. A person who has worked in total not less than 15 years at the Bank of Korea or the institutions subject to inspection (including foreign financial institutions equivalent thereto) provided for under Article 38 of the Act on the Establishment, etc. of Financial Services Commission;
2. A person who has worked as a senior public officer in a field related to finance or economy or as a second grade public officer or in a higher position;
3. A person who has worked in total not less than 15 years as associate professor or in a higher position, or other positions equivalent thereto at research institutes or universities in a field related to finance or economy in the Republic of Korea or foreign countries; or
4. A person who has the experience and knowledge equivalent to the persons under subparagraphs 1 through 3.
(2) The term "cases prescribed by the Presidential Decree" under the former part of Article 402 (5) of the Act shall mean cases where the chairman of the market supervision committee appointed is found to be unable to perform his/her duties as a result of reviewing eligibility when taking into account capabilities to perform the duties, expertise, career, etc. in a comprehensive manner.
(3) The term "others prescribed by the Presidential Decree" under Article 402 (8) 2 of the Act shall mean those falling under any of the following subparagraphs:
1. Cases falling under subparagraph 23 of Appendix 14 of the Act where a member violates an order to submit a report or data under Article 426 (1) of the Act, or rejects, interferes with or evades an inspection;
2. Cases falling under subparagraph 24 of Appendix 14 of the Act where a member fails to comply with the request under Article 426 (2) of the Act;
3. Cases falling under subparagraph 25 of Appendix 14 of the Act where a member fails to comply with the measure under Article 426 (3) of the Act;
4. Cases falling under subparagraph 26 of Appendix 14 of the Act where a member fails to comply with the request to submit data under Article 426 (4) of the Act;
5. Cases falling under subparagraph 28 of Appendix 14 of the Act where a member fails to comply with the interrogation, seizure, or search under Article 427 (1) of the Act;
6. Cases falling under subparagraph 5 of Appendix 18 of this Decree where a member holds stocks in violation of Article 167 (1) of the Act;
7. Cases falling under subparagraph 6 of Appendix 18 of this Decree where a member exercises voting rights in violation of Article 167 (3) of the Act or violates a correction order under Article 167 (3) of the Act;
8. Cases falling under subparagraph 8 of Appendix 18 of this Decree where a member violates an obligation to prohibit using undisclosed material information under Article 174 of the Act;
9. Cases falling under subparagraph 9 of Appendix 18 of this Decree where a member violates an obligation to prohibit market manipulation, etc. under Article 176 of the Act;
10. Cases falling under subparagraph 10 of Appendix 18 of this Decree where a member violates an obligation to prohibit unfair trading, etc. under Article 178 of the Act;
11. Cases falling under subparagraph 11 of Appendix 18 of this Decree where a member effects, entrusts, or is entrusted with a short sale in violation of Article 180 of the Act;
12. Cases falling under subparagraph 13 of Appendix 18 of this Decree where a member holds stocks of the Exchange in violation of Article 406 (1) of the Act;
13. Cases falling under subparagraph 14 of Appendix 18 of this Decree where a member exercises voting rights in violation of Article 406 (3) of the Act; The Enforcement Decree of the Financial Investment Services and Capital Market Act
14. Cases falling under subparagraph 15 of Appendix 18 of this Decree where a member violates a disposal order under Article 406 (4) of the Act;
15. Cases falling under subparagraph 17 of Appendix 18 of this Decree where a member violates Membership Regulations, Securities Market Business Regulations, Derivatives Market Business Regulations, Listing Regulations, Disclosure Regulations, Market Surveillance Regulations, Dispute Resolution Regulations, or other regulations on business under Article 412 (1) of the Act;
16. Cases falling under subparagraph 23 of Appendix 18 of this Decree where a member fails to comply with the request under the main sentence of Article 384 (6) of this Decree;
17. Cases falling under subparagraph 24 of Appendix 18 of this Decree where a member receives any money, etc. from another person or acquires the money, etc. to be distributed to another person in an unfair manner with respect to the business; or
18. Cases falling under subparagraph 25 of Appendix 18 of this Decree while falling under any of the subparagraphs 1 through 3 of Appendix 21 of this Decree. Article 366 (Restrictions on Stockholding)
(1) The term "specially-related persons as prescribed by the Presidential Decree" under Article 406 (2) 2 of the Act shall mean the specially-related persons and joint holders under Article 141 (2) of this Decree. In such a case, Article 141 (3) shall apply to the qualifications for the specially-related persons.
(2) The term "cases prescribed by the Presidential Decree" under Article 406 (2) 3 of the Act shall mean those falling under any of the subparagraphs (excluding subparagraph 3) of Article 142 of this Decree.
Article 367 (Measures against the Exchange)
(1) The term "measures prescribed by the Presidential Decree" under Article 411 (1) 7 of the Act shall mean those falling under any of the following subparagraphs;
1. Requesting or recommending the improvement of management or business methods;
2. Requesting compensation;
3. Where there is any violation of the Act, reporting it or notifying investigating authorities;
4. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
5. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (2) The term "measures prescribed by the Presidential Decree" under Article 411 (2) 6 and Article 411 (3) 7 of the Act shall mean those falling under subparagraphs 3 through 5 of paragraph (1), respectively.
(3) The term "others prescribed by the Presidential Decree" under subparagraph 30 of Appendix 14 of the Act shall mean those falling under any of the subparagraphs of Appendix 18 of this Decree.
Article 368 (Market Efficiency Committee)
(1) The term "organizations prescribed by the Presidential Decree" under Article 414 (2) of the Act shall mean the corporations to which the Exchange makes contributions which are entrusted with the development and operation of data-processing systems to operate the securities market or the derivatives market.
(2) The term "invest more than the amount prescribed by the Presidential Decree" under Article 414 (2) of the Act shall mean making an investment of not less than ten billion won for developing a data-processing system such as software, hardware and the incidental facilities thereof for the operation of markets or the improvement of market infrastructure. (3) The market efficiency committee (hereafter in this Article, referred to as "the committee") under Article 414 (1) of the Act shall be composed of not more than seven members appointed by the chairman of the Financial Services Commission among private experts in the field of finance, law, accounting and data-processing.
(4) The chairman of the committee shall be elected by mutual voting among members. (5) In addition to the matters prescribed under paragraphs (3) and (4), other necessary matters on the operation and deliberation of the committee shall be prescribed by the chairman of the market efficiency committee after going through the resolution made by the committee. Part 8 Supervision and Disciplinary Action
The Enforcement Decree of the Financial Investment Services and Capital Market Act Chapter 1 Order and Approval
Article 369 (Issue Order against Financial Investment Firms) (1) The term "others prescribed by the Presidential Decree" under subparagraph 8 of Article 416 of the Act shall be as follows:
1. Matters on a system to prevent a conflict of interests under Articles 16 (8) and 21 (6) of this Decree;
2. Matters on reporting and notification necessary for supervision where a financial investment firm carries on business equivalent to financial investment services in foreign countries;
3. Matters on reporting and notification necessary for supervision where a foreign financial investment firm provides financial investment services in the Republic of Korea in accordance with Article 12 (2) 1 (b) of the Act or Articles 18 (2) 1 (b) and 18 (2) 1 (c) of the Act;
4. Matters on financial business under each subparagraph of Article 40 of the Act;
5. Matters on purchases or sales of commercial paper securities and the brokerage thereof;
6. Matters on operation of products provided by a financial investment firm;
7. Matters on business, finance and risks of a financial investment firm;
8. Matters on reporting of business of a financial investment firm;
9. Matters on the establishment of internal standards equivalent to the self-regulation conducted by the Association with respect to non-member financial investment firms in order to maintain sound trade practice and protect investors;
10. Matters on submission of the information on a person who makes transactions of derivatives to a certain degree or a person who holds an unsettled contract to a financial investment firm dealing with derivatives; and
11. Matters on deposit of properties related to liquidation of a collective investment scheme (excluding investment trusts) and other necessary matters. (2) The Financial Services Commission shall prescribe and publicize the specific standards necessary to issue orders against financial investment firms in accordance with Article 416 of the Act.
Article 370 (Approval)
(1) The term "activities prescribed by the Presidential Decree" under Article 417 (1) 8 of the Act shall mean the decrease in capital.
(2) The Financial Services Commission shall, when it intends to grant an authorization under Article 417 (1) of the Act, review whether the standards falling under each the following subparagraphs are met:
1. The financial prudence under Article 30 of the Act and standards of prudent management under Article 31 of the Act shall be met (excluding Articles 417 (1) 3, 417 (1) 6, and 417 (1) 7 of the Act);
2. The investor protection shall not to be impeded;
3. The stability of the financial market shall not be undermined;
4. The sound order of financial transactions shall not be undermined;
5. The contents and procedures shall be flawless in accordance with the Act, the Commercial Act, the Monopoly Regulation and Fair Trade Act, and finance-related Acts and subordinate statutes (referring to the finance-related Acts and subordinate statutes under Article 27 (1) of this Decree); and
6. Other standards prescribed and published by the Financial Services Commission shall be met to protect investors based on each activity falling under the subparagraphs of Article 417 (1) of the Act.
(3) A financial investment firm shall, when it intends to obtain an approval under Article 417 (1) of the Act, submit an application for approval containing the matters falling under each of the following subparagraphs:
1. Trade name;
2. Location of the head office;
3. Matters on officers;
4. Matters on the grounds, details, time, etc. of the application for approval; and
5. Other matters prescribed and publicized by the Financial Services Commission as necessary for review for approval.
(4) The application for approval under paragraph (3) shall accompany the documents falling under each of the following subparagraphs:
1. Articles of incorporation; The Enforcement Decree of the Financial Investment Services and Capital Market Act
2. Where there is any resolution made by the board of directors or the general meeting of shareholders for the grounds of applying for approval, the minutes thereof;
3. Where there is any contract related to the grounds of applying for approval, the copies thereof;
4. Other documents prescribed and publicized by the Financial Services Commission as necessary for review for approval.
(5) The Financial Services Commission shall, when it receives an approval application and accompanying documents under paragraphs (3) and (4), review the approval application and documents, make a decision on either granting or denying the approval within two months, and notify the applicant of the result and the reasons therefor in writing without delay. In such a case, the Commission may, when the application is found to be defective, request that the applicant supplement such application.
(6) In calculating the review period referred to under paragraph (5), the periods prescribed by Financial Services Commission, including the supplementation period for a defective application, shall not be added to the review period. (7) The Financial Services Commission may, when it grants an approval pursuant to paragraph (5), add necessary conditions to secure sound management and to protect investors. (8) In addition to the matters prescribed under paragraphs (1) through (7), other necessary matters on the application for and review of an approval, the form of the application, the preparation thereof, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 371 (Reporting Items)
(1) A financial investment firm, when it falls under any of the subparagraphs of Article 418 of the Act, shall report the fact to the Financial Services Commission without delay: Provided, That the Financial Services Commission may prescribe and publicize a different reporting period when taking into account the importance of the fact. (2) The term "material matter prescribed by the Presidential Decree" under subparagraph 2 of Article 418 of the Act shall mean those falling under any of the following subparagraphs:
1. Matters on the purpose of business;
2. Matters on a general meeting of shareholders, board of directors and other corporate governance of the company;
3. Matters on securities issued by the company; and
4. Others prescribed and publicized by the Financial Services Commission for the protection of investors.
(3) The term "others prescribed by the Presidential Decree" under subparagraph 13 of Article 418 of the Act shall mean those falling under any of the following subparagraphs:
1. Where capital is increased;
2. Where any punishment under Part 10 (Articles 443 through 449) of the Act is imposed;
3. When a financial investment firm becomes a party to any lawsuit that has a significant impact on the business of the financial investment firm concerned;
4. Where bankruptcy has been filed for the financial investment firm concerned or any reason for dissolution occurs;
5. Where an application for workout process is filed in accordance with the Debtor Rehabilitation and Bankruptcy Act, where the workout process is determined, or where the effect of the workout process is nullified;
6. Where any measure against tax delinquency is taken or any punishment against tax laws is imposed;
7. Where an overseas direct investment is made in accordance with the Foreign Exchange Transactions Act, or branches or other business offices in foreign countries are established;
8. Where a local business office is newly established or closed (limited to local business offices of foreign financial investment firms);
9. Where any outstanding note or check is dishonored or any current account transaction with a bank is suspended or prohibited;
10. Where any reason prescribed and publicized by the Financial Services Commission occurs to a financial investment firm with respect to overseas subsidiaries, branches, or other business offices in a foreign country;
11. Where any reason prescribed and publicized by the Financial Services Commission occurs to the head office of a foreign financial investment firm (limited to a foreign financial investment firm which has established branches and other business offices in the Republic of Korea); or
The Enforcement Decree of the Financial Investment Services and Capital Market Act
12. Where any other reason prescribed and publicized by the Financial Services Commission as likely to have a material influence on the management, properties, etc. of a financial investment firm occurs.
Chapter 2 Inspection and Measure
Article 372 (Delegation of Inspection Authority)
(1) The inspection authority that the Governor of the Financial Supervisory Service is able to delegate to the Association in accordance with Article 419 (8) of the Act shall be limited to the inspection authority on the following matters:
1. Matters on the conduct of business of experts and introducing brokers;
2. Matters on underwriting securities (limited to matters related to the business under Article 286 (1) 1 of the Act); and
3. Matters on compliance with agreements. (2) The Association shall, when it conducts the inspection authority delegated pursuant to paragraph (1), comply with the standards prescribed by the Governor of the Financial Supervisory Service on the methods and procedures of the inspection, and shall report the results to the Governor of the Financial Supervisory Service without delay when the inspection is completed.
(3) Articles 10 through 15 of the Regulations on Devolution and Entrustment of Administrative Competence shall apply to delegation of inspection authority to the Association by the Governor of the Financial Supervisory Service.
Article 373 (Measures against Financial Investment Firms) (1) The term "case prescribed by the Presidential Decree" under Article 420 (1) 6 of the Act shall mean cases falling under any of the following subparagraphs:
1. Cases falling under subparagraph 1 of Appendix 1 of the Act where a financial investment firm provides financial investment services without obtaining an authorization (including an authorization of changes) of financial investment services (excluding discretionary investment advisory service and non-discretionary investment advisory service) in violation of Article 11 of the Act;
2. Cases falling under subparagraph 21 of Appendix 1 of the Act where a financial investment firm fails to comply with the restriction on the transactions with major shareholders in violation of Article 34 (1) (excluding subparagraph 3) or 34 (2) of the Act;
3. Cases falling under subparagraph 23 of Appendix 1 of the Act where a financial investment firm conducts an activity falling under any of the subparagraphs of Article 35 of the Act in violation of Article 35 of the Act;
4. Cases falling under subparagraph 78 of Appendix 1 of the Act where a financial investment firm purchases or sells financial investment products with the property deposited by investors in violation of Article 70 of the Act;
5. Cases falling under subparagraph 79 of Appendix 1 of the Act where a financial investment firm conducts any activity falling under the subparagraphs of Article 71 of the Act in violation of Article 71(excluding subparagraph 7) of the Act;
6. Cases falling under subparagraph 90 of Appendix 1 of the Act where a financial investment firm manages collective investment property in violation of Article 81 (1) or 84 (1) of the Act;
7. Cases falling under subparagraph 92 of Appendix 1 of the Act where a financial investment firm conducts any activity falling under the subparagraphs of Article 85 in violation of Article 85 (excluding subparagraph 8) of the Act;
8. Cases falling under subparagraph 94 of Appendix 1 of the Act where a financial investment firm exercises voting rights in violation of Articles 87 (1) through 87 (5) of the Act;
9. Cases falling under subparagraph 113 of Appendix 1 of the Act where a financial investment firm conducts any activity falling under the subparagraphs of Article 98 (1) of the Act in violation of Article 98 (1) of the Act (including cases which are applied to Article 101 (4) of the Act);
10. Cases falling under subparagraph 114 of Appendix 1 of the Act where a financial investment firm conducts any activity falling under the subparagraphs of Article 98 (2) of the Act in violation of Article 98 (2) (excluding subparagraph 10) of the Act;
11. Cases falling under subparagraph 125 of Appendix 1 of the Act where a financial investment firm conducts any activity falling under the subparagraphs of Article 108 of Act in violation of Article 108 (excluding subparagraph 9) of the Act; The Enforcement Decree of the Financial Investment Services and Capital Market Act
12. Cases falling under subparagraph 130 of Appendix 1 of the Act where a financial investment firm exercises voting rights in violation of Articles 112 (2) through 112 (5) of the Act;
13. Cases falling under subparagraph 139 of Appendix 1 of the Act where a financial investment firm makes a misstatement or an omission of material matters in the notices or documents falling under any of the items (excluding items (d) and (h)) of subparagraph 139 of Appendix 1 of the Act;
14. Cases falling under subparagraph 140 of Appendix 1 of the Act where a financial investment firm fails to submit any document falling under the items (limited to items (a), (b) and (e)) of subparagraph 140 of Appendix 1 of the Act;
15. Cases falling under subparagraph 141 of Appendix 1 of the Act where a financial investment firm fails to make a public offering or secondary distribution in violation of Articles 119 (3), 119 (4), and 119 (6) of the Act;
16. Cases falling under subparagraph 153 of Appendix 1 of the Act where a financial investment firm makes a public notice in violation of Article 134 (1) or 136 (5) of the Act;
17. Cases falling under subparagraph 163 of Appendix 1 of the Act where a financial investment firm makes a misstatement or an omission of material matters (hereafter in this subparagraph, referred to as "material matters") falling under any of the subparagraphs of Article 157 of this Decree in the reports under Article 147 of the Act or an amendment statement under Article 151 (2) of the Act;
18. Cases falling under subparagraph 166 of Appendix 1 of the Act where a financial investment firm makes a misstatement or an omission of matters to materially affect a proxy decision of the person solicited (hereafter in this subparagraph, referred to as "material matter with respect to the proxy") in the form of proxy and materials under Article 154 of the Act or amended documents under Article 156 of the Act;
19. Cases falling under subparagraph 174 of Appendix 1 of the Act where a financial investment firm violates an obligation to prohibit using undisclosed material information under Article 174 of the Act;
20. Cases falling under subparagraph 175 of Appendix 1 of the Act where a financial investment firm violates an obligation to prohibit market manipulation, etc. under Article 176 of the Act;
21. Cases falling under subparagraph 176 of Appendix 1 of the Act where a financial investment firm violates an obligation to prohibit unfair trading, etc. under Article 178 of the Act;
22. Cases falling under subparagraph 261 of Appendix 1 of the Act where a financial investment firm carries on collective investment scheme service in violation of Article 250 (1) or 251 (1) of the Act;
23. Cases falling under subparagraph 273 of Appendix 1 of the Act where a financial investment firm sells foreign collective investment securities in the Republic of Korea without hiring a broker or a dealer in violation of Article 280 (1) of the Act;
24. Cases falling under subparagraph 293 of Appendix 1 of the Act where a financial investment firm carries on the business without obtaining permission or authorization in violation of Article 324 (1), 355 (1), or 360 (1) of the Act; or
25. Cases falling under subparagraph 294 of Appendix 1 of the Act where a financial investment firm establishes a market under Article 386 (1) of the Act or any other similar facility, or where a financial investment firm trades securities or exchange-traded derivatives through such similar facilities in violation of Article 386 (2) of the Act. (2) The term "finance-related Acts and subordinate statutes, etc. designated by the Presidential Decree" under Article 420 (1) 7 of the Act shall be as follows:
1. The Act on Real Name Financial Transactions and Guarantee of Secrecy;
2. The Criminal Act; and
3. The Act on the Aggravated Punishment, etc. of Specific Economic Crimes. (3) The term "case prescribed by the Presidential Decree" under Article 420 (1) 7 of the Act shall mean those falling under any of the following subparagraphs:
1. Cases falling under item (b) of subparagraph 1 of Appendix 21 of this Decree where a financial investment firm provides or reveals information concerning the contents of financial transactions, or requests such information in violation of the main sentence of Article 4 (1) of the Act on Real Name Financial Transactions and Guarantee of Secrecy;
2. Cases falling under item (c) of subparagraph 1 of Appendix 21 of this Decree where a financial investment firm fails to refuse a request for transaction information in violation of Article 4 (3) of the Act on Real Name Financial Transactions and Guarantee of Secrecy; The Enforcement Decree of the Financial Investment Services and Capital Market Act
3. Cases falling under item (d) of subparagraph 1 of Appendix 21 of this Decree where a financial investment firm provides or reveals the transaction information to other persons, or uses such information for a purpose other than the transaction itself, or requests such transaction information in violation of the main sentence of Article 4 (4) of the Act on Real Name Financial Transactions and Guarantee of Secrecy;
4. Cases falling under item (e) of subparagraph 1 of Appendix 21 of this Decree where a financial investment firm provides or reveals transaction information to other persons in violation of Article 4 (5) of the Act on Real Name Financial Transactions and Guarantee of Secrecy;
5. Cases falling under item (a) of subparagraph 2 of Appendix 21 of this Decree where a financial investment firm violates Articles 214 through 217 of the Criminal Act;
6. Cases falling under item (b) of subparagraph 2 of Appendix 21 of this Decree where a financial investment firm violates Article 223 (limited to cases where Articles 214 through 217 of the Criminal Act are violated) of the Criminal Act;
7. Cases falling under item (d) of subparagraph 2 of Appendix 21 of this Decree where a financial investment firm violates Article 355, 356, or 357 (1) of the Criminal Act;
8. Cases falling under item (f) of subparagraph 2 of Appendix 21 of this Decree where a financial investment firm violates Article 359 (limited to cases where Article 355, 356, or 357 (1) of the Criminal Act are violated) of the Criminal Act;
9. Cases falling under item (a) of subparagraph 3 of Appendix 21 of this Decree where a financial investment firm violates Article 3 (1) (limited to cases related to Article 355 or 356 of the Criminal Act) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes;
10. Cases falling under item (b) of subparagraph 3 of Appendix 21 of this Decree where a financial investment firm violates Articles 5 (1) through 5 (3) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes;
11. Cases falling under item (c) of subparagraph 3 of Appendix 21 of this Decree where a financial investment firm violates Article 7 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes;
12. Cases falling under item (d) of subparagraph 3 of Appendix 21 of this Decree where a financial investment firm violates Article 8 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes; or
13. Cases falling under item (e) of subparagraph 3 of Appendix 21 of this Decree where a financial investment firm violates Article 9 (3) of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes.
(4) The term "others prescribed by the Presidential Decree" under Article 420 (1) 8 of the Act shall mean those falling under any of the following subparagraphs:
1. Where a financial investment firm fails to commence the operation within six months of the date on which the authorization is obtained, or fails to carry on the authorized business without any reasonable cause for more than six months after the operation is commenced;
2. Where a financial investment firm receives any money, etc. from another person or acquires the money, etc. to be distributed to another person in an unfair manner with respect to the business;
3. Where a financial investment firm fails to correct the imposed conditions within one month (where any correction period exceeding one month is set forth when the suspension of business is issued, referring to such correction period) of the date when the suspension of business under Article 420 (3) 1 of the Act is issued;
4. Where a financial investment firm violates any contract for the purchases, sales, or other transactions on the securities market or the derivatives market, or fails to execute any settlement (limited to brokers or dealers who are the members of the Exchange); or
5. Where the same or similar activities in violation are committed continuously or repeatedly. (5) The term "measures prescribed by the Presidential Decree" under Article 420 (3) 7 of the Act shall mean those falling under any of the following subparagraphs:
1. Discontinuing any or all businesses of branches and other business offices, or closing branches and other business offices;
2. Requesting or recommending the improvement of management or business methods;
3. Requesting compensation;
4. Where there is any violation of the Act, reporting it or notifying investigating authorities;
5. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
The Enforcement Decree of the Financial Investment Services and Capital Market Act
6. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (6) The term "others prescribed by the Presidential Decree" under subparagraph 312 of Appendix 1 of the Act shall mean those falling under any of the subparagraphs of Appendix 5 of this Decree.
Article 374 (Measures against Officers and Employees) (1) The term "others prescribed by the Presidential Decree" under subparagraph 312 of Appendix 1 of the Act referred to under Articles 422 (1) and 422 (2) of the Act shall mean cases falling under any subparagraph of Appendix 5 of this Decree. (2) The term "measures prescribed by the Presidential Decree" under Article 422 (1) 6 and Article 422 (2) 7 of the Act shall mean the measures falling under any of the following subparagraphs:
1. Where there is any violation of the Act, reporting it or notifying investigating authorities;
2. Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
3. Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. Chapter 3 Investigation
Article 375 (Request for Submitting Data to Financial Investment Firms) Where the Financial Services Commission (where Articles 172 through 174, 176, 178, and 180 of the Act are violated, referring to the Securities and Futures Commission; hereafter in Articles 376 and 377, the same shall apply) requests that a financial investment firm, financial services-related organization, or the Exchange submit necessary data, the Commission shall use written documents indicating the purpose, the kind, type, and item of financial investment products subject to the inspection, the type, the period of transactions, etc. pursuant to Article 426 (4) of the Act.
Article 376 (Measures Following Investigation Results)
The term "measures prescribed by the Presidential Decree" under Article 426 (5) of the Act shall mean the measures falling under each of the following subparagraphs:
1. In the case of financial investment firms, measures prescribed under Articles 420 (1) and 420 (3) of the Act, or Articles 422 (1) and 422 (2) of the Act;
2. In the case of the Exchange, measures prescribed under Article 411 (1) through (3) of the Act;
3. In the case of the Association, measures prescribed under Articles 293 (1) through (3) of the Act;
4. In the case of the Depository, measures prescribed under Articles 307 (1) through (3) of the Act;
5. In the case of securities finance companies, measures prescribed under Articles 335 (1) through 335 (4) of the Act;
6. In the case of merchant banks, measures prescribed under Articles 354 (1) through 354 (4) of the Act;
7. In the case of fund brokerage companies, measures prescribed under Articles 359 (1) through (4) of the Act;
8. In the case of short-term finance companies, measures prescribed under Articles 364 (1) through 364 (4) of the Act;
9. In the case of transfer agencies (referring to those registered pursuant to Article 365 (1) of the Act), measures prescribed under Articles 369 (1) through 369 (4) of the Act;
10. In the case of financial services-related organizations, measures prescribed under Article 372 (1) of the Act; and
11. In the case of those who are not subject to the provisions under subparagraphs (1) through (10), measures falling under each of the following items: (a) Warning;
(b) Caution;
(c) Where there is any violation of the Act, reporting it or notifying investigating authorities;
(d) Where there is any violation of other Acts, notifying investigating authorities or relevant institutions; or
The Enforcement Decree of the Financial Investment Services and Capital Market Act (e) Other measures that can be taken by the Financial Services Commission under the Act, this Decree and other relevant Acts and subordinate statutes. (2) The term "others prescribed by the Presidential Decree" under subparagraph 13 of Appendix 15 of the Act referred to under Article 426 (5) of the Act shall mean those falling under any of the subparagraphs of Appendix 19 of this Decree. Article 377 (Publication of Investigation Results and Following Disposition) The Financial Services Commission may publicize information and data falling under each of the following subparagraphs as necessary for preventing activities in violation through newspapers, broadcasting, Internet websites, etc. in accordance with Article 426 (8) of the Act: Provided, That in cases prescribed and publicized by the Financial Services Commission, including cases where any investigating authorities are notified or reported to about any related person, the Commission may opt not to publicize all the information and data :
1. Personal information and position of the related person;
2. Details of activities in violation and the disposition thereof; and
3. Others prescribed and publicized by the Financial Services Commission as necessary for preventing activities in violation by a related person. Article 378 (Investigating officers)
The term "public officials designated by the Presidential Decree" under Article 427 (1) of the Act shall mean a person who is designated by the Public Prosecutor General with the recommendation of the chairman of the Securities and Futures Commission among public officials of the Financial Services Commission.
Chapter 4 Fines
Article 379 (Standards for Charging Fines)
(1) The Financial Services Commission shall, when it imposes a fine pursuant to Articles 428 and 429 of the Act, comply with standards falling under each of the following subparagraphs:
1. Where matters on disclosures, including misstatements, or indications are violated, the Commission shall classify the activities in violation as a measurable violation or a non- measurable violation, and then take into account whether the severity of activities in
violation affects net income or equity capital and whether the activities in violation fall under any of the items of subparagraph 2 in a comprehensive manner;
2. Where an activity in violation falls under any of the following items, the Commission shall impose a fine more than 50/100 of the statutory maximum amount of the fine: Provided, That in cases falling under any of the items of subparagraph 3, the fine may be mitigated: (a) Where the activity in violation has been committed for not less than one year or more than three times repeatedly;
(b) Where the profit gained from the activity in violation is not less than 100 million won; or
(c) Where the activity in violation is related to unfair trade under Part 4 of the Act (hereinafter referred to as "unfair trade"), including insider trading and market manipulation, etc.; and
3. Where the activity in violation falls under any of the following items, the fine shall be mitigated:
(a) Where it is recognized that the content of the violation is not significant; (b) Where the person who commits any violation has submitted other disclosure documents, and investors are able to recognize the true contents by the help of such documents;
(c) Where the activities in violation are corrected without delay; or (d) Where the damages to investors incurred from the activities in violation are compensated for.
(2) Where any registration statement under Articles 119 and 134 of the Act is not submitted, the statutory maximum fine under subparagraph 2 of paragraph (1) shall be calculated based on the realized total amount of public offering or secondary distribution or the total amount of tender offer.
(3) In addition to the matters prescribed by this Decree, specific matters necessary for the imposition of fine, etc. shall be prescribed and publicized by the Financial Services Commission.
Article 380 (Procedures for Fines)
The Enforcement Decree of the Financial Investment Services and Capital Market Act (1) The Financial Services Commission shall, when it imposes a fine, notify the classification of the violations and the amount of the fine to be paid in writing under the conditions prescribed and publicized by the Financial Services Commission. (2) A person who receives a notice under paragraph (1) shall pay a fine to the recipients prescribed and publicized by the Financial Services Commission within 60 days of the date of receipt of the notification.
Article 381 (Extension of Time Limit and Installment of Payment of Fines) (1) The extension of the time limit for payment of fine under Articles 433 (1) through 433 (3) of the Act shall not exceed one year from the day following the time limit for payment. (2) In the case of installment payments under Articles 433 (1) through 433 (3) of the Act, the interval of each installment payment shall be within six months and the number of installment payments shall be limited to three.
(3) The extension of time limit for payment or application for installment payments pursuant to paragraphs (1) and (2) shall be as prescribed and publicized by the Financial Services Commission.
