Exhibit 12.5
SECURITIES AND EXCHANGE ACT
- --------------------------------------------------------------------------------
Wholly amended By 1976.12.22 Act No. 2920
Amended By 1982.3.29 Act No. 3541
Amended By 1987.11.28 Act No. 3945
Amended By 1991.12.31 Act No. 4469
Amended By 1994.1.5 Act No. 4701
Amended By 1995.12.29 Act No. 5041
Amended By 1997.1.13 Act No. 5254
Amended By 1997.12.13 Act No. 5423
Amended By 1998.1.8 Act No. 5498
Amended By 1998.2.24 Act No. 5521
Amended By 1998.5.25 Act No. 5539
Amended By 1998.9.16 Act No. 5559
Amended By 1998.12.28 Act No. 5591
Amended By 1999.2.1 Act No. 5736
Amended By 1999.5.24 Act No. 5982
Amended By 2000.1.21 Act No. 6176
Amended By 2001.3.28 Act No. 6423
Amended By 2002.1.26 Act No. 6623
Amended By 2002.4.27 Act No. 6695
CHAPTER I GENERAL PROVISIONS
ARTICLE 1 (PURPOSE)
The purpose of this Act is to contribute to the development of national
economy by
attaining wide and orderly circulation of securities, and by protecting
investors through fair issuance, purchase, sale or other transactions
of securities.
ARTICLE 2 (DEFINITIONS)
(1) The term "securities" in this Act shall mean any of the following
subparagraphs: (Amended by Act No. 4469, Dec. 31, 1991; Act No. 5254,
Jan. 13, 1997)
1.Government bonds;
2.Municipal bonds;
3.Bonds issued by a corporation which is established under a special
Act;
4.Corporate bonds;
5.Certificates of contribution issued by a corporation which is
established under a special Act;
6.Stock certificates, or instruments which represent preemptive right;
7.Certificates or instruments issued by a foreign corporation, etc.,
which have the same nature as those referred to in subparagraphs 1
through 6 of this paragraph;
8.Securities depository receipts which a person designated by the
Presidential Decree issues based on underlying certificates or
instruments issued by a foreign corporation, etc.; and
9.Other certificates or instruments designated by the Presidential
Decree, which are similar or related to those referred to in
subparagraphs 1 through 8 of this paragraph.
(2) Such right as shall be represented by the securities referred to in
each subparagraph of paragraph (1) shall be regarded as such
securities, even before certificates of such securities have been
issued with respect to such rights.
(3) The term "public offering of new securities" in this Act shall mean
a solicitation of an offer to acquire securities which are issued newly
under the Presidential Decree. (Amended by Act No. 4469, Dec. 31, 1991;
Act No. 5254, Jan. 13, 1997)
(4) The term "public offering of outstanding securities" in this Act
shall mean an offer to sell outstanding securities or a solicitation of
an offer to buy those under the Presidential Decree. (Amended by Act
No. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997)
(5) The term "issuer" in this Act shall mean a person who has issued or
intends to issue any securities: Provided, That in issuing securities
prescribed in paragraph (1) 8, the term "issuer" shall mean a person
who has issued or intends to issue certificates or instruments which
are the basis of such issuance. (Amended by Act No. 5254, Jan. 13,
1997)
(6) The term "underwriting" in this Act shall mean an act which falls
under any of the following subparagraphs:
1.To acquire from an issuer all or a part of securities with a view to
distributing, in connection with issuance of the securities;
2.To make a contract to acquire the unsold portion of securities with
an issuer in connection with issuance of the securities, in a case
where there is no one else to acquire it; and
3.To make arrangements on behalf of an issuer for a public offering of
new or outstanding securities, or to participate directly or indirectly
in a public offering of new or outstanding securities in part, for the
purpose of a commission or reward.
(7) The term "underwriter" in this Act shall mean any person who
conducts one of the activities referred to in subparagraphs of
paragraph (6). (Amended by Act No. 5423, Dec. 13, 1997)
(8) The term "securities business" in this Act shall mean any business
which falls under any of the following subparagraphs: (Amended by Act
No. 5254, Jan. 13, 1997; Act No. 6423, Mar. 28, 2001)
1.To buy and sell securities;
2.To buy and sell securities on consignment;
3.To act as an intermediary or an agent with respect to purchase and
sale of securities (excluding what falls under subparagraph 8);
4.To act as an intermediary or agent with respect to an entrustment of
sale and purchase transactions to be executed on a securities market,
Association brokerage market, or market in foreign country similar to
those;
5.To underwrite securities;
6.To make a public offering of outstanding securities;
7.To arrange for a public offering of new or outstanding securities;
and
8.To act as an intermediary or an agent with respect to the sale and
purchase of securities and make other sale and purchase of securities
necessary for the relevant intermediary business according to
quotations falling under each of the following items for listed stocks
or other stocks registered with the Korea Securities Dealers
Association (hereinafter referred to as the "Association") established
under Article 162, making use of information communications networks
and electronic data-processing equipment, on behalf of many persons at
the same
time:
(a) Final quotations of the relevant stocks published by the securities
market or Association brokerage market; and
(b) The single price determined in such manner as prescribed by the
Ordinance of the Ministry of Finance and Economy.
(9) The term "securities company" in this Act means a company which
conducts securities business in accordance with this Act.
(10) The term "investment advisory business" and the term
"discretionary investment business" in this Act mean the business
falling under each of the following subparagraphs: (Amended by Act No.
6176, Jan. 21, 2000)
1.The investment advisory business: The business of offering advice
orally or in writing, or in other manner with respect to the judgment
of value of securities or investment in securities (referring to the
judgment on kinds, items, quantity, and price of securities subject to
investment, and the classification, methods and time of trading such
securities; hereinafter the same shall apply): Provided, That any
advice that is made through publications, etc. issued for many and
unspecified persons and is prescribed by the Presidential Decree shall
be excluded; and
2.The discretionary investment business: The business of making
investments for customers after being entrusted by such customers with
the whole or part of the investment judgment that is made based on the
analysis of the value of securities, etc.
(11) The term "investment advisory company" in this Act shall mean a
company which conducts the investment advisory business or investment
discretionary business under this Act. (Amended by Act No. 3945, Nov.
28, 1987; Act No. 5736, Feb. 1, 1999)
(12) The term "securities market" in this Act shall mean a market which
is established by the Korea Stock Exchange (hereinafter referred to as
the "Stock Exchange") under the provisions of Article 71 for sale and
purchase transaction of securities.
(13) The terms "listed corporation", "unlisted corporation",
"stock-listed corporation" and "stock-unlisted corporation" in this Act
shall mean: (Amended by Act No. 5736, Feb. 1, 1999)
1.Listed corporation: issuer of securities listed on the securities
market;
2.Unlisted corporation: issuer of securities not listed on the
securities market;
3.Stock-listed corporation: corporation which has issued stocks listed
on the securities market; and
4.Stock-unlisted corporation: corporation which has issued stocks not
listed on the securities market.
(14) The term "Association brokerage market" in this Act shall mean a
market operated by the Association for the purpose of brokering sale
and purchase transactions of securities prescribed by the Presidential
Decree. (Newly Inserted by Act No. 5254, Jan. 13, 1997; Act No. 6423,
Mar. 28, 2001)
(15) The term "Association-registered corporation" in this Act shall
mean a corporation which is registered with the Association pursuant to
Article 172-2. (Newly Inserted by Act No. 5254, Jan. 13, 1997)
(16) The term "foreign corporation" in this Act shall mean a foreign
government, foreign local government, foreign public institution,
foreign enterprise established under foreign Acts and subordinate
statutes, international finance organization established under a
treaty, or person who is designated by the Ordinance of the Ministry of
Finance and Economy. (Newly Inserted by Act No. 5254, Jan. 13, 1997;
Act No. 5423, Dec. 13, 1997; Act No. 5539, May 25, 1998)
(17) The term "securities-related institution" in this Act shall mean:
(Amended by Act No. 5736, Feb. 1, 1999)
1.An institution which has been established, licensed to do operations
or business, or registered under this Act;
2.A management company or trustee company under the Securities
Investment Trust Business Act; and
3.An asset management company or a custodian under the Mutual Funds
Act.
(18) The term "employee stock ownership association" in this Act shall
mean an organization created after satisfying requirements prescribed
by the Presidential Decree for the purpose of promoting the welfare of
employees and enhancing their economic status through the management of
stocks acquired by such employees of any stock-listed corporation, any
Association-registered corporation, or any corporation, registered
under Article 3, which intends to list newly its stock certificates.
(Newly Inserted by Act No. 5254, Jan. 13, 1997; Act No. 6176, Jan. 21,
2000; Act No. 6423, Mar. 28, 2001)
(19) The term "outside director" in this Act shall mean a director who
does not engage in the regular business of the relevant company and is
selected and appointed under Article 54-5 or 191-16. (Newly Inserted by
Act No. 6176, Jan. 21, 2000; Act No. 6423, Mar. 28, 2001)
ARTICLE 2-2 (FICTION OF SECURITIES INDEX AS SECURITIES)
(1) Stockprice index or other securities index which indicate
comprehensively the price levels of many types of stock certificates or
other securities according to
their classification and which is designated by the Stock Exchange
(hereinafter referred to as "securities index") shall be deemed
securities.
(2) Any transactions which make an agreement of receiving and giving
money calculated by the margin between the value of securities index in
advance determined by parties according to the standards and procedures
as determined by the Stock Exchange and the value of securities index
which actually arises at a given time in the future in respect of
securities index (hereinafter referred to as "futures transaction of
securities index") shall be deemed sales transaction of securities.
(3) In applying this Act to futures transactions of securities index,
the value of securities index shall be securities prices.
[This Article Newly Inserted by Act No. 4701, Jan. 5, 1994]
CHAPTER II REGISTRATION OF ISSUER OF SECURITIES
ARTICLE 3 (REGISTRATION OF ISSUER OF SECURITIES)
Any issuer who falls under any of the following subparagraphs shall be
registered with the Financial Supervisory Commission so as to provide
for a fair issuance of securities and public disclosure of information
as to a business corporation: Provided, That the same shall not apply
to issuers of securities as prescribed in Article 2 (1) 1 through 3, 4
(limited to corporate bonds as prescribed by the Presidential Decree),
and 5, and of such other securities as determined by the Presidential
Decree: (Amended by Act No. 3541, Mar. 29, 1982; Act No. 3945, Nov. 28,
1987; Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997; Act No.
5423, Dec. 13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 5736, Feb. 1,
1999; Act No. 6176, Jan. 21, 2000; Act No. 6423, Mar. 28, 2001; Act No.
6623, Jan. 26, 2002)
1.Deleted; (by Act No. 6623, Jan. 26, 2002)
2.A corporation that is neither Association-registered corporation nor
listed corporation, which intends to make a public offering of new or
outstanding securities;
3.A corporation that is neither Association-registered corporation nor
listed corporation, which intends to merge with a stock-listed
corporation or an Association-registered corporation;
4.Deleted; (by Act No. 6623, Jan. 26, 2002)
5.A corporation under incorporation which intends to make a public
offering of new securities; and
6.A corporation which intends to grant the stock option pursuant to
Article 189-4.
ARTICLE 4 (DOCUMENTS FOR REGISTRATION)
An issuer of securities who applies for the registration pursuant to
the provisions of Article 3 shall file documents as determined by the
Financial Supervisory Commission such as general situations and
property conditions of the company, with the Financial Supervisory
Commission. In case where any significant matters stated in the filed
documents are modified, such information shall also be filed with the
Financial Supervisory Commission. (Amended by Act No. 4469, Dec. 31,
1991; Act No. 5498, Jan. 8, 1998)
ARTICLE 5 (DISCLOSURE OF DOCUMENTS FILED FOR REGISTRATION)
The Financial Supervisory Commission may offer the documents filed
pursuant to
Article 4 for public inspection. (Amended by Act No. 5498, Jan. 8,
1998)
ARTICLE 6 (ADMINISTRATION OF REGISTERED CORPORATION)
With respect to a corporation which has been registered with the
Financial Supervisory Commission pursuant to the provisions of Article
3 (hereinafter referred to as a "registered corporation"), the
Financial Supervisory Commission may prescribe the criteria for sound
management of the registered corporation such as financing the
corporate and improving financial structure, and make necessary
recommendations. (Amended by Act No. 5498, Jan. 8, 1998) [This Article
Wholly Amended by Act No. 3541, Mar. 29, 1982]
CHAPTER III REGISTRATION STATEMENT
ARTICLE 7 (SCOPE OF APPLICATION)
No provisions of this Chapter shall apply to the securities referred to
in Article 2 (1) 1 through 3 (including bonds that are deemed bonds of
subparagraph 3 in other Acts and subordinate statutes, but excluding
bonds prescribed by the Presidential Decree) and 5 and to such other
securities as determined by the Presidential Decree. (Amended by Act
No. 4469, Dec. 31, 1991; Act No. 6423, Mar. 28, 2001)
ARTICLE 8 (REGISTRATION OF PUBLIC OFFERING)
(1) Where the total value of a public offering of new or outstanding
securities, which is calculated as prescribed by the Ordinance of the
Ministry of Finance and Economy, is not less than the amount prescribed
by the Ordinance of the Ministry of Finance and Economy, the public
offering of such securities may not be made
unless the issuer files a registration statement on such securities
with the Financial Supervisory Commission and the registration
statement is accepted by the Financial Supervisory Commission:
Provided, That if the issuer determines a period in which he is to
issue securities pursuant to the Ordinance of the Ministry of Finance
and Economy, and files en bloc a registration statement of securities
to be offered publicly during the period (hereinafter referred to as
"shelf registration statement") with the Financial Supervisory
Commission, and the shelf registration statement is accepted by the
Financial Supervisory Commission, he shall not be required to file
separately the registration statement on securities to be offered
publicly in such period. (Amended by Act No. 4469, Dec. 31, 1991; Act
No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 5539, May
25, 1998; Act No. 6423, Mar. 28, 2001)
(2) Matters on the predictions or prospects for the issuer's future
financial status or results of operation which fall under any of the
following subparagraphs (hereinafter referred to as "predicted
information") may be entered or indicated in a registration statement
under paragraph (1). In this case, the entry or indication of predicted
information shall be made through the methods as prescribed in Article
14 (2) 1, 2 and 4: (Newly Inserted by Act No. 5736, Feb. 1, 1999)
1.Matters on the issuer's results of operation such as size in sales
and revenues, or other predictions or prospects for results of
operation;
2.Matters on the predictions or prospects for the issuer's financial
status such as the size in capital stock and funds flows;
3.Matters on the issuer's results of operation or changes in financial
status, and targeted levels at a certain point due to the occurrence of
a particular event or the establishment of a particular plan; and
4.Other matters on the predictions or prospects for the issuer's future
as determined by the Presidential Decree.
(3) In filing a registration under paragraph (1), where the matters to
be entered in
such registration or accompanying documents are the same as those which
have already been filed, the Commission may allow the issuer to
substitute the documents referring to the same information which has
already been filed for the above documents. (Amended by Act No. 5423,
Dec. 13, 1997; Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21, 2000)
(4) Matters necessary for the matters to be stated in the registration
statement or accompanying documents referred to in paragraphs (1)
through (3) shall be determined by the Presidential Decree. (Newly
Inserted by Act No. 5423, Dec. 13, 1997; Act No. 5539, May 25, 1998;
Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000)
ARTICLE 9 (EFFECTIVE DATE OF REGISTRATION STATEMENT, ETC.)
(1) A statement pursuant to the provisions of Article 8 (1)
(hereinafter referred to as a "registration statement") shall come into
force on such date as the time period prescribed by the Ordinance of
the Ministry of Finance and Economy elapses after the receipt thereof
by the Financial Supervisory Commission. (Amended by Act No. 5254, Jan.
13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 5539, May 25, 1998)
(2) The effect taken pursuant to the provisions of paragraph (1) shall
not be construed as assuring that the truth or the accuracy of such
matters stated in the registration statement has been recognized on its
face value or that the Government has guaranteed or approved the value
of the securities specified in the registration statement. (Amended by
Act No. 5498, Jan. 8, 1998)
(3) In case where an issuer of securities intends to withdraw a
registration statement of securities, he shall file a registration
statement on withdrawal with the Financial Supervisory Commission
before such registration statement takes effect. (Newly Inserted by Act
No. 4469, Dec. 31, 1991; Act No. 5423, Dec. 13, 1997; Act No. 5498,
Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21, 2000)
[This Article Wholly Amended by Act No. 3541, Mar. 29, 1982]
ARTICLE 10 (RESTRICTIONS ON TRANSACTIONS)
(1) In case where there is an offer to acquire or purchase securities,
unless a registration statement has taken effect pursuant to the
provisions of Article 9, no issuer or seller of securities specified
therein nor his agent shall accept such offer. (Amended by Act No.
3541, Mar. 29, 1982)
(2) No issuer who filed a shelf registration statement pursuant to the
proviso of Article 8 (1), shall accept any offer for acquisition or
purchase of securities, unless he files additional documents of shelf
registration statement determined by the Presidential Decree at each
time he makes a public offering of new or outstanding securities.
(Newly Inserted by Act No. 4469, Dec. 31, 1991; Act No. 5423, Dec. 13,
1997; Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21, 2000)
ARTICLE 11 (AMENDMENT STATEMENT)
(1) If it appears to the Financial Supervisory Commission that a
registration statement is incomplete in its form or inadequate in any
material information required to be stated therein, the Financial
Supervisory Commission may, with presenting the reasons thereof, issue
an order to file an amendment statement. (Amended by Act No. 5498, Jan.
8, 1998)
(2) In case where an order is issued pursuant to the provisions of
paragraph (1), the registration statement concerned shall be construed
not to be received by the Commission after the date on which the order
is issued.
(3) A person who has filed a registration statement may file an
amendment
statement, if there occurs any modification in matters entered in the
registration statement before the day of subscription as determined by
the statement commences. In this case, if important matters as
determined by the Ordinance of the Ministry of Finance and Economy are
modified, the amendment statement thereof shall be filed without fail.
(Amended by Act No. 3945, Nov. 28, 1987; Act No. 4469, Dec. 31, 1991;
Act No. 5423, Dec. 13, 1997; Act No. 5539, May 25, 1998)
(4) A person who filed a shelf registration statement as prescribed in
the proviso of Article 8 (1), notwithstanding the provisions of
paragraph (3), may file an amendment statement before the predetermined
issue period is terminated. In this case, the predetermined issue
amount and period may not be revised. (Newly Inserted by Act No. 4469,
Dec. 31, 1991)
(5) If an amendment statement is filed pursuant to the provisions of
paragraph (1), (3) or (4), a registration statement on securities shall
be regarded as filed and received on the day of receipt of the
amendment statement. (Amended by Act No. 4469, Dec. 31, 1991)
ARTICLE 12 (PREPARATION AND DISCLOSURE OF PROSPECTUS)
(1) When an issuer of securities makes a public offering of new or
outstanding securities pursuant to Article 8, such issuer shall prepare
a prospectus under the conditions as determined by the Presidential
Decree, and make it available for public inspection at a place
determined by the Ordinance of the Ministry of Finance and Economy.
(Amended by Act No. 3541, Mar. 29, 1982; Act No. 3945, Nov. 28, 1987;
Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997; Act No. 5423,
Dec. 13, 1997; Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21, 2000)
(2) In the prospectus as prescribed in paragraph (1), particulars
different from the contents mentioned in the registration statement
(including additional documents of
shelf registration statement as prescribed in Article 10 (2); hereafter
the same shall apply in this Chapter) shall not be mentioned, or
matters to be entered in the registration statement shall not be
omitted: Provided, That the same shall not apply to the matters as
prescribed by the Presidential Decree from among matters which are not
appropriate for being offered for public inspection, considering
balance between interests of keeping secret in management of business
and protection of investors. (Amended by Act No. 4469, Dec. 31, 1991;
Act No. 5254, Jan. 13, 1997)
ARTICLE 13 (JUSTIFIABLE USE OF PROSPECTUS)
(1) No one shall be permitted to allow any other person to acquire
securities the registration of which has taken effect or shall sell
such securities to such other person before a prospectus prepared in
accordance with the provisions of Article 12 is, upon a request by the
other person, given to him. In this case, when the prospectus is given
in the form of digitally recorded document in accordance with the
provisions of Article 194-2, such prospectus shall be deemed to be
given when requirements falling under each of the following
subparagraphs are satisfied:
1.It is required that a person to receive or be transmitted with a
digitally recorded document (hereinafter referred to as the "recipient
of digitally recorded document") agree to the receipt or the
transmission of a prospectus in the form of the digitally recorded
document;
2.It is required that the recipient of digitally recorded document
designate the kind of an electronically transferable media through and
a place at which he receives or is transmitted with the digitally
recorded document;
3.It is required to confirm that the recipient of digitally recorded
document has received or has been transmitted with a digitally recorded
document; and
4.The digitally recorded document is required to be identical in
content with the
prospectus paper.
(2) Where any person intends to induce subscriptions for new or
outstanding securities subject to the registration under the provisions
of Article 8 for the purpose of executing a public offering or other
transactions thereof, he shall induce such subscriptions in a manner
falling under any of the following subparagraphs:
1.A manner in which the prospectus under the provisions of Article 12
is used after the registration of securities comes into force under the
provisions of Article 9 (1);
2.A manner in which an issuer uses a preliminary prospectus (referring
to the prospectus additionally indicating the fact that the
registration has yet to come into force) prepared on the conditions as
prescribed by the Presidential Decree before the registration of
securities comes into force after such registration has been accepted
under the provisions of Article 9 (1); and
3.A manner in which an issuer uses a simple prospectus (referring to a
document, a digitally recorded document and other devices or
indications similar to them that omit part of matters or include
extracted matters from among the matters to be entered in the
prospectus statement) prepared on the conditions as prescribed by the
Presidential Decree through ads making use of newspapers, broadcasts
and magazines, etc., handbooks, publicity leaflets, or electronically
transferable media after his registration of securities is accepted
under the provisons of Article 9 (1).
[This Article Wholly Amended by Act No. 6176, Jan. 21, 2000]
ARTICLE 14 (LIABILITIES FOR COMPENSATION DUE TO FALSE STATEMENTS)
(1) If a purchaser of securities sustains damage because a registration
statement or a prospectus (including a preliminary prospectus and a
simple prospectus; hereafter in this Article the same shall apply) of
securities as prescribed in Article 12 includes false statements or
indications or fails to state or indicate important
matters, the following persons shall be liable to compensate for the
damage: Provided, That the same shall not apply where a person who may
be liable for compensation proves that he could not know such false
facts or omissions of that prospectus in spite of his exercise of due
diligence, or where the purchaser of such securities has known the fact
at the time of his offering to acquire them: (Amended by Act No. 6176,
Jan. 21, 2000)
1.A registrant under the registration statement concerned and directors
of the corporation concerned at the time of registration (if the
registration statement is filed before the corporation is incorporated,
its promoter);
2.Certified public accountants, appraisers or persons specialized in
credit ratings who certified or signed that matters stated in the
registration statement or documents attached thereto are true or
correct;
3.A person who has made a contract to underwrite the securities with
the issuer;
4.A person who has prepared or delivered the prospectus; and
5.A holder of outstanding securities offered for sale at the time of
registration for public offering of outstanding securities.
(2) Where predicted information is entered or indicated through the
following methods, any person falling under any subparagraph of
paragraph (1), notwithstanding the provisions of paragraph (1), shall
not be liable to compensate for the damage concerned: Provided, That
this shall not apply where the purchaser of securities does not know
the fact that there are false entries or indications in predicted
information or that material matters are not entered or indicated at
the time of his offering to acquire them, and where he proves that any
person falling under any subparagraph of paragraph (1) was by intention
or by gross negligence responsible for the entry or indication:
1.The entry or indication concerned shall specify that it is predicted
information;
2.The basis for the assumption or judgement for predictions or
prospects shall be specified;
3.The entry or indication concerned shall be faithfully made on the
basis of rational foundations or assumptions; and
4.A warning phrase that predicted values may differ from actual results
shall be specified in the entry or indication concerned.
(3) The provisions of paragraph (2) shall not apply where a corporation
other than stock-listed corporations and Association-registered
corporations submits a registration statement of securities for the
first time for the public offering of new or outstanding securities.
[This Article Wholly Amended by Act No. 5736, Feb. 1, 1999]
ARTICLE 15 (AMOUNT OF LIABILITY TO BE COMPENSATED)
(1) The amount to be compensated for damage pursuant to the provisions
of Article 14 shall be the difference between the amount actually paid
by the claimant for the acquisition of securities and the amount which
falls under any of the following subparagraphs:
1.The market price of securities at the time of the closing of oral
proceedings, if a lawsuit is entered against the securities concerned
(in case where no market price is available, an estimated price at
which the securities would be disposed of); and
2.The price at which the securities were disposed of, in case where
such disposition of securities has been made prior to the time of the
closing of oral proceedings referred to in subparagraph 1 of this
paragraph.
(2) Notwithstanding the provisions of paragraph (1), where a person
liable for compensation for damage pursuant to the provisions of
Article 14 proves that a claimant has sustained all or part of the
damage without regard to any false statement or indication or any
omission of the entry or indication of material matters, he is not
bound to compensate for damage of such part. (Newly Inserted by Act No.
5254, Jan. 13, 1997)
ARTICLE 16 (EXTINCTION OF CLAIMS)
The compensation liabilities for damage pursuant to the provisions of
Article 14 shall be extinguished, unless the claimant exercises such
right within one year from the date on which he discovers the fact or
within three years from the time when a registration statement has
taken effect.
ARTICLE 17 (AFTER-REPORT)
An issuer of securities specified in a registration statement then in
effect shall file with the Financial Supervisory Commission a report on
results of public offering of new or outstanding securities under the
conditions as determined by the Financial Supervisory Commission.
(Amended by Act No. 3541, Mar. 29, 1982; Act No. 5423, Dec. 13, 1997;
Act No. 5498, Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 6176,
Jan. 21, 2000)
ARTICLE 18 (DISCLOSURE OF REGISTRATION STATEMENT AND AFTER-REPORT)
A registration statement of securities and an after-report pursuant to
Article 17 (hereinafter referred to as an "after-report") shall be kept
in the Financial Supervisory Commission and made available for public
inspection under the conditions as prescribed by the Presidential
Decree: Provided, That the same shall not apply to the matters as
prescribed by the Presidential Decree from among
matters which are not appropriate for being offered for public
inspection, considering balance between interests of keeping secret in
management of business and protection of investors. (Amended by Act No.
5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998)
ARTICLE 18-2 (PUBLIC OFFERING WITHOUT FILING REGISTRATION STATEMENT)
Any issuer who makes a public offering of new or outstanding securities
without filing a registration statement in accordance with the
provisions of Article 9 (1) shall disclose matters concerning his
financial standing and take measures prescribed by the Presidential
Decree to protect investors.
[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]
ARTICLE 19 (REPORT AND INVESTIGATION)
(1) The Financial Supervisory Commission, if necessary in the public
interest or for protection of investors, may order a registrant under
the registration statement, an issuer of securities, an underwriter
thereof, and any other related persons to file a report or materials
for reference, or may have the Governor of the Financial Supervisory
Service established under the Act on the Establishment, etc. of
Financial Supervisory Organization (hereinafter referred to as the
"Financial Supervisory Service") investigate account books, documents
and any other related materials of such registrant, issuer, underwriter
and other related persons. (Amended by Act No. 5254, Jan. 13, 1997; Act
No. 5498, Jan. 8, 1998)
(2) A person who investigates pursuant to the provisions of paragraph
(1) shall carry along a certificate which proves his authority to
investigate and shall present such certificate to persons concerned.
(Amended by Act No. 5254, Jan. 13, 1997)
ARTICLE 20 (DISPOSITION RIGHT OF FINANCIAL SUPERVISORY COMMISSION)
In the case falling under any of the following subparagraphs, the
Financial Supervisory Commission, after showing reason therefor and
making a public notice of such fact, order the issuer of securities
concerned to make an amendment, and if necessary, the Financial
Supervisory Commission may suspend or prohibit the issuance of such
securities, public offering of new or outstanding securities or other
transactions with respect thereto or may take measures as prescribed by
the Presidential Decree. In this case, the Financial Supervisory
Commission may determine procedures and criteria necessary for taking
measures against the issuer of securities: (Amended by Act No. 5254,
Jan. 13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 6176, Jan. 21, 2000;
Act No. 6423, Mar. 28, 2001)
1.In case that a registration statement or an after-report is not
submitted or such statement or such report contains false statements or
omits important matters;
2.In case that a prospectus does not comply with the provisions of
Article 12 or 13;
3.In case that a violation of the provisions of Article 13 (2) is
committed with respect to the public offering of new or outstanding
securities and other transactions of securities through a preliminary
prospectus or a simple prospectus; and
4.In case that a violation of the provisions of Article 18-2 is
committed.
CHAPTER IV TENDER OFFER FOR SECURITIES
ARTICLE 21 (APPLICABLE OBJECT OF TENDER OFFER)
(1) A person who intends to acquire voting stocks or any other
securities as prescribed by the Presidential Decree (hereinafter
referred to as "stocks, etc.") through purchase, exchange, bid or any
other acquisition by transfer (hereafter referred to as "purchase,
etc." in this Chapter) from persons of not less than the number as
prescribed by the Presidential Decree outside the securities market or
Association brokerage market during the period as prescribed by the
Presidential Decree shall acquire the stocks, etc. through tender
offer, in case where the total number of the stocks, etc. held
(including the cases prescribed by the Presidential Decree as owning or
its equivalent; hereafter the same shall apply in this Chapter and
Article 200-2) by the person himself and specially related persons
(this means the specially related person as prescribed by the
Presidential Decree; hereinafter the same shall apply) after the
purchase, etc. is 5/100 or more of the total number of the stocks, etc.
(including the case where the person himself and specially related
persons who have acquired 5/100 or more of the total number of the
stocks, etc. make purchase, etc. of the stocks, etc.): Provided, That
the same shall not apply with respect to purchase, etc. as prescribed
by the Presidential Decree, considering the type thereof and other
circumstances.
(2) Deleted. (by Act No. 5521, Feb. 24, 1998)
(3) In this Chapter, the term "tender offer" means making an offer to
buy stocks, etc. (including exchange with other securities; hereafter
the same shall apply in this Chapter) or a solicitation of an offer to
sell stocks, etc. (including exchange with other securities; hereafter
the same shall apply in this Chapter) against many and unspecified
persons, and buying them outside the securities market and Association
brokerage market.
(4) Number of stocks, etc. and total number of stocks, etc. pursuant to
the provisions of paragraph (1) shall be the number calculated by the
method as prescribed by the Ordinance of the Ministry of Finance and
Economy. (Amended by Act No. 5521, Feb. 24, 1998; Act No. 5539, May 25,
1998)
(5) The term "person handling tender offer affairs" means a person in
charge of keeping in custody stocks, etc. to be purchased, paying funds
necessary for making tender offer or offering securities subject to a
swap and handling administrative affairs related to tender offer on
behalf of any person who intends to make tender offer. In this case,
any person qualified to act as such agent shall be limited to a
securities company. (Newly Inserted by Act No. 6423, Mar. 28, 2001)
[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]
ARTICLE 21-2 (PUBLICATION OF TENDER OFFER AND SUBMISSION OF TENDER OFFER
STATEMENT)
(1) Any person who intends to make tender offer shall publish matters
falling under each of the following subparagraphs (hereinafter referred
to as "publication of tender offer") under the conditions as prescribed
by the Presidential Decree:
1.A person who intends to make tender offer;
2.A person who issues stocks, etc. subject to tender offer;
3.The objective of tender offer;
4.Kinds and numbers of stocks, etc. subject to tender offer;
5.The period of tender offer and tender offer conditions such as
prices, settlement date, etc.; and
6.Details of purchase funds and other matters prescribed by the
Presidential Decree.
(2) Any person who has published his tender offer (hereinafter referred
to as "tender offerer" shall file a statement containing matters
falling under each of the following subparagraphs with the Financial
Supervisory Commission (hereinafter referred to as a "tender offer
statement") on the date on which his tender offer is
published (hereinafter referred to as the "publication date of tender
offer") under the conditions as prescribed by the Presidential Decree:
Provided, That in the event that the publication date of tender offer
falls under any holiday or any other day prescribed by the Financial
Supervisory Commission, the tender offer statement may be submitted on
the day next thereto:
1.Matters concerning tender offerer and specially related persons;
2.Issuers of stocks, etc. subject to tender offer;
3.Objective of tender offer;
4.Kinds and numbers of stocks, etc. subject to tender offer;
5.Period of tender offer and tender offer conditions such as prices and
settlement date, etc.;
6.In the event a contract exists that aims for the purchase of stocks,
etc. without depending on tender offer after the publication date of
tender offer, details of such contract; and
7.Details of purchase funds and other matters prescribed by the
Presidential decree.
(3) The period of tender offer referred to in paragraphs (1) and (2)
shall be set within the scope of the period prescribed by the
Presidential Decree.
(4) The provisions of Article 8 (2) shall apply mutatis mutandis to the
tender offer statement.
[This Article Wholly Amended by Act No. 6423, Mar. 28, 2001]
ARTICLE 21-3 (RESTRICTIONS ON VOTING RIGHTS, ETC.)
In case where a person has made purchase, etc. of stocks, etc. in
violation of the provisions of Article 21 (1) or 21-2 (1) and (2), he
may not exercise the voting rights on the stocks concerned (including
stocks which are acquired through exercise of rights related to the
stocks, etc. concerned) during the period as prescribed by the
Presidential Decree, and the Financial Supervisory Commission may order
to dispose of the stocks, etc. concerned (including stocks which are
acquired through exercise of rights related to the stocks, etc.
concerned). (Amended by Act No. 5498, Jan. 8, 1988; Act No. 5521, Feb.
24, 1998; Act No. 6423, Mar. 28, 2001) [This Article Newly Inserted by
Act No. 5254, Jan. 13, 1997]
ARTICLE 22 (SUBMISSION OF COPY OF TENDER OFFER STATEMENT)
Any tender offerer shall, when he files a tender offer statement,
promptly send a copy thereof to each of issuers of stocks, etc. subject
to his tender offer (referring to persons prescribed by the
Presidential Decree in case of stocks, etc. prescribed by the
Presidential Decree; hereafter in this Chapter the same shall apply)
and also submit such copy to the Stock Exchange or the Association.
[This Article Wholly Amended by Act No. 6423, Mar. 28, 2001]
ARTICLE 23 (RESTRICTIONS ON PURCHASES BY TENDER OFFERER)
(1) Any tender offerer (including any person handling tender offer
affairs; hereafter in this Article and Article 24 the same shall apply)
shall be prohibited from making any tender offer prior to the lapse of
three days (excluding any holiday and any other day prescribed by the
Financial Supervisory Commission in calculating the period) from the
publication date of tender offer (referring to the next date in case of
the date falling under the proviso of Article 21-2 (2)). (Amended by
Act No. 6423, Mar. 28, 2001)
(2) Except for the case as prescribed by the Presidential Decree, no
tender offerer (including a specially related person) shall, during the
period from the date on which tender offer is permitted pursuant to
paragraph (1) to the date on which period of tender offer expires, make
any purchase of securities specified in the said statement by other
means than a tender offer.
(3) Except for the case as prescribed by the Presidential Decree, no
person who has ever purchased stocks, etc. concerned through tender
offer for 6 months of the past from the publication date of tender
offer (including specially related persons) shall purchase the stocks,
etc. concerned through tender offer. (Amended by Act No. 6423, Mar. 28,
2001)
(4) An issuer of stocks, etc. subject to tender offer shall not, during
the period as referred to in paragraph (2), commit an act as prescribed
by the Presidential Decree among the acts which may change the number
of voting stocks.
[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]
ARTICLE 23-2 (AMENDMENT STATEMENT AND PUBLICATION, ETC.)
(1) Any tender offerer, in case where he intends to modify the terms
for purchase, shall file an amendment statement by the date on which
period of tender offer expires: Provided, That reduction of purchase
price, decrease of number of stocks, etc. which are intended to be
purchased, extension of payment period of purchase amount and other
purchase conditions as prescribed by the Presidential Decree shall not
be modified. (Amended by Act No. 5423, Dec. 13, 1997; Act No. 5539, May
25, 1998; Act No. 6176, Jan. 21, 2000)
(2) Any tender offerer shall, when he files an amendment statement
under paragraph (1), promptly publish the fact and details of what is
amended (limited to matters contained in the publication of tender
offer). In this case, the method of making such publication shall be
governed by the provisions of Article 21-2 (1).
(Newly Inserted by Act No. 6423, Mar. 28, 2001)
(3) The provisions of Articles 11 (1), (2) and (5), 22, and 23 (1)
shall apply mutatis mutandis to any tender offer statement and any
amendment statement. (Amended by Act No. 6423, Mar. 28, 2001)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 24 (PREPARATION AND USE OF PROSPECTUS FOR TENDER OFFER)
(1) A tender offerer, when he intends to purchase securities through
tender offer, shall prepare a prospectus for such tender offer
(hereinafter referred to as "prospectus for tender offer") under the
conditions as prescribed by the Ordinance of the Ministry of Finance
and Economy, and shall keep it at the place as prescribed by the
Ordinance of the Ministry of Finance and Economy in order to make it
available for public inspection. (Amended by Act No.
5254, Jan. 13, 1997; Act No. 5539, May 25, 1998)
(2) The provisions of Article 13 shall apply mutatis mutandis to the
use of a prospectus for tender offer.
ARTICLE 24-2 (WITHDRAWAL OF TENDER OFFER)
(1) A tender offerer may not withdraw a tender offer after it has been
possible to make a tender offer pursuant to Article 23 (1): Provided,
That in such case as prescribed by the Presidential Decree, he may
withdraw a tender offer by the last day of the tender offer period.
(2) In case where a tender offerer intends to withdraw a tender offer
pursuant to paragraph (1), a withdrawal statement shall be filed with
the Financial Supervisory
Commission and the Stock Exchange or the Association, and the contents
thereof shall be announced publicly. (Amended by Act No. 5423, Dec. 13,
1997; Act No. 5498, Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No.
6176, Jan. 21, 2000)
(3) A person who accepts an offer to buy stocks, etc. subject to tender
offer or gives his offer (hereinafter referred to as "tender") to sell
them (hereinafter referred to as a "tendering stockholder"), may cancel
such tender at any time during tender offer period. In this case, a
tender offerer may claim damages or penalty due to cancellation of
tender by a tendering stockholder.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 25 (PRESENTATION OF OPINION ON TENDER OFFER)
An issuer of stocks, etc. for which a tender offer statement has been
filed, may present his opinion on the tender offer concerned under the
conditions as prescribed by the Presidential Decree. In this case, the
issuer shall file a written statement describing the contents of such
opinion without delay with the Financial Supervisory Commission and,
the Stock Exchange or the Association, as the case may be. (Amended by
Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998)
ARTICLE 25-2 (CONDITIONS AND MANNERS OF TENDER OFFER)
(1) A tender offerer shall purchase without delay all the stocks, etc.
tendered according to the purchase conditions and manners stated in the
tender offer statement on and after the day following the expiration
date of tender offer period: Provided, That in case where the
Presidential Decree prescribes, the same shall not apply.
(2) Price of tender offer shall be uniform. (Amended by Act No. 5521,
Feb. 24, 1998)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 25-3 (LIABILITY FOR DAMAGES OF TENDER OFFERER)
(1) The provisions of Article 14 (1) shall apply mutatis mutandis to
damages which a person falling under any of the following subparagraphs
causes to tendering stockholder in connection with a tender offer
statement and public notice thereof, an amendment statement and public
notice thereof pursuant to Article 23-2, and a prospectus for tender
offer:
(Amended by Act No. 5736, Feb. 1, 1999)
1.A registrant stated in a tender offer statement and an amendment
statement thereof (including specially related persons of the
registrant, and in case where the registrant is a juristic person,
including directors of the juristic person) and his agent; and
2.A person who prepares a prospectus for tender offer and his agent.
(2) The provisions of Article 16 shall apply mutatis mutandis to
liability for damages pursuant to the provisions of paragraph (1).
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 26 (PUBLIC NOTICE OF STATEMENTS, ETC.)
The Financial Supervisory Commission, the Stock Exchange, and the
Association shall keep the tender offer statement, amendment statement
pursuant to Article 23-2, withdrawal statement pursuant to Article 242
(2), and written statement pursuant to Article 25 for 3 years from the
date on which such statements have been received and shall make them
available for public inspection. (Amended by Act No. 5498, Jan. 8,
1998; Act No. 6423, Mar. 28, 2001)
[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]
ARTICLE 27 (REQUEST FOR MATERIALS TO TENDER OFFERER)
The Financial Supervisory Commission, if necessary in the public
interest or for the protection of investors, may order any tender
offerer, any person related to the tender offerer, and any issuer of
the securities concerned to file a report or material for reference.
(Amended by Act No. 5498, Jan. 8, 1998)
ARTICLE 27-2 (PROVISIONS TO BE APPLIED MUTATIS MUTANDIS)
The provisions of Articles 17, 19 and 20 shall apply mutatis mutandis
to the tender offer. In this case, the "Financial Supervisory
Commission" as referred to in Article 17 shall be deemed to be the
"Financial Supervisory Commission and Stock Exchange or Association".
