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Laws of the Republic of Korea |
1
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
Wholly Amended by Presidential Decree No. 14961, Mar. 30, 1996 Amended by Presidential Decree No. 15760, Apr. 1, 1998 Presidential Decree No. 16323, May 24, 1999
Presidential Decree No. 16409, Jun. 30, 1999
Presidential Decree No. 16709, Feb. 14, 2000
Presidential Decree No. 16897, Jul. 10, 2000
Presidential Decree No. 17235, Jun. 12, 2001
Presidential Decree No. 17791, Dec. 5, 2002
Presidential Decree No. 18297, Feb. 28, 2004
Presidential Decree No. 18312, Mar. 17, 2004
Presidential Decree No. 19422, Mar. 29, 2006
Presidential Decree No. 20113, Jun. 28, 2007
Presidential Decree No. 20120, Jun. 28, 2007
Presidential Decree No. 20554, Jan. 18, 2008
Presidential Decree No. 20653, Feb. 29, 2008
Article 1 (Purpose)
The purpose of this Decree is to prescribe the matters delegated by the
Merchant Banks Act (hereinafter referred to as the "Act")
and those
necessary for the enforcement thereof.
Article 2 (Definitions)
(1) The definitions of terms used in this Decree shall follow those as
determined by the Act.
(2) The term "cash management account (CMA)" means an account
opened by any merchant bank for the purpose of managing bills and
de-
bentures, etc. and consolidating funds deposited by clients and paying profits
generated as the results to clients.
Article 2-2 (Scope of Equity Capital)
The core capital and complementary capital included in the equity capital
under subparagraph 3 of Article 2 of the Act shall be
determined by the
Financial Services Commission pursuant to the following standards:
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
2
1. Core capital shall be permanent real net assets of merchant banks
such as capital money and reserve funds;
2. Complementary capital shall be equal to the capital which falls under
subparagraph 1, such as subordinated bonds, and which can
make
up losses incurred from business operation of a merchant bank; and
3. Those such as own shares which do not contribute to sound debt-to-
equity ratio among the capital held by the said merchant bank
shall
not be included in the list of core capital and complementary capital.
[This Article Newly Inserted by Presidential Decree
No. 16409, Jun. 30, 1999]
Article 2-3 (Scope of Credit Extension)
The scope of credit extension under subparagraph 4 of Article 2 of the
Act shall be the following as determined by the Financial
Services
Commission: 1. Loan;
2. Discount of bills;
3. Facility rental;
4. Payment guarantee;
5. Giving of substitute payments resulting from payment guarantee;
6. Purchase of bills and credit;
7. Other transactions that may incur damage to a merchant bank in the
event of default of payment of the other transaction party;
and
8. Transactions which may bring about an effect equivalent to those result-
ing from transactions under subparagraphs 1 through 7
even when
the merchant bank did not itself engage in any of the said transactions.
[This Article Newly Inserted by Presidential
Decree No. 16409, Jun. 30, 1999]
Article 2-4 (Scope of Specially Related Person)
The "person who has special relation as prescribed by Presidential Decree"
means a person who falls under any of the subparagraphs
of Article 1-4
of the Enforcement Decree of the Banking Act (hereinafter referred to
as "specially related person").
[This Article Newly Inserted by Presidential Decree No. 20554, Jan. 18, 2008]
Article 2-5 (Scope of Major stockholders)
The "person as prescribed by Presidential Decree" means who falls under
any of the subparagraphs:
1. A stockholder who has appointed the representative director or the
majority of directors on his/her own, or with agreement or
contract
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
3
with other stockholders; and
2. A stockholder decided by the Financial Services Commission, among
those who are deemed to exercise predominant influence over
such
decision-making or business administration as business strategy
or restructuring.