Article 382 (Additional Dues)
The term "additional dues prescribed by the Presidential Decree" under Article 434 (1) of the Act shall mean the amount estimated by applying 6/100 per year to fines in arrears. Article 383 (Delegation of Disposition of Default) (1) The Financial Services Commission shall, when it delegates the duty to dispose of default fines to the Commissioner of the National Tax Service in accordance with Article 434 (3) of the Act, use written documents with the accompanying documents falling under each of the following subparagraphs:
1. A letter of resolution of the Financial Services Commission;
2. A letter of resolution to collect tax, and a written notification; and
3. A payment reminder. (2) The Commissioner of the National Tax Service shall, when it is entrusted with the disposition of default pursuant to paragraph (1), report the matters falling under any of the
following subparagraphs to the Financial Services Commission in writing within 30 days of the date when any reason falling under the following subparagraphs occurs:
1. Where the business on the disposition of default is completed, the time and date of completing such business, and other necessary matters; or
2. Where there is any request for the progress from the Financial Services Commission, the details of the progress.
Part 9 Supplementary Provisions
Article 384 (Reports on Activities in Violation)
(1) Where a person who has known about any unfair trade activities, etc. or any other violations of the Act (hereafter in this Article, referred to as "unfair trade activities, etc."), or who has been coerced or solicited to commit such violations, intends to report them to or to notify the Financial Services Commission [where Articles 172 through 174, 176, 178, and 180 of the Act are violated, referring to the Securities and Futures Commission; hereafter in this Article (excluding paragraph (8)), the same shall apply] pursuant to Article 435 (1) of the Act, the person shall follow the standards falling under each of the following subparagraphs:
1. The details of the report or notification shall be related to unfair trade activities, etc. committed by a specified person;
2. The details of violations such as the person who commits violations, the time and date, the place of unfair trade activities, etc. shall be indicated and the evidence thereof shall be provided along with the details; and
3. The identity of a person (hereafter in this Article, referred to as "whistle blower, etc.") who has reported to or notified the Commission shall be included. (2) The Financial Services Commission may, when it receives a report or notification, confirm personal details, the grounds and intention of the report or tip, and other matters necessary to specify the contents thereof from the whistle blower, etc. (3) The Financial Services Commission may request the whistle blower, etc. to submit necessary documents within the scope necessary to confirm whether the report or notification is true.
The Enforcement Decree of the Financial Investment Services and Capital Market Act (4) The Financial Services Commission shall take care of the report or tip within 60 days of the date of receipt. In such a case, when it is recognized as necessary for filing the documents and holding a hearing, the period may be extended up to 30 days. (5) With respect to the report or notification, a whistle blower, etc. may request that the Financial Services Commission take necessary measures such as the restoration to the original state where the whistle blower, etc. receives disadvantageous treatment from the organization in which the whistle blower, etc. is engaged.
(6) Where the Financial Services Commission recognizes that the request of the whistle blower, etc. under paragraph (5) is proper, the Commission may request that the head of the organization in which the whistle blower, etc. is engaged take appropriate measures such as the restoration to the original state: Provided, That where the organization in which the whistle blower, etc. is engaged is not an institution subject to inspection under the Act on the Establishment, etc. of Financial Services Commission, the Commission may recommend that the head of the organizations or relevant organization take appropriate measures. (7) Where it is recognized that the report or notification is helpful to reveal unfair trade activities, etc. or to take necessary measures against such activities, the Financial Services Commission may have the Governor of the Financial Supervisory Service pay bounties to whistle blowers, etc. within the budget of the Financial Supervisory Service under the conditions prescribed and publicized by the Financial Services Commission up to 100 million won.
(8) In addition to the matters prescribed under paragraphs (1) through (7), other necessary matters on the methods and procedures of receiving a report or notification of unfair trade activities, etc., the payment, etc. of bounties shall be prescribed and published by the Financial Services Commission.
Article 385 (Report by Electronic Documents)
(1) A person who files any statement, report, or any other documents or materials, etc. (hereinafter referred to as "statements, etc.") with the Financial Services Commission, the Securities and Futures Commission, the Governor of the Financial Supervisory Services, the Exchange, the Association, or the Depository in accordance with the Act, this Decree, or other Acts and subordinate statutes may use electronic documents (referring to the standardized
materials in the form of documentation prepared electronically and then sent, received or stored through equipment with data-processing capacity, such as computers, etc.; hereinafter the same shall apply) through an information system under the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc. (2) Standardized forms, methods and procedures necessary for submitting statements, etc. in the form of electronic documents shall be prescribed and publicized by the Financial Services Commission. In such a case, when the statements, etc. are submitted to the Exchange, the Association, or the Depository, the Financial Services Commission may collect opinions of the institutions concerned in advance when prescribing or changing the standardized forms, methods, and procedures.
(3) Where statements, etc. are filed in accordance with the regulations related to the businesses of the Exchange, the Association or the Depository, the institution concerned may, notwithstanding the former part of paragraph (2), prescribe the standardized forms, methods and procedures necessary for submitting statements, etc. (4) When a person submits statements, etc. in the form of electronic documents, matters on electronic documents including validity and arrival time of the electronic documents shall be as provided for in the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc.
Article 386 (Exchanges of Information Not Requiring Consultations) The term "cases prescribed by the Presidential Decree" under the proviso of Article 437 (5) of the Act shall mean those falling under any of the following subparagraphs:
1. Where any general information is exchanged, such as the system or current status of the securities market or the derivatives market;
2. Where the Exchange acquires the records and other information in accordance with the Act, this Decree, or other Acts and subordinate statutes, and the disclosure thereof is required;
3. Where the Exchange exchanges the information on the results of the measures that have been taken pursuant to this Act, Decree, other related Acts, subordinate statutes, or regulations; or
The Enforcement Decree of the Financial Investment Services and Capital Market Act
4. Where the Exchange exchanges the same or similar information which has been exchanged in consultation with the Financial Services Commission in advance pursuant to the latter part of Article 437 (5) of the Act.
Article 387 (Delegation or Entrustment of Authority) (1) The Financial Services Commission shall delegate the authorities falling under each of the following subparagraphs to the Securities and Futures Commission in accordance with Article 438 (2) of the Act:
1. Inspection authorities on activities in violation of Part 3 of the Act; and
2. Authorities to take measures against activities in violation of subparagraph 1 pursuant to the Act or this Decree: Provided, That measures falling under each of the following items shall be excluded;
(a) Imposing a fine exceeding 500 million won;
(b) Discontinuing all the business for not less than one month; and (c) Closing branches and other business offices.
(2) The Financial Services Commission shall entrust the authorities falling under each of the following subparagraphs to the Exchange and the Association in accordance with Article 438 (3) of the Act:
1. In the case of the Exchange, authorities falling under each of the following items: (a) Authorities to restrict the trading volume of exchange-traded derivatives among the matters under Article 416 (7) of the Act; and
(b) Others prescribed and publicized by the Financial Services Commission as equivalent to those under item (a); and
2. In the case of the Association, authorities falling under each of the following items: (a) Authorities to receive the reports under the main sentence of Article 56 (1) of the Act and the notification under the proviso of Article 56 (1) of the Act and to review whether the agreement or the standard agreement falls under Article 56 (6) of the Act; (b) Authorities to receive the relevant data under Articles 10 (3) 16 and 10 (3) 17 (including foreigners equivalent thereto) of this Decree; and (c) Others prescribed and publicized by the Financial Services Commission as equivalent to those under items (a) and (b).
(3) The Financial Services Commission or the Securities and Futures Commission shall entrust the authorities falling under each subparagraph of Appendix 20 of this Decree to the Governor of the Financial Supervisory Services according to Article 438 (4) of the Act. (4) The Exchange, the Association and the Governor of the Financial Supervisory Services shall report the handling of the business entrusted pursuant to paragraphs (2) and (3) to the Financial Services Commission or the Securities and Futures Commission every six months: Provided, That the Financial Services Commission may prescribe different reporting periods for the businesses prescribed and publicized by the Financial Services Commission. Article 388 (Rate and Limit of Contributions)
(1) The rate of contributions under Article 442 (1) of the Act shall mean the rate prescribed and publicized by the Financial Services Commission with the scope of the rates prescribed under the following subparagraph. In such a case, when the total amount of outstanding securities is changed after the registration statement is accepted, the rate shall be determined based on the changed total amount of outstanding securities:
1. Where stock certificates are issued, 2/10,000 of the total amount of outstanding securities; and
2. Where securities other than those referred under paragraph (1) are issued, 1/1,000 of the total amount of outstanding securities (where securities are issued through a shelf registration statement, 4/10,000 of the total amount of outstanding securities). (2) The limit of contributions under Article 442 (1) of the Act and the returning of contributions collected in excess of the limit shall be as provided for under Articles 12 (3) and 12 (4) of the Enforcement Decree of the Act on Establishment, etc. of Financial Services Commission.
(3) In addition to the matters prescribed under paragraphs (1) and (2), other necessary matters on the methods of collecting contributions and the returning of such contributions shall be prescribed and publicized by the Financial Services Commission. Part 10 Penal Provisions
Article 389 (Material Matters)
The Enforcement Decree of the Financial Investment Services and Capital Market Act The term "material matters prescribed by the Presidential Decree" under subparagraph 18 of Article 444 of the Act shall mean those falling under any of the subparagraphs of Article 157 of this Decree.
Addenda
Article 1 (Commencement)
This Decree shall enter into force on February 4, 2009: Provided, That Article 4 of Addenda of this Decree shall enter into force on August 4, 2008. Article 2 (Repeal of Other Acts and Subordinate Statutes) The following Acts and subordinate statutes shall be hereby repealed:
1. The Enforcement Decree of the Securities and Exchange Act;
2. The Enforcement Decree of the Futures Trading Act;
3. The Enforcement Decree of the Act on Business of Operating Indirect Investment and Assets;
4. The Enforcement Decree of the Trust Business Act;
5. The Enforcement Decree of the Merchant Banks Act; and
6. The Enforcement Decree of the Korea Securities and Futures Exchange Act. Article 3 (Effective Period)
Article 186 (1) 3 of this Decree shall be effective until February 3, 2012. Article 4 (Matters on Establishment of the Korea Financial Investment Association) (1) The committee for establishing the Korea Financial Investment Association (hereinafter referred to as "Establishment Committee") under Article 3 (2) of Addenda of the Act shall be composed of persons falling under each of the following subparagraphs who are appointed by the Chairman of the Financial Services Commission in accordance with Article 3 (3) of Addenda of the Act:
1. Two persons recommended by the Chairman of the Financial Services Commission;
2. One person each recommended by the Korea Securities Dealers Association established under Article 162 of the Securities and Exchange Act, the Futures Association established
after obtaining the permission in accordance with Article 75 of the Futures Trading Act, and the Asset Management Association established after obtaining the permission pursuant to Article 160 (3) of the Act on Business of Operating Indirect Investment and Assets (hereinafter referred to as "associations subject to merger"). (2) The Establishment Committee may prescribe necessary matters on the appointment of the chairman of the Establishment Committee and the operation of the Establishment Committee including the methods and procedures of resolution, etc. (3) A merger contract under Article 3 (5) of Addenda of the Act shall contain the matters falling under each of the following subparagraphs:
1. Name and purpose of the Association and location of the head office;
2. Properties that each association subject to merger shall transfer to the Association and the value thereof;
3. Date of a general meeting of members on which the resolution on the approval of the merger shall be made;
4. Date on which the merger shall be carried out; and
5. Other matters necessary for the merger. (4) The resolution on the approval of the merger under Article 3 (5) of Addenda of the Act shall be completed within three months of the date on which one year has passed since the promulgation of the Act.
(5) The associations subject to merger shall keep documents falling under the following subparagraphs at the major offices for six months from one week prior to the date of the general meeting of members for the resolution on the approval of the merger in accordance with Article 3 (19) of Addenda of the Act:
1. A merger contract; and
2. Final balance sheets of the associations subject to merger. (6) The associations subject to merger shall, when they convene a general meeting of members for the approval of a merger contract, inform members, in writing, of the purpose of the meeting and the outline of a merger contract one week prior to the date of the general meeting. (7) Where the resolution on the merger fails to be made within the period prescribed in paragraph (4), the Financial Services Commission may alter the contents of a merger contract. The Enforcement Decree of the Financial Investment Services and Capital Market Act (8) Articles 363 (1), 363 (2), 364, 368 (3), 368 (4), 371 (2), and 373 of the Commercial Act shall apply to an inaugural meeting under Article 3 (8) of Addenda of the Act. In this case, under Article 363 (1) of the Commercial Act, "shareholders" shall be deemed "members," respectively, "company" shall be deemed "Establishment Committee," under Article 364 of the same Act, "location of the headquarters" shall be deemed "location of the head office," under Article 368 (3) of the same Act, "shareholders" shall be deemed "members," under Article 371 (2) of the same Act, "shareholders" shall be deemed "members," and under Article 373 (2) of the same Act, "the chairman and directors who attend the meeting" shall be deemed "the chairman of the Establishment Committee and members of the Establishment Committee who attend the meeting."
(9) The associations subject to merger shall, when they conduct a merger, register their dissolution without delay after obtaining an approval form the Financial Services Commission in accordance with Article 3 (10) of Addenda of the Act. (10) Where the settlement of transactions of stock certificates conducted pursuant to Article 84-28 (5) of the Enforcement Decree of the Securities and Exchange Act is not completed when the incorporation is registered pursuant to Article 3 (12) of Addenda of the Act, such transactions shall be regarded as concluded under the same conditions in accordance with Article 178 of this Decree.
Article 5 (Major Contracts Subject to Reports of Substantial Shareholding of Stocks) The term "material matters prescribed by the Presidential Decree such as major contents, etc. of the contract" in Article 21 (2) of Addenda of the Act shall mean the matters falling under any of the subparagraphs of Article 155 of this Decree. Article 6 (Exceptions to Restrictions on Sales)
(1) The term "case prescribed by the Presidential Decree" in the proviso of Article 30 (1) of Addenda of the Act shall mean the case where a distribution company is registered as a collective investment scheme under the Act with the Financial Services Commission pursuant to Article 29 of Addenda of the Act and files a registration statement of securities with the Financial Services Commission pursuant to Article 119 (1) or 119 (2) of the Act.
(2) The term "cases prescribed by the Presidential Decree" under the proviso of Article 30 (2) of Addenda of the Act shall mean those falling under any of the following subparagraphs:
1. Where a securities investment trust or securities investment company receiving tax benefits in accordance with the Restriction of Special Taxation Act inevitably issues additional beneficiary certificates or newly issues stocks of a securities investment company;
2. Where beneficiary certificates of a securities investment trust are additionally issued,
which are equivalent to retirement lump-sum
allowance trust under Article 34 of the Labor
Standards Act at the commencement of the Act on Business of Operating Indirect Investment
and Assets
3. Where a securities investment company incorporated under Article 79 of the Securities
Investment Company Act entrusts with a person
other than an asset management company
with the management of assets of the securities investment company.
(3) The term "case prescribed
by the Presidential Decree" under the proviso of Article 30 (3)
of Addenda of the Act shall mean those falling under any of the
following subparagraphs:
1. In the case of the trust which permits an additional trust until the termination of the trust
among trusts established in accordance
with the Trust Business Act, where an entruster of
such trust requires an additional trust until the period prescribed by the trust
contract at the
commencement of the Act on Business of Operating Indirect Investment and Assets
2. In the case of the special account which permits an additional payment until the
termination of payment pursuant to an insurance
contract among special accounts
established in accordance with the Insurance business Act, where a policyholder requires an
additional
payment until the period prescribed by the insurance contract at the
commencement of the Act on Business of Operating Indirect Investment
and Assets
Article 7 (Application Example concerning Requirements for Maintaining Authorization
and Registration of Financial Investment Firms)
The requirements under item (e)-1 of subparagraph 1 and item (d) of subparagraph 4 of
Appendix 2 of this Decree in accordance with
each item of Article 19 (1) 2 and subparagraph 2
The Enforcement Decree of the Financial Investment Services and Capital Market
Act
of Article 23 of this Decree shall apply to the case where an activity in violation is committed
for the first time since the
commencement of this Decree.
Article 8 (Application Example of Officers)
The requirements under each subparagraph of Article 27 (3) of this Decree shall apply to the
case where an officer commits a violation
for the first time since the commencement of this
Decree.
Article 9 (Application Example of Requirements for Maintaining Authorization of
Securities Finance Companies)
The requirements under item (e)-1 of subparagraph 1 and item (d) of subparagraph 4 of
Appendix 2 of this Decree in accordance with
Article 319 (2) 2 of this Decree shall apply to the
case where an activity in violation is committed for the first time since the
commencement of
this Decree.
Article 10 (Application Example of Requirements for Maintaining Authorization of Fund
Brokerage Companies)
The requirements under item (e)-1 of subparagraph 1 and item (d) of subparagraph 4 of
Appendix 2 of this Decree in accordance with
Article 345 (3) 2 of this Decree shall apply to the
case where an activity in violation is committed for the first time since the
commencement of
this Decree.
Article 11 (Application Example of the Requirements for Maintaining Authorization of
Short-term Finance Companies)
The requirements under item (e)-1 of subparagraph 1 and item (d) of subparagraph 4 of
Appendix 2 of this Decree in accordance with
Article 348 (5) 2 of this Decree shall apply to the
case where an activity in violation is committed for the first time since the
commencement of
this Decree.
Article 12 (Special Cases for Requirements for Maintaining Authorization of Foreign
Financial Investment Firms)
In the application of the requirements under Article 19 (1) 1 of this Decree, where the branches
or other business offices (hereafter
in this Article, referred to as "branches, etc.") of foreign
financial investment firms, foreign financial institutions under the
Banking Act, or foreign
insurance companies under the Insurance Business Act (hereafter in this Article, referred to as
"foreign
financial investment firms, etc.") carry on the business equivalent to dealing at the
expiration of 12 months from the promulgation
of the Act, "70/100" shall be deemed
"50/100" for the business equivalent to dealing: Provided, That the same shall not apply to
the
cases falling under any of the following subparagraphs:
1. Where the branches, etc. of foreign financial investment firms, etc. obtain the
authorization of changes by adding authorized
business units pursuant to Article 16 (1) of
the Act, obtain the registration of financial investment services pursuant to Article
18 (1) of
the Act, or make a registration of changes pursuant to Article 21 (1) of the Act;
2. Where the branches, etc. of foreign financial investment firms, etc. obtain an
authorization or registration of financial investment
services by adding authorized or
registered business units pursuant to Article 6 (1) of Addenda of the Act; or
3. Where foreign financial investment firms, etc. establish additional branches, etc. pursuant
to the latter part of Article 16 (9)
of this Decree.
Article 13 (Special Cases for Restrictions on Asset Management)
In the application of Article 80 (1) 2 (c) of this
Decree, "30/100" under Article 80 (1) 2 of this
Decree shall be deemed as "100/100" until February 3, 2011.
Article 14 (Special
Cases for Money Trust)
Article 109 (3) 5 of this Decree shall not apply to money trust under Article 14 (2) of Addenda
of the Act on Business of Operating
Indirect Investment and Assets
(1) Any approval, registration, order, disciplinary action, or other activity conducted by the
Financial Services Commission, the
Securities and Futures Commission, or the Governor of the
Financial Supervisory Service pursuant to the Enforcement Decrees of the
Securities and
Exchange Act, the Futures Trading Act, the Act on Business of Operating Indirect Investment
The Enforcement Decree
of the Financial Investment Services and Capital Market Act
and Assets, the Trust Business Act, the Merchant Banks Act or the Korea
Securities and
Futures Exchange Act at the commencement of this Decree shall be deemed as an activity
conducted by the Financial
Services Commission, the Securities and Futures Commission, or
the Governor of the Financial Supervisory Service in accordance with
this Decree.
(2) Any report, application, reporting, and others submitted to the Financial Services
Commission, the Securities
and Futures Commission, or the Governor of the Financial
Supervisory Service pursuant to the Enforcement Decrees of the Securities
and Exchange Act,
the Futures Trading Act, the Act on Business of Operating Indirect Investment and Assets, the
Trust Business
Act, the Merchant Banks Act or the Korea Securities and Futures Exchange Act
at the time of commencement of this Decree shall be
deemed filed with the Financial Services
Commission, the Securities and Futures Commission, or the Governor of the Financial
Supervisory
Service in accordance with this Decree.
Article 16 (Transitional Measures on Commercial Papers)
Bills issued pursuant to Article
23 (1) 4 of the Enforcement Decree of the Securities and
Exchange Act before the commencement of this Decree shall be regarded
as satisfying the
requirements under Article 4 of this Decree.
Article 17 (Transitional Measures concerning Appointment of Outside Directors and
Composition of the Board)
A person (excluding those falling under any of the subparagraphs of Article 9 of Addenda of
the Act) who is required to appoint
new outside directors pursuant to Article 28 (1) 1 of this
Decree shall appoint outside directors in accordance with Article 25
of the Act until the first
general meeting of shareholders held after the commencement of this Act. In this case, the
person who
is appointed as an outside director at the general meeting of shareholders shall be
regarded as recommended by the outside director
recommendation committee under Articles
25 (2) and 25 (4) of the Act:
Article 18 (Transitional Measures on Establishment of Audit Committee)
A person (excluding those falling under any of the subparagraphs
of Article 10 of Addenda of
the Act) who is required to establish new audit committee in accordance with Article 29 (1) of
this Decree shall establish the audit committee until the first general meeting of shareholders
held after the commencement of this
Decree pursuant to Article 26 of the Act.
Article 19 (Transitional Measures concerning Reports on Net Operating Capital)
(1) Where
the report obligation occurs concerning equity capital ratio in accordance with
Article 54-2 (2) of the Securities and Exchange
Act before the effectuation of this Decree, the
Securities and Exchange Act shall apply, notwithstanding Article 34 (2) of this
Decree.
(2) Where the obligation occurs concerning the submission of business report in accordance
with Article 47 the Securities
and Exchange Act before the effectuation of this Decree, the
Securities and Exchange Act shall apply, notwithstanding Article 36
(1) of this Decree.
Article 20 (Transitional Measures on Restrictions on Use of Trade Names in Foreign
Languages)
A person using a trade name in violation of Article 42 of this Decree at the commencement of
this Decree may use the trade name
for six months from the commencement of this Decree.
Article 21 (Transitional Measures concerning Delegation)
Notwithstanding Article
45 of this Decree, the business delegated at the commencement of this
Decree shall be deemed as delegated pursuant to the Act and
this Decree until the delegation
contract concerned is terminated.
Article 22 (Transitional Measures on Qualification of Introducing Brokers)
(1) A person who has passed an examination supervised
by the associations subject to merger
at the commencement of this Decree and meets the requirements prescribed by the Association
shall be deemed to pass an examination supervised by the Association pursuant to items (a) and
(b) of subparagraph 1 of Article
56 of this Decree.
(2) Any person who has completed the training prescribed by the associations subject to merger
at the commencement
of this Decree and meets the requirements prescribed by the Association
shall be deemed to complete the training prescribed by the
Association after obtaining a
confirmation from the Financial Services Commission pursuant to subparagraph 2 of Article 56
of this
Decree.
The Enforcement Decree of the Financial Investment Services and Capital Market Act
Article 23 (Transitional Measures concerning
Entries and Accompanying Documents of
Semi-annual and Quarterly Reports)
Notwithstanding Articles 170 (1) and 170 (2) of this Decree, where a reporting corporation of
consolidated financial statements
whose total assets are not more than two trillion won as of
the end of the latest business year adopts Korean International Financial
Reporting Standards
from a business year starting after January 1, 2011, the reporting corporation may indicate
matters on the
financial status under Article 168 (2) 7 of this Decree, the addenda thereof, and
other matters prescribed and publicized by the
Financial Services Commission based on the
financial statements of the corporation among the indications in semi-annual and quarterly
reports by a business year starting from January 1, 2012, may indicate audit opinions prepared
by an accounting auditor on the
financial statements of the corporation, and may submit only
semi-annual and quarterly reports by accompanying only semi-annual
audit reports and review
reports or quarterly audit reports and review reports prepared by an accounting auditor on the
financial
statements of the corporation.
Article 24 (Transitional Measures on Members of Market Efficiency Committee)
Members appointed pursuant to Article 13 (1) 6 of the
Enforcement Decree of the Korea
Securities and Futures Exchange Act at the commencement of this Act shall be regarded as
having
been appointed as members of the market efficiency committee pursuant to Article 368
(3) of this Decree.
Article 25 (Transitional Measures concerning Indirect Investment Schemes)
(1) The Enforcement Decree of the Act on Business of Operating
Indirect Investment and
Assets shall apply to investment trusts (excluding the special accounts established by an
insurance company)
and investment companies which have been incorporated or established in
accordance with the Act on Business of Operating Indirect
Investment and Assets at the
commencement of this Decree.
(2) The Enforcement Decree of the Act on Business of Operating Indirect Investment and
Assets shall apply to foreign indirect investment
securities reported to the Financial Services
Commission in accordance with the Act on Business of Operating Indirect Investment
and
Assets at the commencement of this Decree.
(3) The Enforcement Decrees of the Securities Investment Trust Business Act or the Securities
Investment Company Act shall apply
to securities investment trusts and securities investment
companies under the proviso of Article 3 of Addenda of the Act on Business
of Operating
Indirect Investment and Assets
Article 26 (Amendment to Other Acts and Subordinate Statutes)
(1) The Enforcement Decree of the Fair Transactions in Franchise Business
Act shall be
amended partially as follows:
Subparagraph 4 of Article 5-6 shall be as follows:
4. A trust company under the Financial Investment Services and Capital Market Act.
(2) The Enforcement Decree of the Framework Act
on the Construction Industry shall be
amended partially as follows:
"An asset management company and indirect investment scheme pursuant to the Act on
Business of Operating Indirect Investment and
Assets" in subparagraph 4 of Article 56-2
shall be deemed "a collective investment manager and collective investment scheme under
the Financial Investment Services and Capital Market Act."
(3) The Enforcement Decree of the Act on Building Installation shall
be amended partially as
follows:
Under Article 3 (1) other than each subparagraph, "a trust company in accordance with the
Trust Business Act" shall be regarded
as "a trust company in accordance with the Financial
Investment Services and Capital Market Act" and "a trust company" shall be
regarded as
"a trust company" and under Article 3 (2) other than each subparagraph and Articles 3 (2) 2,
3 (3), and 3 (4), "a trust
company" shall be regarded as "a trust company."
Under Article 8 (1) 8, "a trust company" shall be regarded as "a trust company."
Under Article 9 (1) 5, "a trust company" shall be regarded as "a trust company."
(4) The Enforcement Decree of the Building Act
shall be amended as follows:
Article 10-2 (1) 4 shall be as follows:
4. Securities in accordance with Article 192 of the Enforcement Decree of the Financial
Investment Services and Capital Market Act;
(5) The Enforcement Decree of the Employment Insurance Act shall be amended as follows:
The Enforcement Decree of the Financial
Investment Services and Capital Market Act
"Marketable securities under Article 2 (1) of the Securities and Exchange Act" in Article
105 (1) shall be deemed "securities under Article 4 of the Financial Investment Services
and Capital Market Act."
(6) The Enforcement Decree of the Act on the Protection of Personal Information Maintained
by Public Agencies shall be amended as
follows:
"In accordance with the Securities and Exchange Act" in subparagraph 2 of Article 16 shall
be deemed "in accordance with the Financial
Investment Services and Capital Market Act."
(7) The Enforcement Decree of the Act on Operation of Public Agency shall be amended
as
follows:
"A stock-listed corporation and a KOSDAQ-listed corporation pursuant to Articles 2 (13) 3
and 2 (15) of the Securities and Exchange
Act" referred to in Article 11 (2) 3 shall be "a
stock-listed corporations under Article 9 (15) 3 of the Financial Investment Services
and
Capital Market Act."
(8) The Enforcement Decree of the Act on the Improvement of Managerial Structure and
Privatization of Public Enterprises shall be
amended as follows:
Subparagraph 5 of Article 9 shall be as follows:
5. Broker or dealer under the Financial Investment Services and Capital Market Act;
(9) The Enforcement Decree of the Public Officials
Pension Act shall be amended as follows:
Article 74 (1) 2 shall be as follows and "subparagraphs 8 and 9 of Article 2 of the Act
on
Business of Operating Indirect Investment and Assets" in Article 74 (1) 2-2 shall be regarded
as "Articles 5 (2) and 5 (3) of
the Financial Investment Services and Capital Market Act."
2. Businesses on acquiring and lending securities under Article 4 of the Financial
Investment Services and Capital Market Act;
(10) The Enforcement Decree of the Registration of Bonds and Debentures Act shall be
amended as follows:
Subparagraphs 1 and 2 of Article 1-2 (1) shall be as follows and "in accordance with the
Securities and Exchange Act" under Article
1-2 (3) 3 shall be deemed "in accordance with
the Financial Investment Services and Capital Market Act."
1. The Korea Securities Depository under Article 294 of the Financial Investment
Services and Capital Market Act;
2. Financial Institutions under Article 10 (2) 1 through 10 (2) 3 of the Enforcement
Decree of the Financial Investment Services
and Capital Market Act;
(11) The Enforcement Decree of the Public Property and Commodity Management Act shall be
amended as follows:
"Marketable securities" in the title of Article 24 and Article 24 (2) shall be regarded as
"securities", respectively.
"A securities dealer" under Article 38 (1) 11 shall be regarded as "a broker and dealer."
"A trust company" in the former part of
Article 48 (1) shall be regarded as "a trust
company," "a real estate trust company" in the latter part of Article 48 (1) shall
be
regarded as "a real estate trust company," and "a trust company" in Articles 48 (3), 48 (4)
other than each subparagraph, 48
(5) other than each subparagraph, 48 (5) 2, and 48 (5) 3
shall be regarded as "a trust company."
(12) The Enforcement Decree of the Act on Business of Real Estate Agent and Real Estate
Transactions Registration shall be amended
as follows:
Article 27 (1) 3 shall be as follows:
3. A trust company under the Financial Investment Services and Capital Market Act;
(13) The Enforcement Decree of the Certified Public
Accountant Act shall be amended as
follows:
Article 4 (1) 2 shall be as follows, "a stock listed corporation" under Article 4 (2) 2 shall
be regarded as "a stock listed corporation
on the marketable securities market", and "a
stock listed corporation or corporation registered to the Financial Services Commission
pursuant to the Securities and Exchange Act (hereinafter referred to as "registered
corporation")" shall be regarded as "a stock
listed corporation on the securities market
pursuant to the Financial Investment Services and Capital Market Act (hereinafter referred
to as "a stock listed corporation")."