(Amended by Act No. 5736, Feb. 1, 1999)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
CHAPTER V SECURITIES BUSINESS
SECTION 1 LICENSE
ARTICLE 28 (LICENSE)
(1) A person who may be engaged in the securities business shall be a
stock company which has obtained a license from the Financial
Supervisory Commission by the type of business. (Amended by Act No.
5254, Jan. 13, 1997; Act No. 5539, May 25, 1998; Act No. 5982, May 24,
1999)
(2) The type of business referred to in paragraph (1) shall be as
follows: (Amended by Act No. 6423, Mar. 28, 2001)
1.The business referred to in Article 2 (8) 1;
2.The business referred to in Article 2 (8) 2 through 4;
3.The business referred to in Article 2 (8) 5 through 7; and
4. The business referred to in Article 2 (8) 8.
(3) The capital of a securities company shall not be less than one
billion won and an amount prescribed by the Presidential Decree
according to the scope of its business. (Amended by Act No. 6176, Jan.
21, 2000)
(4) Deleted. (by Act No. 5254, Jan. 13, 1997)
(5) The Financial Supervisory Commission may set conditions to a
license referred to in paragraph (1). (Newly Inserted by Act No. 5736,
Feb. 1, 1999; Act No. 5982, May 24, 1999)
(6) Deleted. (by Act No. 5254, Jan. 13, 1997)
(7) Deleted. (by Act No. 5736, Feb. 1, 1999)
ARTICLE 28-2 (SECURITIES BUSINESS BY FOREIGN SECURITIES COMPANY)
(1) If a foreign securities company (this refers to a person engaged in
securities business in a foreign country pursuant to the relevant Acts
and subordinate statutes of such country; hereinafter the same shall
apply) intends to establish a branch office or any other business
office in order to operate the securities business in the
Republic of Korea, it shall obtain a license from the Financial
Supervisory Commission by the type of business in accordance with the
provisions of each subparagraph of Article 28 (2). (Amended by Act No.
5254, Jan. 13, 1997; Act No. 5539, May 25, 1998; Act No. 5982, May 24,
1999; Act No. 6176, Jan. 21, 2000)
(2) The business fund for any branch office or any other business
office under the provisions of paragraph (1) shall not be less than one
billion won and an amount prescribed by the Presidential Decree
according to the scope of its business. (Newly Inserted by Act No.
6176, Jan. 21, 2000)
(3) A foreign securities company which has not obtained the license for
establishment of branch office, etc. pursuant to paragraph (1) shall
not conduct the securities business with domestic residents. (Newly
Inserted by Act No. 5254, Jan. 13, 1997)
(4) The branch office or any other business office licensed pursuant to
paragraph (1) shall be regarded as a securities company organized under
this Act, except for the provisions of Article 28 (3). (Amended by Act
No. 5254, Jan. 13, 1997)
(5) If a domestic branch office or other business office of a foreign
securities company goes into liquidation or becomes bankrupt, its
domestic holding assets shall be appropriated preferentially for a
performance of obligation to a person who is the other party of
securities transaction and has a domicile or residence in Korea at the
time of the transaction. In this case, the scope of its domestic
holding assets shall be determined by the Presidential Decree. (Newly
Inserted by Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan.
13, 1997)
(6) If it is deemed difficult to conduct the securities business
because a domestic branch office or other business office of a foreign
securities company has violated this Act, an order or disposition made
under this Act, or foreign Acts and subordinate statutes, the Financial
Supervisory Commission may revoke the business license, suspend
business, or take other necessary measures for the purpose of
protecting the public interest or investors. The same shall apply in
case
where it is deemed difficult to conduct securities business of a
domestic branch office or other business office of the foreign
securities company by reason that the foreign securities company has
violated foreign Acts and subordinate statutes, etc. (Newly Inserted by
Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997; Act No. 5498,
Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 5982, May 24, 1999)
(7) The Financial Supervisory Commission may set conditions to the
license referred to in paragraph (1). (Newly Inserted by Act No. 5736,
Feb. 1, 1999; Act No. 5982, May 24, 1999)
(8) Necessary matters relating to the operation of the securities
company by a foreign securities company shall be prescribed by the
Presidential Decree.
[This Article Newly Inserted by Act No. 3541, Mar. 29, 1982]
ARTICLE 29 (PROVISIONS APPLICABLE TO PERSONS WHO OPERATE SECURITIES BUSINESS AS
SIDE BUSINESS)
(1) Deleted. (by Act No. 5736, Feb. 1, 1999)
(2) This Chapter shall apply within the scope of licensed business to a
person who, upon license of securities business pursuant to this
Chapter, operates securities business as a side business: Provided,
That the provisions of Articles 28 (3), 33, 47, and 62 shall not apply.
(Amended by Act No. 3945, Nov. 28, 1987; Act No. 5254, Jan. 13, 1997;
Act No. 5736, Feb. 1, 1999)
ARTICLE 30 (APPLICATION FOR LICENSE)
(1) Any person who intends to obtain a license pursuant to the
provisions of Articles 28 (1) and 28-2 (1) shall file an application
with the Financial Supervisory
Commission under the conditions as prescribed by the Presidential
Decree.
(2) The Financial Supervisory Commission may, where such application it
receives under the provisions of paragraph (1) is found to be
insufficient, ask the applicant to supplement such application. In this
case, the period required to supplement such application shall not be
added to the period under the provisions of Article 31 (1).
[This Article Wholly Amended by Act No. 6176, Jan. 21, 2000]
ARTICLE 31 (PROCEDURE OF LICENSE)
(1) When the Financial Supervisory Commission has received the written
application pursuant to the provisions of Article 30, it shall make a
decision either granting or denying a license and shall notify the
applicant of the decision in writing without delay. (Amended by Act No.
5254, Jan. 13, 1997; Act No. 5539, May 25, 1998; Act No. 5982, May 24,
1999)
(2) Deleted. (by Act No. 3945, Nov. 28, 1987)
ARTICLE 32 (REQUIREMENTS FOR LICENSE)
(1) Any person who intends to obtain a license for his securities
business in accordance with the provisions of Article 28 (1) shall
satisfy requirements falling under each of the following subparagraphs:
1.He is required to satisfy requirements under the provisions of
Article 28 (3);
2.He is required to be able to protect investors and have manpower,
computer installations and other physical facilities enough to carry
out securities business he intends to run;
3.He is required to have a proper and sound business plan; and
4.Any such major investor as prescribed by the Presidential Decree (in
case that an investor is a corporation, this includes any person who
virtually exercises his influence over important matters concerning the
management of such corporation and is prescribed by the Presidential
Decree shall be included) is required to have a sufficient investment
capability, a sound financial standing and social credit.
(2) Any foreign stockbroker who intends to obtain a license for the
establishment of his branch office or other business office pursuant to
the provisions of Article 28-2 (1) shall meet requirements falling
under each of the following subparagraphs:
1.He has to satisfy requirements under the provisions of Article 28-2
(2);
2.He has to have property, financial standing, and business capability
enough to carry out securities business in the country and has to have
a full and high international credit rating; and
3.He has to meet requirements under paragraph (1) 2 and 3.
(3) Necessary matters concerning detailed requirements for a license
under paragraphs (1) and (2) shall be prescribed by the Presidential
Decree.
[This Article Wholly Amended by Act No. 6176, Jan. 21, 2000]
ARTICLE 32-2 (PUBLIC NOTICE OF LICENSE)
The Financial Supervisory Commission shall, when it grants a license in
accordance with the provisions of Articles 28 (1) and 28-2 (1),
promptly publish the grant of such license in the Official Gazette and
make the grant of such license known to the public through computer
communications, etc.
[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]
SECTION 2 MAINTENANCE OF SOUND BUSINESS ORDER
ARTICLE 33 (ELIGIBILITY OF OFFICERS)
(1) Deleted. (by Act No. 5736, Feb. 1, 1999)
(2) Any person who falls under any of the following subparagraphs shall
not be an officer of a securities company, and any officer of a
securities company who falls under any of the following subparagraphs
shall lose his office: (Amended by Act No. 5254, Jan. 13, 1997; Act No.
5423, Dec. 13, 1997; Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21,
2000)
1.A minor, an incompetent, or a quasi-incompetent;
2.A bankrupt who has not been reinstated yet;
3.A person who has been sentenced to imprisonment without prison labor
or a heavier punishment or to a fine or a heavier punishment under this
Act, foreign Acts and subordinate statutes corresponding to this Act
(hereinafter referred to as "foreign securities Acts and subordinate
statutes") and other Acts and subordinate statutes which are related to
finance as prescribed by the Presidential Decree, and for whom 5 years
have not elapsed since the execution of such punishment was terminated
(including the cases where the execution is deemed to have been
terminated) or exempted;
3-2.A person who has been sentenced to the suspension of execution of
imprisonment without prison labor or a heavier punishment and is still
in the
suspended period of execution;
4.Any person who was an officer or an employee of a corporation or a
company whose business license or authorization, etc. was cancelled
pursuant to this Act, foreign securities Acts and subordinate statutes,
or finance-related Acts and subordinate statutes prescribed by the
Presidential Decree (limited to any person who is directly or
correspondingly responsible for the occurrence of the cause of
cancellation and prescribed by the Presidential Decree), and for whom 5
years have yet to elapse from the date on which such license or
authorization was canceled against the corporation or the company; and
5.A person who was discharged or dismissed from a securities company
under this Act, foreign securities Acts and subordinate statutes, or
other Acts and subordinate statutes which are related to finance as
prescribed by the Presidential Decree, and for whom 5 years have not
elapsed since the date of such discharge or dismissal.
[This Article Wholly Amended by Act No. 3541, Mar. 29, 1982]
ARTICLES 33-2 AND 34
Deleted. (by Act No. 3945, Nov. 28, 1987)
ARTICLE 35 (MATTERS TO BE AUTHORIZED)
(1) When a securities company intends to merge with another company,
transfer its whole business, or take over the whole business of another
company (including equivalent cases), such securities company shall
obtain authorization from the Financial Supervisory Commission with
respect thereto. In this case, the provisions of Article 32 shall apply
mutatis mutandis. (Amended by Act No. 5254, Jan. 13, 1997; Act No.
5539, May 25, 1998; Act No. 5736, Feb. 1, 1999; Act No. 5982, May 24,
1999)
(2) The Financial Supervisory Commission shall, in determining whether
to grant such authorization under the provisions of paragraph (1), take
into account matters prescribed by the Presidential Decree. (Newly
Inserted by Act No. 6176, Jan. 21, 2000)
ARTICLE 36 (MATTERS TO BE REPORTED)
In case where a securities company falls under any of the following
subparagraphs, it shall promptly report the fact to the Financial
Supervisory Commission: (Amended by Act No. 5254, Jan. 13, 1997; Act
No. 5498, Jan. 8, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan.
21, 2000)
1.When a securities company appoints or discharges its officer;
2.When a securities company establishes newly a branch office or other
business office, or when it changes the location of its principal
office, branch office or other business office, or when it suspends,
resumes or discontinues the business of its principal office, branch
office or other business office;
3.When a person and such relatives of him and other specially related
persons of him as designated by the Presidential Decree (hereinafter
referred to as the "specially related persons"), who possess the
largest number of stocks of a securities company, are changed;
4.When a trade name of a securities company is changed;
4-2.When a cause to dissolve a securities company occurs; and
5.Cases as prescribed by the Presidential Decree, other than those
under subparagraphs 1 through 4-2.
ARTICLE 37 (PUBLIC NOTICE OF DISCONTINUANCE OF SECURITIES BUSINESS)
When a securities company intends to discontinue its securities
business or the business of its branch office or any other business
office, the securities company shall print a public notice to that
effect in 2 or more daily newspapers 3 or more times not later than 30
days before the date of discontinuance, and shall notify directly the
creditors who are known to the securities company at the same time.
(Amended by Act No. 3541, Mar. 29, 1982)
ARTICLE 38
Deleted. (by Act No. 4469, Dec. 31, 1991)
ARTICLE 39
Deleted. (by Act No. 5423, Dec. 13, 1997)
ARTICLE 40
Deleted. (by Act No. 6623, Jan. 26, 2002)
ARTICLE 41 (LIABILITIES FOR BRANCH OFFICE OR OTHER BUSINESS OFFICE)
If a branch office or other business office of any securities company
causes any damage to other persons in connection with the purchase and
sale of securities or other securities transaction, such securities
company shall be liable to compensate the damage to the person who
suffers the damage.
ARTICLE 42 (RESTRICTIONS ON OFFICERS' SECURITIES TRANSACTION)
No officer or employee of any securities company shall make or entrust
sale and
purchase transactions of securities for his own account in whatsoever
name except for securities savings through payroll deduction plans and
for other cases as prescribed by the Presidential Decree.
ARTICLE 43 (MANIFESTATION OF TYPE OF TRANSACTION)
When any securities company receives an order from any customer for a
securities transaction, such securities company shall make clear in
advance to such customer as to whether it will act as the other party,
or as an intermediary, an agent, or a factor in effectuating such
transaction.
ARTICLE 44 (PROHIBITION OF REPRESENTATION OF OTHER PARTY)
No securities company may act as a principal and concurrently as a
factor, an intermediary or an agent for other party with respect to the
same securities transaction.
ARTICLE 44-2
Deleted. (by Act No. 6423, Mar. 28, 2001)
ARTICLE 44-3 (SEPARATE DEPOSIT OF CUSTOMER DEPOSIT MONEY)
(1) Any securities company shall deposit (including trust; hereinafter
the same shall apply) any money deposited by customers (referring to
the money deposited by customers in connection with sale and purchase
and any other transactions of securities; hereinafter the same shall
apply) separately from his property at a securities finance company
(hereinafter referred to as a "depository institution") under Article
145. (Amended by Act No. 6423, Mar. 28, 2001; Act No. 6623, Jan. 26,
2002)
(2) Where a securities company deposits customer deposit money in a
depository institution pursuant to paragraph (1), it shall specify that
the money is the customers' property.
(3) A securities company which has received customer deposit money
(hereinafter referred to as a "depositing securities company") pursuant
to paragraph (1) shall not transfer or offer as security customer
deposit money deposited in a depository institution except as otherwise
determined by the Presidential Decree, and no person shall set off or
seize it (including provisional seizure).
(4) A depositing securities company shall, where it falls under any of
the following subparagraphs, withdraw customer deposit money deposited
in a depository institution and preferentially pay it to customers. In
this case, the securities company concerned shall publicly announce
payment time and place of customer deposit money and other matters
relating to the payment of customer deposit money in two daily
newspapers or more within the period as determined by the Presidential
Decree:
1.Where it resolves to discontinue its business;
2.Where it receives an order for suspension of business;
3.Where it has its license revoked;
4.Where it resolves to dissolve itself;
5.Where it has been declared bankrupt; and
6.Where any cause equivalent to those listed in subparagraphs 1 through
5 occurs.
(5) A depository institution, where it falls under any subparagraph of
paragraph (4),
shall preferentially pay customer deposit money deposited to the
depositing securities company.
(6) A depository institution shall manage customer deposit money by the
following methods:
1.Purchase of Government bonds and municipal bonds;
2.Purchase of bonds whose payment is guaranteed by the Government,
local governments or financial institutions; and
3.Other methods recognized as being capable of safely managing customer
deposit money, as determined by the Presidential Decree.
(7) The scope of customer deposit money to be deposited by a securities
company in a depository institution pursuant to paragraph (1), the
ratio to be deposited, matters relating to withdrawal of customer
deposit money, matters on the management of customer deposit money by a
depository institution or other matters necessary for the depositing of
customer deposit money shall be determined by the Presidential decree.
In this case, the ratio to be deposited may be otherwise determined by
securities company taking into account the securities company's
financial status, etc.
[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]
ARTICLE 44-4 (DEPOSITING OF SECURITIES, ETC. DEPOSITED BY CUSTOMERS)
(1) A securities company shall promptly deposit securities which come
to be held by customers due to buying and selling consignment or other
transactions and bonds or deeds as determined by the Presidential
Decree in the Korea Securities Depository established under Article 173
(hereafter in this Article, referred to as the "Korea Securities
Depository").
(2) A securities company shall promptly deposit securities, bonds, and
deeds to be held by managing assets on hand as determined by the
Presidential Decree in the Korea Securities Depository.
[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]
ARTICLE 45
Deleted. (by Act No. 5736, Feb. 1, 1999)
ARTICLE 46 (NOTIFICATION OF SALE AND PURCHASE TRANSACTIONS, ETC.)
A securities company shall notify the customer concerned of the
purchase and sale by a customer's order and other contents of
transactions, etc. under the conditions as prescribed by the
Presidential Decree.
[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]
ARTICLE 46-2 (EXCEPTIONAL ACQUISITION OF TREASURY STOCKS)
A securities company may, in case where the securities company has been
entrusted by a customer, acquire treasury stocks less than the minimum
trading unit of the securities market or Association brokerage market
outside those markets. In this case, the acquired treasury stocks shall
be disposed of within the period as prescribed by the Presidential
Decree.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 47 (BUSINESS REPORT)
(1) Any securities company shall compile each business report stating
its business
achievements, financial standing, and other matters prescribed by the
Presidential Decree for 3 months, 6 months, 9 months and 12 months,
respectively, from the date of the commencement of every business year
and file such business report with the Financial Supervisory Commission
within forty-five days from the date of the elapse of such months.
(Amended by Act No. 6623, Jan. 26, 2002)
(2) Any securities company shall keep the business report referred to
in paragraph (1) or its computerized materials at its head office,
branch office, or other business office and make them accessible to the
public for one year from the date on which the business report is filed
with the Financial Supervisory Commission. (Amended by Act No. 6623,
Jan. 26, 2002)
(3) Detailed matters concerning the compilation of the business report
under the provisions of paragraph (1) and other necessary matters shall
be determined by the Financial Supervisory Commission.
[This Article Wholly Amended by Act No. 6176, Jan. 21, 2000]
ARTICLE 48 (OFFICERS' ENGAGING IN OTHER BUSINESS)
Where the Presidential Decree determines that the interests of a
full-time officer of a securities company are in conflict with those of
customers or threaten to impair the sound management of the securities
company, the officer shall not be engaged in the regular business of
another corporation or in other businesses. (Amended by Act No. 6176,
Jan. 21, 2000; Act No. 6423, Mar. 28, 2001)
[This Article Wholly Amended by Act No. 5736, Feb. 1, 1999]
ARTICLE 49 (CREDIT EXTENSION)
(1) Any securities company may extend credit in connection with
securities as lending money or securities to a customer.
(2) The method and contents of the credit extension referred to in
paragraph (1) shall be prescribed by the Presidential Decree. (Amended
by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998; Act No.
6176, Jan. 21, 2000)
(3) The Financial Supervisory Commission shall provide for regulations
on the maximum amount of credit, the ratio of security and method of
receiving security, etc. (Amended by Act No. 3541, Mar. 29, 1982; Act
No. 5498, Jan. 8, 1998)
(4) In case where a securities company sells such securities as
underwritten thereby, the securities company shall not lend funds or
extend any other credit with respect to the purchase of such
securities, until 3 months have elapsed from the date of underwriting
such securities.
ARTICLE 50 (BUSINESS OF SECURITIES SAVINGS)
(1) A securities company may be engaged in the business of securities
savings according to the regulations as prescribed by the Financial
Supervisory Commission. (Amended by Act No. 3541, Mar. 29, 1982; Act
No. 5498, Jan. 8, 1998)
(2) The method and the contents of the securities savings business
referred to in paragraph (1) shall be prescribed by the Presidential
Decree. (Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25,
1998; Act No. 6176, Jan. 21, 2000)
ARTICLE 51 (RESTRICTIONS ON ENGAGING CONCURRENTLY IN OTHER BUSINESS)
(1) Any securities company shall be prohibited from engaging in any
other business than the securities business falling under each of the
following subparagraphs:
1.The financial business (referring to the business prescribed by this
Act or finance-related Acts and subordinate statutes; hereafter the
same in this Article shall apply) that is prescribed by relevant Acts
and subordinate statutes as the business for securities companies to
run;
2.The financial business prescribed by the Presidential Decree, which
is authorized by the Financial Supervisory Commission as the business
for securities company to run; and
3.The business falling under any of the following items, which is
prescribed by the Presidential Decree as a collateral business:
(a) The business related to the securities business;
(b) The business of utilizing manpower, assets, or facilities and
equipment, etc. owned by a securities company; and
(c) The business that does not require any license, authorization,
approval or registration, etc. under other Acts and subordinate
statutes.
(2) Any financial business under the provisions of paragraph (1) 2 for
which a securities company has obtained a license or authorization from
the Financial Supervisory Commission or filed a registration with the
Financial Supervisory Commission in accordance with this Act or other
Acts and subordinate statutes shall be deemed to have been granted
authorization by the Financial Supervisory Commission in accordance
with the provisions of paragraph (1) 2.
[This Article Wholly Amended by Act No. 6176, Jan. 21, 2000]
ARTICLE 52 (PROHIBITION OF UNFAIR SOLICITATION, ETC.)
A securities company, or officers and employees thereof shall not
commit such acts as described in the following subparagraphs: (Amended
by Act No. 3541, Mar. 29,
1982; Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998; Act No.
6176, Jan. 21, 2000)
1.To solicit sale and purchase transaction of securities by promising a
customer to assume all or a part of the loss incurred as a result of
the transaction concerned;
2.To provide, directly or indirectly, any benefit which has a property
value with a customer in relation to the underwriting business of
securities for the purpose of excluding competitors and inducing the
customers, or to restrict business activities of customers by making
improper use of its superior position in transactions; and
3.To do such acts relating to issuance, purchase and sale or other
transaction of securities other than those referred to in subparagraphs
1 and 2 as prescribed by the Presidential Decree as those detrimental
to the protection of investors or the fair transactions, or undermining
the credibility of the securities industry.
ARTICLE 52-2 (BUSINESS METHOD OF SECURITIES COMPANY MAKING USE OF ELECTRONIC
DATA-PROCESSING EQUIPMENT, ETC., AND RESTRICTIONS THEREON)
(1) Any securities company that runs the securities business prescribed
in Article 2 (8) 8 shall make business matters falling under each of
the following subparagraphs conform to the standards prescribed by the
Presidential Decree:
1.Matters concerning securities subject to the brokering of sale and
purchase transactions;
2.Matters concerning the suspension of sale and purchase of securities
subject to the brokering of sale and purchase transactions and the
removal of such suspension;
3.Matters concerning the conclusion of a sale and purchase transaction
contract and
other matters concerning settlement method and settlement
responsibility, etc.;
4.Matters concerning sale and purchase transactions of securities on
consignment, including the consignment guarantee money, etc. of a
securities company participating in such transactions;
5.Matters concerning the publication of issuers of securities subject
to the brokering of sale and purchase transactions;
6.Matters concerning the publication and report of the results of sale
and purchase transactions;
7.Matters concerning the opening, closing, suspension, or interruption
of the brokering of sale and purchase transactions; and
8.Other necessary matters in connection with the brokering of sale and
purchase transactions.
(2) Any securities company that only runs the securities business as
prescribed n Article 2 (8) 8 shall be prohibited from running the
business prescribed in Articles 49 and 50 and any subparagraph of 51
(1).
(3) Any securities company that runs the securities business as
prescribed in Article 2 (8) 8 shall, if such securities subject to the
brokering of sale and purchase transactions are listed stocks or stocks
registered with the Association, be a member of either the Stock
Exchange or the Association.
(4) The provisions of Article 117 shall apply mutatis mutandis to any
securities company that runs the securities business as prescribed in
Article 2 (8) 8.
(5) The provisions of Articles 43, 44, and 46 shall not apply to a case
where any securities company runs the securities business as prescribed
in Article 2 (8) 8. (Amended by Act No. 6623, Jan. 26, 2002)
[This Article Newly Inserted by Act No. 6423, Mar. 28, 2001]
ARTICLE 52-3 (PROHIBITION OF ARBITRARY PURCHASE AND SALE)
Officers and employees of a securities company shall not, unless they
have received entrustment with respect to purchase and sale
transactions of securities from a customer or his agent, make purchase
and sale transactions of securities with property deposited by
customers.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 52-4 (PROHIBITION OF UNFAIR DEMAND TO SECURITIES COMPANY, ETC.)
No person shall unfairly receive money, service and other financial
interests from a securities company or officers and employees thereof
in return for the payment of a commission relating to the business
which a securities company operates, or may request a securities
company or officers and employees thereof to furnish the person himself
or third party with money, service and other financial interests.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 53 (INSPECTION)
(1) A securities company shall be subject to inspection by the Governor
of the Financial Supervisory Service (hereinafter referred to as the
"FSS Governor") with respect to its business condition and property.
(Amended by Act No. 5498, Jan. 8, 1998)
(2) The FSS Governor may, if necessary for the inspection, request any
securities company to report on its business conditions or property, to
file data, to make witness available, or to present any evidence or
opinion thereon. (Amended by Act
No. 5498, Jan. 8, 1998)
(3) Any person who conducts inspection pursuant to the provisions of
paragraph (1) shall show the persons concerned a certificate which
represents his authority to inspect.
(4) The FSS Governor shall, after the inspection referred to in
paragraph (1), file a report on the results of the inspection with the
Financial Supervisory Commission. In this case, if the FSS Governor
finds that any securities company has violated the provisions of this
Act, other Acts and subordinate statutes relating to securities, any
disposition taken under this Act, or the regulations of the Financial
Supervisory Commission, the Securities Futures Commission under the Act
on the Establishment, etc. of Financial Supervisory Organization
(hereinafter referred to as the "Securities Futures Commission"), and
the Stock Exchange, the FSS Governor shall add the written opinion as
to how to take actions against such violations. (Amended by Act No.
5498, Jan. 8, 1998)
(5) The Financial Supervisory Commission shall, reviewing the reports
and the written opinion referred to in paragraph (4), take such
measures as prescribed in the following subparagraphs: (Amended by Act
No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan.
8, 1998; Act No. 5539, May 25, 1998; Act No. 5982, May 24, 1999; Act
No. 6176, Jan. 21, 2000)
1.Where any securities company falls under any subparagraph of Article
55 (1), the cancellation of the securities business license of the
securities company concerned; and
2.Where any securities company has, in the course of its business,
committed unlawful or unfair acts other than those referred to in
subparagraph 1, the order to suspend the business in whole or in part,
request for the discharge of officers concerned, or other measures as
prescribed by the Presidential Decree.
(6) The FSS Governor may, if necessary, entrust part of the inspection
authority as
referred to in paragraph (1) to the Association under the conditions as
prescribed by the Presidential Decree. (Newly Inserted by Act No. 6623,
Jan. 26, 2002)
(7) The Financial Supervisory Commission may determine the method and
procedure of inspection, the criteria for measures against results of
inspection, and other necessary matters relating to inspection. (Newly
Inserted by Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998)
ARTICLE 54 (AUTHORITY OF FINANCIAL SUPERVISORY COMMISSION TO ISSUE ORDER)
The Financial Supervisory Commission may issue such orders necessary
for preventing excessively speculative securities transactions or for
the protection of public interest or investors to a securities company
under the conditions as prescribed by the Presidential Decree. (Amended
by Act No. 5498, Jan. 8, 1998)
ARTICLE 54-2 (MAINTENANCE OF EQUITY CAPITAL REGULATION RATE)
(1) Any securities company shall maintain the rate (hereinafter
referred to as the "equity capital regulation rate") higher than the
rate prescribed by the Presidential Decree, which derives from the
division of the amount calculated by deducting the amount of the
following subparagraph 3 from the added amount of the following
subparagraphs 1 and 2 by total risk amount (referring to the amount
added up with the risks calculated in terms of money, which is involved
in the business or is immanent in assets and debts of such securities
company):
1.The amount obtained by deducting total amount of debts from total
value of assets;
2.The allowance account for bad debts established in the floating
asset, the posterity borrowings, and the amount prescribed by the
Presidential Decree; and
3.The appraised value of fixed assets, the amount of prepayment, and
the amount prescribed by the Presidential Decree.
(2) Any securities company shall calculate its equity capital
regulation rate as of the last day of every quarter (hereafter in this
Article referred to as the "base day") and file a report thereof with
the Financial Supervisory Commission within forty-five days from the
base day and keep such report or its computerized materials at its head
office, branch office and other business office to make it accessible
to the public for three months from the date forty-five days have
passed since the base day. (Amended by Act No. 6623, Jan. 26, 2002)
(3) Specific standards for calculating the equity capital regulation
rate shall be determined by the Financial Supervisory Commission.
[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]
ARTICLE 54-3 (SOUNDNESS OF ASSET OPERATION)
(1) Any securities company shall be prohibited from performing the act
falling under each of the following subparagraphs except as otherwise
provided for by the Presidential Decree: (Amended by Act No. 6423, Mar.
28, 2001)
1.The act of owning securities issued by the biggest stockholder
(referring to the biggest stockholder under the provisions of Article
54-5 (4) 2; hereafter in this paragraph the same shall apply) or the
major stockholder (referring to the major stockholder under the
provisions of Article 188 (1); hereafter in this paragraph the same
shall apply) of a relevant securities company;
2.The act of loaning money or extending credit to the person falling
under each of the following items:
(a) The biggest stockholder of the relevant company (including persons
prescribed by the Presidential Decree from persons specially related to
him; hereafter in this paragraph the same shall apply);
(b) The major stockholder of the relevant company; and
(c) The officers of the relevant company and specially related persons
who are prescribed by the Presidential Decree;
3.The act of directly or indirectly guaranteeing the repayment of debts
for other persons;
4.The act of owning stocks, bonds or commercial papers (referring to
bills issued by the business for the purpose of raising funds) issued
by the largest shareholder or the major shareholder of a relevant
securities company; and
5.Any act that may harm the sound management of assets of a securities
company as prescribed by the Presidential Decree other than acts in
subparagraphs 1 through 4.
(2) The Financial Supervisory Commission may set detailed standards
necessary to execute the matters under paragraph (1).
[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]
ARTICLE 54-4 (INTERNAL CONTROL STANDARDS)
(1) Any securities company shall make basic procedures and standards
(hereafter in this Article referred to as the "internal control
standards") to be followed by its officers and employees when they
perform their duties in order to observe Acts and subordinate statutes,
operate its assets in a sound manner and protect customers.
(2) Any securities company shall have not less than one person assigned
to check whether the internal control standards are observed and to
inspect any violation of the internal control standards and report the
results to the auditor or the inspection committee (hereinafter
referred to as the "compliance officer").
(3) Any securities company shall, if it intends to appoint or dismiss a
compliance officer, go through a resolution thereon of the board of
directors: Provided, That the same shall not apply to any branch office
of a foreign securities business operator. (Newly Inserted by Act No.
6423, Mar. 28, 2001)
(4) Any compliance officer shall satisfy requirements falling under
each of the following subparagraphs: (Newly Inserted by Act No. 6423,
Mar. 28, 2001)
1.He is required to be the person with the experience falling under any
of the following items:
(a) A person who has served not less than 10 years in the Bank of Korea
or an institution subject to inspection (including any foreign
financial institution corresponding thereto) under Article 38 of the
Act on the Establishment, etc. of Financial Supervisory Organizations;
(b) A person with a master's degree or higher in the finance-related
area who has served not less than 5 years in a university as a
full-time lecturer or higher or in a research institute as a researcher
or higher;
(c) A person with the qualification of an attorney-at-law or a
certified public accountant who has served not less than 5 years in the
service area related to such qualification; and
(d) A person who has served not less than 5 years in the Ministry of
Finance and Economy, the Financial Supervisory Commission, the
Securities Futures Commission, or the Financial Supervisory Service and
for whom 5 years have yet to elapse from the date on which he resigned
or retired from each of such institutions;
2.He is required not to fall under each subparagraph of Article 33 (2);
and
3.He is required not to have been subject to measures such as demand
for caution or warning, etc. for violating finance-related Acts and
subordinate statutes from the Financial Supervisory Commission or the
Governor of the Financial Supervisory Service in the past 5 years.
(5) Necessary matters concerning the internal control standards and
compliance officers shall be prescribed by the Presidential Decree.
(Amended by Act No. 6423, Mar. 28, 2001)
[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]
ARTICLE 54-5 (APPOINTMENTS OF OUTSIDE DIRECTORS)
(1) Any securities company (limited to any securities company
prescribed by the Presidential Decree in the light of the size of its
asset, etc.) shall have the board of directors in which the number of
outside directors is not less than half of total number of directors of
the company. In this case, not less than three outside directors shall
be seated in the board of directors.
(2) Any securities company under the provisions of paragraph (1) shall
establish a committee in accordance with the provisons of Article
393-2 of the Commercial Act to recommend candidates for outside
directors (hereafter in this Article referred to as the "outside
director candidate recommendation committee"). In this case, outside
directors shall make up not less than half of the total members of the
outside director candidate recommendation committee.
(3) In case of the securities company under the provisons of paragraph
(1), a general meeting of stockholders of the securities company, when
it intends to appoint its outside directors, shall appoint them from
among candidates
recommended by the outside director candidate recommendation committee.
In this case, when the outside director candidate recommendation
committee of a securities company, which is a stock-listed corporation
or an Association-registered corporation, recommends candidates for
outside directors, it shall include therein candidates for outside
directors recommended by the stockholders who satisfy the requirements
for exercising rights under Article 191-14. (Amended by Act No. 6423,
Mar. 28, 2001)
(4) Any person falling under any of the following subparagraphs shall
be prohibited from becoming an outside director of a securities company
under the provisions of paragraph (1) and shall be dismissed from the
office of an outside director when he is found to fall under any of the
following subparagraphs after appointed as the outside director:
1.A person who falls under Article 191-12 (3) 1 through 4;
2.In case that a person who is a stockholder of a relevant securities
company and another person in a special relationship with him hold the
largest number of stocks on the basis of total number of issued voting
stocks of the company, the former (hereinafter referred to as the
"biggest stockholder");
3.A person in a special relationship with the biggest stockholder;
4.The major stockholder of a relevant securities company (referring to
the major stockholder under the provisions of Article 188 (1)) and his
spouse and lineal ascendants and descendants;
5.A person who is an officer or employee (referring to a person who is
engaged in a regular business; hereafter the same in this paragraph
shall apply) of a relevant securities company or its affiliate
(referring to the affiliate under the Monopoly Regulation and Fair
Trade Act) or worked as an officer or employee for such relevant
securities company or its affiliate within the preceding two years;
6.The spouse or lineal ascendants or descendants of an officer of a
relevant securities company;
7.The officer or employee of a corporation that is in an important
business relationship prescribed by the Presidential Decree with a
relevant securities company, a competitive relationship or a
cooperative relationship with such securities company or the person who
worked as the officer or employee for such corporation within the
preceding two years;
8.The officer or employee of a company in which the officer or employee
of a relevant securities company works as a non-standing director; and
9.A person who has difficulty in faithfully performing his duties as an
outside director or may affect adversely the management of his company
and is prescribed by the Presidential Decree.
(5) The securities company under the provisions of paragraph (1), when
the number of its outside directors does not meet the requirements for
the composition of the board of directors under paragraph (1) owing to
any resignation or death, etc. of the outside directors, shall make
sure that it satisfies the requirements of paragraph (1) at a general
meeting of stockholder called for the first time after the occurrence
of such cause.
[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]
ARTICLE 54-6 (INSPECTION COMMITTEE)
(1) Any securities company (limited to the securities company
prescribed by the Presidential Decree taking into account the size of
its asset) shall establish an inspection committee (hereinafter
referred to the "inspection committee") pursuant to the provisions of
Article 415-2 of the Commercial Act.
(2) Not less than two thirds of the total members of the inspection
committee referred to in paragraph (1) shall come from outside
directors. In this case, the chairman of the inspection committee of
any securities company that is either a stock-listed corporation or an
Association-registered corporation shall be an outside director.
(Amended by Act No. 6423, Mar. 28, 2001)
(3) Any members of the inspection committee who are not outside
directors shall not fall under any subparagraph of Article 191-12 (3):
Provided, That any person who holds office not as a full-time auditor
or an outside director of the inspection committee under the provisions
of Article 191-12 (3) but as a member of the inspection committee may
become a non-outside-director member of the inspection committee
notwithstanding the provisions of Article 191-12 (3) 6.
(4) Where the securities company referred to in paragraph (1) is unable
to fill the fixed number of outside directors of the inspection
committee under paragraph (2) due to such causes as the resignation and
death, etc. of outside directors, a general meeting of stockholders
called for the first time after the occurrence of such causes shall
have the requirement of paragraph (2) satisfied.
(5) The proviso of Article 415-2 (2) of the Commercial Act shall not
apply to the composition of the inspection committee under the
provisions of paragraph (1).
(6) The provisions of Article 409 (2) and (3) of the Commercial Act
shall apply mutatis mutandis to the selection and appointment of any
outside director who becomes a member of the inspection committee.
(Newly Inserted by Act No. 6423, Mar. 28, 2001)
[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]
ARTICLE 55 (CANCELLATION OF LICENSE)
(1) In case that any securities company falls under any of the
following
subparagraphs, the Financial Supervisory Commission may show reason
therefor and cancel the license of such securities company: (Amended by
Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998; Act No. 5736,
Feb. 1, 1999; Act No. 5982, May 24, 1999; Act No. 6176, Jan. 21, 2000)
1.Where a securities company obtains the license of securities business
by fraud or unfair means;
2.Where a securities company commits a violation of licensed contents
or licensed terms or fails to commence the business within 6 months
from the date on which a license was granted;
3.Where a securities company has received money or securities from
other person in connection with its business by unfair means, or when
it has acquired money or securities which shall be delivered to other
persons;
4.Where a securities company having received the order to suspend its
business pursuant to the provisions of Article 57 has not corrected the
reason therefor within 1 month (where a period to correct exceeding one
month is determined in ordering to suspend its business, within the
period) from the date on which such securities company has received
such order;
5.Where a securities company violates any contract in connection with
purchase and sale or other transactions effected on the securities
market or Association brokerage market, or when it does not conduct
delivery with respect to such purchase and sale or other transactions;
6.Where a securities company commits a violation of the provisions of
Articles 35 (1), 54-2 (1), 54-3, 54-5, 54-6 or 63;
7.Where a securities company violates the order issued pursuant to the
provisions of Article 54; and
8.Where a securities company violates this Act, order or disposition
given under this Act other than subparagraphs 1 through 7, and
therefore it is deemed difficult for it to do business as a securities
company.
(2) Any securities company shall, when its securities business license
is canceled, dissolve itself. (Newly Inserted by Act No. 6176, Jan. 21,
2000)
(3) The provisions of Article 32-2 shall apply mutatis mutandis to the
cancellation of license under the provisions of paragraph (1). (Newly
Inserted by Act No. 6176, Jan. 21, 2000)
ARTICLE 56 (CONSUMMATION OF UNSETTLED BUSINESS)
When a securities company is cancelled its license (including the
cancellation of a license under Article 14 of the Act on the Structural
Improvement of the Financial Industry) pursuant to Article 55 or closes
its business by itself, it shall consummate the purchase and sale of
securities and other transactions which it has left unsettled. In this
case, the securities company or the successor of such securities
company shall be regarded as a securities company to the extent
consistent with the purpose of consummating such unsettled purchase and
sale of securities or other transactions. (Amended by Act No. 5736,
Feb. 1, 1999)
ARTICLE 57 (SUSPENSION OF BUSINESS)
(1) In case where any securities company falls under any of the
following subparagraphs, the Financial Supervisory Commission may order
the suspension of the whole or part of the business: (Amended by Act
No. 5498, Jan. 8, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan.
21, 2000; Act No. 6423, Mar. 28, 2001; Act No. 6623, Jan. 26, 2002)
1.Where it violates the provisions of Article 42, 44, 44-3, 44-4, 47,
49 through 52, 52-2, or 54-4;
2.Where it violates an order under Article 54;
3.Where it fails to comply with a request to discharge an officer
referred to in paragraph (3) or Article 53 (5) 2 without any
justifiable cause; and
4.Where it resolves to discontinue its business or dissolve itself in
order to protect public interests and investors.
(2) The provisions of Article 56 shall apply mutatis mutandis to the
suspension of business referred to in paragraph (1).
(3) In case where any securities company violates the provisions of
Article 36, 43, 44, 46 or 48, or any of officers violates the
provisions of Article 52, the Financial Supervisory Commission may
request such securities company to discharge the officer concerned
after showing the reason therefor to such officer. (Amended by Act No.
3541, Mar. 29, 1982; Act No. 5498, Jan. 8, 1998; Act No. 5736, Feb. 1,
1999)
ARTICLE 58 (LIABILITIES OF OFFICERS)
(1) In case where any director or auditor (referring to the members of
the inspection committee if such committee is established; hereafter
the same in this Article shall apply) of a securities company neglects
to perform his duties on purpose or by negligence, or causes any damage
to third person in the course of performing his duties for such
securities company, such director or auditor and the biggest
stockholder shall be jointly and severally made liable to compensate
for the damage: Provided, That the same shall not apply to the biggest
stockholder who proves that the act causing such damage to third person
is not committed upon his
request or with his consent. (Amended by Act No. 3541, Mar. 29, 1982;
Act No. 6176, Jan. 21, 2000)
(2) The provisions of paragraph (1) shall not affect the liabilities of
the securities company concerned.
