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ENFORCEMENT DECREE OF THE SECURITIES AND EXCHANGE ACT
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ENFORCEMENT DECREE OF THE SECURITIES AND EXCHANGE ACT
ENFORCEMENT DECREE OF THE SECURITIES AND EXCHANGE ACT
INTRODUCTION
Details of Enactment and Amendment
- Enactment: This Decree was enacted by the Cabinet Decree No. 618 (Mar. 30, 1962) to prescribe the matters delegated by the Securities
and Exchange Act and those necessary for the enforcement thereof following the enactment of the same Act on January 15, 1962 for
the purpose of contributing to the development of national economy by ensuring fairness in the issue, sale, purchase and other transactions
of securities to facilitate the distribution thereof and protect investors.
- Amendment: This Decree has arrived at its present form as a result of being amended 41 times after being wholly amended on February
9, 1977 following the enactment thereof, and the latest amendment was on March 28, 2005.
Main Contents
- This Decree provides for securities under Article 2 (1) 9 of the Act.
- This Decree prescribes the procedures, etc. for public notification of announced purchase.
- This Decree prescribes the methods of marketing and the procedures for application for permission regarding the operation of securities
business in a foreign country by a domestic securities company.
- This Decree prescribes that the officer and employee of securities company are permitted to acquire and dispose of stocks, held
by the government, sold pursuant to the Furtherance of the Capital Market Act, or stocks allocated to members of employee stock ownership
association pursuant to the Furtherance of the Capital Market Act though they are prohibited from buying and selling stocks except
for the method of securities savings, etc.
- This Decree prescribes the standards, procedures, etc. for the registration of investment consulting business.
- This Decree prescribes the extent of minority stockholder who may request for purchase of stocks to the corporation concerned without
attending stockholders' meeting in case he is against the resolution of the board of directors.
- This Decree prescribes the requirements and procedures for the designation of public corporation.
- This Decree prescribes that the Stock Exchange may request data to the securities company if necessary to grasp the abnormal situation
of sale and purchase in the securities market.
- This Decree prescribes the calculation methods and procedures of return, etc. of short-term margin of selling and buying.
- This Decree prescribes the standards for acquisition, disposition, etc. of one's own stocks.
- This Decree prescribes the requirements, procedures, etc. in case that a stock-listed corporation or KODAQ listed corporation intends
to merge with other corporation.
ENFORCEMENT DECREE OF THE SECURITIES AND EXCHANGE ACT
Amended by Presidential Decree No. 18757, Mar. 28, 2005
CHAPTER I GENERAL PROVISIONS
Article 1 (Purpose)
The purpose of this Decree is to stipulate matters necessary for the enforcement of the Securities and Exchange Act (hereinafter referred
to as the Act ). <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
Article 2 (Definition)
Definitions of terms used in this Decree shall be subject to the provisions of the Act.
[This Article Newly Inserted by Presidential Decree No. 10823, May 15, 1982]
Article 2-2 (Issuer of Securities Depository Receipt)
The term person designated by the Presidential Decree in Article 2 (1) 8 of the Act means the Korea Securities Depository established
pursuant to Article 173 of the Act (hereinafter referred to as the Depository ). <Amended by Presidential Decree No. 18687, Jan.
27, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 2-3 (Designation of Securities)
(1) The securities prescribed in Article 2 (1) 9 of the Act mean those falling under any one of the following subparagraphs: <Amended
by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May
27, 1999; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18297,
Feb. 28, 2004; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18596, Dec. 3, 2004; Presidential Decree No.
18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Beneficiary certificates issued by a trust company in accordance with the provisions of the Trust Business Act;
1-2.Beneficiary certificates issued by a trust company according to an asset securitization plan under the Asset-Backed Securitization
Act (hereinafter referred to as an asset securitization plan );
2.Beneficiary certificates issued by any asset operation company under the Act on Business of Operating Indirect Investment and Assets;
2-2.Equity share of a private investment fund under subparagraph 4-2 of Article 2 of the Act on Business of Operating Indirect Investment
and Assets;
3.Beneficiary certificates issued by any foreign business operator of indirect investment and assets (referring to any person who
runs the business of operating indirect investment and assets in a foreign country in accordance with foreign Acts and subordinate
statues governing the operation of indirect investment and assets; hereinafter the same shall apply);
3-2.Investment certificates issued by a special purpose company for securitization according to an asset securitization plan;
3-3.Mortgage-backed bonds issued by a special purpose company for mortgage-backed bonds according to a bond securitization plan under
the Special Purpose Companies for Mortgage-Backed Bonds Act;
3-4.Housing mortgage securities and school fees loan securities issued by the Korea Housing Finance Corporation established pursuant
to the Korea Housing Finance Corporation Act according to its bond securitization plan;
3-5.Bonds or certificates that show equity shares of anonymous companies, limited partnerships or limited-liability companies provided
for in the Commercial Act;
4.Bills prescribed by the Minister of Finance and Economy from among those which are issued for the purpose of financing by an enterprise;
5.Deleted; <by Presidential Decree No. 18687, Jan. 27, 2005>
6.Bonds or certificates issued according to the standards as prescribed by the Ordinance of the Ministry of Finance and Economy which
indicate rights which may effect the sale and purchase of stocks or transactions involving the transfer of money between the parties
concerned by the unilateral declaration of intention of a party in accordance with the method as set in advance in link with fluctuations
in the prices of specific stock certificates or the price index of stocks that are traded on the securities market, the KOSDAQ market
or any foreign market similar thereto;
7.Bonds or certificates issued according to the standards as prescribed by the Ordinance of the Ministry of Finance and Economy which
indicate claims for the payment of stock certificates or money (referring to the money equivalent to the value of the relevant stock
certificates, securities or written instruments) in link with fluctuations in the prices of specific stock certificates or the price
index of stocks that are traded on the securities market, the KOSDAQ market or any foreign market similar thereto; and
8.Bonds or certificates (excluding those falling under subparagraphs 6 and 7) that show contractual rights to make profits or avoid
losses according to the ways that are predetermined in link with fluctuation on what falling under any one of the following items
according to the standards that are set by the Ordinance of the Ministry of Finance and Economy:
(a)The prices of securities and interest rates provided for in each subparagraph of Article 2 (1) of the Act and the numerical values
of the index number that are calculated based on the former;
(b) Prices and interest rates of what are determined by the Ordinance of the Ministry of Finance and Economy and the numerical values
of index numbers that are computed based on the former; and
(c) The indices of credit risk (referring to changes in the credit ratings, bankruptcies or liability coordinations, etc. of parties
or third parties; hereinafter the same shall apply).
(2) The futures trading referred to in subparagraph 1 (c) of Article 3 of the Futures Trading Act shall be deemed securities in the
application of the provisions of Articles 188, 188-2 and 188-3 of the Act: Provided, That in case where the right can be exercised
to perform the futures trading of stock certificates or anyone becomes the party to the exercise of such right, the application of
the provisions of Article 188 (1) of the Act shall be limited to the futures trading that holds the status of the share seller. <Newly
Inserted by Presidential Decree No. 18687, Jan. 27, 2005>
Article 2-4 (Public Offering of New or Outstanding Securities)
(1)In conducting the public offering of new securities as provided for in Article 2 (3) of the Act, the number of persons who are
solicited to subscribe for securities to be newly issued shall be 50 or more.
(2)In conducting the public offering of outstanding securities as provided for in Article 2 (4) of the Act, the number of persons
who receives an offer to sell or are solicited to make an offer to buy the outstanding securities which have already been issued
outside the securities market or the KOSDAQ market (excluding the case where the trade of securities is intermediated under Article
52-2 (1) of the Act) shall be 50 or more. <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687,
Jan. 27, 2005>
(3)In calculating the number of 50 persons in paragraphs (1) and (2), the person who has been solicited to subscribe for securities
or to make an offer to sell or buy securities (hereinafter referred to as solicitation for an offer ) during past six months from
the date of the solicitation for an offer with regard to the same type of securities subject to the solicitation for an offer, other
than through public offering, shall be included, but a person falling under any of the following subparagraphs shall be excluded:
<Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No.
17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
1.Where a person, as a stockholder of an issuer, has the largest number of stocks together with the specially related person (referring
to the spacially related person as provided in Article 10-3 (2) of this Decree; hereinafter the same shall apply), the person himself
(hereinafter referred to as the biggest stockholder ) and a stockholder who has 5/100 or more of the total number of issued and
outstanding stocks;
2.An officer (referring to a director, an auditor, or a person who is in fact equivalent to such a director or auditor; hereinafter
the same shall apply) of an issuer, and a member of an employee stock ownership association under the Framework Act on Worker s Welfare;
3.An affiliated company (referring to the affiliated company as provided for in the Monopoly Regulation and Fair Trade Act; hereinafter
the same shall apply) of an issuer and officers thereof;
4.Where an issuer is a corporation whose stock certificates are not listed (excluding any KOSDAQ-listed corporation and any corporation
which has ever conducted public offering of new or outstanding stocks), stockholders thereof;
4-2.Where an issuer, who is a foreign enterprise established under foreign Acts and subordinate statutes, sells stocks of the foreign
enterprise to officers and employees of its domestic affiliated company according to the stock purchase system, etc. for promoting
the employee s welfare, officers and employees of the domestic affiliated company;
5.Where an issuer is a company under incorporation, promoters thereof;
6.Institutional investors as provided in Article 17 (1) of the Enforcement Decree of the Corporate Tax Act (hereinafter referred to
as the institutional investors ); and
7.Other persons as having a special relation or an expert who may know well the financial situation or the contents of business of
an issuer as prescribed by the Financial Supervisory Commission.
(4)In case, even if the calculation as provided in paragraph (3) proves that the number of persons who receives the solicitation for
an offer is less than 50 and therefore it does not fall under the public offering of new securities, the securities concerned may
be transferred to 50 persons or more within one year from the date of issuance of the securities concerned and it falls under the
criteria for resale stipulated by the Financial Supervisory Commission, it shall be regarded as the public offering of new securities.
<Amended by Presidential Decree No. 15687, Feb. 24, 1998>
(5)The term solicitation for an offer in paragraph (3) means the activities to make known the fact that securities are to be issued
or sold or to guide the procedure of acquisition of them with such methods as an advertisement through newspapers, broadcasting,
magazines, etc., a wide distribution of printed matters like a letter of information or a leaflet for advertisement, etc., the holding
of an explanatory meeting for inducement of investment, electronic communication, etc. in order to induce the person who is solicited
to acquire securities.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 2-5 Deleted.
<by Presidential Decree No. 18325, Mar. 22, 2004>
Article 2-6 Deleted.
<by Presidential Decree No. 18687, Jan. 27, 2005>
Article 2-7 (Requirements, etc. for Employee Stock Ownership Association)
(1)The term organization created after satisfying requirements prescribed by the Presidential Decree in Article 2 (18) of the Act
means an employee stock ownership association under the Framework Act on Worker s Welfare having the by-law which meets the standards
prescribed in the following subparagraphs: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.It shall satisfy the following standards for membership of the association:
(a) It shall permit all employees of the corporation concerned [if the corporation is a financial holding company under the Financial
Holding Companies Act (hereinafter referred to as the financial holding company ), they include employees of its subsidiary and
sub-subsidiary which is neither a stock-listed corporation nor a KOSDAQ-listed corporation] to join the association; and
(b) It shall prohibit an officer appointed at the general meeting of stockholders of a corporation, which is neither a stock-listed
corporation nor a KOSDAQ-listed corporation among subsidiaries or sub-subsidiaries of a financial holding company, from being a member
of the association, and if a person holds the position of such officer after he becomes a member of the association, shall get him
disqualified from holding membership of the association;
2.It shall prohibit the association from seeking loans on its account for the purpose of purchasing stocks;
3.It shall meet the following standards for the method of allotting stocks acquired by the association to its members:
(a) Stocks acquired by the association shall be allotted to its members in such a manner as provided in Article 19 of the Enforcement
Decree of the Framework Act on Worker s Welfare, among which the stocks acquired through contribution made by the corporation concerned
(including a subsidiary or sub-subsidiary of a financial holding company, which is neither a stock-listed corporation nor a KOSDAQ-listed
corporation) or its big stockholder, etc. shall be allotted to its members within three to seven years after the stocks are provisionally
distributed to the members accounts, according to the by-law; and
(b) Where the association or its members fall under any cause as provided in the main sentence of Article 19 (3) of the Enforcement
Decree of the Framework Act on Worker s Welfare or a subsidiary or sub-subsidiary of a financial holding company loses its qualification
as a member of the association in consequence of separation from the financial holding company, it shall provide that the stocks
provisionally distributed must be alloted to the members of the association without any delay; and
4.It shall meet the following standards for depositing and withdrawing stocks acquired by the association or its members:
(a) The stocks which the association or its members have acquired shall be deposited within one month from the date of acquisition
with the securities finance company established under Article 145 of the Act (hereafter in this Article referred to as the securities
finance company ); and
(b) The members of the association shall withdraw the stocks deposited with the securities finance company through the association
after one year passes from the date they are put to the members accounts: Provided, That where it falls under any subparagraph of
Article 20 (2) of the Enforcement Decree of the Framework Act on Worker s Welfare, the same shall not apply, and the stocks withdrawn
shall be returned to the members of the association without any delay.
