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Laws of the Republic of Korea |
BASIC WORKERS WELFARE ACT
Act No. 6510, Aug. 14, 2001
Amended by Act No. 6916, May 29, 2003
Act No. 7159, Jan. 29, 2004
Act No. 7469, Mar. 31, 2005
Act No. 8135, Dec. 30, 2006
Act No. 8635, Aug. 3, 2007
Act No. 8852, Feb. 29, 2008
Act No. 9042, Mar. 28, 2008
CHAPTER
General Provisions
Article 1 (Purpose)
The purpose of this Act is to improve workers' quality of life and contribute to the balanced development of the national economy by prescribing the matters necessary in establishing welfare policies for workers and carrying out welfare projects. Article 2 (Definition)
The terms used in this Act are defined as follows :
1. The term ßÖworkerß×refers to a person who lives on wages,
salary and other corresponding incomes, regardless of
types of occupation
2. The term ßÖemployerß×refers to a person who carries out
business using workers.
3. The term "housing business operator" refers to a person
who builds or purchases houses for the purpose of selling
or leasing
them to workers.
4. The term ßÖemployee stock ownership associationß×refers to
an entity which is organized by workers of a corporation
in accordance
with the conditions prescribed in this Act
in order to acquire and manage the stocks of the corporation
concerned.
Article 3 (Basic Principles of Workers Welfare Policies)
(1) Worker welfare (excluding basic working conditions such
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as wages, working hours, etc.) policies shall aim to expand
opportunities for workers to participate in economic and social
activities,
to promote their will to work and to improve their
quality of life.
(2) In establishing and implementing worker welfare policies,
consideration and support shall be given to ensure that workers
are
not subject to discrimination on the grounds of gender, age,
physical condition, employment type, religion, social status, etc.
(3) In providing support for the improvement of workersßÓ
welfare pursuant to this Act, preferential treatment shall be
given to
workers in small and medium enterprises,
low-income workers and workers on long-term service.
(4) The scope of small and medium enterprises, low-income
workers and workers on long-term service referred to in
paragraph (2)
shall be prescribed by the Ordinance of the
Ministry of Labor in consideration of the characteristics of
workers welfare projects.
Article 4 (Responsibility of the State or Local Governments)
In establishing and implementing workers welfare policies, the
State
or local governments shall make efforts to promote
workersßÓwelfare by providing budget and taxation support according
to the basic
principles of workers welfare policies prescribed in
Article 3.
Article 5 (Responsibility of Employers and Trade Unions)
(1) An employer shall make an effort to promote the
welfare of workers
in the concerned workplace.
(2) An employer may establish an in-company Workers Welfare
Fund to promote the welfare of workers in the concerned
workplace.
Necessary matters concerning the establishment and
management of and support, etc., for an in-company Workers
Welfare Fund shall
be prescribed by a separate law.
(3) Trade unions and workers shall make an effort to improve
productivity by increasing their
will to work and cooperate on
workers welfare policies.
Article 6 (Prohibition of Use for Other Purposes)
Any person who receives subsidies or loans for workersßÓ
welfare shall use the
money only for the intended projects.
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Article 7 (Raising Funds)
(1) The State shall make an active effort to raise funds
needed for workers welfare projects under this Act.
(2) The funds raised
pursuant to paragraph (1) may be
contributed or loaned to the Workers Welfare Promotion Fund
under Article 47.
Article 8 (Workers Welfare Policy Committee)
(1) The Central Workers Welfare Policy Committee (hereinafter
referred to as ßÖthe Central Committeeß×) shall be set up in the
Ministry of Labor to deliberate the basic directions of and
major policies on workers welfare under this Act.
(2) The Central Committee
shall be composed of less than
15 members including a chairman, with the numbers of members
representing workers, employers and
public interests to be equal,
and the chairman shall be assumed by the Minister of Labor
and its members shall be appointed by
the Minister of
Labor from among those prescribed by the Presidential Decree.