(3) In case of paragraph (1), the provisions of Articles 399 (2) and
(3) and 414 (3) of the Commercial Act shall apply mutatis mutandis.
ARTICLE 59 (PROHIBITION OF OFFER OR DIVULGENCE OF INFORMATION)
(1) Unless any officer or employee of a securities company receives a
written request or a written consent from the customer who makes or
intends to make purchase and sale of securities through the securities
company (including any person who participates in the securities
savings referred to in Article 50; hereinafter the same shall apply),
the officer or the employee of such securities company shall not offer
or divulge the information with respect to the customer, such as
purchase and sale of securities and other securities transaction, and
the money or securities deposited by such customer, to another person:
Provided, That the same shall not apply to case where the securities
company is inspected by a supervisory institution with respect to its
duties or where it is requested pursuant to the provisions of Article
60.
(2) Any person who acquires the information in the ordinary course of
inspection by a supervisory institution shall not offer or divulge such
information to any other person, or make use of the information for any
other purpose other than that of the inspection.
ARTICLE 60 (PROHIBITION OF REQUEST FOR INFORMATION)
(1) No person shall request any officer or employee of a securities
company to offer the information referred to in Article 59 (1), except
when a court issues an order to submit such information or a judge of a
court issues a warrant therefor, or other cases as prescribed by the
Presidential Decree.
(2) Even when the offer of such information is requested pursuant to
the provisions of paragraph (1), the inquiry or investigation shall be
limited within the necessary scope of the purpose.
ARTICLE 61 (REFUSAL OF ILLEGAL INVESTIGATION)
Any officer or employee of a securities company shall, by and after
showing the reason therefor, refuse the request, inquiry or
investigation which is in contravention of the provisions of Article
60.
ARTICLE 62 (TRADE NAME)
(1) Any securities company shall use the letters of securities,
securities brokerage, or bonds brokerage in its trade name under the
conditions as prescribed by the Presidential Decree.
(Amended by Act No. 6423, Mar. 28, 2001)
(2) No person who is not a securities company shall include any word
which represents a securities business in its trade name.
ARTICLE 63 (PROHIBITION OF LENDING TRADE NAME)
No securities company shall allow other persons to operate the
securities business by lending its trade name.
ARTICLE 64 (EXERCISE OF MINORITY STOCKHOLDER'S RIGHT, ETC. OF SECURITIES
COMPANY)
(1) The provisons of Article 191-13 (1) through (6) shall apply mutatis
mutandis to the requirements, etc. for the exercise of the minority
stockholder's right of a securities company (limited to any securities
company prescribed by the Presidential Decree taking into account the
size, etc. of its asset; hereafter the same in this Article shall
apply). In this case, "1/10,000 or more" in Article 191-13 (1) shall be
deemed "5/100,000 or more"; "50/100,000 or more (25/100,000 or more in
case of a corporation prescribed by the Presidential Decree)" in
paragraph (2) of the same Article, "250/100,000 or more (125/1,000,000
or more in case of a corporation prescribed by the Presidential
Decree)"; "10/10,000 or more (5/10,000 or more in case of a corporation
prescribed by the Presidential Decree)" in paragraph (3) of the same
Article, "50/100,000 or more (25/100,000 or more in case of a
corporation prescribed by the Presidential Decree)"; "50/10,000 or more
(25/10,000 or more in case of a corporation prescribed by the
Presidential Decree)" in paragraph (4) of the same Article,
"250/100,000 or more (125/100,000 or more in case of a corporation
prescribed by the Presidential Decree)"; and "30/1,000 or more
(15/1,000 or more in case of a corporation prescribed by the
Presidential Decree)" in paragraph (5) of the same Article, "150/10,000
or more (75/10,000 or more in case of a corporation prescribed by the
Presidential Decree)", respectively. (Amended by Act No. 6423, Mar. 28,
2001)
(2) The provisions of Article 191-14 (1) and (2) shall apply mutatis
mutandis to the requirement, etc. for the exercise of the right by
stockholders of a securities company to make proposals. In this case,
"10/1,000 or more (5/1,000 or more in case of a corporation prescribed
by the Presidential Decree)" in Article 191-14 (1) shall be deemed
"50/10,000 or more (25/10,000 or more in case of a corporation
prescribed by the Presidential Decree)".
[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]
ARTICLES 65 THROUGH 69
Deleted. (by Act No. 5736, Feb. 1, 1999)
SECTION 3 DELETED.
ARTICLES 69-2 THROUGH 70
Deleted. (by Act No. 5736, Feb. 1, 1999)
CHAPTER V-2 INVESTMENT ADVISORY BUSINESS, ETC.
ARTICLE 70-2 (REGISTRATION, ETC.)
(1) Any person who intends to operate the investment advisory business
shall register his business with the Financial Supervisory Commission.
(Amended by Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999)
(2) Any person who intends to do the discretionary investment business
shall be a company registered with the Financial Supervisory
Commission. (Amended by Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan.
21, 2000)
(3) Deleted. (by Act No. 5736, Feb. 1, 1999)
(4) Requirements and procedures for the registration referred to in
paragraphs (1) and (2) and other necessary matters shall be determined
by the Presidential Decree. (Amended by Act No. 6176, Jan. 21, 2000)
(5) No person may operate the discretionary investment business except
for such cases as prescribed in this Act or other Acts.
[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]
ARTICLE 70-3 (RESTRICTION ON ENGAGING CONCURRENTLY IN OTHER BUSINESS)
No investment advisory company shall be engaged in any business other
than registered business: Provided, That the same shall not apply with
respect to the business approved by the Financial Supervisory
Commission from among the businesses related directly to the registered
business. (Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May
25, 1998; Act No. 5736, Feb. 1, 1999)
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 70-4 (DEPOSITION OF BUSINESS GUARANTY MONEY)
(1) The investment advisory company shall deposit the business guaranty
money with a financial institution under the conditions as prescribed
by the Presidential Decree. In this case, such investment advisory
company shall be prohibited from transferring the business guaranty
money or offering it as security, except as otherwise prescribed by the
Presidential Decree. (Amended by Act No. 5254, Jan. 13, 1997; Act No.
5498, Jan. 8, 1998; Act No. 6176, Jan. 21, 2000)
(2) Any person who has concluded an investment advisory contract
(including a discretionary investment contract; hereinafter the same
shall apply) with an investment advisory company, shall be entitled to
get payment out of the investment business guaranty money as referred
to in paragraph (1) in preference to other creditors with respect to
obligation originated in connection with the contract. (Amended by Act
No. 5254, Jan. 13, 1997)
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 70-5 (MAINTENANCE OF SOUND BUSINESS ORDER)
Investment advisory contract of an investment advisory company, method
of discretionary investment, notification of investment result for
customers, fees, disclosure of contents of business, advertisement for
business, and other criteria necessary for maintenance of sound
business order shall be prescribed by the Presidential Decree.
[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]
ARTICLE 70-6 (PROHIBITION OF SECURITIES TRANSACTION, ETC.)
An investment advisory company or its officers and employees shall not
conduct any act falling under any of the following subparagraphs in
connection with its business: (Amended by Act No. 5254, Jan. 13, 1997)
1.Acts as referred to in any subparagraph of Article 2 (8);
2.Receiving a custody or deposition of money or securities from
customers;
3.Lending money or securities to customers, or intermediating,
arranging or acting as an agent for lending money or securities of
third person to customers;
4.Making a promise to guarantee certain profits or division of profits,
or to bear the whole or part of loss with customers with respect to an
investment in securities;
5.Giving advice without any justifiable ground for the purpose of
obtaining any profit for himself or third person other than customers,
taking advantage of the fluctuation in price of securities through
purchase and sale of the customers who obtain advice about the
specified securities;
6.Circulating any false information and other rumor without any
grounds; and
7.Acts, other than those under subparagraphs 1 through 6, which may
harm the fair transaction order and mislead an investment decision of
investors and are designated by the Presidential Decree.
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 70-7 (OFFICERS, SUPERVISION, ETC.)
The provisions of Articles 33 (2), 35, 37, 42, 47, and 48,
subparagraphs 2 and 3 of Article 52, and Articles 53, 54, 56 through
61, and 63 shall apply mutatis mutandis to the investment advisory
company. (Amended by Act No. 5982, May 24, 1999)
[This Article Wholly Amended by Act No. 5736, Feb. 1, 1999]
ARTICLE 70-8 (REPORT ON BUSINESS SIMILAR TO INVESTMENT ADVISORY BUSINESS)
(1) A person who intends to operate a business which gives advice
through publications, etc. oriented to many and unspecified persons
under the provisions of the proviso of Article 2 (10) 1 and is
prescribed by the Presidential Decree, shall report to the Financial
Supervisory Commission in due form as prescribed by the Financial
Supervisory Commission. (Amended by Act No. 5539, May 25, 1998; Act No.
5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000)
(2) The Financial Supervisory Commission may entrust the business of
report pursuant to paragraph (1) to the FSS Governor. (Amended by Act
No. 5498, Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 5736, Feb.
1, 1999)
(3) The provisions of Article 70-6 shall apply mutatis mutandis to a
person who is liable to report pursuant to the provisions of paragraph
(1), officers and personnel thereof, or other employees.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 70-9 (BUSINESS OF FOREIGN INVESTMENT ADVISORY BUSINESSMAN)
(1) A foreign investment advisory businessman (referring to a person
who operates the investment advisory business in a foreign country
pursuant to foreign Acts and subordinate statutes; hereinafter the same
shall apply) shall, where he intends to operate the investment advisory
business or discretionary investment business directly or by
establishing a branch office and other business place (hereinafter
referred to as a "branch office of a foreign investment advisory
businessman") in Korea, register with the Financial Supervisory
Commission. (Amended by Act No. 5539, May 25, 1998; Act No. 5736, Feb.
1, 1999)
(2) Matters necessary for the registration pursuant to the provisions
of paragraph (1) shall be prescribed by the Presidential Decree.
(Amended by Act No. 5736, Feb. 1, 1999)
(3) A branch office of a foreign investment advisory businessman, etc.
which has registered pursuant to the provisions of paragraph (1) shall
be considered as an investment advisory company pursuant to this Act.
(Amended by Act No. 5736, Feb. 1, 1999)
(4) The provisions of Article 28-2 (5) through (7) shall apply mutatis
mutandis to a branch office, etc. of a foreign investment advisory
businessman. (Amended by Act No. 6176, Jan. 21, 2000)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 70-10 (TRADE NAME)
(1) An investment advisory company (excluding a company which operates
investment advisory business or discretionary investment business as a
side business) shall include the word "investment advisory" in its
trade name.
(2) Those other than investment advisory companies shall not include
the word "investment advisory" or "discretionary investment" in their
trade names.
[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]
ARTICLE 70-11 (CANCELLATION OF REGISTRATION)
Where an investment advisory company falls under any of the following
subparagraphs, the Financial Supervisory Commission may cancel the
registration of its investment advisory business or its discretionary
investment business giving the reasons thereof: (Amended by Act No.
6176, Jan. 21, 2000)
1.Where it registers an investment advisory business or discretionary
investment business by fraud or other illegal means;
1-2.Where it is impossible to keep the registration requirements
satisfied after registering the investment advisory business or the
discretionary investment business;
2.Where it operates a discretionary investment business without
registration;
3.Where it receives money or securities from other persons or acquires
money or securities to be granted to other persons in connection with
its business by illegal means;
4.Where it violates a contract for sale and purchase or other
transactions on the securities market or Association brokerage market
or fails to transfer securities;
4-2.Where it violates the provisions of Article 70-4 (1);
5.Where it has been under order to suspend its business pursuant to
Article 57 applied mutatis mutandis under Article 70-7 and fails to
correct the conditions within one month (where a period to correct
exceeding one month is determined at the same time as an order to
suspend its business, within the said period) from the date on which it
has received such order;
6.Where it violates the provisions of Article 35 (1) or 63 applied
mutatis mutandis under Article 70-7;
7.Where it violates an order under Article 54 applied mutatis mutandis
under Article 70-7; and
8.Where it is deemed difficult to conduct its business operations for a
violation of this Act or an order or disposition under this Act other
than subparagraphs 1 through 7.
[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]
CHAPTER VI KOREA STOCK EXCHANGE
SECTION 1 ESTABLISHMENT AND ORGANIZATION
ARTICLE 71 (ESTABLISHMENT)
(1) There shall be established a Stock Exchange for the purpose of
providing a fair and stable market price of securities, and the wide
and orderly circulation thereof.
(2) The Stock Exchange shall be a juristic person as an organization of
members. (Amended by Act No. 3945, Nov. 28, 1987)
(3) The Stock Exchange shall place its principal office in the Seoul
Special Metropolitan City, and may establish its branch offices in such
places as deemed necessary. (Amended by Act No. 3541, Mar. 29, 1982)
(4) The Stock Exchange shall come into existence by the registration of
its incorporation at the location of its principal office.
(5) The registration referred to in paragraph (4) shall contain the
matters prescribed in the following subparagraphs: (Amended by Act No.
3945, Nov. 28, 1987)
1.Objectives;
2.Name;
3.Locations of the principal office and branch offices;
4.Names and addresses of members;
5.Names and addresses of officers;
6.Method of public notice; and
7.Matters as prescribed by the Presidential Decree other than those
referred to in subparagraphs 1 through 6 of this paragraph.
(6) Deleted. (by Act No. 3945, Nov. 28, 1987)
(7) Matters necessary for the registration of the incorporation of the
Stock Exchange other than those referred to in paragraphs (4) and (5)
shall be prescribed by the Presidential Decree.
(Amended by Act No. 3945, Nov. 28, 1987)
ARTICLE 72
Deleted. (by Act No. 3945, Nov. 28, 1987)
ARTICLE 73 (BUSINESS)
(1) The Stock Exchange shall conduct such business as prescribed in the
following subparagraphs in order to attain its objectives: (Amended by
Act No. 3945, Nov. 28, 1987; Act No. 5254, Jan. 13, 1997; Act No. 5498,
Jan. 8, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001;
Act No. 6623, Jan. 26, 2002)
1.Establishment of the securities market (including futures markets);
2.Business relating to the purchase and sale transaction of securities;
3.Business relating to the listing of securities;
4.Business relating to the disclosure of a listed corporation;
5.Business relating to the review of abnormal trade of securities, such
as any trade causing the unusual and abnormal fluctuations in the price
or volume of trading of securities, as prescribed by the Presidential
Decree (hereinafter referred to as the "abnormal trade") and to the
supervision and control of members;
6.Business relating to the auction of securities;
7.Business relating to self-regulatory mediation of any dispute over
purchase and sale transactions on the securities market;
8.Business incidental to the establishment of the securities market;
and
9.Business as determined in the articles of association other than
those as prescribed in subparagraphs 1 through 7.
(2) Deleted. (by Act No. 5736, Feb. 1, 1999)
ARTICLE 73-2 (REVIEW OF ABNORMAL TRADE AND SUPERVISION OF MEMBERS)
(1) Where the Stock Exchange deems it necessary to ascertain the
trading situation of the item of securities suspected of abnormal trade
in the securities market (including the case of brokering the sale and
purchase transaction of securities under Article 52-2; hereafter in
this Article the same shall apply) or check whether a securities
company complies with the trading regulations of the Stock Exchange, it
may request the securities company concerned to submit related
materials with the reasons specified in writing.
(2) Where the Stock Exchange deems it necessary to ascertain the
trading situation of the item of securities suspected of abnormal trade
in the securities market or check whether a member complies with the
trading regulations of the Stock Exchange, it may supervise over the
business, financial standing, books, documents, and other things of the
member with respect to the trading in question.
(3) Where the Stock Exchange deems it necessary to conduct the review
or supervision under paragraphs (1) and (2), it may request its members
to file a report, submit materials, or have the persons concerned
present themselves to make a statement with respect to the abnormal
trade, etc. under the conditions as determined by the articles of
association.
[This Article Newly Inserted by Act No. 6623, Jan. 26, 2002]
ARTICLE 74 (MATTERS TO BE PROVIDED FOR IN ARTICLES OF ASSOCIATION)
(1) The articles of association of the Stock Exchange shall contain the
following matters: (Amended by Act No. 3945, Nov. 28, 1987; Act No.
6423, Mar. 28, 2001)
1.Objectives;
2.Name;
3.Locations of the principal office, the branch offices and the
securities market;
4.Matters relating to contributions;
4-2.Matters relating to members;
4-3.Matters relating to members' guarantee fund;
4-4.Matters relating to the transfer and return of shares of members;
5.Matters relating to officers and executive officers;
6.Matters relating to the general meeting of members and the board of
directors;
7.Matters relating to the execution of business;
8.Matters relating to the accounting and apportionment of expenses; and
9.Method of public notice.
(2) When the Stock Exchange intends to amend any provisions of its
articles of association referred to in paragraph (1), it shall obtain
the authorization of the Minister of Finance and Economy. (Amended by
Act No. 3945, Nov. 28, 1987; Act No. 5254, Jan. 13, 1997; Act No. 5539,
May 25, 1998)
ARTICLE 75 (PROVISIONS OF CIVIL ACT APPLIED MUTATIS MUTANDIS)
The provisions of the Civil Act relating to an incorporated association
(excluding Article 39 of the Civil Act) shall apply mutatis mutandis to
the Stock Exchange unless as otherwise provided for in this Act or any
order pursuant to this Act. In such a case, members, a general meeting
of members, and officers of the Stock Exchange shall be considered
respectively as members, a general meeting of members, and directors or
auditors of an incorporated association. (Amended by Act No.
3945, Nov. 28, 1987)
ARTICLE 76 (PROHIBITION OF ESTABLISHMENT OF SIMILAR FACILITIES)
No person other than the Stock Exchange may establish a securities
market or facilities similar thereto, or may conduct purchase and sale
transactions of securities through similar facilities: Provided, That
the same shall not apply to any person who runs the securities business
under Article 2 (8) 8 and Association brokerage market. (Amended by Act
No. 6423, Mar. 28, 2001) [This Article Wholly Amended by Act No. 5254,
Jan. 13, 1997]
ARTICLE 76-2 (QUALIFICATION FOR MEMBER)
Members of the Stock Exchange shall be the securities companies
satisfying such requirements as prescribed by the articles of
association.
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 76-3 (CONTRIBUTION AND LIABILITY)
(1) Members shall be liable for contribution under the conditions as
prescribed by
the articles of association.
(2) Liability of members to the Stock Exchange shall be limited to
their contribution except as otherwise prescribed by this Act and the
articles of association.
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 76-4 (WITHDRAWAL OF MEMBER)
(1) Any member may withdraw with the approval of the Stock Exchange
under the conditions as prescribed by the articles of association.
(2) If any of the following causes occurs, the member shall withdraw:
1.Disqualification;
2.Dissolution; and
3.Expulsion.
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 76-5 (TRANSFER AND RETURN OF SHARE)
(1) A share of a member may be transferred after obtaining the approval
of the Stock Exchange only when the member intends to withdraw, under
the conditions as prescribed by the articles of association.
(2) If a member withdraws from the Stock Exchange, the Stock Exchange
shall return the entire shares under the conditions as prescribed by
the articles of association.
(3) If it is deemed necessary to adjust the ratio of a member's share,
the Stock Exchange may return a part of a share to a member under the
conditions as prescribed by the articles of association.
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 77 (GENERAL MEETING OF MEMBERS)
(1) The general meeting of members shall resolve only the matters as
provided for in this Act or the articles of association of the Stock
Exchange. (Amended by Act No. 3945, Nov. 28, 1987)
(2) Deleted. (by Act No. 5254, Jan. 13, 1997)
(3) The matters which have been resolved in the general meeting of
members shall be reported to the Minister of Finance and Economy.
(Amended by Act No. 3945, Nov. 28, 1987; Act No. 5254, Jan. 13, 1997;
Act No. 5539, May 25, 1998)
ARTICLE 78 (OFFICERS)
(1) The following officers shall be assigned to the Stock Exchange:
(Amended by Act No. 6423, Mar. 28, 2001)
1.A chief director;
2.A vice chief director;
3.Not more than 5 directors (these directors shall be non-standing and
not more than 3 of them shall represent the public interest while not
more than 2 of them
shall represent the members); and
4.Two auditors (one of them shall be non-standing).
(2) The chief director shall be elected by the general meeting of
members from among those who have rich experience and learning in
securities matters and have a moral influence, and approved by the
Minister of Finance and Economy. (Amended by Act No. 5254, Jan. 13,
1997; Act No. 5539, May 25, 1998)
(3) The vice chief director shall be appointed by the chief director
with the consent of a general meeting of the members. (Amended by Act
No. 6423, Mar. 28, 2001)
(4) Directors representing the public interest shall be appointed by
the chief director from among the persons recommended by the director
candidate recommendation committee. In this case, the director
candidate recommendation committee shall consist of the vice chief
director, directors representing the public interest and directors
representing the members, and the directors representing the public
interest shall not be less than 50% of the total members of such
committee. The chairman of the committee shall be selected and
appointed from among the directors representing the public interest as
prescribed by the articles of association. (Amended by Act No.
6423, Mar. 28, 2001)
(5) Directors representing the members shall be elected at the general
meeting of the members. (Amended by Act No. 6423, Mar. 28, 2001)
(6) Auditors shall be elected at the general meeting of the members.
(Amended by Act No. 5736, Feb. 1, 1999)
(7) The terms of office for the chief director, the vice chief
director, directors, and auditors shall be three years, respectively.
(Amended by Act No. 5254, Jan. 13, 1997; Act No. 6423, Mar. 28, 2001)
(8) Deleted. (by Act No. 5736, Feb. 1, 1999)
(9) Deleted. (by Act No. 5254, Jan. 13, 1997)
[This Article Wholly Amended by Act No. 3945, Nov. 28, 1987]
ARTICLE 79 (DUTIES OF OFFICERS)
(1) The chief director shall represent the Stock Exchange, take charge
of its general affairs and preside over the general meeting of members
and the board of directors. (Amended by Act No. 3945, Nov. 28, 1987)
(2) The vice chief director shall assist the chief director, and if the
chief director is absent by accident, he shall act for the chief
director. (Amended by Act No. 6423, Mar. 28, 2001)
(3) Deleted. (by Act No. 6423, Mar. 28, 2001)
(4) The auditors shall inspect affairs and accounting of the Stock
Exchange, and deliver their opinion to the general meeting of members.
(Amended by Act No. 3945, Nov. 28, 1987)
ARTICLE 80 (INELIGIBILITY OF OFFICERS)
A person falling under any of the following subparagraphs shall not be
an officer of the Stock Exchange, and any officer who falls under any
of the following subparagraphs shall lose his office: (Amended by Act
No. 5254, Jan. 13, 1997; Act No. 5423, Dec. 13, 1997)
1.Any person who is not a national of the Republic of Korea, any
officer who belongs to a corporation of the Republic of Korea of which
fifty percent or more of the amount of stated capital or fifty percent
or more of the total combined voting
rights is owned by foreign individuals and/or foreign corporations,
etc., or any officer of a foreign corporation;
2.A minor, an incompetent or a quasi-incompetent;
3.A bankrupt who has not been reinstated yet;
4.A person who has been sentenced to imprisonment without prison labor
or a heavier punishment or to a fine or a heavier punishment pursuant
to this Act, foreign securities Acts and subordinate statutes, or other
Acts and subordinate statutes relating to finance as prescribed by the
Presidential Decree, and for whom five years have not elapsed since the
execution of such punishment was terminated (including the cases where
the execution is deemed to have been terminated) or exempted;
4-2.A person who has been sentenced to the suspension of execution of
imprisonment without prison labor or a heavier punishment and is still
in the suspended period of execution; or
5.A person who was dismissed or discharged from office pursuant to this
Act, foreign securities Acts and subordinate statutes, or other Acts
and subordinate statutes relating to finance as prescribed by the
Presidential Decree, and for whom five years have not elapsed since
such discharge or dismissal.
ARTICLE 81 (REQUEST FOR DISMISSAL OF OFFICER)
If an officer of the Stock Exchange violates the provisions of Acts and
subordinate statutes or the disposition made by an administrative
agency pursuant to Acts and subordinate statutes, the Financial
Supervisory Commission may suspend the execution of his duties or
request his dismissal. (Amended by Act No. 5254, Jan. 13, 1997; Act No.
5498, Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1,
1999; Act No. 5982, May 24, 1999)
[This Article Wholly Amended by Act No. 3945, Nov. 28, 1987]
ARTICLE 82
Deleted. (by Act No. 3945, Nov. 28, 1987)
ARTICLE 83 (LIABILITIES OF OFFICERS, ETC.)
(1) Any person who is or had been an officer or employee of the Stock
Exchange shall not divulge or make surreptitious use of secrets which
he may have acquired in the course of performing his duties.
(2) The provisions of Article 42 shall apply mutatis mutandis to
officers and employees of the Stock Exchange.
(3) An officer and employee of the Stock Exchange shall not have a
special interest relationship with the securities institutions by
offering funds or participating in the sharing of profit and loss or
other business.
ARTICLE 83-2 (DISPUTE MEDIATION COMMITTEE)
(1) The Stock Exchange shall set up a Dispute Mediation Committee
(hereinafter referred to as the "Mediation Committee") mandated to
deliberate and resolve on matters concerning dispute mediation under
Article 73 (1) 7.
(2) The Stock Exchange may, when it is deemed necessary to mediate any
dispute, ask the parties concerned to confirm facts or furnish
materials, etc.
(3) The Mediation Committee may, when it is deemed necessary to hear
opinions of
the parties concerned and other interested persons, ask them to be
present at the meeting to state their opinions.
(4) Necessary matters concerning the composition and operation of the
Mediation Committee and procedures for mediating disputes, etc. shall
be prescribed by the operating rules under Article 94.
[This Article Newly Inserted by Act No. 6423, Mar. 28, 2001]
SECTION 2 SALE AND PURCHASE TRANSACTIONS ON SECURITIES MARKET
ARTICLE 84
Deleted. (by Act No. 3945, Nov. 28, 1987)
ARTICLE 85 (RESTRICTIONS ON TRADERS ON SECURITIES MARKETS)
(1) No person other than members of the Stock Exchange shall perform
sale and purchase transactions on the securities market: Provided, That
where the articles of association of the Stock Exchange determine that
such person may sell and buy specific securities, he may do so.
(2) A person who has been able to perform sale and purchase
transactions on the securities market under the proviso of paragraph
(1) shall be deemed a member of the Stock Exchange in applying the
provisions of Articles 73 (1) 5, 73-2, 74 (1) 4-2 and 4-3, 76-3 (2),
76-4, 87, 94 (2) 5, 95 through 97, 99, 100, and 206-3 (6). (Amended by
Act No. 6623, Jan. 26, 2002)
[This Article Wholly Amended by Act No. 5736, Feb. 1, 1999]
ARTICLE 86
Deleted. (by Act No. 5736, Feb. 1, 1999)
ARTICLE 87 (COMPLETION OF TRANSACTIONS)
(1) When a member is suspended from transactions or loses his
qualification, the Stock Exchange shall have the member or any other
member complete the sale and purchase transactions which have been
initiated on the securities market by the member. In this case, the
member who loses his qualification shall be regarded as having the
qualification of a member within the objective of completion of those
transactions. (Amended by Act No. 3945, Nov. 28, 1987)
(2) In case where the Stock Exchange has any other member complete the
sale and purchase transactions pursuant to paragraph (1), it shall be
regarded that a trust contract is in existence between the member
concerned and such other member. (Amended by Act No. 3945, Nov. 28,
1987)
ARTICLE 88 (LISTING REGULATIONS)
(1) Deleted. (by Act No. 5254, Jan. 13, 1997)
(2) The Stock Exchange shall adopt the Securities Listing Regulations
(hereinafter referred to as the "Listing Regulations") in order to
examine securities which are to be listed on the securities market or
administer the securities which have been listed on the securities
market (hereinafter referred to as "listed securities"). (Amended by
Act No. 5736, Feb. 1, 1999)
(3) The Listing Regulations referred to in paragraph (2) shall provide
for the
following matters: (Amended by Act No. 5736, Feb. 1, 1999)
1.Matters relating to the listing standards for, listing examination of
and delisting of securities;
2.Matters relating to suspension from and release of suspension from
the sale and purchase transactions of securities; and
3.Matters necessary for the administration of listed securities other
than those prescribed in subparagraphs 1 and 2 of this paragraph.
ARTICLE 89 (DISCLOSURE REGULATIONS)
(1) The Stock Exchange shall adopt the Listed Corporation Disclosure
Regulations (hereinafter referred to as the "Disclosure Regulations")
in order to disclose the financial standing and business activity of
stock-listed corporations and conduct the supervision of stock-listed
corporations.
(2) The Disclosure Regulations under paragraph (1) shall include the
following matters. In this case, the matters provided in subparagraphs
1 and 2 shall meet the provisions of Article 186:
1.Matters relating to the information on which a stock-listed
corporation is to make a report or a disclosure;
2.Matters relating to the methods and procedures which a stock-listed
corporation is to follow in making a report or disclosure;
3.Matters relating to the standards for deciding upon whether or not a
stock-listed corporation follows the provisions of subparagraphs 1 and
2 and to the measures for a securities company against such provisions;
4.Matters relating to the supervision of stock-listed corporations,
such as the suspension of their sale and purchase transactions; and
5.Other necessary matters relating to a report or disclosure which
stock-listed corporations are to make.
[This Article Newly Inserted by Act No. 6623, Jan. 26, 2002]
ARTICLES 90 THROUGH 93
Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLE 94 (OPERATING RULES)
(1) Matters relating to the sale and purchase transactions of
securities on the securities market shall be determined by the
operating rules of the Stock Exchange. In this case, matters relating
to futures markets may be determined by separate operating rules.
(2) The operating rules as referred to in paragraph (1) shall provide
for the following matters: (Amended by Act No. 5736, Feb. 1, 1999; Act
No. 6423, Mar. 28, 2001; Act No. 6623, Jan. 26, 2002)
1.Types of sale and purchase transactions and matters on consignment;
2.Matters relating to the opening, closing, suspending, or temporary
closing of the securities market;
3.Methods of the conclusion of sale and purchase transaction contract
and the settlement;
4.Matters relating to the regulation of sale and purchase transactions,
such as payment of deposit money;
5.Matters relating to the review of abnormal trade and supervision of
members, and disciplinary action against members, officers and
employees as a result of such review and supervision;
5-2.Matters concerning the self-regulatory mediation of any dispute
over sale and purchase transactions on the securities market;
6.Deleted; and (by Act No. 6623, Jan. 26, 2002)
7.Matters necessary for the sale and purchase transactions in addition
to those as referred to in subparagraphs 1 through 5-2.
[This Article Wholly Amended by Act No. 3945, Nov. 28, 1987]
ARTICLE 95 (JOINT COMPENSATION FUND FOR DAMAGE INCURRED FROM CONTRAVENTION OF
CONTRACTS)
(1) Members shall set aside a joint compensation fund for damage
incurred from contraventions of contracts (hereinafter referred to as
the "compensation fund") in the Stock Exchange in order to compensate
for the damage incurred from any contravention of trading contracts on
the securities market: Provided, That the same shall not apply to any
member, etc. prescribed by the Stock Exchange in the articles of
association, who does not bear the responsibility for executing the
settlement of sale and purchase transactions. (Amended by Act No. 3945,
Nov. 28, 1987; Act No. 6423, Mar. 28, 2001)
(2) Any member (excluding the member referred to in the proviso of
paragraph (1)) shall, within the extent of the compensation fund
referred to in paragraph (1), be liable jointly and severally for the
damage incurred from any contravention of trading contract on the
securities market. (Amended by Act No. 3945, Nov. 28,
1987; Act No. 6423, Mar. 28, 2001)
(3) The rate and limit of reserve, use, management, repayment of the
compensation fund referred to in paragraph (1), and other necessary
matters relating to the operation of the compensation fund shall be
prescribed by the Presidential Decree.
ARTICLE 96 (APPROPRIATION OF MEMBER'S DEPOSIT AND GUARANTEE FUND FOR OBLIGATION)
If a member has not fulfilled his obligation based on sale and purchase
transactions on the securities market for the Stock Exchange or other
members, the Stock Exchange may appropriate the member's deposit and
guarantee fund for the payment of that obligation. (Amended by Act No.
3945, Nov. 28, 1987)
ARTICLE 97 (COMPENSATION LIABILITIES OF STOCK EXCHANGE)
(1) The Stock Exchange shall be liable to compensate for the damage
incurred from contravention of trading contract by any member. (Amended
by Act No. 3945, Nov. 28, 1987)
(2) In case where the Stock Exchange compensates for the damage under
paragraph (1), the compensation fund set aside under the provisions of
Article 95 shall be appropriated in preference.
(3) In case where the Stock Exchange compensates for the damage under
paragraphs (1) and (2), the Stock Exchange shall be entitled to the
right to indemnification for the compensated amount and all expenses
required to do so against the member who contravened the trading
contract. (Amended by Act No. 3945, Nov. 28, 1987)
(4) The amount of money collected in accordance with paragraph (3)
shall be, in
preference, appropriated for such amount as the Stock Exchange has
compensated with its own money and all expenses required to do so, and
the remainder shall be reserved in the compensation fund.
(5) Matters with respect to the exercise of the right to
indemnification referred to in paragraph (3) shall be prescribed by the
Presidential Decree.
ARTICLE 98
Deleted. (by Act No. 3945, Nov. 28, 1987)
ARTICLE 99 (PREFERENTIAL RIGHT OF STOCK EXCHANGE OVER OTHER CREDITOR)
(1) The Stock Exchange shall have a right to be paid in preference to
any other creditors with respect to the deposit, member's guarantee
fund and money or securities paid for the delivery and settlement.
(2) When a member, in case where the Stock Exchange delivers securities
to the member prior to the settlement, causes any damage to the Stock
Exchange due to the unfulfillment of delivery or settlement by such
member, the Stock Exchange shall have a right to be paid in preference
to any other creditors with respect to property of such member:
Provided, That the right shall not be in preference to obligations
hypothecated by chonsegwon (right of registered lease on deposit
basis), pledges or mortgage created prior to the arrival of settlement
date. (Amended by Act No. 3945, Nov. 28, 1987)
ARTICLE 100 (PREFERENTIAL RIGHT OF ENTRUSTER DUE TO CONTRAVENTION OF CONTRACT BY
ENTRUSTEE AND RIGHT OF STOCK EXCHANGE IN PREFERENCE TO ENTRUSTER)
(1) Any person who entrusts the sale and purchase transactions on the
securities market to a member shall, in case where the member entrusted
with the transactions contravenes the entrustment contract, have a
right to satisfy the claim based upon such contravention in preference
to any other creditors with respect to the deposit and member's
guarantee fund. (Amended by Act No. 3945, Nov. 28, 1987)
(2) The preferential right referred to in Article 99 shall be in
preference to such preferential right as prescribed by the provisions
of paragraph (1).
ARTICLE 101 (PROHIBITION OF SALE AND PURCHASE IN CONTRAVENTION OF CONTRACT)
Any securities company which has been entrusted with the sale and
purchase transactions on the securities market, shall have such
transactions made only through the securities market without fail. In
this case, the provisions of Article 44 shall not apply. (Amended by
Act No. 3945, Nov.
28, 1987; Act No. 4469, Dec. 31, 1991)
ARTICLE 102
Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLE 103 (PUBLICATION OF QUOTATIONS)
The Stock Exchange shall, under the conditions as prescribed by the
Presidential Decree, make public the quotations showing the daily
trading volume, daily settled price, and the highest, lowest and
closing prices of the securities on the securities market. (Amended by
Act No. 3541, Mar. 29, 1982)
ARTICLE 104
Deleted. (by Act No. 5736, Feb. 1, 1999)
ARTICLES 105 AND 106
Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLE 107 (RESTRICTIONS ON DISCRETIONARY SALE AND PURCHASE TRANSACTIONS)
(1) If a securities company is entrusted by a customer to make a sale
and purchase transaction of securities, the securities company may
carry out such transaction under a discretionary decision only on the
quantity, price and time of the transaction. In this case, the types
and items of securities, the categories and methods of the transaction
shall be determined only according to a decision of the customer.
(Amended by Act No. 4469, Dec. 31, 1991)
(2) If a securities company carries out a sale and purchase transaction
of securities pursuant to paragraph (1), it shall observe the
conditions as prescribed by the Ordinance of the Ministry of Finance
and Economy. (Amended by Act No. 4469, Dec. 31, 1991; Act No. 5254,
Jan. 13, 1997; Act No. 5539, May 25, 1998)
[This Article Wholly Amended by Act No. 3945, Nov. 28, 1987]
ARTICLE 108
Deleted. (by Act No. 5423, Dec. 13, 1997)
SECTION 3 ENTRUSTMENT WITH SALE AND PURCHASE TRANSACTIONS ON SECURITIES MARKET
ARTICLE 109 (RESTRICTIONS ON PLACES OF ENTRUSTMENT)
(1) Deleted. (by Act No. 5736, Feb. 1, 1999)
(2) A securities company may be entrusted with the sale and purchase
transactions of securities by means of electronic communication and
other manners as prescribed by the Presidential Decree.
[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]
ARTICLES 110 AND 111
Deleted. (by Act No. 5736, Feb. 1, 1999)
SECTION 4 ACCOUNTING AND SUPERVISION
ARTICLE 112 (REPORT AND INSPECTION)
(1) The Financial Supervisory Commission may, if deemed necessary in
the public interest or for the protection of investors, order the Stock
Exchange to file reports or materials for reference with respect to its
business and property, and have the FSS Governor inspect its business,
status of property, accounting books, records, and other related
materials. (Amended by Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan.
8, 1998)
(2) The provisions of Article 53 (3) shall apply mutatis mutandis to
the inspection referred to in paragraph (1).
(3) In case where the FSS Governor inspects according to the provisions
of paragraph (1), the FSS Governor shall report the result of the
inspection to the
Financial Supervisory Commission. (Amended by Act No. 5254, Jan. 13,
1997; Act No. 5498, Jan. 8, 1998)
ARTICLE 113
Deleted. (by Act No. 3945, Nov. 28, 1987)
ARTICLE 114
Deleted. (by Act No. 6176, Jan. 21, 2000)
ARTICLE 115 (APPROVAL OF REGULATIONS)
(1) Where the Stock Exchange intends to adopt the Business Regulations,
Listing Regulations, Disclosure Regulations and other regulations
(including rules; hereinafter the same shall apply) relating to
business which are necessary for the administration of the securities
market, the Stock Exchange shall obtain the approval of the Financial
Supervisory Commission. The same shall also apply in case of the
amendment or repeal thereof. (Amended by Act No. 3945, Nov. 28, 1987;
Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 5539,
May 25, 1998; Act No. 5736, Feb. 1, 1999; Act No. 5982, May 24, 1999)
(2) Where the Financial Supervisory Commission intends to grant
approval referred to in paragraph (1), it shall consult in advance with
the Minister of Finance and Economy. (Newly Inserted by Act No. 5498,
Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 5982, May 24, 1999)
ARTICLE 116
Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLE 117 (DISPOSITION IN EMERGENCY)
(1) Deleted. (by Act No. 5736, Feb. 1, 1999)
(2) When the Minister of Finance and Economy deems that the sale and
purchase transactions of securities cannot be normally made because of
natural disaster, warfare, disturbance, sudden and significant change
in economic conditions or other incidents similar thereto, he may order
the temporary closing of the securities market or take other necessary
measures. (Amended by Act No.
5254, Jan. 13, 1997; Act No. 5539, May 25, 1998)
CHAPTER VII DELETED.
ARTICLES 118 THROUGH 144
Deleted. (by Act No. 5498, Jan. 8, 1998)
CHAPTER VIII ORGANIZATIONS CONCERNED WITH SECURITIES
SECTION 1 SECURITIES FINANCE COMPANY
ARTICLE 145 (ESTABLISHMENT)
(1) Any person who is engaged in the business referred to in Article
147
(hereinafter referred to as a "securities finance company") shall be a
licensed stock company by the Minister of Finance and Economy. (Amended
by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998)
(2) Any person who intends to obtain a license referred to in paragraph
(1) shall file a written application including such information as
designated in the following subparagraphs with the Minister of Finance
and Economy: (Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May
25, 1998)
1.Name;
2.Location of business office; and
3.Matters relating to stated capital and assets.
(3) A written application referred to in paragraph (2) shall be
accompanied by such documents as designated in the following
subparagraphs: (Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539,
May 25, 1998)
1.Articles of association and the regulations relating to business;
2.Curricula vitae and certificates of identity of promoters;
3.Project planning statement and the estimated income and expenditure
statement for a period of two years after its establishment; and
4.Documents prescribed by the Minister of Finance and Economy other
than those referred to in subparagraphs 1 through 3.
ARTICLE 146 (AMOUNT OF STATED CAPITAL)
Amount of stated capital of a securities finance company shall be two
billion won or
more.