[This Article Newly Inserted by Presidential Decree No. 20554, Jan. 18, 2008]
Article 3 (Business Authorization)
(1) Any person who intends to get authorization for a merchant bank under
Article 3 (1) of the Act shall file with the Financial
Services Commission
an application stating matters falling under each of the following subpara-
graphs:
1. Firm name;
2. Location of the principal office;
3. Names, resident registration numbers and domiciles of the representa-
tive and executives;
4. Matters relating to capital;
5. Matters relating to facilities and equipment and human resources;
and
6. Type of business intended to be authorized.
(2) The application referred to in paragraph (1) shall be accompanied
by documents
falling under each of the following subparagraphs. In this
case, the competent official shall verify the certified copy of the corporate
register through the mutual utilization of administrative information pur-
suant to Article 21 (1) or 22-2 (1) of the Electronic
Government Act,
or if an applicant does not agree to such verification, the applicant shall
attach it to such application: 1. The articles of incorporation;
2. Operational guidelines;
3. The operational plan (including the estimated financial statements)
and estimated statement of revenues and expenses for three
years
after the commencement of business;
4. A document stating locations and names of the head office and branch
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
4
offices;
5. Deleted; 6. Financial statements and their appendixes;
7. Resumes and career certificates of executives and promoters;
8. The minutes of meetings of promoters;
9. A joint venture contract (limited to the case where it is intended to
run the banking business through a joint venture with a
foreigner);
10. A document attesting the payment of the capital;
11. Names or titles of stockholders who own not less than 1/100 of total
number of issued stocks as of the date on which an application
is filed
for authorization (in case that a financial institution files an application
for authorization to run the banking business
jointly with a mer chant
bank, as of the end of the immediately preceding business year)
and a document stating the number of stocks
owned by such stockholders;
and
12. Other documents, prescribed by the Financial Services Commission,
which are necessary to examine authorization requirements under
the
Act and this Decree.
(3) The formula of operations under paragraph (2) 2 shall contain the
following matters:
1. Classification and methods of operations;
2. Means of ensuring conformity with the management guidelines set
forth by the Financial Services Commission under Article 21-2
of
the Act;
3. How to use the property and its limit; and
4. Other important matters on operations.
(4) The "person as prescribed by Presidential Decree" in Article 3 (2)
4 of the Act means
a person falling under any of the following subpara-
graphs: 1. The largest stockholder of a corporation that is the largest stockholder
(if a person of de facto control over a corporation that
is the largest
stockholder is obviously different from the largest stockholder of the
corporation, the person of de facto control
is included therein); and
2. The representative of a corporation that is the largest stockholder.
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
5
(5) Large stockholders referred to in Article 3 (2) 4 of the Act shall meet
the requirements as prescribed in the attached Table
1.
(6) Any person who intends to get authorization for a merchant bank under
Article 3 (8) of the Act shall meet detailed requirements
falling under
each of the following subparagraphs: 1. The operational plan is required to be suitable for sustaining the banking
business, and estimated financial statements and profit
prospect are
required to be appropriate in the light of the operational plan;
2. The method of raising funds, including capital, etc. necessary to imple-
ment the operational plan is required to be appropriate;
3. Sepecialists, data processing personnel, computer facilities and equipment,
office spaces, etc. are required to properly conduct
authorized banking
business; and
4. Promoters (limited to the case where such promoters are individuals)
and executives are required not to fall under any subparagraph
of Article
3-4 of the Act, and persons who have been engaged in the intended
banking business for not less than five years and
specialists prescribed
by the Financial Services Commission are required to be appointed
as executives and employees.
(7) The Financial Services Commission may determine specific standards
regarding detailed requirements on paragraphs (5) and (6).
Article 3-2 (Approval for Change of Large Stockholders)
(1) The "requirements as prescribe by Presidential Decree"as referred
to
in Article 3 (3) of the Act means requirements pursuant to the attached
Table 2: Provided, That this shall not apply to any of the
following
cases:
1. The State;
2. Korea Deposit Insurance Corporation under the Depositor Protection
Act; and
3. A stockholder who is specially related to the largest stockholder
(limited only to a stockholder who is not the largest stockholder).
