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Laws of the Republic of Korea |
1
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT BUSINESS ACT
Ordinance of Ministry of Finance and Economy No. 374, Apr. 1, 2004 Amended by Ordinance of Ministry of Finance and Economy No. 507, May 9, 2006 Ordinance of Ministry of Finance and Economy No. 599, Jan. 8, 2008 Ordinance of Ministry of Finance and Economy No. 875, Mar. 3, 2008 Article 1 (Purpose)
The purpose of this Rule is to prescribe the matters delegated by the
Indirect Investment Asset Management Business Act and the
Enforcement
Decree thereof and other matters necessary for the enforcement thereof.
The definitions of terms used in this Rule shall follow those as determined
by the Indirect Investment Asset Management Business
Act (hereinafter
referred to as the "Act") and the Enforcement Decree thereof (hereinafter
referred to as the "Decree").
Article 3 (Sale by Asset Management Company)
(1) through (5) Deleted.
(6) Where an asset management company of investment trust sells
beneficiary certificates, it may have any person falling under each
of
subparagraphs of Article 26 (1) of the Act vicariously perform the paid-in
or payment of proceeds, etc. from sale.
Article 4 (Publication, etc. of Application for License)
(1) Where an application for main license or preliminary license has been
filed in accordance with Article 14 or 15 of the Decree, the Financial Services
Commission shall make the applicant, the date of
application, the details
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
2
of application, the method and period for opinion submission, etc. known
to the general public by means of daily newspapers (referring
to the daily
newspapers that are registered as newspapers with a nationwide circulation
under Article 12 (1) 6 of the Act on the
Freedom of Newspapers, etc.
and Guarantee of Their Functions and fall under subparagraph 2 (a) or
(b) of Article 2 of the same
Act) or by means of the Internet homepage,
etc. in order to collect the opinions of interested persons, etc.
(4) The term "period prescribed by Ordinance of the Prime Minister" in
the latter part of Article 6 (2) of the Act means two months
after a preliminary
license is filed: Provided, That the period required for receiving data
provided by any other institution or
any foreign financial supervisory
organization, etc. necessary for the confirmation on whether executives
and major equity investors
meet the requirements for license, shall not
be included in the foregoing.
Article 5 (Examination, etc. of License)
(1) The Financial Services Commission shall confirm the validity of the
contents of an application for a main license or a preliminary
license in
accordance with Article 14 or 15 of the Decree and examine whether the
contents of application satisfy the requirements
for license under Article
5 (1) of the Act and Article 13 of the Decree, taking into consideration
the opinions of interested persons,
etc.
(2) The Financial Services Commission may, where it is necessary to confirm
the contents of an application for a main license or
a preliminary license
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
3
or whether the terms of a preliminary license are implemented, conduct
an on-spot survey including the interview with the interested
persons,
promoters or executives.
(3) The Financial Services Commission may, where supplementing
documents or additional data are required to examine a main license
or
a preliminary license, ask the relevant license applicant to submit such
documents or data, by fixing a deadline.
(4) Where a criminal procedure is pending against a major equity investor
of an asset management company or an investigation, etc.
by the Fair
Trade Commission, the National Tax Service, the Public Prosecutors' Office
or the Financial Supervisory Service, etc.
has been commenced against
such investor and it is deemed that the results of such procedure or
investigation may have an important
effect on the examination of a main
license, the Financial Services Commission may delay the examination
until such procedure or
investigation, etc. is finished.
(1) The term "scale prescribed by Ordinance of the Prime Minister" in
the main sentence of the portion other than each subparagraph
of Article
17 (1) of the Decree means 500 billion won.
(2) The term "scale prescribed by Ordinance of the Prime Minister" in
Article 17 (1) 1 of the Decree means 100 billion won.
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17 (2) 5 of the Decree means the training fulfilling each condition of the
following subparagraphs, which is published by the Financial
Services
Commission as necessary for the real estate management business
prescribed in Article 17 (2) 2 of the Decree:
1. The matters provided in the following items shall be included in the
contents of the training:
(a) Acts, regulations, and tax system related to the real estate;
(b) Ways of the management and operation of real estate assets
including
the investment techniques regarding real estate; and
(c) Ways of the value analysis and appraisal of real estate investment;
and
2. The total hours for training on subjects under each of items of
subparagraph 1 shall be 50 hours or more.
Article 8 (Accounting Period)
The term "period prescribed by Ordinance of the Prime Minister" in Article
26 (1) 1 of the Decree means the period from April 1
of each year to
March 31 of the following year.
Article 9 (Report on Management)
The term "matters prescribed by Ordinance of the Prime Minister" in Article
27 (2) 5 of the Decree means those falling under each
of the following
subparagraphs:
1. Matters regarding the business administration of a company including
the current status of executives and stockholders;
2. Matters regarding the management scale of an indirect investment
fund, etc.;
3. Matters regarding the concurrent running of businesses;
4. Matters regarding internal controls; and
5. Current status regarding the management of the proprietary property
including the current status of holding investment securities.
Article 10 (Scope of Restriction on Exchange, etc. of Personnel,
Information, etc.)