(2) The securities finance company may re-deposit the stocks deposited pursuant to paragraph (1) 4 (a) with the Depository.
(3) The detailed matters necessary for the organization and operating method of the employee stock ownership association under paragraph
(1) shall be prescribed by the Ordinance of the Ministry of Finance and Economy.
[This Article Wholly Amended by Presidential Decree No. 17518, Feb. 9, 2002]
CHAPTER II REGISTRATIONOFSECURITIES
Article 3 (Securities which are Exempted from Registration)
(1) The term corporate bonds as prescribed by the Presidential Decree provided in the proviso of Article 3 of the Act, means corporate
bonds of which the payment of principal and interest is guaranteed by the financial institutions, etc. which fall under any of the
following subparagraphs (hereinafter referred to as guaranteed bonds ), excluding convertible bonds, bonds with warrants, participating
bonds as provided in Article 84-12 (hereinafter referred to as participating bonds ) and exchangeable bonds as provided in Article
84-13 (hereinafter referred to as exchangeable bonds ). In this case, guaranteed bonds the payment of which is guaranteed by the
Korea Credit Guarantee Fund under subparagraph 8 shall include those guaranteed by the credit guarantee fund for the industrial infrastructure
under the Act on Private Participation in Infrastructure: <Amended by Presidential Decree No. 16367, May 27, 1999; Presidential
Decree No. 16773, Apr. 1, 2000; Presidential Decree No. 17791, Dec. 5, 2002; Presidential Decree No. 18687, Jan. 27, 2005; Presidential
Decree No. 18736, Mar. 8, 2005>
1.Financial institutions as prescribed in the Banking Act;
2.The Korea Development Bank as prescribed in the Korea Development Bank Act;
3.The Industrial Bank of Korea as prescribed in the Industrial Bank of Korea Act;
4.The Long-Term Credit Bank as prescribed in the Long-Term Credit Bank Act;
5.Deleted; <by Presidential Decree No. 15516, Nov. 29, 1997>
6.Merchant banks as prescribed in the Merchant Banks Act;
7.Insurers as prescribed in the Insurance Business Act;
8.The Korea Credit Guarantee Fund under the Credit Guarantee Fund Act and the Korea Technology Credit Guarantee Fund under the Korea
Technology Credit Guarantee Fund Act; and
9.Securities companies.
(2)The term securities as determined by the Presidential Decree in the proviso of Article 3 of the Act means those falling under
any of the following subparagraphs: <Amended by Presidential Decree No. 16773, Apr. 1, 2000; Presidential Decree No. 17907, Feb.
24, 2003; Presidential Decree No. 18146, Nov. 29, 2003; Presidential Decree No. 18297, Feb. 28, 2004; Presidential Decree No. 18350,
Apr. 1, 2004; Presidential Decree No. 18596, Dec. 3, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Beneficiary certificates issued by trust companies under the Trust Business Act;
2.Beneficiary certificates issued by any asset operation company in accordance with the Act on Business of Operating Indirect Investment
and Assets;
2-2.Equity share of a private investment fund under subparagraph 4-2 of Article 2 of the Act on Business of Operating Indirect Investment
and Assets;
3.Beneficiary certificates issued by any foreign business operator of indirect investment assets;
4.Bonds issued by securities companies;
5.Redeemable housing bonds issued by the person who has obtained the approval of the Minister of Construction and Transportation on
the issuance of the redeemable housing bonds under the Housing Act;
6.Deleted; <by Presidential Decree No. 18687, Jan. 27, 2005>
7.Mortgage-backed bonds issued by special purpose companies for mortgage-backed bonds pursuant to the bond securitization plan under
the Special Purpose Companies for Mortgage-Backed Bonds Act;
8.Beneficiary certificates issued by trust companies pursuant to the asset securitization plan; and
9.Housing mortgage securities and school fees loan securities issued by the Korea Housing Finance Corporation established pursuant
to the Korea Housing Finance Corporation Act according to its bond securitization plan.
[This Article Wholly Amended by Presidential Decree No. 15312, Mar. 22, 1997]
Article 4 Deleted.
<by Presidential Decree No. 13634, Apr. 28, 1992>
Article 5 (Administration of Registered Corporations)
Until new or outstanding securities publicly offered by the corporation under subparagraph 2 of Article 3 of the Act are listed on
the securities market or the KOSDAQ market, the Financial Supervisory Commission shall administer the corporation concerned as a
registered corporation: Provided, That bonds publicly offered by the corporation, other than the bonds stipulated in Article 3 (1)
are not listed, the corporation shall be administered as a registered corporation until redemption of the bond is completed. <Amended
by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291, Jul.
7, 2001; Presidential Decree No. 18687, Jan. 27, 2005>
[This Article Wholly Amended by Presidential Decree No. 10823, May 15, 1982]
CHAPTER III REGISTRATIONSTATEMENT OF SECURITIES
Article 5-2 (Securities Whereto Chapter III of Act is Applied)
The term bonds prescribed by the Presidential Decree in Article 7 of the Act means those listed in each of the following subparagraphs:
<Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Bonds issued by the merchant banks under the Merchant Banks Act;
2.Bonds issued by the specialized credit financial companies under the Specialized Credit Financial Business Act; and
3.Bonds issued by the special purpose companies for mortgage-backed bonds under the Special Purpose Companies for Mortgage-Backed
Bonds Act pursuant to Article 14 of the said Act.
[This Article Newly Inserted by Presidential Decree No. 17291, Jul. 7, 2001]
Article 5-3 (Securities Which are Exempted from Application of Chapter III of Act)
The term securities as determined by the Presidential Decree in Article 7 of the Act means those listed in each of the following
subparagraphs: <Amended by Presidential Decree No. 18297, Feb. 28, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Securities provided for in Article 3 (2) 1 through 3, 5 through 7 and 9;
2.Where the State or local government sells through public offering the securities owned by it, the relevant securities; and
3.Where the Government-invested institutions under the Framework Act on the Management of Government-Invested Institutions (hereinafter
referred to as the Government-invested institutions ) and other corporations deemed by the Financial Supervisory Commission that
there would be no problem in the protection of investors even if a report on securities is not filed, sell through public offering
the securities as stipulated by the Financial Supervisory Commission from among the securities owned by them, the relevant securities.
[This Article Wholly Amended by Presidential Decree No. 17291, Jul. 7, 2001]
Article 5-4 (Entries in Registration Statement and Documents to be Attached Thereto)
(1)Deleted. <by Presidential Decree No. 18757, Mar. 28, 2005>
(2) A registration statement on the public offering of new or outstanding securities provided for in the main sentence of Article
8 (1) of the Act shall specify the following matters under the conditions as prescribed by the Financial Supervisory Commission:
<Amended by Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No.
18757, Mar. 28, 2005>
1.Signatures affixed by the representative director and directors provided for in Article 8 (4) of the Act to matters referred to
in each subparagraph of Article 5-8 (2);
2.Matters concerning public offering of new or outstanding securities:
(a)General matters concerning public offering of new or outstanding securities;
(b)Contents of the rights of securities that are put on public offering of new or outstanding securities;
(c) The risky elements of investment in the acquisition of securities that are put on public offering of new or outstanding securities;
(d) In case where anyone intends to underwrite securities, the opinion on the securities that are put on public offering of new or
outstanding securities to him;
(e) The purposes of using the fund; and
(f) Other matters necessary to protect investors; and
3.Matters concerning issuers:
(a)The general situation of any company (in the case of any corporation that is in the process of its incorporation, the objectives
of its business);
(b) Details of its business (in the case of any corporation that is in the process of its incorporation, the business plan);
(c) Matters concerning financial affairs (excluding any corporation that is in the process of its incorporation);
(d) The audit opinion of the auditor provided for in the Act on External Audit of Stock Companies (hereinafter referred to as the
auditor );
(e) Matters concerning organs, including the board of directors of the company and its affiliates;
(f) Matters concerning shareholders;
(g) Matters concerning officers and employees;
(h) Details of transactions executed by interested persons; and
(i) Other matters necessary to protect investors.
(3) The registration statement referred to in paragraph (2) shall be accompanied by the following documents: <Amended by Presidential
Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005; Presidential
Decree No. 18757, Mar. 28, 2005>
1.Articles of association;
2.A copy of the minute of the general meeting of stockholders (for a corporation under organization, a general meeting of promoters)
or a copy of the minute of the meeting of the board of directors (in case where the securities are issued pursuant to Article 418
(2) of the Commercial Act, the specific managerial objectives of issuing such securities, the relationship between the issuer and
persons other than shareholders and the explanatory note of selecting the persons other than shareholders shall be entered in the
minute) which has decided on the issue of the securities concerned;
3.If any permission, authorization, or approval, etc. from an administrative agency is required for the issuance of the securities
concerned, documents attesting such permission, authorization, or approval, etc.;
4.If any contract is entered into for the underwriting of the securities concerned, a copy of the written contract;
5.If it is intended to list the securities falling under each of the following items on the securities market or the KOSDAQ market,
a document pertaining to the result of preliminary listing examination that shows the confirmation of the conformity of the relevant
securities with the listing regulations by the Korea Securities and Futures Exchange (hereinafter referred to as the Exchange )
that is established pursuant to the Korea Securities and Futures Exchange Act:
(a) Securities referred to in Article 2 (1) 6 of the Act;
(b) Securities referred to in Article 2 (1) 7 of the Act (limited to those which have the nature of stock certificates);
(c) Securities referred to in Article 2 (1) 8 of the Act (limited to those which are issued based on the securities of item (b));
(d) Securities provided for in Article 2-3 (1) 3-5; and
(e) Securities referred to in Article 2-3 (1) 6; and
6.Such other documents as may be necessary for the protection of investors.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 5-5 (Submission of Shelf Registration Statement)
(1)A shelf registration statement referred to in the proviso of Article 8 (1) of the Act (hereinafter referred to as the shelf registration
statement ) shall specify the following matters under the conditions as prescribed by the Financial Supervisory Commission: <Amended
by Presidential Decree No. 18350, Apr. 1, 2004>
1.Signatures affixed by the representative director and directors provided for in Article 8 (4) of the Act to matters referred to
in each subparagraph of Article 5-8 (2);
2.The scheduled period of issue;
3.The estimated amount of issue;
4.Matters relating to an issuer referred to in Article 5-4 (2) 3; and
5.Such other matters as may be necessary for the protection of investors.