(2) A person who seeks approval pursuant to Article 3 (3) of the Act
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
6
shall submit an application for approval for change of large stockholders
in which the following matters are stated:
1. Information on applicant;
2. The status of ownership of stocks, which are issued by a merchant
bank that seeks to be a large stockholder; and
3. Plans for acquisition of stocks, which are issued by a merchant bank
that seeks to be a large stockholder
(3) An application as referred to in paragraph (2) shall be accompanied
by the following documents:
1. Articles of incorporation (limited only to corporations);
2. Documents corresponding to the certified copy of corporate register,
in cases of foreign corporations;
3. Financial statements as of the end of the latest fiscal year, and half
year financial statements since the end of the latest fiscal
year (limited
only to corporations);
4. Audit reports and examination reports made by outside auditors on
financial statements as referred to in subparagraph 3;
5. In cases where a financial institution seeks to be a large stockholder,
financial status assessed pursuant to the standards of
financial sound-
ness applied to such financial institution, and examination reports there-
on made by outsided auditors; and
6. Other documents prescribed by the Financial Services Commission,
from among necessary documents for examination on requirements
for
approval.
(4) The Financial Services Commission shall, if it receives an application
as referred to in paragraph (2), verify the following
administrative in-
formation through the mutual utilization of administrative information
pursuant to Article 21 (1) of the Electronic
Government Act: Provided,
That if an applicant does not agree to such verification, he/she shall
attach such documents (a business
register may substitute for the docu-
ment referred to in subparagraph 1) the application:
1. The certified copy of corporate register (limited only to a domestic corpo-
ration);
2. The certified copy of resident registration of a person who intends to
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
7
be a large stockholder; and
3. The certified copy of corporate register of a merchant bank that seeks
to be a large stockholder
(5) The Financial Services Commission shall, if it receives an application
as referred to in paragraph (2), check with the requirements
pursuant
to the attached Table 2, decide whether or not to give approval within
60 days from the date of receipt of such application,
and then notify
the applicant of such decision in writing without delay. In cases of
disapproval, the grounds therefor shall be
stated.
(6) The Financial Services Commission may, if any flaws are found
in an application as referred to in paragraph (2), request replenishment
for such application. In this case, period for replenishment shall not be
counted toward the period as referred to in paragraph
(5).
(7) The Financial Services Commission shall, if it gives an order of
disposition pursuant to Article 3 (4) of the Act, state the
number of
stocks to be disposed of, disposition period, etc. in writing.
(8) Other necessary details for the methods and procedures of an applica-
tion for approval and order of disposition shall be prescribed
by the
Financial Services Commission.
[This Article newly Inserted by Presidential Decree No. 20554, Jan. 18, 2008]
Article 3-3 (Combing Short-Term Financial Business
by Financial Institu-
tions)
(1) The "financial institutions as determined by Presidential Decree"
listed in Article 3-2 (1) of the Act means:
1. Financial institutions established upon authorization under the Bank-
ing Act;
2. Industrial Bank of Korea established under the Industrial Bank of
Korea Act;
3. A financial Institution from among those as prescribed under subpar-
agraph 1 of Article 2 of the Act on the Structural Improvement
of the
Financial Industry which merges with a merchant bank; and
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
8
4. Where a merchant bank is converted into other financial institution
under Article 3 of the Act on the Structural Improvement of
the Financial
Industry, such financial institution.
(2) The provisions of Article 3 (2) and (3) shall apply mutatis mutandis
to authorization referred to in Article 3-2 (1) of the
Act.
[This Article Newly Inserted by Presidential Decree No. 15760, Apr. 1, 1998]
Article 3-4 (Qualification Requirements for Executives,
etc.)