The term "cases prescribed by Ordinance of the Prime Minister" in Article
30 (5) 1 of the Decree means those falling under each
of the following
subparagraphs:
599, Jan. 8, 2008; Ordinance of Ministry of Finance and Economy No. 875, Mar. 3, 2008>
1. The case where part-time executives and employees of any asset
management company concurrently hold the offices of executives
and
employees of another asset management company (including any person
who performs the business corresponding to any asset management
company in a foreign country; hereafter the same shall apply in this
Article) which is its affiliate company, or where full-time
executives
and employees of any asset management company concurrently hold
the offices of part-time executives and employees of
another asset
management company which is its affiliate company;
2. The case where executives and employees of any asset management
company which is an affiliate company of the relevant asset management
company are seconded to the relevant asset management company;
3. The case where executives and employees of any financial holding
company under Article 2 of the Financial Holding Companies Act
(including those similar thereto and established under foreign Acts
and subordinate statutes) concurrently work as part-time executives
and employees of any asset management company (including the case
where they concurrently work for as part-time executives of other
affiliate company);
4. When any asset management company is a partner in charge of
performing the business of a private equity fund, the case where
executives and employees of the asset management company are
seconded to a corporation in which the private equity fund has invested
or concurrently work as part-time executives and employees of such
corporation (limited to businesses conforming to the investment
objectives of the private equity fund); or
5. When any asset management company establishes any foreign indirect
investment fund in a foreign country under the foreign Acts
and
subordinate statutes, the case where executives and employees of the
asset management company concurrently work as part-time
executives
of the relevant foreign indirect investment fund.
[This Article Wholly Amended by Ordinance of Ministry of Finance and
Economy No.
507, May 9, 2006]
Article 11 (Information Available for Provision)
The term "information prescribed by Ordinance of the Prime Minister"
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
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in Article 30 (5) 2 (a) of the Decree means any one of the following
subparagraphs:
1. The case of providing to any distribution company:
(a) Information on investment securities (excluding stocks); or
(b) Information
on assets other than item (a), for which one month
elapses since the production date of information; or
2. The case of providing to other affiliate company than a distribution
company in relation to the business of ordering sale and
purchase
or of checkup under Article 30 (5) 2 (b) of the Decree: Information
regarding assets, for which one month elapses since
the production
date of information.
Article 12 (Procedures for Provision of Information)
(1) Any asset management company which seeks to provide information
to its
affiliate company that is entrusted with and performs the business
of ordering of sale and purchase of investment securities or
the task of
checking on the observance of the internal control standards in accordance
with Article 30 (5) 2 (b) of the Decree,
may provide such information
only after concluding a written information provision contract containing
the following matters with
the relevant company and obtaining approval
therefor from the Financial Services Commission: 1. The purpose of providing information;
2. The details and scope of information to be provided;
3. The purport that the asset management company which provides
information and the company which receives such information will
record and keep the details thereon;
4. The purport that the company which is served with information shall
neither use such information for its own interest nor get
such information
to be used by others;
5. The purport that the company which is served with information shall
use such information within the limit of purposes for providing
information which are prescribed in a contract for the provision of
information;
6. The purport that the company which is served with information shall
comply with the demand from the Financial Services Commission
to
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
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submit the data necessary for the inspection or supervision;
7. The purport that the company which is served with information shall
not intervene directly or indirectly in the management of
the indirect
investment property of the relevant asset management company;
8. The purport that, where the company which is served with information
violates the contract for the provision of information, such
contract
will be terminated and the company shall bear the liability for damages;
and
9. Other matters equivalent to those under subparagraph 1 through 8,
which are prescribed by the Financial Services Commission as
necessary
for the protection of indirect investors or the overseeing purpose.
(2) Every asset management company may have its affiliate
company
perform the business of ordering sale and purchase of investment securities
under Article 30 (5) 2 (b) of the Decree after
obtaining approval from
the Financial Services Commission with regard to the system, by which
the conflict of interests can be
prevented, held by the affiliate company
including the matters falling under each of the following subparagraphs:
1. Where the affiliate company is entrusted with the business of ordering
sale and purchase, the department in charge of such business
shall
be operated independently from the departments in charge of other
businesses;
2. The results of trading shall be fairly distributed to each financial
institution of such affiliate company which entrusts the
ordering of
sale and purchase;
3. The electronic data regarding the businesses shall be stored and managed
independently and provided for public reading; and
4. Other matters equivalent to those under subparagraphs 1 through
3, as prescribed by the Financial Services Commission.
(3) Every
asset management company may have its affiliate company
perform the business of checkup on whether the internal control standards
under Article 30 (5) 2 (b) of the Decree are well observed with regard
to the system, by which the conflict of interests can be
prevented, held
by the affiliate company including the matters falling under each of the
following subparagraphs after obtaining
approval therefor from the
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
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Financial Services Commission.
1. The checking on the observance of the internal control standards shall
be performed independently by each such entrusting financial
institution;
2. The electronic data regarding the business shall be stored and managed
independently and provided for inspection; or
3. Other matters corresponding to subparagraphs 1 and 2, as prescribed
by the Financial Services Commission.
Article 13 (Matters to be Entered in Application for Registration of Trustee
Company, etc.)
(1) In the application for registration submitted to the Financial Services
Commission by any person who intends to be registered
as a trustee company
or an asset custody company in accordance with Article 32 (6) of the Decree,
the following matters shall be
stated:
1. The firm name and the location of the headquarters;
2. The names, resident registration numbers and domiciles of
representative and executives;
3. The matters concerning fund managers under Article 23 (3) 2 of the
Act;
4. The matters concerning physical facilities under Article 23 (3) 3 of
the Act; and
5. The matters concerning financial soundness.
(2) To the application for registration under paragraph (1), the following
documents
shall be attached:
1. Articles of incorporation;
2. A certified copy of the corporate register;
3. The resumes and career records of executives;
4. The documents including names or titles of stockholders each of whom
holds 1/100 or more of the total number of the issued stock
as of
the date when the application for registration is submitted, and the
number of stocks held by them;
5. Business programs (including estimated financial statements) and the
forecasted statement of income and expense of the two business
years
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
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after the commencement of business; and
6. The financial statements and the accessory detailed statement thereof.
Article 14 (Matters to be Entered in Application for Registration
of General
Fund Administrator)
(1) In the application for registration submitted to the Financial Services
Commission by any person who intends to be registered
as a general fund
administrator in accordance with Article 33 (6) of the Decree, the following
matters shall be stated:
1. The firm name and the location of the headquarters;
2. The names, resident registration numbers and domiciles of
representative and executives;
3. The matters concerning fund managers under Article 25 (3) 2 of the
Act; and
4. The matters concerning physical facilities under Article 25 (3) 3 of
the Act.
