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ENFORCEMENT DECREE OF THE SHIP INVESTMENT COMPANY ACT

Article 1 (Purpose)

The purpose of this Decree shall be to prescribe matters delegated by the Ship Investment Company Act and matters necessary for the enforcement thereof.

Article 2 (Maritime or Finance Laws)

(1) The words "any other such maritime or finance laws as prescribed by the Presidential Decree" as set forth in Article 7 (1) 4 of the Ship Investment Company Act (hereinafter referred to as the "Act") shall refer to the following laws:

1. The Marine Transport Act;

2. The International Ship Registration Act;

3. The Shipowners Mutual Protection and Indemnity Insurance Act;

4. The Ship Act;

5. The Ship Safety Act;

6. The Marine Environment Management Act

7. The Sea Traffic Safety Act;

8. The Ship Registry Act;

9. The Harbor Act;

10. The Harbor Transport Business Act;

11. The Bank of Korea Act;

12. The Banking Act;

13. The Capital Market and Financial Investment Service Act;

14. The Insurance Business Act;

15. The Foreign Exchange Transactions Act;

16. The Foreign Investment Promotion Act; and

17. The Act on the Establishment etc. of the Financial Supervisory Commission. (2) The phrase "such person ... as prescribed by the Presidential Decree" as set forth in Article 7 (1) 6 of the Act shall refer to any of the following officers or employees holding a position with the legal entity as of the date on which the event leading to the revocation of the business permit, license, or registration occurs:

1. Any statutory auditor or any member of the audit committee;

2. Any officer who has been subjected to suspension, request for dismissal, or any other actions or any employee who has been subjected to request for suspension or any other more stringent actions taken by the Minister of Land, Transport and Maritime Affairs, the Financial Supervisory Commission, or the Governor of the Financial Supervisory Commission established pursuant to the Act on the Establishment etc. of the Financial Supervisory Commission (hereinafter referred to as the "Governor of the Financial Supervisory Commission") for any unlawful or unreasonable acts giving rise to an event leading to the revocation of the business permit, license, or registration; or

3. Any person who is subject to a penalty under subparagraph 2 but resigned from office or was voluntarily separated prior to the imposition of such penalty.

Article 3 (Subscription by Promoters to Shares)

The words "such percentage as prescribed by the Presidential Decree" as set forth in Article 7 (2) of the Act shall refer to ten percent.

Article 4 (Matters to Be Included in Articles of Incorporation) The phrase "such matters ... as prescribed by the Presidential Decree" as set forth in Article 8 (1) 17 of the Act shall refer to the following:

1. Matters concerning the general meeting of shareholders and the board of directors;

2. Matters concerning officers;

3. Matters concerning asset valuation and accounting records;

4. Matters concerning service contracts; and

5. The details of an initial public offering, if contemplated, on the stock exchange of the Korea Exchange under Article 373 of the Capital Market and Financial Investment Service Act (hereinafter referred to as the "KSE").

Article 5 (Matters to Be Included in Prospectus)

Matters to be included in a prospectus under Article 9 (1) of the Act shall be as follows:

1. The corporate name, the intent of the incorporation of the ship investment company, and the address of the head office;

2. A summary of the chartering plan;

3. An overview of the investment plan;

4. The class and number of the shares to be issued;

5. Matters concerning the specifications and maintenance of the ship;

6. A financial profile (including, inter alia, the cost of purchasing a ship and fundraising methods);

7. An overview of the ship investment management company and its historical performance;

8.A income distribution plan;

9. Whether the shares are listed on the Korea Stock Exchange or the Korea Securities Dealers Automated Quotations; and

10. Market conditions for maritime transportation and any other matters as may be necessary for investors.

Article 6 (Registration of Incorporation)

The phrase "such documents as prescribed by the Presidential Decree" as set forth in Article 12 (2) of the Act shall refer to the following documents:

1. The articles of incorporation;

2. Documents evidencing subscription to shares;

3. Subscription order forms;

4. An investment report on the incorporation of the company as prepared by a director;

5. The minutes of the organization meeting of incorporators;

6. Documents evidencing the acceptance of office by directors and statutory auditors;

7. Documents evidencing the engagement of a transfer agent; and

8. A document certifying the safekeeping of capital contributions issued by banks or other financial institutions accepting the payment thereof.