ARTICLE 147 (BUSINESS)
(1) A securities finance company may manage any business referred to in
the following subparagraphs: (Amended by Act No. 5254, Jan. 13, 1997;
Act No. 5539, May 25, 1998; Act No. 6623, Jan. 26, 2002)
1.To loan money for securities market making and money for underwriting
to underwriters;
2.To loan through the clearing organ of the Stock Exchange or the
Association such money or securities as may be necessary in the
settlement of sale and purchase transactions on the securities market
or the Association brokerage market;
3.To lend money by collateralizing securities or lend securities;
4.To lend money to public investors through underwriters for purchasing
stocks through public offering;
5.To effect sale and purchase transactions of bonds within such extent
as may be prescribed by the Presidential Decree;
6.To undertake safekeeping in connection with securities;
7.To trust money under the Trust Business Act;
8.To perform the affairs of a trustee company under the Securities
Investment Trust Business Act;
9.To perform the affairs of a custodian under the Securities Investment
Company
Act; and
10.To be approved by the Minister of Finance and Economy other than
those referred to in subparagraphs 1 through 9.
(2) Where a securities finance company carries on the trust business
under paragraph (1) 7, it shall be deemed a financial institution
engaging concurrently in the trust business under the Trust Business
Act, which is not subject to the provisions of Articles 7 (1), 8-2, 15,
15-2, 16, and 24-3 of the Trust Business Act. (Newly Inserted by Act
No. 6623, Jan. 26, 2002)
ARTICLE 148
Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLE 149 (RESTRICTIONS ON OFFICERS)
(1) Any officer who is engaged in the regular business of a securities
finance company (including a person who practically performs the
function of officer; hereinafter the same shall apply) shall be a
person other than officers and employees of a securities company.
(Amended by Act No. 3541, Mar. 29, 1982)
(2) The provisions of Articles 33 (2) and 80 shall apply mutatis
mutandis to any officer of a securities finance company: Provided, That
a person may be appointed as an officer falling under subparagraph 1 of
Article 80, in so far as he is not engaged in the regular business.
(Amended by Act No. 3541, Mar. 29, 1982)
ARTICLE 150
Deleted. (by Act No. 3945, Nov. 28, 1987)
ARTICLE 151 (REPORT ON ARTICLES OF ASSOCIATION AND REGULATIONS)
(1) Any securities finance company shall, when it changes its articles
of association, file a report thereof with the Financial Supervisory
Commission. (Amended by Act No. 6176, Jan. 21, 2000)
(2) When a securities finance company has adopted, amended or repealed
the regulations relating to its business, it shall report such fact to
the Financial Supervisory Commission. (Amended by Act No. 5254, Jan.
13, 1997; Act No. 5498, Jan. 8, 1998)
(3) Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLE 152
Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLE 153 (REQUEST TO DISCHARGE OFFICERS)
When any officer of a securities finance company is elected by the
illegal means, or violates this Act, the orders pursuant to this Act or
the articles of association of the securities finance company, the
Financial Supervisory Commission may request it to discharge such
officer. (Amended by Act No. 5498, Jan. 8, 1998)
ARTICLE 154 (LIABILITIES OF OFFICERS)
The provisions of Articles 58 and 83 shall apply mutatis mutandis to a
securities finance company: Provided, That the provisions of Article 83
(3) shall not apply mutatis mutandis to officers who are not engaged in
full time.
ARTICLE 155 (DISPOSITIONS AGAINST VIOLATIONS OF ACTS AND SUBORDINATE STATUTES)
(1) The provisions of Article 55 (excluding paragraph (1) 5 through 7
of the same Article) shall apply mutatis mutandis to the cancellation
of a securities financial business license for a securities finance
company. In this case, the "Financial Supervisory Commission" shall be
deemed the "Minister of Finance and Economy". (Amended by Act No. 6176,
Jan. 21, 2000)
(2) Where any securities finance company falls under any of the
following subparagraphs, the Financial Supervisory Commission may order
the suspension of its business in whole or in part for a specified
period not exceeding six months: (Amended by Act No. 6623, Jan. 26,
2002)
1.Where it does business without obtaining approval under Article 147
(1) 10;
2.Where it fails to comply with a request to discharge its officer
under Article 153 without any justifiable cause; and
3.Where it violates the provisions of Article 154.
[This Article Wholly Amended by Act No. 5498, Jan. 8, 1998]
ARTICLE 156
Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLE 157 (INSPECTION)
The provisions of Article 53 shall apply mutatis mutandis to a
securities finance company. In this case, the "cancellation of a
securities business license" referred to
in Article 53 (5) 1 shall be deemed a "request for the cancellation of
license to the Minister of Finance and Economy". (Amended by Act No.
6176, Jan. 21, 2000)
ARTICLE 158 (DISCONTINUANCE OF BUSINESS AND DISSOLUTION)
The resolution of a securities finance company for the discontinuance
of its business and for the dissolution shall be subject to the
authorization of the Minister of Finance and Economy. (Amended by Act
No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998)
ARTICLE 159
Deleted. (by Act No. 5736, Feb. 1, 1999)
ARTICLE 160 (ISSUANCE OF CORPORATE BONDS)
(1) Notwithstanding the provisions of Article 470 of the Commercial
Act, any securities finance company may issue the corporate bonds up to
20 times the aggregate amount of its stated capital and reserve.
(Amended by Act No. 5521, Feb. 24, 1998; Act No. 6176, Jan. 21, 2000)
(2) The corporate bonds issued by a securities finance company pursuant
to the provisions of paragraph (1) shall be considered to be the bonds
pursuant to the provisions of Article 2 (1) 3.
(3) Any securities finance company may temporarily issue corporate
bonds in excess of the limit to redeem corporate bonds issued in
accordance with paragraph (1). In this case, it shall be subject to the
redemption of corporate bonds already issued within one month after
they are issued. (Newly Inserted by Act No. 6176, Jan. 21, 2000)
(4) Matters necessary for the issuance of corporate bonds by a
securities finance company pursuant to the provisions of paragraph (1),
shall be prescribed by the Presidential Decree.
[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]
ARTICLE 161 (DEPOSIT OF MONEY)
(1) Any securities finance company may receive a deposit of money from
the Stock Exchange, securities companies, other securities-related
institutions, and such persons as designated by the Ordinance of the
Ministry of Finance and Economy. (Amended by Act No. 5254, Jan. 13,
1997; Act No. 5539, May 25, 1998)
(2) Any securities finance company may, if necessary for the
performance of deposit pursuant to paragraph (1), issue debt
instruments in accordance with the Ordinance of the Ministry of Finance
and Economy. (Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May
25, 1998)
(3) In case of paragraphs (1) and (2), the Bank of Korea Act and the
Banking Act shall not apply.
SECTION 2 KOREA SECURITIES DEALERS ASSOCIATION
SUB-SECTION 1 ESTABLISHMENT AND SUPERVISION
ARTICLE 162 (ESTABLISHMENT)
(1) A Korea Securities Dealers Association shall be established for the
purpose of maintaining business orders between securities companies,
assuring fair trading of securities, and protecting investors.
(2) The Association shall be a juristic person as the organ consisting
of members.
(3) The Association shall place its principal office in the Seoul
Special Metropolitan City, and may establish its branch offices in
necessary places.
(4) The Association shall come into existence by the registration of
incorporation at the location of the principal office under the
conditions as prescribed by the Presidential Decree.
[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]
ARTICLE 162-2 (BUSINESS)
The Association shall do such business as described in the following
subparagraphs: (Amended by Act No. 5498, Jan. 8, 1998; Act No. 5736,
Feb. 1, 1999; Act No. 6176, Jan. 21, 2000; Act No. 6423, Mar. 28, 2001;
Act No. 6623, Jan. 26, 2002)
1.Business relating to the maintenance of sound business orders between
members and for the protection of investors;
2.Business relating to the publication of Association-registered
corporations, review of abnormal trade and supervision of members, and
self-regulatory mediation of disputes in connection with sale and
purchase transactions on the Association brokerage market, and the
operation of the Association brokerage market;
3.Operation and management of fund managers in order to maintain sound
order in business under Article 28 (2) 2;
4.Examination and research of the system relating to securities;
5.Business relating to the study and training with respect to
securities;
6.Business incidental to those as referred to in subparagraphs 1
through 5; and
7.Business as determined by the Presidential Decree other than those as
referred to in subparagraphs 1 through 6. [This Article Newly Inserted
by Act No. 5254, Jan. 13, 1997]
ARTICLE 162-3 (REVIEW OF ABNORMAL TRADE AND SUPERVISION OF MEMBERS)
(1) Where the Association deems it necessary to ascertain the trading
situation of the item of securities suspected of abnormal trade in the
Association brokerage market (including the case of brokering the sale
and purchase transaction of securities under Article 52-2; hereafter in
this Article the same shall apply) or check whether a securities
company complies with the trading regulations of the Association, it
may request the securities company concerned to submit related
materials with the reasons specified in writing.
(2) Where the Association deems it necessary to ascertain the trading
situation of the item of securities suspected of abnormal trade in the
Association brokerage market or check whether a member complies with
the trading regulations of the Association, it may supervise over the
business, financial standing, books, documents, and other things of the
member with respect to the trading in question.
(3) Where the Association deems it necessary to conduct the review or
supervision under paragraphs (1) and (2), it may request its members to
file a report, submit
materials, or have the persons concerned present themselves to make a
statement with respect to the abnormal trade, etc. under the conditions
as determined by the articles of association.
[This Article Newly Inserted by Act No. 6623, Jan. 26, 2002]
ARTICLE 163 (MATTERS TO BE PROVIDED FOR IN ARTICLES OF ASSOCIATION)
Matters to be provided for in the articles of association of the
Association shall be prescribed by the Presidential Decree.
ARTICLE 164 (REPORT ON REGULATIONS, ETC.)
(1) Where the Association has adopted, amended or repealed regulations
relating to its business, it shall report such fact to the Financial
Supervisory Commission within ten days. (Amended by Act No. 3541, Mar.
29, 1982; Act No. 5498, Jan. 8, 1998; Act No. 5736, Feb. 1, 1999)
(2) The Association shall, where it intends to change matters
prescribed by the Presidential Decree in the articles of association,
obtain approval from the Financial Supervisory Commission. (Newly
Inserted by Act No. 6176, Jan. 21, 2000)
ARTICLE 165 (MEMBERSHIP DUES)
The Association may collect membership dues from members under the
conditions as prescribed by the articles of association.
ARTICLE 166
Deleted. (by Act No. 5423, Dec. 13, 1997)
ARTICLE 167
Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLE 168 (ORDER OF SUSPENSION OF BUSINESS, ETC.)
In case where any event described in the following subparagraphs
occurs, the Financial Supervisory Commission may order the Association
to suspend its business or may request it to discharge the officer
concerned in the public interest and for the protection of investors:
(Amended by Act No. 3541, Mar. 29, 1982; Act No. 5498, Jan. 8, 1998)
1.When the Association has violated Acts and subordinate statutes or
disposition taken by administrative authorities pursuant to Acts and
subordinate statutes; and
2.When any officer of the Association has violated the articles of
association of the Association or regulations relating to the business
of the Association or has abused his authorities.
ARTICLE 169 (OFFICERS AND SUPERVISION, ETC.)
The provisions of Articles 33, 42, 53 and 117 shall apply mutatis
mutandis to the Association. (Amended by Act No. 5254, Jan. 13, 1997;
Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000) [This Article
Wholly Amended by Act No. 3541, Mar. 29, 1982]
ARTICLE 170 (PROVISIONS OF CIVIL ACT APPLIED MUTATIS MUTANDIS)
The provisions of the Civil Act relating to an incorporated association
shall apply
mutatis mutandis to the Association except otherwise provided for in
this Act or the orders pursuant to this Act.
ARTICLE 171 (PROHIBITION OF USE OF SIMILAR NAME)
Any person other than the Korea Securities Dealers Association shall
not use the name "Securities Dealers Association" or any other name
similar thereto. (Amended by Act No. 5254, Jan. 13, 1997)
ARTICLE 172 (SECURITIES TRAINING INSTITUTE)
The Association may establish a Securities Training Institute in order
to improve qualifications of persons who engage in securities business
and to diffuse professional knowledge about securities.
SUB-SECTION 2 OPERATION OF ASSOCIATION BROKERAGE MARKET AND SALE AND
PURCHASE TRANSACTIONS
ARTICLE 172-2 (REGISTRATION WITH ASSOCIATION AND OPERATION OF ASSOCIATION
BROKERAGE MARKET)
(1) Any corporation that intends to get securities, prescribed by the
Presidential Decree, traded on the Association brokerage market shall
file a registration with the Association through a person who has
obtained a business license under Article 28 (2) 3.
(2) The Association shall set up an Association Brokerage Market
Operation Committee (hereinafter referred to as the "Association
Brokerage Market Operation Committee") mandated to deal with affairs
related with the operation of Association brokerage market.
(3) Members of the Association Brokerage Market Operation Committee
shall be elected at a general meeting of the Association.
(4) The provisions of Articles 33 and 83 shall apply mutatis mutandis
to the members of the Association Brokerage Market Operation Committee.
[This Article Wholly Amended by Act No. 6423, Mar. 28, 2001]
ARTICLE 172-3 (ADOPTION AND APPROVAL OF REGULATIONS)
(1) The Association shall make necessary regulations governing the
operation of Association brokerage market according to standards
falling under each of the following subparagraphs. In this case, the
detailed matters to be entered in the regulations shall be prescribed
by the Presidential Decree: (Amended by Act No. 6423, Mar. 28, 2001)
1.The operational regulations of the Association Brokerage Market
Operation Committee, which govern matters concerning the makeup,
operation, personnel affairs and budget, etc. of the Association
Brokerage Market Operation Committee and its secretariat;
2.Securities association registration regulations that govern matters
concerning standards for the registration of securities, the
examination of registration and the cancellation of registration, etc.;
3.Business regulations that govern matters concerning the acceptance as
a trustee,
suspension, and cancellation of purchase and sale transactions, etc.;
and
4.Regulations that govern matters concerning the publication, etc. of
Association-registered corporations.
(2) In case where the Association intends to make, alter, or repeal the
regulations referred to in paragraph (1), the Association shall obtain
approval from the Financial Supervisory Commission after going through
a resolution of the Association Brokerage Market Operation Committee.
(Amended by Act No. 5498, Jan. 8, 1998; Act No. 5539, May 25, 1998; Act
No. 5982, May 24, 1999; Act No. 6423, Mar. 28, 2001)
(3) Where the Financial Supervisory Commission intends to grant
approval referred to in paragraph (2), it shall consult in advance with
the Minister of Economy and Finance. (Newly Inserted by Act No. 5498,
Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 5982, May 24, 1999)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 172-4 (BUDGET AND PERSONNEL AFFAIRS OF ASSOCIATION BROKERAGE MARKET
OPERATION COMMITTEE AND SECRETARIAT)
(1) The Association shall manage its budget separately from the budget
of the Association Brokerage Market Operation Committee (including the
budget of its secretariat; hereinafter the same shall apply). In this
case, the Association shall appropriate an amount equivalent to the
ratio set by the regulations on the Association Brokerage Market
Operation Committee as the budget of such Committee from among revenues
accruing from its membership fees and the operation of Association
brokerage market.
(2) In managing the personnel affairs of the secretariat of the
Association Brokerage Market Operation Committee, the Association shall
consult with the
chairman of the Association Brokerage Market Operation Committee. [This
Article Newly Inserted by Act No. 6423, Mar. 28, 2001]
SECTION 3 SECURITIES DEPOSITORY
ARTICLE 173 (ESTABLISHMENT)
(1) A Securities Depository (hereinafter referred to as the
"Depository") shall be established in order to promote a concentrated
deposition of securities, transfer of securities between their
accounts, and harmonious trading of securities.
(2) The Depository shall be a juristic person.
(3) The Depository shall come into existence by the registration of
incorporation at the location of the principal office under the
conditions as prescribed by the Presidential Decree.
[This Article Wholly Amended by Act No. 4701, Jan. 5, 1994]
ARTICLE 173-2 (BUSINESS)
(1) The Depository shall carry on the business as prescribed in the
following subparagraphs in order to attain its objects: (Amended by Act
No. 5254, Jan. 13, 1997; Act No. 5736, Feb. 1, 1999)
1.Business concentrating the deposition of securities;
2.Business transferring securities between accounts;
3.Business depositing securities and transferring between accounts
through opening of a mutual account with a foreign juristic person
(hereinafter referred to as a "foreign deposition institution") which
carries on the business similar to the Depository;
4.Securities transfer agency business (including the agency business
for payment of dividend, interest, and redemption of securities and the
agency business for issuing securities);
5.Undertaking safekeeping of securities;
6.Business other than those as referred to in subparagraphs 1 through
5, which is authorized under this Act and other Acts;
7.Business incidental to those as referred to in subparagraphs 1
through 6; and
8.Businesses as determined by the articles of association other than
those as referred to in subparagraphs 1 through 7.
(2) Deleted. (by Act No. 5736, Feb. 1, 1999)
[This Article Newly Inserted by Act No. 4701, Jan. 5, 1994]
ARTICLE 173-3 (PROHIBITION OF CARRYING ON DEPOSITING BUSINESS)
No person other than the Depository may carry on any business receiving
securities, and settling accounts by means of a transfer between
accounts in lieu of giving and receiving such securities.
[This Article Newly Inserted by Act No. 4701, Jan. 5, 1994]
ARTICLE 173-4 (MATTERS TO BE PROVIDED FOR IN ARTICLES OF ASSOCIATION)
The articles of association of the Depository shall include the
following matters:
1.Objectives;
2.Name;
3.Location of a principal office;
4.Matters relating to stocks and stated capital;
5.Matters relating to the general meeting of stockholders and the board
of directors;
6.Matters relating to officers;
7.Matters relating to the accounting; and
8.Method of the public notice.
[This Article Newly Inserted by Act No. 4701, Jan. 5, 1994]
ARTICLE 173-5 (PROVISIONS OF COMMERCIAL ACT APPLIED MUTATIS MUTANDIS)
The provisions of the Commercial Act concerning the stock company shall
apply mutatis mutandis to the depositor, unless otherwise prescribed by
this Act or any order issued pursuant to this Act.
[This Article Newly Inserted by Act No. 4701, Jan. 5, 1994]
ARTICLE 173-6 (OFFICERS)
(1) The officers of the Depository shall be the president, managing
director,
director and auditor.
(2) The president shall be appointed by the general meeting of
stockholders, but he shall be subject to approval of the Minister of
Finance and Economy. (Amended by Act No. 5736, Feb. 1, 1999)
(3) The standing auditor shall be appointed by the general meeting of
stockholders. (Newly Inserted by Act No. 5736, Feb. 1, 1999)
[This Article Newly Inserted by Act No. 4701, Jan. 5, 1994]
ARTICLE 173-7 (DESIGNATION OF SECURITIES TO BE DEPOSITED)
(1) The securities which may be deposited at the Depository
(hereinafter referred to as "securities to be deposited"), shall be
designated by the Depository.
(2) Deleted. (by Act No. 5736, Feb. 1, 1999)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 173-8 (NOTIFICATION OF DETAILS OF ISSUANCE AND DETAILS OF SECURITIES
STOLEN, LOST OR DESTROYED)
(1) In case where an issuer of securities to be deposited issues newly
securities, the issuer shall notify the type of such securities and
other matters as prescribed by the Ordinance of the Ministry of Finance
and Economy to the Depository without delay. (Amended by Act No.
5539, May 25, 1998)
(2) In case where an issuer of securities to be deposited is notified
of orders with respect to the seizure, provisional seizure or
provisional disposition of securities or receives a report that the
securities are stolen, lost or destroyed (including public
summons and nullification judgment pursuant to the Civil Procedure
Act), such issuer shall notify the type of such securities and other
matters as prescribed by the Ordinance of the Ministry of Finance and
Economy to the Depository without delay. (Amended by Act No. 5539, May
25, 1998; Act No. 6423, Mar. 28, 2001)
(3) The Depository which has received the notifications pursuant to
paragraphs (1) and (2) shall make public the details of such reports.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 174 (DEPOSITION IN DEPOSITORY, ETC.)
(1) Any person who intends to deposit securities in the Depository,
shall open an account in the Depository. (Amended by Act No. 4701, Jan.
5, 1994)
(2) Any person who has opened an account pursuant to paragraph (1)
(hereinafter referred to as a "depositor"), may deposit securities
which he holds and has been deposited by his customers in the
Depository with the consent of customers. (Amended by Act No. 4701,
Jan. 5, 1994)
(3) The Depository shall prepare and keep the depositors account book
in which the following matters are stated, but shall establish therein
a distinction between the portion owned by depositors and the portion
deposited by customers: (Amended by Act No. 4701, Jan. 5, 1994; Act No.
5254, Jan. 13, 1997; Act No. 5539, May 25, 1998)
1.Name and address of a depositor;
2.Type and number of securities which are deposited (hereinafter
referred to as "deposited securities") and the name of an issuer; and
3.Other matters as prescribed by the Ordinance of the Ministry of
Finance and
Economy.
(4) The Depository may keep deposited securities in a state mixed by
type and item. (Amended by Act No. 4701, Jan. 5, 1994)
(5) In case where a depositor or his customer accepts or subscribes for
securities or requests issuance of securities based on other grounds,
an issuer of securities may, upon a request of the depositor or his
customer, issue or register (this refers to a registration pursuant to
the State Bond Act or the Registration of Bonds and Debentures Act;
hereinafter the same shall apply) securities by the name of the
Depository in lieu of the depositor or his customer. (Newly Inserted by
Act No. 4469, Dec. 31, 1991; Act No. 4701, Jan. 5, 1994; Act No. 5254,
Jan. 13, 1997)
[This Article Wholly Amended by Act No. 3945, Nov. 28, 1987]
ARTICLE 174-2 (DEPOSITION, ETC. TO DEPOSITOR BY CUSTOMERS)
(1) Any depositor who redeposits securities deposited by customers in
the Depository, shall prepare and keep the customers account book in
which the following matters are stated: (Amended by Act No. 4701, Jan.
5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998)
1.Names and addresses of customers;
2.Types and number of deposited securities, and names of issuers; and
3.Other matters as prescribed by the Ordinance of the Ministry of
Finance and Economy.
(2) When a depositor has stated matters referred to in paragraph (1),
he shall deposit without delay securities in the Depository specifying
that such securities are deposited by customers. (Amended by Act No.
4701, Jan. 5, 1994; Act No. 5254,
Jan. 13, 1997)
(3) When a depositor has stated matters referred to in paragraph (1),
he shall keep the securities separately from his own until he deposits
them in the Depository pursuant to paragraph (2). (Amended by Act No.
4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997)
(4) The securities stated in the customers account book pursuant to
paragraph (1) shall be considered deposited in the Depository at the
time of statement. (Amended by Act No. 4701, Jan. 5, 1994) [This
Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 174-3 (EFFECT OF STATEMENT IN ACCOUNT BOOK)
(1) Persons who are stated in the customers account book and the
depositors account book shall be considered to hold the respective
securities.
(2) If a transfer between accounts is stated in the customers account
book and the depositors account book, the purpose of which is a
transfer of or creation of pledge on securities, the statement of such
transfer or creation shall have the same effect as if the securities
had been delivered.
(3) Notwithstanding the provisions of Article 3 (2) of the Trust Act, a
trust of deposited securities may oppose against the third person, by
stating that they are the trust properties in the customers account
book or the depositors account book.
(4) In case where a sale and purchase transaction of stocks on the
securities market or Association brokerage market is settled by means
of a transfer between accounts in the customers account book or the
depositors account book before the stock certificates thereof are
issued, notwithstanding the provisions of Article 335 (3) of the
Commercial Act, it shall be effective against an issuing company.
(Newly
Inserted by Act No. 5254, Jan. 13, 1997)
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 174-4 (PRESUMPTION OF RIGHT, ETC.)
(1) Customers of a depositor and the depositor shall be presumed to
have co-ownership share on the deposited securities according to the
types, items and quantity of securities stated respectively in the
customers account book and the depositors account book.
(2) Any customer of a depositor or his pledgee may request at any time
the depositor to return the deposited securities corresponding to a
co-ownership share of the customer, and the depositor may request the
Depository to return the deposited securities corresponding to his
co-ownership share. In this case, a consent of the pledgee shall be
required with respect to the deposited securities which are the object
of the right of pledge. (Amended by Act No.
4701, Jan. 5, 1994)
(3) The Depository may, in case where such causes as prescribed by the
Presidential Decree occur, limit the return or inter-account transfer
of the portion deposited by customers among deposited securities under
the conditions as designated by the Ordinance of the Ministry of
Finance and Economy. (Newly Inserted by Act No. 5254, Jan. 13, 1997;
Act No 5423, Dec. 13, 1997; Act No. 5539, May 25, 1998; Act No. 6423,
Mar. 28, 2001)
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 174-5 (LIABILITY FOR COVERAGE)
(1) In case where the deposited securities becomes insufficient, the
Depository and
the depositor as prescribed in Article 174-2 (1) shall make up such
insufficient portion according to the methods and procedure as
prescribed by the Presidential Decree. In this case, the Depository and
the depositor may exercise a right to indemnification to a person who
is liable for such insufficiency. (Amended by Act No. 4701, Jan. 5,
1994; Act No. 5254, Jan. 13, 1997)
(2) The depositor as referred to in paragraph (1) shall bear a
liability for coverage pursuant to paragraph (1), even after closing
the account as prescribed in Article 174 (1): Provided, That in case
where five years has elapsed from the time at which the account is
closed, he shall be exempted from the liability.
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 174-6 (EXERCISE OF RIGHT TO DEPOSITED SECURITIES)
(1) The Depository may exercise the right to the deposited securities
according to a request of a depositor or customer. In this case, a
request of a customer shall be made through the depositor. (Amended by
Act No. 4701, Jan. 5, 1994)
(2) The Depository may request a change of entry in the register or a
registration in its own name with respect to the deposited securities.
(Amended by Act No. 5254, Jan. 13, 1997)
(3) With respect to stocks with regard to which the entry in the
register is changed in the name of the Depository pursuant to paragraph
(2), it may exercise the right as a stockholder as to matters as
prescribed in Article 358-2 of the Commercial Act, as to statement in
the register of stockholders and as to stock certificates, even though
there is no request by the depositor. (Amended by Act No. 4701, Jan. 5,
1994)
(4) In case where a company issuing stock certificates makes a
notification or public notice on a convocation of the general meeting
of stockholders, with respect
to stockholders holding stock certificates with regard to which the
entry in the register is changed in the name of the Depository, the
company shall notify personally or publicly the particulars concerning
the exercise of voting rights held by the Depository as referred to in
paragraph (5). (Newly Inserted by Act No. 4469, Dec. 31, 1991; Act No.
4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997)
(5) If a stockholder holding stock certificates with regard to which
the entry in the register is changed in the name of the Depository
fails to express his intention to exercise directly or by proxy or not
to exercise his voting right to the Depository not later than five days
before the date of the general meeting of stockholders, the Depository
may exercise such voting right: Provided, That the same shall not apply
to the following cases: (Newly Inserted by Act No. 4469, Dec. 31, 1991;
Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5498,
Jan. 8, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000;
Act No. 6623, Jan. 26, 2002)
1.Where a company issuing the stock certificates fails to make a
notification or public notice on the exercise of voting right by the
Depository pursuant to paragraph (4);
2.Where a company issuing the stock certificates requests the Financial
Supervisory Commission to prevent the Depository from exercising its
voting right;
3.Where subject matters of the general meeting of stockholders fall
under any of matters as prescribed in Articles 360-3, 360-16, 374, 438,
518, 519, 522, 530-3 and 604 of the Commercial Act; and
4.Where a stockholder concerned exercises directly or by proxy his
voting right at the general meeting of stockholders.
(6) Matters with respect to which any company issuing stock
certificates is required to notify the Depository in order for the
Depository to exercise its rights under paragraph (1) and other matters
necessary for the Depository to exercise its voting right under
paragraph (5) shall be prescribed by the Presidential Decree. (Amended
by Act No. 6423, Mar. 28, 2001)
(7) The provisions of paragraph (3) shall apply mutatis mutandis to
registered securities among the deposited securities. (Newly Inserted
by Act No. 6423, Mar. 28, 2001) [This Article Newly Inserted by Act No.
3945, Nov. 28, 1987]
ARTICLE 174-7 (EXERCISE OF RIGHT BY BENEFICIAL OWNER)
(1) Co-owners of stock certificates of deposited securities
(hereinafter referred to as "beneficial owners") shall be considered to
hold stocks equivalent to the co-ownership shares as prescribed in
Article 174-4 (1) in exercising the rights as stockholders.
(2) A beneficial owner may not exercise the right as prescribed in
Article 174-6 (3): Provided, That the same shall not apply with respect
to a notification to stockholders by a company, and an inspection or
transcription of the register of stockholders as prescribed in Article
396 (2) of the Commercial Act.
(3) When a company issuing stock certificates of deposited securities
has fixed a certain period or date pursuant to Article 354 of the
Commercial Act, the company shall notify the Depository of such fact
without delay; and the Depository shall notify a company issuing stock
certificates concerned or a company which conducts change of entry in a
register as an agent of the matters referred to in the following
subparagraphs with respect to beneficial owners on the first day of the
period or on the date (hereafter in this Article referred to as "fixed
date for the closing of register of stockholders") without delay:
(Amended by Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997)
1.Name and address; and
2.Types and number of stocks as prescribed in paragraph (1).
(4) The Depository may request a depositor as prescribed in Article
174-2 (1) to notify matters as referred to in subparagraphs of
paragraph (3) with respect to beneficial owners on the fixed date for
the closing of register of stockholders. In this case, the depositor,
upon receiving the request, shall notify it without delay. (Amended by
Act No. 4701, Jan. 5, 1994)
(5) The provisions of paragraphs (3) and (4) shall apply mutatis
mutandis where the issuer of stocks, etc. whose tender offer statement
was submitted requests the Depository to communicate matters on
beneficial owners in order to know the stockholding status by setting a
specified date. (Newly Inserted by Act No. 5736, Feb. 1, 1999)
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 174-8 (PREPARATION OF REGISTER OF BENEFICIAL OWNERS, ETC.)
(1) Any issuing company or company which conducts change of entry in a
register as an agent shall, upon receiving a notification pursuant to
Article 174-7 (3), prepare and keep a register of beneficial owners,
stating therein the notified matters and the date of notification.
(2) Any statement in a register of beneficial owners relating to stocks
the certificates of which are deposited in the Depository, shall have
the same effect as the statement in a register of stockholders.
(Amended by Act No. 4701, Jan. 5, 1994)
(3) When an issuing company or a company which conducts change of entry
in a register as an agent pursuant to the provisions of paragraph (1)
deems that a person stated in a register of stockholders as a
stockholder is the same as a person stated in a register of beneficial
owners as a beneficial owner, the issuing company
or the company which conducts change of entry in a register as an agent
shall sum up the number of stocks on the register of stockholders and
those on the register of beneficial owners for the exercise of rights
as a stockholder.
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 174-9 (CIVIL EXECUTION)
Matters necessary for the compulsory execution, execution of
provisional seizure and provisional disposition, or auction with
respect to the deposited securities, shall be determined by the Supreme
Court Regulations.
[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]
ARTICLE 174-10 (CERTIFICATE OF BENEFICIAL OWNERSHIP)
(1) In case where a depositor or a customer of depositor requests the
Depository to issue a document certifying the deposition of securities
(hereinafter referred to as a "certificate of beneficial ownership") in
order to exercise the right as a stockholder, the Depository may issue
the certificate of beneficial ownership under the conditions as
prescribed by the Ordinance of the Ministry of Finance and Economy. In
this case, a request of the customer shall be made through the
depositor. (Amended by Act No. 5539, May 25, 1998)
(2) The Depository shall, in case of issuing the certificate of
beneficial ownership pursuant to paragraph (1), notify the issuing
company concerned of such fact without delay.
(3) In case where a depositor or a customer of depositor has filed the
certificate of beneficial ownership which is issued pursuant to
paragraph (1) with the issuing company, notwithstanding the provisions
of Article 337 (1) of the Commercial Act, the depositor or the customer
of depositor may set up against the issuing company.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 174-11 (SPECIAL CASE FOR DEPOSITION IN FOREIGN DEPOSITING INSTITUTIONS
AND FOREIGN CORPORATIONS, ETC.)
(1) The provisions of Articles 174-2, 174-5, 174-6 (4) through (6),
1747 and 174-8 (3) shall not apply to foreign depositing institutions:
Provided, That this shall not apply where any foreign depositing
institution makes a request for its application. (Amended by Act No.
5736, Feb. 1, 1999)
(2) In the event that an issuer of deposited securities is a foreign
corporation, etc., the provisions of Articles 174 (5), 174-6 (4)
through (6), 174-7, 174-8 and 174-10 shall not apply: Provided, That
the same shall not apply to a case where the relevant foreign
corporation, etc. requests the application thereof. (Newly Inserted by
Act No. 6423, Mar. 28, 2001)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 174-12 (REPORT AND CONFIRMATION, ETC.)
The Depository may request a depositor to file the report or data
concerning the depositing business, inspect the relating account books,
or confirm the status of custody, etc. of securities kept under the
depositor's own custody.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 175 (REPORT ON REGULATIONS)
Where the Depository makes, changes, or repeals the regulations
relating to deposition and other business, it shall file a report
thereof with the Financial Supervisory Commission.
(Amended by Act No. 6176, Jan. 21, 2000)
[This Article Wholly Amended by Act No. 5736, Feb. 1, 1999]
ARTICLE 176
Deleted. (by Act No. 5736, Feb. 1, 1999)
ARTICLE 176-2 (CONTROL OF SECURITIES)
(1) A listed corporation, Association-registered corporation and
company which conducts change of entry in a register as an agent
(referring to a person who obtains a license pursuant to Article 180
(1); hereinafter the same shall apply) shall be subject to the
Securities Handling Regulations as determined by the Depository with
respect to printed form, issuance, retirement, issuance for
replacement, effacement, and other matters regarding control of
securities.
(2) The Depository may control the printed forms of securities which
any listed corporation or Association-registered corporation keeps as
spares for issuance of securities (hereinafter referred to as "spare
certificates").
(3) The Depository may, if it deems necessary, ask any listed
corporation, Association-registered corporation and any company which
conducts change of entry in a register as an agent to submit data
regarding the procedure of handling securities and the control of spare
certificates pursuant to paragraph (1) and may direct it's staff
personnels to confirm the data.
(4) When an unlisted corporation intends to use printed forms pursuant
to the Securities Handling Regulations of the Depository with respect
to securities of the corporation concerned, it shall obtain the
approval of the Depository. In this case, the provisions of paragraphs
(1) through (3) shall apply mutatis mutandis.
(5) If any listed corporation becomes an unlisted corporation, the
provisions of
paragraphs (1) through (3) shall apply mutatis mutandis to such
corporation until all of printed forms pursuant to the Securities
Handling Regulations of the Depository and the securities issued by
using the printed forms is entirely effaced.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 177
Deleted. (by Act No. 3945, Nov. 28, 1987)
ARTICLE 178 (OFFICERS, SUPERVISION, ETC.)
The provisions of Articles 59 through 61, 74 (2), 80, 81, 83, 117 and
157 shall apply mutatis mutandis to the Depository. (Amended by Act No.
5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000)
[This Article Wholly Amended by Act No. 5498, Jan. 8, 1998]
SECTION 4 ORDER MATCHING COMPANY AND TRANSFER AGENT
ARTICLE 179 (ORDER MATCHING COMPANY)
(1) Any person who may conduct the business of matching orders of sale
and purchase transactions on the securities market shall be a stock
company which obtains the license of the Financial Supervisory
Commission. (Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May
25, 1998; Act No. 5736, Feb. 1, 1999; Act No. 5982, May 24, 1999)
(2) Any person who obtained the license pursuant to paragraph (1)
(hereinafter
referred to as an "order matching company") may conduct the business of
purchase and sale of securities which is necessary in performing the
function of order matching on the securities market.
(3) Any order matching company shall be subject to inspection by the
Stock Exchange with respect to its business and properties.
(4) The provisions of Articles 53, 149, 151 (1), 153, 154, 155 and 158
shall apply mutatis mutandis to an order matching company. (Amended by
Act No. 5498, Jan. 8, 1998)
ARTICLE 180 (TRANSFER AGENT)
(1) A person who may conduct the business of changing entry in a
register as an agent shall be a stock company registered with the
Financial Supervisory Commission. (Amended by Act No. 5254, Jan. 13,
1997; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999; Act No.
5982, May 24, 1999)
(2) A transfer agent may conduct business of paying dividends,
interests and redemption in connection with securities and issuing
securities as an agent. (Amended by Act No. 3541, Mar. 29, 1982; Act
No. 5254, Jan. 13, 1997)
(3) The provisions of Articles 53, 70-2 (4), 70-11, 149, 151 (1), 153,
154, 155 (2), and 158 shall apply mutatis mutandis to a transfer agent.
(Amended by Act No. 5736, Feb. 1, 1999)
ARTICLE 181 (LICENSE AND SUPERVISION OF OTHER ORGANIZATIONS RELATING TO
SECURITIES)
(1) Any person who intends to establish an organization which is
composed of
investors in securities, stock-listed corporations, or other persons
prescribed by the Presidential Decree for the purpose of assuring
public interest, protecting investors or maintaining orderly securities
market, shall obtain the license of the Minister of Finance and Economy
under the conditions as prescribed by the Presidential Decree. (Amended
by Act No. 3541, Mar. 29, 1982; Act No. 5254, Jan. 13, 1997; Act No.
5539, May 25, 1998; Act No. 5736, Feb. 1, 1999)
(2) The provisions of Articles 53, 151 (1) and 168 shall apply mutatis
mutandis to organizations relating to securities which are established
with the license pursuant to paragraph (1). (Amended by Act No. 5254,
Jan. 13, 1997)
CHAPTER IX CONTROL OF LISTED CORPORATIONS, ETC.
SECTION 1 DISCLOSURE BY LISTED CORPORATIONS, ETC.
ARTICLE 182
Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLES 183 THROUGH 185
Deleted. (by Act No. 3541, Mar. 29, 1982)
ARTICLE 186 (DUTY OF REPORT AND DISCLOSURE OF LISTED CORPORATION, ETC.)
(1) Where a listed corporation or an Association-registered corporation
falls under any of the following subparagraphs, such corporation shall
report to the Financial Supervisory Commission and the Stock Exchange
or the Association such fact or the contents of a resolution adopted at
the meeting of the board of directors under the conditions as
prescribed by the Presidential Decree without delay: (Amended by Act
No. 3541, Mar. 29, 1982; Act No. 3945, Nov. 28, 1987; Act No. 4701,
Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998;
Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000; Act No. 6423,
Mar. 28, 2001)
1.Where any issued bill or check is dishonored, or when transaction
with banks is suspended or prohibited;
2.Where the business is suspended in part or in whole;
3.Where a petition for the reorganization procedure of the corporation
is filed or the reorganization thereof is virtually commenced pursuant
to the provisions of relevant Act;
4.Where there is a resolution of the board of directors with respect to
changing the objective of business;
5.Where it suffers enormous damages caused by a disaster;
6.Where a lawsuit which may have great influence upon the listed
securities or the securities registered with the Association is filed
against it;
7.Where any of the events referred to in Articles 374, 522, 527-2,
527-3 and 530-2 of the Commercial Act occurs;
8.Where causes for dissolution pursuant to the provisions of relevant
Act take place;
9.Where there is a resolution of the board of directors with respect to
increase or
decrease of capital or the retirement of stocks;
10.Where the operation is suspended or is unable to be continued due to
special causes;
11.Where a correspondent bank commences a control of the corporation
concerned;
12.Where there is a resolution of the board of directors, or a decision
of the representative director or other person who is prescribed by the
Presidential Decree with respect to the acquisition and disposal of the
treasury stocks; and
13.Where the fact, which is prescribed by the Presidential Decree as
the matters having serious effects on the management and properties,
etc. of corporation other than subparagraphs 1 through 12, occurs.
(2) The Stock Exchange or the Association may, if it is necessary for
the fair transaction of securities and the protection of investors,
request a listed corporation or an Association-registered corporation
to confirm as to whether a rumor and news concerning such listed
corporation or such Association-registered corporation is true or not;
and the Stock Exchange or the Association may, if the price or the
trading volume of securities issued by the listed corporation or the
Association-registered corporation is changed remarkably, request such
corporation to disclose as to whether there is important information as
prescribed in Article 188-2. In this case, the corresponding
corporation shall comply with it without delay, except in case where it
is difficult to make such disclosure due to other Acts and subordinate
statutes, natural disaster and/or other reasons similar thereto.
(Amended by Act No. 4469, Dec. 31, 1991; Act No. 6176, Jan. 21, 2000)
(3) If a listed corporation or an Association-registered corporation
fails to discharge faithfully the duty of report pursuant to paragraph
(1) or to comply with a request for confirmation or disclosure pursuant
to paragraph (2), the Stock Exchange or the Association shall notify it
to the Financial Supervisory Commission so as to take a measure as
prescribed in the provisions of Article 193. (Newly
Inserted by Act No. 3945, Nov. 28, 1987; Act No. 4469, Dec. 31, 1991;
Act No. 5498, Jan. 8, 1998; Act No. 6176, Jan. 21, 2000)
(4) The provisions of Articles 8 (2) and 14 through 16 shall apply
mutatis mutandis to the case of the report pursuant to the provisions
of paragraph (1). (Newly Inserted by Act No. 5254, Jan. 13, 1997; Act
No. 5736, Feb. 1, 1999)
(5) Where the Financial Supervisory Commission, the Stock Exchange or
the Association deems it necessary to promptly inform an investor of
the contents of the matters listed in paragraph (1) 1, 3, 6, 8 and 11
and matters requested to be confirmed or disclosed under paragraph (2)
as they threaten to have important effect on the investors' judgement
to invest, it may request any administrative agency or other related
agencies to provide or exchange necessary information pursuant to the
Presidential Decree. In this case, the agency which has received such
request shall cooperate with it unless there exists any special cause.