(3) The Central Committee shall deliberate the matters
described in any of the following subparagraphs:
1. Basic plan for the promotion of workersßÓwelfare
under Article 9 (1);
2. Matters concerning the raising of funds needed for
workers welfare projects; and
3. Other matters referred to by the chairman.
(4) Necessary matters concerning the composition and operation
of the Central Committee
shall be prescribed by the Presidential
Decree.
(5) A City and Provincial Workers Welfare Policy Committee
(hereinafter referred to as ßÖCity and Provincial Committeeß×) may
be
set up in special cities, metropolitan cities and provinces
(hereinafter referred to as ßÖcities and provincesß×) to deliberate
the basic directions of and major policies on workersßÓwelfare in
cities and provinces. In case there are other committees suitable
to function as the City and Provincial Committee, the former
may take the place of the latter and necessary matters
concerning
the composition and operation of the City and
Provincial Committee shall be prescribed by an ordinance.
Article 9 (Establishment,
etc., of Basic Plan)
(1) The Minister of Labor shall establish a basic plan for the
promotion of workersßÓwelfare(hereinafter referred to as the
ßÖbasic
planß×) every five years through consultation with the
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heads of related central administrative agencies. In this case, the
basic plan shall be subject to deliberation by the Central Committee
under Article 8.
(2) The basic plan shall include the matters described in any
of the following subparagraphs:
1. Matters on workersßÓresidential stability;
2. Matters on workersßÓlivlihood stability;
3. Matters on workersßÓproperty formation;
4. Matters on the employee stock ownership system;
5. Matters on the establishment and operation of welfare
facilities for workers:
6. Matters on the raising of funds needed for workers
welfare projects; and
7. Other matters considered by the Minister of Labor to be
necessary for the promotion of workersßÓwelfare.
(3) The Minister of Labor shall, if he/she has established a
basic plan, shall announce it.
(4) The head of a local government shall establish and
implement the workers welfare promotion plan of the local
government concerned
in accordance with a basic plan
deliberated by the Central Committee pursuant to Article 8(3).
Article 10 (Cooperation, etc., of
Related Authorities)
(1) The Minister of Labor or the head of a local
government may request related agencies and associations such
as central administrative agencies to submit documents
required for
the establishment of a basic plan and
implementation of workers welfare projects and the related
agencies and associations shall
comply with such a request
unless there is a justifiable reason.
(2) If local governments and the State-subsidized nonprofit
corporations carry out workers welfare projects, they shall
consult
with the Minister of Labor.
Article 11 (Financial Institutions Engaging in Loan Activities)
(1) The State and a local government may have financial
institutions
(hereinafter referred to as ßÖinstitutions engaging in
loan activitiesß×) described in any of the following subparagraphs
engage
in loan activities under this Act:
1. A financial institution established under Article 8 (1) of
the Banking Act; and
2. Other financial institutions prescribed by the Presidential
Decree.
(2) The Minister of Labor and the head of a local
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government may give priority, such as in engaging in loan
activities under this Act, to the financial institutions which give
preferential
treatment to workers.
Article 12 (Tax Incentives)
The State or the head of a local government may provide
tax incentives as prescribed in tax laws such as the Restriction
of Special
Taxation Act, in a bid to promote workersßÓwelfare
by ensuring workersßÓresidential stability, livlihood stability,
property formation,
the activation of the employee stock ownership
system, and the establishment and operation of workers welfare
facilities and the
workers welfare promotion fund.
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CHAPTER
Workers Residential Stability
Article 13 (Operation of Workers Housing Supply System)
(1) In order to support the acquisition or rental of housing
by workers,
the State and a local government may operate a
system of having a housing business operator sell or lease
(hereinafter referred
to as ßÖsupplyß×) housing preferentially to workers.