2. Corporations (hereinafter referred to as "a stock listed corporation on the marketable
securities market") that issue stock certificates
listed on the marketable securities market
under the Financial Investment Services and Capital Market Act;
The Enforcement Decree
of the Financial Investment Services and Capital Market Act
"A stock listed corporation or registered corporation" in Article 12
(1) 3 shall be regarded
as "a stock listed corporation on the securities market."
(14) The Enforcement Decree of the Notary Public
Act shall be amended as follows:
Subparagraph 150 of Appendix 1 shall be as follows:
150. The Korea Exchange;
(15) The Enforcement Decree of the Public Service Ethics Act shall be amended as follows:
"The Korea Securities
Exchange" under Article 5-2 (1) 1 shall be regarded as "the Korea
Exchange," Article 5-2 (1) 2 shall be deleted, and "pursuant to
Article 194 of the Securities
and Exchange Act" under Article 5-2 (1) 3 shall be regarded as "pursuant to Article 166 of
the Financial
Investment Services and Capital Market Act."
"The Trust Business Act and the Act on Business of Operating Indirect Investment and
Assets" under Article 27-5 shall be deemed "the Financial Investment Services and Capital
Market Act."
Subparagraph 153 in the column for institution and organization of subparagraph 5 of
Appendix 1 shall be as follows:
153. The Korea Securities Depository;
(16) The Enforcement Decree of the Framework Act on Science and Technology shall be
amended
partially as follows:
"Marketable securities under Article 2 (1) of the Securities and Exchange Act" in
subparagraph 3 of Article 35 shall be deemed "securities
under Article 4 of the Financial
Investment Services and Capital Market Act."
(17) The Enforcement Decree of the Act on Contracts to Which the State is a Party shall be
amended partially as follows:
Article 37 (2) 2 shall be as follows, "a trust company in accordance with the Trust Business
Act" under Article 37 (2) 6 shall be
deemed "a trust company in accordance with the
Financial Investment Services and Capital Market Act," and "the consignment company
under the Act on Business of Operating Indirect Investment and Assets" under Article 37
(2) 7 shall be deemed "the collective investment
manager under the Financial Investment
Services and Capital Market Act."
2. Securities pursuant to Article 192 of the Enforcement Decree of the Financial
Investment Services and Capital Market Act;
"Marketable securities under Article 84-16 of the Securities and Exchange Act" in Article
50 (8) shall be deemed "securities under
Article 192 of the Enforcement Decree of the
Financial Investment Services and Capital Market Act."
(18) The Enforcement Decree
of the Finance Act shall be amended partially as follows:
"Indirect investment company appraisal companies pursuant to Article 154
of the Act on
Business of Operating Indirect Investment and Assets" in Article 35 (2) 1 shall be regarded
as "collective investment
scheme appraisal companies pursuant to Article 258 of the
Financial Investment Services and Capital Market Act" and "a stock-listed
company or a
KOSDAQ-listed corporation pursuant to Articles 2 (13) and 2 (15) of the Securities and
Exchange Act" in Article 35
(2) 2 shall be regarded as "a stock-listed company pursuant to
Article 9 (15) of the Financial Investment Services and Capital Market
Act."
(19) The Enforcement Decree of the State Credit Management Act shall be amended partially as
follows:
Under the main sentence of Article 17 (2) 1 "listed marketable securities" shall be deemed
"listed securities" and "the Korea Stock
Exchange" shall be deemed "the Korea
Exchange" and under the proviso of Article 17 (2) 1 "the Korea Stock Exchange" shall be
deemed
"the Korea Exchange."
(20) The Enforcement Decree of the National Fund Management Act shall be amended
partially as follows:
Article 53 (2) 1 shall be as follows and Article 53 (2) 2 shall be deleted.
1. Broker, dealer, securities finance company and merchant bank under the Financial
Investment Services and Capital Market Act;
"A securities company under Article 2 (9) of the Securities and Exchange Act and a
securities finance company under Article 145
of the same Act" under Article 71 (2) shall be
regarded as "broker, dealer and securities finance company under the Financial Investment
Services and Capital Market Act."
The Enforcement Decree of the Financial Investment Services and Capital Market Act
Under Article 72 (1) other than each subparagraph
and Article 72 (1) 2, "the Korea
Securities Futures Exchange Act" shall be regarded as "the Korea Exchange."
Under Article 74,
"listed marketable securities" shall be regarded as "listed securities."
(21) The Enforcement Decree of the National Health Insurance
Act shall be amended partially
as follows:
In subparagraph 4 of Article 11, "a trust company in accordance with the Trust Business
Act" shall be regarded as "a trust company
in accordance with the Financial Investment
Services and Capital Market Act" and "an asset management company under the Act on
Business of Operating Indirect Investment and Assets" shall be regarded as "a trust company
under the same Act."
(22) The Enforcement Decree of the National Basic Living Security Act shall be amended
partially as follows:
"The Securities and Exchange Act" under subparagraph 1 of Article 21-3 shall be regarded
as "the Financial Investment Services and
Capital Market Act."
(23) The Enforcement Decree of the National Pension Act shall be amended partially as
follows:
Article 74 (1) 2 shall be as follows, Articles 74 (1) 3 through 74 (1) 5 shall be deleted,
respectively, "exchange-traded derivatives
and over-the-counter derivatives pursuant to
subparagraphs 8 and 9 of Articles 2 of the Act on Business of Operating Indirect Investment
and Assets" under Article 74 (3) 3 shall be deemed "exchange-traded derivatives and over-
the-counter derivatives pursuant to Articles
5 (2) and 5 (3) of the Financial Investment
Services and Capital Market Act," "indirect investment schemes, etc. pursuant to
subparagraph
2 of Article 2 of the Act on Business of Operating Indirect Investment and
Assets" under Article 74 (3) 5 shall be deemed "collective
investment schemes pursuant to
Article 9 (18) of the Financial Investment Services and Capital Market Act," and "the
marketable
securities market and KOSDAQ pursuant to Article 194 of the Securities and
Exchange Act" under Article 74 (4) other than each subparagraph
shall be deemed "the
securities market pursuant to Article 166 of the Financial Investment Services and Capital
Market Act."
2. Broker, dealer, trust company, collective investment manger, discretionary investment
advisory company and merchant bank under
the Financial Investment Services and
Capital Market Act;
(24) The Enforcement Decree of the State Properties Act shall be amended partially as follows:
"The Korea Securities Depository
established in accordance with Article 173 of the
Securities and Exchange Act" under Article 17 (3) shall be regarded as "the Korea
Securities Depository established in accordance with Article 294 of the Financial Investment
Services and Capital Market Act."
"Marketable securities" under Article 23 (2) shall be regarded as "securities."
Article 33 (3) 9 shall be as follows and Article
33 (3) 10 shall be deleted;
9. Collective investment manager, broker and dealer under the Financial Investment
Services and Capital Market Act;
"Financial institutions, securities companies and insurance companies or asset management
companies under the Act on Business of
Operating Indirect Investment and Assets" in
subparagraph 5 of Article 35 shall be regarded as "financial institutions and insurance
companies or brokers, dealers and collective investment managers under the Financial
Investment Services and Capital Market Act."
"The Securities Exchange" under Article 36 (1) 7 shall be regarded as "the Korea
Exchange" and "financial institutions, securities
companies and insurance companies or
asset management companies under the Act on Business of Operating Indirect Investment
and
Assets" under Article 36 (1) 8 shall be regarded as "financial institutions and insurance
companies or brokers, dealers and collective
investment managers under the Financial
Investment Services and Capital Market Act."
"Marketable securities" in the title of Article 38 and Article 38 (1) other than each
subparagraph shall be regarded as "securities,"
"other than the marketable securities
market of the Korea Stock Exchange (hereinafter referred to as "the Securities Exchange")
or association brokerage market established by the Korea Securities Dealers Association" in
the proviso of Article 38 (1) 1 shall
be regarded as "other than the securities market
established by the Korea Exchange," under the main sentence of Article 38 (1) 2,
"listed
The Enforcement Decree of the Financial Investment Services and Capital Market Act
stock or Association-registered stock"
shall be regarded as "listed stock," "the Securities
Exchange" shall be regarded as "the Korea Exchange," and "final market price
(in case of
Association-registered stock, referring to the base price published by the Korea Securities
Dealers Association; hereafter
in this subparagraph, the same shall apply)" shall be
regarded as "final market price", under the proviso of Article 38 (1) 2 "secondary
distribution of marketable securities pursuant to Article 2 (4) of the Securities and Exchange
Act" shall be regarded as "secondary
distribution pursuant to Article 9 (9) of the Financial
Investment Services and Capital Market Act" and "the Securities Exchange"
shall be
regarded as "the Korea Exchange," under Article 38 (1) 3, "listed marketable securities"
shall be regarded as "securities"
and "the Securities Exchange" shall be regarded as "the
Korea Exchange," under Article 38 (1) 4, "unlisted marketable securities"
shall be
regarded as "unlisted securities" under Article 38 (2), "marketable securities" shall be
regarded as "securities" and
"the securities market of the Securities Exchange or
association brokerage market established by the Korea Securities Dealers Association"
shall
be regarded as "other than the securities market established by the Korea Exchange," under
Article 38 (3) 2, "the Securities
Exchange pursuant to Article 94 (2) 1 of the Securities and
Exchange Act" shall be regarded as "the Korea Exchange pursuant to Article
393 (1) 1 of
the Financial Investment Services and Capital Market Act," under Article 38 (5),
"securities company" shall be regarded
as "broker or dealer," under Article 38 (6) 2,
"analysis of marketable securities" shall be regarded as "analysis of securities,"
and under
Article 38 (7), "marketable securities" shall be regarded as "securities."
"Marketable securities" under Article 38-2
(1) 2 shall be regarded as "securities."
"A trust company" under Articles 48-4 (1) and 48-4 (2) other than each subparagraph shall
be regarded as "a trust company," respectively.
(25) The Enforcement Decree of the Military Welfare Fund Act shall be amended partially as
follows:
Article 12 (1) 2 shall be as follows, Article 12 (1) 3 shall be deleted, "Marketable securities
pursuant to Article 2 (1) of the
Securities and Exchange Act" in Article 12 (1) 5 shall be
regarded as "securities pursuant to Article 4 of the Financial Investment Services and
Capital Market Act," and "Article 12 (1)
6 shall be as follows:
2. Deposit in collective investment manager, trust company and merchant bank under the
Financial Investment Services and Capital
Market Act;
6. Transactions of exchange-traded derivatives under Article 5 (2) of the Financial
Investment Services and Capital Market Act;
(26) The Enforcement Decree of the Veterans' Pension Act shall be amended partially as
follows:
"Marketable securities pursuant to each subparagraph of Article 2 (1) of the Securities and
Exchange Act" in subparagraph 2 of Article
75-5 shall be deemed "securities pursuant to
Article 4 of the Financial Investment Services and Capital Market Act" and subparagraph
3
of Article 75-5 shall be as follows:
3. Transaction business of exchange-traded derivatives pursuant to Article 5 (2) of the
Financial Investment Services and Capital
Market Act;
(27) The Enforcement Decree of the Framework Act on Worker's Welfare shall be amended
partially as follows:
Subparagraph 6 of Article 6 shall be as follows:
6. Securities finance company under the Financial Investment Services and Capital
Market Act.
"In accordance with Article 54-5 (4) 2 of the Securities and Exchange Act" in Article 12 (2)
2 shall be deemed "in accordance with
Article 9 (1) 1 of the Financial Investment Services
and Capital Market Act" and "in accordance with Article 10-3 (2) 1 (a) or 10-3
(2) 1 (i) of
the Securities and Exchange Act" in Article 12 (2) 3 shall be deemed "in accordance with
Articles 8 (1) (a) through
8 (1) (i) of the Financial Investment Services and Capital Market
Act."
"In accordance with the Securities and Exchange Act" in Article 17-3 (1) 3 shall be deemed
"in accordance with the Financial Investment
Services and Capital Market Act."
The Enforcement Decree of the Financial Investment Services and Capital Market Act
"Established
under Article 145 of the Securities and Exchange Act" in Article 24 (1) shall
be deemed "authorized pursuant to Article 324 of the
Financial Investment Services and
Capital Market Act."
Under Article 25 (1) 1, "a stock-listed corporation or a KOSDAQ-listed corporation" shall
be deemed "a stock-listed corporation"
and "marketable securities market or KOSDAQ
market" shall be deemed "securities market."
(28) The Enforcement Decree of the Guarantee of Workers' Retirement Benefits Act shall be
amended partially as follows:
Under Article 13 (3), "in accordance with the Trust Business Act" shall be regarded as "a
trust company in accordance with the Financial
Investment Services and Capital Market
Act."
Under Article 15 other than each subparagraph, "pursuant to Article 3 (2) 1 of the
Enforcement Decree of the Trust Business Act"
shall be regarded as "pursuant to
subparagraph 1 of Article 103 of the Financial Investment Services and Capital Market Act."
Under
Article 17 (1) 1 (c), "pursuant to Article 3 (2) 1 of the Trust Business Act" shall be
regarded as "pursuant to subparagraph 1 of
Article 103 of the Financial Investment Services
and Capital Market Act," under the former part of Article 17 (1) 1 (d), "pursuant
to the
Securities and Exchange Act" shall be regarded as "pursuant to the Financial Investment
Services and Capital Market Act,"
"marketable securities" shall be regarded as
"securities," respectively, under the latter part of Article 17 (1) 1 (d), "marketable
securities" shall be regarded as "securities," "indirect investment securities pursuant to the
Act on Business of Operating Indirect
Investment and Assets" shall be regarded as
"collective investment securities pursuant to the Financial Investment Services and
Capital
Market Act ," under the latter part of Article 17 (1) 2 (a), "pursuant to subparagraph 1 of
Article 2 of the Act on Business
of Operating Indirect Investment and Assets" shall be
regarded as "pursuant to Article 6 (5) of the Financial Investment Services
and Capital
Market Act," "indirect investment" shall be regarded as "collective investment,"
respectively, and under the former part of Article 17 (1) 2 (b), "indirect investment" shall
be regarded as "collective investment."
(29) The Enforcement Decree of the Act on the Efficient Disposal of Non-performing Assets,
etc. of Financial Institutions and the
Establishment of Korea Asset Management Corporation
shall be amended partially as follows:
Subparagraph 8 of Article 2 shall be as follows and subparagraphs 10 and 17 of Article 2
shall be deleted, respectively.
8. Merchant bank, broker, dealer, collective investment manager, and private equity
company under the Financial Investment Services
and Capital Market Act;
"Indirect Investment Schemes" in subparagraph 1 of Article 18-3 shall be regarded as
"collective investment
schemes", and "Article 144-2 of the Act on Business of Operating
Indirect Investment and Assets" in subparagraph 2 of Article 18-3
shall be regarded as
"Article 9 (18) 7 of the Financial Investment Services and Capital Market Act."
(30) The Enforcement Decree
of the Act on the Structural Improvement of the Financial
Industry shall be amended partially as follows:
Subparagraph 2 of Article 2 shall be deleted.
Under Article 5-3 (1) 1, "pursuant to the Merchant Banks Act" shall be regarded as
"pursuant to the Financial Investment Services
and Capital Market Act" and "business
under Article 7 (1) 1 and the incidental business under Article 7 (1) 8 of the Merchant Banks
Act" shall be regarded as "business under Article 336 (1) 1 and the incidental business
under Article 336 (1) 8 of the Financial
Investment Services and Capital Market Act, and
subparagraphs 2 and 3 of Article 5-3 (1) shall be as follows:
2. Where a broker and dealer (hereinafter referred to as "dealers and brokers") under the
Financial Investment Services and Capital
Market Act merges with a merchant bank to
become a new dealer and broker, or where a merchant bank converges to a dealer and
broker:
the business under Articles 336 (1) 1, 336 (1) 2, 336 (1) 4, and 336 (1) 7 of the
Financial Investment Services and Capital Market
Act and the incidental businesses
thereof, and the business under Articles 336 (2) 1 through 336 (2) 3 and 336 (2) 5 of the
Act;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
3. Where a bank merges with a dealer and broker to become a new bank: dealing
(including arranging and intermediating a public offering,
secondary distribution, and
private placement, or acting as an agent for that purpose) the Financial Investment
Services and Capital
Market
Under Article 6 (3) 4, "securities companies hold marketable securities under Article 2 (8)
5 of the Securities and Exchange Act"
shall be regarded as "dealers and brokers hold
securities in Article 9 (11) of the Financial Investment Services and Capital Market
Act."
(31) The Enforcement Decree of the Act on Real Name Financial Transactions and Guarantee
of Secrecy shall be amended partially
as follows:
Subparagraph 9 of Article 2 shall be deleted, and subparagraph 10 of Article 2 shall be as
follows:
10. The Korea Exchange established in accordance with the Financial Investment
Services and Capital Market Act (limited to the cases
where a request is made to provide
information on the report obligation pursuant to Article 391 (2) 1 and the report or
confirmation
obligation pursuant to Article 391 (2) 3 of the Financial Investment
Services and Capital Market Act pursuant to Article 392 (2)
of the same Act;)
(32) The Enforcement Regulations of the Organization of the Financial Services Commission
and its Support Organizations
shall be amended partially as follows:
Under Article 13 (3) 31, "securities business" shall be deemed "dealing and brokerage,"
under Article 13 (3) 32, "marketable securities" shall be deemed "securities," under
Article 13 (3) 34, "securities business and
futures business" shall be deemed "dealing and
brokerage," "under Article 13 (3) 37, "marketable securities" shall be deemed
"securities,"
under Article 13 (3) 41, "the Korea Securities Futures Exchange" shall be
deemed "the Korea Exchange," "the Korea Securities Depository"
shall be deemed "the
Korea Securities Depository," "the Korea Securities Dealers Association" shall be deemed
"the Korea Financial
Investment Association," and "securities-related institution" shall be
deemed "financial services-related institution," under Article
13 (3) 43, "asset
management business" shall be deemed "collective investment scheme service," under
Article 13 (3) 44, "indirect
investment products" shall be deemed "collective investment
securities," "under Article 13 (3) 49, "asset management business" shall be deemed
"collective investment scheme service," Article
13 (3) 50 shall be deleted, under Article 13
(3) 52, "marketable securities" shall be deemed "securities," under Article 13 (3)
55,
"futures" shall be deemed "derivatives," and under Article 13 (3) 57, "futures market"
shall be deemed "derivatives market."
(33) The Enforcement Decree of the Act on the Establishment, etc. of Financial Services
Commission shall be amended partially as
follows:
"Subparagraphs 5 through 9" in Article 12 (1) 1 shall be deemed "subparagraphs 6, 7, and
9," "subparagraphs 2, 3, and
10 of Article 38 of the Act" in Article 12 (1) 2 shall be
deemed "subparagraph 2 of Article 38 of the Act," "Articles 206-8 (1)
1 and 206-8 (1) 2 of
the Securities and Exchange Act" in Article 12 (3) other than each subparagraph and Article
12 (3) 3 shall
be deemed "Article 442 (1) of the Financial Investment Services and Capital
Market Act," and "Articles 206-8 (1) 1 and 206-8 (1)
2 of the Securities and Exchange
Act" in the main sentence of Article 12 (4) other than the formula and the formula of
Article
12 (4) shall be deemed "Article 442 (1) of the Financial Investment Services and
Capital Market Act."
"The securities and futures market" in Article subparagraph 4 of Article 23 shall be deemed
"securities and derivatives market."
(34) The Enforcement Decree of Act on Establishment and Development of Financial Hub of
the shall be amended partially as follows:
"The Korea Securities and Futures Exchange under the Korea Securities and Futures
Exchange Act" in Article 10 (3) 5 shall be deemed
"the Korea Exchange under the
Financial Investment Services and Capital Market Act," "the Korea Securities Dealers
Association
under the Securities and Exchange Act" in Article 10 (3) 7 shall be deemed
"the Korea Financial Investment Association under the
Financial Investment Services and
Capital Market Act," and Article 10 (3) 10 shall be deleted.
(35) The enforcement Decree of the
Financial Holing Companies Act shall be amended
partially as follows:
The Enforcement Decree of the Financial Investment Services and Capital Market Act
Under the main sentence of Article 2 (3) other
than each subparagraph, "the Act on
Business of Operating Indirect Investment and Assets" shall be regarded as "the Financial
Investment
Services and Capital Market Act."
Under the main sentence of Article 5 (1) 4 other than each item, "a stock-listed corporation
(hereinafter referred to as "a stock-listed
corporation") or a KOSDAQ-listed corporations
(hereinafter referred to as "KOSDAQ-listed corporation") under the Securities and
Exchange Act" shall be regarded as "a stock-listed corporation (hereinafter referred to as
"stock-listed corporation") under the
Financial Investment Services and Capital Market
Act," and "listing and registration" shall be regarded as "listing," under the
main sentence
of Article 5 (5) other than each subparagraph, "a stock-listed corporation or a KOSDAQ-
listed corporation" shall
be regarded as "a stock-listed corporation," under Article 5 (5) 1,
"between stock-listed corporations, KOSDAQ-listed corporations,
or between a stock-listed
corporation and a KOSDAQ-listed corporation" shall be regarded as "between stock-listed
corporations,"
under Article 5 (5) 2 other than each item, "a stock-listed corporation or a
KOSDAQ-listed corporation, or between corporations
other than stock-listed or KOSDAQ-
listed corporations" shall be regarded as "a stock-listed corporation and between
corporations
other than stock-listed corporations," under Article 5 (5) 2 (a), "a stock-listed
corporation or a KOSDAQ-listed corporation" shall
be regarded as "a stock-listed
corporation," under Articles 5 (5) 2 (b) and 5 (5) 3, "a stock-listed corporation and a
KOSDAQ-listed
corporation" shall be regarded as "a stock-listed corporation,"
respectively, and under the proviso of Article 5 (6), "a KOSDAQ-listed
corporation" shall
be regarded as "a KOSDAQ-listed corporation (referring to a corporation that has issued
stock certificates listed
on the KOSDAQ market in accordance with the Financial
Investment Services and Capital Market Act.")
Under Article 5-2 (1) 5, "marketable securities pursuant to Article 2 (8) 5 of the Securities
and Exchange Act" shall be regarded
as "securities pursuant to Article 9 (11) of the
Financial Investment Services and Capital Market Act."
Under Article 5-5 (1) other than each subparagraph, "the Act on Business of Operating
Indirect Investment and Assets" shall be regarded
as "the Financial Investment Services
and Capital Market Act."
Under Article 5-8 (1) 3, "marketable securities pursuant to Article 2 (8) 5 of the Securities
and Exchange Act" shall be regarded
as "securities pursuant to Article 9 (11) of the
Financial Investment Services and Capital Market Act."
Under the proviso of Article
14 (1) other than each subparagraph, "a stock-listed
corporation or a KOSDAQ-listed corporation" shall be regarded as "a stock-listed
corporation."
Under Article 15 (1) 3 other than each item, "under the Merchant Banks Act" shall be
regarded as "under the Financial Investment
Services and Capital Market Act," and "a
securities company (hereinafter referred to as "securities company") under the Securities
and Exchange Act" shall be regarded as "a broker and dealer (hereinafter referred to as "a
broker and dealer") under the Financial
Investment Services and Capital Market Act,"
under Article 15 (1) 3 (a), "a trust company under the Trust Business Act, a futures
company (hereinafter referred to as "futures company") under the Futures Trading Act, a
non-discretionary investment advisory company
(hereinafter referred to as "non-
discretionary investment advisory company") and an asset management company
(hereinafter referred
to as "asset management company") under the Act on Business of
Operating Indirect Investment and Assets" shall be regarded as "a
trust company, broker
and dealer, non-discretionary investment advisory company (hereinafter referred to as "a
non-discretionary
investment advisory company"), discretionary investment advisory
company (hereinafter referred to as "discretionary investment advisory
company"), and a
collective investment manager (hereinafter referred to as "collective investment manager")
under the Financial
Investment Services and Capital Market Act," Article 15 (1) 3 (b) shall
be regarded as follows, and "an asset management company"
under Article 15 (1) 3 (c)
shall be regarded as "a collective investment manager."
The Enforcement Decree of the Financial Investment
Services and Capital Market Act
(b) Where a subsidiary company is a broker or dealer: collective investment manager,
non-discretionary
investment advisory company, discretionary investment advisory
company, dealer, and broker;
Article 17 (1) 7 shall be as follows, and subparagraphs 9 through 11 and 23 of Article 17 (1)
shall be deleted.
7. The Financial Investment Services and Capital Market Act;
Under Article 19 (4) 1, "a stock-listed corporation or a KOSDAQ-listed
corporation" shall
be regarded as "a stock-listed corporation," under Article 19 (4) 3, "Article 21 (1) of the
Securities and Exchange
Act" shall be regarded as "Article 133 (3) of the Financial
Investment Services and Capital Market Act."
Under subparagraph 3 of Article 19-2, "a stock-listed corporation or a KOSDAQ-listed
corporation" shall be regarded as "a stock-listed
corporation," under subparagraph 4 of
Article 19-2, "the Korea Securities and Futures Exchange under the Korea Securities and
Futures
Exchange Act or securities-related institutions in Article 2 (17) of the Securities and
Exchange Act" shall be regarded as "the
Korea Exchange under the Financial Investment
Services and Capital Market Act or financial services-related institution (excluding
financial
services-related organization) in Article 9 (17) of the Act."
"Marketable securities" in the title of Article 21 and
Arties, 21 (1) 1, 21 (1) 2, and 21 (2)
shall be regarded as "securities," respectively.
"Securities company" under Article 24 (1) 3 shall be regarded as "broker or dealer,"
"pursuant to subparagraph 4 of Article 2 of
the Merchant Banks Act" in Article 24 (2) 2
shall be regarded as "pursuant to Article 342 (1) of the Financial Investment Services
and
Capital Market Act," "securities company" in Article 24 (2) 3 shall be regarded as "broker
or dealer," "pursuant to subparagraph
3 of Article 2 of the Merchant Banks Act" in Article
24 (3) 2 shall be regarded as "pursuant to Article 342 (1) of the Financial
Investment
Services and Capital Market Act," and "securities company" in Article 24 (3) 3 shall be
regarded as "broker or dealer."
"Pursuant to Articles 2 (3) and 2 (4) of the Securities and Exchange Act" in Article 24-2 (4)
shall be regarded as "pursuant to
Articles 9 (7) and 9 (9) of the Financial Investment
Services and Capital Market Act."
"Marketable securities market and KOSDAQ market under the Korea Securities and Futures
Exchange Act" under Article 24-3 (4) shall
be regarded as "securities market under the
Financial Investment Services and Capital Market Act."
Under the classification section
of subparagraph 1 of Appendix 2, "a securities investment
company under the Securities Investment Company Act" shall be regarded
as "an
investment company, investment limited liability company, investment limited partnership
company, or investment limited
partnership under the Financial Investment Services and
Capital Market Act," under the classification section of subparagraph 2
of Appendix 2, "a
securities investment company under the Securities Investment Company Act" shall be
regarded as "an investment
company, investment limited liability company, investment
limited partnership company, or investment limited partnership under the
Financial
Investment Services and Capital Market Act," under item (a) in the requirement section of
subparagraph 2 of Appendix
2, "to an asset management company (referring to an asset
management company pursuant to subparagraph 2 of Article 2 of the Securities
Investment
Company Act)" shall be regarded as "to collective investment manager (referring to a
collective investment manager pursuant
to Article 8 (4) of the Financial Investment Services
and Capital Market Act," under item (a) in the requirement section of subparagraph
5 of
Appendix 2, "securities business" shall be regarded as "financial investment services,"
and under the classification section
and item (b) in the requirement section of subparagraph
6 of Appendix 2, "the Act on Business of Operating Indirect Investment and
Assets" shall
be regarded as "the Financial Investment Services and Capital Market Act."
(36) The Enforcement Decree of the Korea
Technology Credit Guarantee Fund Act shall be
amended partially as follows:
Under Article 4 (1) 1, "pursuant to Article 8 of the Securities and Exchange Act" shall be
regarded as "pursuant to Article 119
of the Financial Investment Services and Capital
Market Act."
The Enforcement Decree of the Financial Investment Services and Capital Market Act
(37) The Enforcement Decree of the Corporate
Restructuring Promotion Act shall be amended
partially as follows:
"The Act on Business of Operating Indirect Investment and Assets" referred to in
subparagraph 4 of Article 2 shall be regarded as
"the Financial Investment Services and
Capital Market Act."
"The chairman of Asset Management Association established under the Act on Business of
Operating Indirect Investment and Assets"
in subparagraph 1 of Article 6 shall be regarded
as "the chairman of the Korea Financial Investment Association established under
the
Financial Investment Services and Capital Market Act."
(38) The Enforcement Decree of the Corporate Restructuring Investment
Companies Act shall
be amended partially as follows:
"In accordance with the Merchant Banks Act" in subparagraph 7 of Article 3 shall be
deemed "in accordance with the Financial Investment
Services and Capital Market Act,"
and "a securities company under the Securities and Exchange Act" in subparagraph 9 of
Article
3 shall be deemed "a broker or dealer under the Financial Investment Services and
Capital Market Act."
Article 5 (1) 7 shall be as follows and subparagraphs 9 through 12 and 21 of Article 5 (1)
shall be deleted, respectively.
7. The Financial Investment Services and Capital Market Act;
"Pursuant to Article 9 of the Merchant Banks Act" in Article 11 shall
be deemed "pursuant
to Article 355 of the Financial Investment Services and Capital Market Act."
"Securities-related institution
pursuant to Article 2 (17) of the Securities and Exchange Act"
in Article 20 (2) 6 shall be deemed "financial services-related institution
(excluding
financial services-related organization) pursuant to Article 9 (17) of the Financial
Investment Services and Capital
Market Act."
Under Article 22, "marketable securities designated as securities to be deposited pursuant to
Article 173-7 of the Securities and
Exchange Act" shall be deemed "securities, etc.
designated as securities to be deposited pursuant to Article 308 of the Financial
Investment
Services and Capital Market Act," and "the Korea Depository" shall be deemed "the
Korea Depository."
(39) The Enforcement Decree of the Agricultural Cooperatives Act shall be amended partially
as follows:
Article 9 (1) 2 shall be as follows and subparagraphs 3 through 5 of Article 9 (1) shall be
deleted, respectively.
2. Collective investment manager, trust company, merchant bank, broker and dealer
under the Financial Investment Services and Capital
Market Act;
Article 9 (2) 1 shall be as follows, Article 9 (2) 2 shall be deleted, Article 9 (2) 3 shall be as
follows, and subparagraphs
4 and 5 of Article 9 (2) shall be deleted, respectively.