(2) The provisions of Article 13 (2) shall apply mutatis mutandis to the
application for registration under paragraph (1).
Article
15 (Matters to be Entered in Application for Registration of
Distribution Company)
(1) In the application for registration submitted to the Financial Services
Commission by any person who intends to be registered
as a distribution
company in accordance with Article 34 (3) of the Decree, the following
matters shall be stated:
1. The firm name and the location of the headquarters;
2. The names, resident registration numbers and domiciles of
representative and executives;
3. The current status of training undergone by executives and employees
in charge of performing the selling business in accordance
with Article
57 (5) of the Act; and
4. The matters concerning physical facilities under Article 26 (5) 3 of
the Act.
(2) To the application for registration under paragraph (1), the following
documents shall be attached:
1. Documents under each of subparagraphs of Article 13 (2); and
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS
ACT
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2. Working rules governing the selling acts under Article 57 (1) of the
Act.
Article 16 (Update Period of Investment Prospectus)
The term "period prescribed by Ordinance of the Prime Minister" in Article
54 (5) of the Decree means every one year from the creation date of
investment trust or the establishment date of investment company.
The term "matters prescribed by Ordinance of the Prime Minister" in
subparagraph 8 of Article 57 of the Decree means those falling
under each
of the following subparagraphs:
1. Information on general economic conditions;
2. Limit for the amount of investment and methods for accumulation
thereof;
3. Where a comparison advertising is used, the matters regarding the
types of other asset management company and other indirect investment
fund which has been the subject of comparison, management term,
management results, base date for comparison, etc.; and
4. Title and subtitle that are necessary in the light of characteristics
of a selling advertising.
Article 18 (Claim for Redemption)
(1) Where any indirect investor claims for redemption directly to the asset
management company in accordance with the proviso to
Article 62 (2)
of the Act, he/she may claim redemption from the headquarters of the
asset management company or other branches
or business places of the
distribution company agreed and determined by the asset management
company and the distribution company.
(2) Every asset management company may, within the scope necessary
to comply with the claim for redemption by an indirect investor
in accordance
with paragraph (1), use the information regarding indirect investors, office
machines, and other necessary goods
and facilities held by a distribution
company which is dissolved, whose license is revoked or whose business
is suspended, or the
employees of the distribution company.
(3) When any asset management company complies with the claim for
redemption by an indirect
investor in accordance with paragraph (1), the
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
11
redemption price shall be the price prescribed by the trust deed or the
articles of incorporation of the investment company.
(4)
The Financial Services Commission may determine procedures related
to the redemption by the asset management company in accordance
with
paragraphs (1) through (3) and other necessary details.
(1) The term "amount prescribed by Ordinance of the Prime Minister"
in Article 60 (2) 1 of the Decree means 10 billion won.
(1) The reference materials to be taken into consideration in case of exercise
of voting rights in written form in accordance with
Article 66 (1) of the
Decree shall include the following matters:
1. If the general meeting of beneficiaries is held for the change of a trust
deed, the purpose of such change and details thereon;
and
2. If the general meeting of beneficiaries is held for the matters on merger,
the matters falling under each of the following items:
(a) Objectives and details of merger;
(b) Major points of the merger contract; and
(c) Matters falling under each of subparagraphs of Article 107 (1) of
the Act.
(2) With regard to the matters to be entered in reference materials under
paragraph (1), which are already published on the Official
Gazette,
newspapers, etc., their entering may be omitted by indicating on the
reference materials the names of the Official Gazette
and newspapers in
which such matters are published and the date of publication.
Article 21 (Selling of Bonds with Condition of
Redemption)
The term "scope prescribed by Ordinance of the Prime Minister" in Article
70 (2) 3 of the Decree means 5/100 of the
total amount of bonds held
by any indirect investment fund.
Article 22 (Restriction on Management of Short-term Financial Indirect
Investment Fund)
(1) The term "requirements prescribed by Ordinance of the Prime Minister"
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
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in Article 70 (2) 5 of the Decree means those falling under each of the
following subparagraphs:
1. Where the indirect investment property is deposited in a financial
institution or is managed in a certificate of deposit (CD),
the due
date shall be within six months;
2. The weighted average maturity of the indirect investment property
held by each short-term financial indirect investment fund shall
be
within the scope prescribed by the Financial Services Commission;
3. Where the indirect investment property held by each short-term financial
indirect investment fund (excluding any short-term financial
indirect
investment fund whose selling is restricted in accordance with Article
58 of the Act or whose redemption is deferred in
accordance with Article
65 of the Act) does not fulfill the requirements under each of the following
items, the creation of any
other short-term financial investment trust
or the entrustment of the business of managing the investment company
property from
any other short-term finance investment company shall
not be allowed:
(a) The case of a short-term financial indirect investment fund whose
indirect investors are composed of solely by individuals:
not less
than 300 billion own; or
(b) The case of a short-term financial indirect investment fund whose
indirect investors are composed of solely by corporations:
not less
than 500 billion own.
(2) Every asset management company may, notwithstanding subparagraph
3 of paragraph (1), create or establish a short-term financial
indirect
investment fund which combines and manages free cash under Article
81 of the State Finance Act.