(2) The Minister of Land, Transport and Marine Affairs
shall include a supply
plan on the housing to be supplied to
workers (hereinafter referred to as ßÖhousing for workersß×)
pursuant to paragraph (1) in
the comprehensive housing plan
prescribed in Article 7 of the Housing Act.
Article 14 (Loans for Workers' Housing Funds)
(1) In the cases falling under any of the following
subparagraphs, the State may provide loans for funds
(hereinafter referred
to as "workers' housing funds") needed by
a housing business operator or a worker out of the National
Housing Fund prescribed in
Article 60 of the Housing Act:
1. In case a housing business operator builds or
purchases housing for workers; and
2. In case a worker acquires housing for workers.
(2) Necessary matters concerning those eligible for and
procedures for loans for
workers' housing funds, and other
supports shall be determined by the Minister of Land, Transport
and Marine Affairs through consultation
with the Minister of
Labor.
Article 15 (Loans for Housing Purchase Funds, etc.)
(1) To ensure workersßÓresidential stability, the State
may provide loans for
funds(hereinafter referred to as ßÖhousing
purchase fundsß×) needed by workers to purchase(including new
construction) or rent
housing out of the National Housing Fund
prescribed in Article 60 of the Housing Act.
(2) The State or a local government may have institutions
engaging in loan activities provide loans for housing purchase
funds
to workers at an interest rate lower than general interest
rates and pay the balance.
(3) Necessary matters concerning those eligible for and
procedures for loans for housing purchase funds, and other
supports shall
be determined by the Minister of Land, Transport
and Marine Affairs through consultation with the Minister of
Labor.
Article 16 (Support for Moving by Workers, etc.)
The State may provide necessary support to ensure
residential stability for workers who move or live far away
from their families
because of employment and a local
government may do so for workers who move or live far away
from their families because of employment,
a change of
workplace, etc.
CHAPTER
Workers Livlihood Stability and Property Formation
Article 17 (Support for Livlihood Stability Funds)
(1) The State shall provide
necessary support such as loans
for medical, wedding and funeral expenses of workers and their
families in order to support workersßÓlivlihood
stability.
(2) Taking into account the economic situation and the time
when workers need livlihood stability funds, etc., the State
may
provide necessary support such as loans for living expenses in
order to stabilize the livlihood of workers who do not receive
their wages.
(3) Necessary matters concerning those eligible for and
procedures for support for medical, wedding, funeral, and
living expenses
under paragraph (1) and (2) shall be
prescribed by the Ordinance of the Ministry of Labor.
Article 18 (Support, etc., for School
Expenses)
(1) The State may provide necessary support such as scholarship
or loans for school expenses in order to expand opportunities of
education for workers and their children.
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(2) Necessary matters concerning those eligible for and
procedures for the provision of scholarship and loans for school
expenses
shall be prescribed by the Ordinance of the Ministry
of Labor.
Article 19 (Preferential Savings Account for Workers)
The State shall operate a savings account giving preferential
treatment to
workers in order to support workers property
formation.
Article 20 (Support for Gain-sharing, etc.)
(1) If a business achieves more than its business targets,
such as profit targets for the year concerned, etc., set in
consultation
with workers, the employer shall make an effort to
distribute the surplus to workers or use it to promote workersßÓ
welfare.
(2) If a worker in the concerned workplace invents or
makes a suggestion related to his/her work or contributes to an
increase
in productivity and sales of the company by developing
new knowledge, information and technology, the employer shall
make an effort
to give a corresponding reward to the worker.
In this case, specific criteria for the reward shall be determined
through the Labor-Management
Council, etc. pursuant to the Act
on the Promotion of Worker Participation and Cooperation.
(3) The State or a local government
may provide necessary
support in a bid to activate the gain-sharing, etc., prescribed in
paragraph (1) and (2).