Article 7 Deleted.

Article 8 (Issuance of Shares)

(1) The subscription order form under Article 15 (1) of the Act shall include the following:

1. Matters as set forth in the subparagraphs of Article 8 (1) of the Act;

2. Matters as set forth in Articles 9 (2) 2 and 9 (2) 5 of the Act;

3. The total number and issue price of the shares to be issued;

4. The number of shares to be subscribed to and the amount of the subscription deposit; and

5. How shares will be allotted and the due date for the payment of capital contributions.

(2) The prospectus under Article 15 (1) of the Act shall include matters as set forth in the subparagraphs of Article 5.

Article 9 (Issue Price of Shares)

The issue price of shares under Article 16 (2) of the Act shall be calculated in accordance with Article 176-8 (2) of the Capital Market and Financial Investment Service Act; provided, however, that if the shares in the applicable ship investment company are not listed on the KSE or the Korea Securities Dealers Automated Quotations, the issue price shall be the difference between (i) the sum of such value of each class of assets as calculated in the following manner as of a calculation date, a date immediately preceding the date of a board of directors meeting resulting in a resolution for rights offering and (ii) the current liabilities, as divided by the total number of shares to be issued:

1. The price of the ship: its acquisition value, or a price at which the ship may be sold in consideration of market and other conditions if no less than one year has passed since the acquisition.

2. Charter fee income: the amount determined on a date on which the contract is entered into.

3. Securities: to be calculated by applying, mutatis mutandis, Article 260 of the Capital Market and Financial Investment Service Act, where the "valuation date" shall be deemed "calculation date".

4. Deposits with financial institutions: a sum of principals and interests accrued thereon until the calculation date.

5. Other assets: balance sheet values.

Article 10 (Scope of Specific Parties in Interest) The scope of specific parties in interest under Article 18 of the Act shall be the scope of specific parties in interest under Article 141 of the Capital Market and Financial Investment Service Act.

Article 11 (Exceptions to Acquisition of Treasury Shares and Pledge) (1) Under Article 19 (1) of the Act, a ship investment company may acquire treasury shares in any of the following cases:

1. Where the acquisition is made to cancel the shares;

2. Where the acquisition is made to eliminate fractional shares;

3. Where shares are acquired at no cost; or

4. Where shares are acquired by exercising the pledge established under paragraph (2).

(2) The cases where a ship investment company may offer treasury shares as a pledge under Article 19 of the Act shall be limited to such cases as deemed necessary to secure and exercise its claim on, inter alia, the sale price of the ship and charter fees.

Article 12 (Scope of Operations)

The phrase "operations as prescribed by the Presidential Decree" as set forth in Article 24 (1) 6 of the Act shall refer to the procurement of insurance coverage against ship price and charter fee fluctuations resulting from foreign exchange rate fluctuations and other operations ancillary to those set forth in subparagraphs 1 through 5 of the same Article.

Article 13 (Borrowing of Funds and Issuance of Bonds) The maximum amount of borrowings and bonds under Article 25 (2) of the Act shall be ten times the equity capital.

Article 14 Deleted.

Article 15 (Ship Inspection Organization)

The ship inspection organization under Article 27 of the Act shall be any of the following:

1. The Korea Ship Safety Technology Authority under Article 45 (1) of the Ship Safety Act and any ship registry under Article 60 (2) of the same Act; and

2. Any member society of the International Association of Classification Societies.

Article 16 (Scope of Specific Affiliates)

The scope of specific affiliates under Article 29 (2) of the Act shall be the scope of specific affiliates under Articles 8 and 141 (3) of the Capital Market and Financial Investment Service Act.