(2)The shelf registration statement shall be accompanied by the following documents: Provided, That in the event that it is possible
to confirm information on accompanied documents through the joint use of administrative information provided for in Article 21 (1)
of the Act on Promotion of the Digitalization of Administrative Affairs, etc. for Creation of Digital Government, such confirmation
may replace the accompanied documents: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18687,
Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Articles of association;
2.A certified copy of the corporate register;
3.An audit report made by auditors;
4.If it is required to prepare consolidated financial statements under the Act on External Audit of Stock Companies (hereinafter referred
to as the consolidated financial statements ), an audit report made by an auditor on the consolidated financial statements; and
5.A copy of minutes of the board of directors which has decided to make a shelf registration.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 5-6 (Special Provisions relating to Documents to be Attached to Securities Registration Statement and Matters to be Entered
in Such Statement)
Notwithstanding Articles 5-4 (2) and (3) and 5-5, the Financial Supervisory Commission shall, if necessary to protect investors, determine
and announce separately matters to be entered in and documents to be attached to a registration statement under Article 8 (1) of
the Act (hereinafter referred to as a securities registration statement ) which are to be submitted by a foreign corporation, etc.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 5-7 (Scope of Forecast Information)
The term matters as determined by the Presidential Decree in Article 8 (2) 4 of the Act means matters which the requested person
has evaluated about the adequacy of forecast information where a request for evaluation is made by an issuer about forecast information
referred to in Article 8 (2) 1 through 3 of the Act.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]
Article 5-8 (Confirmation and Examination of Registration Statement by Representative Director, etc.)
(1) The term important matter prescribed by the Presidential Decree in Article 8 (4) of the Act means the matter related to the
company or its securities, which is information that may greatly affect the rational judgment of investors or the value of securities
from among the matters of entries provided for in Article 5-4 (2) 2 and 3.
(2) The term matters prescribed by the Presidential Decree in Article 8 (4) of the Act means matters falling under each of the following
subparagraphs: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.The fact that entries of the registration statement are personally confirmed and examined with great attention;
2.The fact that entries of important matters or indications are not omitted in the registration statement, false entries or false
indications are not found in the registration statement and the registration statement does not carry any entry and any indication
that could seriously mislead any person who uses such entry and such indication; and
3.In the case of a corporation that is subject to external audit under Article 2 of the Act on External Audit of Stock Companies,
the fact that such corporation operates the internal accounting control system in accordance with Articles 2-2 and 2-3 of the same
Act.
[This Article Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004]
Article 5-9 (Submission of Additional Shelf Registration Document)
(1) The entries in an additional shelf registration document under Article 10 (2) of the Act (hereinafter referred to as an additional
shelf registration document ) shall not include any alteration of the entries in a shelf registration statement concerned (including
a registration statement on any correction).
(2) The additional shelf registration document shall state the following matters under the conditions as prescribed by the Financial
Supervisory Commission: <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
1.Outline of public offering of new or outstanding securities;
2.The scheduled period of issue and the estimated amount of issue in a shelf registration statement;
3.The records of public offering of new or outstanding securities during the scheduled period of issue; and
4.Such other matters as may be necessary for the protection of investors.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 6 (Drawing up of Prospectus)
(1) A prospectus under Article 12 (1) of the Act (hereinafter referred to as a prospectus ) shall be prepared with a classification
of the column for title and the text.
(2)The column for title of the prospectus shall include the following matters under the conditions as prescribed by the Financial
Supervisory Commission: <Amended by Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The effective date of the securities registration under Article 8 (1) of the Act (hereinafter referred to as the securities registration
);
2.The amount of public offering of new or outstanding securities concerned;
3.The period of offer;
4.The period of payment;
5.The place of inspection of a copy of the securities registration statement concerned and a prospectus;
6.In conducting stabilization or market making under Article 83-8, the effect that such stabilization or market making may be conducted
on the securities market or the KOSDAQ market;
7.The effect that any alteration may be effected in part of the entries in the securities registration statement concerned until the
initial date of offer;
8.The effect that it may not be said that the Government recognizes the entries in a securities registration statement as true or
correct or guarantees or approves the value of the securities; and
9.Such other matters as may be necessary for the protection of investors.
(3) If a registration statement is submitted in accordance with the main sentence of Article 8 (1) of the Act, the matters under each
subparagraph of Article 5-4 (2) shall be entered in the text of a prospectus, and if an additional shelf registration document is
submitted, the matters provided for in Article 5-5 (1) 4 and each subparagraph of Article 5-9 (2) shall be entered in the text of
the prospectus. <Amended by Presidential Decree No. 18350, Apr. 1, 2004>
(4) An issuer, who has prepared a prospectus, shall submit it to the Financial Supervisory Commission on the date the securities registration
concerned takes effect (for an issuer who has submitted a shelf registration statement, the date of submitting an additional shelf
registration document).
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 7 (Matters to be Excluded from Prospectus)
Of the matters which are required to be stated in a securities registration statement, matters under each of the following subparagraphs
shall be excluded from the entry in a prospectus in accordance with the proviso of Article 12 (2) of the Act: <Amended by Presidential
Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18687, Jan. 27, 2005>
1.Matters falling under military secrets in accordance with Article 2 of the Military Secret Protection Act; and
2.Activities and business of an issuer as approved by the Financial Supervisory Commission.
Article 7-2 (Method of Drawing up Preliminary Prospectus, etc.)
(1)The column for title of a preliminary prospectus under Article 13 (2) 2 of the Act (hereinafter referred to as the preliminary
prospectus ) shall include the following matters under the conditions as prescribed by the Financial Supervisory Commission: <Amended
by Presidential Decree No. 18757, Mar. 28, 2005>
1.Matters of Article 6 (2) 2 through 6;
2.The effect that the securities registration statement in question is submitted to the Financial Supervisory Commission but its effect
has yet to be taken and any alteration may be effected in part of its entries until it takes effect; and
3.Such other matters as may be necessary for the protection of investors.
(2) Any person who intends to use a preliminary prospectus shall, at the time of making a securities registration, submit both a securities
registration statement and a preliminary prospectus.
(3) Any issuer who has submitted a preliminary prospectus under paragraph (2) may, if no alteration is made in the entries of a securities
registration statement until the securities registration concerned takes effect, substitute a preliminary prospectus for a prospectus.
In this case, the column for title of a preliminary prospectus shall be rectified into the column for title of a prospectus stating
the matters specified in subparagraphs of Article 6 (2).
(4) The provisions of Article 6 (1) and (3) shall apply mutatis mutandis with respect to the preparation of a preliminary prospectus.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 7-3 (Method of Preparing Simple Prospectus, etc.)
(1)A simple prospectus under Article 13 (2) 3 of the Act (hereinafter referred to as a simple prospectus ) shall specify or indicate
matters described in the following subparagraphs: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.If the effect of the securities registration concerned has yet to be taken, matters specified in the following items:
(a) Matters of Article 6 (2) 2 through 6;
(b) The effect that the securities registration statement is submitted to the Financial Supervisory Commission, but its effect has
yet to be taken and any alteration may be effected in part of the entries thereof until it becomes effective;
(c) In case where it is intended to list securities under every item of Article 5-4 (3) 5 on the securities market or the KOSDAQ market,
the result of a preliminary listing examination that shows the confirmation of the conformity of the relevant securities with the
listing requirements by the Exchange;
(d) Such matters to be entered in the text of a prospectus under Article 6 (3) as the Financial Supervisory Commission deems that
such entry or indication is necessary for the protection of investors; and
(e) The effect that a preliminary prospectus or a prospectus is to be seen for the detailed contents of the public offering of the
new or outstanding securities and for the matters relating to their issuer; and
2.If the registration on the securities is in force, the following matters:
(a) Matters of Article 6 (2) 1 through 8; and
(b) Matters of subparagraph 1 (c) through (e).
(2) In entering or indicating matters set forth in subparagraphs of paragraph (1) in a simple prospectus, any information unfavorable
to the issuer shall not be omitted nor shall only information favorable to him be cited.
(3) Any person who intends to use a simple prospectus shall submit the simple prospectus to the Financial Supervisory Commission not
later than three days prior to its use. <Amended by Presidential Decree No. 17907, Feb. 24, 2003>
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 7-4 (Person Liable for Indemnification for False Entries, etc.)
The term persons prescribed by the Presidential Decree in Article 14 (1) 2 of the Act means persons whose qualifications are certified
as attorneys, patent attorneys or tax accountants, etc.
[This Article Newly Inserted by Presidential Decree No. 18350, Apr. 1, 2004]
Article 8 (Public Notice of Securities Registration Statement and After-Report)
The Financial Supervisory Commission shall, in accordance with Article 18 of the Act, keep the registration statement of securities
and the after-report at a specified place and make them available for public inspection for three years. <Amended by Presidential
Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 18757, Mar. 28, 2005>
Article 9 (Matters to be Excluded from Disclosure)
The provisions of Article 7 shall apply mutatis mutandis to the matters which are not to be made available for public inspection in
accordance with the proviso of Article 18 of the Act. <Amended by Presidential Decree No. 16966, Sep. 8, 2000>
Article 9-2 (Public Offering Made without Filing Registration Statement)
(1) An issuer, who makes a public offering of new or outstanding securities without filing a securities registration statement, shall
take the following measures in accordance with the provisions of Article 18-2 of the Act: <Amended by Presidential Decree No.
18350, Apr. 1, 2004>
1.Prior to the public offering of new or outstanding securities, he shall submit documents stating his financial status or business
results to the Financial Supervisory Commission (limited to an issuer liable to make a registration with the Financial Supervisory
Commission under Article 3 of the Act). In this case, such documents shall be subject to the completion of an auditing by an external
auditor or a confirmation and indication of opinion by a certified public accountant under the conditions as determined by the Financial
Supervisory Commission;
2.In making solicitation for an offer, he shall enter or indicate the following matters in printed materials, etc. In this case, with
respect to his financial status or business results, he shall not enter or indicate any matters inconsistent with the contents of
documents submitted under subparagraph 1 or any false facts therein:
(a) Matters referred to in each item of Article 5-4 (2) 2 and 3; and
(b) Matters of Article 6 (2) 2 through 4;
3.When the public offering of new or outstanding securities is commenced, he shall forthwith submit to the Financial Supervisory Commission
the method of making solicitation for an offer and matters entered or indicated in printed materials, etc. under subparagraph 2.
This shall also apply to any alteration in the method of making solicitation for an offer or in the matters entered or indicated
in printed materials, etc. after the commencement of the public offering of new or outstanding securities; and
4.When the public offering of new or outstanding securities is completed, he shall forthwith notify the results to the Financial Supervisory
Commission.
(2) Where an issuer is to submit to the Financial Supervisory Commission documents concerning his financial status and business results
under paragraph (1) 1, such documents may be substituted by a written statement with the indication of seeing documents, if any,
which were already submitted prior to the public offering of new or outstanding securities concerned and whose contents are not altered.
(3) Where the public offering of outstanding securities meets the following requirements, the issuer of the securities shall be deemed
to have taken the measures of paragraph (1): <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No.
18350, Apr. 1, 2004>
1.The public offering of the outstanding securities has been made through brokerage method under Article 84-27 (5);
2.The public offering has been made by minority stockholders (excluding an issuer and underwriter of the securities); and
3.The issuer of the securities has made public notification of the following contents under the conditions as prescribed by the Financial
Supervisory Commission:
(a) Matters relating to an issuer under Article 5-4 (2) 3; and
(b) Documents stating matters relating to the financial status and business results of an issuer under paragraph (1) 1.
(4) The Financial Supervisory Commission may determine detailed standards for measures to be taken under paragraph (1).
(5)The term minority stockholders in paragraph (3) 2 means the stockholders who own stocks or contribution certificates of less
than the amount which is the lesser of 1/100 of the total amount of issued and outstanding stocks or contributions to the corporation
concerned and three hundred million won: Provided, That the biggest stockholder and the specially related persons shall not be regarded
as minority stockholders. <Newly Inserted by Presidential Decree No. 17518, Feb. 9, 2002>
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 9-3 (Measures of Financial Supervisory Commission)
The term measures prescribed by the Presidential Decree in the former part of Article 20 of the Act with the exception of its subparagraphs
means those which fall under any of the following subparagraphs: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential
Decree No. 17907, Feb. 24, 2003>
1.Advisory opinion of removal of officers;
1-2.Restriction on the issuance of securities for a specified period;
2.Announcement of sanctions suffered for violation of the Act;
3.Demand for a submission of commitment letter;
4.In case of violation of the Act, accusation or report to the investigation agencies;
5.In case of violation of other Acts, report to the related institutions or investigation agencies; and
6.Warning or caution.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 9-4 (Registration Form, etc.)