1. Government bonds, municipal bonds, special bonds, corporate bonds, and commercial
papers under Article 4 (3) of the Financial
Investment Services and Capital Market Act;
3. Trust company, collective investment manger, and merchant bank under the Financial
Investment Services and Capital Market Act;
Under Article 15 (1) 5, "marketable securities pursuant to Article 2 (1) of the Securities and
Exchange Act" shall be deemed "securities
pursuant to Article 4 of the Financial
Investment Services and Capital Market Act."
Under subparagraph 6 of Article 15-2, "marketable securities pursuant to Article 2 (1) of
the Securities and Exchange Act" shall
be deemed "securities pursuant to Article 4 of the
Financial Investment Services and Capital Market Act," and under subparagraph
8 of
Article 15-2, "marketable securities" shall be deemed "securities."
(40) The Enforcement Decree of the Crop Insurance Act
shall be amended partially as follows:
Under subparagraph 2 of Article 12-6, "marketable securities pursuant to Article 2 (1) of
the Securities and Exchange Act" shall be deemed "securities pursuant to Article 4 of the
Financial Investment Services and Capital
Market Act."
(41) The Enforcement Decree of the Foreign Trade Act shall be amended partially as follows:
Under Article 13 (1) other
than each subparagraph, "listed corporation pursuant to Article 2
(13) of the Securities and Exchange Act" shall be deemed "listed
corporation (excluding
The Enforcement Decree of the Financial Investment Services and Capital Market Act
corporations whose securities
are listed on the KOSDAQ market) pursuant to Article 9 (15)
of the Financial Investment Services and Capital Market Act."
(42)
The Enforcement Decree of the Korea National Housing Corporation Act shall be amended
partially as follows:
Article 14 (2) 2 shall be as follows:
2. Collective investment scheme under Article 9 (18) of the Financial Investment
Services and Capital Market Act;
(43) The Enforcement Decree of the Urban Development Act shall be amended partially as
follows:
"Among trust companies in accordance with the Trust Business Act" under Article 14 (5) 2
shall be deemed "among trust companies
in accordance with the Financial Investment
Services and Capital Market Act."
"Trust company" under Article 16 (1) shall be deemed "trust company."
"Trust company" under Article 22 (3) shall be deemed "trust
company."
"Marketable securities" in the main sentence other than items (c)-1 and (c)-2 of Article 44
(1) 2 shall be deemed "securities."
"The Korea Depository established pursuant to Article 173 of the Securities and Exchange
Act" under Article 73 (4) shall be "the
Korea Depository established pursuant to Article
294 of the Financial Investment Services and Capital Market Act."
(44) The Enforcement
Decree of the Act on the Maintenance and Improvement of Urban Areas
and Dwelling Conditions for Residents shall be amended partially
as follows:
"A trust company under the Trust Business Act" under Article 14 (1) shall be deemed "a
trust company under the Financial
Investment Services and Capital Market Act" and "a
real estate trust company" under Article 14 (2) 3 shall be deemed "a real estate
trust
company."
(45) The Enforcement Decree of the Urban Railroad Act shall be amended partially as follows:
"The Korea Depository established pursuant
to Article 173 of the Securities and Exchange
Act" under Article 14 (2) shall be "the Korea Depository established pursuant to Article
294 of the Financial Investment Services and Capital Market Act."
(46) The Enforcement Decree of the Monopoly Regulation and Fair Trade Act shall be amended
partially as follows:
Under Article 3-2 (1) 2 (a), "a stock-listed corporation or a KOSDAQ-listed corporation"
shall be regarded as "a stock-listed corporation
(hereinafter referred to as "stock-listed
corporation") pursuant to Article 9 (15) 3 of the Financial Investment Services and Capital
Market Act," under Articles 3-2 (1) 2 (b), 3-2 (1) 4 (a), and 3-2 (1) 5 (a), "a stock-listed
corporation or a KOSDAQ-listed corporation"
shall be regarded as "a stock-listed
corporation," respectively, and under the latter part of Article 3-2 (4) 1, "a stock-listed
corporation" shall be regarded as "corporation that listed securities on the securities market
pursuant to Article 9 (13) 1 of
the Financial Investment Services and Capital Market Act."
Under Articles 17-8 (3) 3 and 17-8 (3) 4, "a stock-listed corporation
or a KOSDAQ-listed
corporation" shall be regarded as "a stock-listed corporation," respectively.
Under the latter part of Articles
17-9 (1) 3, "Article 2 (19) of the Securities and Exchange
Act" shall be regarded as "Article 9 (3) of the Financial Investment
Services and Capital
Market Act," under the former part of Article 17-9 (1) 4, "subparagraphs 2 and 3 of Article
54-5 of the Securities
and Exchange Act" shall be regarded as "subparagraphs 2 and 4 of
Article 25 of the Financial Investment Services and Capital Market
Act," and under the
latter part of Article 17-9 (1) 4, "Article 2 (19) of the Securities and Exchange Act" shall
be regarded as
"Article 9 (3) of the Financial Investment Services and Capital Market Act."
Under Article 17-10 (3) 1, "the Trust Business Act"
shall be regarded as "the Financial
Investment Services and Capital Market Act," and "private indirect investment scheme
under
the Act on Business of Operating Indirect Investment and Assets" shall be regarded
as "private collective investment scheme under
the same Act," and under Article 17-10 (6),
"a stock-listed corporation or a KOSDAQ-listed corporation" shall be regarded as "a
stock-listed corporation."
Under Article 18 (6), "a stock-listed corporation or a KOSDAQ-listed corporation" shall
be regarded as "a stock-listed corporation,"
respectively, under Article 18 (9) 1 (a),
"marketable securities market and KOSDAQ market" shall be regarded as "securities
The
Enforcement Decree of the Financial Investment Services and Capital Market Act
market under Article 9 (13) of the Financial Investment
Services and Capital Market Act,"
and under Article 18 (9) 1 (b), "the Securities and Exchange Act" shall be regarded as
"the Financial
Investment Services and Capital Market Act."
Under Article 21-2, "in accordance with the Securities and Exchange Act" shall be
regarded as "in accordance with the Financial Investment Services and Capital Market
Act."
Under Article 21-4 (1) 2-2 (a), "Article 3 (indicating the type of business) 2 (1) of the
Enforcement Decree of the Trust Business
Act" shall be regarded as "subparagraph 1 of
Article 103 (the type of trust) of the Financial Investment Services and Capital Market
Act,"
and "trust company" shall be regarded as "trust company," respectively.
Under the former part of Article 23-3 (6), "agencies
accepting the reports under Article 186
(duty of report and disclosure of listed corporations, etc.) of the Securities and Exchange
Act" shall be regarded as "agencies accepting the reports under Article 161 (submission of
material change report) of the Financial
Investment Services and Capital Market Act or the
Korea Exchange under the same Act."
(47) The Enforcement Decree of the Broadcasting Act shall be amended partially as follows:
Under Article 15-2 (1) 1 (a), "Article
194 of the Securities and Exchange Act" shall be
"Article 166 of the Financial Investment Services and Capital Market Act."
(48)
The Enforcement Decree of the Act on Special Measures for the Promotion of Venture
Businesses shall be amended partially as follows:
Subparagraph 14 of Article 2 shall be as follows:
14. Broker or dealer under Articles 8 (2) and 8 (3) of the Financial Investment Services
and Capital Market Act;
Under Article 2-3 (2) 5, "Article 144-2 (1) of the Act on Business of Operating Indirect
Investment and Assets" shall be deemed
"Article 9 (18) 7 of the Financial Investment
Services and Capital Market Act."
Under Article 3-9 (3) 1 (b), "in accordance with Article 10-3 (2) of the Securities and
Exchange Act" shall be deemed "in accordance
with Article 8 of the Financial Investment
Services and Capital Market Act."
Subparagraph 1 of Article 6-3 shall be as follows:
1. Broker or dealer (limited to those who have obtained an authorization for underwriting
securities and arranging and intermediating
such underwriting or acting as an agent for
that purpose) under the Financial Investment Services and Capital Market Act;
(49)
The Enforcement Decree of the Special Post Offices Act shall be amended partially as
follows:
Article 36 (1) 3 shall be as follows and subparagraphs 4 and 5 of Article 36 (1) shall be
deleted, respectively.
3. Merchant bank, trust company, collective investment manager, broker and dealer, and
securities finance company under the Financial
Investment Services and Capital Market
Act;
(50) The Enforcement Decree of the Insurance Business Act shall be amended partially as
follows:
"Business of a trust company under the Trust Business Act" in Article 16 (2) shall be
regarded as "trust service under the Financial
Investment Services and Capital Market Act,"
and Article 16 (3) 3 shall be as follows:
3. Collective investment scheme service and dealing or brokerage of collective
investment scheme under the Financial Investment Services
and Capital Market Act;
Article 19 (2) 8 shall be as follows and subparagraphs 9 through 11 and 24 of Article 19 (2)
shall be deleted,
respectively.
8. The Financial Investment Services and Capital Market Act;
Article 19 (3) 4 shall be as follows and subparagraphs 5 through 8 shall
be deleted,
respectively.
4. The Financial Investment Services and Capital Market Act;
Under Article 21-2 (2) 1, "a stock-listed corporation or a KOSDAQ-listed
corporation"
shall be regarded as "a stock-listed corporation," under Article 21-2 (2) 3, "Article 21 (1)
of the Securities and
Exchange Act" shall be regarded as "Article 133 (3) of the Financial
Investment Services and Capital Market Act."
Under Article 21-3 (1) 3, "a stock-listed corporation or a KOSDAQ-listed corporation"
shall be regarded as "a stock-listed corporation,"
under Article 21-3 (1) 4, "the Korea
The Enforcement Decree of the Financial Investment Services and Capital Market Act
Securities
and Futures Exchange under the Korea Securities Futures Exchange Act or
securities-related institutions under Article 2 (17) of
the Securities and Exchange Act" shall
be regarded as "the Korea Exchange under the Financial Investment Services and Capital
Market
Act or financial services-related institutions (excluding financial services-related
organizations) under the same Act."
Under Article 33 (4) 1, "the Korea Securities and Futures Exchange" shall be regarded as
"the Korea Exchange," and "marketable securities"
shall be regarded as "securities,"
respectively.
Article 49 (4) 1 shall be as follows, and Article 49 (4) 2 shall be deleted.
1. Transactions on the derivatives market in a foreign country pursuant to Article 5 (2) of
the Financial Investment Services and
Capital Market Act;
Under Article 50 (1) 2, "the Act on Business of Operating Indirect Investment and Assets"
shall be regarded
as "the Financial Investment Services and Capital Market Act."
Under Article 53 (1) 9, "the Korea Securities and Futures Exchange
pursuant to the Korea
Securities Futures Exchange Act" shall be regarded as "the Korea Exchange pursuant to
the Financial Investment
Services and Capital Market Act" and "listing or registration"
shall be regarded as "listing," and under Article 53 (1) 11, "futures
trading or overseas
futures trading" shall be regarded as "exchange-traded derivatives trading."
Under the former part of Article
57 (1), "under the Korea Securities Futures Exchange Act"
shall be regarded as "under the Financial Investment Services and Capital
Market Act."
Under Article 59 (1) 13, "asset management business" shall be regarded as "collect
investment scheme service," under
Article 59 (2) 4, "the Act on Business of Operating
Indirect Investment and Assets" shall be regarded as "the Financial Investment
Services
and Capital Market Act," under Article 59 (2) 7, "asset management business" shall be
regarded as "collect investment
scheme service."
Under Article 60 (3), "the Act on Business of Operating Indirect Investment and Assets"
shall be regarded as "the Financial Investment
Services and Capital Market Act."
Under subparagraph 3 of the note section of Appendix 2, "the Act on Business of Operating
Indirect Investment and Assets" shall
be regarded as "the Financial Investment Services
and Capital Market Act."
(51) The Enforcement Decree of the Patriots and Veterans Fund Act shall be amended partially
as follows:
Subparagraph 2 of Article 7 shall be as follows and subparagraphs 3 and 4 of Article 7 shall
be deleted.
2. Collective investment manager, trust company and merchant bank under the Financial
Investment Services and Capital Market Act;
"Marketable securities pursuant to Article 2 (1) of the Securities and Exchange Act" under
Article 8 shall be regarded as "securities
pursuant to Article 4 of the Financial Investment
Services and Capital Market Act."
(52) The Enforcement Decree of the Lottery Tickets and Lottery Fund Act shall be amended
partially as follows:
"Marketable securities pursuant to Article 2 (1) of the Securities and Exchange Act" in
subparagraph 1 of Article 20 shall be regarded
as "securities pursuant to Article 4 of the
Financial Investment Services and Capital Market Act."
(53) The Enforcement Decree
of Public Notice of Values and Appraisal of Real Estate Act shall
be amended partially as follows:
Subparagraph 2 of Article 74 shall be as follows:
2. Broker and dealer under the Financial Investment Services and Capital Market Act;
(54) The Enforcement Decree of the Act on the
Management and Promotion of Real Estate
Development Business shall be amended partially as follows:
Under Article 6 (1) 2, "indirect
investment scheme of real estate in subparagraph 3 of
Article 27 of the Act on Business of Operating Indirect Investment and Assets"
shall be
deemed "collective investment scheme of real estate in subparagraph 2 of Article 229 of the
Financial Investment Services
and Capital Market Act" and Article 6 (2) 2 (b) shall be as
follows:
The Enforcement Decree of the Financial Investment Services and Capital Market Act
(b) Collective investment manager that manages
the property of the investment company
concerned falling under subparagraph 2 of paragraph (1) pursuant to Article 184 (2) of
the
Financial Investment Services and Capital Market Act;
(55) The Enforcement Decree of the Real Estate Investment Company Act shall
be amended
partially as follows:
"Marketable securities" in the title of Article 2 shall be "securities," subparagraph 1 of
paragraph (1) shall be as follows, and
subparagraph 2 of paragraph (1) shall be deleted:
1. Collective investment securities issued by collective investment scheme of real estate
pursuant to subparagraph 2 of Article 229
of the Financial Investment Services and
Capital Market Act;
Article 5 (1) 6 shall be as follows, subparagraphs 7, 8, 10 and 33 of Article 5 (1) shall be
deleted:
6. The Financial Investment Services and Capital Market Act;
Under the latter part of Article 13 (1) 8, "listed on the marketable
securities market
(hereinafter referred to as "marketable securities market") of the Korea Securities and
Futures Exchange pursuant
to Article 4 of the Korea Securities and Futures Exchange Act or
registered at the Korea Securities Dealers Association (hereinafter
referred to as "Korea
Securities Dealers Association") pursuant to Article 162 of the Securities and Exchange
Act" shall be regarded
as "listed on the securities market (hereinafter referred to as
"securities market") of the Korea Exchange pursuant to Article 373
of the Financial
Investment Services and Capital Market Act."
Under the proviso of Article 15 other than each subparagraph, "not listed on the marketable
securities market or registered as the
Korea Securities Dealers Association" shall be
regarded as "not listed on the securities market," and under the former part of
subparagraph 2 of Article 15, "marketable securities" shall be regarded as "securities,"
and "Article 82 of the Act on Business
of Operating Indirect Investment and Assets" shall
be regarded as "Article 260 of the Financial Investment Services and Capital
Market Act."
Article 18 (2) 3 shall be as follows:
3. Any person falling under Article 286 (1) 3 (c) of the Financial Investment Services
and Capital Market Act;
Under Article 19 (1), "license of securities business pursuant to Article 28 of the Securities
and Exchange Act" shall be regarded
as "authorization of dealing or brokerage pursuant to
Article 12 of the Financial Investment Services and Capital Market Act."
"Marketable securities" in subparagraph 5 of Article 20 shall be regarded as "securities."
Article 22 (1) 1 shall be as follows
and in the proviso of Article 22 (1) 3, "an asset
management company pursuant to Article 4 of the Act on Business of Operating Indirect
Investment and Assets" shall be regarded as "a collective investment manger pursuant to
Article 8 (4) of the Financial Investment
Services and Capital Market Act."
1. Trust business under the Financial Investment Services and Capital Market Act:
Provided, That the same shall only apply to the
trust business of properties falling under
subparagraphs 4 through 6 of Article 103 (1) of the same Act and the incidental business
thereof, and trust business under paragraph Article 103 (4) of the same Act and
incidental business thereof;
"Marketable securities" in Article 27 (3) 2 shall be regarded as "securities."
"Marketable securities" in the title of Article 31
and Article 31 (2) other than each
subparagraph shall be regarded as "securities," "public offering pursuant to subparagraph 2
of paragraph (3) of the Securities and Exchange Act" in Article 31 (2) 3 shall be regarded
as "public offering pursuant to Article
9 (7) of the Financial Investment Services and
Capital Market Act," "marketable securities" in Article 31 (2) 5 shall be regarded
as
"securities," and "pursuant to Article 145 of the Securities and Exchange Act" in Article
31 (2) 7 shall be regarded as "pursuant
to Article 324 of the Financial Investment Services
and Capital Market Act."
Article 33 (1) 9 shall be as follows and subparagraphs 11 and 13 of Article 33 (1) shall be
deleted.
9. Broker, dealer, trust company, merchant bank and securities finance company under
the Financial Investment Services and Capital
Market Act;
"Marketable securities" in Article 35 shall be regarded as "securities."
"Marketable securities" in subparagraph 2
of Article 36 shall be regarded as "securities."
The Enforcement Decree of the Financial Investment Services and Capital Market
Act
Under Article 37 (1) other than each subparagraph, "marketable securities" shall be
regarded as "securities," under Article
37 (1) 1, "Article 10 of the Trust Business Act"
shall be regarded as "Article 103 of the Financial Investment Services and Capital
Market
Act," and "trust company under the Trust Business Act" shall be regarded as "trust
company under the Financial Investment
Services and Capital Market Act," under Article
37 (1) 2, "marketable securities" shall be regarded as "securities," and "trust
company
under the Trust Business Act" shall be regarded as "trust company under the Financial
Investment Services and Capital Market
Act," under Article 37 (2), "marketable securities"
shall be regarded as "securities," "marketable securities to be deposited under
Article 173-
7 of the Securities and Exchange Act" shall be regarded as "securities, etc. to be deposited
under Article 308 the
Financial Investment Services and Capital Market Act," and "Korea
Depository" shall be "Korea Depository."
Under Article 38 (1) 7, "Article 18 of the Enforcement Decree of the Trust Business Act"
shall be regarded as "Article 109 of the
Financial Investment Services and Capital Market
Act" and under Article 38 (2) 7, "marketable securities" shall be regarded as "securities."
Under Article 40 (1) 6, "marketable securities" shall be regarded as "securities."
Under Article 45 (1) 6, "details of trading
marketable securities" shall be regarded as
"details of trading securities."
Under Article 47 (1) 2, "list on the marketable securities market or register at the Korea
Securities Dealers Association" shall
be regarded as "listed on the securities market."
(56) The Enforcement Decree of the Act on Special Measures for Support for Manufacturer
Specialized in Parts and Materials shall be amended partially as follows:
Article 7 (3) 2 shall be as follows, Article 7 (3) 3
shall be deleted, and under Article 7 (3) 5,
"a stock-listed corporation or a KOSDAQ-listed corporation pursuant to Article 2 (13)
3 and
Article 15 of the Securities and Exchange Act" shall be "a stock-listed corporation
pursuant to Article 9 (15) the Financial
Investment Services and Capital Market Act;"
2. Broker, dealer and collective investment manager under Article 8 of the Financial
Investment Services and Capital Market Act;
(57) The Enforcement Decree of the Intra-Company Labor Welfare Fund Act shall be amended
partially as follows:
"The Act on Business of Operating Indirect Investment and Assets" in subparagraph 1 of
Article 20 shall be "the Financial Investment
Services and Capital Market Act."
(58) The Enforcement Decree of the Pension for Private School Teachers and Staff Act shall be
amended partially as follows:
"Marketable securities" in Article 69-2 (2) 2 shall be "securities."
Article 87-2 (1) 2 shall be as follows and subparagraphs 3
and 4 of Article 87-2 (1) shall be
deleted, respectively.
2. Broker, dealer, collective investment manager, trust company, non-discretionary
investment advisory company, discretionary investment
advisory company, securities
finance company and merchant bank under the Financial Investment Services and
Capital Market Act;
Article 87-2 (2) 1 and Article 87-2 (3) 4 shall be shall be as follows.
1. Securities under Article 4 of the Financial Investment Services and Capital Market
Act;
4. Transaction of exchange-traded derivatives (limited to the transactions conducted on
the derivatives market pursuant to Article
9 (14) of the Financial Investment Services
and Capital Market Act) under Article 5 (2) of the Financial Investment Services and
Capital Market Act;
(59) The Enforcement Decree of the Act on Private Participation in Infrastructure shall be
amended partially as follows:
"Bonds referred to in Article 2 (1) 1 or 2 (1) 3 of the Securities and Exchange Act" in
subparagraph 2 of Article 28 shall be deemed
"government bonds, municipal bonds and
special bonds in subparagraph 3 of Article 4 of the Financial Investment Services and
Capital
Market Act" and "marketable securities" in subparagraph 3 of Article 28 shall be
deemed "securities."
"Article 56 of the Act on Business of Operating Indirect Investment and Assets" in Article
34-2 (1) shall be deemed "Articles 123
and 124 of the Financial Investment Services and
The Enforcement Decree of the Financial Investment Services and Capital Market
Act
Capital Market Act" and "an asset management company" in Article 34-2 (3) 8 shall be
deemed "a collective investment manager."
"Article 105 (1) of the Act on Business of Operating Indirect Investment and Assets" in the
former part of Article 34-4 (1) shall
be deemed "Articles 90 (1) of the Financial Investment
Services and Capital Market Act and Article 94 (1) of the Enforcement Decree
of the
Financial Investment Services and Capital Market Act," "asset management Association"
in the latter part of Article 34-4
(1) shall be deemed "Association," "in accordance with
Article 124 of the Act on Business of Operating Indirect Investment and Assets"
in Article
34-4 (2) shall be deemed "in accordance with Article 90 of the Financial Investment
Services and Capital Market Act."
"Indirect investment securities under Article 96 of the Act on Business of Operating Indirect
Investment and Assets" in the main
sentence of Article 34-5 shall be deemed "collective
investment securities under Article 238 of the Financial Investment Services
and Capital
Market Act."
(60) The Enforcement Decree of the Forestry Cooperatives Act shall be amended partially as
follows:
Article 11 (1) 2 shall be as follows, subparagraphs 3, 4, and 5 of Article 11 (1) shall be
deleted, "trust company under the Trust
Business Act" in Article 11 (2) 3 shall be deemed
"trust company under the Financial Investment Services and Capital Market Act,"
"asset
management company under the Act on Business of Operating Indirect Investment and
Assets" in Article 11 (2) 4 shall be deemed
"collective investment manager under the
Financial Investment Services and Capital Market Act," and "in accordance with the
Merchant
Banks Act" in Article 11 (2) 5 shall be deemed "in accordance with the Financial
Investment Services and Capital Market Act."
2. Broker, dealer, collective investment manager, trust company and merchant bank
under the Financial Investment Services and Capital
Market Act;
(61) The Enforcement Decree of the Industrial Development Act shall be amended partially as
follows:
Article 9 (6) 6 shall be as follows, subparagraphs 8 through 10, 19 and 27 shall be deleted,
respectively, and in the proviso of
article 9 (8) other than each subparagraph, "a stock-listed
corporation or an Association-registered company pursuant to the Securities
and Exchange
Act" shall be regarded as "a stock-listed company pursuant to the Financial Investment
Services and Capital Market
Act."
6. The Financial Investment Services and Capital Market Act;
"Pursuant to Article 10-3 (2) of the Enforcement Decree of the Securities
and Exchange
Act" in Article 11-3 (3) shall be regarded as "pursuant to Article 8 of the Enforcement
Decree of the Financial Investment
Services and Capital Market Act."
"Subparagraph 11 of Article 2 of the Act on Business of Operating Indirect Investment and
Assets"
in Article 14 (3) 3 shall be regarded as "Article 241 of the Financial Investment
Services and Capital Market Act" and "marketable
securities" in Article 14 (3) 4 shall be
regarded as "securities."
"Trust company under the Trust Business Act" in subparagraph 3 of Article 14-2 shall be
regarded as "trust company under the Financial
Investment Services and Capital Market
Act."
(62) The Enforcement Decree of the Industrial Sites and Development Act shall be amended
partially as follows:
Under Article 24-2 (1) other than each subparagraph and Article 24-2 (3), "real estate trust
companies" shall be "real estate trust
companies," respectively.
(63) The Enforcement Decree of the Industrial Accident Compensation Insurance Act shall be
amended partially
as follows:
"Marketable securities pursuant to Article 2 (1) of the Securities and Exchange Act" in
Article 86 (1) 2 shall be "securities pursuant
to Article 4 of the Financial Investment
Services and Capital Market Act."
(64) The Regulation on the Enforcement of Some Provisions of Commercial Code shall be
amended partially as follows:
"The Korea Securities Depository established pursuant to Article 173 (1) of the Securities
and Exchange Act and Article 180 (1)
of the same Act" in Article 4 shall be "the Korea
The Enforcement Decree of the Financial Investment Services and Capital Market
Act
Securities Depository pursuant to Article 294 (1) of the Financial Investment Services and
Capital Market Act and Article 365
(1) of the same Act."
(65) The Enforcement Decree of the Mutual Saving Banks Act shall be amended partially as
follows:
Under Article 7-2 (4) 1, "a stock-listed corporation or a KOSDAQ-listed corporation under
the Securities and Exchange Act" shall
be deemed "a stock-listed corporation under the
Financial Investment Services and Capital Market Act," under Article 7-2 (4) 3,
"Article
21 (1) of the Securities and Exchange Act" shall be deemed "Article 133 (3) of the
Financial Investment Services and Capital
Market Act," under Article 7-2 (5) 3 "a stock-
listed corporation or a KOSDAQ-listed corporation" shall be deemed "a stock-listed
corporation," and under Article 7-2 (5) 4, "the Korea Securities and Futures Exchange
pursuant to the Korea Securities Futures
Exchange Act, or securities-related institutions
pursuant to Article 2 (17) of the Securities and Exchange Act" shall be deemed
"the Korea
Exchange pursuant to the Financial Investment Services and Capital Market Act, or financial
services-related institutions
(excluding financial services-related organizations) pursuant to
Article 9 (17) of the same Act."
Under Article 9-4 (1), "the Korea Securities Futures Exchange Act" shall be deemed "the
Financial Investment Services and Capital
Market Act."
Articles 24 (1) 9 and 24 (1) 10 shall be as follows:
9. A trust company under the Financial Investment Services and Capital Market Act;
10. A merchant bank under the Financial Investment Services and Capital Market Act;
Under Article 27 (1) 4 shall be as follows and
subparagraphs 5 through 7, 15 and 16 shall be
deleted, respectively.
4. The Financial Investment Services and Capital Market Act;
"The Act on Business of Operating Indirect Investment and Assets" in
subparagraph 4 of
the note section of Appendix 1 shall be "the Financial Investment Services and Capital
Market Act."
"The Act on Business of Operating Indirect Investment and Assets" in subparagraph 2 of
the note section of Appendix 2 shall be "the
Financial Investment Services and Capital
Market Act."
(66) The Enforcement Decree of the Ship Investment Company Act shall be amended partially
as follows:
Article 2 (1) 13 shall be as follows and Article 2 (1) 15 shall be deleted:
13. The Financial Investment Services and Capital Market Act;
Subparagraph 5 of Article 4 shall be as follows:
5. Where securities are listed on the securities market (hereinafter referred to as
"securities market") of the Korea Exchange pursuant
to Article 373 of the Financial
Investment Services and Capital Market Act, the detail thereof;
"Securities market" in the proviso
of Article 9 other than each subparagraph shall be
"securities market."
"Pursuant to Article 10-3 of the Enforcement Decree of the Securities and Exchange Act"
in Article 10 shall be "pursuant to Article
141 of the Financial Investment Services and
Capital Market Act."
"Pursuant to Articles 10-3 (2) and 10-3 (3) of the Enforcement Decree of the Securities and
Exchange Act" in Article 16 shall be
""pursuant to Articles 8 and 141 (3) of the Financial
Investment Services and Capital Market Act."
"License of securities business" in Article 17 (1) 4 shall be "authorization of dealing or
brokerage."
"Marketable securities" in subparagraph 2 of Article 19 shall be "securities."
Under Article 20 (1) 2, "marketable securities" shall
be "securities" and under Article 20
(2), "marketable securities" shall be "securities," respectively, "marketable securities to
be deposited pursuant to Article 173-7 of the Securities and Exchange Act" shall be
"securities to be deposited pursuant to Article
308 of the Financial Investment Services and
Capital Market Act," and "Korea Depository" shall be "Korea Depository."
(67) The
Enforcement Decree of the Shipowners Mutual Protection and Indemnity Insurance
Act shall be amended partially as follows:
The Enforcement Decree of the Financial Investment Services and Capital Market Act
"Marketable securities listed on the Korea Stock
Exchange" in Article 4 (1) 1 shall be
deemed "securities listed on the Korea Exchange" and "A trust company under the Trust
Business
Act" in Article 4 (1) 4 shall be deemed "a trust company under the Financial
Investment Services and Capital Market Act," and "marketable
securities" shall be
deemed "securities."
(68) The Enforcement Decree of the Fisheries Cooperatives Act shall be amended partially as
follows:
"A trust company under the Trust Business Act" in Article 21 (1) 3 shall be deemed "a
trust company under the Financial Investment
Services and Capital Market Act," Article 21
(1) 4 shall be as follows, and "the Merchant Banks Act" in Article 21 (1) 5 shall be
deemed
"the Financial Investment Services and Capital Market Act:"
4. Collective investment securities under the Financial Investment Services and Capital
Market Act;
Article 21 (3) 2 shall be as follows and subparagraph 3 through 5 of Article 21 (3) shall be
deleted, respectively:
2. Broker, dealer, collective investment manager, trust company and Merchant bank
under the Financial Investment Services and Capital
Market Act;
Subparagraph 1 of Article 61 shall be as follows:
1. Securities under Article 4 of the Financial Investment Services and Capital Market
Act;
(69) The Enforcement Decree of the Use and Protection of Credit Information Act shall be
amended partially as follows:
Article 2 (2) 3 shall be as follows, subparagraphs 12, 13 and 19 of Article 2 (2) shall be
deleted, and Article 2 (3) shall be as
follows:
3. Broker, dealer, trust company collective investment manager, securities finance
company, merchant bank, fund brokerage company,
and transfer agent under the
Financial Investment Services and Capital Market Act;
(3) The term "securities prescribed by the Presidential
Decree" in subparagraph 11 of
Article 2 of the Act shall mean special bonds, corporate bonds and commercial papers
pursuant to
Article 4 (3) of the Financial Investment Services and Capital Market Act,
which are subject to underwriting referring to the underwriting (including the
business to arrange and intermediate a public offering,
secondary distribution and private
placement and to act as an agent for that purpose) pursuant to Article 9 (11) of the
Financial
Investment Services and Capital Market Act, brokerage and transaction by
financial institutions falling under the following subparagraphs:
1. Merchant bank under the Financial Investment Services and Capital Market Act;
2. Broker and dealer under the Financial Investment Services and Capital Market Act;
3. Trust company under Financial Investment Services and Capital Market Act; and
4. Investment company and collective investment manager under the Financial
Investment Services and Capital Market Act.