CHAPTER
Support for Credit Guarantee for Workers
Article 21 (Credit Guarantee Support and Those Eligible Therefor)
(1) With regard to monetary obligations a worker weak in
capability
to offer collaterals(including the unemployed who has
applied for job-seeking service and workers suffering from
accidents as prescribed
in the Industrial Accident Compensation
Insurance Act; hereinafter the same shall apply in this Chapter)
has to pay as he/she has
received loans for the livelihood
stability and school expenses, etc., from a financial institution,
the Korea Labor Welfare Corporation(hereinafter
referred to as the
ßÖCorporationß×) established under the Industrial Accident
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Compensation Insurance Act may guarantee the payment of
the monetary obligations according to a contract with the
concerned financial
institution. In this case, loan business and
workers eligible for such guarantee shall be prescribed by the
Ordinance of the Ministry
of Labor.
(2) The contract between the Corporation and a financial
institution under paragraph (1) shall contain the matters described
in
any of the following subparagraphs:
1. Contents that guarantee the payment of obligations
pursuant to paragraph (1);
2. Loan business and workers eligible for the credit
guarantee;
3. Ceiling amount for the credit guarantee support per
worker;
4. Reasons for and period and method of a request for
the payment of guaranteed obligations;
5. Deliberation on and scope of the substitute payment and
the ratio in which the Corporation and the financial
institution share
the amount of loss;
6. Matters to be notified to the Corporation by the financial
institution concerning the operation of the credit
guarantee system
; and
7. Other matters necessary for the credit guarantee for
workers.
(3) If the Corporation intends to sign the contract
prescribed in paragraph (1), it shall obtain an approval from the
Minister
of Labor. The same shall apply if the Corporation
intends to modify the contents of the contract.
Article 22 (Guaranty Relationship)
(1) If the Corporation has decided to provide a credit
guarantee for a worker, it shall notify the concerned worker
and the financial
institution from which the worker intends to
receive loans of the fact.
(2) Credit guaranty relationship is established at the time
when the notified financial institution offers loans to the concerned
worker pursuant to paragraph (1).
Article 23 (Fee for Guarantee)
The Corporation may collect guarantee fees from a worker
whose credit is guaranteed pursuant to Article 21 at an annual
rate not
exceeding 1/100 on the guaranteed amount as
prescribed by the Presidential Decree.
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Article 24 (Obligation of Notification)
If a financial institution given a notification pursuant to
Article 22 falls under any of the following subparagraphs, it
shall
notify the Corporation of the fact without delay:
1. In case the main liability relationship has been established;
2. In case all or part of the main liabilities become extinguished;
3. In case the worker fails to pay his/her liabilities;
4. In case the worker loses the benefit of time; and
5. In case there occur other reasons which are feared to
influence the guaranteed obligations.
Article 25 (Performance etc., of Guaranteed Obligations)
(1) A financial institution which engages in loan business
pursuant to
Article 21 (1) may request the Corporation to
perform guaranteed obligations according to the same Article, if
there occur reasons
to request the performance of guaranteed
obligations.
(2) The Corporation shall, if a financial institution requests the
performance of guaranteed obligations pursuant to paragraph
(1), make a substitute payment in accordance with the contract
under Article 21 (2).
(3) If the Corporation performs guaranteed obligations
pursuant to paragraph (2), it may exercise the right to
indemnity and the
exercise of the said right may be entrusted
to financial institutions, etc.
(4) The financial institutions, etc., to which the exercise of
the right to indemnity is entrusted pursuant to paragraph (3)
may
take all judicial and non-judicial actions relating to the
exercise of the right to indemnity on behalf of the Corporation.
Article
26 (Amount of Loss)
If the Corporation has paid guaranteed obligations, it may
collect the amount of loss at a rate not exceeding 20/100 of the
annual
rate on the paid amount from the concerned worker as
prescribed by the Presidential Decree, for the period starting
from the date
of payment until when the worker reimburses the
amount.