(Newly Inserted by Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21,
2000)
ARTICLE 186-2 (SUBMISSION OF ANNUAL BUSINESS REPORT, ETC.)
(1) A stock-listed corporation, Association-registered corporation
and/or corporations as prescribed by the Presidential Decree shall
submit an annual business report to the Financial Supervisory
Commission and, the Stock Exchange or the Association, as the case may
be, within 90 days after the lapse of each business year: Provided,
That the same shall not apply to the case as determined by the
Presidential Decree. (Amended by Act No. 5498, Jan. 8, 1998)
(2) The objective, trade name, contents of business and matters
concerning finance of a corporation and other matters as prescribed by
the Presidential Decree shall be stated in an annual business report
under paragraph (1). (Amended by Act No. 5539, May 25, 1998; Act No.
6176, Jan. 21, 2000)
(3) Where a corporation is subject to submission of a business report
under paragraph (1) for the first time, it shall promptly (by the time
limit for submission, where a corporation is subject to submission of
an annual business report during the period to submit the business
report referred to in paragraph (1)) submit the annual business report
of the immediately preceding business year to the Financial Supervisory
Commission and the Stock Exchange or the Association: Provided, That
this shall not apply where the corporation has already disclosed the
matters equivalent to the annual business report of the immediately
preceding business year through a registration statement of securities,
etc. (Amended by Act No. 5736, Feb. 1, 1999)
(4) The annual business report pursuant to paragraph (1) shall be
prepared in accordance with such method and form determined by the
Financial Supervisory Commission by type and line of business. (Amended
by Act No. 5423, Dec. 13, 1997; Act No. 5539, May 25, 1998; Act No.
6176, Jan. 21, 2000)
(5) Where a corporation which has to submit an annual business report
pursuant to paragraph (1) is a company affiliated with a conglomerate
which has to prepare conglomerate combined financial statements
pursuant to Article 1-3 of the Act on External Audit of Stock
Companies, it shall submit conglomerate combined financial statements
as prescribed by subparagraph 3 of Article 1-2 of the same Act to the
Financial Supervisory Commission and the Stock Exchange or the
Association within six months from the end of a business year. (Newly
Inserted by Act No.
5736, Feb. 1, 1999)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 186-3 (SUBMISSION OF SEMIANNUAL REPORT, ETC.)
A corporation which is under obligation to submit an annual report
pursuant to the provisions of Article 186-2 (1), shall submit a
business report for 6 months from the beginning of a business year
(hereinafter referred to as a "semiannual report") and business reports
for 3 months and 9 months from the beginning of a business
year (hereinafter referred to as "quarterly reports"), respectively, to
the Financial Supervisory Commission and the Stock Exchange or the
Association, as the case may be, within 45 days after the lapse of the
period. (Amended by Act No. 5498, Jan. 8, 1998; Act No. 5736, Feb. 1,
1999)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 186-4 (SPECIAL TREATMENT CONCERNING FOREIGN CORPORATION, ETC.)
Notwithstanding the provisions of Articles 186-2 and 186-3, different
regulations, such as providing for different period of submission,
etc., may apply with respect to a foreign corporation, etc. under the
conditions as prescribed by the Presidential Decree.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 186-5 (PROVISIONS APPLIED MUTATIS MUTANDIS)
The provisions of Articles 8 (2), 11 (1) through (3), 14 through 16,
18, 19, and 20 shall apply mutatis mutandis to the annual business
report, semiannual business report, and quarterly business report.
(Amended by Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 187
Deleted. (by Act No. 5254, Jan. 13, 1997)
SECTION 2 PROHIBITION OF UNFAIR TRADE, ETC.
ARTICLE 188 (DISGORGEMENT OF SHORT-TERM SALES MARGIN OF INSIDER, ETC.)
(1) Officers, employees or major stockholders (referring to those who
hold stocks or contribution certificates of 10/100 or more of the total
number of voting stocks issued or of the total amount of contributions
for their own account regardless of the title thereof, and those who
are prescribed by the Presidential Decree; hereinafter the same shall
apply) of a stock-listed corporation or Association-registered
corporation shall not sell certificates of stocks (including
contribution certificates), convertible bonds, bonds with warrants,
warrants and securities as prescribed by the Ordinance of the Ministry
of Finance and Economy (hereinafter referred to as "stock certificates,
etc.") of the corporation listed on the Stock Exchange or registered
with the Association, unless they own the stock certificates, etc.
(Amended by Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997;
Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999)
(2) Where officers, employees or major stockholders of a stock-listed
corporation or Association-registered corporation gain any profit by
selling stock certificates, etc. of the corporation concerned within
six months after purchasing them, or by purchasing such stock
certificates within six months after selling them, the corporation
concerned may request such officers, employees or major stockholders to
give such profit to the corporation. In this case, necessary matters
relating to standards for calculation of such profit and procedures for
return, etc. shall be determined by the Presidential Decree. (Amended
by Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997; Act No.
5423, Dec. 13, 1997; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1,
1999; Act No. 6176, Jan. 21, 2000)
(3) Stockholders of the corporation concerned or the Securities Futures
Commission may demand that such corporation make the request pursuant
to the provisions of paragraph (2), and such stockholders or the
Securities Futures Commission may, unless the corporation concerned
makes such request within two months after the date on which such
stockholders or the Securities Futures Commission have demanded such
request, make such request by subrogating the corporation concerned.
(Amended by Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998)
(4) When stockholders or the Securities Futures Commission instituting
a lawsuit according to the provisions of paragraph (3) wins the
lawsuit, the Securities Futures Commission or such stockholders may
claim the legal cost and other actual expenses actually incurred in the
lawsuit against the corporation concerned. (Newly Inserted by Act No.
3541, Mar. 29, 1982; Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8,
1998)
(5) The right referred to in paragraphs (2) and (3) shall lapse, unless
the right is exercised within two years after the date on which such
profit is gained.
(6) Any officer or major stockholder of a stock-listed corporation or
Association-registered corporation shall report the situation of such
stocks of the corporation concerned, held by him for his own account
regardless of the title thereof to the Securities Futures Commission,
and the Stock Exchange or the Association under the conditions as
designated by the Presidential Decree within ten days after he becomes
an officer or major stockholder; and if the number of stocks held by
him is changed, he shall report such fact to the Securities Futures
Commission and the Stock Exchange or the Association under the
conditions as prescribed by the Presidential Decree within the 10th day
of the month following the month in which the date on which such change
occurs is included. (Amended by Act No. 4469, Dec. 31, 1991; Act No.
5254, Jan. 13, 1997; Act No. 5423, Dec. 13, 1997; Act No. 5498, Jan. 8,
1998; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999; Act No.
6176, Jan. 21, 2000)
(7) The Securities Futures Commission and the Stock Exchange or the
Association shall keep the report pursuant to paragraph (6), and shall
make it available for public inspection. (Newly Inserted by Act No.
3541, Mar. 29, 1982; Act No. 4469, Dec. 31, 1991; Act No. 5498, Jan. 8,
1998; Act No. 5736, Feb. 1, 1999)
(8) The provisions of paragraph (2) shall not apply in such case as
prescribed by the Presidential Decree taking into consideration of the
nature of selling or purchasing which was carried out in the capacity
of an officer, employee or major
stockholder, and in such case where a major stockholder does not hold
such capacity at a time when he sells or purchases stocks. (Amended by
Act No. 4469, Dec. 31, 1991)
(9) The provisions of paragraphs (2) and (3) shall apply mutatis
mutandis to a securities company which makes arrangements for a public
offering of new or outstanding securities or underwrites stocks issued
by a stock-listed corporation or Association-registered corporation
during the period as determined by the Presidential Decree. (Amended by
Act No. 3945, Nov. 28, 1987; Act No. 4469, Dec. 31, 1991; Act No. 5254,
Jan. 13, 1997; Act No. 5736, Feb. 1, 1999)
ARTICLE 188-2 (PROHIBITION OF USING UNDISCLOSED INFORMATION)
(1) Any person who is informed of material information which is
undisclosed to the public in relation with affairs, etc. of a listed
corporation or Association-registered corporation (including
corporations listed or registered with the Association within six
months) in the course of performing his duties, from among those who
fall under any of the following subparagraphs (including those for whom
one year has not passed after they become not to fall under any of
subparagraphs 1 through 5 of this paragraph), and those who are
informed of such information from him, shall not use or have another
person use the information in connection with sale and purchase or any
other transaction of securities issued by the corporation concerned:
(Amended by Act No. 5254, Jan. 13, 1997; Act No. 5521, Feb. 24, 1998;
Act No. 5736, Feb. 1, 1999)
1.The corporation concerned and its officers, employees and agents;
2.Major stockholders of the corporation concerned;
3.A person who has the authority pursuant to Acts and subordinate
statutes of license, authorization, direction, supervision or other
authorities with respect to
the corporation concerned;
4.A person who entered into a contract with the corporation concerned;
and
5.An agent, employee, and other staff personnel of a person who falls
under any of subparagraphs 2 through 4 (in case where a person who
falls under any of subparagraphs 2 through 4 is a corporation, the
officers, employees and agents of such corporation).
(2) The term "material information which is undisclosed to the public"
in paragraph (1) means information which may have important effect on
investors' judgment on investment and is undisclosed yet to the public
by the corporation concerned under the conditions as prescribed by the
Ordinance of the Ministry of Finance and Economy from among any
information on fact, etc. falling under any subparagraph of Article 186
(1). (Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25,
1998)
(3) The provisions of paragraphs (1) and (2) shall apply mutatis
mutandis to the case of performing tender offer pursuant to Article 21.
In this case, the term "the corporation concerned" in the main sentence
of paragraph (1) shall be considered as the term "issuer of securities
which are subject to tender offer"; the term "material information", as
the term "information on carrying out or stopping tender offer"; and
the term "the corporation concerned" in each subparagraph of paragraph
(1), as the term "tender offerer". (Amended by Act No. 5254, Jan. 13,
1997)
[This Article Newly Inserted by Act No. 4469, Dec. 31, 1991]
ARTICLE 188-3 (LIABILITY FOR DAMAGES AGAINST USING UNDISCLOSED INFORMATION)
(1) Any person who violates the provisions of Article 188-2, shall be
liable for damages which a person who has made a purchase or sale of
securities or other transaction suffers from that transaction.
(2) The claim for damages pursuant to paragraph (1) shall be
extinguished by prescription, unless a claimant exercises such claim
for damages for one year after the claimant is informed of the fact
that an act in violation of the provisions of Article 188-2 is
committed or for three years after the offense takes place. (Amended by
Act No. 5736, Feb. 1, 1999)
[This Article Newly Inserted by Act No. 4469, Dec. 31, 1991]
ARTICLE 188-4 (PROHIBITION OF UNFAIR TRANSACTION SUCH AS MARKET MANIPULATION)
(1) No person shall do any acts which fall under any of the following
subparagraphs for the purpose of creating a misleading appearance of
active trading or causing any person to make a false judgment with
respect to the sale and purchase transaction of securities listed on
the securities market or registered on the Association brokerage
market:
1.Selling securities after a person has conspired in advance with other
person that other person purchases securities at the same time when the
person sells securities and at the same price;
2.Purchasing securities after a person has conspired in advance with
other person that other person sells securities at the same time when
the person purchases securities and at the same price;
3.Making fictitious sale and purchase transaction which does not
accompany the transfer of ownership in the securities transaction; and
4.Entrusting or being entrusted with action as prescribed in
subparagraphs 1 through 3 of this paragraph.
(2) No person shall do any acts which fall under any of the following
subparagraphs
for the purpose of inducing the sale and purchase transaction of
securities on the securities market or Association brokerage market:
1.To effect, to entrust or to be entrusted with, alone or in conspiracy
with other persons, sale and purchase transactions in the securities,
creating a false or misleading appearance of active trading or making
the price of such securities fluctuate;
2.Disseminating the rumor that the price of concerned securities
fluctuates by his or other person's manipulation; and
3.Making willfully the representation which is false or misleading with
respect to important matters in selling or purchasing the concerned
securities.
(3) No person shall effect, entrust or to be entrusted with,
independently or jointly, the sale and purchase transaction of
securities on the securities market or Association brokerage market,
for the purpose of pegging or stabilizing price of securities in
violation of the conditions as prescribed by the Presidential Decree.
(4) With respect to purchase and sale or other transaction of
securities, no person shall commit an act which falls under any of the
following subparagraphs:
1.Disseminating intentionally the false quotations or untrue facts or
other rumors or using a deceptive scheme for the purpose of gaining
unjust benefits; and
2.Intending to gain money or other benefits which has property value by
inducing misunderstanding of other persons, through false
representation of any material fact or making use of document in which
any fact required is omitted.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 188-5 (LIABILITY FOR DAMAGES AGAINST MARKET MANIPULATION)
(1) A person who violates the provisions of Article 188-4 shall be
liable for damages which a person who has effected a sale and purchase
transaction of securities or has entrusted such securities transaction
at the price formed due to such violative act on the securities market
or Association brokerage market suffers from such transaction or
entrustment.
(2) The claim for damages pursuant to paragraph (1) shall be
extinguished by prescription, unless a claimant exercises such claim
for damages for one year after the claimant is informed of the fact
that an act in violation of the provisions of Article 188-4 is
committed or for three years after the offense has taken place.
(Amended by Act No. 5736, Feb. 1, 1999)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
SECTION 3 SPECIAL TREATMENT FOR LISTED CORPORATION, ETC.
ARTICLE 189 (RETIREMENT OF STOCKS)
(1) Any stock-listed corporation or any Association-registered
corporation may, if the articles of incorporation of such corporation
provide that such corporation may retire its stocks based on a
resolution of the board of directors under Article 434 of the
Commercial Act as dividends for its stockholders, retire its stocks
based on a resolution of the boards of directors except as otherwise
provided for in the provisions of other Acts.
(2) In the event that it is intended to retire stocks under paragraph
(1), the board of directors shall vote on matters falling under each of
the following subparagraphs. In this case, the stocks to be retired
shall be limited to stocks acquired after a
resolution of the board of directors:
1.Kinds and numbers of stocks to be retired;
2.Total value of stocks to be acquired for retirement; and
3.Period for which it is intended to acquire stocks. In this case, such
period shall expire prior to a regular general meeting of stockholders
called for the first time after the resolution of the board of
directors.
(3) Any stock-listed corporation or any Association-registered
corporation shall, if it acquires its stocks for the purpose of
retiring such stocks under paragraph (1), acquire such stocks according
to the standards falling under each of the following subparagraphs:
1.The stocks shall be acquired according to the method of any
subparagraph of Article 189-2 (1). In this case, where the stocks are
acquired according to the method of subparagraph 1 of the same
paragraph, the acquisition period therefor and method thereof shall be
made to conform to the standards prescribed by the Presidential Decree;
and
2.The amount to be acquired for retiring stocks shall not exceed the
amount prescribed by the Presidential Decree within limits of dividends
available for stockholders at the end of the relevant business year
under Article 462 (1) of the Commercial Act.
(4) Any stock-listed corporation or any Association-registered
corporation shall, if it retires its stocks under paragraph (1), report
the matters of each subparagraph of paragraph (2) and the fact of
retiring such stocks to a regular general meeting of stockholders
called for the first time after a resolution of the board of directors
with respect to the retirement of such stocks.
(5) In the event that any stock-listed corporation or any
Association-registered
corporation acquires stocks and retires them in violation of the limits
as prescribed in paragraph (3) 2, directors who vote for retiring such
stocks at a meeting of the board of directors shall be jointly and
severally liable for compensating for the value accruing from the
acquisition of the stocks in excess of the limits: Provided, That the
same shall not apply to a case where such directors prove that the
stocks are acquired and retired in excess of the limits despite their
reasonable care.
[This Article Newly Inserted by Act No. 6423, Mar. 28, 2001]
ARTICLE 189-2 (ACQUISITION OF TREASURY STOCKS)
(1) Any stock-listed corporation or any Association-registered
corporation shall acquire treasury stocks (excluding the acquisition
under the provisions of Article 341 of the Commercial Act) in a manner
falling under any of the following subparagraphs under its name and for
its own account. In this case, the acquisition amount shall be within
the limit of allowing any dividend in accordance with the provisions of
Article 462 (1) of the Commercial Act: (Amended by Act No. 6176, Jan.
21, 2000; Act No. 6423, Mar. 28, 2001)
1.A manner in which the acquisition is made on the securities market or
Association brokerage market; and
2.A manner in which the open purchase is made in accordance with the
provisions of Chapter IV.
(2) Where a stock-listed corporation or an Association-registered
corporation acquires treasury securities through money trust contract
as determined by the Presidential Decree, an amount calculated
according to what is prescribed by the Presidential Decree shall be
deemed the acquisition amount as described in the provisions of the
later part of paragraph (1). (Amended by Act No. 6176, Jan. 21, 2000)
(3) Where a stock-listed corporation or an Association-registered
corporation acquires the treasury stocks (including the conclusion of a
trust contract, etc.; hereafter the same in this Article shall apply)
pursuant to paragraphs (1) and (2) or intends to dispose of the
treasury stocks acquired pursuant to paragraphs (1) and (2) (including
the cancellation of a trust contract, etc.; hereafter the same in this
Article shall apply), it shall report the matters relating to the
acquisition or disposal of treasury stocks to the Financial Supervisory
Commission and, the Stock Exchange, or the Association according to the
criteria as prescribed by the Presidential Decree, such as necessary
conditions and procedure, etc. (Amended by Act No. 5254, Jan. 13, 1997;
Act No. 5498, Jan. 8, 1998; Act No. 5521, Feb. 24, 1998; Act No. 5736,
Feb. 1, 1999; Act No. 6423, Mar. 28, 2001)
(4) Where a stock-listed corporation or an Association-registered
corporation acquires the treasury stocks in excess of the limit as
referred to in paragraph (1) due to a reduction of the limit to
distribute the dividend, the stock-listed corporation shall dispose of
the excessive portion within such period as determined by the
Presidential Decree from that day. (Amended by Act No. 5254, Jan. 13,
1997; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999; Act No.
6423, Mar. 28, 2001)
(5) The provisions of Articles 14 (1), 15, 16, 19 and 20 shall apply
mutatis mutandis in the case of acquiring or disposing of the treasury
stocks. (Newly Inserted by Act No. 5254, Jan. 13, 1997; Act No. 5736,
Feb. 1, 1999)
(6) The provisions of Article 341-2 (1) of the Commercial Act shall not
apply to the case in which a stock-listed corporation or an
Association-registered corporation acquires treasury securities
pursuant to the provisions of paragraph (1). (Newly Inserted by Act No.
6176, Jan. 21, 2000)
[This Article Newly Inserted by Act No. 4701, Jan. 5, 1994]
ARTICLE 189-3 (CAPITAL INCREASE BY PUBLIC OFFERING)
(1) A stock-listed corporation or Association-registered corporation
may issue new stocks by public offering as prescribed in the
Presidential Decree by a resolution of the board of directors in
accordance with the articles of association of the corporation.
(Amended by Act No. 5736, Feb. 1, 1999)
(2) In case where new stocks are issued by public offering pursuant to
paragraph (1), the price of the new stocks shall not be less than the
price calculated by the methods as prescribed by the Presidential
Decree.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 189-4 (STOCK OPTIONS)
(1) Notwithstanding the provisions of Articles 340-2 through 340-5 of
the Commercial Act, any stock-listed corporation or any
Association-registered corporation shall offer newly issued stocks at
the pre-set price to officers and employees of such corporation or its
affiliated company as prescribed by the Presidential Decree (excluding
any officer or employee prescribed by the Presidential Decree) who have
contributed or are able to contribute to the establishment, management,
overseas business, technological renovations, etc. of such corporation
in compliance with a resolution (hereafter in this Article referred to
as the "special resolution") adopted as prescribed by the articles of
association in accordance with the provisions of Article 434 of the
Commercial Act and grant such officers and employees the right to
purchase its stocks (hereinafter referred to as the "stock option") in
accordance with the provisions of this Article under the conditions as
prescribed by the Presidential Decree. (Amended by Act No. 6176, Jan.
21, 2000; Act No. 6623, Jan. 26, 2002)
(2) Any stock-listed corporation or any Association-registered
corporation (hereinafter referred to as the "stock option granting
corporation") that intends to grant the stock option shall enter
matters falling under each of the following
subparagraphs in its articles of association: (Amended by Act No. 6176,
Jan. 21, 2000)
1.The fact that the corporation may grant the stock option in certain
cases;
2.The types and total number of stocks to be issued through the
exercise of the stock option;
3.The qualifications of a person who is to be granted the stock option;
and
4.The fact that a corporation may cancel the stock option in certain
cases.
(3) Any stock option granting corporation may, if there is a special
resolution containing matters falling under each of the following
subparagraphs, grant stock option up to the limits prescribed by the
Presidential Decree within the scope of 20/100 of the total number of
stocks issued: Provided, That notwithstanding paragraph (1) and the
main sentence of this paragraph, such corporation may offer such stock
option up to the limits prescribed by the Presidential Decree within
the scope of 10/100 of the total number of stocks issued according to a
resolution that contains matters falling under each of the following
subparagraphs and is adopted by the board of directors as prescribed by
the articles of association: (Amended by Act No. 6423, Mar. 28, 2001)
1.The names of persons who are to be granted the stock option;
2.The method of granting the stock option;
3.The matters concerning option prices of the stock option and
adjustment thereof;
4.The period for which the stock option is exercised; and
5.The kinds and numbers of stocks to be offered by the exercise of the
stock option to each of persons who are granted such stock option.
(4) The stock option shall have the effect on a company that grants
such stock option for a period ranging from the date of a resolution
under paragraph (1) or the proviso of paragraph (3) to the date on
which the exercise of the stock option prescribed by the relevant
corporation in the articles of association expires. In this case, any
person who is granted the stock option shall be allowed to exercise
such stock option only after holding office or serving for not less
than two years from the date of a resolution under paragraph (1) or the
proviso of paragraph (3) save the case prescribed by the Ordinance of
the Ministry of Finance and Economy. (Amended by Act No. 6423, Mar. 28,
2001)
(5) The stock option shall not be transferred to other persons:
Provided, That when a person who has been granted the stock option
dies, a successor of the person shall be deemed to be granted such
option. (Amended by Act No. 6176, Jan. 21, 2000)
(6) The provisions of Articles 340-3 (3) and 350 (2), the latter part
of Article 350 (3), Articles 351 and 516-8 (1), (3), and (4), and the
former part of Article 516-9 of the Commercial Act shall apply mutatis
mutandis to the case in which new stocks are issued as a result of the
exercise of the stock option. (Amended by Act No. 6176, Jan. 21, 2000)
(7) The Financial Supervisory Commission may give necessary
recommendations to a stock option granting corporation under the
conditions as determined by the Presidential Decree. (Amended by Act
No. 5498, Jan. 8, 1998; Act No. 6176, Jan. 21, 2000)
(8) A stock option granting corporation shall, when making a resolution
pursuant to paragraph (1), report such fact to the Financial
Supervisory Commission and the Stock Exchange or the Association under
the conditions as prescribed by the Presidential Decree, and the
Financial Supervisory Commission and the Stock Exchange or the
Association shall keep the content of such resolution to make it
available for public inspection during the period from the date of
report to the end
of duration of stock option. (Amended by Act No. 5498, Jan. 8, 1998;
Act No. 6176, Jan. 21, 2000)
(9) Matters necessary for stock option other than those provided in
paragraphs (1) through (8) shall be determined by the Presidential
Decree. (Newly Inserted by Act No. 5423, Dec. 13, 1997; Act No. 6176,
Jan. 21, 2000)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 190 (MERGER WITH STOCK-LISTED CORPORATION OR ASSOCIATION-REGISTERED
CORPORATION)
In the event that any corporation that is neither a stock-listed
corporation nor an Association-registered corporation intends to merge
with a stock-listed corporation or an Association-registered
corporation, any approval therefor of a general meeting of stockholders
under Article 522 of the Commercial Act shall not take effect unless it
is made after two months from the date on which the relevant
corporation has registered under Article 3. (Amended by Act No. 5254,
Jan. 13, 1997; Act No. 5521, Feb. 24, 1998; Act No. 5736, Feb. 1, 1999;
Act No. 6423, Mar. 28, 2001)
ARTICLE 190-2 (MERGER, ETC.)
(1) Any stock-listed corporation or any Association-registered
corporation shall, where it intends to merge with other corporations,
report to the Financial Supervisory Commission and the Stock Exchange
or the Association. In this case, the stock-listed corporation or
Association-registered corporation shall report the matters relating to
the merger according to standards for merger conditions such as the
requirements and procedures as prescribed by the Presidential Decree.
(Amended by Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001)
(2) The provisions of paragraph (1) shall apply mutatis mutandis where
a stock-
listed corporation or Association-registered corporation intends to
split or merge by split-off, or to transfer or take over important
business as prescribed by the Presidential Decree. (Amended by Act No.
5736, Feb. 1, 1999)
(3) The provisions of Articles 8 (2), 14 through 16, 19 and 20 shall
apply mutatis mutandis in the case of report under paragraphs (1) and
(2). (Amended by Act No. 5736, Feb. 1, 1999)
[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]
ARTICLE 191 (APPRAISAL RIGHTS OF STOCKHOLDERS)
(1) A stockholder (including stockholders who have non-voting rights
pursuant to Article 370 (1) of the Commercial Act; hereafter the same
shall apply in this Article) who opposes a resolution made at the
meeting of the board of directors of a stock-listed corporation or an
Association-registered corporation with regard to the matters under
Articles 360-3, 360-9, 360-16, 374, 522, 527-2 and 530-3 of the
Commercial Act (limited to a merger by split-off referred to in Article
530-2 of the said Act) may demand of the corporation concerned the
purchase of the stocks that he owns within twenty days after the date
on which such resolution is made at the general meeting of stockholders
(after the date on which two weeks have passed since the public notice
or notification referred to in Articles 360-9 (2) and 527-2 (2) of the
Commercial Act for stockholders of a company to become a complete
subsidiary under Article 360-9 of the said Act and stockholders of a
company to be extinguished under Article 527-2 of the said Act) by a
written request in which class and number of stocks are stated, only in
case where he has made written notification that he opposes the
resolution of the corporation concerned prior to the general meeting of
stockholders (within two weeks from the date on which a public notice
or notification is made under Articles 360-9 (2) and 527-2 (2) of the
Commercial Act for stockholders of a company to become a complete
subsidiary under Article 360-9 of the same Act and stockholders of a
company to be extinguished under Article 527-2 of the same Act).
(Amended by Act No. 4469,
Dec. 31, 1991; Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997;
Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001; Act No. 6623,
Jan. 26, 2002)
(2) A stock-listed corporation or an Association-registered corporation
which has received a demand pursuant to paragraph (1) shall purchase
the stocks concerned within one month after the expiration of the
period for demand for purchase. (Amended by Act No. 5736, Feb. 1, 1999)
(3) The purchase price under paragraph (2) shall be determined by
consultation between the stockholder concerned and the corporation
concerned: Provided, That the purchase price shall, where a purchase
agreement has not been reached among them, be an amount calculated
through the methods as determined by the Presidential Decree based on
transaction price of the stocks concerned traded on the securities
market or Association brokerage market prior to the date on which a
resolution by the board of directors is made, and where the corporation
concerned or the stockholders holding 30/100 or more of total number of
stocks subject to such purchase object to this purchase price, the
Financial Supervisory Commission may adjust it. In this case, an
application for adjusting purchase price shall be made not later than
ten days prior to the date on which such a purchase is to be finalized
pursuant to paragraph (2). (Amended by Act No. 5498, Jan. 8, 1998; Act
No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001)
(4) Any stock-listed corporation or any Association-registered
corporation shall, where it purchases stocks pursuant to paragraph (1),
dispose of them within a period as prescribed by the Presidential
Decree: Provided, That in the event that it is intended to retire
stocks with dividends to be offered to stockholders, such stocks shall
be retired in accordance with Article 189 (excluding the latter part
other than each subparagraph of paragraph (2) of the same Article and
paragraph (3) 1 of the same Article). In this case, in the application
of paragraph (2) 2 of the same Article, "the total value of stocks to
be acquired for retirement" shall be read "the total value of stocks to
be retired," in the application of paragraph (2) 3 of the same Article,
"the period for which it is intended to acquire stocks. In this case,
the period" shall be read "the date on which it is intended to retire
stocks. In this case,
the date", and in the application of paragraph (3) 2 of the same
Article, "the amount to be acquired for retirement" shall be read "the
total value of stocks to be retired," respectively. (Amended by Act No.
5254, Jan. 13, 1997; Act No. 6423, Mar. 28, 2001)
(5) Where any stock-listed corporation or any Association-registered
corporation makes notification or public notice for the convocation of
a general meeting of stockholders in order to resolve the matters
prescribed in Articles 360-3, 360-16, 374, 522 and 530-3 of the
Commercial Act (limited to merger by split-off referred to in Article
530-2 of the said Act) or makes notification or public notice pursuant
to Articles 360-9 (2) and 527-2 (2) of the same Act, under the
conditions as prescribed by Article 363 of the same Act, it shall
specify the contents and exercising methods of appraisal rights of
stockholders pursuant to paragraph (1). In this case, the stock-listed
corporation or Association-registered corporation shall notify
stockholders having no voting rights pursuant to Article 370 (1) of the
same Act or give a public notice thereof to them. (Newly Inserted by
Act No. 3945, Nov. 28, 1987; Act No. 4701, Jan. 5, 1994; Act No. 5254,
Jan. 13, 1997; Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001;
Act No. 6623, Jan. 26, 2002)
[This Article Wholly Amended by Act No. 3541, Mar. 29, 1982]
ARTICLE 191-2 (SPECIAL CASES FOR NONVOTING STOCKS)
(1) In applying the limit on the number of nonvoting stocks pursuant to
Article 370 (2) of the Commercial Act, where a stock-listed corporation
(including a corporation which makes a public offering of new or
outstanding stocks for the purpose of listing them initially) or an
Association-registered corporation (including a corporation which makes
a public offering of new or outstanding stocks for the purpose of
trading them initially on the Association brokerage market) falls under
any of the following subparagraphs, the nonvoting stocks issued by such
corporation shall not be counted in the calculation of the limit:
(Amended by Act No. 5423, Dec. 13, 1997; Act No. 5498, Jan. 1998; Act
No. 5539, May 25, 1998; Act No.
5736, Feb. 1, 1999)
1.In case where such corporation issues stocks in a foreign country as
prescribed by the Ordinance of the Ministry of Finance and Economy or
issues stocks as a result of the excercise of the rights upon
convertible bonds, bonds with warrants or any other certificates or
instruments related to stocks issued in a foreign country; and
2.In case where a corporation which is deemed necessary to issue
nonvoting stocks in the public interest by the Financial Supervisory
Commission and satisfies the criteria as prescribed by the Presidential
Decree from among corporations carrying on an industry important for
the national economy, such as the national key industry, issues stocks.
(2) The aggregate number of nonvoting stocks falling under any
subparagraph of paragraph (1) and those pursuant to Article 370 (2) of
the Commercial Act shall not exceed 1/2 of the total number of issued
and outstanding stocks.
(3) A corporation of which the total number of nonvoting stocks exceeds
1/4 of the total number of issued and outstanding stocks may issue
nonvoting stocks within the ratio, by means of exercising preemptive
right, capitalization of reserve or stock dividend, etc., as determined
by the Presidential Decree. (Amended by Act No. 5423, Dec. 13, 1997;
Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21, 2000)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-3 (SPECIAL TREATMENT OF STOCK DIVIDEND)
(1) Notwithstanding the proviso of Article 462-2 (1) of the Commercial
Act, a stock-listed corporation or Association-registered corporation
may make a dividend by newly issued stocks up to the limit of the total
amount of dividend: Provided, That in case where the current price of
concerned stock is less than par
value thereof, the same shall not apply. (Amended by Act No. 5736, Feb.
1, 1999)
(2) The method calculating the price of stock pursuant to the proviso
of paragraph (1) shall be prescribed by the Presidential Decree.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-4 (ISSUANCE OF NEW TYPE CORPORATE BONDS)
(1) A stock-listed corporation or Association-registered corporation
may issue new type of bonds which are different from those under
Articles 513 (1) and 516-2 (1) of the Commercial Act, such as bonds
entitled to participate in dividend, bonds with rights to demand an
exchange with stocks or other securities, or other bonds as prescribed
by the Presidential Decree. (Amended by Act No. 5736, Feb. 1, 1999)
(2) Necessary matters such as contents and issuance method of bonds
issued pursuant to the provisions of paragraph (1) shall be prescribed
by the Presidential Decree.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-5 (SPECIAL TREATMENT OF ISSUANCE OF BONDS)
The amount corresponding to the portion with respect to which the
conversion to stocks or the exercise of preemptive right is possible,
of convertible bonds or bonds with warrants which are issued by a
stock-listed corporation or Association-registered corporation, shall
not be subject to the limits of the issuance of bonds pursuant to the
provisions of Article 470 of the Commercial Act. (Amended by Act No.
5736, Feb. 1, 1999)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-6 (SPECIAL TREATMENT OF DIVIDEND BY PUBLIC CORPORATION)
(1) In paying dividend of profits or interests, a public corporation
(this refers to a public corporation pursuant to the provisions of
Article 199 (2)) may, notwithstanding the provisions of Article 464 of
the Commercial Act, pay all or part of dividend to which the Government
is entitled to persons who fall under any of the following
subparagraphs from among stockholders of the concerned corporation
under the conditions as prescribed by the Presidential Decree:
1.Employees who are members of an employee stock ownership association
of the corporation which issued the stocks concerned; and
2.Any person as prescribed by the Presidential Decree, taking into
consideration a level of yearly income and amount of property owned.
(2) In capitalizing all or a part of reserve, a public corporation may,
notwithstanding the provisions of Article 461 (2) of the Commercial
Act, issue stocks to which the Government is entitled in whole or in
part, to stockholders who hold stocks issued by the public corporation
for a period as prescribed by the Presidential Decree.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-7 (PREFERENTIAL ALLOCATION TO MEMBER OF EMPLOYEE STOCK OWNERSHIP
ASSOCIATION)
(1) In case where a stock-listed corporation or a corporation which
intends to list stocks publicly offers or sells its stocks, member of
employee stock ownership association of such corporation shall have the
right to be allocated preferentially with stocks within the limit of
20/100 of the total number of stocks to be offered or sold: Provided,
That in case where it falls under any of the following subparagraphs,
this shall not apply: (Amended by Act No. 5559, Sep. 16, 1998)
1.A case where a corporation as prescribed by the Presidential Decree
from among foreign-invested enterprises pursuant to the Foreign
Investment Promotion Act issues stocks; and
2.Other case prescribed by the Presidential Decree as the case where
preferential allocation to member of employee stock ownership
association is difficult.
(2) In case where the number of stocks owned by members of employee
stock ownership association is more than 20/100 of the total number of
stocks issued newly and stocks to have been issued already, paragraph
(1) shall not apply.
(3) The Minister of Finance and Economy may determine the criteria
necessary for the stock dividend for member of employee stock ownership
association pursuant to paragraph (1) and for the disposal of such
stocks. (Amended by Act No. 5539, May 25, 1998)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-8 (PAYMENT OF DEPOSIT WITH LISTED SECURITIES, ETC.)
(1) Deposit or deposit money as prescribed by the Presidential Decree
from among those which are to be paid to the State, a local government
or a government-invested institution pursuant to the Framework Act on
the Management of Government-Invested Institutions (hereinafter
referred to as a "government-invested institution") may be paid with
listed securities (including securities registered in the Association
pursuant to Article 172-2; hereafter the same shall apply in this
Article). (Amended by Act No. 5736, Feb. 1, 1999)
(2) The State, a local government or a government-invested institution
may not refuse the payment with listed securities pursuant to paragraph
(1).
(3) The listed securities which are eligible for a payment to the
State, local government or government-invested institution pursuant to
paragraph (1) and the valuation standard of such securities, shall be
prescribed by the Presidential Decree.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-9
Deleted. (by Act No. 6176, Jan. 21, 2000)
ARTICLE 191-10 (PUBLIC NOTICE ON CONVOCATION OF GENERAL MEETING)
(1) In case where a stock-listed corporation or Association-registered
corporation convenes a general meeting of stockholders, with respect to
stockholders who hold stocks not more than the number as prescribed by
the Presidential Decree, the notice of convocation pursuant to Article
363 (1) of the Commercial Act may be substituted by determining the
date of a general meeting of stockholders under the conditions as
prescribed by the articles of association of the corporation and giving
twice or more public notices to the effect that the such corporation
convenes the general meeting of stockholders and the subject matters of
that meeting on two or more daily newspapers not later than two weeks
before the date of the general meeting of stockholders. (Amended by Act
No. 5736, Feb. 1, 1999)
(2) In the event that any stock-listed corporation or any
Association-registered corporation serves a convocation notice to each
of the stockholders under Article 363 (1) of the Commercial Act or
makes the public notice thereof under paragraph (1) for the purpose of
holding a general meeting of stockholders to select and appoint
directors, such stock-listed corporation or such Association-registered
corporation shall notify each of the stockholders of names and brief
personal records of candidates for such directors, persons who
recommend such candidates and other matters concerning such candidates
prescribed by the Presidential Decree or publish them. (Amended by Act
No. 6423, Mar. 28, 2001)
(3) In the event that any stock-listed corporation or any
Association-registered corporation serves the convocation notice of a
general meeting of stockholders on each of the stockholders or makes a
public notice thereof, such stock-listed corporation or such
Association-registered corporation shall notify each of the
stockholders of matters falling under each of the following
subparagraphs or publish such matters: Provided, That the stock-listed
corporation or the Association-registered corporation may run such
matters on the information communications network and offer such
matters for public perusal in places prescribed by the Ordinance of the
Ministry of Finance and Economy in lieu of the notice and publication:
(Newly Inserted by Act No. 6423, Mar. 28, 2001)
1.Matters concerning the attendance rates of outside directors and
other non-standing directors at meetings of board of directors, details
of their activities such as pros and cons over the agendas of meetings
of the board of directors and their remunerations;
2.Matters prescribed by the Presidential Decree from among details of
transactions with the biggest stockholder, etc. under Article 191-19;
and
3.Management reference matters prescribed by the Presidential Decree
such as the outline of the business, current operations.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-11 (APPOINTMENT AND DISMISSAL OF AUDITOR)
(1) In case where the total number of voting stocks of a stock-listed
corporation or Association-registered corporation owned by the biggest
stockholder and his specially related persons and/or other persons as
prescribed by the Presidential Decree exceeds 3/100 of the total number
of issued voting stocks of such corporation (in case where the articles
of association of the corporation designates
a ratio lower than 3/100, such ratio shall apply), such stockholders
shall not exercise the voting rights of stocks exceeding the ratio in
case of the appointment or dismissal of an auditor or a member of the
inspection committee (limited to any member who is not an outside
director). (Amended by Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan.
21, 2000)
(2) A stock-listed corporation or Association-registered corporation
shall, in case where it proposes the appointment of an auditor or the
determination of remuneration for auditor as the subject matter of the
general meeting of stockholders, propose and resolve that subject
matter separately from the appointment of director or for the
determination of remuneration for director. (Amended by Act No. 5736,
Feb. 1, 1999)
(3) The auditor or inspection committee of a stock-listed corporation
or Association-registered corporation may, notwithstanding Article
447-4 (1) of the Commercial Act, submit an auditing report to directors
not later than one week before the date of the general meeting of
stockholders. (Amended by Act No. 5736, Feb. 1, 1999; Act No. 6176,
Jan. 21, 2000)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-12 (QUALIFICATIONS FOR AUDITOR)
(1) A stock-listed corporation or Association-registered corporation as
prescribed by the Presidential Decree, shall appoint one or more
standing auditors: Provided, That the same shall not apply to the case
in which the inspection committee is established in accordance with
this Act or other Acts. (Amended by Act No. 5736, Feb. 1, 1999; Act No.