Under the main sentence of Article 4-2 (1) 3 (a), "marketable securities" shall be deemed
"securities," "Article 155 of the Act
on Business of Operating Indirect Investment and
Assets" shall be deemed "Article 263 of the Financial Investment Services and Capital
Market Act," and in the proviso of Article 4-2 (1) 3 (a), "marketable securities" shall be
deemed "securities."
Under Article 6-3 other than each subparagraph, "marketable securities" shall be deemed
"securities."
(70) The Enforcement Decree of the Credit Union Act shall be amended partially as follows:
Article 15 (1) 4 shall be as follows
and subparagraphs 5 through 8 shall be deleted,
respectively.
4. The Financial Investment Services and Capital Market Act;
Under Article 17-2 (2) 2, "indirect investment securities by securities
indirect investment
schemes under subparagraph 1 of Article 27 of the Act on Business of Operating Indirect
Investment and Assets,
or trust companies under the Trust Business Act" shall be regarded
as "collective investment securities by collective investment
schemes of securities under
subparagraph 1 of Article 229 of the Financial Investment Services and Capital Market Act,
or trust
companies under the same Act," "marketable securities market under Article 2 (12)
of the Securities and Exchange Act, and KOSDAQ
market under Article 2 (14) of the same
Act" shall be regarded as "securities market under Article 9 (13) of the same Act," and
"subparagraphs 8 and 9 of Article 2 of the Act on Business of Operating Indirect Investment
The Enforcement Decree of the Financial
Investment Services and Capital Market Act
and Assets" shall be regarded as "Articles 5 (2) and (3) of the same Act" and under
Article 17-2 (2) 3, "indirect investment securities by indirect investment schemes of short-
term finance under subparagraph 5 of
Article 27 of the Act on Business of Operating
Indirect Investment and Assets" shall be regarded as "collective investment securities
by
collective investment scheme of in subparagraph 5 of Article 229 of the Financial
Investment Services and Capital Market Act."
Article 19-7 (3) 1 (a) shall be as follows:
(a) Government bonds, municipal bonds, or special bonds pursuant to Article 4 (3) of the
Financial Investment Services and Capital
Market Act;
Under Article 19-7 (3) 1 (c), "indirect investment securities by securities indirect
investment schemes under subparagraph
1 of Article 27 of the Act on Business of Operating
Indirect Investment and Assets, or trust companies under the Trust Business
Act" shall be
regarded as "collective investment securities by collective investment schemes of securities
under subparagraph 1
of Article 229 of the Financial Investment Services and Capital
Market Act, or trust companies under the same Act" and Article 19-7
(3) 1 (d) shall be as
follows:
(d) Collective investment securities by a collective investment scheme of short-term
finance pursuant to subparagraph 5 of Article
229 of the Financial Investment Services
and Capital Market Act;
Article 19-7 (3) 2 (a) shall be as follows, under Article 19-7 (3) 2 (d), "indirect investment
securities of indirect investment
schemes pursuant to subparagraphs 1, 3, 5, and 6 of Article
27 of the Act on Business of Operating Indirect Investment and Assets
or a trust company
under the Trust Business Act" shall be regarded as "collective investment securities by
collective investment
scheme of securities in subparagraphs 1, 2 and 5 of Article 229 of the
Financial Investment Services and Capital Market Act, or
trust companies under the same
Act," under Article 19-7 (4) 2 (b) and Article 19-7 (4) 3, "indirect investment securities by
indirect
investment schemes of short-term finance in subparagraph 5 of Article 27 of the Act
on Business of Operating Indirect Investment
and Assets" shall be regarded as "collective
investment securities by collective investment scheme of short-term finance in subparagraph
5 of Article 229 of the Financial Investment Services and Capital Market Act" and
"subparagraphs 8 and 9 of Article 2 of the Act on Business of Operating Indirect Investment
and Assets" shall be regarded as "Articles
5 (2) and 5 (3) of the Financial Investment
Services and Capital Market Act."
(a) Government bonds, municipal bonds, or special bonds pursuant to Article 4 (3) of the
Financial Investment Services and Capital
Market Act;
"Any of the subparagraphs of Article 10-3 (2) of the Enforcement Decree of the Securities
and Exchange Act" in Article
19-14 (1) 2 shall be regarded as "any of the subparagraphs of
Article 8 of the Enforcement Decree of the Financial Investment Services
and Capital
Market Act."
(71) The Enforcement Decree of the Fishing Vessels' and Their Crew Members' Accident
Compensation Insurance Act shall be amended
partially as follows:
"An investment trust under subparagraph 3 of Article 2 of the Act on Business of Operating
Indirect Investment
and Assets" in Article 16 (1) 2 shall be "an investment trust under
Article 9 (18) 1 of the Financial Investment Services and Capital
Market Act."
(72) The Enforcement Decree of the Framework Act on Women's Development shall be
amended partially as follows:
"Marketable securities pursuant to Article 2 (1) of the Securities and Exchange Act" in
Articled 30 (1) 2-2 shall be "securities
pursuant to Article 4 of the Financial Investment
Services and Capital Market Act."
(73) The Enforcement Decree of the Specialized Credit Financial Business Act shall be
amended partially as follows:
Under Article 3 (1) 6, "the Merchant Banks Act" shall be regarded as "the Financial
Investment Services and Capital Market Act."
Under Article 19 (2) 1, "license of securities business under the Securities and Exchange
Act" shall be regarded as "authorization
of dealing under the Financial Investment
Services and Capital Market Act" and under Article 19 (2) 2, "merchant banks under the
Merchant Banks Act or securities companies under the Securities and Exchange Act" shall
be regarded as "merchant banks, or dealers
and brokers under the Financial Investment
Services and Capital Market Act."
The Enforcement Decree of the Financial Investment Services and Capital Market Act
Under the proviso of Article 19-3 (1), "the Korea
Securities Futures Exchange Act" shall
be regarded as "the Financial Investment Services and Capital Market Act" and under
Article
19-3 (2), "Article 2 (3) or 2 (4) of the Securities and Exchange Act" shall be
regarded as "Article 9 (7) or 9 (9) of the Financial
Investment Services and Capital Market
Act."
Article 19-7 (2) 4 shall be as follows and subparagraphs 5 through 8 of Article 19-7 (2) shall
be deleted, respectively.
4. The Financial Investment Services and Capital Market Act;
Under Article 19-8 (3) 1, "a stock-listed corporation or a KORDAQ-listed
corporation"
shall be regarded as "a stock-listed corporation."
Under subparagraph 3 of Article 19-9, "a stock-listed corporation
or a KORDAQ-listed
corporation" shall be regarded as "a stock-listed corporation" and under subparagraph 4 of
Article 19-9, "the
Korea Securities and Futures Exchange pursuant to the Korea Securities
Futures Exchange Act, or securities-related institutions
pursuant to Article 2 (17) of the
Securities and Exchange Act" shall be regarded as "the Korea Exchange under the
Financial Investment
Services and Capital Market Act, or financial services-related
institutions (excluding financial services-related organizations)
under Article 9 (17) of the
same Act."
Under subparagraph 4 of the note section of Appendix 1, "the Act on Business of Operating
Indirect Investment and Assets" shall
be regarded as "the Financial Investment Services
and Capital Market Act."
Under subparagraph 2 of the note section of Appendix 1-2, "the Act on Business of
Operating Indirect Investment and Assets" shall
be regarded as "the Financial Investment
Services and Capital Market Act."
(74) The Enforcement Decree of the Depositor Protection Act shall be amended partially as
follows:
Under Article 3 (3) other than each subparagraph, "securities company" shall be "broker
or dealer," "from customers" shall be "from
investors," "customer's deposit" shall be
"investor's deposit," under Article 3 (3) 1, "customer's deposit" shall be "investor's
deposit," and under subparagraphs 3 and 4 of Article 3 (3), "under the Securities and
Exchange Act" shall be "under the Financial
Investment Services and Capital Market Act,"
respectively, and "marketable securities" shall be "securities."
Under Article 14
(1) 2, "a securities company" shall be regarded as "a broker or dealer."
Under Article 17-2, "pursuant to each subparagraph of Article
10-3 (2) of the Enforcement
Decree of the Securities and Exchange Act" shall be regarded as "pursuant to each
subparagraph of Article
8 of the Enforcement Decree of Financial Investment Services and
Capital Market Act."
Under Article 18 (4), "a securities company" shall be regarded as "a broker or dealer"
and "marketable securities" shall be regarded
as "securities."
Under the insured financial institution section of subparagraph 2 of Appendix 1, "a
securities company" shall
be regarded as "a broker or dealer," and under subparagraph 3
of Note section of Appendix 1, "a securities company deposits customer's
deposit pursuant
to Article 44-3 (1) of the Securities and Exchange Act" shall be regarded as "a broker or
dealer deposits investor's
deposit pursuant to Article 74 (1) of the Financial Investment
Services and Capital Market Act."
Under the insured financial institution section of subparagraph 2 of Appendix 1-2, "a
securities company" shall be regarded as "a
broker or dealer."
(75) The Enforcement Decree of the Hot Spring Act shall be amended partially as follows:
"A trust company under
the Trust Business Act" in Article 7-2 (1) 5 shall be "a trust
company under the Financial Investment Services and Capital Market
Act."
(76) The Enforcement Decree of the Foreign Investment Promotion Act shall be amended
partially as follows:
"Listed or registered on the marketable securities market" in Article 2 (9) 1 shall be "listed
on the securities market."
(77) The Enforcement Decree of the Foreign Exchange Transactions Act shall be amended
partially as follows:
The Enforcement Decree of the Financial Investment Services and Capital Market Act
"The Merchant Banks Act" in subparagraph 2 of
Article 14 other than each item and item
(b) of subparagraph 2 of Article 14 shall be regarded as "the Financial Investment Services
and Capital Market Act."
Article 24 (2) 3 shall be as follows and subparagraphs 4 and 5 shall be deleted, respectively:
3. Broker, dealer, collective investment manager, trust company and merchant bank
under the Financial Investment Services and Capital
Market Act;
(78) The Enforcement Decree of the Act on Special Accounts for Postal Insurance shall be
amended partially as follows:
Article 5 (1) 4 shall be as follows:
4. Transaction of over-the-counter derivatives pursuant to Article 5 (3) of the Financial
Investment Services and Capital Market
Act;
(79) The Enforcement Decree of the Atomic Energy Act shall be amended partially as follows:
"Marketable securities pursuant to Article
2 (1) of the Securities and Exchange Act" in
subparagraph 1 of Article 20-22 shall be regarded as "securities pursuant to Article
4 of the
Financial Investment Services and Capital Market Act."
(80) The Enforcement Decree of the Nuclear Damage Compensation
Act shall be amended
partially as follows:
Under Article 4 other than each subparagraph, "marketable securities falling under any of
the following subparagraph among the those
pursuant to the Securities and Exchange Act"
shall be deemed "securities falling under any of the following subparagraph among the
those pursuant to the Financial Investment Services and Capital Market Act," under
subparagraph 1 of Article 4, "pursuant to Article
2 (1) 1 of the Securities and Exchange
Act" shall be deemed "pursuant to Article 4 (3) of the Financial Investment Services and
Capital Market Act," and under subparagraph 2 of Article 4, "pursuant to Article 2 (1) 2 of
the Securities and Exchange Act" shall
be deemed "pursuant to Article 4 (3) of the
Financial Investment Services and Capital Market Act."
(81) The Enforcement Decree
of the Banking Act shall be amended partially as follows:
Article 13 (1) 7 shall be as follows and subparagraphs 9 through 12 and
24 of Article 13 (1)
shall be deleted, respectively:
7. The Financial Investment Services and Capital Market Act;
Article 13 (3) 4 shall be as follows and subparagraphs 5 through 8 of
Article 13 (3) shall be
deleted, respectively:
4. The Financial Investment Services and Capital Market Act;
"Under the Trust Business Act" in subparagraph 1 of Article 18-3 shall
be deemed "under
the Financial Investment Services and Capital Market Act" and subparagraph 3 of Article
18-3 shall as follows:
3. Collective investment scheme service and dealing or brokerage under the Financial
Investment Services and Capital Market Act;
Article 19 (5) shall be deleted.
"Pursuant to Articles 2 (3) and 2 (4) of the Securities and Exchange Act" in Article 20-5 (6)
shall be regarded as "pursuant to
Articles 9 (7) and 9 (9) of the Financial Investment
Services and Capital Market Act."
"Marketable securities market and association brokerage market pursuant to the Securities
and Exchange Act" in Article 20-6 (4)
shall be regarded as "securities market pursuant to
the Financial Investment Services and Capital Market Act."
"The Securities
and Exchange Act" in Articles 24-4 (1) 4 and 24-4 (2) 3 shall be regarded
as "the Financial Investment Services and Capital Market
Act," respectively.
Under the classification section of subparagraph 1 of the Appendix "securities investment
company pursuant
to the Securities Investment Company Act" shall be regarded as "trust
company, investment limited liability company, or investment
limited partnership company,
and investment limited partnership pursuant to the Financial Investment Services and
Capital Market
Act," under the classification section of subparagraph 2 of the Appendix,
"securities investment company pursuant to the Securities
Investment Company Act" shall
be regarded as "trust company, investment limited liability company, or investment limited
partnership
company, and investment limited partnership pursuant to the Financial
Investment Services and Capital Market Act," under item (a)
of the requirements section of
subparagraph 2 of the Appendix, "an asset management company (referring to the asset
management
company pursuant to subparagraphs 2 of Article 2 of the Securities Investment
The Enforcement Decree of the Financial Investment
Services and Capital Market Act
Company Act") shall be regarded as "a collective investment manager (referring to the
collective
investment manager pursuant to Article 8 (4) of the Financial Investment Services
and Capital Market Act"), under item (a) under
the requirements section of subparagraph 5
of the Appendix, "securities business" shall be regarded as "brokerage and dealing",
and
under the classification section and item (b) under the requirements section of subparagraph
6 of the Appendix, "the Act on
Business of Operating Indirect Investment and Assets"
shall be regarded as "the Financial Investment Services and Capital Market
Act."
(82) The Enforcement Decree of the Rental Housing Act shall be amended partially as follows:
Article 14 (4) 2 shall be as
follows and "trust company established after obtaining an
authorization pursuant to Article 3 of the Trust Business Act" in Article
14 (4) 4 (d) shall be
"trust company established after obtaining an authorization pursuant to Article 12 of the
Financial Investment
Services and Capital Market Act:"
2. Collective investment scheme under the Financial Investment Services and Capital
Market Act;
"A trust company established after obtaining an authorization pursuant to Article 3 of the
Trust Business Act" in Article 17 (2)
shall be "a trust company established after obtaining
an authorization pursuant to Article 12 of the Trust Business Act."
(83)
The Enforcement Decree of the Asset-Backed Securitization Act shall be amended
partially as follows:
Subparagraph 4 of Article 2 shall be as follows:
4. Trust company under the Financial Investment Services and Capital Market Act;
"A trust company" in Article 4 (1) shall be "a trust
company."
(84) The Enforcement Decree of the Special Act on Assistance to Farmers, Fishermen, etc.
Following the Conclusion of
Free Trade Agreements shall be amended partially as follows:
"Marketable securities pursuant to Article 2 (1) of the Securities
and Exchange Act" in
subparagraph 2 of Article 14 shall be regarded as "securities pursuant to Article 4 of the
Financial Investment
Services and Capital Market Act."
(85) The Enforcement Decree of the Framework Act on the Management of Disasters and Safety
shall
be amended partially as follows:
"A securities company" in the section on the criteria for designating finance of Appendix 3
shall be "brokerage and dealing."
(86) The Enforcement Decree of the Special Act on the Nurturing of Traditional Markets and
shopping district shall be amended partially
as follows:
"A trust company under Article 2 of the Trust Business Act" in Article 26 shall be deemed
"a trust company established
after obtaining an authorization pursuant to Article 12 of the
Financial Investment Services and Capital Market Act."
(87) The
Enforcement Decree of the Telecommunications Business Act shall be amended
partially as follows:
"A stock-listed corporation or a KOSDAQ-listed corporation pursuant to Articles 2 (13) 3 or
2 (15) of the Securities and Exchange
Act" in Article 59 (2) 1 shall be deemed "a stock-
listed corporation pursuant to Article 9 (15) 3 of the Financial Investment Services
and
Capital Market Act."
(88) The Enforcement Decree of the Electronic Finance Transaction Act shall be amended
partially as follows:
Subparagraphs 7, 8, and 12 of Article 2 shall be as follows and subparagraph 13 of Article 2
shall be deleted:
7. The Korea Exchange under the Financial Investment Services and Capital Market Act;
8. The Korea Depository under the Financial Investment Services and Capital Market
Act;
12. The Korea Financial Investment Association under the Financial Investment Services
and Capital Market Act;
Under Article 15 (2) 2 (a), "a securities company under the Securities and Exchange Act"
shall be deemed "a broker or dealer under
the Financial Investment Services and Capital
Market Act," Article 15 (2) 2 (b) shall be deleted, and under Article 15 (2) 2 (c),
"the
Merchant Banks Act" shall be deemed "the Financial Investment Services and Capital
Market Act."
Under the main sentence of Article 18 (3) 1 other than each item, "Article 2-8 of the
Enforcement Decree of the Securities and Exchange
Act" shall be deemed "Article 8 of the
Enforcement Decree of the Financial Investment Services and Capital Market Act."
The Enforcement
Decree of the Financial Investment Services and Capital Market Act
Under Articles 25 (1) 1 (d) and 25 (1) 2 (c), "the Securities
and Exchange Act" shall be
deemed "the Financial Investment Services and Capital Market Act."
Subparagraph 8 of Appendix 1 shall
be as follows and subparagraphs 9 through 11 and 24
shall be deleted, respectively.
8. The Financial Investment Services and Capital Market Act;
(89) The Enforcement Decree of the Electronic Promissory Note Act shall
be amended
partially as follows:
"The Securities and Exchange Act" in Article 14 (2) 3 shall be "the Financial Investment
Services and Capital Market Act."
(90) The Enforcement Decree of the Act on Promotion of Information and Communications
Network Utilization and Information Protection,
etc. shall be amended partially as follows:
"Article 2-8 of the Securities and Exchange Act" in subparagraphs 1 and 2 of Article
66-4
shall be "Article 8 of the Financial Investment Services and Capital Market Act."
(91) The Enforcement Decree of the Government
Procurement Act shall be amended partially
as follows:
"(Futures trading)" in the title of Article 6 shall be "(transactions of exchange-traded
derivatives)" and "the Futures Exchange"
in Article 6 (1) shall be "the Korea Exchange"
and "futures trading" shall be "transactions of exchange-traded derivatives."
(92)
The Enforcement Decree of the Resident Registration Act shall be amended partially as
follows:
Item (e) of subparagraph 3 of Appendix 2 shall be as follows and item (f) shall be deleted:
(e) Trust company and securities finance
company under the Financial Investment
Services and Capital Market Act;
(93) The Enforcement Decree of the Act on External Audit of Stock Companies shall be
amended partially as follows:
Under Article 1-4 (2) 4, "pursuant to the Act on Business of Operating Indirect Investment
and Assets" shall be regarded as "pursuant
to the Financial Investment Services and
Capital Market Act."
Under Article 2 (1) 2, "a stock-listed corporation (referring to a stock-listed corporation
under the Securities and Exchange Act:
hereinafter the same shall apply) or a KOSDAQ-
listed corporation (referring to a KOSDAQ-listed corporation under the Securities and
Exchange Act: hereinafter the same shall apply)"
shall be regarded as "a stock-listed
corporation (referring to a stock-listed corporation under the Financial Investment Services
and Capital Market Act: hereinafter the same shall apply)," "a stock-listed corporation or a
KOSDAQ-listed corporation" shall be
regarded as "a stock-listed corporation," and under
Article 2 (2) 1-2, "the Act on Business of Operating Indirect Investment and
Assets" shall
be regarded as "the Financial Investment Services and Capital Market Act."
Under Article 2-3 (3), "a stock-listed
corporation or a KOSDAQ-listed corporation" shall
be regarded as "a stock-listed corporation."
Under Article 3 (1), "a stock-listed corporation" shall be regarded as "a listed corporation
on the marketable securities market
(referring to a corporation issuing stocks listed on the
marketable securities market in accordance with the Financial Investment
Services and
Capital Market Act; hereinafter the same shall apply)," and "a stock-listed corporation"
shall be regarded as "a listed
corporation on the marketable securities market."
Under Article 4 (4) other than each subparagraph, "a stock-listed corporation"
shall be
regarded as "a listed corporation on the marketable securities market," under Article 4 (4)
2, "pursuant to Article 88
of the Securities and Exchange Act" shall be regarded as
"pursuant to Article 390 of the Financial Investment Services and Capital
Market Act,"
under Article 4 (4) 5, "the Securities and Exchange Act" shall be regarded as "the
Financial Investment Services and
Capital Market Act," under Article 4 (5) 1 other than
each item, "a stock-listed corporation or a KOSDAQ-listed corporation" shall
be regarded
as "a stock-listed corporation," items (a) and (b) of Article 4 (5) 1 shall be as follows,
under item (c) of Article
4 (5) 1, "a stock-listed corporation or a KOSDAQ-listed
corporation" shall be regarded as "a stock-listed corporation," under Article
4 (5) 2, "a
KOSDAQ-listed corporation" shall be regarded as "a listed corporation on the KOSDAQ
market," and "the Securities and
Exchange Act" shall re regarded as "the Financial
Investment Services and Capital Market Act," and under Article 4 (5) 3 "a KOSDAQ-
listed corporation" shall be regarded as "a listed corporation on the KOSDAQ market."
The Enforcement Decree of the Financial Investment
Services and Capital Market Act
(a) A listed corporation on the marketable securities market to become a listed
corporation on
the KOSDAQ market (referring to a corporation issuing stocks listed on
the KOSDAQ market in accordance with the Financial Investment
Services and Capital
Market Act; hereinafter the same shall apply);
(b) A listed corporation on the KOSDAQ market to become a listed corporation on the
marketable securities market;
Under subparagraph 2 of Article 6, "a stock-listed corporation or a KOSDAQ-listed
corporation" shall be deemed "a stock-listed corporation."
Under Article 7 (1) 2, "a stock-listed corporation or a KOSDAQ-listed corporation" shall
be deemed "a stock-listed corporation"
and under Article 7 (3), "a stock-listed corporation
or a KOSDAQ-listed corporation" shall be deemed "a stock-listed corporation."
Under Article 7-2 (3), "pursuant to Article 206-8 (1) 2 of the Securities and Exchange Act"
shall be regarded as "pursuant to Article
442 (1) of the Financial Investment Services and
Capital Market Act."
Subparagraph 5 of Article 17 shall be as follows and subparagraphs 7 and 8 of Article 17
shall be deleted, respectively.
5. Collective investment manager, trust company and merchant banks pursuant to the
Financial Investment Services and Capital Market
Act;
(94) The Enforcement Decree of the Housing Act shall be amended partially as follows:
"Marketable securities pursuant to Article
2 (1) of the Securities and Exchange Act" in
subparagraph 1 of Article 89 shall be regarded as "securities pursuant to Article 4
of the
Financial Investment Services and Capital Market Act" and "the Securities Exchange" in
subparagraph 3 of Article 89 shall
be regarded as "the Korea Exchange."
"The Korea Depository pursuant to Article 173 of the Securities and Exchange Act" in the
former
part of article 91 (3) shall be regarded as "the Korea Depository pursuant to Article
294 of the Financial Investment Services and
Capital Market Act."
(95) The Enforcement Decree of the Special Purpose Companies for Mortgage-Backed Bonds
Act shall be amended
partially as follows:
"The Securities Exchange or association brokerage market under the Securities and
Exchange Act" in the main sentence of Article
6 shall be "securities market (hereafter in
this Article, referred to as "securities market") under the Financial Investment Services
and
Capital Market Act" and "not listed on the Securities Exchange or registered on the
association brokerage market" in the proviso
of Article 6 shall be "not listed on the
securities market."
(96) The Enforcement Decree of the Special Act on Promoting Conversion of Small and
Medium Enterprises shall be amended partially
as follows:
Subparagraph 1 of Article 14 shall be as follows:
1. Broker and dealer (limited to those who have obtained an authorization for
underwriting securities, and arranging and intermediating
the underwriting of securities,
or acting as an agent for that purpose) under the Financial Investment Services and
Capital Market
Act;
(97) The Enforcement Decree of the Support for Small and Medium Enterprise Establishment
Act shall be amended partially as follows:
Article 9 (2) 3 shall be as follows, subparagraphs 4 through 7 of Article 9 (2) shall be
deleted, respectively, and "Article 2-8
of the Enforcement Decree of the Securities and
Exchange Act" in Article 9 (5) 1 shall be "Article 8 of the Financial Investment
Services
and Capital Market Act:"
3. The Financial Investment Services and Capital Market Act;
"Securities market pursuant to Article 2 (1) of the Korea Securities
and Futures Exchange
Act or the KOSDAQ market pursuant to Article 2 (2) of the same Act" in Article 10 (1) 1
shall be "securities
market pursuant to Article 9 (13) of pursuant to the Financial
Investment Services and Capital Market Act" and "Article 144-6 of
the Act on Business of
Operating Indirect Investment and Assets" in Article 10 (1) 2 (b) shall be "Article 9 (18) 7
of the Financial
Investment Services and Capital Market Act."
"A trustee company of investment company pursuant to Article 23 (1) of the Act on
Business of Operating Indirect Investment and Assets" in Article 14 (3) 5 shall be "a trust
The Enforcement Decree of the Financial
Investment Services and Capital Market Act
company pursuant to Article 8 (7) of the Financial Investment Services and Capital Market
Act."
(98) The Enforcement Decree of the Act on Contracts to Which a municipal government is a
Party shall be amended partially as follows:
Article 37 (2) 2 shall be as follows, "a trust company under the Trust Business Act" in
Article 37 (2) 6 shall be "a trust company
under the Financial Investment Services and
Capital Market Act," and "a trust company under the Act on Business of Operating
Indirect
Investment and Assets" in Article 37 (2) 7 shall be "a collective investment
manager under the Financial Investment Services and
Capital Market Act," and
"beneficiary certificates" shall be "collective investment securities."
2. Securities pursuant to Article 192 of the Financial Investment Services and Capital
Market Act;
(99) The Enforcement Decree of the Framework Act on Juveniles shall be amended partially as
follows:
"Marketable securities pursuant to Article 2 (1) of the Securities and Exchange Act" in
Article 34 (1) 2 shall be regarded as "securities
pursuant to Article 4 of the Financial
Investment Services and Capital Market Act."
(100) The Enforcement Decree of the Act on the Aggravated Punishment, etc. of Specific
Economic Crimes shall be amended partially
as follows:
Subparagraph 2 of Appendix 1 shall be as follows:
2. The Korea Exchange;
(101) The Enforcement Decree of the Act on Report on Specific Financial Transaction
Information and Utilization
Thereof, etc. shall be amended partially as follows:
Subparagraph 3 of Article 2 shall be as follows:
3. A discretionary investment advisory under the Financial Investment Services and
Capital Market Act;
Articles 10 (1) 1 and 10 (1) 3 shall be as follows and "the Trust Business Act" in Article 10
(2) 2 shall be deemed "the Financial
Investment Services and Capital Market Act" and "trust
company" shall be deemed "trust company."
1. A securities finance company and transfer agency under the Financial Investment
Services and Capital Market Act;
3. A collective investment manager under the Financial Investment Services and Capital
Market Act;
(102) The Enforcement Decree of the Act on the Aggravated Punishment, etc. of Specific
Crimes shall be amended partially as follows:
Subparagraph 10 of Article 2 shall be as follows:
10. The Korea Exchange;
(103) The Enforcement Decree of the Storm and Flood Insurance Act shall be amended
partially as follows:
"Beneficiary certificates of an investment trust in subparagraph 3 of Article 2 of the Act on
Business of Operating Indirect Investment
and Assets" in Article 15 (1) 2 shall be deemed
"collective investment securities pursuant to Article 9 (21) of the Financial Investment
Services and Capital Market Act" and "marketable securities" in Article 15 (1) 3 shall be
deemed "securities."
(104) The Enforcement Decree of the Sciences Promotion and Credit Guarantee, etc. for School
Expense Loans Act shall be amended
partially as follows:
"Pursuant to the Trust Business Act" in subparagraph 1 of Article 2-2 shall be deemed
"pursuant to the Financial
Investment Services and Capital Market Act" and "trust
company" shall be deemed "trust company."
"Marketable securities" in Article 28 (1) 2 shall be regarded as "securities."
"Marketable securities" in subparagraph 1 of Article
49 shall be regarded as "securities."
(105) The Enforcement Decree of the Korea Foundation for the Promotion of Private School Act
shall be amended partially as follows:
"Marketable securities" in Articles 3 (1) 2 and 3 (1) 3 shall be regarded as "securities."
(106) The Enforcement Decree of the Korea
Minting and Security Printing Corporation Act
shall be amended partially as follows:
"The Korea" in subparagraph 2 of Article 10 shall be "the Korea Depository,"
subparagraph 6 of Article 10 shall be as follows, and
subparagraph 7 of Article 10 shall be
deleted:
The Enforcement Decree of the Financial Investment Services and Capital Market Act
6. Merchant bank and collective investment manager under the Financial Investment
Services and Capital Market Act;
(107) The Enforcement Decree of the Korea Housing Finance Corporation Act shall be
amended partially as follows:
"Pursuant to the Korea Securities and Futures Exchange Act" in the main sentence of
article 18 (2) shall be deemed "pursuant to
the Financial Investment Services and Capital
Market Act."