CHAPTER
Employee Stock Ownership System
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Article 27 (Purpose of Employee Stock Ownership System)
The purpose of the employee stock ownership system is to
improve workersßÓeconomic
and social status and enhance
cooperation between labor and management by enabling
workers to acquire and hold the stocks (hereinafter
referred to
as "company's own stocks") of a company where an employee
stock ownership association is set up through the employee
stock ownership association.
Article 28 (Establishment of Employee Stock Ownership Association)
(1) Workers may establish an employee stock ownership
association
as prescribed by the Presidential Decree. In this case,
the workers shall consult with the company in advance.
(2) With respect to the establishment and operation of
an employee stock ownership association, the provisions of
the Civil Act
on corporate judicial persons shall be applied
mutatis mutandis, unless otherwise provided for in this Act.
Article 29 (Membership,
etc., of Employee Stock Ownership
Association)
(1) All workers [including the workers of a company
(hereinafter referred to as the "affiliated company") which
through ownership
rights, controls 50/100 or more of the
total stocks issued by the company concerned as prescribed
by the Presidential Decree] of
a company with an employee
stock ownership association can join the employee stock
ownership association : Provided that a person
falling under any
of the following subparagraphs shall not become a member of
the employee stock ownership association and an existing
member of the employee stock ownership association falling under
these shall lose his/her membership:
1. An officer appointed at the general shareholdersßÓmeeting
of the company concerned or affiliated company thereof :
Provided that
if a member of the employee stock
ownership association is selected as an officer at the
general shareholders' meeting, he/she can maintain
his/her membership in
the employee stock ownership
association only in relation to the company's own stocks
allocated to him/her as a member of the employee
stock
ownership association and the employee stock options
granted pursuant to Article 32-2;
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2. A shareholder of the company concerned or in the case of
a worker of the affiliated company, a shareholder of the
affiliated
company : Provided that minority shareholders
prescribed by the Presidential Decree shall be excluded from
this; and
3. Other persons prescribed by the Presidential Decree.
(2) A member of an employee stock ownership association
may freely withdraw
from the employee stock ownership
association: Provided that an employee stock ownership
association member who withdrew from the
employee stock
ownership association may be prohibited from rejoining the
association for up to a period prescribed by the Presidential
Decree in accordance with the association rules prescribed in
subparagraph 1 of Article 30 (2).
(3) A worker (excluding those falling under each subparagraph
of paragraph (1) : hereinafter in this Act, the same shall apply.)
of the affiliated company shall satisfy all of the following
requirements to join the employee stock ownership association
of
the company (hereinafter referred to as the "controlling
company") controlling the affiliated company pursuant to
paragraph (1)
and if the employee stock ownership association
of the affiliated company is set up after he/she joins the
employee stock ownership
association of the controlling
company, he/she shall lose his/her membership in the
employee stock ownership association of the
controlling
company : 1. He/she shall obtain the consent of a majority of all
workers of the affiliated company;
2. He/she shall obtain the consent of the employee stock
ownership association of the controlling company; and
3. In case an employee stock ownership association has been
set up in the affiliated company, the employee stock
ownership association
concerned shall be dissolved :
Provided that this shall not apply in a case falling under
the proviso of Article 39 (1) 4.
(4) A worker of a company shall, if there are changes to
his/her membership of the employee stock ownership
association due to
the incorporation of the company into an
affiliated company, its exclusion from an affiliated company,
etc., maintain his/her membership
in the employee stock
ownership association prior to the changes only in relation to
the company's own stocks already allocated
to him/her and the
employee stock options granted pursuant to Article 32-2.
Article 30 (Operation of Employee Stock Ownership Association)
(1) An employee stock ownership association shall be operated
in
a democratic way by reflecting the opinions of all members
of the association.