(3) Where any asset management company seeks to create or establish
a short-term financial indirect investment fund which combines
and
manages free cash under Article 81 of the State Finance Act, the provisions
of paragraph (1) 3 shall not apply to the short-term
financial indirect
investment fund managed by the relevant asset management company.
13
(4) The Financial Services Commission may determine the kinds of
debentures and commercial papers in which any asset management
company
may invest when managing the indirect investment property held by a
short-term financial indirect investment fund, the
credit ratings thereof
and investment limits by such credit ratings, the limits on investment
in bills issued by a securities finance
company under the Securities and
Exchange Act, the calculation method of weighted average maturity, and
other detailed matters
necessary for the maintenance of soundness of asset
management.
1. The composition items of index numbers targeted by the relevant
exchange traded indirect investment fund shall be 30 or more;
2. The relative importance of each item which constitutes index numbers
targeted by the relevant exchange traded indirect investment
fund
(referring to the average aggregate value of listed stocks of the relevant
item of the latest three months divided by the
total of average aggregate
values of listed stocks of the items which constitute the index numbers
of the latest three months)
is required to account for 20/100 or less
in the total index numbers; and
3. It is required that the term of six months or more have elapsed since
the creation or establishment of the relevant exchange traded
indirect
investment fund and the tracked error rate under Article 123 (2) of
the Decree of the latest six months be 5/100 or less
per annum.
(2) The term "requirements prescribed by Ordinance of the Prime Minister"
in Article 70 (3) 4 of the Decree means those
falling under each of the
following subparagraphs:
1. The management shall not be made over 20/100 of the total number
of indirect investment securities issued by any other indirect
investment
fund [excluding any exchange traded indirect investment fund that
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET
MANAGEMENT
BUSINESS ACT
14
fulfills requirements under each of subparagraphs of paragraph (1)
(including those similar thereto, which are created or established
in
accordance with foreign Acts and subordinate statutes)] as of the date
on which the investment in indirect investment securities
of the relevant
other indirect investment fund is made; and
2. The sum of remunerations and commissions received by the distribution
company of the fund of funds and by the distribution company
of any
other indirect investment fund that invests by means of the indirect
investment property of the fund of funds shall not
exceed the limit
prescribed in Article 58 (4) of the Decree.
[This Article Wholly Amended by Ordinance of Ministry of Finance and Economy No.
599, Jan. 8, 2008]
Article 24 (Appraised Amount of Risk)
(1) The appraised amount of risk under the latter part of Article 88 (1)
3 (a) of the Act shall be calculated by considering the
nominal contract
amount, etc. obtained following the transaction of exchange traded
derivatives or over-the-counter derivatives.
(2) The Financial Services Commission may determine the detailed
standards for calculation of the nominal contract amount under
paragraph
(1), the total appraised amount of risks involved in the indirect investment
property obtained following the transaction
of exchange traded derivatives
or over-the-counter derivatives, or such.
Article 25 (Management Limit, etc. of Bonds with Condition of Redemption)
(1) The term "ratio prescribed by Ordinance of the Prime
Minister" in
subparagraphs 1 and 2 of Article 72 of the Decree means 50/100.
The relative importance of an aggregate value of listed stocks under Article
73 (3) of the Decree shall be the monthly average rate
of the rates obtained
by dividing the total amounts of daily closing prices of the relevant stocks
at the securities market or
the KOSDAQ market by the total amounts
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
15
of daily closing prices of all of items traded in the said market, and it
shall be calculated as of the end of every month and apply
for following
one month.
Article 27 (Book and Documents on Details, etc. of Asset Distribution)
(1) Every asset management company of investment trust shall
prepare
a written order of sale and purchase that contains the order amount, price,
quantity, etc. of the assets, by investment
trusts, which it seeks to trade
and an itemized statement of asset distribution that contains details on
distribution by investment
trusts, before executing the business of
acquisition or selling of assets in accordance with Article 90 (3) of the
Act. In the
case of changing the order of sale and purchase or details
of distribution, the same shall also apply.
(2) The compliance executive of an asset management company shall check
up the appropriateness of a written order of sale and purchase
and an
itemized statement of asset distribution prepared in accordance with
paragraph (1), and the implementation thereof.
(3) When an asset management company distributes the results of trading
by investment trusts in accordance with paragraph (1), it
shall follow
the following standards:
1. The asset management company is required to distribute acquired
or sold assets under equal price; and
2. Where the quantity of acquired or sold assets is short of the order
quantity of purchase or sale, the asset management company
is required
to distribute the said assets in accordance with the details of
pre-determined asset distribution.
(4) Every asset management company of investment trust shall, when
it determines the matters on details of asset distribution in
accordance
with Article 90 (4) of the Act, make a decision thereon following the
standards under each of the following subparagraphs
after going through
the resolution of the indirect investment property appraisal committee:
1. It is required not to be favorable or unfavorable to a specific beneficiary
or a specific investment trust; and
2. The selling and buying orders of assets by investment trusts and details
on the asset distribution shall be recorded and maintained
by means
of a data-processing system.
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
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(5) Every asset management company of investment trust shall publish
the standards on asset distribution determined under paragraph
(4) by
means of Internet homepages.
(6) Every asset management company shall, in order to protect indirect
investors including a fair distribution of assets, etc.,
separate employees
in charge of managing the indirect investment property and those in charge
of directly executing the business
of acquisition or sale of assets in accordance
with Article 75 (3) of the Decree: Provided, That the foregoing shall not
apply
to the cases prescribed by the Financial Services Commission,
including the ordering of sale and purchase of assets belonging to
any
indirect investment fund with an aim to link its operation to changes
in index numbers that comprehensively show the price
levels of many
items according to the items of investment securities.