Article 17 (License of Ship Investment Management Company) (1) Any person intending to obtain a license of a ship investment management company shall file with the Minister of Land, Transport and Maritime Affairs an application (including an application in electronic form) stating the following:

1. The corporate name and address of the company;

2. Matters concerning equity capital;

3. Matters concerning officers; and

4. Matters concerning the operations of offering or sale of shares if such person intends to obtain a constructive license for investment dealing or investment brokerage. (2) The following documents shall be attached to an application for license under paragraph (1), upon the receipt of which application, the Minister of Land, Transport and Maritime Affairs shall verify the same against a corporate registry extract by accessing administrative information under Article 21 (1) of the Electronic Government Act:

1. The articles of incorporation;

2. Documents evidencing payment of capital contributions;

3. Documents stating the names and shareholdings of the shareholders;

4. Documents stating the name and location of the head office and branch offices;

5. A business plan and a statement of expected earnings and expenses for two fiscal years starting from the year of commencing operation;

6. The curriculum vitae and career certificates of ship investment management professionals and financial professionals; and

7. Financial statements. (3) Upon the receipt of an application under paragraph (1), the Minister of Land, Transport and Maritime Affairs shall issue a license stating the following if the applicant is deemed to meet all licensing requirements:

1. A license number;

2. A date of license;

3. The corporate name and address of the company;

4. The name of the representative; and

5. The details of other operations under paragraph (4) if such operations are approved.

(4) Any person intending to obtain a license for a ship investment management company and the approval under the proviso of Article 32 (1) of the Act in order to engage in other operations shall state the details of such other operations in the application under paragraph (1) and submit other relevant documents, in which case, an application for the approval of other operations shall be deemed to have been filed.

Article 18 (Licensing Requirements for Ship Investment Management Company) (1) Such criteria in terms of the contributed capital, ship investment management professionals, and financial professionals as included in the licensing requirements for a ship investment management company under Articles 31 (1) 2 and 31 (1) 3 shall be as follows:

1. The contributed capital shall be no less than seven billion won; and

2. The number of the professionals as set forth in each of the following items shall be no less than two, where two or more persons shall fall within each scope as set forth in item (a) and (b):

(a) any person who was engaged in financial, shipbuilding, chartering, sale and purchase, or any other duties similar thereto in the marine transportation industry under subparagraph 1 of Article 2 of the Marine Transport Act for a period of five years or more, to which period the period of service for which the person was engaged in the same types of duties at a ship investment management company shall be added; (b) any person who was engaged in asset management, international finance, corporate finance, or any other duties similar thereto at any financial institution as set forth in subparagraph 1 (a) through (d) and (h) of Article 2 of the Act on the Structural Improvement of the Financial Industry or a facilities leasing business as set forth in subparagraph 9 of Article 2 of the Specialized Credit Financial Business Act for a period of five years or more, to which period the period of service for which the person was engaged in the same types of duties at a ship investment management company shall be added; and

(c) any such person licensed as an attorney-at-law or any such person who was engaged in the shipbuilding industry as deemed by the Minister of Land, Transport and Maritime Affairs to be equivalent to any person as set forth in item (a) or (c). (2) The viability and soundness of a business plan under Article 31 (1) 4 of the Act shall refer to meeting the following requirements:

1. The balance projected in the business plan is viable and achievable; and

2. The business plan is not in violation of laws and not likely to undermine sound financial integrity.

(3) The phrase "Such controlling shareholders as set forth in the Presidential Decree" as set forth in Article 31 (1) 6 of the Act shall refer to any shareholder holding no less than ten percent of the total number of issued and outstanding voting shares on such shareholder's own account, whether or not held in the shareholder's own name, or exercising de facto control over the appointment and dismissal of officers and other major aspects of management of the ship investment management company (hereinafter referred to as a "controlling shareholder").

(4) If a controlling shareholder is a legal entity, its total assets of its total liabilities as stated in the balance sheet as of the close of the recent fiscal year shall be no less than three times its capital contribution.

Article 19 (Code of Conduct of Ship Investment Management Company) The phrase "such act ... as prescribed by the Presidential Decree" as set forth in Article 33 (2) 5 of the Act shall refer to any of the following:

1. An act of borrowing or lending money from or to the ship investment company that engaged the ship investment management company; or

2. An act of elaborately manipulating the prices of securities issued by the ship investment company that engaged the ship investment management company.