(108) The Enforcement Decree of the shall be amended partially as follows:
Article 2 (1) 1 (b) shall be as follows, items (c) and
(d) of Article 2 (1) 1 shall be deleted,
respectively, and "marketable securities" in Articles 2 (1) 2 and 2 (1) 3 shall be deemed
"securities:"
(b) Broker, dealer, collective investment manager, trust company, discretionary
investment advisory company, non-discretionary investment
advisory company,
securities finance company, and merchant bank under the Financial Investment Services
and Capital Market Act;
(109) The Enforcement Decree of the Korea Land Corporation Act shall be amended partially
as follows:
Subparagraph 2 of Article 12-2 shall be as follows:
2. Collective investment scheme pursuant to Article 9 (18) of the Financial Investment
Services and Capital Market Act;
Subparagraph 10 of Article 42 shall be as follows and subparagraph 12 of Article 12-2 shall
be deleted:
10. Trust company and merchant bank under the Financial Investment Services and
Capital Market Act;
(110) The Enforcement Decree of the shall be amended partially as follows:
Article 3 (1) 2 shall be as follows, under Article 3
(1) 3, "a securities company under the
Securities and Exchange Act" shall be deemed "a broker and dealer under the Financial
Investment
Services and Capital Market Act," and under Article 3 (1) 4, "asset
management business" shall be deemed "collective investment
scheme service,"
"securities business" shall be deemed "brokerage and dealing," and "indirect investment
scheme" shall be deemed "collective investment
scheme."
2. A collective investment manger under the Financial Investment Services and Capital
Market Act that manages a collective investment
scheme with not less than two trillion
won in total assets as of the end of the latest business year;
(111) The Enforcement Decree
of the Installment Transactions Act shall be amended partially
as follows:
Subparagraph 4 of Article 2 shall be as follows:
4. Securities pursuant to Article 4 of the Financial Investment Services and Capital
Market Act;
(112) The Enforcement Decree of the Act on Development and Utilization of Harbor and
Neighboring Areas shall be amended partially
as follows:
"A trust company pursuant to the Trust Business Act" in Article 14 (2) 2 shall be regarded
as "a trust company pursuant
to the Financial Investment Services and Capital Market Act"
and "real estate trust company" in Article 14 (2) 5 shall be regarded
as "real estate trust
company."
(113) The Enforcement Decree of the Overseas Resources Development Business Act shall be
amended partially as follows:
Under Article 2 (1) 1, "pursuant to Article 10-3 of the Enforcement Decree of the Securities
and Exchange Act" shall be deemed "pursuant
to Article 141 of the Enforcement Decree of
the Financial Investment Services and Capital Market Act."
Under the former part of
Article 12-2 (1), "Article 105 (1) of the Act on Business of
Operating Indirect Investment and Assets" shall be deemed "Articles
90 (1) of the
Financial Investment Services and Capital Market Act and 94 (1) of the Enforcement Decree
of the Financial Investment
Services and Capital Market Act," under the latter part of
Article 12-2 (1), "Asset Management Association" shall be deemed "Association,"
and
under Article 12-2 (2), "Article 124 of the Act on Business of Operating Indirect
Investment and Assets" shall be deemed "Article
90 of the Financial Investment Services
and Capital Market Act."
The Enforcement Decree of the Financial Investment Services and Capital Market Act
In the title of Article 12-3, "(fund manager
of an asset management company)" shall be
"(investment manager of a collective investment manager)," under Article 12-3 (1) other
than each subparagraph, "specialized asset management company" shall be "specialized
collective investment manager," "fund manager"
shall be "investment manager," and
"meeting any of the requirements falling under each subparagraph of Article 17 (1) of the
Act
on Business of Operating Indirect Investment and Assets" shall be "pursuant to Article
286 (1) 3 (c) of the Financial Investment
Services and Capital Market Act," under Article
12-3 (1) 1, "business of fund manager pursuant to Article 17 (1) of the Act on Business
of
Operating Indirect Investment and Assets" shall be "business of investment manager
pursuant to Article 286 (1) 3 (c) of the
Financial Investment Services and Capital Market
Act," under Article 12-3 (1) 4, "an asset management company under Article 4 of
the Act
on Business of Operating Indirect Investment and Assets or a financial institution under
Article 6 of the Enforcement Decree
of the same Act" shall be "a collective investment
manager under Article 8 of the Financial Investment Services and Capital Market
Act or a
financial institution under Article 79 (2) 5 of the Enforcement Decree of the same Act," and
under Article 12-3 (2), "ordinary
asset management company" shall be "ordinary
collective investment company" and "fund manager" shall be "investment manager."
"An
asset management company" in the title of Article 12-4 shall be "a collective
investment manager" and "ordinary asset management
company" in the Article 12-4 shall
be "ordinary collective investment company."
"An asset management company" in the title of Article 12-5 shall be "a collective
investment manager."
"Article 165 of the Act on Business of Operating Indirect Investment and Assets" in Article
12-6 shall be "Article 86 (2) of the
Financial Investment Services and Capital Market Act."
"Private offering indirect investment fund referred to in Article 175 of
the Act on Business
of Operating Indirect Investment and Assets" in Article 12-7 (3) shall be "private equity
fund pursuant to
Article 9 (19) of the Financial Investment Services and Capital Market
Act."
"Falling under any of subparagraph 3 or 9 of Article 2 (1) of the Securities and Exchange
Act" in the main sentence of Article 12-9
(2) shall be "falling under any of the securities
(excluding government bonds, and municipal bonds) under Article 4 of the Financial
Investment Services and Capital Market Act" and "Article 88 of the Act on Business of
Operating Indirect Investment and Assets"
in the proviso of Article 12-9 (2) shall be
"Article 81 of the same Act."
Article 27 (Transitional Measures concerning Amendments of Other Acts and
Subordinate Statutes)
(1) In the application of Article 17 (1) 7 of the Enforcement Decree of the Financial Holding
Companies Act which is amended pursuant
to Article 26 (35) of Addenda of this Decree, "the
Financial Investment Services and Capital Market Act" shall be deemed to include
the
Securities Exchange Act, the Merchant Banks Act, the Trust Business Act, the Act on Business
of Operating Indirect Investment
and Assets and the Futures Trading Act.
(2) In the application of Article 5 (1) 7 of the Enforcement Decree of the Corporate
Restructuring
Investment Companies Act which is amended pursuant to Article 26 (38) of
Addenda of this Decree, "the Financial Investment Services
and Capital Market Act" shall be
deemed to include the Securities Exchange Act, the Merchant Banks Act, the Trust Business
Act,
the Act on Business of Operating Indirect Investment and Assets and the Futures Trading
Act.
(3) In the application of Articles 19 (2) 8 and Article 19 (3) 4 of the Enforcement Decree of the
Insurance Business Act which is
amended pursuant to Article 26 (50) of Addenda of this
Decree, "the Financial Investment Services and Capital Market Act" shall
be deemed to
include the Securities Exchange Act, the Merchant Banks Act, the Trust Business Act, the Act
on Business of Operating
Indirect Investment and Assets and the Futures Trading Act.
(4) In the application of Article 5 (1) 6 of the Enforcement Decree
of the Real Estate
Investment Company Act which is amended pursuant to Article 26 (55) of the Addenda, "the
Financial Investment
Services and Capital Market Act" shall be deemed to include the
Securities Exchange Act, the Merchant Banks Act, the Trust Business
Act, the Act on Business
of Operating Indirect Investment and Assets and the Futures Trading Act.
The Enforcement Decree of the
Financial Investment Services and Capital Market Act
(5) In the application of Article 9 (6) 6 of the Enforcement Decree of the
Real Estate
Investment Company Act which is amended pursuant to Article 26 (61) of Addenda of this
Decree, "the Financial Investment
Services and Capital Market Act" shall be deemed to
include the Securities Exchange Act, the Merchant Banks Act, the Futures Trading
Act, the Act
on Business of Operating Indirect Investment and Assets and the Korea Securities and Futures
Exchange Act.
(6) In the application of Article 27 (1) 4 of the Enforcement Decree of the Mutual Savings
Banks Act which is amended pursuant to
Article 26 (65) of Addenda of this Decree, "the
Financial Investment Services and Capital Market Act" shall be deemed to include
the
Merchant Banks Act, the Trust Business Act, the Securities Exchange Act, the Futures Trading
Act, the Act on Business of Operating
Indirect Investment and Assets and the Korea Securities
and Futures Exchange Act.
(7) In the application of Article 2 (1) 13 of the Enforcement Decree of the Ship Investment
Company Act which is amended pursuant
to Article 26 (66) of the Addenda, "the Financial
Investment Services and Capital Market Act" shall be deemed to include the Securities
Exchange Act and the Trust Business Act.
(8) In the application of Article 15 (1) 4 of the Enforcement Decree of the Credit Unions Act
which is amended pursuant to Article
26 (70) of Addenda of this Decree, "the Financial
Investment Services and Capital Market Act" shall be deemed to include the Merchant
Banks
Act, the Trust Business Act, the Securities Exchange Act, the Futures Trading Act and the Act
on Business of Operating Indirect
Investment and Assets.
(9) In the application of Article 19-7 (2) 4 of the Enforcement Decree of the Specialized Credit
Financial
Business Act which is amended pursuant to Article 26 (73) of Addenda of this
Decree, "the Financial Investment Services and Capital
Market Act" shall be deemed to
include the Merchant Banks Act, the Trust Business Act, the Securities Exchange Act, the
Futures
Trading Act and the Act on Business of Operating Indirect Investment and Assets.
(10) In the application of Articles 13 (1) 7 and
Article 13 (3) 4 of the Enforcement Decree of
the Banking Act which is amended pursuant to Article 26 (81) of Addenda of this Decree,
"the
Financial Investment Services and Capital Market Act" shall be deemed to include the
Securities Exchange Act, the Merchant Banks Act, the Trust Business Act, the Act on Business
of Operating Indirect Investment and
Assets and the Futures Trading Act.
(11) In the application of subparagraph 8 of Appendix 1 of the Enforcement Decree of the
Electronic
Financial Transaction Act which is amended pursuant to Article 26 (88) of Addenda
of this Decree, "the Financial Investment Services
and Capital Market Act" shall be deemed
to include the Securities Exchange Act, the Merchant Banks Act, the Trust Business Act,
the
Act on Business of Operating Indirect Investment and Assets and the Futures Trading Act.
(12) In the application of subparagraph
8 of Appendix 1 of the Enforcement Decree of Support
for Small and Medium Enterprise Establishment Act which is amended pursuant
to Article 26
(88) of Addenda of this Decree, "the Financial Investment Services and Capital Market Act"
shall be deemed to include
the Merchant Banks Act, the Trust Business Act, the Securities
Exchange Act, the Futures Trading Act and the Act on Business of
Operating Indirect
Investment and Assets.
Article 28 (Relations with Other Acts and Subordinate Statutes)
When Other Acts and subordinate statutes refer to the Securities
and Exchange Act or the
Enforcement Decree of the same Act, the Futures Trading Act or the Enforcement Decree of
the same Act,
the Act on Business of Operating Indirect Investment and Assets or the
Enforcement Decree of the same Act, the Trust Business Act
or the Enforcement Decree of the
same Act, the Merchant Banks Act or the Enforcement Decree of the same Act, and the Korea
Securities
and Futures Exchange Act or the Enforcement Decree of the same Act or the
provisions thereof at the commencement of the Act or this
Decree, the provisions of the Act or
this Decree shall replace the existing provisions and other Acts and subordinate statutes shall
be deemed to refer to the Act, this Decree or the provisions thereof.
Appendix
[Appendix 1] Authorized Business Units and minimum Equity Capital
(related to Articles 15 (1) and 16 (3) of this Decree)
(Unit:
hundred billion won)
The Enforcement Decree of the Financial Investment Services and Capital Market Act
Authorized
Business
Unit
Types of
financial
investment
services
Scope of financial
investment
products
Investor
Minimum
Equity
capital
1-1-1
Dealing
Securities
Professional &
non-professional
500
1-1-2 Dealing Securities Professional 250
1-11-1 Dealing Debt securities
Professional &
non-professional
200
1-11-2 Dealing Debt securities Professional 100
1-111-1 Dealing
Government
bonds, municipal
bonds and special
bonds
Professional &
non-professional
75
1-111-2 Dealing
Government
bonds, municipal
bonds and special
bonds
Professional 37.5
1-12-1 Dealing
Equity securities
(excluding
collective
investment
securities)
Professional &
non-professional
250
1-12-2 Dealing
Equity securities
(excluding
collective
investment
securities)
Professional 125
1-13-1 Dealing
Collective
Investment
Securities
Professional &
non-professional
50
1-13-2 Dealing
Collective
Investment
Securities
Professional 25
11-1-1
Dealing
(excluding
underwriting)
Securities
Professional &
non-professional
200
11-1-2
Dealing
(excluding
underwriting)
Securities Professional 100
11-11-1
Dealing
(excluding
underwriting)
Debt securities
Professional &
non-professional
80
11-11-2
Dealing
(excluding
underwriting)
Debt securities Professional 40
11-111-1
Dealing
(excluding
underwriting)
Government
bonds, municipal
bonds and special
bonds
Professional &
non-professional
30
11-111-2
Dealing
(excluding
underwriting)
Government
bonds, municipal
bonds and special
bonds
Professional 15
11-112-1
Dealing
(excluding
underwriting)
Corporate bonds
Professional &
non-professional
40
11-112-2 Dealing Corporate bonds Professional 20
The Enforcement Decree of the Financial Investment Services and Capital Market Act
(excluding
underwriting)
11-12-1
Dealing
(excluding
underwriting)
Equity securities
(excluding
collective
investment
securities)
Professional &
non-professional
100
11-12-2
Dealing
(excluding
underwriting)
Equity securities
(excluding
collective
investment
securities)
Professional 50
11-13-1
Dealing
(excluding
underwriting)
Collective
Investment
Securities
Professional &
non-professional
20
11-13-2
Dealing
(excluding
underwriting)
Collective
Investment
Securities
Professional 10
11r-1r-1
Dealing
(excluding
underwriting)
Securities falling
under Article 181
(1) 1
Professional &
non-professional
60
12-112-1
Dealing
(excluding
underwriting)
Corporate bonds
Professional &
non-professional
60
12-112-2
Dealing
(excluding
underwriting)
Corporate bonds Professional 30
1-2-1 Dealing
Exchange-traded
derivatives
Professional &
non-professional
100
1-2-2 Dealing Exchange-traded Professional 50
derivatives
1-21-1 Dealing
Exchange-traded
derivatives
(limited to those
whose underlying
assets are stock
certificates)
Professional &
non-professional
50
1-21-2 Dealing
Exchange-traded
derivatives
(limited to those
whose underlying
assets are stock
certificates)
Professional 25
1-3-1 Dealing
Over-the-counter
derivatives
Professional &
non-professional
900
1-3-2 Dealing
Over-the-counter
derivatives
Professional 450
1-31-1 Dealing
Over-the-counter
derivatives
(limited to those
whose underlying
assets are stock
certificates)
Professional &
non-professional
450
1-31-2 Dealing
Over-the-counter
derivatives
(limited to those
whose underlying
assets are stock
certificates)
Professional 225
1-32-1 Dealing Over-the-counter Professional & 450
The Enforcement Decree of the Financial Investment Services and Capital Market
Act
derivatives
(limited to those
whose underlying
assets are not
stock certificates)
non-professional
1-32-2 Dealing
Over-the-counter
derivatives
(limited to those
whose underlying
assets are not
stock certificates)
Professional 225
1-321-1 Dealing
Over-the-counter
derivatives
(limited to those
whose underlying
assets are currency
and interest rate)
Professional &
non-professional
180
1-321-2 Dealing
Over-the-counter
derivatives
(limited to those
whose underlying
assets are currency
and interest rate)
Professional 90
2-1-1 Brokerage Securities
Professional &
non-professional
30
2-1-2 Brokerage Securities Professional 15
2r-1-2 Brokerage Securities Professional 5
2-11-1 Brokerage Debt securities
Professional &
non-professional
10
2-11-2 Brokerage Debt securities Professional 5
2-12-1
Brokerage
Equity securities
(excluding
collective
investment
securities)
Professional &
non-professional
10
2-12-2 Brokerage
Equity securities
(excluding
collective
investment
securities)
Professional 5
2-13-1 Brokerage
Collective
investment
securities
Professional &
non-professional
10
2-13-2 Brokerage
Collective
investment
securities
Professional 5
2-2-1 Brokerage
Exchange-traded
derivatives
Professional &
non-professional
20
2-2-2 Brokerage
Exchange-traded
derivatives
Professional 10
2-21-1 Brokerage
Exchange-traded
derivatives
(limited to those
whose underlying
assets are stock
certificates)
Professional &
non-professional
10
2-21-2 Brokerage
Exchange-traded
derivatives
(limited to those
whose underlying
Professional 5
The Enforcement Decree of the Financial Investment Services and Capital Market Act
assets are stock
certificates)
2-3-1 Brokerage
Over-the-counter
derivatives
Professional &
non-professional
100
2-3-2 Brokerage
Over-the-counter
derivatives
Professional 50
2-31-1 Brokerage
Over-the-counter
derivatives
(limited to those
whose underlying
assets are stock
certificates)
Professional &
non-professional
50
2-31-2 Brokerage
Over-the-counter
derivatives
(limited to those
whose underlying
assets are stock
certificates)
Professional 25
2-32-1 Brokerage
Over-the-counter
derivatives
(limited to those
whose underlying
assets are not
stock certificates)
Professional &
non-professional
50
2-32-2 Brokerage
Over-the-counter
derivatives
(limited to those
whose underlying
Professional 25
assets are not
stock certificates)
2-321-1 Brokerage
Over-the-counter
derivatives
(limited to those
whose underlying
assets are currency
and interest rate)
Professional &
non-professional
20
2-321-2 Brokerage
Over-the-counter
derivatives
(limited to those
whose underlying
assets are currency
and interest rate)
Professional 10
2e-121-1 Brokerage Listed stocks
Professional &
non-professional
150
2e-121-2 Brokerage Listed stocks Professional 75
2i-11-2i Brokerage Debt securities Professional 30
3-1-1
Collective
investment
scheme service
Collective
Investment
Schemes falling
under
subparagraphs 1
through 5 of
Article 229 of the
Act
Professional &
non-professional
80
3-1-2
Collective
investment
scheme service
Collective
Investment
Schemes falling
under
Professional 40
The Enforcement Decree of the Financial Investment Services and Capital Market Act
subparagraph 1
through 5 of
Article 229 of the
Act
3-11-1
Collective
investment
scheme service
Collective
Investment
Schemes falling
under
subparagraphs 1
and 5 of Article
229 of the Act
Professional &
non-professional
40
3-11-2
Collective
investment
scheme service
Collective
Investment
Schemes falling
under
subparagraphs 1
and 5 of Article
229 of the Act
Professional 20
3-12-1
Collective
investment
scheme service
Collective
Investment
Schemes falling
under
subparagraph 2 of
Article 229 of the
Act
Professional &
non-professional
20
3-12-2
Collective
investment
scheme service
Collective
Investment
Schemes falling
under
subparagraphs 2
Professional 10
of Article 229 of
the Act
3-13-1
Collective
investment
scheme service
Collective
Investment
Schemes falling
under
subparagraphs 3
of Article 229 of
the Act
Professional &
non-professional
20
3-13-2
Collective
investment
scheme service
Collective
Investment
Schemes falling
under
subparagraph 3 of
Article 229 of the
Act
Professional 10
4-1-1 Trust service
Trust properties
falling under
subparagraphs 1
through 7 of
Article 103 (1) of
the Act
Professional &
non-professional
250
4-1-2 Trust service
Trust properties
falling under
subparagraphs 1
through 7 of
Article 103 (1) of
the Act
Professional 125
4-11-1 Trust service
Trust properties
falling Article 103
Professional &
non-professional
130
The Enforcement Decree of the Financial Investment Services and Capital Market Act
(1) 1 of the Act
4-11-2 Trust service
Trust properties
falling under
Article 103 (1) 1
of the Act
Professional 65
4-12-1 Trust service
Trust properties
falling under
subparagraphs 2
through 7 of
Article 103 (1) of
the Act
Non-professional
& Professional
120
4-12-2 Trust service
Trust properties
falling under
subparagraphs 2
through 7 of
Article 103 (1) of
the Act
Professional 60
4-121-1 Trust service
Trust properties
falling under
subparagraphs 4
through 6 of
Article 103 (1) of
the Act
Professional &
non-professional
100
4-121-2 Trust service
Trust properties
falling under
subparagraphs 4
through 6 of
Article 103 (1) of
the Act
Professional 50
Note
1) Issuance of derivative-linked securities in each subparagraph of Article 7 (1) of this
Decree shall be limited to the cases where
a person who has obtained an authorization of
financial investment services for 1-1-1 or 1-1-2 also obtains an authorization of
financial
investment services for 1-3-1 or 1-3-2
2) 1-11-1, 1-11-2, 1-111-1, 1-111-2, 1-12-1, 1-12-2, 1-13-1, 1-13-2, 11-11-1, 11-11-2, 11-
111-1, 11-111-2, 11-112-1, 11-112-2,
11-12-1, 11-12-2, 11-13-1, 11-13-2, 12-112-1, 12-
112-2, 2-11-1, 2-11-2, 2-12-1, 2-12-2, 2-13-1, 2-13-2 and 2i-11-2i include securities
deposit
receipts related to the securities concerned.
3) 11r-1r-1 is limited to purchase and sales of securities purchased under repurchase
agreement pursuant to Article 181 of this
Decree.
4) 2r-1-2 is limited to cases of brokerage of purchase and sales of securities purchased under
repurchase agreement and
professional investors shall mean persons falling under each item
of Article 7 (3) 3 of this Decree.
5) 2e-121-1 and 2e-121-2 are limited to the business under Article 78 of the Act.
6) 2i-11-2i is limited to the business under Article
179 of this Decree and professional
investors shall mean persons falling under each item of Article 179 (1) 1 of this Decree.
7)
2-1-1, 2-1-2, 2-12-1 and 2-12-2 exclude business under Article 78 of the Act and 2-1-1, 2-
1-2, 2-11-1 and 2-11-2 exclude business
under Article 179 of this Decree.
8) When a collective investment manager purchases or sells collective investment securities
of
a collective scheme managed by the manager, the minimum equity capital of 11-13-1 and
11-13-2 shall be 1/2 of the minimum equity
capital concerned.
9) In the application of an equity capital pursuant to Article 12 (2) 2 of the Act to those
falling under each
subparagraph of Article 22 of the Act, the equity capital shall be
calculated based on the amount deducting equity capital required
by relevant Acts (including
amount equivalent thereto).
[Appendix 2] Requirements for Major Shareholders (related to Article 16 (6) of this
Decree)
Classification Requirements
The Enforcement Decree of the Financial Investment Services and Capital Market Act
1. Where a major
shareholder is the
institutions subject to
inspection (excluding
private equity
companies: hereinafter
referred to as "financial
institutions") pursuant to
Article 38 of the Act on
the Establishment, etc. of
Financial Services
Commission.
(a) The amount (hereinafter referred to as "equity capital")
calculated by deducting the total amount of the liabilities from the
total amount of assets on balance sheet as of the end of recent
business year is required to be not less than three times the
contributions as prescribed and publicized by the Financial Services
Commission.
(b) The standard on financial prudence applied to the financial
institutions is required to be met as prescribed and publicized
by the
Financial Services Commission.
(c) Where the financial institution belongs to the business group
subject to the limitations on cross-shareholding, etc. (hereinafter
referred to as "business group subject to the limitations on cross-
shareholding, etc.") under the Monopoly Regulation and Fair
Trade
Act, or main debtor groups (hereinafter referred to as "main debtor
groups") under the same Act as prescribed and publicized
by the
Financial Services Commission, the debt ratio (referring to the ratio
calculated by dividing the total debt on balance sheet
as of the end
of recent business year with the equity capital, in this case financial
institutions are excluded from the debt ratio
calculation: hereinafter
the same shall apply) is required to be not more than 300/100 and
the standard prescribed and publicized
by the Financial Services
Commission is required to be met.
(d) The contribution is required not to be borrowed as prescribed
and publicized by the Financial Services Commission.
(e) The
following requirements are required to be satisfied:
Provided, That minor violations are excluded:
1) A major shareholder is required not to have any record of
receiving criminal punishment equivalent to fines or heavier
measure
in violation of this Act, this Decree, other finance-related
Acts (referring to the finance-related Acts pursuant to Article 27
(1)
of this Decree: hereinafter the same shall apply), the Monopoly
of this Decree: hereinafter the same shall apply), the Monopoly
Regulation and Fair Trade Act, and Punishment of Tax Evaders Act
in the last five years.
2) A major shareholder is required not to have any record of defaults
that have undermined the sound credit practice in the last
five years.
3) The person is required not to be a major shareholder or a
specially-related person of financial institutions whose
business
license, authorization and registration have been canceled pursuant
to finance-related Acts, or designated as insolvent
financial
institutions under the Act on the Structural Improvement of the
Financial Industry: Provided, That the person who meets
the
standard prescribed and publicized by the Financial Services
Commission by being recognized by the Court as irresponsible for
the insolvency, or assuming the subsequent economic responsibility
is excluded.
4) A major shareholder is required not to have any records that have
undermined the sound financial trade practice prescribed and
publicized by the Financial Services Commission.
2. Where a major
shareholder is a local
corporation other than
subparagraph 1
(excluding private equity
companies and special
purpose companies:
hereinafter the same
shall apply.)
(a) The equity capital as of the end of recent business year is
required to be not less than three times the contributions as
prescribed
and publicized by the Financial Services Commission.
(b) The debt ratio as of the end of recent business year is required to
be
not more than 300/100 as prescribed and publicized by the
Financial Services Commission.
(c) Where the corporation belongs to the business group subject to
the limitations on cross-shareholding, etc. or the main debtor
groups, the debt ratio of such business group subject to the
limitations on cross-shareholding, etc. or main debtor groups is
required to be not more than 300/100 as prescribed and publicized
by the Financial Services Commission.
(d) The requirements referred to in items (d) and (e) of subparagraph
1 are required to be satisfied.
The Enforcement Decree of the Financial Investment Services and Capital Market Act
1 are required to be satisfied.
3. Where a major
shareholder is an
individual who is a local
resident.
(a) A major shareholder is required not to fall under any of the
subparagraph of Article 24 of the Act.
(b) The requirements referred to in items (d) and (e) of subparagraph
1 are required to be met.
4. Where a major
shareholder is a foreign
corporation established
under foreign Acts and
subordinate statutes
(hereinafter referred to
as "foreign
corporation")
(a) A major shareholder is required to provide services equivalent to
financial investment service overseas of which it intends
to obtain
an authorization as of the date of application for authorization.
(b) The equity capital as of the end of recent business
year is
required to be not less than three times the contributions as
prescribed and publicized by the Financial Services Commission.
(c) A major shareholder is required to be confirmed that it receives
not less than investment grade status by internationally recognized
credit rating agencies or satisfies the standard on financial prudence
prescribed by the supervisory agency in its home country.
(d) A major shareholder shall not have been the subject of
administrative actions equivalent to a warning or heavier actions
taken
by the supervisory authorities in its home country, or criminal
punishment equivalent to fines or heavier measures with respect
to
the business equivalent to financial business for the last five years.
(e) The requirement referred to in item (e) of subparagraph
1 is
required to be satisfied.
5. Where a major
shareholder is a private
equity company or
special purpose
company.
Where a managing director of a private equity company, a limited
partner (excluding the cases which is confirmed through the articles
of incorporation, the investment agreement, or the letter of
assurance that the person has no substantial influence over a private
equity company) whose contribution is not less than 30/100, and a
limited partner who controls the private equity company in practice
fall under any of the following items, or where a managing director
of a private equity company who is a shareholder or an employee of
a special purpose company, a shareholder or an employee
(excluding
the cases which is confirmed through the articles of
incorporation, the investment agreement, or the letter of assurance
that the
person has no substantial influence over a special purpose
company) whose contribution is not less than 30/100, and a limited
partner
who controls the private equity company in practice fall
under any of the following items, the requirements under the
classification
falling the following items are required to be met:
(a) In case of a financial institution referred to in subparagraph 1:
the requirements
referred to in items (b), (c) and (e) of subparagraph
1 are required to be satisfied.
(b) In case of a local corporation referred to in subparagraph 2: the
requirements in item (e) of subparagraph 1, and items (b)
and (c) of
subparagraph 2 are required to be satisfied.
(c) In case of an individual whom is a local resident referred to in
subparagraph 3: the requirements in item (e) of subparagraph
1, and
item (a) of subparagraph 3 is required to be satisfied.
(d) In case of a foreign corporation referred to in subparagraph
4:
the requirements in item (e) of subparagraph 1, item (b) (excluding
foreign financial institutions) of subparagraph 2, and items
(c) and
(d) of subparagraph 4 are required to be satisfied.
Note
1. Where the person referred to in each subparagraph of Article 16 (7) of this Decree, falls
under subparagraphs 1 through 3 or subparagraph
5 (excluding item (d)), only the
requirement for major shareholders in item (e) of subparagraph 1 shall apply, where the
person
falls under subparagraphs 4 or item (d) of subparagraph 5, only the requirement for
major shareholders in item (e) of subparagraph
1 and item (d) of subparagraph 4 shall apply:
Provided, That where the corporation which is the largest shareholder is a private
equity
company or a special purpose company, the requirements in subparagraph 5 shall apply.
2. The increased or decreased amount of capital from the end of recent business year to the
The Enforcement Decree of the Financial
Investment Services and Capital Market Act
date of application for authorization shall be included in calculating the equity capital.
3. Where all or a part of subparagraph 4 is difficult or unreasonable to be applied to a
holding company since a foreign corporation
which is a major shareholder is the holding
company, the holding company shall be regarded to satisfy the requirements, if a company
(limited to the company which controls the management of the holding company in practice,
or the company whose management is controlled
by the holding company in practice)
designated by the holding company at the time of applying an authorization satisfies all or
a
part of each item of subparagraph 4.
[Appendix 3] Registered Business Units and minimum Equity Capital
(related to Articles 20 and 21(1) of this Decree)
(Unit: hundred
billion won)
Authorized
Business Unit
Types of financial
investment services
Scope of financial
investment products
Investor
Minimum
Equity
capital
5-0-1
Non-discretionary
investment advisory
service
Securities, exchange-
traded and over-the-
counter derivatives
Non- professional
& professional
5
5-0-2
Non-discretionary
investment advisory
service
Securities, exchange-
traded and over-the-
counter derivatives
Professional 2.5
6-0-1
Discretionary
investment advisory
service
Securities, exchange-
traded and over-the-
counter derivatives
Non- professional
& professional
15
6-0-2
Discretionary
investment advisory
service
Securities, exchange-
traded and over-the-
counter derivatives
Professional 7.5
Note
In the application of an equity capital pursuant to Article 18(2) 2 of the Act to those falling
under each subparagraph of Article
22 of the Act, the equity capital shall be calculated based
on the amount deducting equity capital required by a relevant law (including
amount
equivalent thereto).