(1) The term "ratio prescribed by Ordinance of the Prime Minister" in
Article 76 (1) 2 of the Decree means 30/100.
(2) The term "ratio prescribed by Ordinance of the Prime Minister" in
Article 76 (3) 1 of the Decree means 50/100.
Article 29 (Restriction on Acquisition of Treasury Stock)
(1) The term "act prescribed by Ordinance of the Prime Minister" in Article
76 (3) 5 of the Decree means the act of acquiring investment securities
issued or held by an indirect investor of a private offering
indirect investment
fund or a specially related person of such indirect investor by using the
indirect investment property of the
private offering indirect investment
fund, upon a request by the said indirect investor: Provided, That this
shall not apply to
a private offering indirect investment fund whose indirect
investor is a corporation listed on the stock market or the KOSDAQ market,
in which the trust deed or the articles of incorporation of the investment
company (referring to the investment trust or investment
company in
accordance with Article 84-2 (3) 1 or 2 of the Enforcement Decree of the
Securities and Exchange Act; hereinafter referred
to as the "indirect
investment fund for treasury stock") prescribes the investment in treasury
stocks issued by the corporation
listed on the stock market or the KOSDAQ
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
17
market.
(3) The Financial Services Commission may determine the ways of aquisition
and selling, restriction on quantity, restriction on
the short-term trade
of treasury stocks, and other necessary details that shall be applied when
the treasury stocks is acquired
in the indirect investment fund for treasury
stock.
Article 30 (Related Distribution Company, etc.)
(1) The term "related distribution company prescribed by Ordinance of
the Prime Minister" in Article 77 (1) 4 of the Decree means
any distribution
company which sells 30/100 or more of indirect investment securities of
the whole indirect investment fund managed
by the asset management
company concerned.
(2) The term "trustee company or the asset custody company prescribed
by Ordinance of the Prime Minister" in Article 77 (1) 5 of
the Decree
means the trustee company or the asset custody company which is trusted
with or keeps in custody 30/100 or more of the
indirect investment property
managed by the asset management company concerned.
Article 31 (Grounds for Recognition of Excess of Limit)
The term "grounds prescribed by Ordinance of the Prime Minister" in Article
78 (4) of the Decree means those falling under each of the following
subparagraphs:
1. The case falling under any of subparagraphs of Article 73 (5) of the
Decree;
2. The decrease in the capital of the asset management company; or
3. The merger or division of the asset management company or the transfer
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
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and the acquisition by transfer of business.
Article 32 (Appraisal of Short-Term Financial Indirect Investment Fund)
The term "ratio prescribed by Ordinance of the Prime Minister"
in the
latter part of Article 81 (1) of the Decree means 5/1,000.
1. Over-the-counter derivatives and real assets: the price based on the
price calculated following the appraisal ways submitted to
the Financial
Services Commission in accordance with paragraph (3);
2. Indirect investment securities: the standard price published on the
reference day for appraisal (in case of indirect investment
securities
of a master-type indirect investment fund of a master-feeder fund
under Article 140 of the Act, referring to the standard
price calculated
on the reference day for appraisal): Provided, That in case of listed
indirect investment securities, it means
the market price of the last
transaction at the securities market or at the KOSDAQ market;
3. Foreign indirect investment securities: the standard price of the relevant
foreign indirect investment securities published on
the latest reference
day for appraisal: Provided, That in case of foreign indirect investment
securities listed on or registered
with a foreign market, it means the
market price of the last transaction in a foreign market in which the
foreign indirect investment
securities are traded;
4. Commercial paper or the debt certificates that are issued by financial
institutions: the price based on those provided by two
or more bond
appraisal companies; or
5. Unlisted securities denominated in foreign currency: the price based
on that provided by a bond appraisal company.
(2) The assets prescribed in each of the following subparagraphs may
be appraised with the price determined by the indirect investment
property
appraisal committee based on the prices under paragraph (1) and Article
82 (1) of the Decree by applying the appraisal
standards on the indirect
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
19
investment property, in accordance with Article 82 (2) of the Decree:
1. Assets, including stocks for a debt-equity swap, etc., the appraisal
of whose fair values is difficult to be made because there
exist no
records of trade on the reference day for appraisal;
2. Assets, the appraisal of whose fair values is difficult to be made because
their sale in a market is restricted or hampered; or
3. Assets denominated in foreign currency which are traded in a foreign
market as of the time when the standard price is calculated,
and whose
closing market prices in the foreign market are judged not to reflect
their fair values.
(3) Every asset management company shall, when it makes a report to
or registration with the Financial Services Commission in order
to create
or establish a derivative fund or a property fund to be invested in
over-the-counter derivatives in accordance with Articles
29 and 41 of the
Act, submit to the Financial Services Commission the documents that
contain the ways of appraising the over-the-counter
derivatives or the
real assets in which it invests and notify the trustee company or the asset
custody company thereof.
(4) The Financial Services Commission shall examine the appropriateness
of the ways of appraising over-the-counter derivatives or
real assets
submitted by the asset management company in accordance with paragraph
(3).
20
conduct an appraisal thereof by referring to such rate.
Article 34 Deleted.
Article 35 (Rescission of Investment Trust)
The term "amount prescribed by Ordinance of the Prime Minister" in Article
93 (1) 2 of the Decree means 10 billion won.
Article 36 (Preparation of Property List, etc. by Liquidator)
A liquidator shall, in accordance with Article 114 (1) of the Act,
make
a property list and a balance sheet within 15 days from the date of his/her
appointment and submit them to the meeting of
liquidators.