The form for registration, etc. of the public offering of new or outstanding securities and other necessary matters shall be determined
by the Financial Supervisory Commission.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
CHAPTER IV TENDEROFFERFOR SECURITIES
Article 10 (Securities Subject to Tender Offer)
The term voting stocks or any other securities prescribed by the Presidential Decree provided for in the main sentence of Article
21 (1) of the Act means, among the securities issued by a stock-listed corporation or a KOSDAQ-listed corporation, those which are
related to voting stocks and which fall under any of the following subparagraphs (hereinafter referred to as stocks, etc. ): <Amended
by Presidential Decree No. 18687, Jan. 27, 2005>
1.Stock certificates;
2.A certificate representing preemptive rights;
3.Convertible bonds;
4.Bonds with warrants; and
5.Exchangeable bonds (limited to those bonds which may be exchanged for the securities prescribed in subparagraphs 1 through 4; hereafter
in this Chapter the same shall apply).
[This Article Wholly Amended by Presidential Decree No. 15312, Mar. 22, 1997]
Article 10-2 (Criteria for Calculating Number of Counterparts of Tender Offer)
(1)The term period prescribed by the Presidential Decree provided for in the main sentence of Article 21 (1) of the Act means the
past six months prior to the date on which the purchase, etc. (referring to the purchase, etc. as stipulated in Article 21 (1) of
the Act; hereafter in this Chapter the same shall apply) of the stocks, etc. concerned is conducted.
(2)The term persons of not less than the number prescribed by the Presidential Decree provided for in the main sentence of Article
21 (1) of the Act means 10 persons or more which are obtained by adding the number of persons who are the counterparts of the purchase,
etc. of the stocks, etc. concerned and that of the persons who have been the counterparts of the purchase, etc. of the stocks, etc.
concerned during the period stipulated in paragraph (1).
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 10-3 (Scope of Specially Related Persons)
(1)The specially related persons as provided for in Article 21 (1) of the Act means the specially related persons and joint holders.
(2)The term specially related persons provided for in paragraph (1), means those who fall under any of the following subparagraphs:
1.Where the person in question is an individual, persons falling under any of the following items:
(a) A spouse (including a person who is under de facto marital relations; hereinafter the same shall apply);
(b) A paternal blood relative of not more than six degrees of relationship and the wife of a paternal blood relative of not more than
four degrees of relationship;
(c) The husband and children of a paternal blood relative of not more than three degrees of relationship;
(d) A maternal blood relative of not more than three degrees of relationship and the spouse and children of such person;
(e) A paternal blood relative of not more than two degrees of relationship of the spouse, and the spouse of such person;
(f) A lineal ascendant of the birth parents of an adoptee;
(g) A person who enters a family as an adopted child and his/her spouse, and a lineal descendant of an adoptive family of the person
who enters a family as an adopted child;
(h) The natural mother of a person born out of wedlock;
(i) A person sharing a livelihood with the person in question, or a person who maintains his/her livelihood based on money or other
property of the person in question;
(j) Where the person in question, alone or together with the persons who have the relation provided for in items (a) through (i) to
him, contributes not less than 30/100 of the capital or has de facto control over principal matters related to the management of
a corporation or any other organizations, such as the appointment and removal of officers thereof, the corporation or such other
organizations concerned and officers thereof; and
(k) Where the person in question, alone or together with the persons who have the relation provided for in items (a) through (j) to
him, contributes not less than 30/100 of the capital or has de facto control over principal matters related to the management of
a corporation or any other organizations, such as the appointment and removal of officers thereof, the corporation or such other
organizations concerned and officers thereof; and
2.Where the person in question is a corporation or any other organization, the person falling under any of the following items:
(a) Officers;
(b) Affiliated companies and officers thereof;
(c) An individual who, alone or together with the persons who have the relation provided for in each item of subparagraph 1 to him,
contributes not less than 30/100 of the capital of the person in question or has de facto control over principal matters on the management
of the person in question, such as the appointment and removal of officers, and the persons and organizations (excluding the affiliated
companies; hereafter in this subparagraph the same shall apply) who have the relation provided for in each item of subparagraph 1
to the individual and officers thereof; and
(d) In case the person in question, alone or together with the persons who have the relation provided for in items (a) through (c)
to him, contributes not less than 30/100 of the capital or has de facto control over principal matters on the management of an organization,
such as the appointment and removal of officers thereof, the organization concerned and officers thereof.
(3)Where the number of stocks, etc. which the person falling under any item of subparagraphs of paragraph (2) possesses is less than
1,000 or he presents evidence that he does not fall under the provisions of paragraph (4), he shall not be regarded as the specially
related person in the application of this Chapter and Articles 86-3 through 86-10. <Amended by Presidential Decree No. 18757,
Mar. 28, 2005>
(4)The term joint holders in paragraph (1) means persons who have agreed to perform one of the following acts by agreement or contract
with the principal: <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
1.Act of acquiring or disposing of stocks, etc. jointly;
2.Act of mutually transferring or taking over stocks, etc. after acquiring the stocks, etc. jointly or separately; and
3.Act of exercising voting rights (including rights which can give instructions to excercise voting rights) jointly.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 10-4 (Holding Which is Equivalent to Ownership)
The term cases prescribed by the Presidential Decree as owning or its equivalents in Article 21 (1) of the Act means those which
fall under any of the following subparagraphs: <Amended by Presidential Decree No. 16745, Mar. 4, 2000; Presidential Decree No.
18687, Jan. 27, 2005>
1.The case of owning stocks, etc. for one s own account irrespective of name;
2.The case of having a claim for the delivery of stocks, etc., by the operation of law, sale and purchase agreement, or other contracts;
3.The case of having a right of acquisition or disposal of the stocks concerned, etc. or having voting rights (including the rights
to give instructions as to exercise of voting rights) by the operation of law or a money trust contract, a security contract, or
other contracts;
4.The case of having a right to complete the sale and purchase of stocks, etc. in accordance with the unilateral promise, and upon
exercise of such right, becoming the purchaser thereof;
5.The case of becoming a purchaser by exercising securities option concerned, where performing the futures trading of securities referred
to in subparagraph 1 (c) of Article 3 of the Futures Trading Act (hereinafter referred to as the securities option trading ); and
6.The case of being granted the stock options as provided for in Article 189-4 of the Act (hereinafter referred to as the stock option
).
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 11 (Purchase, etc. Which is not Subject to Tender Offer)
The term purchase, etc. prescribed by the Presidential Decree in the proviso of Article 21 (1) of the Act means those which fall
under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291,
Jul. 7, 2001>
1.Purchase, etc. of stocks, etc. for the purpose of retirement (excluding the stock retirement under Article 189 of the Act);
2.Purchase, etc. of stocks effected in response to the excercise of appraisal rights of stockholders;
3.Purchase, etc. of stocks, etc. from the specially related person;
4.Purchase, etc. of stocks, etc. by the exercise of preemptive rights or rights to demand for conversion or exchange;
4-2.Purchase of stocks, etc. by the method of intermediating the trade of securities under Article 52-2 (1) of the Act; and
5.Purchase, etc. of stocks, etc. as prescribed by the Financial Supervisory Commission, which do not infringe upon the rights and
interests of any other stockholders, other than the matters as provided in subparagraphs 1 through 4-2.
[This Article Wholly Amended by Presidential Decree No. 15312, Mar. 22, 1997]
Articles 11-2 and 11-3 Deleted.
<by Presidential Decree No. 15687, Feb. 24, 1998>
Article 11-4 (Publication, etc. of Tender Offer)
(1)The publication of tender offer under Article 21-2 (1) of the Act shall be made on two or more newspapers covering nationwide from
among the general dailies or the special dailies in economy field under the Registration, etc. of Periodicals Act. <Amended by
Presidential Decree No. 18687, Jan. 27, 2005>
(2)The term matters prescribed by the Presidential Decree in Article 21-2 (1) 6 of the Act means those listed in each of the following
subparagraphs:
1.Current status of a tender offerer and the specially related persons (referring to the specially related persons under Article 21
(1) of the Act; hereinafter the same shall apply);
2.Matters concerning a person handling tender offer affairs;
3.Manner of tender offer;
4.Whether there exists any prior consultation with the officers or the biggest stockholder of the issuer of stocks, etc. subject to
tender offer (hereinafter referred to as the company which is an object of tender offer ), and if any, the contents thereof;
5.Plan on the future of the company which is an object of tender offer, after the completion of tender offer; and
6.Place for a perusal of a tender offer statement and an explanatory note of tender offer.
(3) Where the person who intends to make a tender offer submits the tender offer statement (including any statement prepared in the
form of electronic documents) under Article 21-2 (2) of the Act, such tender offer statement shall be accompanied by the documents
(including electronic documents) listed in the following subparagraphs: Provided, That in the event that it is possible to confirm
information on accompanied documents through the joint use of administrative information provided for in Article 21 (1) of the Act
on Promotion of the Digitalization of Administrative Affairs, etc. for Creation of Digital Government, such confirmation may replace
the accompanied documents: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.In case a tender offerer is an individual, a certified copy of his resident registration (in case of a foreigner, the document which
is equivalent to it);
2.In case a tender offerer is a corporation or any other organization, the articles of association and a certified copy of company
register or the document which is equivalent to it;
3.A copy of the contract concerning the affairs related to tender offer;
4.The documents proving the balance of the account at financial institutions or the holding of other funds which are not less than
the amount necessary for tender offer;
5.In case of tender offer through an exchange with other securities, the documents proving the holding of the securities which a tender
offerer intends to deliver as the price for exchange: Provided, That in case where intending to make a tender offer in order to receive
the investment in kind for the purpose of not falling under the criteria of Article 8-2 (1) 2 of the Monopoly Regulation and Fair
Trade Act, the documents proving the issuance of new stocks;
6.In case the permission, authorization, or approval of the Government is needed for the purchase, etc. of stocks, etc., the documents
proving that the permission, authorization, or approval is given;
7.A draft for the publication of tender offer;
8.In case a statement under Article 8 (1) of the Act is to be filed with respect to the tender offer through an exchange with other
securities, the documents containing the same details of matters as are to be contained in the relevant statement; and
9.Other documents determined by the Financial Supervisory Commission as those necessary for verifying the matters stated on the tender
offer statement.
(4) Deleted. <by Presidential Decree No. 18757, Mar. 28, 2005>
(5) The term matters prescribed by the Presidential Decree in Article 21-2 (2) 7 of the Act means each of the following subparagraphs:
1.Matters on the person handling tender offer affairs;
2.Current status of the company which is an object of tender offer;
3.Manner of tender offer;
4.Particulars of formation of the funds necessary for tender offer or of the securities which are an object of exchange (in case of
borrowing funds, the source from which money is borrowed shall be included therein);
5.Situation of holding and transactions of the stocks, etc. of the company which is an object of tender offer by a tender offerer
and the specially related persons for the latest one year;
6.Whether there exists any prior consultation with the officers or the biggest stockholder of the company which is the object of tender
offer, and if any, the contents thereof;
7.Plan on the future of the company which is an object of tender offer, after the completion of tender offer;
8.In case there is a mediator or an agent of tender offer, matters concerning it; and
9.Place for a perusal of a report on tender offer and an explanatory note of tender offer.
(6) The draft for the publication of tender offer under paragraph (1) and the tender offer statement under paragraph (3) shall be
subject to the form prescribed by the Financial Supervisory Commission.