6176, Jan. 21, 2000)
(2) Deleted. (by Act No. 5736, Feb. 1, 1999)
(3) A person who falls under any of the following subparagraphs shall
not be a
standing auditor of a stock-listed corporation or
Association-registered corporation, and any auditor of a stock-listed
corporation who falls under any of the following subparagraphs shall
lose his office: (Amended by Act No. 5736, Feb. 1, 1999)
1.A minor, an incompetent, or a quasi-incompetent;
2.A bankrupt who has not been reinstated yet;
3.A person who has been sentenced to imprisonment without prison labor
or a heavier punishment and for whom two years has not elapsed since
the execution of such punishment was terminated or since the final
judgment was rendered that the punishment on him would not be executed;
4.A person who was discharged or dismissed from a stock-listed
corporation or Association-registered corporation under this Act and
for whom two years has not elapsed since the date of such discharge or
dismissal;
5.A major stockholder of the corporation concerned;
6.A full-time officer or employee of the corporation concerned or a
person who has been a full-time officer or employee thereof in the last
two years; and
7.A person who is capable of having influence on the management of the
corporation concerned other than those under subparagraphs 5 and 6 and
who is prescribed by the Presidential Decree.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-13 (EXERCISE OF MINORITY STOCKHOLDERS' RIGHTS)
(1) Any person who has been holding 1/10,000 or more of the total
number of outstanding stocks issued by a stock-listed corporation or an
Association-
registered corporation for six months under the conditions as
prescribed by the Presidential Decree may exercise his right as a
stockholder prescribed in Article 403 of the Commercial Act (including
where it is applicable mutatis mutandis under Articles 324, 415, 424-2,
467-2, and 542 of the Commercial Act). (Amended by Act No. 5539, May
25, 1998; Act No. 5736, Feb. 1, 1999)
(2) Any person who has been holding 50/100,000 or more (in case of a
corporation prescribed by the Presidential Decree, 25/100,000 or more)
of the total number of outstanding stocks issued by a stock-listed
corporation or an Association-registered corporation for 6 months under
the conditions as prescribed by the Presidential Decree may exercise
his right as a stockholder prescribed in Article 402 of the Commercial
Act. (Amended by Act No. 6423, Mar.
28, 2001)
(3) Any person who has been holding 10/10,000 or more (in case of a
corporation prescribed by the Presidential Decree, 5/10,000 or more) of
the total number of outstanding stocks issued by a stock-listed
corporation or an Association-registered corporation for 6 months under
the conditions as prescribed by the Presidential Decree may exercise
his right as a stockholder under Article 466 of the Commercial Act.
(Amended by Act No. 5736, Feb. 1, 1999; Act No.
6423, Mar. 28, 2001)
(4) Any person who has been holding stocks 50/10,000 or more (in case
of a corporation prescribed by the Presidential Decree, 25/10,000 or
more) of the total number of outstanding stocks issued by a
stock-listed corporation or an Association-registered corporation for 6
months under the conditions as prescribed by the Presidential Decree
may exercise his right as a stockholder under Articles 385 (including a
case where it is applicable mutatis mutandis in Article 415 of the
Commercial Act) and 539 of the Commercial Act. (Newly Inserted by Act
No. 6423, Mar. 28, 2001)
(5) Any person who has been holding 30/1000 or more (in case of a
corporation as prescribed by the Presidential Decree, 15/1000 or more)
of the total number of outstanding stocks issued by a stock-listed
corporation or an Association-
registered corporation for six months under the conditions as
prescribed by the Presidential Decree may exercise his right as a
stockholder prescribed in Articles 366 and 467 of the Commercial Act.
In this case, when a person exercises his right as a stockholder
prescribed in Article 366 of the Commercial Act, the number of stocks
shall be calculated based on voting stocks. (Amended by Act No. 5736,
Feb. 1, 1999)
(6) When a stockholder pursuant to paragraph (1) of this Article
institutes a lawsuit as prescribed in Article 403 of the Commercial Act
(including where it is applicable mutatis mutandis under Articles 324,
415, 424-2, 467-2 and 542 of the Commercial Act) and wins such lawsuit,
the stockholder may request the company concerned to pay the cost of
the lawsuit and other costs resulting from such lawsuit.
[This Article Wholly Amended by Act No. 5521, Feb. 24, 1998]
ARTICLE 191-14 (STOCKHOLDER'S PROPOSAL)
(1) A person who has been holding 10/1000 or more (in case of a
corporation as prescribed by the Presidential Decree, 5/1000 or more)
of the total number of issued and outstanding stocks of a stock-listed
corporation or Association-registered corporation for six months under
the Presidential Decree, may propose to the directors that such
directors make certain matters as the subject matters of the general
meeting of stockholders under the conditions as prescribed by the
Presidential Decree (hereinafter referred to as a "stockholder's
proposal"). (Amended by Act No. 5736, Feb. 1, 1999)
(2) Any person who makes a stockholder's proposal pursuant to the
provisions of paragraph (1) may ask directors to enter the summary of
his proposal in a publication and a notice thereof in accordance with
the provisions of Article 363 of the Commercial Act in addition to
matters to be put on the agenda of a general meeting of stockholders on
the conditions as prescribed by the Presidential Decree. (Newly
Inserted by Act No. 6176, Jan. 21, 2000)
(3) The board of directors shall submit stockholder's proposal before
the general meeting of stockholders as the subject matters thereof,
except in the case where the contents of the stockholder's proposal
violate Acts and subordinate statutes or the articles of association or
in the case as prescribed by the Presidential Decree, and in case where
there is a demand of a person who makes stockholder's proposal, the
board of directors shall give him an opportunity to explain the
concerned proposal in the general meeting of stockholders.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 191-15 (SPECIAL CASES FOR ISSUANCE BELOW PAR VALUE)
(1) Notwithstanding the provisions of Article 417 of the Commercial
Act, any stock-listed corporation or any Association-registered
corporation may issue stocks below par value subject to a resolution of
the general meeting of stockholders under Article 434 of the Commercial
Act without authorization of a court: Provided, That this shall not
apply where the corporation concerned fails to complete a redemption
under Article 455 (2) of the Commercial Act. (Amended by Act No. 6423,
Mar. 28, 2001)
(2) The minimum issue value for stocks shall be determined by a
resolution of the general meeting of stockholders under paragraph (1).
In this case, the minimum issue value shall not be lower than price
calculated according to the methods as determined by the Presidential
Decree.
(3) Except as otherwise determined by the general meeting of
stockholders, stocks under paragraph (1) shall be issued within one
month from the date on which a resolution of the general meeting of
stockholders is made.
[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]
ARTICLE 191-16 (APPOINTMENTS OF OUTSIDE DIRECTORS)
(1) Any stock-listed corporation or any Association-registered
corporation prescribed by the Presidential Decree shall make the number
of outside directors not less than one fourth of total number of its
directors: Provided, That any stock-listed corporation or any
Association-registered corporation prescribed by the Presidential
Decree shall have not less than three outside directors, but make the
number of such outside directors not less than half of total number of
its directors. (Amended by Act No. 6423, Mar. 28, 2001)
(2) The provisions of paragraph (1) shall not apply to any stock-listed
corporation or any Association-registered corporation that is a mutual
fund incorporated pursuant to the Mutual Fund Act and any other
stock-listed corporation or any other Association-registered
corporation prescribed by the Presidential Decree. (Amended by Act No.
6423, Mar. 28, 2001)
(3) The provisions of Article 54-5 (4) and (5) shall apply mutatis
mutandis to any outside director of a stock-listed corporation or an
Association-registered corporation referred to in paragraph (1) and the
provisions of Article 54-5 (2) and (3) shall apply mutatis mutandis to
the stock-listed corporation or the Association-registered corporation
referred to in the proviso of paragraph (1). (Amended by Act No. 6423,
Mar. 28, 2001)
(4) Any non-standing or outside director appointed under the Act on the
Improvement of Managerial Structure and Privatization of Public
Enterprises, the Banking Act and other Acts shall be deemed an outside
director appointed under this Act.
(5) Any director of a stock-listed corporation or an
Association-registered corporation may seek assistance from experts at
the expense of his company according to a resolution of the board of
directors. (Newly Inserted by Act No. 6423, Mar. 28, 2001)
(6) Where any stock-listed corporation or any Association-registered
corporation appoints any outside director or dismisses him or any
outside director resigns prior to the expiration of his term of office,
such stock-listed corporation or such Association-registered
corporation shall file a report thereof with the Financial Supervisory
Commission and the Stock Exchange or the Association by the day
following the day on which such appointment, dismissal or resignation
occurs. (Amended by Act No. 6423, Mar. 28, 2001)
[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]
ARTICLE 191-17 (INSPECTION COMMITTEE)
(1) Any stock-listed corporation or any Association-registered
corporation prescribed by the Presidential Decree shall establish an
inspection committee. (Amended by Act No. 6423, Mar. 28, 2001)
(2) The provisions of Article 54-6 (2) through (6) shall apply mutatis
mutandis to the composition of the inspection committee referred to in
paragraph (1). (Amended by Act No. 6423, Mar. 28, 2001) [This Article
Newly Inserted by Act No. 6176, Jan. 21, 2000]
ARTICLE 191-18 (SPECIAL CASES FOR CUMULATIVE VOTE)
(1) In the event that a general meeting of stockholders is called for
the purpose of selecting and appointing not less than two directors,
notwithstanding Article 382-2 (1) of the Commercial Act, any
stockholder holding stocks equivalent to not less than 1/100 of the
total number of stocks issued, with the exception of non-voting stocks
of any stock-listed corporation or any Association-registered
corporation under the proviso of Article 191-16 (1), may apply to the
relevant corporation for
selecting and appointing such directors in a cumulative vote manner,
except as otherwise provided for in the articles of association.
(2) In the event that any stock-listed corporation or any
Association-registered corporation referred to in paragraph (1) intends
to preclude the cumulative vote in the articles of association or to
change the articles of association for such preclusion, any stockholder
holding stocks in excess of 3/100 (if the percentage is set lower than
it by the articles of association, such percentage shall be applied) of
the total number of stocks issued, with the exception of non-voting
stocks, shall be prohibited from exercising his voting right on the
stocks held in excess.
(3) In the event that any stock-listed corporation or any
Association-registered corporation referred to in paragraph (1) intends
to put on the agenda of a general meeting of stockholders the question
of whether to change the articles of association for precluding the
cumulative vote referred to in paragraph (2), such stock-listed
corporation or such Association-registered corporation shall put such
question on the agenda separately from other agenda relating to a
change in the articles of association for other matters and resolve on
changing the articles of association.
[This Article Newly Inserted by Act No. 6423, Mar. 28, 2001]
ARTICLE 191-19 (TRANSACTIONS WITH BIGGEST STOCKHOLDER, ETC. OF MAJOR
STOCK-LISTED CORPORATION AND MAJOR ASSOCIATION-REGISTERED CORPORATION)
(1) In the event that any corporation prescribed by the Presidential
Decree from among stock-listed corporations and Association-registered
corporations intends to execute transactions falling under any of the
following subparagraphs with the biggest stockholder (including any
person specially related to him) of such corporation and any specially
related person, such corporation shall obtain approval therefor from
the board of directors and report matters prescribed by the
Presidential Decree in connection with such transactions to a regular
general
meeting of stockholders called for the first time after the board of
directors resolves on such approval:
1.The scale of the single transaction runs in excess of the scale
prescribed by the Presidential Decree in terms of the total amount of
assets or the total amount of sales; and
2.The total amount of the transactions executed with a specified person
during the current business year runs in excess of the scale prescribed
by the Presidential Decree.
(2) Notwithstanding the provisions of paragraph (1), any transactions
falling under any of the following subparagraphs, including the normal
transactions executed according to the business line of the relevant
corporation, may be carried out without obtaining approval therefor
from the board of directors and details of the transaction falling
under subparagraph 2 shall not be required to be reported to a general
meeting of stockholders:
1.In the event that the relevant corporation is a financial
institution, the transaction that is ordinarily executed according to
the contractual terms and conditions under Article 11-2 (4) of the
Monopoly Regulation and Fair Trade Act and in conformity with the
standards prescribed by the Presidential Decree; and
2.The transaction that is executed within the total amount approved by
the board of directors.
[This Article Newly Inserted by Act No. 6423, Mar. 28, 2001]
ARTICLE 192 (STANDARDS FOR FINANCIAL MANAGEMENT OF STOCK-LISTED CORPORATION,
ETC.)
(1) The Financial Supervisory Commission may, for the protection of
investors and the establishment of a fair transaction order, prescribe
the standards for financial
management of any stock-listed corporation or any
Association-registered corporation and may give necessary
recommendation, with respect to the matters falling under any of the
following subparagraphs on the conditions as prescribed by the
Presidential Decree: (Amended by Act No. 5254, Jan. 13, 1997; Act No.
5498, Jan. 8, 1998; Act No. 6176, Jan. 21, 2000)
1.Matters relating to requirements for paid-in capital increase;
2.Matters relating to reserves for improvement of financial structure;
3.Matters relating to dividend;
4.Matters relating to the issue of oversea securities prescribed by the
Presidential Decree; and
5.Other matters that are corresponding to subparagraphs 1 through 4 and
prescribed by the Presidential Decree.
(2) Any stock-listed corporation or any Association-registered
corporation shall act in accordance with the standards for financial
management referred to in paragraph (1). (Amended by Act No. 5254, Jan.
13, 1997; Act No. 6423, Mar. 28, 2001)
ARTICLE 192-2
Deleted. (by Act No. 5591, Dec. 28, 1998)
ARTICLE 192-3 (SPECIAL CASES ON DIVIDENDS)
(1) A stock-listed corporation or Association-registered corporation
which sets the term for the settlement of accounts as once per year may
pay profit dividends in cash (hereinafter referred to as "interim
dividends") through a resolution of the
board of directors to the stockholders as of the date only once during
a business year by fixing a given date under the conditions as
determined by the articles of association. (Amended by Act No. 5591,
Dec. 28, 1998)
(2) A resolution of the board of directors described in paragraph (1)
shall be made not later than 45 days after a given date referred to in
paragraph (1).
(3) The interim dividends referred to in paragraph (1) shall be paid
not later than one month after the date on which a resolution of the
board of directors has been made: Provided, That this shall not apply
in case where the articles of association otherwise provide the time of
paying interim dividends.
(4) The interim dividends shall be within the limit of the amount
obtained by deducting the following from the amount of net property in
a balance sheet in the immediately preceding term for the settlement of
accounts:
1.The amount of capital in the immediately preceding term for the
settlement of accounts;
2.The total amount of capital surplus reserve and earned surplus
reserve accumulated until the immediately preceding term for the
settlement of accounts;
3.The amount determined to pay profits at a regular general meeting of
stockholders in the immediately preceding term for the settlement of
accounts; and
4.The earned surplus reserve to be accumulated in the term for the
settlement of accounts pursuant to interim dividends.
(5) Where the net amount of property in a balance sheet in the term for
the settlement of accounts is likely to fall short of the total amount
listed in subparagraphs of Article 462 (1) of the Commercial Act, no
interim dividends shall be paid.
(6) Where the net amount of property in a balance sheet in the term for
settlement of accounts falls short of the total amount listed in
subparagraphs of Article 462 (1) of the Commercial Act, any directors
who voted for a resolution of interim dividends made by the board of
directors shall be liable to compensate for the difference (where the
interim dividends are smaller than the difference, the interim
dividends) jointly and severally against the corporation: Provided,
That this shall not apply in case where the director concerned has
proved that he could not know that there was a concern listed in
paragraph (5) even though he had paid considerable attention to it.
(7) In applying the provisions of Articles 340 (1), 344 (1), 350 (3)
(including where the provisions of Article 350 (3) are applicable
mutatis mutandis under Articles 423 (1), 516 (2) and 516-9 of the
Commercial Act; hereafter in this paragraph the same shall apply), 354
(1), 370 (1), 457 (2), 458, and 464 and subparagraph 3 of Article 625
of the Commercial Act, interim dividends shall be deemed profit
dividends referred to in Article 462 (1) of the Commercial Act, in
applying the provisions of Article 350 (3) of the Commercial Act, a
given date listed in paragraph (1) shall be deemed the end of a
business year, and in applying the provisions of Article 635 (1) 22-2
of the Commercial Act, the period listed in paragraph (3) shall be the
period listed in Article 464-2 (1) of the Commercial Act.
(8) The provisions of Articles 399 (3) and 400 of the Commercial Act
shall apply mutatis mutandis where directors bear joint and several
liability pursuant to paragraph (6) and the provisions of Article 462
(2) and (3) of the Commercial Act shall apply mutatis mutandis where
interim dividends are paid in violation of paragraph (4).
[This Article Newly Inserted by Act No. 5423, Dec. 13, 1997]
ARTICLE 193 (MEASURES AGAINST LISTED CORPORATION, ETC.)
If any listed corporation or Association-registered corporation
violates this Act, orders and regulations pursuant to this Act or
orders of the Financial Supervisory
Commission, the Financial Supervisory Commission may recommend the
general meeting of stockholders of such corporation to discharge
officers concerned, or may set restrictions on issuance of securities
for a fixed period of time or take such measures as prescribed by the
Presidential Decree. (Amended by Act No. 5254, Jan. 13, 1997; Act No.
5498, Jan. 8, 1998) [This Article Wholly Amended by Act No. 3541, Mar.
29, 1982]
CHAPTER X SUPPLEMENTARY PROVISIONS
ARTICLE 194 (OVER-THE-COUNTER TRANSACTIONS)
(1) Sale and purchase transactions of securities outside the securities
market and Association brokerage market, method of their settlement and
other necessary matters shall be determined by the Presidential Decree.
(Amended by Act No. 5254, Jan. 13, 1997; Act No. 5423, Dec. 13, 1997;
Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21, 2000)
(2) Deleted. (by Act No. 3945, Nov. 28, 1987)
ARTICLE 194-2 (REPORT, ETC. BY DIGITALLY RECORDED DOCUMENT)
In case where a registration statement, a report, or other documents or
data, etc. are to be filed with the Financial Supervisory Commission
and the Securities Futures Commission, the Stock Exchange or the
Association pursuant to this Act, such submission may be executed by
digitally recorded document under the conditions as prescribed by the
Presidential Decree.
(Amended by Act No. 5498, Jan. 8, 1998)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 194-3 (AUDIT CERTIFICATION BY EXTERNAL AUDITOR)
(1) A person as prescribed by the Presidential Decree from among
persons who files documents concerning finance with the Financial
Supervisory Commission, the Stock Exchange or the Association pursuant
to this Act, shall be audited with regard to financial accounting in
accordance with the Act on External Audit of Stock Companies: Provided,
That in case where the Presidential Decree prescribes, the same shall
not apply. (Amended by Act No. 5498, Jan. 8, 1998)
(2) The Financial Supervisory Commission may, if deemed necessary in
the public interest or for the protection of investors, request an
external auditor pursuant to the Act on External Audit of Stock
Companies who audited with regard to financial accounting pursuant to
paragraph (1) (hereinafter referred to as an "external auditor") or a
corporation which is audited, to submit data and to report, and may
take other necessary measures to such external auditor and corporation.
(Amended by Act No. 5498, Jan. 8, 1998)
(3) In case where a foreign corporation, etc. has been audited with
respect to financial accounting to the foreign securities Acts and
subordinate statutes, and when the audit meets the standards as
prescribed by the Presidential Decree, it shall be considered that the
foreign corporation, etc. has been audited pursuant to paragraph (1).
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLES 195 AND 196
Deleted. (by Act No. 3541, Mar. 29, 1982)
ARTICLE 197 (COMPENSATION LIABILITIES OF AUDITORS)
(1) The provisions of Article 17 (2) through (7) of the Act on External
Audit of Stock Companies shall apply mutatis mutandis to the
compensation liabilities of auditors to bona fide investors. (Amended
by Act No. 3541, Mar. 29, 1982; Act No. 5423, Dec. 13, 1997)
(2) The provisions of Article 15 shall apply mutatis mutandis to the
calculation of the amount compensated pursuant to paragraph (1).
(Amended by Act No. 3541, Mar. 29, 1982)
(3) Deleted. (by Act No. 5423, Dec. 13, 1997)
ARTICLE 198
Deleted. (by Act No. 3541, Mar. 29, 1982)
ARTICLE 199 (RESTRICTION ON SOLICITATION FOR EXERCISE OF VOTING RIGHTS AS PROXY)
(1) No one shall make solicitation for exercise of voting rights either
by himself or by other persons as proxy with respect to listed stocks
or stocks registered in the Association, in violation of the provisions
of the Presidential Decree. (Amended by Act No. 5736, Feb. 1, 1999)
(2) In case of a listed corporation or registered corporation which is
prescribed by the Presidential Decree as corporations carrying on an
industry important for the national economy, such as the national key
industry, etc. (hereinafter referred to as a "public corporation"),
only such public corporation may solicit for exercise of voting rights
of its stocks as proxy under the conditions as prescribed by the
Presidential Decree. (Newly Inserted by Act No. 3945, Nov. 28, 1987)
ARTICLE 200 (RESTRICTION, ETC. ON OWNERSHIP OF STOCKS ISSUED BY PUBLIC
CORPORATION)
(1) No one shall own, for his own account regardless of the title
thereof, stocks issued by a public corporation in excess of the
criteria prescribed in the following subparagraphs. In this case,
nonvoting stocks shall not be counted in the total number of issued and
outstanding stocks, and stocks owned in the names of specially related
persons shall be regarded as those owned for his account: (Amended by
Act No. 3541, Mar. 29, 1982; Act No. 3945, Nov. 28, 1987; Act No. 4469,
Dec. 31, 1991; Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997;
Act No. 5498, Jan. 8, 1998)
1.The rate of ownership at the time of registration of securities
concerned with the Financial Supervisory Commission pursuant to Article
3, in case of stockholders who owned 10/100 or more of the total number
of issued and outstanding stocks at such time; and
2.The rate as determined by the articles of association within the
limit of 3/100 of the total number of issued and outstanding stocks, in
case of persons other than stockholders pursuant to subparagraph 1.
(2) Notwithstanding the provisions of paragraph (1), if any person
obtains the approval by the Financial Supervisory Commission on the
rate limit of ownership, he may own the stocks issued by a public
corporation up to such limit. (Amended by Act No. 4701, Jan. 5, 1994;
Act No. 5498, Jan. 8, 1998)
(3) Any person whose beneficial ownership is in excess of the criteria
referred to in paragraphs (1) and (2) shall not exercise voting rights
on the stocks in excess, and the Financial Supervisory Commission may
order such person to rectify his stock holding position so as to comply
with the criteria concerned. (Newly Inserted by Act No. 3541, Mar. 29,
1982; Act No. 5498, Jan. 8, 1998)
ARTICLE 200-2 (REPORT ON MASS HOLDING, ETC. OF STOCKS)
(1) Any person (excluding those who are prescribed by the Presidential
Decree) who holds stocks, etc. of a stock-listed corporation or
Association-registered corporation in large quantities (this refers to
such case where the number of the stocks, etc. owned by the person
himself and specially related person is 5/100 or more of the total
number of such stocks, etc.), shall report the situation of his
holdings to the Financial Supervisory Commission and the Stock Exchange
(meaning the Association in case of an Association-registered
corporation; hereafter in this Article the same shall apply), within
five days (the day as prescribed by the Presidential Decree shall not
be counted therein; hereafter the same shall apply in this paragraph)
from the day on which he comes to hold such stocks, etc., under the
conditions as prescribed by the Presidential Decree, and if the rate of
his holding is changed in excess of 1/100 of the total number of the
stocks, etc. of such corporation (excluding such cases as prescribed by
the Presidential Decree), he shall report the contents of such change
to the Financial Supervisory Commission and the Stock Exchange, within
five days after such change occurs, under the conditions as prescribed
by the Presidential Decree: Provided, That with respect to the
institutional investors, etc. as prescribed by the Presidential Decree,
the time, contents, etc. of such report may be determined separately by
the Presidential Decree. (Amended by Act No. 4701, Jan. 5, 1994; Act
No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 5539, May
25, 1998; Act No. 6176, Jan. 21, 2000)
(2) The provisions of Article 21 (4) shall apply mutatis mutandis with
respect to the method of calculating the number and total number of
stocks, etc. as prescribed in paragraph (1). (Newly Inserted by Act No.
5254, Jan. 13, 1997)
(3) In case where a report on the holding of stocks, etc. in large
quantities or on a change therein is to be filed pursuant to paragraph
(1), and another cause for a report occurs by the day immediately
preceding the day on which the original report should be filed, such
new change shall be reported together with the orignal cause to be
reported. (Newly Inserted by Act No. 5254, Jan. 13, 1997)
(4) The Financial Supervisory Commission and the Stock Exchange shall
keep the reports as referred to in paragraph (1) and make them
available for public inspection. (Amended by Act No. 5498, Jan. 8,
1998)
(5) If it is deemed necessary for protecting the public interest or
investors, the Financial Supervisory Commission may order the reporter
as referred to in paragraph (1), the company which has issued the
stocks, etc. and other interested persons to file any report or
materials for reference, or have the FSS Governor investigate any
accounting books, documents and other things. (Newly Inserted by Act
No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan.
8, 1998)
(6) Any person who conducts the investigation as referred to in
paragraph (5), shall carry with himself any certificate indicating his
competence, and show it to any interested person. (Newly Inserted by
Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997)
[This Article Newly Inserted by Act No. 4469, Dec. 31, 1991]
ARTICLE 200-3 (RESTRICTION ON EXERCISE OF VOTING RIGHTS OF STOCKS, ETC.)
Any person who fails to report on the holdings of stocks, etc. in large
quantities or on a change therein (including the report on modification
thereof) in violation of the provisions of Article 200-2 (1) and (3),
may not exercise the voting rights with respect to stocks held in
violation of the provisions concerning report from among stocks held in
excess of 5/100 of the total number of issued and outstanding voting
stocks during the period as prescribed by the Presidential Decree, and
the Financial Supervisory Commission may order him to dispose of the
violating portion concerned. (Amended by Act No. 5498, Jan. 8, 1998)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 200-4 (PROVISIONS TO APPLY MUTATIS MUTANDIS)
The provisions of Articles 11 (1) through (3) and 20 shall apply
mutatis mutandis to the cases of the report on the situation of mass
holdings and the report on the change of the situation of mass
holdings.
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 201
Deleted. (by Act No. 3541, Mar. 29, 1982)
ARTICLES 202 AND 202-2
Deleted. (by Act No. 5498, Jan. 8, 1998)
ARTICLE 203 (RESTRICTIONS ON ACQUISITION OF SECURITIES BY FOREIGNERS)
(1) Acquisition of securities by a foreigner or foreign corporation,
etc. may be restricted by the provisions of the Presidential Decree.
(Amended by Act No. 3945, Nov. 28, 1987; Act No. 5254, Jan. 13, 1997)
(2) With respect to an acquisition of stocks of a public corporation by
a foreigner or foreign corporation, etc., it may be restricted
separately under the conditions as prescribed by the articles of
association of the public corporation in addition to a restriction
pursuant to paragraph (1). (Newly Inserted by Act No. 3945, Nov. 28,
1987; Act No. 5254, Jan. 13, 1997)
(3) Any person who has acquired stocks in contravention of the
provisions of paragraph (1) or (2), may not exercise his voting rights
to the stocks, and the Financial Supervisory Commission may order a
correction to the person who acquired stocks in contravention of the
provisions of paragraph (1) or (2). (Newly
Inserted by Act No. 3945, Nov. 28, 1987; Act No. 5498, Jan. 8, 1998)
(4) Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLES 204 THROUGH 206
Deleted. (by Act No. 5498, Jan. 8, 1998)
ARTICLE 206-2 (DELEGATION OF AUTHORITY)
(1) The Financial Supervisory Commission may delegate part of its
authority under this Act to the Securities Futures Commission under the
conditions determined by the Presidential Decree.
(2) Where the Securities Futures Commission decides on the matters
delegated pursuant to paragraph (1), it shall make a report thereon
with out delay to the Financial Supervisory Commission.
(3) Where it is deemed that a decision by the Securities Futures
Commission referred to in paragraph (2) is illegal or extremely unjust
in the light of the protection of the public interest or investors, the
Financial Supervisory Commission may cancel whole or part of the
decision or suspend its execution.
(4) Matters under the authority of the Financial Supervisory Commission
or the Securities Futures Commission under this Act which require
urgent disposition may be delegated to the Chairman of the Financial
Supervisory Commission or the Chairman of the Securities Futures
Commission, respectively, and minor matters may be entrusted to the FSS
Governor.
(5) The scope of urgent matters and minor matters listed in paragraph
(4) shall be determined by the Presidential Decree.
[This Article Wholly Amended by Act No. 5498, Jan. 8, 1998]
ARTICLE 206-3 (INVESTIGATION, SEIZURE, AND SEARCH BY FINANCIAL SUPERVISORY
COMMISSION AND SECURITIES FUTURES COMMISSION)
(1) Where there is a violation of this Act or an order under this Act
or, a violation of the regulations of or an order under the Financial
supervisory Commission, or where it is deemed necessary to protect
public interest or investors, the Financial Supervisory Commission
(referring to the Securities Futures Commission in case of the matters
in violation of Articles 188, 188-2 and 188-4; hereafter in this
Article the same shall apply) may order the person concerned to submit
a report or materials for reference or have the FSS Governor
investigate books, documents or other things.
(2) The Financial Supervisory Commission may demand the following
matters from the persons concerned in order to make an investigation
referred to in paragraph (1):
1.Submission of a statement on the facts and situation with regard to
matters to be invested;
2.Appearance for testimony pertaining to the matters to be invested;
and
3.Submission of books, documents, or other things necessary for an
investigation.
(3) In making investigation under paragraph (1), the Financial
Supervisory Commission may take the following measures if it is
necessary to find out any violation of Articles 188, 188-2, and 188-4:
(Newly Inserted by Act No. 6623, Jan. 26, 2002)
1.Provisional holding of books, documents, or other things submitted
under
paragraph (2) 3; and
2.Investigation into the business, books, documents, or other things
through the entry into an office or workplace of the person concerned.
(4) Where it is deemed necessary to make an investigation referred to
in paragraph (1), the Financial Supervisory Commission may request a
securities-related institution to submit documents necessary for the
investigation under the conditions as determined by the Presidential
Decree.
(5) Where a violation of this Act or an order under this Act, or a
violation of the regulations of or an order under the Financial
Supervisory Commission has been proved as a result of an investigation
referred to in paragraph (1), the Financial Supervisory Commission may
make an order for correction or take other measures as determined by
the Presidential Decree, and may determine the procedures necessary for
the investigation and taking measures, standards for measures and other
necessary matters.
(6) Where the Stock Exchange or the Association has a suspicion that
there is a violation of this Act or an order under this Act or a
violation of the regulations of or an order under the Financial
Supervisory Commission as a result of a member's supervision over an
abnormal trade, it shall notify the Financial Supervisory Commission.
(Amended by Act No. 6176, Jan.
21, 2000)
(7) Where it is deemed necessary to investigate any violation of
Articles 188, 188-2, and 188-4 (hereafter in this Article, referred to
as the "violation"), the Securities Futures Commission may order a
public official of the Financial Supervisory Commission as determined
by the Presidential Decree (hereinafter referred to as the
"investigating officer"), to interrogate a person suspected of the
violation, seize things, or search a workplace. (Newly Inserted by Act
No. 6623, Jan. 26, 2002)
(8) Where an investigating officer conducts a search or seizure to
investigate any violation, he shall carry a warrant for search or
seizure issued by a judge upon a
request of a public prosecutor. (Newly Inserted by Act No. 6623, Jan.
26, 2002)
(9) Where an investigating officer conducts an investigation,
interrogation, search, or seizure under paragraph (3) 2 or (7), he
shall carry a certificate indicating his authority and present it to
the person concerned. (Newly Inserted by Act No. 6623, Jan. 26, 2002)
(10) The provisions of the Criminal Procedure Act concerning search and
seizure, execution of a warrant for search or seizure, return of seized
articles, etc. shall apply mutatis mutandis to the search and seizure
and the warrant for search or seizure as provided in this Act.
(Newly Inserted by Act No. 6623, Jan. 26, 2002)
(11) Where an investigating officer has conducted a provisional
holding, interrogation, search, or seizure, he shall prepare a report
thereon and add his signature and seal to it with an official watchman
or interrogated person after confirmation of the report by such person.
If such an official watchman or interrogated person fails or is unable
to give any signature and seal, the reasons therefor shall be added.
(Newly Inserted by Act No. 6623, Jan. 26, 2002)
(12) Where an investigating officer has completed the investigation
into a violation, he shall report the results thereof to the Securities
Futures Commission. (Newly Inserted by Act No. 6623, Jan. 26, 2002)
[This Article Wholly Amended by Act No. 5498, Jan. 8, 1998]
ARTICLE 206-4 (EXCHANGE OF INFORMATION WITH FOREIGN SECURITIES SUPERVISORY
AGENCIES, ETC.)
(1) The Financial Supervisory Commission may exchange information with
foreign securities supervisory agencies.
(2) Where the Financial Supervisory Commission intends to exchange
information
under paragraph (1), it shall consult in advance with the Minister of
Finance and Economy: Provided, That this shall not apply to cases as
determined by the Presidential Decree. (Amended by Act No. 5539, May
25, 1998)
(3) The Financial Supervisory Commission (referring to the Securities
Futures Commission in case of matters relating to a violation of the
provisions of Articles 188, 188-2, and 188-4) may, where any foreign
securities supervisory agency asks for its cooperation in conducting an
investigation or inspection under this Act, giving expressly the
objective and scope, etc. of such investigation or inspection,
cooperate with such foreign securities supervisory agency. In this
case, the Financial Supervisory Commission may furnish the data on such
investigation or inspection to such foreign securities supervisory
agency or be furnished with such data from such foreign securities
supervisory agency, according to the principle of reciprocity. (Newly
Inserted by Act No. 6176, Jan. 21, 2000; Act No. 6623, Jan. 26, 2002)
(4) The Financial Supervisory Commission may furnish the data on an
investigation or inspection to a foreign securities supervisory agency
under the latter part of paragraph (3), only in case where it meets the
following requirements: (Newly Inserted by Act No. 6623, Jan. 26, 2002)
1.The data on an investigation or inspection furnished to a foreign
securities supervisory agency shall not be used for other than the
purpose of furnishing;
2.Confidentiality shall be kept on the data on an investigation or
inspection and the fact of furnishing such data; and
3.The data on an investigation or inspection furnished to a foreign
securities supervisory agency shall not be used for the investigation
into or trial of a criminal case in a foreign country without any prior
consent from the Financial Supervisory Commission.
[This Article Newly Inserted by Act No. 5498, Jan. 8, 1998]
ARTICLE 206-5 (DELIBERATION BY SECURITIES FUTURES COMMISSION)
Where there exists a case falling under any of the following
subparagraphs, the Financial Supervisory Commission shall go through
prior deliberation by the Securities Futures Commission: (Amended by
Act No. 5521, Feb. 24, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6176,
Jan. 21, 2000; Act No. 6623, Jan. 26, 2002)
1.Where it provides for matters falling under any of the following:
(a) Documents for registration referred to in Article 4;
(b) Criteria for administration of registered corporations referred to
in Article 6;
(c) Procedures and criteria for taking measures referred to in Article
20 (including where it is applicable mutatis mutandis under Articles
27-2, 186-5, 189-2 (5), 190-2 (3) and 200-4);
(d) Standards for financial management of stock-listed corporations or
Association-registered corporations referred to in Article 192 (1); and
(e) Procedures and standards for investigation and measures taken by
the Financial Supervisory Commission referred to in Article 206-3 (5);
2.Where it takes measures or issue orders falling under any of the
following:
(a) Measures referred to in Article 20 (including where it is
applicable mutatis mutandis under Articles 27-2, 186-5, 189-2 (5),
190-2 (3) and 200-4);
(b) Orders referred to in Article 54 (including where it is applicable
mutatis mutandis under Article 70-7);
(c) Adjustment of purchase price of stocks referred to in Article 191
(3);
(d) Deeming it necessary to issue non-voting stocks referred to in
Article 191-2 (1) 2;
(e) Measures referred to in Article 193;
(f) Approval of stockholding rate limit referred to in Article 200 (2);
(g) Measures pursuant to the results of investigation referred to in
Article 206-3 (5);
(h) Disposition to impose penalties referred to in Article 206-11; and
(i) Disposition to impose a fine for negligence referred to in Article
213 (3); and
3.Matters other than those listed in subparagraphs 1 and 2 for which
the Financial Supervisory Commission deems deliberation by the
Securities Futures Commission to be necessary.
[This Article Newly Inserted by Act No. 5498, Jan. 8, 1998]
ARTICLE 206-6 (DIRECTION AND SUPERVISION, ETC. OVER FSS GOVERNOR)
Where the Financial Supervisory Commission or the Securities Futures
Commission deems it necessary in order to exercise its powers under
this Act, it may direct and supervise the FSS Governor and have him
change his method of executing his duties or give other supervisory
orders.
[This Article Newly Inserted by Act No. 5498, Jan. 8, 1998]
ARTICLE 206-7 (DUTIES OF FINANCIAL SUPERVISORY SERVICE)
The Financial Supervisory Service shall carry out the following duties
under the
direction and supervision of the Financial Supervisory Commission or
the Securities Futures Commission: (Amended by Act No. 5736, Feb. 1,
1999)
1.Matters on the registration of issuers of securities;
2.Matters on the registration statement of securities;
3.Matters on the tender offer of securities;
4.Matters on inspections of institutions which are subject to
inspection by the FSS Governor under this Act;
5.Matters on the administration of listed corporations;
6.Matters on the public notification of the analysis and substance of
business of registered corporations and listed corporations;
7.Matters on the supervision over sale and purchase transactions of
securities outside the securities market and Association brokerage
market;
8.Business entrusted by the Government;
9.Business assigned under this Act other than those listed in
subparagraphs 1 through 8; and
10.Business incidental to those listed in subparagraphs 1 through 9.
[This Article Newly Inserted by Act No. 5498, Jan. 8, 1998]
ARTICLE 206-8 (CONTRIBUTIONS)
(1) Any person falling under any of the following subparagraphs shall
bear part of
the working expenses of the Financial Supervisory Service:
1.Securities companies which take commission from customers;
2.Issuers who submit a report to the Financial Supervisory Commission
pursuant to Article 8;
3.Institutions which are subject to inspection by the FSS Governor
under this Act; and
4.Registered corporations.
(2) The amount and limit of the contribution referred to in paragraph
(1) and other matters necessary for the payment of contributions shall
be determined by the Presidential Decree.
[This Article Newly Inserted by Act No. 5498, Jan. 8, 1998]
ARTICLE 206-9 (LIABILITIES OF MEMBERS AND OFFICERS, ETC. OF FINANCIAL
SUPERVISORY COMMISSION, SECURITIES FUTURES COMMISSION AND FINANCIAL SUPERVISORY
SERVICE)
The provisions of Article 83 shall apply mutatis mutandis to the
liabilities of those falling under any of the following subparagraphs:
1.Members and public officials of the Financial Supervisory Commission;
2.Members of the Securities Futures Commission; and
3.Governor, Vice-Governor, Assistant Vice-Governor, auditor and staff
members of the Financial Supervisory Service.
[This Article Newly Inserted by Act No. 5498, Jan. 8, 1998]
ARTICLE 206-10 (HEARING)
Where the Minister of Finance and Economy or the Financial Supervisory
Commission intends to take a disposition falling under any of the
following subparagraphs, it shall hold a hearing:
1.Cancellation of license or registration of securities companies,
investment advisory companies, and transfer agencies under Article 55
or 70-11 (including where the provisions of Article 70-11 are
applicable mutatis mutandis under Article 180 (3)); and
2.Cancellation of license of securities financial companies and
brokerage companies referred to in Article 155 (1) (including where it
is applicable mutatis mutandis under Article 179 (4)).
[This Article Wholly Amended by Act No. 5736, Feb. 1, 1999]
CHAPTER X-2 IMPOSITION AND COLLECTION OF PENALTIES
ARTICLE 206-11 (PENALTIES)
(1) The Financial Supervisory Commission may impose penalties of up to
3/100 of the subscription or sales value on a statement of securities
(up to two billion won where the price exceeds two billion won) on a
person falling under any subparagraph of Article 14 (1) where he falls
under any of the following subparagraphs: (Amended by Act No. 6423,
Mar. 28, 2001)
1.Where he makes a false entry or indication or fails to enter or
indicate important matters in any registration statement, prospectus,
or other documents to be
submitted under Article 8, 11 or 12; and
2.Where he fails to submit a registration statement, prospectus, or
other documents to be submitted under Article 8, 11 or 12.
(2) The Financial Supervisory Commission may impose penalties of up to
3/100 of the total estimated amount for tender offer stated in a tender
offer statement (up to two billion won where the price exceeds two
billion won) on a person falling under any subparagraph of Article 25-3
(1) where he falls under any of the following subparagraphs. In this
case, a total estimated amount for tender offer shall be an amount
calculated by multiplying the tender offer price per stock by the
number of stocks: (Amended by Act No. 6423, Mar. 28, 2001)
1.Where he makes a false entry or indication or fails to enter or
indicate important matters in any registration statement, prospectus,
or other documents to be submitted or in the public notice to be made
under Article 21-2, 22, 23-2 or 24; and
2.Where he fails to submit any registration statement, prospectus, or
other documents to be submitted or fails to make public notice of
matters to be publicly notified under Article 21-2, 22, 23-2 or 24.
(3) The Financial Supervisory Commission may impose penalties within
the limit of not exceeding two billion won on any listed corporation or
any Association-registered corporation where it falls under any of the
following subparagraphs: (Amended by Act No. 6176, Jan. 21, 2000; Act
No. 6423, Mar. 28, 2001)
1.Where it makes a false statement or indication in matters to be
reported or disclosed under Article 186 (1) or (2) or fails to enter or
indicate important matters therein; and
2.Where it fails to report or disclose matters to be reported or
disclosed under Article 186 (1) or (2).