[Appendix 4] Requirements on Approval of Alteration of Major Shareholders
(related to Article 26 (1) of this Decree)
Classification Requirements
1. Where a major
shareholder is a financial
institution.
(a) The standard on financial prudence applied to the financial
institutions is required to be met as prescribed and publicized
by the
Financial Services Commission.
(b) Where the financial institution belongs to the business group
subject to the limitations on cross-shareholding, etc. or main
debtor
groups, the debt ratio of such business group subject to the
limitations on cross-shareholding, etc. or main debtor groups
is
required to be not more than 300/100 as prescribed and publicized
by the Financial Services Commission.
(c) The following requirements are required to be satisfied:
Provided, That minor violations are excluded:
1) A major shareholder is required not to have any record of
receiving criminal charges equivalent to fines or heavier measure in
violation of this Act, this Decree, other finance-related Acts, the
Monopoly Regulation and Fair Trade Act, and Punishment of Tax
Evaders Act in the last five years.
2) A major shareholder is required not to have any record of
defaults that have undermined the sound credit practice in the last
five years.
3) The person is required not to be a major shareholder or a
specially-related person of financial institutions whose business
license, authorization and registration have been canceled pursuant
to finance-related Acts, or designated as insolvent financial
institutions under the Act on the Structural Improvement of the
Financial Industry: Provided, That the person who meets the
standard
prescribed and publicized by the Financial Services
The Enforcement Decree of the Financial Investment Services and Capital Market
Act
Commission by being recognized by the Court as irresponsible for
the insolvency, or assuming the subsequent economic responsibility
is excluded.
4) A major shareholder is required not to have any records that have
undermined the sound financial trade practice prescribed and
publicized by the Financial Services Commission.
2. Where a major
shareholder is a local
corporation other than
subparagraph 1
(a) The debt ratio as of the end of recent business year is required to
be not more than 300/100 as prescribed and publicized by
the
Financial Services Commission.
(b) Where the corporation belongs to the business group subject to
the limitations on cross-shareholding, etc. or the main debtor
groups, the debt ratio of such business group subject to the
limitations on cross-shareholding, etc. or main debtor groups is
required to be not more than 300/100 as prescribed and publicized
by the Financial Services Commission.
(c) The fund raised by means of borrowing shall be not more than
2/3 of the contributions.
(d) The requirement in items (c) of subparagraph 1 is required to be
satisfied.
3. Where a major
shareholder is an
individual who is a local
resident.
(a) A major shareholder is required not to fall under any of the
subparagraph in Article 24 of the Act.
(b) The requirements referred to in items (c) and (d) of
subparagraph 1 are required to be satisfied.
4. Where a major
shareholder is a foreign
corporation.
(a) A major shareholder is required to provide services equivalent to
financial investment service overseas that the financial investment
firm subject to stock acquisition as of the date of application for
approval.
(b) A major shareholder is required to be confirmed that it receives
not less than investment grade status by internationally recognized
credit rating agencies or satisfies the standard on financial prudence
prescribed by the supervisory authorities in its home country.
(c) A major shareholder is required not to have any record of
receiving administrative actions equivalent to a warning or heavier
actions taken by the supervisory authorities in its home country or
criminal punishment equivalent to fines or heavier measures
with
respect to the business equivalent to financial business for the last
five years.
(d) The requirement in item (c) of subparagraph 1 is required to be
satisfied.
5. Where a major
shareholder is a private
equity company or a
special purpose company.
Where a managing director of a private equity company, a limited
partner (excluding the cases which is confirmed through the articles
of incorporation, the investment agreement, or the letter of
assurance that the person has no substantial influence over a private
equity company) whose contribution is not less than 30/100, and a
limited partner who controls the private equity company in practice
fall under any of the following items, or where a managing director
of a private equity company who is a shareholder or an employee
of
a special purpose company, a shareholder or an employee
(excluding the cases which is confirmed through the articles of
incorporation,
the investment agreement, or the letter of assurance
that the person has no substantial influence over a special purpose
company)
whose contribution is not less than 30/100, and a limited
partner who controls the private equity company in practice fall
under
any of the following items, the requirements referred to in
each item shall be satisfied:
(a) In case of a financial institution referred to in subparagraph 1:
the requirements in subparagraph 1 are required to be satisfied.
(b) In case of a local corporation referred to in subparagraph 2: the
requirements in item (c) of subparagraph 1, and items (a)
and (b) of
subparagraph 2 are required to be satisfied.
(c) In case of an individual whom is a local resident referred to in
subparagraph 3: the requirements in item (c) of subparagraph
1, and
The Enforcement Decree of the Financial Investment Services and Capital Market Act
item (a) of subparagraph 3 are required
to be satisfied.
(d) In case of a foreign corporation referred to in subparagraph 4:
the requirements in item (c) of subparagraph
1, and items (b) and
(c) of subparagraph 4 are required to be satisfied.
Note
1. Where the person falling under each subparagraph of Article 16 (7) of this Decree, falls
under subparagraphs 1 through 3 or subparagraph
5 (excluding item (d)), only the
requirement for major shareholders in item (c) of subparagraph 1 shall apply, where the
person
falls under subparagraph 4 or item (d) of subparagraph 5, only the requirement for
major shareholders in item (c) of subparagraph
1 and item (c) of subparagraph 4 shall
apply: Provided, That where the corporation which is the largest shareholder is a private
equity company or a special purpose company, the requirements in subparagraph 5 shall
apply.
2. Where all or a part of subparagraph 4 is difficult or unreasonable to be applied to a
holding company since a foreign corporation
which is a major shareholder is the holding
company, the holding company shall be regarded as satisfying the requirements, if a
company (limited only to the company which controls the management of the holding
company in practice, or the company whose management
is controlled by the holding
company in practice) designated by the holding company at the time of applying an
authorization satisfies
all or a part of each item of subparagraph 4.
[Appendix 5] Reasons for discretionary actions against Financial Investment Firms
and
their officers and employees and cancellation or alternation of business entrustment
contracts
(related to Articles 49 (6), 373 (6), and 374 (1) of this Decree)
1. To fail to specify or falsely specify the restriction on the disposal of listed securities in the
depository account book or investor
account book in violation of Article 171 (5) of the Act;
2. To fail to fulfill the matters and conditions of the preliminary authorization within the
designated period in violation of Article
18 (4) of this Decree, or fail to apply for an
authorization pursuant to Article 12 of the Act;
3. To fail to include the matters in each subparagraph of Article 31 (1) of this Decree in
internal control standard in violation
of Article 31 (1) of this Decree;
4. To establish or change the internal control standard without going through the resolution
of the board of directors in violation
of Article 31 (2) of this Decree;
5. To fail to include the matters in each subparagraph of Article 36 (3) of this Decree in a
business report in violation of Article
36 (3) of this Decree;
6. To fail to include the matters in each subparagraph of Article 36 (4) of this Decree in the
entries to disclosure documents in
violation of Article 36 (4) of this Decree;
7. To fail to comply with the request for an amendment disclosure or re-disclosure by the
Financial Services Commission pursuant
to Article 36 (6) of this Decree;
8. To fail to comply with the methods in each subparagraph of Article 70 (1) of this Decree
in violation of Article 70 (1) of this
Decree;
9. To fail to specify the fact that some content in the advertisement may change as the
amendment of relevant Acts is confirmed in
violation of the latter part of Article 77 (3) of
this Decree;
10. To fail to dispose of collective investment securities within a month from the date of
acquisition in the methods referred to
in each subparagraph of Article 82 of this Decree in
violation of Article 82 of this Decree;
11. To fail to provide an asset management report directly or through mails within two
months from the reference day via a broker
or dealer who has sold the collective investment
securities in violation of the main sentence of Article 92 (4) of this Decree;
12. Where the collective investment manager fails to pay the cost for preparing and
providing asset management reports in violation
of Article 92 (5) of this Decree;
13. To prepare a business report in violation of Article 94 (1) of this Decree;
14. To fail to distribute a written document indicating the meaning that an access or a
distribution is impossible and the reason
therefor to investors in violation of the latter part of
Article 95 (1) of this Decree other than each subparagraph;
15. To violate the loan limit pursuant to Article 97 (4) of this Decree, or limit of borrowing
money pursuant to Article 97 (7) of
this Decree;
16. To manage the borrowed money in ways other than investing in real estates in violation
of the main sentence of Article 97 (8)
of this Decree;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
17. To fail to include the matters falling under each subparagraph of Article 100 (1) of this
Decree in a discretionary investment
advisory report in violation of Article 100 (1) of this
Decree;
18. To fail to distribute a discretionary investment advisory report directly or through mails
within two months after the period
subject to preparing a discretionary investment advisory
report expires in violation of the main sentence of Article 100 (2) of
this Decree;
19. To fail to submit the documents, etc. in violation of Article 108 (5) of this Decree;
20. To fail to distribute a written document indicating the intention that an access or a
distribution is impossible and the reason
therefor to beneficiaries in violation of the latter
part of Article 115 (1) of this Decree other than each subparagraph;
21. To set the prospective period for the issuance of a shelf registration statement in
violation of Article 121 (2) of this Decree;
22. To fail to issue securities not less than three times during the prospective period for the
issuance in violation of Article
121 (3) of this Decree;
23. To submit a shelf registration statement without satisfying the requirements under each
subparagraph of Article 121 (4) of this
Decree in violation of Article 121 (4) of this Decree;
24. To fail to include the matters falling under each subparagraph of Article 122 (2) of this
Decree in violation of Article 122
(2) of this Decree;
25. To prepare an additional document of shelf registration statement by amending the
entries in a shelf registration statement in
violation of Article 122 (3) of this Decree;
26. To prepare a prospectus in violation of Article 131 (1) through (3) of this Decree;
27. To fail to change the headline in violation of the latter part of Article 131 (4) of this
Decree;
28. To prepare a preliminary prospectus in violation of Article 133 of this Decree;
29. To prepare a simple prospectus in violation of Article 134 of this Decree;
30. To make a public notice in violation of publication methods pursuant to Article 145 (1)
of this Decree;
31. To include particulars different from the contents in the publication of tender offer or
omit particulars described in the publication
of tender offer in violation of Article 146 (1) of
this Decree;
32. To fail to accompany documents referred to in each subparagraph of Article 146 (4) of
this Decree in violation of the main sentence
of Article 146 (4) of this Decree other than
each subparagraph;
33. To change tender offer conditions in violation of Article 147 of this Decree;
34. To fail to include particulars of a tender offer prospectus in violation of the main
sentence of Article 148 of this Decree;
35. To expresses the opinion about a tender offer in violation of Article 149 of this Decree;
36. To distribute a form of proxy and materials in violation of Article 160 of this Decree;
37. To prepare a form of proxy and materials in violation of Article 163 of this Decree;
38. To prepare a business report and materials in violation of Article 168 of this Decree;
39. To prepare a semi-annual report and a quarterly report in violation of Article 170 of this
Decree;
40. To fail make a report, or make a false report in violation of Article 195 (5) of this
Decree;
41. To fail to dispose of treasury collective investment securities within one month from the
acquisition date in a way described
in each subparagraph of Article 213 of this Decree in
violation of Article 213 of this Decree;
42. To fail to re-publish the base price after changing it, or make it available to the public
without delay in violation of the
latter part of Article 262 (1) of this Decree;
43. To fail to receive confirmation from the compliance officer and trust company in
violation of Article 262 (2) of this Decree;
44. To fail to make a report, or make a false report in violation of Article 262 (3) of this
Decree;
45. To fail to provide reports of custody and management of asset in violation of the main
sentence of Article 270 (3) of this Decree
in person or by mail through the broker or dealer
who has sold the collective investment securities;
46. Where the trust company fails to pay for the preparation and the provision of reports of
custody and management of asset in violation
of Article 270 (4) of this Decree;
47. To provide the details of collective investment properties in violation of Article 282 (2)
or Article 287 (4) of this Decree;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
48. To fail to distribute a written document indicating the meaning that an access or a
distribution is impossible and the reason
therefor to investors in violation of the latter part of
Article 302 (2) of this Decree other than each subparagraph;
49. To fail to comply with requests under the main sentence of Article 384 (6) of this
Decree; and
50. To fall under any of the subparagraphs 1 through 3 of Appendix 21.
[Appendix 6] Reasons for Disciplinary Actions against Investment
Companies, etc.
(related to Articles 275 (8) of this Decree)
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
3. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
4. To violate an obligation of the prohibition on market manipulation, etc. under Article 178
of the Act;
5. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
6. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
7. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act (limited
to private equity funds);
8. To exercise voting rights in violation of Article 406 (3) of the Act (limited to private
equity funds);
9. To violate a disposition order under Article 406 (4) of the Act (limited to private equity
funds);
10. To fail to provide an asset management report thought a broker or dealer who has sold
collective investment securities directly
or via mail within two months from a reference day
in violation of the main sentence of Article 92 (4) of this Decree;
11. To fail to pay costs for preparation and provision of an asset management report by a
collective investment manager in violation
of Article 92 (5) of this Decree;
12. To prepare a business report in violation of Article 94 (1) of this Decree;
13. To fail to provide a written documents indicating that access or distribution is unable and
reasons thereof to investors in violation
of the latter part of Article 95 (1) other than each
subparagraph of this Decree;
14. To violate the limitation on loan under Article 97 (4) of this Decree or the limitation on
borrowed money under Article 97 (7)
of this Decree;
15. To manage loan in the methods other than investing in real estate in violation of the
main sentence of Article 97 (8) of this
Decree;
16. To fail to dispose treasury collective investment securities in the methods prescribed in
each subparagraph of Article 213 of
this Decree within one month from the date of
acquisition of the securities in violation of Article 213 of this Decree;
17. To change a base price without delay and fail to publish the changed price and make it
available to the public in violation of
the latter part of Article 262 (1) of this Decree;
18. To fail to receive confirmation of a compliance officer and a trust company in violation
of Article 262 (2) of this Decree;
19. To fail to make a report, or makes a false report in violation of Article 262 (3) of this
Decree; and
20. To fall under any of subparagraphs 1 through 3 of Appendix 21 of this Decree.
[Appendix 7] Reasons for Disciplinary Actions against
General Fund Administrators and
Their Officers and Employees
(related to Article 279 (3))
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
3. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
4. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
5. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
6. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
The Enforcement Decree of the Financial
Investment Services and Capital Market Act
7. To fail to commence a service within six months from the date of registration under
Article 254 (1) of the Act, or fail to continue
the service for not less than six months without
justifiable causes;
8. To fail to correct the conditions concerned within one month (where any correction period
exceeding one month is set forth when
the suspension of business is issued, referring to such
correction period) from the date when the suspension of business is issued
under Article 257
(2) 1 of the Act;
9. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
10. To exercise voting rights in violation of Article 406 (3) of the Act;
11. To violate a disposition order under Article 406 (4) of the Act;
12. To fail to comply with requests under the main sentence of Article 384 (6) of this
Decree;
13. To receive the money, etc. from other person or acquire the money, etc. to be delivered
to other person through fraudulent methods
in relation to the business; and
14. To fall under any of the subparagraphs 1 through 3 of Appendix 21.
[Appendix 8] Reasons for Disciplinary Actions against Collective
Investment Scheme
Appraisal Companies and Their Officers and Employees
(related to Articles 284 (3) of this Decree)
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
3. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
4. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
5. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
6. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
7. To fail to commence the business operation within six months from the date of
registration under Article 258 (1) of the Act or
continue the authorized business for six
months or longer after the commencement of the business without any justifiable cause;
8. To fail to conduct the correction of pertinent conditions within one month (where the
correction period is determined for more
than one month along with the suspension of
business, the period thereof) from the date on which the suspension of business was
imposed
pursuant to Article 262 (2) 1 of the Act;
9. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
10. To exercise voting rights in violation of Article 406 (3) of the Act;
11. To violate a disposition order under Article 406 (4) of the Act;
12. To fail to include matters falling under each subparagraph of Article 282 (1) in working
rules governing the conduct of business
in violation of Article 282 (1);
13. To fail to make a disclosure of the assessment standards of a collective investment
scheme or make a false disclosure in violation
of Article 282 (3);
14. To fail to disclose or provide comparison standards in violation of Article 282 (4);
15. To fail to disclose or provide amendment without delay in violation of Article 282 (5);
16. To fail to comply with the request under the main sentence of Article 384 (6);
17. To receive money, etc. from other person or to acquire money, etc. to be delivered to
other person through fraudulent methods
in relation to the business; and
18. To fall under any of subparagraphs 1 through 3 of Appendix 21 of this Decree.
[Appendix 9] Reasons for Disciplinary Actions against
Bond Appraisal Companies and
Their Officers and Employees
(related to Article 289 (3))
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
3. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
4. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
5. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
6. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
The Enforcement Decree of the Financial
Investment Services and Capital Market Act
7. To fail to commence a service within six months from the date of registration under
Article 263 (1) of the Act, or fail to continue
the service for not less than six months without
justifiable causes;
8. To fail to correct the conditions concerned within one month (where any correction period
exceeding one month is set forth when
the suspension of business is issued, referring to such
correction period) from the date when the suspension of business is issued
under Article 267
(2) 1 of the Act;
9. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
10. To exercise voting rights in violation of Article 406 (3) of the Act;
11. To violate a disposition order under Article 406 (4) of the Act;
12. To fail to include the matters under each subparagraph of Article 287 (1) in the working
rules in violation of Article 287 (1)
of this Decree;
13. To fail to make a disclosure of the amendments without delay in violation of Article 287
(3) of this Decree;
14. To fail to comply with requests under the main sentence of Article 384 (6) of this
Decree;
15. To receive any money, etc. from another person or acquire the money, etc. to be
distributed to another person in an unfair manner
with respect to the business; and
16. To fall under any of the subparagraphs 1 through 3 of Appendix 21.
[Appendix 10] Reasons for Disciplinary Actions against Private
Equity Companies and
Their Executive Officer
(related to Articles 300 (10) of this Decree)
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
3. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
4. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
5. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
6. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
7. To fail to comply with the request for access and distribution by partners other than
executive officers under Article 272 (9)
of the Act without any justifiable cause;
8. To reject, interfere with, or evade an inspection by partners other than executive officers
under Article 272 (10) of the Act
without any justifiable cause;
9. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
10. To exercise voting rights in violation of Article 406 (3) of the Act;
11. To violate a disposition order under Article 406 (4) of the Act;
12. To delegate the business falling under each subparagraph of Article 295 (3) to a third
party in violation of the same paragraph;
and
13. To fall under any of subparagraphs 1 through 3 of Appendix 21 of the Act.
[Appendix 11] Reasons for Disciplinary Actions against
the Association and Its Officers
and Employees
(related to Article 309 (3))
1. To run an investment advertisement in violation of Article 57 of the Act;
2. To hold stocks in violation of Article 167 (1) of the Act;
3. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
4. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
5. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
6. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
7. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
8. To violate rules with respect to the business under Article 290 of the Act;
9. To fail to correct the conditions concerned within one month (where any correction period
exceeding one month is set forth when
the suspension of business is issued, referring to such
correction period) from the date when the suspension of business is issued
under Article 293
(1) 1 of the Act, or keep carrying on the business during the suspension period;
10. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
The Enforcement Decree of the Financial Investment
Services and Capital Market Act
11. To exercise voting rights in violation of Article 406 (3) of the Act;
12. To violate a disposition order under Article 406 (4) of the Act;
13. To violate relevant Acts and subordinate statutes while conducting the business based on
the authority delegated from the Financial
Services Commission pursuant to Article 438 (3)
of the Act;
14. To compare the management performances of collective investment property and make a
public disclosure about it in violation of
Article 94 (2) of this Decree;
15. To fail to classify and operate organizations of the Association pursuant to each
subparagraph of Article 308 (1) of this Decree
in violation of Article 308 (1) of this Decree;
16. To violate Article 372 (2) of this Decree with respect to the delegated inspection
business;
17. To fail to comply with requests under the main sentence of Article 384 (6) of this
Decree;
18. To receive any money, etc. from another person or acquire the money, etc. to be
distributed to another person in an unfair manner
with respect to the business; and
19. To fall under any of the subparagraphs 1 through 3 of Appendix 21.
[Appendix 12] Reasons for Disciplinary Actions against Officers
and Employees of the
Depository
(related to Article 313 (3) of this Decree)
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
3. To fail to indicate that disposal of listed stocks shall be restricted or make a false
indication on a depository account book
or investor account book in violation of Article 171
(5) of the Act;
4. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
5. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
6. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
7. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
8. To violate business rules under Article 305 of the Act;
9. To fail to commence the business operation within six months from the date of
registration under Article 307 (1) 1 of the Act
or continue the authorized business for six
months or longer after the commencement of the business without any justifiable cause;
10. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
11. To exercise voting rights in violation of Article 406 (3) of the Act;
12. To violate a disposition order under Article 406 (4) of the Act;
13. To issue a deposit certificate in violation of Article 193 of this Decree;
14. To violate Article 220 (2) or 220 (3) of this Decree in relation to convention of a general
meeting of beneficiaries;
15. To fail to comply with the request under the main sentence of Article 384 (6) of this
Decree;
16. To receive money, etc. from other person or to acquire money, etc. to be delivered to
other person through fraudulent methods
in relation to the business; and
17. To fall under any of subparagraphs 1 through 3 of Appendix 21 of this Decree.
[Appendix 13] Reasons for Disciplinary Actions
against Securities and Finance Companies
and Its Officers and Employees
(related to Articles 324 (7))
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
3. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
4. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
5. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
6. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
7. To violate rules with respect to the business under Article 333 (2) of the Act;
8. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
The Enforcement Decree of the Financial Investment
Services and Capital Market Act
9. To exercise voting rights in violation of Article 406 (3) of the Act;
10. To violate a disposition order under Article 406 (4) of the Act;
11. To violate Article 322 of this Decree with respect to the issuance of corporate bonds;
12. To fail to comply with requests under the main sentence of Article 384 (6) of this
Decree; and
13. To fall under any of the subparagraphs 1 through 3 of Appendix 21.
[Appendix 14] Reasons for Disciplinary Actions against Merchant
Banks and Their
Officers or Employees
(related to Article 344 (7) of this Decree)
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under the same paragraph;
3. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
4. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
5. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
6. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
7. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
8. To exercise voting rights in violation of Article 406 (3) of the Act;
9. To violate a disposition order under Article 406 (4) of the Act;
10. To issue cover bills or integrate the Won currency bills, etc. into the accounts for sales,
provision of collateral, or cash
management in violation of Article 326 (2) of this Decree;
11. To fail to select a qualified company in violation of the main sentence of Article 327 (1)
of this Decree;
12. To guarantee payment of clean bills in violation of the main sentence of Article 328 (1)
of this Decree;
13. To sell clean bills which have failed to meet the requirements of each subparagraph of
Article 328 (2) of this Decree in violation
of Article 328 (2) of this Decree;
14. To arrange, intermediate the transaction of clean bills or act as an agent for that purpose
in violation of the main sentence
of Article 328 (3) of this Decree;
15. To set the trust period of cash management accounts in violation of the main sentence of
Article 329 (1) of this Decree;
16. To manage trust money deposited in cash management accounts in violation of the
provisions of Article 329 (2) through 329 (4)
of this Decree;
17. To violate Article 330 of this Decree in relation to business;
18. To violate Article 332 of this Decree in relation to issuance of bonds;
19. To fail to obtain an approval for exceeding the credit line from the Financial Services
Commission in violation of Article 334
(3) of this Decree;
20. To fail to file a plan necessary to correct the situation with the Financial Services
Commission within a month in violation
of Article 334 (4) of this Decree;
21. To fail to comply with the request under the main sentence of Article 384 (6) of this
Decree; and
22. To fall under any of subparagraphs 1 through 3 of Appendix 21 of this Decree.
[Appendix 15] Reasons for Disciplinary Actions
against Fund Brokerage Companies and
Their Officers and Employees
(related to Articles 347 (7))
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
3. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
4. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
5. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
6. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
7. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
8. To exercise voting rights in violation of Article 406 (3) of the Act;
9. To violate a disposition order under Article 406 (4) of the Act;
The Enforcement Decree of the Financial Investment Services and
Capital Market Act
10. To arrange and intermediate the borrowing of money for financial institutions through a
call trading, or act as an agent for
that purpose in violation of Article 346 (2) of this Decree;
11. To arrange a fund brokerage in violation of Article 346 (3) of this Decree;
12. To fail to make a report, or make a false report in violation of Article 346 (4) of this
Decree;
13. To fail to comply with requests under the main sentence of Article 384 (6) of this
Decree;
14. To fall under any of the subparagraphs 1 through 3 of Appendix 21.
[Appendix 16] Reasons for Disciplinary Actions against Short-term
Finance Companies
and Their Officers or Employees
(related to Article 349 (7) of this Decree)
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
3. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
4. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
5. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
6. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
7. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
8. To exercise voting rights in violation of Article 406 (3) of the Act;
9. To violate a disposition order under Article 406 (4) of the Act;
10. To fail to comply with the request under the main sentence of Article 384 (6) of this
Decree; and
11. To fall under any of subparagraphs 1 through 3 of Appendix 21 of this Decree.
[Appendix 17] Reasons for Disciplinary Actions
against Transfer Agents and Their
Officers or Employees
(related to Articles 352 (7))
1. To hold stocks in violation of Article 167 (1) of the Act;
2. To exercise voting rights in violation of Article 167 (3), or violate a correction order
under Article 167 (3) of the Act;
3. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
4. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
5. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
6. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
7. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
8. To exercise voting rights in violation of Article 406 (3) of the Act;
9. To violate a disposition order under Article 406 (4) of the Act;
10. To fail to comply with requests under Article 384 (6) of this Decree; and
11. To fall under any of the subparagraphs 1 through 3 of Appendix 21.
[Appendix 18] Reasons for Disciplinary Actions against the
Exchange and Its officers and
employees
(related to Article 367 (3) of this Decree)
1. To fail to keep the documents and make them available to the public in violation of
Article 144 of the Act;
2. To fail to keep the reports and disclose such reports in violation of Article 149 of the Act;
3. To fail to keep the form of proxy, etc. and disclose them in violation of Article 157 of the
Act;
4. To fail to keep the annual reports, etc. and disclose them in violation of Article 163 of the
Act;
5. To hold stocks in violation of Article 167 (1) of the Act;
6. To exercise voting rights in violation of Article 167 (3) of the Act, or violate a correction
order under Article 167 (3) of the
Act;
7. To fail to keep the documents and make them available to the public in violation of
Article 173 (2) of the Act;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
8. To violate an obligation of the prohibition on using undisclosed material information
under Article 174 of the Act;
9. To violate an obligation of the prohibition on market manipulation, etc. under Article 176
of the Act;
10. To violate an obligation of the prohibition on unfair trading, etc. under Article 178 of the
Act;
11. To effect, entrust, or be entrusted with, a short sale in violation of Article 180 of the Act;
12. To fail to send reports submitted to the Financial Services Commission without delay in
violation of Article 392 (3) of the Act;
13. To hold stocks issued by the Exchange in violation of Article 406 (1) of the Act;
14. To exercise voting rights in violation of Article 406 (3) of the Act;
15. To violate a disposition order under Article 406 (4) of the Act;
16. To fail to commence the business operation within six months from the date of
registration under Article 411 (1) 1 of the Act
or continue the authorized business for six
months or longer after the commencement of the business without any justifiable cause;
17. To violate membership Regulations, Securities Market Business Regulations,
Derivatives Market Business Regulations, Listing Regulations,
Disclosure Regulations,
Market Surveillance Regulations, Dispute Resolution Regulations, and other regulations on
business under
Article 412 (1) of the Act;
18. To exchange information with foreign Exchanges in violation of Articles 437 (5) or 437
(6) of the Act;
19. To violate relevant Acts and subordinate statutes in conducting business under the
authority entrusted by the Financial Services
Commission under Article 438 (3) of the Act;
20. To request administrative agencies or any other related agencies to provide necessary
information in violation of Article 361
of this Decree;
21. To violate Article 362 of this Decree in relation to accumulation and management of
joint compensation fund for damages;
22. To violate Article 363 of this Decree in relation to exercise of right to indemnification
and reservation of joint compensation
fund;
23. To fail to comply with the request under the main sentence of Article 384 (6) of this
Decree;
24. To receive money, etc. from other person or to acquire money, etc. to be delivered to
other person through fraudulent methods
in relation to the business; and
25. To fall under any of subparagraphs 1 through 3 of Appendix 21 of this Decree.
[Appendix 19] Reasons for Disciplinary Actions
of the Financial Services Commission
(related to Article 376 (2))
To fall under any of the subparagraphs of Appendix 5 through 18.