Article 37 (Public Disclosure of Report on Management of Assets)
Every asset management company may, in accordance
with Article 100
(2) 2 and 2-2 of the Decree, publish a report on the management of assets
of the short-term financial indirect
investment fund, the irredeemable
investment trust or the redemption-prohibited investment company by
means of the Internet homepages
of the asset management company, the
distribution company and the Asset Management Association of Korea.
Article 39 (Public Disclosure of Management Performances by Asset
Management Association of Korea)
(1) When the Asset Management Association of Korea publishes the
management performances of each indirect investment fund in accordance
with Article 105 (3) of the Decree, it shall prepare data by comparing
standard prices, earning rates, distribution rates, the
scale of managed
assets, etc. and publish them in written form or by means of the Internet
homepages, etc.
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
21
(2) When the Asset Management Association of Korea publishes the
management performances in accordance with paragraph (1), the following
matters shall be included:
1. Names of the asset management company and the indirect investment
fund;
2. Fund managers;
3. Amounts and relative importances by kinds of assets held;
4. Scale of assets and the standard prices; and
5. Matters regarding the fluctuation of the standard prices.
(3) The Asset Management Association of Korea may, within the scope
necessary for the comparison and publication of the management
performances of indirect investment funds in accordance with paragraphs
(1) and (2), ask any asset management company of investment trust or
any investment company to submit the investment prospectus
of each
such indirect investment fund, the data on standard price, etc.
(4) The Asset Management Association of Korea may determine
the
classification of indirect investment funds, the publication cycle, the ways
of comparing, the standards for publication, ways
of receiving data from
an asset management company or an investment company, and other
necessary specific standards regarding the
comparison and publication
business of management performances.
Article 40 (Permissible Scope of Difference in Standard Prices)
(1) Where a trustee company or an asset custody company makes
confirmation
on the appropriateness of the standard price calculated by
any asset management company of investment trust or any investment
company
in accordance with Article 132 (3) of the Act, if a difference
between the standard price calculated by the asset management company
of investment trust or the investment company and that calculated by
the trustee company or the asset custody company is 3/1,000
or less,
such standard price shall be deemed to be properly calculated.
(2) Where a trustee company or an asset custody company
confirms the
occurrence of a difference in the standard prices exceeding the permissible
scope under paragraph (1), it shall notify
the fact to the asset management
company of investment trust or the investment company without delay.
(3) Every asset management
company of investment trust or every
investment company which is notified in accordance with paragraph (2)
ENFORCEMENT RULE OF
THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
22
shall notify the fact to indirect investors individually (if the intention
of any indirect investor that he/she will receive such
notice by means
of e-mail is indicated, including the notice by means of e-mail) through
the distribution company and publish it
by means of the Internet homepages
of the asset management company, the distribution company and the Asset
Management Association
of Korea.
(4) Every asset management company of investment trust or every
investment company may, notwithstanding the provisions of paragraph
(3), omit individual notification for an indirect investor, in the case of
falling under any of the following subparagraphs:
1. Where the indirect investor indicates in advance the intention of rejection
to such notice; or
2. Where the indirect investor does not claim for additional buying or
redemption of indirect investment securities of the relevant
indirect
investment fund;
Article 41 (Notice of Correction)
In accordance with Article 132 (3) of the Act, every trustee company and
every asset custody company shall without delay confirm
the matters falling
under each of subparagraphs of Article 132 (1) of the Act and if, as a
result of such confirmation, it finds
any violation of Acts and subordinate
statutes, the trust deed, the articles of incorporation of the investment
company, or the
investment prospectus, etc., it shall immediately notify
the asset management company of investment trust or the investment
company
thereof.
Article 42 (System for Prevention of Conflict of Interests)
The term "period prescribed by Ordinance of the Prime Minister" in
subparagraph 3 of Article 113 of the Decree means one year.
1. The composition items of index numbers shall be 10 or more;
2. The relative importance (referring to the average aggregate value of
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
23
listed stock of the relevant item of the latest three months divided
by the total of average aggregate values of listed stock of
items, which
constitute the index numbers, of the latest three months) of each item
which constitutes index numbers is required
to account for 30/100
or less in the total index numbers;
3. Deleted; and
4. The aggregate value of listed stock (referring to the average aggregate
value of listed stock of the latest three months) of the
item corresponding
to 85/100 in the order of aggregate value of listed stock from among
those which constitute the index numbers
is required not to be less
than 15 billion won and the transaction value (referring to the average
transaction value of the latest
three months) thereof is required not
to be less than 100 million won.
Article 44 (Creation or Establishment of Exchange Traded Indirect
Investment Fund)
(1) The term "specific unit prescribed by Ordinance of the Prime Minister"
in Article 119 (2) of the Decree means the minimum quantity
of indirect
investment securities of an exchange traded indirect investment fund
required for the creation or establishment of
the exchange traded indirect
investment fund, which is determined in the trust deed or the articles
of incorporation of the investment
company.
(2) Where any investor or any distribution company pays investment
securities under Article 109 (1) of the Decree to the designated
distribution
company for the creation or establishment of the exchange traded indirect
investment fund in accordance with Article
119 (3) of the Decree or the
designated distribution company pays them to the asset management
company, such payment shall be made
by means of any transfer account
transaction on the ledger of depositors' account recorded and kept by the
Korea Securities Depository.
(3) Where any investor requests the establishment of an exchange traded
indirect investment fund or the issuance of new stocks,
the difference
between the appraised payed-in amount, etc. and the appraised amount
of the indirect investment securities of the
exchange traded indirect
investment fund corresponding to the establishment unit shall be adjusted
ENFORCEMENT RULE OF THE INDIRECT
INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
24
by the third business day from the day when the request is made. In
this case, the appraised amount means the amount appraised after
closing
of the securities market, the KOSDAQ market or any other similar market
located in a foreign country as of the day when
the investor requests the
establishment of the exchange traded indirect investment fund or the
issuance of new stocks.