(4) The Financial Supervisory Commission may impose penalties of up to
10/100 of an average daily transaction volume (up to two billion won
where an amount exceeds two billion won or stocks issued by a
corporation are not traded on the securities market or Association
brokerage market) of stocks issued by a corporation quoted in the
securities market or Association brokerage market in the immediately
preceding year on the corporation which has to submit an annual
business report, a semiannual business report or a quarterly report
pursuant to Article 186-2 (1) or 186-3 where it falls under any of the
following subparagraphs: (Amended by Act No. 6 423, Mar. 28, 2001)
1.Where it makes a false entry or indication or fails to enter or
indicate important matters in a report under Article 186-2 (1) or
186-3; and
2.Where it fails to submit a report under Article 186-2 (1) or 186-3.
(5) The Financial Supervisory Commission may impose penalties of up to
2/100 (1/100 for a consolidation and two billion won where the amount
exceeds two billion won) of the total amount (based on the amount
entered in reported documents submitted under Article 190-2) of the
book value (for a transfer or takeover of business, the amount acquired
or paid in compensation for the transfer or takeover) of stocks granted
in compensation for a merger (including a merger by split-off) or
split-off and the amount of debts taken over on a stock-listed
corporation or Association-registered corporation where it falls under
any of the following subparagraphs: (Amended by Act No. 6423, Mar. 28,
2001)
1.Where it makes a false entry or indication or fails to enter or
indicate important matters in making a report under Article 190-2; and
2.Where it fails to make a report under Article 190-2.
(6) Where a securities company violates the provisions of Article 54-3
(1) 1, 2, or 4, the Financial Supervisory Commission may impose
penalties of up to 10/100 (up to one billion won where the amount
exceeds one billion won) of the violated amount
of money (in case of Article 54-3 (1) 1, the amount acquired; in case
of 54-3 (1) 2, the amount loaned or the amount given on credit; in case
of 54-3 (1) 4, the amount acquired in excess of the ratio), on the
securities company. (Newly Inserted by Act No. 6623, Jan. 26, 2002)
(7) Penalties prescribed in paragraphs (1) through (6) shall be imposed
on a person subject to the imposition of such penalties who violates
the respective corresponding provisions by intention or by gross
negligence. (Amended by Act No. 6623, Jan. 26, 2002) [This Article
Newly Inserted by Act No. 5736, Feb. 1, 1999]
ARTICLE 206-12 (IMPOSITION OF PENALTIES)
(1) In imposing penalties pursuant to Article 206-11, the Financial
Supervisory Commission shall take account of the following matters
according to the standards as determined by the Presidential Decree:
1.Contents and severity of the offense;
2.Duration and frequency of the offense; and
3.Scale of benefits acquired by the offense.
(2) The Financial Supervisory Commission shall seek opinions from the
Stock Exchange or the Association in advance where it imposes penalties
pursuant to Article 206-11 (3). (Amended by Act No. 6176, Jan. 21,
2000)
(3) Where a corporation which has violated the provisions of this Act
merges, the Financial Supervisory Commission may impose and collect
penalties on and from the corporation which continues to exist or is
newly established after the merger, deeming the offense committed by
the previous corporation to be an offense
committed by the existing or newly established corporation.
(4) Matters necessary for the imposition of penalties shall be
determined by the Presidential Decree.
[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]
ARTICLE 206-13 (PRESENTATION OF OPINIONS)
(1) The Financial Supervisory Commission shall, in advance, give a
concerned party or interested person an opportunity to present his
opinions prior to the imposition of penalties.
(2) A concerned party or interested person described in paragraph (1)
may attend a meeting of the Financial Supervisory Commission and state
his opinions or present necessary materials.
[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]
ARTICLE 206-14 (FORMAL OBJECTION)
(1) A person who is dissatisfied with a disposition of imposition of
penalties under Article 206-11 may raise an objection to the Financial
Supervisory Commission within thirty days from the date of receipt of
notice of the said disposition by giving the reasons.
(2) The Financial Supervisory Commission shall make a decision on the
objection under paragraph (1) within thirty days: Provided, That where
it cannot make a decision within such period for any compelling cause,
it may extend the period up to thirty days.
(3) A person who is dissatisfied with a decision under paragraph (2)
may apply for administrative appeal.
[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]
ARTICLE 206-15 (EXTENSION OF TIME LIMIT FOR PAYMENT FOR AND INSTALLMENT PAYMENT
OF PENALTIES)
(1) Where the Financial Supervisory Commission deems that a person who
has been subject to penalties (hereinafter referred to as a "person
liable for the payment of penalties") has difficulty in paying
penalties in full in a lump sum for a cause falling under any of the
following subparagraphs, it may extend the time limit for payment or
enable him to pay them in installments. In this case, it may, if deemed
necessary, have him offer a security:
1.Where he suffers a serious loss of property due to disaster or theft,
etc.;
2.Where his business is in a crisis due to worsening business
conditions;
3.Where he is expected to face serious financial difficulties due to
payment of penalties in a lump sum; and
4.Where there exist any other causes equivalent to those listed in
subparagraphs 1 through 3.
(2) Where a person liable for the payment of penalties intends to have
the time limit for payment extended or pay them in installments, he
shall apply for such extension or installments to the Financial
Supervisory Commission not later than ten days prior to the expiration
of the time limit for payment.
(3) Where a person liable for the payment of penalties for whom the
time limit for payment thereof is extended or payment thereof in
installments is allowed pursuant
to paragraph (1) falls under any of the following subparagraphs, the
Financial Supervisory Commission may cancel the extension of the time
limit for payment or decision on payment in installments and collect
penalties in a lump sum:
1.Where he fails to pay penalties in installments within the time limit
for payment;
2.Where he fails to fulfill an order by the Financial Supervisory
Commission which is necessary to change securities or otherwise
supplement security;
3.Where it deems that it cannot collect all or the residual of
penalties due to compulsory execution, opening of auction, declaration
of bankruptcy, dissolution of the corporation, disposition on default
of national or local taxes; and
4.Where there exist any other causes equivalent to those listed in
subparagraphs 1 through 3.
(4) Matters necessary for the extension of the time limit for payment
of penalties, payment in installments, or security under paragraphs (1)
through (3) shall be determined by the Presidential Decree.
[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]
ARTICLE 206-16 (COLLECTION OF PENALTIES AND DISPOSITION ON DEFAULT)
(1) The Financial Supervisory Commission may collect additional dues as
determined by the Presidential Decree for the period from the date
following the expiration date of the time limit for payment to the date
preceding the date of payment where a person liable for the payment of
penalties fails to pay penalties within the time limit for payment.
(2) Where a person liable for the payment of penalties fails to pay
penalties within the time limit, the Financial Supervisory Commission
may urge him to pay the
penalties, by specifying a period, and where he fails to pay penalties
and additional dues under paragraph (1) within the specified period,
the Financial Supervisory Commission may collect them pursuant to the
example of the disposition of national taxes in arrears.
(3) The Financial Supervisory Commission may entrust its duties of the
collection or disposition on default of penalties and additional dues
under paragraphs (1) and (2) to the Commissioner of the National Tax
Administration.
(4) Matters necessary for the collection of penalties shall be
determined by the Presidential Decree.
[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]
ARTICLE 207
Deleted. (by Act No. 5736, Feb. 1, 1999)
CHAPTER XI PENAL PROVISIONS
ARTICLE 207-2 (PENAL PROVISIONS)
(1) A person who falls under any of the following subparagraphs shall
be punished by imprisonment for not more than ten years or by a fine
not exceeding twenty million won: Provided, That if the amount
equivalent to three times of the profit gained or loss evaded by the
offense exceeds twenty million won, he shall be punished by a fine of
the amount equivalent to or less than three times of such profit or
loss amount evaded:
1.A person who violates the provisions of Article 188-2 (1) or (3); and
2.A person who violates the provisions of Article 188-4.
(2) Where the amount of the profit gained or loss evaded by any such
offense as provided in any subparagraph of paragraph (1) is not less
than five hundred million won, aggravated punishment shall be imposed
according to the following subparagraphs: (Newly Inserted by Act No.
6695, Apr. 27, 2002)
1.Where the amount of the profit gained or loss evaded is not less than
five billion won, the punishment of imprisonment for life or for not
less than five years shall be imposed; and
2.Where the amount of the profit gained or loss evaded is not less than
five hundred million won but less than five billion won, the punishment
of imprisonment for a limited term of not less than three years shall
be imposed.
(3) Where the punishment of imprisonment is imposed under paragraphs
(1) and (2), the suspension of qualifications for not more than ten
years may be imposed concurrently. (Newly Inserted by Act No. 6695,
Apr. 27, 2002)
[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]
ARTICLE 207-3 (PENAL PROVISIONS)
Any person falling under any of the following subparagraphs shall be
punished by imprisonment for not more than 5 years or by a fine not
exceeding thirty million won:
1.A person who makes a public offering of new or outstanding securities
or issued new stocks in violation of Article 8 or who violates Article
21-2 (1) and (2);
2.A person who falsely enters important matters in the registration
statement under Article 8, the additional documents of shelf
registration statement under Article 10 (2), the amendment statement
under Article 11 (including a case where the
provisions are applied mutatis mutandis in Article 186-5 or 200-4), the
tender offer statement under Article 21-2 (2), the amendment statement
under Article 23-2 (1), the report documents under Article 186 (1), the
business report under Article 186-2, the semiannual report and the
quarterly report under Article 186-3, or the report documents under
Article 190-2 (1) and (2);
3.A person who fails to submit the amendment statement in violation of
the latter part of Article 11 (3) (including a case where the
provisions are applied mutatis mutandis in Article 186-5 or 200-4) or
to make an amendment publication in violation of Article 23-2 (2);
4.A person who falsely makes a tender offer publication required under
Article 21-2 (1), an amendment publication required under Article 23-2
(2), or disclosure required under Article 186 (2) with respect to
important matters; and
5.A person who violates Article 52-3.
[This Article Wholly Amended by Act No. 6423, Mar. 28, 2001]
ARTICLE 208 (PENAL PROVISIONS)
A person who falls under any of the following subparagraphs shall be
punished by imprisonment for not more than three years or a fine not
exceeding twenty million won: (Amended by Act No. 3541, Mar. 29, 1982;
Act No. 3945, Nov. 28, 1987; Act No. 4469, Dec. 31, 1991; Act No. 4701,
Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998;
Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000)
1.A person who conducts the business concerned without a license
therefor in accordance with the provisions of Article 28 (1), 28-2 (1),
145 (1) or 179 (1), or who conducts the business concerned after
cancellation of a license therefor in accordance with the provisions of
Article 55 or 155 (including where the provisions of Article 155 are
applicable mutatis mutandis under Article 179);
2.A person who violates the provisions of Articles 28-2 (3) and 35 (1);
3.A person who violates the provisions of Articles 63 (including where
the provisions of Article 63 are applicable mutatis mutandis under
Article 70-7), 76, 95 (1), 107 (1) or 173-3;
4.A person who violates the provisions of Article 59 (including where
it is applicable mutatis mutandis under Article 70-7 or 178), Article
60 (1) (including where it is applicable mutatis mutandis under Article
70-7 or 178), or Article 61 (including where it is applicable mutatis
mutandis under Article 70-7 or 178), or who refuses any investigation
conducted by the Financial Supervisory Commission referred to in
Article 206-3 (2) (meaning the Securities Futures Commission in case of
violation of Articles 188, 188-2 and 188-4);
5.A person who violates the provisions of Article 83 (including where
it is applicable mutatis mutandis under Article 206-9); and
6.Deleted. (by Act No. 5254, Jan. 13, 1997)
ARTICLE 209 (PENAL PROVISIONS)
A person who falls under any of the following subparagraphs shall be
punished by imprisonment for not more than two years or by a fine not
exceeding ten million won: (Amended by Act No. 3541, Mar. 29, 1982; Act
No. 3945, Nov. 28, 1987; Act No. 4469, Dec. 31, 1991; Act No. 4701,
Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5423, Dec. 13, 1997;
Act No. 5498, Jan. 8, 1998; Act No. 5521, Feb. 24, 1998; Act No. 5736,
Feb. 1, 1999; Act No. 6423, Mar. 28, 2001)
1.Deleted; (by Act No. 6423, Mar. 28, 2001)
2.A person who makes arrangements for a public offering of new or
outstanding
securities in violation of the provisions of Article 8;
3.A person who violates the provisions of Article 10;
4.A person who violates the provisions of Article 21(1) or Article 23
(including where the provisions of Article 23 are applicable mutatis
mutandis under Article 23-2 (3));
5.A person who carries out the business concerned after being suspended
from such business in accordance with the provisions of Article 57 or
155 (2) (including where the provisions of Article 155 (2) are
applicable mutatis mutandis under Article 179 (4));
6.A person who violates the provisions of Article 62 or 70-10;
7.A person who violates any order issued upon the basis of the
provisions of Article 54 (including where they are applicable mutatis
mutandis under Article 70-7) or 168;
8.A person who establishes an organization concerned with securities
without a license in accordance with the provisions of Article 181 (1);
and
9.A person who violates the provisions of Article 188 (1), 189-2 (3),
190-2 (1) and (2), or 199 or orders issued pursuant to Article 213, 200
(3), 200-3, or 203 (3).
ARTICLE 210 (PENAL PROVISIONS)
A person who falls under any of the following subparagraphs shall be
punished by imprisonment for not more than one year or by a fine not
exceeding five million won: (Amended by Act No. 3541, Mar. 29, 1982;
Act No. 3945, Nov. 28, 1987; Act No. 4469, Dec. 31, 1991; Act No. 5254,
Jan. 13, 1997; Act No. 5423, Dec. 13, 1997; Act No. 5498, Jan. 8, 1998;
Act No. 5521, Feb. 24, 1998; Act No. 5736, Feb. 1,
1999)
1.A person who violates any disposition of the Financial Supervisory
Commission taken upon the basis of Article 20 (including where it is
applicable mutatis mutandis under Article 27-2, 186-5, 189-2 (5), 190-2
(3) or 200-4);
2.A person who violates Article 13 (including where it is applicable
mutatis mutandis under Article 24), 42 (including where it is
applicable mutatis mutandis under Article 70-7, 154, 169, 178, 179 or
180) through 44, or 70-2 (5);
3.Deleted; (by Act No. 5254, Jan. 13, 1997)
4.Deleted; (by Act No. 5736, Feb. 1, 1999)
4-2.A person who conducts the business concerned without a registration
as prescribed in Article 70-2 (1) and (2), 70-9 (1), or 180 (1), or who
conducts the business concerned after registration is cancelled under
Article 70-11 (including where it is applicable mutatis mutandis under
Article 180 (3));
5.A person who violates Article 70-6 (including where it is applicable
mutatis mutandis under Article 70-8 (3)), 101, 188 (6), 194-3, or 200-2
(1);
6.Deleted; and (by Act No. 6423, Mar. 28, 2001)
7.A person who fails to prepare and keep a depositors account book as
prescribed in Article 174 (3) or a customers account book as prescribed
in Article 174-2 (1), or who has made a false statement therein.
ARTICLE 211 (PENAL PROVISIONS)
Any person who falls under any of the following subparagraphs shall be
punished by a fine not exceeding five million won: (Amended by Act No.
3945, Nov. 28, 1987;
Act No. 5254, Jan. 13, 1997; Act No. 5736, Feb. 1, 1999)
1.A person who conducts the business concerned notwithstanding it is
suspended under Article 57 (including where it is applicable mutatis
mutandis under Article 70-7) or 155 (2) (including where it is
applicable mutatis mutandis under Article 180 (3));
2.A person who violates the provisions of Article 186 (1) and (2),
186-2 or 186-3;
3.A person who fails to report pursuant to the provisions of Article
189-4 (8); and
4.A person who violates the provisions of Article 200 (1).
ARTICLE 212 (PENAL PROVISIONS)
A person who violates the provisions of Article 171 shall be punished
by a fine not exceeding two million won. (Amended by Act No. 5254, Jan.
13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 5736, Feb. 1, 1999; Act
No. 6176, Jan. 21, 2000)
[This Article Wholly Amended by Act No. 4701, Jan. 5, 1994]
ARTICLE 213 (FINE FOR NEGLIGENCE)
(1) A person who falls under any of the following subparagraphs shall
be punished by a fine for negligence of not more than ten million won:
(Amended by Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998;
Act No. 5521, Feb. 24, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6176,
Jan. 21, 2000; Act No. 6623, Jan. 26, 2002)
1.A person who has failed to file a registration in contravention of
the provisions of Article 3;
2.A person who has committed a violation of the provisions of Article
18-2;
3.A person who has refused, interfered with, or evaded the inspection,
investigation or confirmation under Article 19 (1) (including where it
is applicable mutatis mutandis under Article 27-2, 186-5, 189-2 (5) or
190-2 (3)), 53 (1) (including where it is applicable mutatis mutandis
under Articles 70-7, 157, 169 or 178 through 181), 174-12 or 200-2 (5);
4.A person who has committed a violation of the provisions of Article
37 (including where they are applicable mutatis mutandis under Article
70-7) or 70-8 (1); and
5.A person who has neglected the disposal of stocks in contravention of
the provisions of Article 189-2 (4) or 191 (4).
(2) A person who falls under any of the following subparagraphs, shall
be punished by a fine for negligence not exceeding five million won:
(Amended by Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998;
Act No. 5521, Feb. 24, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6623,
Jan. 26, 2002)
1.A person who violates the provisions of Article 17 (including where
they are applicable mutatis mutandis under Article 27-2), 36, 46 or 107
(2);
2.A person who fails to comply with a demand for the report, etc. or
violates the order pursuant to Article 19 (1) (including where it is
applicable mutatis mutandis under Article 27-2, 186-5, 189-2 (5) or
190-2 (3)) or 53 (2) (including where it is applicable mutatis mutandis
under Article 70-7, 157, 169 or 178 through 181);
3.A person who violates the provisions of Article 47 (including where
it is applicable mutatis mutandis under Article 70-7);
4.A person who violates the provisions of Article 54-5 (1) through (3)
or 191-16 (1) and (3);
5.A person who violates the provisions of Article 54-6 (1) and (2) or
191-17;
6.A person who violates the provisions of Article 174-2 (2) or who
fails to make a notification, or makes a false notification, to the
beneficial owners in violation of the provisions of Article 174-7 (3)
through (5);
7.A person who violates the provisions of Article 174-6 (4) or 174-8
(1); and
8.A person who violates the provisions of Article 191 (5), 191-10 (2)
and (3), 191-11 (2), or 191-19 (1).
(3) The fine for negligence as referred to in paragraphs (1) and (2)
shall be imposed and collected by the Financial Supervisory Commission,
under the conditions as prescribed by the Presidential Decree. (Amended
by Act No. 5498, Jan. 8, 1998)
(4) A person who is dissatisfied with the disposition of the fine for
negligence as referred to in paragraph (3), may raise an objection to
the person who is authorized to take the disposition, within thirty
days after he is informed of such disposition.
(5) If the person, who is subject to a disposition of fine for
negligence pursuant to paragraph (3), has raised an objection pursuant
to paragraph (4) of this Article, the person who is authorized to take
the disposition shall without delay notify the competent court, which
shall, upon receiving the notification, bring the case of fine for
negligence to a trial under the Non-Contentious Case Litigation
Procedure Act.
(6) If neither objection is raised, nor fine for negligence is paid, in
the period as referred to in paragraph (4) of this Article, it shall be
collected according to the examples of the disposition of national
taxes in arrears.
[This Article Wholly Amended by Act No. 4701, Jan. 5, 1994]
ARTICLE 214 (CONCURRENT PUNISHMENT)
(1) A person who commits a crime as referred to in Articles 207-2 through
210 may be confined to imprisonment and fined concurrently. (Amended by Act
No. 5254, Jan. 13, 1997)
(2) Where a violator of Article 207-2 (2) is subject to a fine in addition
to the punishment of imprisonment in accordance with paragraph (1), he
shall be punished by the fine of the amount equivalent to or less than
three times of the profit gained or loss evaded in consequence of such
violation. (Newly Inserted by Act No. 6695, Apr. 27, 2002)
ARTICLE 215 (JOINT PENAL PROVISIONS)
If a representative of a juristic person, or an agent, employee or other
employed person of the juristic person or an individual commits any offense
as prescribed in Articles 207-2 through 212 in connection with the affairs
of the juristic person or individual, the fine as prescribed in the
respective Articles shall be imposed on such juristic person or individual,
in addition to the punishment of the offender. (Amended by Act No. 5254,
Jan. 13, 1997)
[This Article Wholly Amended by Act No. 4701, Jan. 5, 1994]
ADDENDA
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force on February 1, 1977: Provided, That the
provisions of Article 12 of the Addenda shall enter into force on the date
of its promulgation.
ARTICLE 2 (TRANSITIONAL MEASURES AS TO FILING OF REGISTRATION STATEMENT)
(1) Any registration statement (including amendment statement) and
notification which the Minister of Finance received prior to the effective
date of this Act shall be regarded to have been received by the Commission,
and any designation of effective date thereof shall be regarded as
designated by the Commission.
(2) Notwithstanding the provisions of Article 9 (3) 1, the Commission may,
by December 31, 1977, designate an effective date of such registration
statement filed by any corporation registered with the Commission.
ARTICLE 3 (TRANSITIONAL MEASURES AS TO SECURITIES COMPANIES)
A securities company, as of the enforcement date of this Act, shall be
regarded as a securities company under this Act: Provided, That unless a
securities company obtains license by meeting the requirements referred to
in Article 28 (3) within three years from the effective date of this Act,
the license of such company shall be cancelled.
ARTICLE 4 (TRANSITIONAL MEASURES AS TO ACCOUNTING)
Accounting of a securities company shall be in accordance with the previous
provisions until the Commission adopts the Regulations relating to the
Accounting Standards of Securities Companies pursuant to the provision of
Article 47.
ARTICLE 5 (TRANSITIONAL MEASURES AS TO ORDER BY MINISTER OF FINANCE)
Orders issued to a securities company by the Minister of Finance prior to
the enforcement date of this Act with respect to extension of credit or
other matters
shall be regarded as orders by the Commission pursuant to the provisions of
Articles 49 and 54.
ARTICLE 6 (TRANSITIONAL MEASURES AS TO REGISTERED SALESMAN)
A registered salesman who entered a registration with the Ministry of
Finance as of the enforcement date of this Act shall be regarded to have
been registered with the Commission under this Act: Provided, That when the
qualification requirements are determined pursuant to the provisions of
Article 65 (3), the Commission shall examine every registered salesman and
have such one register again pursuant to the provisions thereof.
ARTICLE 7 (TRANSITIONAL MEASURES AS TO AUDITOR OF KOREA STOCK EXCHANGE)
An auditor of the Korea Stock Exchange, as of the enforcement date of this
Act, shall be regarded as a standing auditor of the Stock Exchange under
this Act.
ARTICLE 8 (TRANSITIONAL MEASURES AS TO EXCHANGE MEMBERS)
Any exchange member who was registered with the Korea Stock Exchange, as of
the enforcement date of this Act, shall be regarded as registered under
this Act.
ARTICLE 9 (TRANSITIONAL MEASURES AS TO LISTED SECURITIES)
(1) Any security which was listed on the Korea Stock Exchange as of the
enforcement date of this Act shall be regarded as a security listed under
this Act.
(2) Previous provisions shall apply to the listing of securities referred
to in Article
88 (1), until the provisions of the Presidential Decree pursuant to the
proviso of Article 88 (1) become effective.
ARTICLE 10 (TRANSITIONAL MEASURES AS TO SEMIANNUAL REPORTS)
Any listed corporation as of the enforcement date of this Act, for which a
period of six months has elapsed since its accounting period commenced,
shall file a semiannual report referred to in Article 92 within forty-five
days from the enforcement date of this Act.
ARTICLE 11 (TRANSITIONAL MEASURES AS TO CERTIFICATES OF CONTRIBUTION OF STOCK
EXCHANGE)
Any certificate of contribution of the Stock Exchange which was owned as of
the enforcement date of this Act by any person other than the Government or
securities companies, may be cancelled through purchases by the Stock
Exchange from the enforcement date of this Act. In such a case, the method
of purchase, period, purchase price and other necessary matters shall be
prescribed by the Presidential Decree.
ARTICLE 12 (ESTABLISHMENT OF SUPERVISORY BOARD)
(1) The Minister of Finance shall organize an establishment commission
composed of seven or less members appointed by the Minister, and have it
handle affairs concerned with the establishment of the Supervisory Board.
(2) The establishment commission shall prepare the articles of association
of the Supervisory Board and obtain the authorization of the Minister of
Finance with respect thereto.
(3) The establishment commission shall make the registration referred to in
Article 130, after obtaining the authorization pursuant to the provisions
of paragraph (2).
(4) When the establishment commission has completed the registration
referred to in paragraph (3), it shall turn over its business and property
to the director of the Supervisory Board.
(5) When the commission members were appointed pursuant to the provisions
of paragraph (1), the Government may deliver a contribution referred to in
Article 204 to the establishment Commission.
ARTICLE 13 (TRANSITIONAL MEASURES AS TO AUTHORITY OF COMMISSION)
Authority of the Commission and the Supervisory Board pursuant to this Act
shall be exercised by the Minister of Finance until the Commission is
organized and the Supervisory Board is established.
ARTICLE 14 (TERMS OF OFFICE OF COMMISSIONERS FIRST TAKING OFFICE)
Notwithstanding the provisions of Article 123, the terms of office of the
Commissioners first taking office after the effective date of this Act
shall be one year for one, two years for one and three years for one.
ARTICLE 15 (TRANSITIONAL MEASURES AS TO RESTRICTIONS ON OWNERSHIP OF STOCKS)
The time of original listing referred to in Article 200 (1) as to a listed
corporation as of the enforcement date of this Act shall be regarded as the
record date for closing of a register of stockholders first taken after the
enforcement of this Act.
ARTICLE 16 (TRANSITIONAL MEASURES AS TO OFFICERS OF SECURITIES FINANCE COMPANY)
Terms of office of directors and auditors of a securities finance company
as of the enforcement date of this Act shall be in accordance with the
previous provisions.
ARTICLE 17 (TRANSITIONAL MEASURES AS TO SECURITIES DEALERS ASSOCIATION)
Any direction which was issued to the Securities Dealers Association by the
Minister of Finance prior to the effective date of this Act shall be
regarded as measures taken by the Commission under this Act.
ARTICLE 18 (TRANSITIONAL MEASURES AS TO MUTUAL OWNERSHIP OF STOCKS)
Any stock which a listed corporation owns in violation of the provisions of
Article 189 as of the effective date of this Act shall be transferred
within one year from the effective date of this Act.
ARTICLE 19 (TRANSITIONAL MEASURES AS TO MERGERS OF UNLISTED CORPORATIONS)
The provisions of Article 190 shall not apply until December 31, 1977, to
the case where any listed corporation merges any registered corporation.
ARTICLE 20 (TRANSITIONAL MEASURES AS TO ACT OR SUBORDINATE STATUTE WHICH CITES
PROVISIONS OF PREVIOUS ACT)
In case any other Act or subordinate statute cites the provisions of the
previous Securities and Exchange Act, the provisions which fall within the
purview thereof in this Act shall, if any, be regarded to be cited for
replacement of the previous provisions.
ADDENDA (Act No. 3541, Mar. 29, 1982)
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force on April 1, 1982.
ARTICLE 2 (TRANSITIONAL MEASURES AS TO FILING OF REGISTRATION STATEMENT)
(1) Registration statements received in accordance with the previous
provisions of Article 8 as of the enforcement date of this Act shall take
effect in accordance with the previous provisions.
(2) Previous provisions shall apply, even after the enforcement of this
Act, to the registration statement and documents accompanied thereby
referred to in Article 8 (2), prospectus referred to in Article 12 and
after-report referred to in Article 17 as far as the forms thereof are
concerned, until the Commission fixes such forms in accordance with this
Act.
ARTICLE 3 (TRANSITIONAL MEASURES AS TO ELIGIBILITY OF OFFICERS)
(1) Notwithstanding the provisions of Article 33 (1) and (2) 5 (including
the case where it shall apply mutatis mutandis under Article 149, 169 or
178), officers of a securities company, securities finance company,
Securities Dealers Association and securities depository corporation as of
the enforcement date of this Act, may hold office for a period of their
existing terms respectively.
(2) Notwithstanding the provisions of Article 33-2 (including the case
where it shall apply mutatis mutandis under Article 150 or 178), officers
of a securities company, securities finance company and securities
depository corporation as of the enforcement date of this Act, may hold
office for the period of their existing terms.
ARTICLE 4 (TRANSITIONAL MEASURES AS TO SECURITIES SAVINGS BUSINESS)
Previous provisions shall apply to a securities savings business of a
securities company, until the Commission adopts the Securities Savings
Business Regulations in accordance with the provisions of Article 50 (1).
ARTICLE 5 (TRANSITIONAL MEASURES AS TO INVESTMENT COUNSELLORS)
(1) A registered salesman registered with the Commission as of the
enforcement date of this Act shall be regarded an investment counsellor
registered with the Supervisory Board in accordance with this Act.
(2) A securities company may, notwithstanding the provisions of Article 65
(2), have its officer or employee perform duties of an investment
counsellor in the business office thereof until two years have elapsed
since the enforcement date of this Act.
(3) Matters reported to the Commission in accordance with the previous
provisions of Article 68 as of the enforcement date of this Act shall be
regarded as reported to the Supervisory Board in accordance with this Act.
(4) Dispositions taken by the Commission in accordance with the previous
provisions of Article 69 as of the enforcement date of this Act shall be
regarded taken by the Supervisory Board in accordance with this Act.
ARTICLE 6 (TRANSITIONAL MEASURES AS TO ACCOUNTING AUDIT)
Previous provisions shall apply to an audit on such corporation which has
entered into an audit contract with certified public accountants as of the
enforcement date of this Act.
ARTICLE 7 (TRANSITIONAL MEASURES AS TO OWNERSHIP OF BLOCK STOCKS)
(1) A stockholder, as of the enforcement date of this Act, who comes to
exceed the maximum limit referred to in the latter part of Article 200 (1)
as a result of application of the provisions of the former part of
paragraph (1) of the said Article shall report the contents thereof to the
Commission within thirty days from the enforcement date of this Act and the
person who reported this shall be regarded as the owner as of the time of
original listing.
(2) A person who reported the ownership of block stocks to the Commission
in accordance with the previous provisions of Article 201 as of the
enforcement date of this Act shall be regarded as reported as major
stockholder to the Commission in accordance with the provisions of Article
188 (6).
ADDENDA (Act No. 3945, Nov. 28, 1987)
ARTICLE 1 (ENFORCEMENT DATE)
(1) This Act shall enter into force on January 1, 1988, but the revised
provisions of Articles 74 and 82 shall enter into force on the day on which
the Government sells
all of its contribution certificates of the Stock Exchange.
(2) If the Government does not sell all of its contribution certificates of
the Stock Exchange until January 1, 1988, the revised provisions of those
included in Chapter VI of this Act (excluding the revised provisions of
Articles 89, 92, 105 and 107; hereinafter the same shall apply) shall enter
into force on the date of its selling.
ARTICLE 2 (APPLICATION EXAMPLE CONCERNING REGISTRATION STATEMENT)
The revised provisions of Article 8 (1) shall be applicable even in case
where a registration statement is filed pursuant to the previous provisions
at the time this Act enters into force.
ARTICLE 3 (TRANSITIONAL MEASURES CONCERNING INVESTMENT ADVISORY BUSINESS)
Any person who operates an investment advisory business at the time this
Act enters into force, shall register the investment advisory business with
the Ministry of Finance pursuant to the revised provisions of Article 70-2
(1) within three months after this Act enters into force.
ARTICLE 4 (TRANSITIONAL MEASURES CONCERNING STOCK EXCHANGE)
(1) The Stock Exchange shall satisfy requirements pursuant to this Act
within three months after the enforcement of this Act (this refers to the
enforcement of the revised provisions of those included in Chapter VI;
hereafter the same shall apply in this Article).
(2) Any exchange member registered with the Stock Exchange pursuant to the
previous provisions at the time this Act enters into force shall be
considered as a
member under this Act.
(3) The capital of the Stock Exchange under the previous provisions at the
time this Act enters into force shall be considered as the contribution of
a member under this Act.
(4) The president, executive officers and auditors of the Stock Exchange at
the time this Act enters into force shall perform their duties according to
the previous provisions until the chief director, managing director,
standing directors and auditors are appointed under this Act.
(5) If the president, standing officers and auditors existing at the time
this Act enters into force are reappointed to the chief director, managing
director, standing directors and auditors, respectively, their terms of
office shall include the period of service pursuant to the previous
provisions.
ARTICLE 5 (TRANSITIONAL MEASURE CONCERNING ASSISTANT GOVERNOR OF SUPERVISORY
BOARD)
The Assistant Governor as prescribed by the articles of association of the
Supervisory Board at the time this Act enters into force shall be
considered as the Assistant Governor as prescribed by this Act, and his
term of office shall run on the date he is appointed pursuant to the
articles of association of the Supervisory Board.
ADDENDA (Act No. 4469, Dec. 31, 1991)
(1) (Enforcement Date) This Act shall enter into force on the date of its
promulgation: Provided, That the revised provisions of Article 200 (1)
shall enter into force at the expiration of six months from the enforcement
date of this Act, and the revised provisions of Articles 187 and 200-2, at
the expiration of three months from the enforcement date of this Act,
respectively.
(2) (Transitional Measures concerning Capital of Securities Company)
Notwithstanding the revised provisions of Article 28 (3), securities
companies existing at the time this Act enters into force shall be
considered to satisfy the requirements as prescribed by this Act.
(3) (Transitional Measures concerning Restriction, etc. of Mass Holding of
Stocks) Any person who falls under the revised provisions of Article 200
(1) 1 of this Act at the time this Act enters into force, shall report the
situation of his ownership to the Commission within one month after this
Act enters into force.
(4) (Transitional Measures concerning Report on Mass Holding of Stocks) Any
person who is liable to make a report pursuant to the revised provisions of
Article 200-2 (1) at the time this Act enters into force, shall report the
situation of his ownership to the Commission and the Stock Exchange within
one month from the enforcement date of this Act.
ADDENDA (Act No. 4701, Jan. 5, 1994)
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force on April 1, 1994: Provided, That the
revised provisions of Article 200 shall enter into force on April 1, 1997;
and those of Section 3 of Chapter VIII (Articles 173, 173-2 through 173-6,
174, 174-2, 174-4 through 174-8, 175, 176 and 178) and of Article 187, on
the date at which the Securities Depository comes into existence. (Amended
by Act No. 5254, Jan. 13, 1997)
ARTICLE 2 (EXAMPLES OF APPLICATION TO APPRAISAL RIGHTS OF STOCKHOLDERS)
The revised provisions of Article 191 shall be applicable to the portion
for which a notification or public notice on a convocation of the general
meeting of stockholders is made on or after the date this Act enters into
force.
ARTICLE 3
Deleted. (by Act No. 4701, Feb. 1, 1999)
ARTICLE 4 (TRANSITIONAL MEASURES CONCERNING REGISTRATION, ETC. OF INVESTMENT
COUNSELLOR)
(1) Any investment counsellor who has registered with the Securities
Supervisory Board at the time this Act enters into force, shall be
considered to have been registered as investment counsellor with the
Securities Dealers Association under this Act.
(2) Matters reported to the Securities Supervisory Board under the previous
Article 68 at the time this Act enters into force, shall be considered to
have been reported to the Securities Dealers Association under this Act.
ARTICLE 5 (CONVERSION OF SECURITIES DEPOSITORY CORPORATION INTO SECURITIES
DEPOSITORY)
(1) When the securities depository corporation as prescribed in the
previous Article 173 (hereinafter referred to as the "securities depository
corporation") at the time this Act enters into force, has obtained the
approval of the Minister of Finance on the conversion to the Securities
Depository through a resolution of the general meeting of stockholders, it
shall be considered as the Securities Depository established under the
revised provisions of Article 173.
(2) In the case as referred to in paragraph (1), the representative
director of the securities depository corporation shall prepare the
articles of association of the Securities Depository within three months
after this Act enters into force, obtain the authorization of the Minister
of Finance, and take charge of the affairs concerning the registration of
incorporation, etc. of the Securities Depository.
(3) The securities depository corporation shall carry on the affairs
pursuant to the previous provisions until the Securities Depository comes
into existence.
(4) When the Securities Depository comes into existence, the stockholders
of the securities depository corporation existing at that time shall be
those of the Securities Depository, and all rights and duties of the
securities depository corporation shall be succeeded en bloc to the
Securities Depository. In this case, the securities depository corporation
shall be extinguished on the day of such succession without going through
the procedure of dissolution and liquidation under the Commercial Act.
(5) The officers of the securities depository corporation existing at the
time the Securities Depository comes into existence, shall be considered as
those of the Securities Depository as prescribed by this Act, and their
terms of office shall count from the day on which they have been appointed
as officers of the securities depository corporation.
ARTICLE 6 (TRANSITIONAL MEASURES CONCERNING APPROVAL ON USE OF PRINTED FORMS OF
SECURITIES)
Approval on the use of the printed forms of securities made by the
Securities Supervisory Board for a non-listed corporation before the
revised provisions of Article 187 enter into force, shall be considered as
approval made by the Securities Depository.
ARTICLE 7 (TRANSITIONAL MEASURES CONCERNING REPORT ON MASS HOLDING OF STOCKS)
Any person who is to make a report pursuant to the revised provisions of
Article 200-2 (1) at the time this Act enters into force, shall make a
report on the situation of his holdings to the Commission and the Stock
Exchange within one month after this Act enters into force.
ARTICLE 8 (TRANSITIONAL MEASURES CONCERNING CONCILIATION COMMISSION)
(1) The dispute conciliation institution established by the previous
provisions at the time this Act enters into force, shall be considered as
the securities dispute conciliation commission under this Act.
(2) Any request for a conciliation of dispute made pursuant to the previous
provisions before this Act enters into force, shall be considered as a
request for dispute conciliation under this Act.
ARTICLE 9 (RELATION WITH OTHER ACTS AND SUBORDINATE STATUTES)
Any citation of the securities depository corporation in other Acts and
subordinate statutes at the time the Securities Depository comes into
existence, shall be considered as a citation of the Securities Depositor.
ADDENDA (Act No. 5254, Jan. 13, 1997)
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force on April 1, 1997: Provided, That the
revised provisions of subparagraph 6 of Article 3 and Article 189-4 shall
enter into force on the date of its promulgation; and the revised
provisions of Section 2 of Chapter VIII (excluding the provisions of
Article 167), on the date on which the Korea Dealers Association comes into
existence, respectively. (Amended Act by No. 5498, Jan. 8, 1998)
ARTICLE 2 (APPLICABLE CASES CONCERNING LIABILITY FOR DAMAGES DUE TO FALSE
STATEMENTS)
The revised provisions of subparagraph 5 of Article 14 and Article 15 (2)
shall apply to a registration statement and a prospectus which are filed on
or after the date this Act enters into force.
ARTICLE 3 (APPLICABLE CASES CONCERNING TENDER OFFER OF SECURITIES)
The revised provisions of Chapter VI (Articles 21 through 27-2) shall not
apply in case where a tender offer statement is filed according to the
previous provisions before this Act comes into force.
ARTICLE 4 (APPLICABLE CASES CONCERNING QUALIFICATION OF OFFICERS OF SECURITIES
COMPANY)
The revised provisions of Article 33 (2) 3 and 5 (including the case where
it shall apply mutatis mutandis under Articles 70-7, 149 (2), 169, 178, 179
(4) and 180 (3)), subparagraphs 4 and 5 of Article 80, subparagraphs 4 and
5 of Article 121 and Article 133 (8) shall not apply with respect to an
officer who is in office at the time of enforcement of this Act.
ARTICLE 5 (APPLICABLE CASES CONCERNING TERM OF OFFICE OF AUDITOR OF STOCK
EXCHANGE)
The revised provisions of Article 78 (7) shall apply to an auditor who is
assigned on or after the date this Act comes into force.
ARTICLE 6 (APPLICABLE CASES CONCERNING ANNUAL REPORT AND SEMIANNUAL REPORT)
The revised provisions of Articles 186-2 and 186-3 shall apply from the
business year commencing newly after this Act comes into force: Provided,
That in the case of a corporation of which the last day of business year
falls under the period between December and February, they shall apply from
the business year to which the date of enforcement of this Act belongs.
ARTICLE 7 (APPLICABLE CASES CONCERNING RETURN OF SHORT-TERM SALES MARGIN OF
INSIDER)
The revised provisions of Article 188 (2) through (4) shall not apply, in
case where six months has not elapsed since securities, etc. are bought or
sold before this Act comes into force.
ARTICLE 8 (APPLICABLE CASES CONCERNING NOTIFICATION AND PUBLIC NOTICE ON
CONVOCATION OF GENERAL MEETING)
The revised provisions of Article 191-10 (2) shall apply from the
notification or public notice on the convocation of the general meeting
effected for the first time after the enforcement of this Act.
ARTICLE 9 (APPLICABLE CASES CONCERNING APPOINTMENT AND DISMISSAL, ETC. OF
AUDITOR)
The revised provisions of Article 191-11 (1) and (2) shall apply from the
general meeting of stockholders which is convened for the first time after
this Act comes into force; and the revised provisions of paragraph (3) of
the said Article, from an
auditing report which an auditor submits to directors for the first time
after this Act comes into force.