[Appendix 20] Scope of Authority Delegated with the Governor of
the Financial
Supervisory Service by the Financial Services Commission or the Securities and Futures
Commission
(related to Article 387 (3) of this Decree)
1. Review of an authorization application pursuant to the former part of Article 13 (2) of the
Act, request for supplementation of
the application when it is found to be defective under
the latter part of Article 13 (2) of the Act and review of decision on cancellation
or changes
in conditions pursuant to the latter part of Article 13 (5) of the Act;
2. Request for review of an application for preliminary authorization pursuant to the former
part of Article 14 (2) of the Act and
supplementation of the application when it is found to
be defective under the latter part of Article 14 (2) of the Act;
3. Confirmation whether conditions for the preliminary authorization and authorization
requirements under Article 14 (5) of the Act
are satisfied;
4. Request for review of a registration application pursuant to the former part of Article 19
(2) of the Act and supplementation
of the application when it is found to be defective under
the latter part of Article 19 (2) of the Act;
5. Receipt of the report of alteration of major shareholders under the former part of Article
23 (4) of the Act;
6. Receipt of the appointment and dismissal of compliance officers pursuant to Article 28 (7)
of the Act (including the cases applied
to Article 350 of the Act);
7. Receipt of the report of a written document indicating the amount deducting the total risk
amount from the net operating capital
under Article 30 (3) of the Act;
8. Assessment of actual conditions and risks of the management under Article 31 (3) of the
Act;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
9. Receipt of business reports filed under Article 33 (1) of the Act;
10. Receipt of report of occurrence of matters under Article 33 (3) of the Act (including the
cases applied to Articles 350, 357
and 361 of the Act);
11. Receipt of transactions with major shareholders and specially-related persons under
Article 34 (4) of the Act, receipt of reports
on a quarterly basis under Article 34 (5) of the
Act and request for filing necessary data to financial investment firm or its major
shareholder under Article 34 (6) of the Act;
12. Request for filing necessary data to financial investment firm or its major shareholder
under Article 36 of the Act (including
the cases which are applied to Article 350 of the Act);
13. Receipt of report to conduct business falling under the latter part of each subparagraph
of Article 40 of the Act other than
each subparagraph;
14. Receipt of reports under Article 41 (1) of the Act and review whether such reports are
falling under any of each subparagraph
of Article 41 (2) of the Act;
15. Receipt of reports under Article 42 (2) of the Act other than each subparagraph and
review whether such reports are falling under
each subparagraph of Article 42 (3) of the Act
(including the cases applied to Article 255 of the Act, Articles 49 (4) and 49 (5)
of this
Decree;
16. Review whether the person who is delegated with the businesses is falling under any of
each subparagraph of Article 43 (2) of
the Act, record, keeping or management the measures
taken under Article 43 (3) of the Act, receipt of request for a reference under
Article 43 (4)
of the Act, notification to an inquirer under Article 43 (5) of the Act and receipt of raising an
objection under
Article 425 of the Act which is applied to Article 43 (6) of the Act
(including the cases applied to Article 49 (5) of this Decree);
17. Review whether an introducing broker is falling under each subparagraph of Article 53
(2) of the Act, record, keeping or management
the measures taken under Article 53 (3) of
the Act, receipt of request for a reference under Article 53 (5) of the Act, notification
to an
inquirer under Article 53 (6) of the Act and receipt of raising an objection under Article 425
of the Act which is applied
to Article 53 (7) of the Act;
18. Receipt of reports under the main sentence of Article 56 (4) of the Act and the proviso of
Article 56 (4) of the Act ;
19. Receipt of business reports filed under Article 90 (1) of the Act, receipt of settlement
statements filed under Article 90 (2)
of the Act and disclosure under Article 90 (3) of the
Act (including the cases applied to Article 186 (2));
20. Receipt of methods to manage the risks reported under Article 93 (2) of the Act;
21. Review of liquidation affairs and financial status under Article 95 (2) of the Act;
22. Receipt of business reports filed under Article 100 (5) of the Act;
23. Receipt of reports to conduct like-kind services of non-discretionary investment advisory
under Article 101 (1) of the Act, receipt
of reports under Article 101 (2) of the Act other
than each subparagraph and request for documents under Article 101 (3) of the
Act;
24. Receipt of reports on the issuance of beneficiary certificates under Article 110 (2) of the
Act;
25. Receipt of reports on appointment or dismissal of an accounting auditor under Article
114 (4) of the Act;
26. Receipt and acceptance of a registration statement of a public offering of securities or
secondary distribution under Article
119 (1) of the Act, receipt and acceptance of a shelf
registration statement filed under the former part of Article 119 (2) of the
Act and receipt of
additional documents of shelf registration statement under the latter part of Article 119 (2)
of the Act;
27. Receipt of a withdrawal statement under Article 120 (4) of the Act;
28. Request for an amendment statement under Article 122 (1) of the Act, receipt and
acceptance of such amendment statement, receipt
and acceptance of an amendment
statement under the former and latter part of Article 122 (3) of the Act and the former part of
Article 122 (4) of the Act;
29. Receipt and acceptance of a prospectus filed under Article 123 (1) of the Act, and receipt
of an additional prospectus under
the main sentence of Article 123 (3) of the Act other than
each subparagraph;
30. Receipt of an after-report under Article 128 of the Act;
31. Keeping and disclosure of a registration statement under the former part of Article 129
other than each subparagraph;
32. Execution of investigation including request for report or documents for reference to a
registrant of the registration statements,
etc. under Article 131 (1) of the Act;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
33. Order of publication and amendment to a registrant of the registration statement under
Article 132 of the Act other than each
subparagraph;
34. Receipt of a tender offer statement filed under the main sentence of Article 134 (2) of
the Act other than each subparagraph;
35. Request for an amendment statement under Article 136 (1) of the Act, receipt and
acceptance of such amendment statement, receipt
and acceptance of an amendment
statement under the main sentence of Article 136 (3) of the Act;
36. Receipt of a tender offer statement filed under the former part of Article 137 (1) of the
Act;
37. Receipt of a document indicating an opinion on tender offer filed under Article 138 (2)
of the Act;
38. Receipt of a withdrawal statement filed under the former part of Article 139 (2) of the
Act;
39. Receipt of a report on results of tender offer filed under Article 143 of the Act;
40. Keeping and disclosure of a tender offer statement under Article 144 other than each
subparagraph;
41. Execution of investigation including request for report or documents for reference to a
registrant of the registration statements,
etc. under the former part of Article 146 (1) of the
Act;
42. Order of publication and amendment under the former part of Article 146 of the Act
other than each subparagraph;
43. Receipt of a report on substantial shareholding of stocks and changes in such stocks
under the former part of Article 147 (1)
of the Act and a report on changes in material
matters under Article 147 (4) of the Act;
44. Keeping and disclosure of reports under Article 149 of the Act;
45. Execution of investigation including request for report or documents for reference to a
person who has filed a report on substantial
shareholding of stocks, etc. under Article 151
(1) of the Act and order of amendment under Article 151 (2) of the Act;
46. Receipt of a form of proxy and materials under Article 153 of the Act;
47. Receipt of a document indicating an opinion on a proxy solicitation filed under Article
155 of the Act;
48. Request for amendment of a form of proxy and materials and receipt thereof under
Article 156 (1) of the Act and receipt of an
amended form of proxy and materials submitted
under the former and latter part of Article 156 (3) of the Act;
49. Keeping and disclosure of a form of proxy and materials under Article 157 of the Act;
50. Execution of investigation including request for report or documents for reference to a
person who has filed a report on substantial
shareholding of stocks, etc. under Article 158
(1) of the Act and order of amendment under the former part of Article 158 (2) of
the Act
other than each subparagraph;
51. Receipt of an annual report filed under the main sentence of Article 159 (1) of the Act,
the annual report of the latest business
year filed under Article 159 (3) of the Act and
combined financial statements filed under Article 159 (5) of the Act;
52. Receipt of semi-annual and quarterly reports filed under the former part of Article 160 of
the Act;
53. Receipt of a material change report filed under the former part of Article 161 (1) of the
Act other than each subparagraph, request
for provision or exchange of necessary
information under the former part of Article 161 (4) of the Act and sending a material
change
report to the Exchange under Article 161 (5) of the Act;
54. Keeping and disclosure of an annual report under the former part of Article 163 of the
Act;
55. Execution of investigation including request for report or documents for reference under
the former part of Article 164 (1) of
the Act and order of amendment under the former part
of Article 164 (2) of the Act other than each subparagraph;
56. Order of submission of materials and report to the accounting auditor who performs an
audit or the corporation that is audited
under Article 169 (2) of the Act;
57. Informing the corporation concerned of accrued short-term sales margin under Article
172 (3) of the Act;
58. Receipt of a reporting of the ownership status of specific securities and, if any, the
changes in the ownership status of such
securities, etc. under Article 173 (1) of the Act;
59. Registration of collective investment schemes under Article 182 (1) of the Act, receipt of
a registration application under Article
182 (3) of the Act, review of the registration
application and making a decision on either accepting or denying a registration under
the
The Enforcement Decree of the Financial Investment Services and Capital Market Act
former part Article 182 (4) of the Act,
notifying the applicant of the result and the reasons
therefor in writing and request for supplementation of the application when
it is found to be
defective under the latter part of the same paragraph, description of necessary matters in the
register of collective
investment scheme, and make a public notice of the decision under
Article 182 (7) of the Act and registration of changes under the
former part of Article 182
(8) of the Act (including the cases which are applied to Article 279 (3) of the Act);
60. Approval of convention of the general meeting of beneficiaries under Articles 190 (3) of
the Act (including the cases which are
applied to Articles 201 (3), 210 (3), 215 (4), 220 (4)
and 226 (4) of the Act);
61. Approval of the purchase of beneficiary certificates under Article 191 (3) of the Act
(including the cases which are applied
to Article 201 (4) of the Act);
62. Receipt of reporting of termination of the investment trust under the proviso of Article
192 (1) of the Act and the latter part
of Article 192 (2) of the Act other than each
subparagraph;
63. Receipt of reporting of merger of investment trusts under the former part of Article 193
(5) of the Act (including the cases
which are applied to Articles 204 (3), 211 (2) and 216 (3)
of the Act);
64. Receipt of reporting of dissolution of an investment company under the latter part of
Article 202 (1) of the Act other than each
subparagraph, appointment of a liquidator and a
liquidation supervisor under Articles 202 (6) and 202 (7) of the Act, dismissal
and
appointment of a liquidator and a liquidation supervisor under Article 202 (8) of the Act and
delegation of the registration
concerned under Article 202 (9) of the Act other than each
subparagraph (including the cases which are applied to Articles 211 (2)
and 216 (3) of the
Act);
65. Receipt of a list of properties and certified copies of balance sheet filed under Article
203 (1) of the Act, a report under
Article 203 (2) of the Act, a settlement statement filed
under the latter part of Article 203 (5) of the Act and a decision on payment
of commissions
of the liquidator or the liquidation supervisor under Article 203 (6) of the Act (including the
cases which are
applied to Articles 211 (2), 216 (3) and 221 (6) of the Act);
66. Receipt of a report under the latter part of Article 221 (1) other than each subparagraph,
appointment of a liquidator under
Article 221(3) of the Act and dismissal and appointment
of a liquidator under Article 221(4) of the Act (including the cases applied to Article 227 (3)
of the Act);
67. Delegation of the business of calculating a base price under the former part of Article
238 (3) of the Act;
68. Receipt of a report of appointment or changes an accounting auditor under Article 240
(4) of the Act;
69. Receipt of a report of the fact that the net asset amount falls short of the minimum net
asset amount under Article 243 (1) of
the Act and notification of the fact that the company's
registration may be revoked under Article 243 (2) of the Act;
70. Receipt of a report under the main sentence and the proviso of Article 247 (3) of the Act,
receipt of an objection raised under
the former part of Article 247 (4) of the Act and a
decision on the objection raised under the latter part of Article 247 (4) of
the Act;
71. Receipt of the report on the custody and management of assets filed under Article 248
(2) of the Act;
72. Revocation a registration of a collective investment scheme filed under the main
sentence and the proviso of Article 253 (1)
other than each subparagraph, measures under
each subparagraph of Article 253 (2) of the Act, cautionary warning and warning under
Article 253 (3) of the Act other than each subparagraph and holding hearings where the
Commission revokes the registration of a
collective investment scheme under Article 253
(4) of the Act;
73. Review of the registration application, a decision on either accepting or denying the
registration, notification of the result
and the reasons therefor in writing and request for
supplement when the registration application is found to be defective under
the former part
of Article 254 (4) of the Act;
74. Measures under Articles 257 (2) 5 and 257 (2) 6 of the Act, Articles 257 (3) 4 and 257
(3) 5 of the Act, request for taking measures
falling under subparagraphs 2 through 6 of
Article 257 (4) of the Act and measures and request for measures under the main sentence
of
Article 422 (3) of the Act which is applied to Article 257 (5) of the Act (referring to only
measures falling under Article
257 (3) 4 and 5 of the Act and request for measures falling
under subparagraphs 2 through 6 of Article 257 (4) of the Act);
The
Enforcement Decree of the Financial Investment Services and Capital Market Act
75. Review of the registration application under the former part of Article 258 (4) of the Act
and request for supplement when the
registration application is found to be defective under
the latter part of Article 258 (4) of the Act;
76. Measures under Articles 262 (2) 5 and 262 (2) 6 of the Act, Articles 262 (3) 4 and 262
(3) 5 of the Act, request for taking measures
falling under subparagraphs 2 through 6 of
Article 262 (4) of the Act and measures and request for measures under the main sentence
of
Article 422 (3) of the Act which is applied to Article 262 (5) of the Act (referring to only
measures falling under subparagraph
4 and 5 of Articles 262 (3) 4 and 262 (3) 5 of the Act
and request for measures falling under subparagraphs 2 through 6 of Article
262 (4) of the
Act);
77. Receipt of a registration application filed under Article 263 (3) of the Act, review of the
registration application under the
former part of Article 263 (4) of the Act and request for
supplement when the registration application is found to be defective
under the latter part of
Article 263 (4);
78. Measures under Articles 267 (2) 5 and 267 (2) 6 of the Act, Articles 267 (3) 4 and 267
(3) 5 of the Act, request for taking measures
falling under subparagraphs 2 through 6 of
Article 267 (4) of the Act and measures and request for measures under the main sentence
of
Article 422 (3) of the Act which is applied to Article 267 (5) of the Act (referring to only
measures falling under Articles
267 (3) 4 and 267 (4) 5 of the Act and request for measures
falling under subparagraphs 2 through 6 of Article 267 (4) of the Act);
79. Registration of a private equity company under Article 268 (3) of the Act, receipt of a
registration application under Article
268 (5) of the Act, review of the registration
application and making a decision on either accepting or denying a registration under
the
former part Article 268 (6) of the Act, notifying the applicant of the result and the reasons
therefor in writing and request
for supplementation of the application when it is found to be
defective under the latter part of Article 268 (6) of the Act, description
of necessary matters
in the register of a private equity company, and make a public notice of the decision under
Article 268 (9)
of the Act and registration amendment under Article 268 (10) of the Act;
80. Approval under the proviso of Articles 270 (3), 270 (4), 270 (5) of the Act, receipt of a
report under the main sentence of Article
270 (6) of the Act and approval under the proviso
of Article 270 (6) of the Act (including the cases which are applied to Article 271 (4) of the
Act);
81. Receipt of a report under the main sentence of Article 272 (7) of the Act, order of
amendment or supplement under the latter
part of Article 272 (7) of the Act and approval
under Article 272 (10) of the Act;
82. Receipt of a report under Article 275 (3) of the Act other than each subparagraph,
Article 275 (4) of the Act other than each
subparagraph and Article 275 (5) of the Act other
than each subparagraph;
83. Receipt of a report and notification to the Fair Trade Commission of under Article 276
(2) of the Act
84. Revocation a registration of a private equity company filed under the main sentence and
the proviso of Article 278 (1) other
than each subparagraph, measures under the main
sentence of Article 278 (3) of the Act other than each subparagraph, Articles 278
(4) 1 (c)
and 278 (4) 1 (d), 278 (4) 2 (d) of the Act , request for taking measures falling under items
(b) through (e) of Article
278 (3) of the Act, measures under Article 278 (5) 4 of the Act and
holding hearings where the Commission revokes the registration
of a private equity
company under subparagraph 1 of Article 423 which is applied to Article 278 (6) of the Act;
85. Registration of a foreign collective investment scheme under Article 279 (1) of the Act;
86. Revocation a registration of a foreign collective investment scheme under Article 282
(1) of the Act other than each subparagraph
and holding hearings where the Commission
revokes the registration of a private equity company under Article 282 (2) of the Act;
87. Receipt of a request from an issuer under Article 314 (5) 2 of the Act;
88. Receipt of a report under the main sentence and the proviso of Article 339 (2) of the Act
other than each subparagraph;
89. Receipt of a report under Articles 343 (3) and 343 (4) of the Act, and order of a
submission of necessary documents under Article
343 (8) of the Act;
90. Measures under Articles 354 (2) 5 and 354 (2) 6 of the Act, Articles 354 (3) 4 and 354
(3) 5 of the Act, request for taking measures
falling under subparagraphs 2 through 6 of
Article 354 (4) of the Act and measures and request for measures under the main sentence
of
Article 422 (3) of the Act which is applied to Article 354 (5) of the Act (referring to only
The Enforcement Decree of the Financial
Investment Services and Capital Market Act
measures falling under Articles 354 (3) 4 and 354 (3) 5 of the Act and request for measures
falling under subparagraphs 2 through 6 of Article 354 (4) of the Act);
91. Review of an authorization application under the former part of Article 355 (4) of the
Act and request for supplementation of
the application when it is found to be defective under
the latter part of Article 355 (4) of the Act;
92. Measures under Articles 359 (2) 5 and 359 (2) 6 of the Act, Articles 359 (3) 4 and 359
(3) 5 of the Act, request for taking measures
falling under subparagraphs 2 through 6 of
Article 359 (4) of the Act and measures and request for measures under the main sentence
of
Article 422 (3) of the Act which is applied to Article 359 (5) of the Act (referring to only
measures falling under Articles
359 (3) 4 and 359 (3) 5 of the Act and request for measures
falling under subparagraphs 2 through 6 of Article 359 (4) of the Act);
93. Review of an authorization application under the former part of Article 360 (4) of the
Act and request for supplementation of
the application when it is found to be defective under
the latter part of Article 360 (4) of the Act;
94. Measures under Articles 364 (2) 5 and 364 (2) 6 of the Act, Articles 364 (3) 4 and 364
(3) 5 of the Act, request for taking measures
falling under subparagraphs 2 through 6 of
Article 364 (4) of the Act and measures and request for measures under the main sentence
of
Article 422 (3) of the Act which is applied to Article 364 (5) of the Act (referring to only
measures falling under Articles
364 (3) 4 and 364 (3) 5 of the Act and request for measures
falling under subparagraphs 2 through 6 of Article 364 (4) of the Act);
95. Review of a registration application under the former part of Article 365 (4) and request
for supplementation of the application
when it is found to be defective under the latter part
of Article 365 (4) of the Act;
96. Measures under Articles 369 (2) 5 and 369 (2) 6 of the Act, Article 369 (3) 4 and 369 (3)
5 of the Act, request for taking measures
falling under subparagraphs 2 through 6 of Article
369 (4) of the Act and measures and request for measures under the main sentence
of Article
422 (3) of the Act which is applied to Article 369 (5) of the Act (referring to only measures
falling under Articles
369 (3) 4 and 369 (3) 5 of the Act and request for measures falling
under subparagraphs 2 through 6 of Article 369 (4) of the Act);
97. Receipt of a report sent under Article 392 (3) of the Act and disclosure under Article 392
(4) of the Act;
98. Receipt of a report under Article 418 of the Act other than each subparagraph (including
cases which are applied to Article 350
of the Act);
99. Measures under Articles 420 (3) 5 and 420 (3) 6 of the Act;
100. Receipt of a report sent under Article 421 (2) of the Act;
101. Measures under Articles 422 (1) 4 and 422 (1) 5 of the Act, request for taking measures
falling under subparagraphs 2 through
6 of Article 422 (2) of the Act and request for
measures under the main sentence of Article 422 (3) of the Act (referring to only
measures
falling under Articles 422 (1) 4 and 422 (1) 5 of the Act and request for measures falling
under subparagraphs 2 through
6 of Article 422 (2) of the Act);
102. Keeping and maintenance of a record of disciplinary action or measures taken under
Article 424 (1) of the Act, notification
to retired officers and employees under the former
part of Article 424 (3) of the Act, receipt of request for a reference under
Article 424 (5) of
the Act and notification under Articles 424 (6) of the Act (including cases which are applied
to Article 257
(5), 262 (5), 267 (5), 278 (6), 282 (3), 293 (4), 307 (4), 355 (5), 354 (5), 359
(5), 364 (5), 369 (5), 372 (2) and 411 (4) of the
Act);
103. Order of a submission of reference or data under Article 426 (1) of the Act, request for
matters falling under each subparagraph
of Article 426 (2) of the Act and execution of
investigation including request for report or documents for reference under Article
426 (4)
of the Act;
104. Receipt of a report or tip under Article 435 (1) of the Act, dealing with such report or
tip and notifying the result in writing
under Article 435 (2) of the Act, receipt of a request
for the information about the process of a report or tip under the former
part of Article 435
(3) of the Act and response under the latter part of Article 435 (3) of the Act;
105. Receipt of a request for information from a foreign supervisory agency regarding
information exchange under Article 437 (1)
of the Act and provision of such information
(limited to information necessary for review of eligibility including records of disciplinary
measures);
106. Recognition under Article 7 (3) 5 (a) of this Decree and receipt of materials submitted
under Article 7 (3) 5 (b) of this Decree;
107. Confirmation whether contents of an application of authorization is true and review of
such application under Article 17 (5)
of this Decree, actual investigation under Article 17 (6)
The Enforcement Decree of the Financial Investment Services and Capital
Market Act
of this Decree and confirmation whether the conditions under Article 17 (11) of this Decree
are satisfied;
108. Confirmation whether contents of an application of registration is true and review of
such application under Article 22 (4)
of this Decree;
109. Review of an application for approval of alteration under the former part of Article 26
(5) of this Decree and request for supplementation
of the application when it is found to be
defective under the latter part of Article 26 (5) of this Decree;
110. Recommendation of amendment of internal control standards under Article 31 (3) of
this Decree;
111. Request for disclosure of amendment and re-disclosure under Article 36 (6) of this
Decree;
112. Confirmation of provision of information to an affiliate company under Article 51 (2) 1
(a) of this Decree and confirmation
under Article 51 (2) 2 of this Decree other than each
item;
113. Receipt of a request for appointment of an acting representative under Article 66 (1) of
this Decree and request for appointment
and designation of a representative and acting
representative under Article 66 (2) of this Decree;
114. Receipt of a report of establishment and amendment of business standards under
Article 78 (12) of this Decree;
115. Confirmation of a transaction under Article 85 (6) of this Decree;
116. Recognition of a transaction under Article 87 (1) 3 (d) of this Decree;
117. Recognition of a transaction with an interested person Article 99 (2) 3 (h) of this
Decree;
118. Recognition of acquisition of a trust property by proprietary property under Article 105
of this Decree other than each subparagraph;
119. Recognition of monetary loan from proprietary property of a trust company under
Article 106 (4) 2 of this Decree other than
each subparagraph;
120. Receipt of submission under Article 108 (5) of this Decree;
121. Recognition of asset transaction between trust properties under Article 109 (1) 3 (b) of
this Decree and recognition of transaction
with proprietary property with a trust company or
its interested person under Article 109 (1) 4 (j) of this Decree;
122. Receipt of a report on accounting audit under Article 118 (5) of this Decree;
123. Receipt of documents submitted under former part of Article 137 (1) 1 of this Decree,
contents under the former part of Article
137 (1) 3 of this Decree, and a report on the result
under Article 137 (1) 4 of this Decree;
124. Measures falling under Article 138 (5) of this Decree;
125. Measures falling under Article 152 (6) of this Decree;
126. Measures falling under Article 159 (4) of this Decree;
127. Measures falling under Article 166 (5) of this Decree;
128. Confirmation and recognition of exemption from an obligation to submit annual reports
under Articles 167 (2) 3 and 167 (2) 4
of this Decree;
129. Measures falling under Article 175 (5) of this Decree;
130. Receipt of material reports filed under Article 176 (5) of this Decree;
131. Designation of bond dealers under Article 180 (1) of this Decree other than each
subparagraph;
132. Receipt of a report under Article 186 (1) 5 of this Decree;
133. Investment registration under Article 188 (1) of this Decree;
134. Receipt of a report whether a short-term sales margin is returned under Article 195 (5)
of this Decree;
135. Receipt of a stabilization statement under Article 204 (3) of this Decree other than each
subparagraph, a stabilization report
under Article 204 (5) of this Decree other than each
subparagraph, and keeping and disclosure of a stabilization statement and stabilization
report under Article 204 (6) of this Decree other than each subparagraph;
136. Receipt of a registration for market making under Article 205 (1) of this Decree other
than each subparagraph, a market-making
report under Article 205 (3) of this Decree other
than each subparagraph, and keeping and disclosure of a registration for market
making and
market-making report under Article 205 (3) of this Decree;
137. Receipt of notification under Article 206 (4) of this Decree;
138. Receipt of an application for termination filed under Article 224 (1) of this Decree
other than each subparagraph;
139. Receipt of a report under Article 233 (1) of this Decree;
140.Receipt of a report under Article 250 (4) of this Decree;
The
Enforcement Decree of the Financial Investment Services and Capital Market Act
141. Receipt of changes in a base price under Article 262 (3) of this Decree;
142. Receipt of an audit report under Article 265 (5) of this Decree;
143. Measures falling under each subparagraph of Article 275 (5) of this Decree;
144. Measures falling under Articles 279 (1) 2 and 279 (1) 3 of this Decree;
145. Measures falling under Articles 284 (1) 2 and 284 (1) 3 of this Decree;
146. Confirmation of an application for registration under Article 286 (3) of this Decree and
review of such application under Article
286 (4) of this Decree.
147. Measures falling under Article 289 (1) 2 and 289 (1) 3 of this Decree;
148. Measures falling under each subparagraph of Articles 300 (5), 300 (6) (limited to
measures under Articles 300 (5) 1 and 300
(5) 2), 300 (7) 1, 300 (8) 1 and 300 (9) (limited to
measures falling under Article 300 (7) 1) of this Decree;
149. Review of authorization of establishment of branches, etc. under Article 331 (1) of this
Decree;
150. Receipt of a plan filed under Article 334 (4) of this Decree;
151. Measures falling under Articles 344 (5) 2 and 344 (5) 3 of this Decree;
152. Receipt of the details of brokerage business under Article 346 (4) of this Decree;
153. Measures falling under Articles 347 (5) 2 and 347 (5) 3 of this Decree;
154. Measures falling under Articles 349 (5) 2 and 349 (5) 3 of this Decree;
155. Measures falling under Articles 352 (5) 2 and 352 (3) of this Decree;
156. Approval of decrease of capital under Article 370 (1) of this Decree, review of an
approval application and its accompanying
documents under the former part of Articles 370
(2) and 370 (5) of this Decree, and supplementation of such application when it
is found to
be defective under the latter part of Articles 370 (2) and 370 (5) of this Decree;
157. Measures falling under Articles 373 (5) 2 and 375 (5) 3 of this Decree;
158. Measures falling under Articles 376 (1) 11 (a) and 376 (1) 11 (b) of this Decree;
159. Confirmation under Articles 384 (2) of this Decree, request for a submission of
materials under Article 384 (3) of this Decree,
receipt for a request for measures under
Article 384 (5) of this Decree, request for measures under the main sentence of Article
384
(6) of this Decree and recommendation of measures under the proviso of Article 384 (6) of
this Decree; and
160. Other business prescribed and publicized by the Financial Services Commission as
necessary for execution of decisions made by
the commission equivalent to those specified
in subparagraphs 1 through 159 of this Article.
[Appendix 21] Reasons for violating finance-related Acts and subordinate statutes
(related to subparagraph 50 of Appendix 5, subparagraph
20 of Appendix 6, subparagraph 14
of Appendix 7, subparagraph 18 of Appendix 8, subparagraph 16 of Appendix 9, subparagraph
13
of Appendix 10, subparagraph 19 of Appendix 11, subparagraph 17 of Appendix 12,
subparagraph 13 of Appendix 13, subparagraph 22
of Appendix 14, subparagraph 14 of
Appendix 15, subparagraph 11 of Appendix 16, subparagraph 11 of Appendix 17, and
subparagraph
25 of Appendix 18)
1. To fall under any of the following items in violation of the Act on Real Name Financial
Transactions and Guarantee of Secrecy:
(a) To fail to use the real name for financial transactions in violation of Article 3 (1) of
the Act on Real Name Financial Transactions
and Guarantee of Secrecy;
(b) To provide or divulge transaction information, etc. or requests such information in
violation of
the main sentence of Article 4 (1) of the Act on Real Name Financial
Transactions and Guarantee of Secrecy;
(c) To fail to reject the request for transaction information in violation of Article 4 (3) of
the Act on Real Name Financial Transactions
and Guarantee of Secrecy;
(d) To provide or divulge the acquired transaction information, etc. to a third party, use
the information
for other purposes, or request such information in violation of the main
sentence of Article 4 (4) of the Act on Real Name Financial
Transactions and Guarantee
of Secrecy;
(e) To provide or divulge transaction information, etc. to a third party in violation of
Article 4 (5) of the Act on Real Name Financial
Transactions and Guarantee of Secrecy;
(f) To fails to notify the title holder, in writing, of the provision of transaction
information
in violation of Article 4-2 (1) of the Act on Real Name Financial
Transactions and Guarantee of Secrecy;
(g) To fail to postpone the notification in violation of Articles 4-2 (2) or 4-2 (3) of the
Act on Real Name Financial Transactions
and Guarantee of Secrecy;
The Enforcement Decree of the Financial Investment Services and Capital Market Act
(h) To violate Articles
4-2 (5) of the Act on Real Name Financial Transactions and
Guarantee of Secrecy (limited only to the cases where Article 4-2 (1)
through 4-2 (3) are
applied to);
(i) To fail to record, manage or keep the information on the provision of transaction
information in violation of Article 4-3 (1)
or 4-3 (2) of the Act on Real Name Financial
Transactions and Guarantee of Secrecy; and
(j) To violate Articles 4-3 (3) of the Act on Real Name Financial Transactions and
Guarantee of Secrecy.
2. To fall under any of the following items in violation of the Criminal Act:
(a) To violate Article 214 through 217 of the Criminal
Act;
(b) To violate Article 223 of the Criminal Act (limited only to the cases where Articles
214 through 217 of the Criminal Act
is violated);
(c) To violate Article 224 of the Criminal Act (limited only to the cases where the
purpose if to commit crimes referred
to in Articles 214 or 215 referred to in the Criminal
Act);
(d) To violate Articles 355, 356, or 357 (1) of the Criminal Act;
(e) To violate Article 357 (2) of the Criminal Act;
(f) To violate
Article 359 of the Criminal Act (limited only to the cases where Articles
355, 356, or 357 (1) of the Criminal Act are violated);
(g) To violate Article 359 of the Criminal Act (limited only to the cases where Article
357 (2) of the Criminal Act is violated);
3. To fall under any of the following items in violation of the Act on the Aggravated
Punishment, etc. of Specific Economic Crimes:
(a) To violate Article 3 (1) of the Act on the Aggravated Punishment, etc. of Specific
Economic Crimes (limited to the cases related
to Articles 355 or 356 of the Criminal
Act);
(b) To violate Articles 5 (1) through 5 (3) of the Act on the Aggravated Punishment, etc.
of Specific Economic Crimes;
(c) To violate Article 7 of the Act on the Aggravated Punishment, etc. of Specific
Economic Crimes;
(d) To violate Article 8 of the Act on the Aggravated Punishment, etc. of Specific
Economic Crimes;
(e) To violate Article 9 (3) of the Act on the Aggravated Punishment, etc. of Specific
Economic Crimes;
(f) To violate Article 9 (5) of the Act on the Aggravated Punishment, etc. of Specific
Economic Crimes; and
(g) To violate Articles 12 (1) or 12 (2) of the Act on the Aggravated Punishment, etc. of
Specific Economic Crimes.
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