(4) Every designated distribution company may, where it trades investment
securities with the payed-in amount, etc. paid for the
establishment of
an exchange traded indirect investment fund or the issuance of new stocks,
use the account that stands in the
name of the designated distribution
company (referring to the joint account through which investment securities
are traded by combining
the paid-in amounts, etc. paid by investors for
the establishment of an exchange traded indirect investment fund or the
issuance
of new stocks, and the indirect investment securities of the
exchange traded indirect investment fund issued in accordance with
paragraph (2) are distributed).
(5) Where a designated distribution company seeks to transform the paid-in
amount, etc. paid by investors into the assets equivalent
to the
establishment unit but the establishment of an exchange traded indirect
investment fund or the issuance of new stocks is
not possible due to any
inevitable grounds including the case it may not buy investment securities
required for constituting the
establishment unit, it may refund it with
assets held in the account of the relevant investor (including the accounts
that stands
in the name of the designated distribution company under
paragraph (4)) as prescribed by the trust deed or the articles of incorporation
of the investment company.
Article 45 (Redemption of Indirect Investment Securities of Exchange
Traded Indirect Investment Fund)
(1) The term "grounds prescribed by Ordinance of the Prime Minister"
in the proviso to Article 121 (1) of the Decree means any computer
failure
caused by natural disasters, etc. and other grounds equivalent thereto,
recognized by the Financial Services Commission
as the normal operation
of business activities is not impossible.
(2) The term "case prescribed by Ordinance of the Prime Minister" in
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
25
the former part of Article 121 (7) of the Decree means the case where
the relevant exchange traded indirect investment fund holds
assets which
are difficult to be paid with investment securities.
(1) The term "grounds prescribed by Ordinance of the Prime Minister"
in Article 122 (1) of the Decree means those falling under
each of the
following subparagraphs:
1. The case where the tracked error rate exceeds 10/100 continuously
for three months;
2. The case where the index numbers targeted by the exchange traded
indirect investment fund come to the state that cannot be calculated
or used; or
3. Other case that is prescribed by the Financial Services Commission
as being feared to undermine the protection of indirect investors
of
the exchange traded indirect investment fund or the sound management
of indirect investment property.
(2) The term "period prescribed by Ordinance of the Prime Minister" in
the former part of Article 122 (2) of the Decree means ten
days.
(1) The Korea Stock Exchange or the Korea Securities Dealers Association
shall, in accordance with Article 123 (2) of the Decree,
publish once or
more per day the value of net assets of the indirect investment property
of an exchange traded indirect investment
fund and the tracked error
rate thereof.
(2) In the asset composition of the indirect investment property of the
exchange traded indirect investment fund which is required
to be published
in accordance with Article 123 (3) of the Decree, asset composition of
the establishment unit for a new or additional
establishment or a new
creation or an issuance of new stocks, etc. shall be included.
Article 48 (Scope of Financial Institutions)
The term "financial institutions prescribed by Ordinance of the Prime
Minister" in Article 128 (3) 2 of the Decree means those falling
under
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
26
each of the following subparagraphs:
1. The financial institution under subparagraph 1 of Article 2 of the Act
on the Structural Improvement of the Financial Industry;
2. The Korea Development Bank under the Korea Development Bank
Act; and
3. The Industrial Bank of Korea under the Industrial Bank of Korea Act.
Article 49 (Public Disclosure, etc. of Matters on Risk)
Every asset management company of investment trust and every investment
company shall publish the business programs of the real
estate fund and
the index on risk of the derivative fund by means of their Internet homepages,
in accordance with Articles 130
(6) and 131 (3) of the Decree.
Article 50 (Registration Certificates of Investment Advisory Business or
Discretionary Investment
Business)
The term "matters prescribed by Ordinance of the Prime Minister" in Article
135 (2) of the Decree means those falling under each
of the following
subparagraphs:
1. Registration number;
2. Firm name and the location of the headquarters;
3. Name of the representative;
4. Details of registration; and
5. Date of registration.
Article 51 (Matters to be Entered in Report on Investment Results)
The term "matters prescribed by Ordinance
of the Prime Minister" in Article
138 (1) of the Decree means those falling under each of the following
subparagraphs: Provided,
That in case of any securities company that
concurrently runs the discretionary investment business, subparagraph
5 shall be excluded:
1. The current management of the discretionary investment assets
entrusted by the relevant customer including the trading dates,
trading
prices, entrustment commissions, and other dues and taxes;
2. The balance, acquisition value, market price and appraised profits
or losses of the discretionary investment assets by assets;
3. Where discretionary investment commissions are imposed, the time
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
27
and amount thereof;
4. The details on appraisal of investment performances; and
5. Where there exists any transaction record of the asset identical with
the asset to be managed by using the discretionary investment
assets
of the relevant customer, which is made on the account of the investment
counsel company, the time, the performance and
the balance.
Article 52 (Exercise of Rights to Discretionary Investment Assets)
The term "exercise of rights prescribed by Ordinance
of the Prime Minister"
in Article 140 (2) 3 of the Decree means each of the following subparagraphs:
1. The exercise of an appraisal right by an stockholder;
2. The bid for a tend offer;
3. The offer for a paid-in capital increase;
4. The exercise of conversion rights to convertible bonds;
5. The exercise of preemptive rights to bonds with subscription warrant;
6. The claim for exchange of exchangeable bonds; or
7. Other acts prescribed by the Financial Services Commission in case
where the exercise of rights by the investment counsel company
is
required in order to manage the discretionary investment assets
efficiently.