ARTICLE 10 (APPLICABLE CASES CONCERNING QUALIFICATIONS OF STANDING AUDITOR)
The revised provisions of Article 191-12 (2) and (3) shall apply from an
auditor who is appointed in the general meeting of stockholders convened
for the first time after this Act comes into force.
ARTICLE 11 (TRANSITIONAL MEASURES CONCERNING EMPLOYEE STOCK OWNERSHIP
ASSOCIATION)
An employee stock ownership association pursuant to subparagraph 5 of
Article 2 of the Capital Market Promotion Act (Act No. 4679) at the time of
enforcement of this Act, shall be considered as an employee stock ownership
association pursuant to the revised provisions of Article 2 (18) of this
Act.
ARTICLE 12 (TRANSITIONAL MEASURES CONCERNING LICENSE FOR SECURITIES BUSINESS)
In case where the license for securities business referred to in the
previous provisions of Article 2 (8) 4 is obtained pursuant to the
provisions of Article 28 (2) 2 at the time of enforcement of this Act, it
shall be considered as a license for securities business pursuant to the
revised provisions of Article 2 (8) 4.
ARTICLE 13 (TRANSITIONAL MEASURES CONCERNING PROTECTION FUND)
Securities company bound to set aside protection fund pursuant to the
revised provisions of Article 69-2 (3), shall set aside the protection fund
pursuant to the revised provisions of paragraph (2) of the said Article
within one month after this Act comes into force.
ARTICLE 14 (TRANSITIONAL MEASURES CONCERNING REPORT ON BUSINESS SIMILAR TO
INVESTMENT ADVISORY BUSINESS)
A person who conducts a business similar to investment advisory business
pursuant to Article 70-8 at the time of enforcement of this Act, shall
report pursuant to the revised provisions of Article 70-8 within one month
after the enforcement date of this Act.
ARTICLE 15 (TRANSITIONAL MEASURES CONCERNING FEES)
Fees which has been collected by the Supervisory Board during the period
from January 1, 1997 to the last day before the enforcement date of this
Act according to the previous provisions of Article 143, shall be
considered as the fees pursuant to the revised provisions of Article 143.
ARTICLE 16 (TRANSITIONAL MEASURES CONCERNING KOREA SECURITIES DEALERS
ASSOCIATION)
(1) The Korea Securities Dealers Association, the incorporated association,
which was established pursuant to the previous provisions of Article 162
and is existing at the time of enforcement of this Act (hereinafter
referred to as the "Association"), shall be considered as the Korea
Securities Dealers Association which is established pursuant to the revised
provisions of Article 162.
(2) In case of paragraph (1) of this Article, the president of the
Association shall prepare the articles of association of the Korea
Securities Dealers Association within three months from the enforcement
date of this Act and shall obtain the authorization of the Minister of
Finance and Economy; and he shall manage the affairs relating to the
registration of incorporation of the Korea Securities Dealers
Association.
(3) The Association shall conduct the business pursuant to the previous
provisions until the Korea Securities Dealers Association comes into
existence.
(4) When the Korea Securities Dealers Association comes into existence, the
members of the Association at the time when it comes into existence shall
become the members of the Korea Securities Dealer Association, and the
Korea Securities Dealers Association shall succeed to the rights and
obligations of the Association by a universal title. In this case, the
Association shall cease to exist at the date of succession by a universal
title without being subject to the procedure of dissolution and liquidation
pursuant to the provisions of the Civil Act.
(5) Officers of the Association at the time when it comes into existence
shall be considered as officers of the Korea Securities Dealers Association
pursuant to this Act, and the terms of office of such officers shall begin
on the date on which officers of the Association has been appointed.
ARTICLE 17 (TRANSITIONAL MEASURES CONCERNING CORPORATION REGISTERED WITH
ASSOCIATION)
A corporation registered with the Association pursuant to the previous
provisions of Article 194 at the time this Act enters into force shall be
regarded as a corporation registered with the Korea Securities Dealers
Association pursuant to the revised provisions of Article 172-2.
ARTICLE 18 (TRANSITIONAL MEASURES CONCERNING DESIGNATION OF SECURITIES WHICH ARE
OBJECT OF DEPOSITING)
The securities which the Securities Depository has designated at the time
this Act enters into force shall be regarded that they have been designated
pursuant to the revised provision of Article 173-7.
ARTICLE 19 (TRANSITIONAL MEASURES CONCERNING KOREA LISTED COMPANIES ASSOCIATION)
The Korea Listed Companies Association, the incorporated association, which
is established pursuant to the Civil Act at the time this Act enters into
force, shall be deemed to be established with the license by the Minister
of Finance and Economy under the revised provisions of Article 181 (1).
ARTICLE 20 (TRANSITIONAL MEASURES CONCERNING NONVOTING STOCKS)
In case where the number of nonvoting stocks issued pursuant to Article 7
of the previous Capital Market Promotion Act (Act No. 3946) (including the
number of nonvoting stocks issued after the enforcement of the Capital
Market Promotion Act (Act No. 4679) due to the exercise of the rights of
convertible bonds or bonds with warrants which have been issued before the
enforcement of the Capital Market Promotion Act (Act No. 4679)), exceeds
1/4 of the total number of the issued stocks, the portion exceeding such
ratio shall be considered that it is issued under the revised provisions of
each subparagraph of Article 191-2 (1).
ARTICLE 21 (TRANSITIONAL MEASURES CONCERNING ISSUANCE OF NEW TYPE OF BONDS)
New type bonds issued pursuant to Article 9 of the Capital Market Promotion
Act at the time this Act enters into force, shall be considered that they
are issued pursuant to the revised provisions of Article 191-4.
ARTICLE 22 (TRANSITIONAL MEASURES CONCERNING PUBLIC NOTICE ON CONVOCATION OF
GENERAL MEETING)
The public notice on the convocation of the general meeting of stockholders
effected pursuant to Article 23 of the Capital Market Promotion Act at the
time this Act enters into force, shall be considered that it is effected
pursuant to the revised provisions of Article 191-10 (1).
ARTICLE 23 (TRANSITIONAL MEASURES CONCERNING STANDING AUDITOR)
A stock listed corporation which shall appoint a standing auditor pursuant
to the revised provisions of Article 191-12 (1), shall appoint a standing
auditor by the time of the regular general meeting of stockholders convened
for the first time after this Act enters into force.
ARTICLE 24 (TRANSITIONAL MEASURES CONCERNING REPORT ON MASS HOLDING, ETC. OF
STOCKS)
A person who shall make the report pursuant to the revised provisions of
Article 200-2 (1) at the time this Act enters into force, shall report the
situation of holdings to the Commission and the Stock Exchange within two
months from the enforcement date of this Act.
ARTICLE 25 (REPEAL OF OTHER ACT, ETC.)
(1) The Capital Market Promotion Act shall be repealed.
(2) In case where the provisions of the previous Capital Market Promotion
Act was quoted in other Acts and subordinate statutes at the time this Act
enters into force, this Act and the provisions in this Act corresponding to
the provisions of the previous Capital Market Promotion Act shall be
considered to have been quoted in place of the provisions of the previous
Capital Market Promotion Act.
ADDENDA (Act No. 5423, Dec. 13, 1997)
(1) (Enforcement Date) This Act shall enter into force on April 1, 1998:
Provided, That the amended provisions of Articles 69-5 and 192-2 shall
enter into force on January 1, 1998. (Amended by Act No. 5498, Jan. 8,
1998)
(2) (Applicable Cases concerning Interim Dividends) The amended provisions
of Article 192-3 shall apply from the business year commencing for the
first time after January 1, 1998.
(3) (Transitional Measures on Penal Provisions) The application of penal
provisions to acts committed prior to the entry into force of this Act
shall be governed by the previous provisions.
ADDENDA (Act No. 5498, Jan. 8, 1998)
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force on April 1, 1998: Provided, That the
provisions among the amended provisions of Articles 69-6 and 200-2 which
pertain to Association-registered corporations, the amended provisions of
Article 1 of the Addenda of Act No. 5254, and the amended provisions of
paragraph (1) of the Addenda of Act No. 5423 shall enter into force on the
date of its promulgation, the amended provisions of Article 206-10 shall
enter into force on January 1, 1998, and the amended provisions of Article
69-6 shall remain in force until March 31, 1998.
ARTICLE 2 (GENERAL TRANSITIONAL MEASURES PURSUANT TO REPEAL OF SECURITIES AND
EXCHANGE COMMISSION AND SECURITIES SUPERVISORY BOARD)
(1) Any approval, authorization, order, disposition, measures, consent,
proposition, recommendation, direction, request, adjustment, etc. and
inspection or investigation conducted by the Securities and Exchange
Commission or the Securities Supervisory Board pursuant to the previous
provisions prior to the entry into force of this Act shall be deemed to
have been conducted by the Financial Supervisory Commission, the Securities
Futures Commission or the FSB Director under this Act.
(2) Any declaration and report, etc. received or accepted by the Securities
and Exchange Commission or the Financial Supervisory Board prior to the
entry into force of this Act shall be deemed to have been received or
accepted by the Financial Supervisory Commission, the Securities Futures
Commission or the FSB Director under this Act.
(3) Any corporation registered with the Securities and Exchange Commission
at the time when this Act enters into force shall be deemed to have been
registered with the Financial Supervisory Commission under this Act.
ARTICLE 3 (TRANSITIONAL MEASURES ON LICENSE FOR SECURITIES BUSINESS IN FOREIGN
COUNTRIES)
Any securities company which has obtained a license on operating a
securities business in a foreign country from the Minister of Finance and
Economy at the time when this Act enters into force shall be deemed to have
made a report to the Financial Supervisory Commission pursuant to the
amended provisions of Article 28 (7).
ARTICLE 4 (TRANSITIONAL MEASURES ON PROTECTION FUND)
The fund management company referred to in the previous provisions of
Article 69-2 (1) shall return the reserve accumulated by a securities
company bound to set
aside the fund referred to in paragraph (3) of the same Article (including
the right of indemnification referred to in Article 69-3 (4) where the real
balance of the protection fund falls short of the reserve due to the
payment, etc. referred to in Article 69-3 (1)) to the securities company
bound to set aside the fund not later than one month from the date of entry
into force of this Act.
ARTICLE 5 (TRANSITIONAL MEASURES ON LICENSE FOR INVESTMENT ADVISORY BUSINESS AND
DISCRETIONARY INVESTMENT BUSINESS IN FOREIGN COUNTRIES)
Any investment advisory company which has obtained a license on operating
investment advisory business or discretionary investment business in a
foreign country from the Minister of Finance and Economy at the time when
this Act enters into force shall be deemed to have made a report to the
Financial Supervisory Commission pursuant to the amended provisions of
Article 70-2 (3).
ARTICLE 6 (TRANSITIONAL MEASURES ON AUTHORIZATION, ETC. OF BUSINESS OF STOCK
EXCHANGE, ETC.)
Any business which has obtained authorization or approval from the Minister
of Finance and Economy pursuant to the previous provisions of Article 73
(1) 8, subparagraph 7 of Article 162-2 and Article 173-2 (2) at the time
when this Act enters into force shall be deemed to be a business authorized
or approved by the Financial Supervisory Commission under this Act.
ARTICLE 7 (TRANSITIONAL MEASURES ON APPROVAL OF CHANGE OF ARTICLES OF
ASSOCIATION OF SECURITIES FINANCE COMPANY, ETC.)
Any securities finance company, the Korea Securities Dealers Association,
any order matching company, any transfer agency and other organizations
relating to securities which have obtained approval from the Minister of
Finance and Economy
on the change of articles of association at the time this Act enters into
force shall be deemed to have obtained approval from the Financial
Supervisory Commission pursuant to the amended provisions of Article 151
(1) (including cases applied mutatis mutandis under Articles 169, 179, 180
and 181)
ARTICLE 8 (TRANSITIONAL MEASURES ON EXCHANGE OF INFORMATION WITH FOREIGN
SECURITIES SUPERVISORY AGENCIES)
Any exchange of information with a foreign securities supervisory agency by
the Stock and Exchange Commission under the previous provisions of Article
129-2 shall be deemed to have been effected by the Financial Supervisory
Commission under this Act.
ARTICLE 9 (TRANSITIONAL MEASURES ON REPORT OF MASS HOLDING OF STOCKS OF
CORPORATIONS REGISTERED WITH ASSOCIATION)
Any person who has to make a report referred to in the amended provisions
of Article 200-2 at the time when this Act enters into force shall make a
report to the Stock and Exchange Commission and the Korea Securities
Dealers Association not later than one month from the date of entry into
force of this Act.
ARTICLE 10 (TRANSITIONAL MEASURES ON CONTRIBUTIONS)
Contribution paid to the Securities Supervisory Board at the time when this
Act enters into force shall be deemed to be contributions paid to the
Financial Supervisory Board pursuant to the amended provisions of Article
206-8.
ARTICLE 11 (CONTINUANCE IN EXISTENCE OF SECURITIES SUPERVISORY BOARD AND
SUCCESSION TO ITS PROPERTY, RIGHTS AND DUTIES)
(1) Notwithstanding the amended provisions of this Act, the Securities
Supervisory Board shall continue in existence until the date on which the
Financial Supervisory Board is established pursuant to the Act on the
Establishment, etc. of Financial Supervisory Organizations.
(2) All the rights and duties which belong to the Securities Supervisory
Board shall be succeeded to by universal title by the Financial Supervisory
Board on the date on which the Financial Supervisory Board is established,
and the titles of the Securities Supervisory Board indicated in its
register or other public books on property and rights and duties shall be
deemed to be the titles of the Financial Supervisory Board.
(3) The value of property to which the Financial Supervisory Board succeeds
pursuant to paragraph (2) shall be the book value at the time of its
succession.
ARTICLE 11-2 (TRANSITIONAL MEASURES PURSUANT TO ABOLITION OF STOCK AND EXCHANGE
COMMISSION)
(1) The Securities Supervisory Board shall be deemed the Financial
Supervisory Board in the application of the provisions of Articles 18, 23,
39 and Chapters IV and V of the Act on the Establishment, etc. of Financial
Supervisory Organizations until the date on which the Financial Supervisory
Board is established.
(2) The Director of the Securities Supervisory Board shall be appointed by
the President on the recommendation of the Financial Supervisory Commission
until the Financial Supervisory Board is established, and the person who
has been appointed as Chairman of the Stock and Exchange Commission prior
to the entry into force of this Act shall be deemed to have been appointed
as the Director of the Securities Supervisory Board.
(3) The provisions of Article 29 (3) of the Act on the Establishment, etc.
of Financial Supervisory Organizations shall apply mutatis mutandis to the
appointment of the Vice-Director and assistant vice-director of the
Securities Supervisory Board until the date on which the Financial
Supervisory Board is established: Provided, That any person who has been
appointed under the previous Act at the time when this Act enters into
force shall be deemed to have been appointed under the Act on the
Establishment, etc. of Financial Supervisory Organizations until the date
on which the Financial Supervisory Board is established.
(4) Where the Director of the Securities Supervisory Board is unable to
perform his duties due to an accident from the date on which the Securities
and Exchange Commission is abolished to the date on which the Financial
Supervisory Board is established, the Vice-Director shall act as chairman
on his behalf. [This Article Newly Inserted by Act No. 5521, Feb. 24, 1998]
ARTICLE 12 (TRANSITIONAL MEASURES ON PENAL PROVISIONS)
The application of penal provisions to acts committed prior to the entry
into force of this Act shall be governed by the previous provisions.
ARTICLE 13 (TRANSITIONAL MEASURES ON FINE FOR NEGLIGENCE)
(1) The application of the provisions of a fine for negligence to acts
committed prior to the entry into force of this Act shall be governed by
the previous provisions.
(2) A fine for negligence imposed by the Minister of Finance and Economy at
the time when this Act enters into force shall be deemed to have been
imposed by the Financial Supervisory Commission pursuant to the amended
provisions of Article 213 (3).
ARTICLE 14
Omitted.
ARTICLE 15 (RELATION TO OTHER ACTS AND SUBORDINATE STATUTES)
Where other Acts and subordinate statutes cite the previous provisions at
the time when this Act enters into force, if this Act includes the
provisions corresponding to them, the provisions corresponding to this Act
shall be deemed to have been cited in lieu of the previous provisions.
ADDENDA (Act No. 5521, Feb. 24, 1998)
(1) (Enforcement Date) This Act shall enter into force on April 1, 1998:
Provided, That the amended provisions of Articles 21, 21-3, 25-2 (2), 188-2
(1), and 189-2 (1) and subparagraph 4 of Article 209 shall enter into force
on the date of its promulgation.
(2) (Applicable Cases concerning Tender Offer of Securities) The amended
provisions of Articles 21 (2), 21-3, and 25-2 (2) and subparagraph 4 of
Article 209 shall not apply to cases where tender offer statements have
been submitted pursuant to the previous provisions prior to the entry into
force of this Act.
ADDENDUM (Act No. 5539, May 25, 1998)
This Act shall enter into force on the date of its promulgation.
ADDENDA (Act No. 5559, Sep. 16, 1998)
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force two months after the date of its
promulgation.
ARTICLES 2 THROUGH 9 Omitted.
ADDENDA (Act No. 5591, Dec. 28, 1998)
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force on the date of its promulgation. (Proviso
Omitted.)
ARTICLES 2 THROUGH 5 Omitted.
ADDENDA (Act No. 5736, Feb. 1, 1999)
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force on April 1, 1999: Provided, That the
amended
provisions of Articles 186-3, 186-5 (limited to where Article 186-5 is
applicable quarterly business reports), 191-12 (1) and (3) (limited to
where Article 191-12 (1) and (3) is applicable to Association-registered
corporations), and 191-13 shall enter into force on January 1, 2000, and
the amended provisions of Articles 3, 23, 29, 30, 33 (1), 35, 45, 48, and
65 through 69, Section 3 (Article 69-6), Articles 70-2 (3) and (4), 73, 78,
81, 85, 86, 94, 104, 109 through 111, 115, 117, 159, 162-2, 164, 173-2,
173-6, 173-7, 175, 176, 178, 179, 181, 186 (1), 189, 190, 191 (1) and (5),
and 191-12 (2) shall enter into force on the date of its promulgation.
ARTICLE 2 (APPLICABLE CASES CONCERNING IMMUNITY FROM COMPENSATION LIABILITY DUE
TO FALSE ENTRY, ETC.)
The amended provisions of Article 14 shall apply to a registration
statement of securities or a prospectus (including a preliminary
prospectus) submitted after this Act enters into force.
ARTICLE 3 (APPLICABLE CASES CONCERNING DISGORGEMENT OF SHORT-TERM SALES MARGIN
OF INSIDERS)
With respect to officers, employees or major stockholders of an
Association-registered corporation at the time when this Act enters into
force, the amended provisions of Article 188 (1) and (2) shall apply to the
portion of purchase or sale effected on or after the date this Act enters
into force. In this case, in applying the amended provisions of Article 188
(2), the calculation of a six-month period shall be reckoned from the point
of purchase or sale effected initially after this Act enters into force.
ARTICLE 4 (APPLICABLE CASES CONCERNING APPOINTMENT AND DISMISSAL OF AUDITORS OF
ASSOCIATION-REGISTERED CORPORATION)
The amended provisions of Article 191-11 (1) and (2) shall apply starting
from a general meeting of stockholders to which a bill for appointing,
dismissing or determining remuneration for an auditor is first proposed
after this Act enters into force, and the amended provision of paragraph
(3) of the said Article shall apply starting from the audit report first
submitted by the auditor to directors after the entry into force of this
Act.
ARTICLE 5 (APPLICABLE CASES CONCERNING PENALTIES)
The amended provisions of Article 206-11 shall apply starting from the
portion submitted, stated, announced, disclosed or reported after the entry
into force of this Act.
ARTICLE 6 (TRANSITIONAL MEASURES ON QUALIFICATIONS AS OFFICERS OF SECURITIES
COMPANIES)
Where an officer of a securities company who has been in office at the time
when this Act enters into force falls under the amended provisions of
Article 33 (2) 4 due to a cause which occurred before this Act enters into
force, he shall, notwithstanding the said amended provisions, be governed
by the previous provisions until his term of office expires.
ARTICLE 7 (TRANSITIONAL MEASURES ON CUSTODY AND MANAGEMENT OF CUSTOMER DEPOSIT
MONEY BY SECURITIES COMPANIES)
A securities company (including foreign securities company's domestic
branches) engaged only in business listed in Article 28 (2) 2 at the time
of the entry into force of this Act which has received, had custody of, and
managed customer deposit money, shall, notwithstanding the amended
provisions of Article 44-2, be governed by the amended provisions of
Article 44-3 for two years from the date of the entry into force of this
Act.
ARTICLE 8 (TRANSITIONAL MEASURES ON SECURITIES COMPANIES' TRADE NAMES)
A trade name of a securities company engaged only in business listed in
Article 28 (2) 2 at the time of the entry into force of this Act shall,
notwithstanding the amended provisions of the latter part of Article 62
(1), be governed by the previous provisions.
ARTICLE 9 (TRANSITIONAL MEASURES ON REGISTRATION OR REPORT OF INVESTMENT
ADVISORY BUSINESS, ETC.)
A person who has registered investment advisory business with, obtained a
license for discretionary investment business from, and reported any
similar investment advisory business to the Minister of Finance and Economy
pursuant to the previous provisions at the time of the entry into force of
this Act shall be deemed to have registered with, or reported to the
Financial Supervisory Commission under the amended provisions of Articles
70-2, 70-8 and 70-9.
ARTICLE 10 (TRANSITIONAL MEASURES ON REGISTRATION OF TRANSFER AGENTS)
A transfer agent who has obtained a license from the Minister of Finance
and Economy pursuant to the previous provisions at the time of the entry
into force of this Act shall be deemed to have registered with the Minister
of Finance and Economy under the amended provisions of Article 180 (1).
ARTICLE 11 (TRANSITIONAL MEASURES ON SUBMISSION OF CONGLOMERATE COMBINED
FINANCIAL STATEMENTS)
In applying the amended provisions of Article 186-2 (5), conglomerate
combined
financial statements of a business year commencing after January 1, 1999
shall be submitted within seven months after the end of the business year.
ARTICLE 12 (TRANSITIONAL MEASURES ON REPORT OF STATUS OF STOCKHOLDINGS)
The officers or major stockholders of an Association-registered corporation
which has to report the status of stockholdings pursuant to the amended
provisions of Article 188 (6) at the time when this Act enters into force
shall, notwithstanding the amended provisions of the said Article and
paragraph, report the status of stockholdings to the Securities Futures
Commission and the Association within one month from the date when this Act
enters into force.
ARTICLE 13 (TRANSITIONAL MEASURES ON LIMIT EXCESS OF ACQUISITION OF TREASURY
STOCKS BY ASSOCIATION-REGISTERED CORPORATIONS)
An Association-registered corporation which holds treasury stocks in excess
of the acquisition limit under the latter part of Article 189-2 (1) at the
time when this Act enters into force shall dispose of the excess by the
time the money trust contract under paragraph (2) of the same Article
terminates.
ARTICLE 14 (TRANSITIONAL MEASURES ON APPOINTMENTS OF STANDING AUDITORS OF
ASSOCIATION-REGISTERED CORPORATIONS)
An Association-registered corporation which has to appoint full-time
auditors pursuant to the amended provisions of Article 191-12 (1) shall
appoint them by the first stockholders meeting after this Act enters into
force.
ARTICLE 15 (TRANSITIONAL MEASURES ON QUALIFICATIONS FOR STANDING AUDITORS)
Qualifications for full-time auditors who are in office at the time when
this Act enters into force shall, notwithstanding the amended provisions of
Article 191-12 (3), be governed by the previous provisions until their
terms of office expire.
ARTICLE 16 (TRANSITIONAL MEASURES ON PENAL PROVISIONS)
The application of penal provisions to any act committed before this Act
enters into force shall be governed by the previous provisions.
ADDENDA (Act No. 5982, May 24, 1999)
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force on the date of its promulgation. (Proviso
Omitted.)
ARTICLES 2 THROUGH 6 Omitted.
ADDENDA (Act No. 6176, Jan. 21, 2000)
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force on April 1, 2000: Provided, That the
amended provisions of Articles 2, 3, 54-5, 54-6, 58, 64, 160, 174-6 (5),
189-2, 189-4, 191-9, 191-11, 191-12, 191-14, 191-16 and 191-17 shall enter
into force on the date
of its promulgation.
ARTICLE 2 (TRANSITIONAL MEASURES CONCERNING DISQUALIFICATIONS)
Where any officer of a securities company, an investment advisory company,
a securities finance company or the Association falls under the
disqualification due to the cause under the amended provisions of Article
33 (2) (including the case in which the provisions apply mutatis mutandis
under the provisions of Articles 70-7, 149 (2) and 169) that has occurred
prior to the enforcement of this Act at the time of the entry into force of
this Act, his case shall be dealt with according to the previous provisions
notwithstanding the amended provisions.
ARTICLE 3 (TRANSITIONAL MEASURES CONCERNING EQUITY CAPITAL REGULATION RATE)
The amended provisions of Article 54-2 shall not apply to any securities
company falling under any of the following subparagraphs until the day
prescribed by the Presidential Decree:
1.A securities company that has been incorporated as a result of the
conversion of a financial institution or a securities company that has
merged with a financial institution in accordance with the Act on the
Structural Improvement of the Financial Industry; and
2.A securities company that, after having been ordered to take timely and
corrective measures under the Act on the Structural Improvement of the
Financial Industry, is presently implementing a plan for such measures.
ARTICLE 4 (TRANSITIONAL MEASURES CONCERNING INTERNAL CONTROL STANDARDS OF
SECURITIES COMPANY)
Any securities company shall set its internal control standards in
accordance with the amended provisions of Article 54-4 within six months
after the enforcement of this Act.
ARTICLE 5 (TRANSITIONAL MEASURES CONCERNING APPOINTMENTS OF OUTSIDE DIRECTORS OF
SECURITIES COMPANY)
Any securities company that has to appoint outside directors in accordance
with the amended provisions of Article 54-5 shall appoint such outside
directors in accordance with such amended provisions at a regular general
meeting of stockholders that is called for the first time after the
enforcement of this Act. In this case, any outside director appointed at
the regular general meeting of stockholders shall be deemed to be
recommended by the outside director candidate recommendation committee in
accordance with the provisions of Article 54-5 (2) and (3).
ARTICLE 6 (TRANSITIONAL MEASURES CONCERNING ESTABLISHMENT OF INSPECTION
COMMITTEE OF SECURITIES COMPANY)
Any securities company that has to establish an inspection committee in
accordance with the amended provisions of Article 54-6 shall establish such
inspection committee at a regular general meeting of stockholders that is
called for the first time after the enforcement of this Act.
ARTICLE 7 (TRANSITIONAL MEASURES CONCERNING STOCK OPTION GRANTING CORPORATION)
Any corporation that grants its officers and employees the stock option
under the previous provisions at the time of the entry into force of this
Act shall be deemed to grant them such stock option in accordance with the
amended provisions of Article 189-4.
ARTICLE 8 (TRANSITIONAL MEASURES CONCERNING APPOINTMENTS OF OUTSIDE DIRECTORS OF
STOCK-LISTED CORPORATION)
(1) Any stock-listed corporation that has to appoint outside directors in
accordance with the amended provisions of Article 191-16 shall appoint such
outside directors in accordance with such amended provisions at a regular
general meeting of stockholders that is called for the first time after the
enforcement of this Act. In this case, any person appointed as an outside
director at the regular general meeting of stockholders shall be deemed to
be recommended by the outside director candidate recommendation committee
in accordance with the provisions of Article 54-5 (2) and (3) that are
applied mutatis mutandis by the amended provisions of Article 191-16 (3).
(2) Any stock-listed corporation under the provisions of the proviso of
Article 191-16 (1) shall, notwithstanding the amended provisions of the
same Article, increase the number of outside directors to 3 or more prior
to a regular general meeting of stockholders that is called for the first
time after the end of the 2000 business year, but may make the number of
outside directors less than half of the total number of directors on the
board of directors.
(3) Any outside director who holds office at a stock-listed corporation at
the time that this Act is enforced shall be deemed to be an outside
director appointed under this Act until his term of office expires.
ARTICLE 9 (TRANSITIONAL MEASURES CONCERNING ESTABLISHMENT OF INSPECTION
COMMITTEE OF STOCK-LISTED CORPORATION)
Any stock-listed corporation that has to establish an inspection committee
in accordance with the amended provisions of Article 191-17 shall establish
such
inspection committee in accordance with the amended provisions at a regular
general meeting of stockholders that is called for the first time after the
enforcement of this Act.
ARTICLE 10 (TRANSITIONAL MEASURES CONCERNING STANDING AUDITOR FOLLOWING
ESTABLISHMENT OF INSPECTION COMMITTEE OF STOCK-LISTED CORPORATION)
With respect to any standing auditor (in case that there are not less than
two standing auditors, one standing auditor designated by the board of
directors of a stock-listed corporation out of such not less than two
standing auditors) who holds office at a stock-listed corporation that has
to establish an inspection committee in accordance with the amended
provisions of Article 191-17 at the time of the entry into force of this
Act, where his term of office does not expire by the date on which a
regular general meeting of stockholders is called to establish an
inspection committee in accordance with the provisions of Article 9 of the
Addenda and he is not dismissed at such regular general meeting of
stockholders, he shall be deemed not an outside director but a member of
the inspection committee until his term of office expires. In this case,
such standing auditor shall be deemed a director appointed at a general
meeting of stockholders in accordance with the provisions of Article 382
(1) of the Commercial Act until his term of office expires.
ADDENDA (Act No. 6423, Mar. 28, 2001)
ARTICLE 1 (ENFORCEMENT DATE)
This Act shall enter into force on April 1, 2001: Provided, That the
amended provisions of Articles 2 (19), 54-5 (3), 54-6 (2) and (6), 64,
172-4, 186 (1), 189-4, 191-13, 191-17 (2), 191-18, and 192 (2) shall enter
into force on the date of its promulgation and the amended provisions of
Article 2 (18) shall enter into force on
the date prescribed by the Presidential Decree.
ARTICLE 2 (APPLICABLE CASES FOR DISPOSITION RIGHT OF FINANCIAL SUPERVISORY
COMMISSION)
The amended provisions of subparagraph 1 of Article 20 shall apply starting
with the portion of any registration statement or any after-report
submitted first after the enforcement of this Act.
ARTICLE 3 (APPLICABLE CASES FOR QUALIFICATIONS FOR COMPLIANCE OFFICER OF
SECURITIES COMPANY)
The amended provisons of Article 54-4 (4) shall apply starting with the
portion of the compliance officer selected and appointed first after the
enforcement of this Act.
ARTICLE 4 (APPLICABLE CASES FOR SELECTION OF CHAIRMAN OF INSPECTION COMMITTEE OF
MAJOR STOCK-LISTED CORPORATION)
In the event that the chairman of the inspection committee of any
stock-listed corporation or any Association-registered corporation that is
required to set up an inspection committee at the time that this Act enters
into force is not an outside director, such stock-listed corporation or
such Association-registered corporation shall select and appoint a chairman
who is an outside director in compliance with the amended provisions of
Article 54-6 (2) (including a case where the provisions are applied mutatis
mutandis in Article 191-17 (2)) not later than three months after this Act
takes effect.
ARTICLE 5 (APPLICABLE CASES FOR RECOMMENDATION OF CANDIDATES FOR PUBLIC INTEREST
DIRECTOR OF STOCK EXCHANGE)
The amended provisions of Article 78 (4) shall apply starting with the
portion of a director representing the public interest selected and
appointed first after the enforcement of this Act.
ARTICLE 6 (APPLICABLE CASES FOR GRANTING OF STOCK OPTION)
The amended provisions of Article 189-4 (3) and (4) shall apply starting
with the portion of the stock option granted first after the enforcement of
this Act.
ARTICLE 7 (APPLICABLE CASES FOR APPRAISAL RIGHTS OF STOCKHOLDERS OF
ASSOCIATION-REGISTERED CORPORATION)
The amended provisions of Article 191 shall apply starting with the portion
of a resolution adopted first by the board of directors after the
enforcement of this Act.
ARTICLE 8 (APPLICABLE CASES FOR IMPOSITION OF PENALTIES)
The amended provisions of Article 206-11 shall apply starting with the
portion of the submission, statement, public notice, disclosure, or report
made first after the enforcement of this Act.
ARTICLE 9 (TRANSITIONAL MEASURE CONCERNING LICENSE OF SECURITIES BUSINESS)
Any person who is licensed with his securities business under the previous
provisions of Article 2 (8) 3 at the time that this Act enters into force
shall be deemed licensed with his securities business under the amended
provisions of Article 2 (8) 3.
ARTICLE 10 (TRANSITIONAL MEASURE CONCERNING TENDER OFFER OF SECURITIES)
(1) In the event that a tender offer statement is filed under the previous
provisions of Article 21-2 prior to the enforcement of this Act,
notwithstanding the amended provisions of Articles 21, 21-2, 21-3, 22, 23
and 23-2, such tender offer statement shall be governed by the previous
provisions.
(2) With respect to a registration statement, etc. filed with the Financial
Supervisory Commission, etc. under the previous provisions of Article 26
prior to the enforcement of this Act, notwithstanding the amended
provisions of Article 26, such registration statement, etc. shall be
governed by the previous provisions.
ARTICLE 11 (TRANSITIONAL MEASURE CONCERNING RESTRICTIONS ON DIRECTORS HOLDING
CONCURRENT OFFICES)
With respect to prohibiting any standing officer of a securities company,
who is engaged in the regular business of a corporation that is not a
company from holding any concurrent office under the previous provisions at
the time that this Act enters into force, notwithstanding the amended
provisions of Article 48, he shall be governed by the previous provisions
until his term of office expires.
ARTICLE 12 (TRANSITIONAL MEASURE CONCERNING TRADE NAME OF SECURITIES COMPANY)
With respect to any securities company that uses a trade name under the
previous provisions at the time that this Act enters into force,
notwithstanding the amended provisions of Article 62 (1), the use of such
trade name by such securities company shall be governed by the previous
provisions.
ARTICLE 13 (TRANSITIONAL MEASURE CONCERNING MANAGING DIRECTOR AND STANDING
DIRECTOR OF
STOCK EXCHANGE)
(1) Any person who works for the Stock Exchange as a managing director at
the time that this Act enters into force shall be deemed appointed as vice
chief director of the Stock Exchange under the amended provisions of
Article 78 (1) 2 and (3) until his term of office expires.
(2) Any person who works for the Stock Exchange as a standing director at
the time that this Act enters into force shall be deemed an executive
officer under the amended provisions of Article 74 (1) 5 until his term of
office expires.
ARTICLE 14 (TRANSITIONAL MEASURE CONCERNING ASSOCIATION BROKERAGE MARKET
OPERATION COMMITTEE AND ITS MEMBERS)
(1) The Committee on the Operation of Association Brokerage Market, which
is established in accordance with the regulations on the operation of the
previous Association brokerage market at the time that this Act enters into
force, shall be deemed the Association Brokerage Market Operation Committee
established pursuant to the amended provisions of Article 172-2 (2).
(2) Members of the committee that is deemed the Association Brokerage
Market Operation Committee under paragraph (1) shall be deemed members of
the Association Brokerage Market Operation Committee established under the
amended provisions of Article 172-2 (2) until their terms of office expire.
ARTICLE 15 (TRANSITIONAL MEASURE CONCERNING REGULATIONS ON OPERATION OF
ASSOCIATION BROKERAGE MARKET)
The regulations made on the operation of Association brokerage market at
the time
that this Act enters into force shall be deemed to be in conformity with
the amended provisions of Article 172-3 within the limit of 6 months from
the date on which this Act enters into force, until new regulations are
made under the amended provisions of Article 172-3.
ARTICLE 16 (TRANSITIONAL MEASURES CONCERNING RETIREMENT OF STOCKS)
Any treasury stocks held by any stock-listed corporation or any
Association-registered corporation after having acquired them under Article
189-2 at the time that this Act enters into force may be retired under the
amended provisions of Article 189 (1). In this case, the requirements
falling under each of the following subparagraphs shall be satisfied and
Article 189 (4) and (5) shall be applied thereto:
1.It is required to file a report thereon with the Financial Supervisory
Commission, the Stock Exchange or the Association under Article 189-2 (3).
In this case, in the application of the same paragraph of the same Article,
the Financial Supervisory Commission may set separate standards;
2.It is required to go through a resolution of the board of directors with
respect to kinds and total numbers of stocks to be retired, the total value
of stocks to be retired and the date on which it is intended to retire such
stocks;
3.The total value of the stocks to be retired is required to be within the
limit provided for in Article 189 (3) 2; and
4.The stocks to be retired are required to be in the lapse of 6 months from
the date on which they are acquired.
ARTICLE 17 (TRANSITIONAL MEASURES CONCERNING SELECTION AND APPOINTMENT OF
OUTSIDE DIRECTORS OF ASSOCIATION-REGISTERED CORPORATION)
(1) Any Association-registered corporation that is required to select and
appoint outside directors under the amended provisons of the main sentence
of Article 191-16 (1) shall select and appoint such outside directors under
the amended provisions at a regular general meeting of stockholders called
for the first time after the enforcement of this Act. In this case,
notwithstanding the amended provisions of the main sentence of the same
paragraph of the same Article, the relevant Association-registered
corporation shall increase the number of outside directors to not less than
one prior to a regular general meeting of stockholders called for the first
time after the end of the 2001 business year, but the number of the outside
directors may be less than a quarter of the total number of directors on
the board of directors.
(2) Any Association-registered corporation that is required to select and
appoint outside directors under the amended provisions of the proviso of
Article 191-16 (1) shall select and appoint such outside directors under
the same amended provisions at a regular general meeting of stockholders
called for the first time after the enforcement of this Act. In this case,
notwithstanding the amended provisions, the relevant Association-registered
corporation shall make the number of outside directors not less than three
prior to a regular general meeting of stockholders called for the first
time after the end of the 2001 business year, but may make the number of
the outside directors less than a half of the total number of directors on
the board of directors. Any person who is selected and appointed as an
outside director at a regular general meeting of stockholders called for
the first time after the enforcement of this Act shall be deemed
recommended by the outside director candidate recommendation committee.
ARTICLE 18 (TRANSITIONAL MEASURE CONCERNING ESTABLISHMENT OF INSPECTION
COMMITTEE OF ASSOCIATION-REGISTRATION CORPORATION)
Any Association-registered corporation that is required to set up an
inspection committee under the amended provisions of Article 191-17 shall
establish such inspection committee under the same amended provisions by
the date on which a
regular general meeting of stockholders is called for the first time after
the enforcement of this Act.
ARTICLE 19 (TRANSITIONAL MEASURE CONCERNING STANDING AUDITOR FOLLOWING
ESTABLISHMENT OF INSPECTION COMMITTEE OF ASSOCIATION-REGISTERED CORPORATION)
In the event the term of office of any standing auditor (referring to a
standing auditor designated by the board of directors of the relevant
company in the event of not less than two standing auditors) who serves in
an Association-registered corporation that is required to set up an
inspection committee under the amended provisions of Article 191-17 at the
time of entry into force of this Act does not expire by the date on which a
regular general meeting of stockholders is called to discuss the question
of establishing an inspection committee under the provisions of Article 16
of the Addenda and he is not dismissed at such regular general meeting of
stockholders, such standing auditor shall be deemed a member, who is not an
outside director, of the inspection committee of the relevant corporation
until his term of office expires. In this case, the standing auditor shall
be deemed a director selected and appointed at a general meeting of
stockholders under Article 382 (1) of the Commercial Act until the time
that his term of office expires.
ARTICLE 20 (TRANSITIONAL MEASURE CONCERNING PENAL PROVISIONS)
The application of the penal provisions to any act committed prior to the
enforcement of this Act shall be governed by the previous provisions.
ADDENDA (Act No. 6623, Jan. 26, 2002)
(1) (Enforcement Date) This Act shall enter into force on February 1, 2002.
(2) (Applicable Cases concerning Appraisal Rights of Stockholders) The
amended provisions of Article 191 shall apply with respect to the public
notice or notification which is made for the convocation of the general
meeting of stockholders or which is made under Article 360-9 (2) or 527-2
(2) of the Commercial Act on or after the date this Act takes effect.
(3) (Transitional Measures concerning Reserve for Securities Transaction)
The reserve for securities transaction set aside by a securities company in
accordance with the previous provisions of Article 40 at the time of the
entry into force of this Act shall be distributed proportionally over a
fixed period as set and publicly announced by the Financial Supervisory
Commission.
(4) (Transitional Measures concerning Fine for Negligence) The application
of a fine for negligence to any act committed prior to the enforcement of
this Act shall be governed by the previous provisions.
ADDENDA (Act No. 6695, Apr. 27, 2002)
(1) (Enforcement Date) This Act shall enter into force on the date of its
promulgation.
(2) (Transitional Measures concerning Application of Penal Provisions) The
imposition of a penalty on any act committed prior to the enforcement of
this Act shall be governed by the previous provisions.