[This Article Wholly Amended by Presidential Decree No. 17291, Jul. 7, 2001]
Article 11-5 (Period for Tender Offer)
The term period prescribed by the Presidential Decree in Article 21-2 (3) of the Act means the period that is not less than 20 days
but not more than 60 days: Provided, That in case, during the period of the tender offer concerned, a counter tender offer (hereinafter
referred to as the counter tender offer ) is filed, the period may be extended to the last day of the period of the counter-tender
offer. <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18757, Mar. 28, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 12 (Period during Which Exercise of Voting Rights is Restricted)
The term period prescribed by the Presidential Decree in Article 21-3 of the Act means the period from the date on which a purchase
of the stocks, etc. is made in violation of Article 21 (1) or 21-2 (1) or (2) of the Act until the day preceding that becoming unable
to exercise voting rights by the disposal of the relevant stocks, etc.
[This Article Wholly Amended by Presidential Decree No. 17291, Jul. 7, 2001]
Article 12-2 (Subject of Transmission of Copy of Statement)
(1)The term stocks, etc. prescribed by the Presidential Decree in Article 22 of the Act means exchangeable bonds. <Amended by
Presidential Decree No. 17291, Jul. 7, 2001>
(2)The term person prescribed by the Presidential Decree in Article 22 of the Act means an issuer of stocks, etc. which are objects
of exchange. <Amended by Presidential Decree No. 17291, Jul. 7, 2001>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 12-3 (Acquisition of Stocks, etc. by Other Means Than Tender Offer)
The term case prescribed by the Presidential Decree in Article 23 (2) of the Act means any of the following subparagraphs: <Amended
by Presidential Decree No. 15687, Feb. 24, 1998>
1.Where a contract for the purchase, etc. of the stocks, etc. concerned is concluded before a tender offer statement is filed, and
it is not subject to the tender offer as provided for in Article 21 (1) of the Act at the time of the conclusion of the contract
concerned as well as the fact that the contract concerned has been concluded and the contents thereof is written in the tender offer
statement;
2.Where a person handling tender offer affairs is entrusted with the purchase, etc. of stocks, etc. by a person other than a tender
offerer and the specially related persons; and
3.Where the Financial Supervisory Commission determines as not detrimental to the rights and interests of other stockholders even
though the purchase, etc. of stocks, etc. other than through tender offer is permitted.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Articles 12-4 and 12-5 Deleted.
<by Presidential Decree No. 18757, Mar. 28, 2005>
Article 12-6 (Prohibition of Modification of Condition of Tender Offer)
The term purchase conditions as prescribed by the Presidential Decree in the proviso of Article 23-2 (1) of the Act means those
which fall under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
1.Reduction of period of tender offer;
2.Alteration of the type of consideration to be paid to the tendering stockholders: Provided, That where the type of consideration
which the tendering stockholders may choose is added, it shall not apply; and
3.Other cases prescribed by the Financial Supervisory Commission as the modification of the conditions of tender offer which are unfavorable
to the tendering stockholders.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 12-7 (Exceptional Withdrawal of Tender Offer)
The term such case as prescribed by the Presidential Decree in the proviso of Article 24-2 (1) of the Act means the case which falls
under any of the following subparagraphs: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291,
Jul. 7, 2001; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.Where a counter tender offer is made;
2.Where a tender offerer falls under any of the following items:
(a) Death;
(b) Dissolution;
(c) Bankruptcy;
(d) Dishonor of bills or checks issued; and
(e) Where the causes as determined by the Financial Supervisory Commission have occurred, such as the grave disaster which was unpredictable
at the time of publication of tender offer, other than items (a) through (d); and
3.Where the condition that the tender offer may be withdrawn has been publicly announced at the time of tender offer publication and
written in the tender offer statement, if a cause falling under any of the following items happens to a company which is an object
of tender offer:
(a) Merger;
(b) Aquisition by transfer or transfer of important business or assets (referring to the acquisition by transfer or transfer of business
or assets provided for in each subparagraph of Article 84-8 (1));
(c) Dissolution;
(d) Bankruptcy;
(e) Dishonor of bills or checks issued;
(f) Delisting securities; and
(g) Other than items (a) through (f), the matters prescribed by the Financial Supervisory Commission, such as the grave disaster which
was unpredictable at the time of tender offer publication.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 13 (Presentation of Opinion on Tender Offer)
The issuer of stocks, etc. for which the tender offer statement is filed in accordance with Article 25 of the Act may present his
opinions on the said tender offer by means of advertisement, correspondence or other documents. In this case, the important matters
shall not be omitted and the contents shall be such that no misunderstanding may be caused therefrom. <Amended by Presidential
Decree No. 15312, Mar. 22, 1997>
Article 13-2 (Exception to Full Purchase)
The term case where the Presidential Decree prescribes in the proviso of Article 25-2 (1) of the Act means the case where the condition
falling under any of the following subparagraphs has been publicly announced at the time of tender offer publication and written
in the relevant tender offer statement: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 17291,
Jul. 7, 2001>
1.The condition that all of the tendered stocks, etc. shall not be purchased where the total number of tendered stocks, etc. is less
than the number of stocks, etc. scheduled to be purchased through tender offer; and
2.The condition that purchase will be made proportionally up to the number of stocks, etc. scheduled to be purchased through tender
offer and all or a part of excess will not be purchased where the total number of tendered stocks, etc. exceeds the number of stocks,
etc. scheduled to be purchased through tender offer.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 13-3 Deleted.
<by Presidential Decree No. 15687, Feb. 24, 1998>
CHAPTER V SECURITIES BUSINESS
Article 14 (Capital of Securities Company)
The minimum capital of the securities company as provided in Article 28 (3) of the Act shall be as follows: <Amended by Presidential
Decree No. 16367, May 27, 1999; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential
Decree No. 18687, Jan. 27, 2005>
1.In case of the securities company which conducts all of the business provided for in Article 28 (2) 1 through 3 of the Act, 50 billion
won;
2.In case of the securities company which conducts the business provided for in Article 28 (2) 1 and 2 of the Act, 20 billion won;
3.In case of the securities company which conducts the business provided for in Article 28 (2) 2 of the Act, 3 billion won;
4.In case of the securities company which conducts only the following businesses from among businesses of Article 28 (2) 1 and 2 of
the Act, 2 billion won:
(a) A securities sale business which targets securities under items of subparagraph 5;
(b) A securities consignment sale business which targets securities of Article 2 (1) 1 and 2 of the Act; and
(c) A securities sale brokerage business which targets securities under items of subparagraph 5 in any other place than the securities
market and the KOSDAQ market (hereinafter referred to as the over-the-counter market );
5.In case of the securities company which conducts a securities sale brokerage business in the over-the-counter market targeting the
following securities from among businesses of Article 28 (2) 2 of the Act, 2 billion won:
(a) Securities of Article 2 (1) 1 through 4 of the Act; and
(b) Securities of Article 2 (1) 7 of the Act (limited to those which have the nature of securities of item (a)); and
6.In case of the securities company which conducts the business provided for in Article 28 (2) 4 of the Act, 15 billion won.
[This Article Wholly Amended by Presidential Decree No. 15312, Mar. 22, 1997]
Article 15 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>
Article 15-2 Deleted.
<by Presidential Decree No. 16367, May 27, 1999>
Article 15-3 (Business Fund for Branch Office of Foreign Securities Company)
(1) The minimum business fund for any branch office and any other business office of a foreign securities company (hereinafter referred
to as a branch office of a foreign securities company ) under Article 28-2 (2) of the Act shall be as follows:
1.In case of a branch office of a foreign securities company which conducts the business of subparagraph 1 of Article 14, fifteen
billion won;
2.In case of a branch office of a foreign securities company which conducts the business of subparagraph 2 of Article 14, ten billion
won;
3.In case of a branch office of a foreign securities company which conducts the business of subparagraph 3 of Article 14, three billion
won; and
4.In case of a branch office of a foreign securities company which conducts the business of subparagraph 4 of Article 14, two billion
won.
(2) The business fund of Article 28-2 (2) of the Act shall be a fund in Korean currency, won, with which the head office of a foreign
securities company provides a branch office of the foreign securities company to establish a branch office of the foreign securities
company or to conduct the business and a fund transferred from the earned surplus reserve which a branch office of the foreign securities
company has accumulated. <Amended by Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
[This Article Wholly Amended by Presidential Decree No. 16966, Sep. 8, 2000]
Article 15-4 (Fiction of Operating Funds of Branch Office of Foreign Securities Company as Capital)
(1)In applying the Act to the branch office of a foreign securities company regarded as a securities company under Article 28-2 (4)
of the Act, the operating fund as provided in Article 15-3 shall be considered as capital thereof. <Amended by Presidential Decree
No. 16966, Sep. 8, 2000>
(2)A foreign securities company s branch office shall reserve the amount equivalent to the ratio that is set by the Financial Supervisory
Commission as the earned surplus within the scope of not less than 1/10 to not more than 2/100 of the net profit of the current period
until the amount reaches 1/2 of the operating fund. <Newly Inserted by Presidential Decree No. 15687, Feb. 24, 1998; Presidential
Decree No. 18757, Mar. 28, 2005>
(3)A foreign securities company s branch office shall not use the earned surplus reserve under paragraph (2) unless it needs the surplus
to compensate for the branch office s deficit or disposes of the surplus on approval by the Financial Supervisory Commission. <Newly
Inserted by Presidential Decree No. 15687, Feb. 24, 1998>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 15-5 (Scope, etc. of Assets which Foreign Securities Company Holds in Republic of Korea)
(1)The assets which a foreign securities company as provided in the latter part of Article 28-2 (5) of the Act holds in the Republic
of Korea, shall be as follows: <Amended by Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16966, Sep. 8,
2000>
1.Cash, and savings, installment savings, or installments which he has in financial institutions in the Republic of Korea;
2.Securities which are deposited or kept in the Republic of Korea;
3.Loan and other claims to the person in the Republic of Korea;
4.Tangible and intangible fixed assets in the Republic of Korea; and
5.Other than subparagraphs 1 through 4, the assets prescribed by the Financial Supervisory Commission from among those for which compulsory
execution is possible and of which encashment is easy in accordance with domestic laws.
(2)Any foreign securities company shall hold in the Republic of Korea assets equivalent to the sum of operating funds and debts in
accordance with the method provided for in any subparagraph of paragraph (1). <Amended by Presidential Decree No. 16367, May 27,
1999>
(3)Any branch office of a foreign securities company shall settle accounts independently from its head office, and in case the settlement
of accounts proves that the assets held in the Republic of Korea under paragraph (2) are less than the total amount of operating
funds and debts, such assets shall be made up within the period that is set by the Financial Supervisory Commission within the scope
of 90 days from the date on which the settlement of accounts becomes definite. <Amended by Presidential Decree No. 18757, Mar.
28, 2005>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 15-6 (Representative and Acting Representative of Branch Office of Foreign Securities Company)
(1)The provisions pertaining to officers of a securities company in the Republic of Korea shall apply mutatis mutandis to the representative
of a branch office of a foreign securities company.
(2)When there is no representative of a branch office of a foreign securities company or when the representative is unable to perform
his duties as such, if a representative is not newly appointed or a person acting for him is not designated, a person having interests
in the branch office concerned may require the Financial Supervisory Commission to appoint a person to execute the duties by proxy
temporarily (hereinafter referred to as the acting representative ). <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
(3)Upon request of the interested person under paragraph (2), the Financial Supervisory Commission shall require the branch office
concerned to appoint or designate a representative or an acting representative within 10 days. <Amended by Presidential Decree
No. 15687, Feb. 24, 1998>
(4)If the branch office concerned does not appoint or designate a representative or an acting representative within the period referred
to in paragraph (3), the Financial Supervisory Commission shall designate an acting representative without delay and the branch office
concerned shall register that fact at location thereof. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
(5)When the Financial Supervisory Commission designates an acting representative under paragraph (4), it may order the branch office
concerned to pay reasonable remuneration to the acting representative. <Amended by Presidential Decree No. 15687, Feb. 24, 1998>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 15-7 Deleted.
<by Presidential Decree No. 17291, Jul. 7, 2001>
Article 16 Deleted.