(2) The matters described in any of the following
subparagraphs shall be determined after resolution at a
general meeting of employee
stock ownership association
members:
1. Matters on the enactment and modification of the
association rules;
2. Matters on the establishment of an employee stock
ownership association fund pursuant to Article 35;
3. Matters on the budget and settlement of accounts;
4. Matters on the election of officers including the representative
of the employee stock ownership association;
5. Deleted 6. Other important matters.
(3) An employer stock ownership association may have a
meeting of delegates instead of a general meeting
of employee
stock ownership association members according to the
association rules : Provided that the matters prescribed in
subparagraph
1 and 5 of paragraph (2) shall be determined after
resolution at a general meeting of employee stock ownership
association members.
(5) Other necessary matters concerning the operation of an
employee stock ownership association shall be prescribed by
the Presidential
Decree.
Article 31 (Employee Stock Ownership Association s Exercise of
Voting Rights)
(1) The representative of an employee stock ownership
association shall exercise voting rights(hereinafter referred to as
ßÖvoting
rightsß×) over the agenda of the general shareholdersßÓ
meeting according to opinions expressed by the members of the
employee
stock ownership association. The specific ways of
exercising the voting rights shall be prescribed by the
Presidential Decree.
(2) Notwithstanding the provision of paragraph (1), if an
employee stock ownership association member demands to be
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entrusted with the voting rights, the representative of the
employee stock ownership association shall entrust the member
with
the voting right to shares owned by the employee stock
ownership association member concerned.
Article 32 (Preferential Allocation to Members of Employee
Stock Ownership Association)
(1) If a listed corporation (excluding corporations listed on
the KOSDAQ market) under Article 9 (15) 3 of the Capital
Market Consolidation
Act or a corporation which intends to be
listed on the securities market under Article 9 (13) 1 of the
same Act invites subscription
for, or sells, its stocks pursuant to
the same Act, an employee stock ownership association member
shall have the right to be preferentially
allocated the stocks as
prescribed in Article 191-7 of the Securities Transaction Act.
(2) When a corporation other than those prescribed in
paragraph (1) invites subscription for, or sells, its stocks or
increases
its capital with its new stocks pursuant to the Capital
Market Consolidation Act, it may preferentially allocate the
stocks to
an employee stock ownership association member
within the scope of the preferential allocation percentage
prescribed in Article
191-7(1) of the Capital Market Consolidation
Act, notwithstanding the provision of Article 418 of the
Commercial Act.
(1) A company in which an employee stock ownership
association has been established may grant its employee stock
association members
the right (hereinafter referred to as the
"employee stock option") to subscribe to new stocks or buy its
own stocks held by the
company concerned within the limits of
20/100 of the total number of issued stocks for a price
(hereinafter referred to as the
"exercise price") set in advance
within a certain period (hereinafter referred to as the "offering
period"), after resolution at
a general meeting of shareholders
under the conditions prescribed by the articles of incorporation :
Provided that if the employee
stock options are granted within
the limits of 10/100 of the total number of issued stocks, it
shall be granted after resolution
at the board of directors under
the conditions prescribed by the articles of incorporation.
(2) A company (hereinafter referred
to as a "company
granting employee stock options") which intends to grant
- 15 -
employee stock options shall have the following matters
prescribed by the articles of incorporation :
1. Statements indicating that it may grant its employee stock
ownership association members employee stock options;
2. Types and number of stocks to be issued or transferred
as a result of exercising employee stock options;
3. Statements indicating that in certain cases, it may revoke
the decision to grant employee stock options through
resolution at
the board of directors; and
4. Requirements for resolution at a general meeting of
shareholders to grant employee stock options.
(3) If a company granting employee stock options makes a
resolution at a general meeting of shareholders or the board of
directors
pursuant to paragraph (1), the following matters shall
be included in the resolution :
1. How to grant employee stock options;
2. Matters concerning the exercise price of an employee
stock option and the adjustment thereof;
3. Period for offering or exercising employee stock options;
and
4. Types and number of stocks to be issued or transferred
as a result of exercising an employee stock option
(4) The offering period
under paragraph (1) shall be six
months or more but not more than two years from the date of
granting the employee stock options,
determined by a general
meeting of shareholders or the board of directors pursuant to
paragraph (3).