Article 53 (Piece Rate Commissions)
Where any investment counsel company seeks to enter into an investment
counsel contract or a discretionary investment contract under
which piece
rate commissions will be paid, it shall explain any one of the following
matters in advance for the understanding of
the customer concerned:
1. Ways of appraising investment advisory assets or discretionary
investment assets and calculating the piece rate commissions;
2. Matters regarding commissions including piece rate commissions;
3. The characteristics of securities index numbers or interest indexes
to be used for measuring investment performance, and the measuring
period; or
4. The fact that the customer may be exposed to higher investment risk
than the case of not receiving the piece rate commissions.
Article 54 (Training for Experts in Asset Planning)
The term "training prescribed by Ordinance of the Prime Minister" in Article
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
28
144 (2) 2 of the Decree means the training falling under Article 7.
The term "agent falling under requirements prescribed by Ordinance of
the Prime Minister" in Article 147 (2) of the Decree means
any one of
the following subparagraphs:
1. Asset management company which runs the investment advisory
business;
2. Financial institution under Article 6 of the Decree;
3. Any entity under the Attorney-at-Law Act which falls under any one
of the following items:
(a) Law Firm;
(b) Law Firm (a limited-liability company);
(c) Judicial Association; or
(d) Attorney-at-law of a joint business office which has been registered
under the Income Tax Act, who meets the requirements for
a member
under item (a); or
4. Accounting firm under the Certified Public Accountant Act.
Article 56 (Institutional Investor)
The term "institutional investors prescribed by Ordinance of the Prime
Minister" in Article 147 (3) of the Decree means those falling
under the
requirements of each subparagraph of Article 163 (1) of the Decree. 1. Firm name and the location of the headquarters;
2. Names and titles of executives (including directors, auditors and other
persons virtually equivalent to the former in their positions);
3. Business fund of domestic branch, etc.;
4. Name and the location of domestic branch, etc.;
5. Name and domestic address of the representative of domestic branch,
etc.; and
6. Date on which the management business of indirect investment fund
is commenced in the relevant country.
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
29
(2) To an application for license under paragraph (1), the following
documents shall be attached:
1. Articles of incorporation and the certified copy of the corporate register
(including those equivalent thereto)
2. Balance sheets, statements of profit and loss and statements of
appropriations of retained earnings of the last three business
years;
3. Documents that contain the names or titles of major stockholders or
the number of stocks held by them in accordance with Article
13 (3)
3 of the Decree;
4. Matters regarding physical facilities;
5. The minutes of the board of directors in which the establishment of
domestic branch, etc. has been resolved (limited to the company
in
which the resolution is to be made by the board of directors);
6. Identification of the representative of domestic branch, etc. and the
documents attesting the fact thereof;
7. Business programs and the forecasted statements of income and expense
of domestic branch, etc. for three business years after
the commencement
of business; and
8. Other documents prescribed by the Financial Services Commission
as necessary for the examination on whether or not to comply with
requirements for license in accordance with Article 157 of the Act.
Article 58 (Report, etc. on Domestic Selling of Foreign Indirect
Investment
Securities)
(1) When a report or document is submitted in accordance with Article
154 (1) and (3) through (5) of the Decree, the summary in
Korean shall
be attached to the document not prepared in Korean. In this case, if the
contents of the Korean summery differ from
the contents of the original
text, the former shall prevail.
(2) The term "local agent falling under requirements prescribed by
Ordinance of the Prime Minister" in Article 154 (6) of the Decree
means
each of the following subparagraphs:
1. Any asset management company under Article 4 of the Act;
2. Any distribution company under Article 26 of the Act;
3. Any person falling under each item of subparagraph 3 of Article 55;
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
30
or
4. Any accounting firm under the Certified Public Accountant Act.
(3) Every foreign asset management company shall, in accordance
with
Article 154 (9) of the Decree, report the current status of domestic selling
of foreign indirect investment securities as
of the end of every month to
the Financial Services Commission and the Asset Management Association
of Korea through a sale agency
by the 20th of the following month.
ADDENDA
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (Repeal of Acts and Subordinate Statutes)
The Enforcement
Rule of Securities Investment Trust Business Act and
the Enforcement Rule of Securities Investment Company Act shall be hereby
abrogated: Provided, That the previous Enforcement Rule of Securities
Investment Trust Business Act or the previous Enforcement
Rule of
Securities Investment Company Act shall apply to any securities investment
trust that is established in accordance with
the previous Securities
Investment Trust Business Act and any securities investment company
that is incorporated in accordance
with the previous Securities Investment
Company Act prior to the enforcement of this Rule.
Article 3 (Transitional Measures concerning
Short-term Financial
Indirect Investment Fund)
(1) Every investment trust that is established in accordance with the
previous Securities Investment Trust Business Act and converted
into
a short-term financial indirect investment fund under the Act by changing
its trust deed, shall fulfill the requirements under
Article 22 within six
months from the date when such trust deed is altered.
ENFORCEMENT RULE OF THE INDIRECT INVESTMENT ASSET MANAGEMENT
BUSINESS ACT
31
(2) No asset management company shall, where any short-term financial
indirect investment fund does not fulfill requirements under
paragraph
(1), sell indirect investment securities of the short-term financial indirect
investment fund additionally.
Article 4 (Applicability to Special Account of Insurance Company)
The term "period prescribed by Ordinance of the Ministry of Finance
and
Economy" in subparagraph 2 (b) of Article 11 of the Addenda of the Decree
means the day on which two years elapse from the
enforcement date of
the Act.
ADDENDA
(2) (Applicability) The relative importance of an aggregate value of listed
stocks under the amended provisions of Article 26 shall
apply from the month
next to the month to which the date of its enforcement belongs.
ADDENDUM
This Rule shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
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