<by Presidential Decree No. 16367, May 27, 1999>
Article 17 (Application for Permission)
(1)A person who intends to obtain permission for a securities business under Article 28 (1) of the Act shall submit to the Financial
Supervisory Commission an application for permission specifying the following matters: <Amended by Presidential Decree No. 18757,
Mar. 28, 2005>
1.The trade name;
2.The location of the principal office and branch offices;
3.Matters concerning the composition of personnel, including the chief executive officer and officers;
4.Matters concerning financial affairs, including the capital;
5.Matters concerning physical facilities;
5-2.Matters concerning the business plan; and
6.Matters concerning the business for which he intends to obtain permission.
(2)The documents under each of the following subparagraphs shall be attached to the application referred to in paragraph (1): Provided,
That where a securities company engaging in only a part of the business under any subparagraph of Article 28 (2) of the Act intends
to obtain permission for the whole of the business under any subparagraph of the said paragraph, the documents to be required shall
be limited to the documents under subparagraphs 1, 2, 5, and 7:
1.Articles of association;
2.The business plan (including presumptive financial statements) and estimated revenue and expenditure statement for three business
years after the commencement of business;
3.A document specifying the locations and names of the head office and branch offices, etc.;
4.A certified copy of corporate registry;
5.A balance sheet as of the date of application for permission (as of the latest business year, in case of application for combining
securities business);
6.The curriculum vitae and career certificates of officers;
7.Documents stating the names or titles of stockholders who have 1/100 or more of the total number of issued and outstanding stocks
and the number of their stocks as of the date of application for permission (as of the end of the latest business year, in case of
application for combining securities business); and
8.Other documents prescribed by the Financial Supervisory Commission which are necessary for the examination of permission requirements
under the Act or this Decree.
(3) A person who intends to obtain permission of a securities business for a foreign securities company under Article 28-2 (1) of
the Act shall submit to the Financial Supervisory Commission an application for permission stating the following matters: <Amended
by Presidential Decree No. 18757, Mar. 28, 2005>
1.The trade name and location of the head office;
2.Matters concerning financial affairs, including the business fund;
3.The names and titles of officers of the head office;
4.The title and location of a branch office of the foreign securities company;
5.Matters concerning the composition of personnel, including the representative of a branch office of the foreign securities company;
6.Matters concerning the business for which he intends to obtain permission; and
7.The commencement date of the business, if he conducts in his country the same type of business as the business for which he intends
to obtain permission.
(4) The application for permission under paragraph (3) shall be accompanied by the following documents: Provided, That in the event
that it is possible to confirm information on accompanied documents through the joint use of administrative information provided
for in Article 21 (1) of the Act on Promotion of the Digitalization of Administrative Affairs, etc. for Creation of Digital Government,
such confirmation may replace the accompanied documents: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential
Decree No. 18687, Jan. 27, 2005>
1.The articles of association and the certified copy of the corporate registry (including its equivalent);
2.Documents stating the content of the business;
3.Documents stating the method of conducting the business for which he intends to obtain permission;
4.A copy of minutes of the board of directors which has decided upon the establishment of the branch office;
5.Documents stating personal record of the representative of the branch office and attesting to it;
6.The balance sheet, income statement, and documents relating to the disposition of earned surplus or the disposal of deficit, for
the latest three business years;
7.Documents stating the names or titles of major stockholders (referring to the major stockholders under Article 188 (1) of the Act;
hereinafter the same shall apply) and the number of their stocks;
8.The business plan (including presumptive financial statements) and estimated revenue and expenditure statement for three business
years after the commencement of business; and
9.Other documents, as prescribed by the Financial Supervisory Commission, which are required for the examination of permission requirements
under the Act or this Decree.
[This Article Wholly Amended by Presidential Decree No. 16966, Sep. 8, 2000]
Article 17-2 (Detailed Requirements for Permission)
(1)Detailed requirements for manpower and physical facilities which a person, who intends to obtain permission for a securities business,
must be complete with under Article 32 (1) 2 of the Act shall be as follows:
1.He shall have necessary manpower including specialized securities personnel with expert knowledge and sound quality concerning the
securities business for which he intends to obtain permission and computer personnel, etc. to conduct the business of the securities
company; and
2.He shall build necessary computer system and secure sufficient business space including offices to conduct a securities business
for which he intends to obtain permission.
(2) The business plan under Article 32 (1) 3 of the Act shall meet the following requirements:
1.It shall be appropriate and feasible in respect of prospect for revenue and expenditure;
2.It shall meet standards for financial soundness; and
3.It shall not be in violation of Acts and subordinate statutes and shall be unlikely to disturb sound financial order.
(3) The term major investor as prescribed by the Presidential Decree in Article 32 (1) 4 of the Act means any person falling under
any of the following subparagraphs:
1.The biggest stockholder;
2.A stockholder who is specially related to the biggest stockholder; and
3.A major stockholder.
(4) The term any person who virtually exercises his influence over important matters concerning the management of such corporation
and is prescribed by the Presidential Decree in Article 32 (1) 4 of the Act means any person falling under any of the following
subparagraphs:
1.The biggest stockholder of a corporation which is the biggest stockholder (including any person who virtually controls a corporation
which is the biggest stockholder, if he is obviously different from the biggest stockholder of the corporation); and
2.The representative of a corporation which is the biggest stockholder.
(5) A major investor under Article 32 (1) 4 of the Act shall meet the requirements specified in the attached Table: Provided, That
in any case of the following subparagraphs, the Financial Supervisory Commission may determine such requirements separately:
1.Where it is intended to obtain permission for a securities business for the purpose of combining such a securities business;
2.Where a securities company, which is running part of the business under any subparagraph of Article 28 (2) of the Act, intends to
obtain permission for a securities business to conduct any other securities business than its current securities business; and
3.Where a securities company merges with another company.
(6) The Financial Supervisory Commission may determine concrete standards for the detailed permission requirements under paragraphs
(1), (2) and (5).
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 17-3 (Examination of Establishment Permission for Branch Office of Foreign Securities Company)
(1) Detailed requirements for permission, which a foreign securities company intending to obtain establishment permission for a branch
office or any other business office shall meet under Article 32 (2) of the Act, shall be as follows: <Amended by Presidential
Decree No. 17907, Feb. 24, 2003>
1.It shall satisfy the requirements of subparagraph 4 (b) through (e) of the attached Table;
2.It shall satisfy the requirements of Article 17-2 (1) and (2); and
3.The substance of supervision over a foreign securities company by the supervisory organization of its own country shall satisfy
internationally recognized supervisory standards.
(2) The Financial Supervisory Commission may determine concrete standards for detailed permission requirements under paragraph (1).
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 17-4 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>
Article 17-5 Deleted.
<by Presidential Decree No. 16966, Sep. 8, 2000>
Article 18 Deleted.
<by Presidential Decree No. 12352, Dec. 31, 1987>
Article 18-2 (Eligibility, etc. for Officers)
(1) Deleted. <by Presidential Decree No. 16367, May 27, 1999>
(2)The term other Acts and subordinate statutes related to financial matters as prescribed by the Presidential Decree in Article
33 (2) 3, 4 and 5 of the Act means: <Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15604,
Dec. 31, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No.
16709, Feb. 14, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17791, Dec. 5, 2002; Presidential Decree
No. 18297, Feb. 28, 2004; Presidential Decree No. 18350, Apr. 1, 2004; Presidential Decree No. 18687, Jan. 27, 2005>
1.The Bank of Korea Act;
2.The Banking Act;
3.The Act on Business of Operating Indirect Investment and Assets;
4.The Insurance Business Act;
5.The Merchant Banks Act;
6.The Mutual Savings Banks Act;
7.The Act on Real Name Financial Transactions and Guarantee of Secrecy;
8.The Futures Trading Act;
8-2.The Korea Securities and Futures Exchange Act;
9.The Act on the Establishment, etc. of Financial Supervisory Organizations;
10.The Depositor Protection Act;
11.The Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset
Management Corporation;
12.The Specialized Credit Financial Business Act;
13.The Korea Development Bank Act;
14.The Industrial Bank of Korea Act;
15.The Long-Term Credit Bank Act;
16.The Export-Import Bank of Korea Act;
17.The Credit Unions Act;
18.The Trust Business Act;
19.The Credit Guarantee Fund Act;
20.The Korea Technology Credit Guarantee Fund Act;
21.The Community Credit Cooperatives Act;
22.The Support for Small and Medium Enterprise Establishment Act;
23.The Use and Protection of Credit Information Act;
24.The Foreign Exchange Transactions Act;
25.The Foreign Investment Promotion Act;
26.The Asset-Backed Securitization Act;
27.The Special Purpose Companies for Mortgage-Backed Bonds Act;
28.Deleted; <by Presidential Decree No. 18350, Apr. 1, 2004>
29.The Act on the Structural Improvement of the Financial Industry;
30.The Secured Debentures Trust Act;
31.The Financial Holding Companies Act;
32.The Corporate Restructuring Investment Companies Act; and
33.The Korea Housing Finance Corporation Act.
(3) The term any person as prescribed by the Presidential Decree in Article 33 (2) 4 of the Act means any officer or employee at
the time of occurrence of a cause of cancellation of permission or authorization, etc. of business (for a corporation or company
for which permission or authorization, etc. is canceled pursuant to Article 14 (2) of the Act on the Structural Improvement of the
Financial Industry, any officer or employee at the time of occurrence of a cause of timely corrective measures referred to in Article
10 of the said Act), who falls under any of the following subparagraphs: <Amended by Presidential Decree No. 16966, Sep. 8, 2000;
Presidential Decree No. 18687, Jan. 27, 2005>
1.An auditor or a member of the inspection committee;
2.An officer who has been subjected to a demand for caution, warning, reprimand, suspension from duties, or demand for removal from
office, or other disposition by the Financial Supervisory Commission or the Governor of the Financial Supervisory Service (hereinafter
referred to as the FSS Governor ) established under the Act on the Establishment, etc. of Financial Supervisory Organizations for
an unlawful or unjust act in connection with occurrence of a cause of cancellation of permission or authorization, etc.;
3.An employee who has been subjected to a demand for suspension from duties or any severer disposition by the Financial Supervisory
Commission or the FSS Governor for an unlawful or unjust act in connection with occurrence of a cause of cancellation of permission
or authorization, etc.; and
4.A person who is subjected to the sanction under subparagraph 2 or 3 but already resigned his position or office before such sanction
measure is taken.
[This Article Newly Inserted by Presidential Decree No. 10823, May 15, 1982]
Article 18-3 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>
Articles 19 through 23 Deleted.
<by Presidential Decree No. 12352, Dec. 31, 1987>
Article 24 (Application for Authorization of Merger)
When a securities company intends to obtain authorization for a merger in accordance with Article 35 (1) of the Act, the said company
shall submit to the Financial Supervisory Commission an application therefor, wherein the reasons for and time of the merger are
stated, by attaching thereto the documents enumerated in the following subparagraphs: <Amended by Presidential Decree No. 14438,
Dec. 23, 1994; Presidential Decree No. 16323, May 24, 1999; Presidential Decree No. 18757, Mar. 28, 2005>
1.Agreements for merger;
2.Articles of association of the company which continues to exist after a merger or which is newly established due to a consolidation;
3.Balance sheets and inventories of each company concerned; and
4.Other documents that are prescribed by the Financial Supervisory Commission as being necessary to confirm matters entered in the
application for authorization.
Article 25 (Matters to be Considered at Time of Authorizing Merger)
(1)Where the Financial Supervisory Commission intends to authorize a merger under Article 35 (2) of the Act, it shall examine whether
or not it satisfies the following standards: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.A merger shall not disturb the sound order of a financial market;
2.A securities company which survives after a merger or a securities company which is newly established after such merger shall meet
standards for the soundness of financial affairs determined by the Financial Supervisory Commission;
3.The scope of business to be conducted after a merger shall be appropriate;
4.Customers shall not suffer any unjust loss due to a merger; and
5.The procedures and contents of a merger shall be allowed by the Act, the Commercial Act, the Monopoly Regulation and Fair Trade
Act, and other finance-related Acts and subordinate statutes.