(5) A company granting employee stock options may set a
certain exercise period during or after the offering period and
allow the
exercise of the employee stock options during that
period. In this case, if the exercise period comes after the end
of the offering
period, the offering period shall be deemed to
be extended notwithstanding the provision of paragraph (4).
(6) A company granting
employee stock options may not
grant employee stock options to its employee stock ownership
association members whose consecutive
service period is less
than what is prescribed by the Presidential Decree.
(7) Employee stock options shall not be transferred
to other
persons : Provided that if a person granted employee stock
options has died, his/her successor shall be deemed to be
granted it.
(8) A company granting employee stock options may, if its
employee stock ownership association member exercises his/her
- 16 -
employee stock options, acquire its own stocks for the purpose
of issuing them notwithstanding the provision of Article 341 of
the Commercial Act : Provided that the amount of stocks
acquired shall be within the limits to which dividends can be
paid pursuant
to Article 462 (1) of the Commercial Act and if
the company acquires its own stocks in excess of the limits, it
shall dispose of
the excess amount within the period prescribed
by the Presidential Decree.
(9) The provisions of Article 350 (2), the latter part of
Article 350 (3), Article 351, Article 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 where new stocks are issued as a
result
of exercising employee stock options.
(10) Except those prescribed in paragraphs (1) through (9),
necessary matters concerning the operation of an employee stock
option
system, such as the procedures for granting employee
stock options, revocation criteria, exercise price, offering period,
option
ceilings by types of employee stock ownership
association members, etc., shall be prescribed by the Presidential
Decree.
Notwithstanding the provisions of Article 32 and Article
32-2 (1), a company in which an employee stock ownership
association has
been established shall not preferentially allocate
its stocks or grant employee stock options in a way to make
the sum of preferentially
allocated stocks, stocks that can be
acquired in the case of exercising the employee stock options
and stocks already held by the
employee stock ownership
association and its members exceed 20/100 of the sum of new
stocks (including new stocks to be issued
as a result of
granting employee stock options) and already issued stocks.
(2) The company and the shareholders may make an
agreement with the employee stock ownership association to
contribute money or valuable goods for the repayment of the
- 17 -
loan prescribed in paragraph (1).
(3) An employee stock ownership association may offer, as
collateral, the company's own stocks acquired using a loan to
the lender
of the loan or the loan guarantor thereof. In this
case, it shall be required that as for the company's stocks
corresponding to
the amount of repaid loan, the security right
shall be terminated upon the repayment.
(4) Detailed matters concerning borrowing by an employee
stock ownership association, such as repayment methods, loan
period, loan
size, how to allocate stocks acquired using a loan,
etc., shall be prescribed by the Presidential Decree.
(2) An employee stock ownership association shall allocate
the company's own stocks acquired pursuant to paragraph (1)
to the employee
stock ownership association members concerned
as prescribed by the Presidential Decree.
Article 34 (Deposit Period of Company's Own Stocks)
An employee stock ownership association member shall
deposit the company's
own stocks allocated to him/her
pursuant to Article 32 (2) in a trustee prescribed in Article 37(1)
for a period prescribed by
the Presidential Decree within the
ranges described in any of the following subparagraphs :
1. Stocks acquired through the contribution of the company's
own stocks by the company, the shareholders, etc.,
pursuant to Article
33 (1) and stocks acquired using
financial resources prescribed in Article 35 (1) 1 : eight
years;
2. Stocks acquired using financial resources prescribed in
Article 35 (1) 2 : one year; and
3. Stocks acquired using financial resources prescribed in
Article 35 (1) 3 through 5 : period corresponding to the
one prescribed
in subparagraphs 1 and 2
(2) Notwithstanding the provision of paragraph (1), an
employee stock ownership association member may, if there
- 18 -
occur reasons prescribed by the Presidential Decree, such as the
dissolution of the employee stock ownership association or the
death of its member, withdraw the company's own stocks
through the employee stock ownership association even in the
middle of
the deposit period prescribed in paragraph (1).