Article 19-2 (Minimum Net Asset Value of Ship Investment Management Company)

The phrase "such minimum ... as prescribed by the Presidential Decree" as set forth in Article 34-2 of the Act shall refer to four billion won.

Article 20 (Custodian Contract)

(1) Under Article 36 (1) of the Act, a ship investment company shall entrust an asset custodian with the safekeeping of the ship and other assets in the following manner:

1. The ship and real property: its ownership shall be registered in the name of the company immediately upon acquisition, and the safekeeping of documents relevant thereto shall be entrusted to the asset custodian.

2. Securities, cash and other assets: the safekeeping of the same shall be entrusted to the asset custodian immediately upon acquisition. (2) The asset custodian shall promptly deposit with the Korea Securities Depository such securities of which it is entrusted by a ship investment company with its safekeeping under Article 36 (2) of the Act as designated as securities to be deposited under Article 308 of the Capital Market and Financial Investment Service Act.

Article 21 (Terms etc. of Asset Custody Agreement) (1) Any asset custody agreement on the safekeeping of assets under Article 36 (1) of the Act entered into by and between a ship investment company and an asset custodian shall include the following:

1. The corporate name of the asset custodian;

2. Matters concerning the scope of services, responsibilities, and authorities of the asset custodian;

3. Matters concerning the method for the safekeeping of assets;

4. How the fees payable to the asset custodian will be calculated and when the payment will be made;

5. Matters concerning the termination or rescission of the asset custody agreement; and

6. The period of asset custody service, if prescribed. (2) Upon entering an asset custody agreement, the asset custodian shall receive from the ship investment company and maintain the following documents:

1. The articles of incorporation;

2. Acopy of a certificate of business entity registration;

3. A corporate seal impression certificate of the representative director;

4. A registered seal impression; and

5. The minutes of the meetings of the board of directors.

Article 22 (Obligation of Asset Custodian)

Such procedures and standards prescribed by an asset custodian as may be necessary to perform its activities shall include the following:

1. A statement that no officer or employee may provide any information or data acquired in connection with asset custodian activities to any third party without the approval of the applicable ship investment company or to use the same for any purposes other than those of the asset custodian activities;

2. A statement that no officer or employee of the asset custodian may use the assets held in custody as the asset custodian's own property;

3. A statement that the asset custodian shall designate a supervisor and personnel for each ship investment company to perform asset custody procedures for such company in good faith and in a prompt manner;

4. A statement that the asset custodian may not serve as a ship investment management company for the applicable ship investment company; and

5. A statement that the asset custodian shall make clear its administrative and accounting activities by maintaining records and keeping books.

Article 23 (Distribution of Income)

(1) The phrase "such operating expenditures as prescribed by the Presidential Decree" as set forth in Article 41 (1) of the Act shall refer to the following:

1. The service fees payable to the ship investment management company and the asset custodian;

2. Costs and expenses incurred over the course of raising funds to acquire a ship;

3. Any and all costs and expenses incurred in connection with the construction, sale, purchase, chartering, and maintenance of a ship;

4. Costs and expenses as may be necessary for, inter alia, ship registration and inspection; and

5. Insurance premiums, taxes, and public dues. (2) The income from asset management under Article 41 (1) of the Act shall be charter fees, the proceeds of the sale of the ship, discounts on the ship price, and any other incomes.

Article 24 (Supervision, Inspection, etc.)

The phrase "such measures ... as prescribed by the Presidential Decree" as set forth in Article 44 (6) 3 of the Act shall refer to the following:

1. The request for the modification of the articles of incorporation (for ship investment companies only);

2. The request for the modification of a service agreement entered into between the ship investment company and the ship investment management company;

3. The request for the disposal of assets held by the ship investment company; and

4. The request for the compensation of damage to shareholders et al.

Article 25 (Ship Investment Company Targeting Small Number of Investors) The phrase "such number ... as prescribed by the Presidential Decree" as set forth in Article 53 (1) of the Act shall refer to 150.

Article 26 Deleted.

ADDENDUM

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