(2) The Financial Supervisory Commission may set concrete standards for matters to be examined under paragraph (1).
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 26 (Application for Authorization of Transfer or Acquisition of Business)
(1)When a securities company intends to obtain the authorization for transfer or acquisition of business in accordance with Article
35 (1) of the Act, the said company shall submit to the Financial Supervisory Commission an application therefor, wherein matters
under each of the following subparagraphs are stated: <Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree
No. 16323, May 24, 1999>
1.Trade name;
2.Location of the head office;
3.Matters relating to the capital; and
4.Time for transfer or acquisition.
(2)The documents under each of the following subparagraphs shall be attached to the application referred to in paragraph (1): <Amended
by Presidential Decree No. 18757, Mar. 28, 2005>
1.The proceedings of the general meeting of stockholders, if the transfer or acquisition has been resolved therein;
2.The latest balance sheet and inventory;
3.A copy of transfer or acquisition agreement; and
4.Other documents that are prescribed by the Financial Supervisory Commission as being necessary to confirm matters entered in the
application for authorization.
Article 27 (Matters to be Considered in Authorizing Transfer and Acquisition of Business)
The provisions of Article 25 shall apply mutatis mutandis to authorization for the transfer and acquisition of business of a securities
company.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 28 Deleted.
<by Presidential Decree No. 14910, Feb. 12, 1996>
Article 28-2 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>
Article 29 Deleted.
<by Presidential Decree No. 14910, Feb. 12, 1996>
Article 30 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>
Article 30-2 (Scope of Specially Related Persons)
The term relatives and other specially related persons of him as designated by the Presidential Decree in subparagraph 3 of Article
36 of the Act means those who fall under Article 10-3 (2).
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 31 (Matters to be Reported)
(1)When a securities company falls under any of the following subparagraphs, the said company shall report to the Financial Supervisory
Commission in accordance with subparagraph 5 of Article 36 of the Act: <Amended by Presidential Decree No. 10823, May 15, 1982;
Presidential Decree No. 14229, Apr. 30, 1994; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24,
1998; Presidential Decree No. 16367, May 27, 1999; Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan.
27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.When the capital of the company (the business fund in case of a domestic branch office of a foreign securities company) is changed;
2.through 4.Deleted; <by Presidential Decree No. 14229, Apr. 30, 1994>
5.Deleted; <by Presidential Decree No. 13634, Apr. 28, 1992>
6.When the company is punished in accordance with Chapter XI of the Act;
7.When the company becomes a party to a lawsuit which has important effect on its business;
8.When a bankruptcy petition is filed with respect to the company concerned;
9.When the company applies for the commencement of composition, when a decision on the authorization of composition is finalized,
or when composition becomes void;
10.When the company receives a disposition for arrear of tax or when it is subject to punishment in violation of the provisions of
Acts and subordinate statutes relating to taxation;
11.When the company makes any foreign direct investment or establishes an overseas business office or other offices under the Foreign
Exchange Transactions Act;
12.When the company establishes a domestic office (limited to domestic offices of foreign securities companies); and
13.When the grounds accrue that are prescribed by the Financial Supervisory Commission as being seriously influencing the management
and property, etc. of the securities company.
(2)Deleted. <by Presidential Decree No. 14229, Apr. 30, 1994>
Article 32 Deleted.
<by Presidential Decree No. 13634, Apr. 28, 1992>
Article 33 Deleted.
<by Presidential Decree No. 15312, Mar. 22, 1997>
Article 34 Deleted.
<by Presidential Decree No. 17518, Feb. 9, 2002>
Article 35 (Exception to Restrictions on Securities Transaction by Officers, etc.)
The term other cases to be prescribed by the Presidential Decree in Article 42 of the Act means as follows: <Amended by Presidential
Decree No. 10823, May 15, 1982; Presidential Decree No. 12352, Dec. 31, 1987; Presidential Decree No. 13940, Jul. 28, 1993; Presidential
Decree No. 14229, Apr. 30, 1994; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No. 15687, Feb. 24, 1998; Presidential
Decree No. 16745, Mar. 4, 2000; Presidential Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 17291, Jul. 7, 2001; Presidential
Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18350, Apr. 1, 2004; Presidential
Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The case of sale and purchase of securities issued by a corporation other than a stock-listed corporation and a KOSDAQ-listed corporation:
Provided, That this shall not include the case where the sale and purchase of the securities is made through any brokerage under
Article 84-27 (5);
2.The case of sale and purchase of securities referred to in Article 2 (1) 1 through 4 of the Act (including the equivalents of bonds
or certificates referred to in Article 2 (1) 1 through 4 of the Act from among bonds or certificates which a foreign corporation,
etc. issued) and securities referred to in Article 2-3 (1) 6 through 8 of this Decree (excluding a case where securities fall under
the sale and purchase of stock certificates as a result of the exercise of the right on the securities), beneficiary certificates,
or stock certificates issued by investment companies incorporated in accordance with the Act on Business of Operating Indirect Investment
and Assets: Provided, That this shall not apply to the case falling under the proviso of subparagraph 5;
3.The case of acquiring listed securities or KOSDAQ-listed securities through succession, donation (including bequeathal ), exercise
of mortgage right, or accord and satisfaction, or disposal of such securities so acquired;
4.The case of disposal of stocks acquired by an officer or employee of a securities company before he has the said position;
5.The case of disposal of the stocks, convertible bonds, bonds with warrants of the relevant corporation or the convertible bonds
eligible to request an exchange with the stocks of the relevant corporation, which have been acquired before it becomes a stock-listed
corporation or a KOSDAQ-listed corporation: Provided, That this shall not apply to the case of disposal within the elapse of one
year since an acquisition by other method than a public offer of new or outstanding securities;
6.The case of acquisition of stocks publicly offered or of disposal of stocks so acquired;
7.The case of selling and purchasing listed securities or KOSDAQ-listed securities upon obtaining the approval thereof after reporting
to the Financial Supervisory Commission according to the criteria determined by the Financial Supervisory Commission;
8.Deleted; <by Presidential Decree No. 15312, Mar. 22, 1997>
9.The case where a member of the employee stock ownership association acquires stocks through the association or disposes of stocks
so acquired;
10.The case of acquisition of stocks or of disposal of stocks acquired, by exercising stock options;
11.The case of acquisition of stocks by exercising the preemptive rights derived from the stocks acquired in accordance with subparagraphs
3 through 10, or of disposal of such stocks acquired;
12.Deleted; <by Presidential Decree No. 18687, Jan. 27, 2005>
12-2.The case where stock certificates are disposed of as the right on securities provided for in Article 2-3 (1) 6 through 8 is exercised,
which are acquired by any officer or any employee of a securities company before he is appointed as the officer or he is hired as
the employee; and
13.The case of disposal of securities which he acquired by exercising the right to perform the securities option trading, which any
officer or any employee of a securities company conducted before attaining to the said position.
Article 35-2 Deleted.
<by Presidential Decree No. 17291, Jul. 7, 2001>
Article 35-3 (Scope, etc. of Customer Deposits)
(1) The scope of customer deposits which a securities company has to deposit (including trust; hereafter in this Article through Article
35-9, the same shall apply) with a securities finance company (hereinafter referred to as the depository ) referred to in Article
145 of the Act pursuant to Article 44-3 (1) of the Act means money excluding money of Article 3 (3) 1 through 4 of the Enforcement
Decree of the Depositor Protection Act among money deposited from customers in connection with securities transaction or other transaction.
<Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
(2) The specific standards for calculating customer deposits referred to in paragraph (1), the deposit time and the deposit cycle
shall be determined by the Financial Supervisory Commission. <Amended by Presidential Decree No. 18757, Mar. 28, 2005>
(3) A securities company shall deposit at least the amount calculated pursuant to paragraph (2) with the depository. <Amended by
Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]
Article 35-4 (Exceptional Assignment of Customer Deposits)
The cases where a securities company which has deposited customer deposits (hereinafter referred to as a depository securities company
) may assign customer deposits deposited pursuant to Article 44-3 (3) of the Act shall be as follows:
1.Where a depository securities company assigns to a company which absorbs the depository securities company by a merger or is newly
established by consolidating the depository securities company and another company; and
2.Where a depository securities company assigns all or part of securities business to the company which takes over it according to
the contents of assignment.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]
Article 35-5 (Withdrawal of Customer Deposits)
A depository securities company may withdraw customer deposits deposited with the depository according to the standards falling under
each of the following subparagraphs:
1.Where customer deposits already deposited are larger than customer deposits to be deposited: The difference between deposited customer
deposits and customer deposits to be deposited;
2.Where the cause of preferential payment occurred under Article 44-3 (4) of the Act: Deposited customer deposits; and
3.Where the Financial Supervisory Commission approves as necessary such as large-scale request for payment of customer deposits at
the same time from customers: Approved amount.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]
Article 35-6 (Time for Public Announcement for Payment of Customer Deposits)
The term period as determined by the Presidential Decree in the latter part of Article 44-3 (4) of the Act means two months from
the date on which a cause of any subparagraph of paragraph (4) of the said Article occurs: Provided, That where it is impossible
to make public announcement within the said period for occurrence of any inevitable cause, he may extend such period within one month
on approval by the Financial Supervisory Commission.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]
Article 35-7 (Operation of Customer Deposits)
(1) Financial institutions referred to in Article 44-3 (6) 2 of the Act mean financial institutions referred to in Article 3 (1) 1
through 8.
(2) The term methods determined by the Presidential Decree in Article 44-3 (6) 3 of the Act means as follows: <Amended by Presidential
Decree No. 16966, Sep. 8, 2000; Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.Loans to a depository securities company secured on securities (including negotiable certificates of deposit);
1-2.Loans, secured on national bonds, to a person determined by the Financial Supervisory Commission;
2.Buying of the Bank of Korea currency stabilization bonds under Article 69 of the Bank of Korea Act; and
3.Other methods deemed capable of safe operation of customer deposits, which are determined by the Financial Supervisory Commission.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]
Article 35-8 (Management of Customer Deposits)
The depository shall manage deposited customer deposits, in good faith and sincerity, separately from its own property. <Amended
by Presidential Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]
Article 35-9 (Detailed Matters on Management, etc. of Customer Deposits)
Detailed matters necessary for the deposition, withdrawal, payment and management of customer deposits shall be determined by the
Financial Supervisory Commission.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]
Article 35-10 (Deposition of Securities by Securities Companies)
(1)The term bonds or certificates as determined by the Presidential Decree in Article 44-4 (1) of the Act means any of securities,
bonds or certificates as follows: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Negotiable certificates of deposit; and
2.Foreign currency bonds referred to in the Foreign Exchange Transactions Act, which are determined by the Financial Supervisory Commission.
(2) The term those as determined by the Presidential Decree in Article 44-4 (2) of the Act means any of securities, bonds or certificates
as follows: <Amended by Presidential Decree No. 18687, Jan. 27, 2005>
1.Securities referred to in Article 2 (1) of the Act;
2.Negotiable certificates of deposit; and
3.Foreign currency bonds referred to in the Foreign Exchange Transactions Act, which are determined by the Financial Supervisory Commission.
(3) Where a securities company keeps in custody any securities, bonds or certificates, other than securities to be deposited referred
to in Article 173-7 of the Act, with the Korea Securities Depository by deposition in custody or other methods, it shall be deemed
to deposit them pursuant to Article 44-4 of the Act.
[This Article Newly Inserted by Presidential Decree No. 16367, May 27, 1999]
Article 35-11 (Notification of Transaction)
(1)When purchase and sale on the basis of order of customers and other transactions are concluded under Article 46 of the Act, a securities
company shall without delay notify the customer concerned of the item, quantity, price, and other contents of transaction.