(1) An employee stock ownership association may create
an employee stock ownership association fund using the
following financial
resources :
1. Money or other valuable goods contributed by the
company, the shareholders, etc.;
2. Money contributed by employee stock ownership association
members;
3. Loans under Article 32-4;
4. Dividends on stocks held by the employee stock ownership
association but not allocated to its members; and
5. Other revenues
(2) The employee stock ownership association fund under
paragraph (1) shall be used to acquire the company's own
stocks, repay the loans prescribed in Article 32-4 (1) and pay
interests thereon : Provided that the money or other valuable
goods
or dividends, etc., under subparagraphs 1 and 4 of
paragraph (1) shall not be used to repay loans other than the
loans for the
repayment of which the company or the
shareholders have agreed to make contributions pursuant to
Article 32-4 (2) and the money
under subparagraph 2 of
paragraph (1) shall not be used to repay the loans for the
repayment of which the company or the shareholders
have
agreed to make contributions pursuant to Article 32-4 (2).
Article 36 (Support, etc. for Employee Stock Ownership Association)
(1) A company and its shareholders may contribute the
company's
own stocks or money or other valuable goods to the
employee stock ownership association where workers of the
company have joined
or provide supports such as making loans
or guaranteeing loans to finance the purchase of the company's
own stocks by the employee
stock ownership association or its
member who is a worker of the company. In this case, the
employee stock ownership association
shall operate the
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company's own stocks acquired through the contribution and
support to ensure that the stocks are allocated to its members
who are
workers of the company.
(2) A company and its employee stock ownership association
may set up an employee stock ownership administrative
committee with
equal numbers of members representing the
company and the employee stock ownership association,
respectively, as prescribed by
the Presidential Decree in order to
discuss the contents, conditions, etc., of support for employee
stock ownership association.
(3) The provision of Article 341-3 of the Commercial Act
shall not apply to stocks a company receives as a security to
provide
the support prescribed in paragraph (1).
Article 37 (Restriction on Transaction by Employee Stock Ownership
Association)
(1) An employee stock ownership association shall deposit
the company's own stocks held by itself or allocated to its
members through
it in a trustee prescribed by the Presidential
Decree.
(2) An employee stock ownership association or its members
shall not transfer or offer as a security the company's own
stocks deposited
pursuant to paragraph (1) : Provided that this
shall not apply in cases prescribed by the Presidential Decree,
including the case
prescribed in Article 32-4 (3).
(3) A security right holder who is offered the company's
own stocks as a security pursuant to the proviso of paragraph
(2) shall
not exercise the security right during the deposit
period prescribed in Article 34.
(4) An employee stock ownership association shall deposit
the employee stock ownership association fund created pursuant
to Article
35 in financial institutions prescribed by the Presidential
Decree.
(5) If an employee stock ownership association member
takes out the company's own stocks according to the rules of
the employee
stock ownership association, the preemptive right
to purchase the stocks may be given first to the employee stock
ownership association
and then to its members.
Article 38 (Disposition of Unlisted Corporation s Own Stocks)
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(1) If an employee stock ownership association member in
an corporation (hereinafter referred to as an "unlisted corporation")
which is not listed on the stock market under Article 9 (13) of the
Capital Market Consolidation Act inevitably intends to dispose
of
the company's own stocks acquired pursuant to Article 33, the
State shall make an effort to take necessary measures
concerning
share transaction, etc., to ensure the conversion of
the stocks into cash.
1. Contribution of the stocks to the employee stock
ownership association;
2. Disposition of the stocks pursuant to Article 342 of the
Commercial Act; and
3. Retirement of the stocks as gains to be distributed among
the shareholders according to the resolution made at a
general meeting
of shareholders.