(2)Every securities company shall notify its customers of details of its monthly and quarterly transactions and its current balance
under the conditions as prescribed by the Financial Supervisory Commission. <Amended by Presidential Decree No. 18757, Mar. 28,
2005>
(3)Deleted. <by Presidential Decree No. 18757, Mar. 28, 2005>
(4)The detailed matters necessary for the notification of purchase and sale and other contents of transaction and balance situation
by a securities company, shall be prescribed by the Financial Supervisory Commission. <Amended by Presidential Decree No. 15687,
Feb. 24, 1998>
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 35-12 (Period for Disposal of Treasury Stock)
The term period prescribed by the Presidential Decree in the latter part of Article 46-2 of the Act means three months from the
date of acquisition.
[This Article Newly Inserted by Presidential Decree No. 15312, Mar. 22, 1997]
Article 35-13 (Business Report)
The business report provided in Article 47 of the Act (hereafter in this Article referred to as the business report ) shall include
the following matters: <Amended by Presidential Decree No. 17518, Feb. 9, 2002>
1.The outline of a company such as its history and organization;
2.Matters relating to the contents of business to be conducted by a company;
3.Matters relating to the financial affairs of a company such as its financial standing and business records;
4.Matters relating to officers and employees such as the brief personal records of outside directors and the compliance officer under
Article 54-4 (2) of the Act (hereinafter referred to as the compliance officer ) and the holding situation of professional securities
manpower (including professional derivatives manpower);
5.Matters relating to the biggest stockholder (including any person specially related to him) and major stockholders;
6.Matters relating to business connections with any person specially related to the company;
7.Matters relating to the current condition and protection of deposited property such as customer deposits and customer deposit securities;
7-2.Matters relating to the contents of business, situation of transaction, and situation of appraised profit and loss (including
any appraised profit and loss concerning the relevant transaction for evading any risk from over-the-counter derivatives), etc. concerning
the over-the-counter derivatives transaction under Article 36-2 (1) 1-2;
8.Matters relating to the management of shops and manpower;
9.Where a company or its officer or employee has been subjected to a certain measure taken by the Financial Supervisory Commission
or the FSS Governor, etc. for the latest five years, the contents of such measure; and
10.Other matters, relating to the business or management of a securities company, determined by the Financial Supervisory Commission
as those which are to be known to the general public.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 35-14 (Restrictions on Officers Engaging in Other Business)
The full-time officer of a securities company shall not be allowed to engage in the regular business of the following corporations
under Article 48 of the Act: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 18687, Jan. 27,
2005>
1.An institution which is subject to examination by the Financial Supervisory Service under Article 38 of the Act on the Establishment,
etc. of Financial Supervisory Organizations;
2.An affiliated company of the securities company concerned or a company subject to the preparation of consolidated financial statements
(hereinafter referred to as a subsidiary company ): Provided, That this shall exclude the following cases:
(a) Where he holds concurrently the office of an officer of a financial institution, which is a subsidiary company located in a foreign
country, or serves for such financial institution as a dispatched officer; and
(b) Where he holds concurrently the office of an officer of a subsidiary company or serves for such subsidiary company as a dispatched
officer in order to facilitate business rationalization or restructuring of such a subsidiary company;
2-2.An accounting corporation under the Certified Public Accountant Act;
3.A company which is the biggest or major stockholder of the securities company concerned;
4.A company which is given the loan of money or the extension of credit equivalent to 10/100 or more of the equity capital from the
securities company concerned; and
5.Other corporations which might impair the sound management of a securities company, as determined by the Ordinance of the Ministry
of Finance and Economy.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 35-15 (Credit Extension)
The method and contents of credit extension under Article 49 (2) of the Act shall be as follows: <Amended by Presidential Decree
No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18687, Jan. 27, 2005>
1.Advance of the purchase funds of stock certificates within the limit of one-year period pursuant to the public offering or the issuance
of new stocks by a stock-listed corporation or a KOSDAQ-listed corporation;
2.Advance of purchase funds for transactions at the securities market or the KOSDAQ market or lending of sale securities;
3.Advance of funds secured on securities for the purpose of purchasing securities; and
4.Advance of funds to a person depositing securities in a securities company, which is secured on the securities.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 35-16 (Securities Savings Business)
The method and contents of securities savings business under Article 50 (2) of the Act shall be as follows: <Amended by Presidential
Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 18687, Jan. 27, 2005>
1.Holding by a securities company of securities after selling them in a manner of installment sale;
2.Holding by a securities company of securities after receiving a prior deposit of money from its customers and then selling such
securities for such money; and
3.Holding by a securities company of securities after its customers purchase such securities at the securities market or the KOSDAQ
market (including the brokerage of securities transactions under Article 52-2 of the Act) within the scope of their deposits previously
given.
[This Article Newly Inserted by Presidential Decree No. 16966, Sep. 8, 2000]
Article 36 (Application for Authorization on Engaging Concurrently in Other Business)
(1)When a securities company intends to obtain authorization as provided in Article 51 (1) 2 of the Act, the said company shall submit
to the Financial Supervisory Commission an application therefor, wherein matters under each of the following subparagraphs are stated:
<Amended by Presidential Decree No. 14438, Dec. 23, 1994; Presidential Decree No. 15312, Mar. 22, 1997; Presidential Decree No.
16323, May 24, 1999; Presidential Decree No. 16966, Sep. 8, 2000>
1.Trade name;
2.Location of the head office;
3.Matters relating to the stated capital;
4.Type and outline of the business in which it intends to engage concurrently;
5.Commencement date of the business concerned; and
6.Reasons for engaging in the business concerned.
(2)The documents under each of the following subparagraphs shall be attached to an application referred to in paragraph (1): <Amended
by Presidential Decree No. 18757, Mar. 28, 2005>
1.Articles of association;
2.The minutes of the general meeting of stockholders, if the concurrent engagement in other business is resolved at the said meeting;
3.The latest balance sheet;
4.Business plan related to the concurrent engagement in other business; and
5.Other documents concerning financial matters that are prescribed by the Financial Supervisory Commission as being necessary to confirm
matters entered in the application for authorization.
Article 36-2 (Scope of Business of Securities Company)
(1) The term financial business prescribed by the Presidential Decree in Article 51 (1) 2 of the Act means each of the following
businesses: <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential Decree No. 17518, Feb. 9, 2002; Presidential
Decree No. 17907, Feb. 24, 2003; Presidential Decree No. 18325, Mar. 22, 2004; Presidential Decree No. 18350, Apr. 1, 2004; Presidential
Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The futures business under the Futures Trading Act (limited to any transaction subject to stock certificates and index based on
them);
1-2.Transactions that are executed on the matters falling any one of the following items outside the securities market, the KOSDAQ
market and the futures market (referring to the futures market provided for in the Futures Trading Act), which are prescribed by
the Ordinance of the Ministry of Finance and Economy (hereinafter referred to as over-the-counter financial derivatives transactions
) and the act of intermediating, arranging or executing transactions by proxy:
(a)The prices of securities and interest rates provided for in each subparagraph of Article 2 (1) of the Act and the numerical values
of index number that is based on the former;
(b) The prices of currencies and general goods (referring to the general goods provided for in subparagraph 1 of Article 2 of the
Futures Trading Act; hereinafter the same shall apply) and the numerical values of index number that is based on the former; and
(c) The indices of credit risk;
2.The investment consulting business provided for in subparagraph 5 of Article 2 of the Act on Business of Operating Indirect Investment
and Assets;
3.The discretionary investment business provided for in subparagraph 6 of Article 2 of the Act on Business of Operating Indirect Investment
and Assets; and
4.The trust business provided for in the Trust Business Act.
(2) A securities company competent for conducting a business referred to in paragraph (1) 1-2, 2, and 3 shall be a securities company
that falls under any of the following subparagraphs: <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree
No. 18757, Mar. 28, 2005>
1.For the business of paragraph (1) 1-2, a securities company meeting the following requirements:
(a) It shall be a securities company that runs all of the businesses as referred to in Article 28 (2) 1 through 3 of the Act;
(b) The major investors in the securities company shall satisfy the requirements as referred to in subparagraph 1 (f) ( ) of the attached
Table;
(c) It shall maintain the equity capital regulation rate, as referred to in Article 54-2 (1) of the Act, 300/100 or higher and have
equity capital of not less than the amount as prescribed by the Ordinance of the Ministry of Finance and Economy;
(c)It shall maintain the equity capital regulation rate of 300/100 or higher, as referred to in Article 54-2 (1) of the Act; Enforcement
Date: Mar. 29, 2007
(d) It shall have professional derivatives manpower, including but not limited to full-time officers making a specialty of over-the-counter
financial derivatives transaction; and
(e) It shall meet the standards for the risk management and internal control, etc. as determined by the Financial Supervisory Commission;
and
2.For the businesses of paragraph (1) 2 and 3, a securities company that conducts all of the businesses as referred to in Article
28 (2) 1 and 2 of the Act.
(3) The Financial Supervisory Commission may set standards for business method and procedure, etc. necessary for a securities company
to conduct the business referred to in paragraph (1) 1-2, 2, and 3. <Amended by Presidential Decree No. 17291, Jul. 7, 2001; Presidential
Decree No. 17518, Feb. 9, 2002>
(4) A securities company shall, in running any business of paragraph (1) 2 and 3, meet the following standards: <Newly Inserted
by Presidential Decree No. 17907, Feb. 24, 2003>
1.Deleted; <by Presidential Decree No. 18757, Mar. 28, 2005>
2.It shall manage the accounts of investment advisory customers and discretionary investment customers separately from other accounts
of such customers;
3.Deleted; <by Presidential Decree No. 18757, Mar. 28, 2005>
4.It shall not conduct the sale and purchase of securities on its own account, or investment advice, the sale and purchase of property
subject to a discretionary investment contract, etc., which are intended to close or facilitate any transaction favorable to itself;
and
5.It shall not make any investment of discretionary investment property in any securities issued by itself.
(5) The term ancillary business prescribed by the Presidential Decree in Article 51 (1) 3 of the Act means any of the following
businesses: <Amended by Presidential Decree No. 17518, Feb. 9, 2002; Presidential Decree No. 17907, Feb. 24, 2003; Presidential
Decree No. 18687, Jan. 27, 2005; Presidential Decree No. 18757, Mar. 28, 2005>
1.The business related to a securities business that falls under any one of the following items:
(a) A business of appraising securities and equities;
(b) A business of intermediating, arranging, or conducting as proxy the purchase and merger of corporations;
(c) The sale or purchase of negotiable certificates of deposit and the brokerage business of such sale or purchase;
(d) A business of receiving the entrustment of bond subscription;
(e) A business of agents relating to the transactions of securities;
(f) A consulting or supporting business for the management, restructuring, and financing of corporations;
(g) A business of lending or borrowing securities, or intermediating, arranging, or conducting as proxy, it;
(h) A business of underwriting securities issued through a method other than the public offering of new securities, and a business
of intermediating, arranging, or conducting as proxy, it;
(i) A business of trading claims on credits and other relevant business, and a business of intermediating, arranging, or conducting
as proxy, it;
(j) A business of conducting safe deposit of securities;
(k) The business of renting, brokering the transaction of real estate that is owned by enterprises that are customers or offering
consulting services in the process of performing the business referred to in item (b) or (f);
(l) The business of selling information pertaining to the analysis of security values, etc. to many and unspecified persons by means
of publication, book or electronic document, etc.;
(m)The business of getting any financial institution (referring to the institution subject to the inspection provided for in Article
38 of the Act on the Establishment, etc. of Financial Supervisory Organizations) with which a business partnership is maintained
to extend loans to customers by means of brokerage, arrangement or proxy; and
(n) Other businesses equivalent to items (a) through (m), as prescribed by the Ordinance of the Ministry of Finance and Economy; and
2.A business of utilizing manpower, assets, or facilities, etc. held by the securities company concerned, which falls under any of
the following items:
(a) A business of renting real estate;
(b) A business of lending safes;
(c) Deleted; <by Presidential Decree No. 17907, Feb. 24, 2003>
(d) A business of performing as proxy the sale of lottery ti