(1) The "finance-related Acts and subordinate statutes prescribed Presi-
dential Decree" in subparagraphs 3 and 5 of Article
3-4 of the Act and
the "finance-related Acts and subordinate statutes prescribed by Presidential
Decree" in subparagraph 6 of the
same Article, respectively, means the
following Acts:
1. The Bank of Korea Act;
2. The Banking Act;
3. The Korea Development Bank Act;
4. The Industrial Bank of Korea Act;
5. The Long-Term Credit Bank Act;
6. The Export-Import Bank of Korea Act;
7. The Securities and Exchange Act;
8. The Insurance Business Act;
9. The Indirect Investment Asset Management Business Act;
10. Deleted; 11. The Mutual Savings Banks Act;
12. The Specialized Credit Financial Business Act;
13. The Credit Guarantee Fund Act;
14. The Korea Technology Credit Guarantee Fund Act;
15. The Credit Unions Act;
16. The Agricultural Cooperatives Act;
17. The Fisheries Cooperatives Act;
18. The Community Credit Cooperatives Act;
19. The Support for Small and Medium Enterprise Establishment Act;
20. The Use and Protection of Credit Information Act;
21. The Futures Trading Act;
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
9
22. The Foreign Exchange Transactions Act;
23. The Act on the Establishment, etc. of the Financial Services Com-
ssion;
24. The Asset-Backed Securitization Act;
25. The Special Purpose Companies for Mortgage-Backed Bonds Act;
26. The Act on the Efficient Disposal of Non-Performing Assets, etc. of
Financial Institutions and the Establishment of Korea Asset
Manage-
ment Corporation;
27. The Act on Real Name Financial Transactions and Guarantee of
Secrecy;
28. The Foreign Investment Promotion Act;
29. The Act on the Structural Improvement of the Financial Industry;
30. The Korea Housing Finance Corporation Act; and
31. The Electronic Financial Transaction Act.
(2) The "person prescribed by Presidential Decree" in subparagraph 6 of
Article 3-4
of the Act means any executive or any employee at the time
that the grounds which are the cause of revoking the business license
or authorization, etc. accrue (in the case of a corporation or a company
whose business license or authorization, etc. is revoked
under Article 14
of the Act on the Structural Improvement of the Financial Industry, any
executive or any employee at the time
that the grounds which are the cause
of taking timely and corrective measures occur under Article 10 of the
same Act), who falls
under any of the following subparagraphs:
1. An auditor or a member of the audit committee;
2. An executive who is subjected to caution, warning, censure, the suspen-
sion of duties, demand for dismissal, or other measures
from the
Financial Services Commission or the Governor of the Financial Su-
pervisory Service (hereinafter referred to as the "Governor
of the Fi-
nancial Supervisory Service") established pursuant to the Act on the
Establishment, etc. of Financial Services Commission
for his/her ille-
gal and unfair act in connection with the occurrence of the grounds
which are the cause of revoking the business
license or authorization,
etc.;
3. Employees who are subjected to the suspension of their duties or
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
10
a heavier censure demanded by the Financial Services Commission
or the Governor of the Financial Supervisory Service for his/her
illegal
and unfair act in connection with the occurrence of the grounds which
are the cause of revoking the business license or
authorization, etc.;
and
4. A person who is subjected to the censure under subparagraph 2 or
3 and resigns or retires before facing such censure.
[This Article
Wholly Amended by Presidential Decree No. 16897, Jul. 10, 2000]
Article 4 Deleted.
(1) Where the Financial Services Commission intends to authorize the
establishment of branches, etc. pursuant to Article 4 of the
Act, it shall
check the following: 1. Whether the financial soundness criteria are satisfied as prescribed
under Article 21-2 (1) 1 of the Act;
2. Whether a net profit for the current term has been generated for at
least one fiscal year from among the two immediately preceding
fiscal
years; or
3. Whether there has been an order for disposition of partial or entire
suspension of business or a warning for the said merchant
bank in
the last two years as revealed by an inspection of the Governor of
the Financial Supervisory Service under Article 25 of
the Act.
(2) The matter as prescribed under paragraph (1) 2 and 3 shall not
apply to merchant banks which intend to gain authorization
of establish-
ment of a branch etc. in Metropolitan Cities or Dos where there are no
main offices or branch offices of merchant
banks.
[This Article Wholly Amended by Presidential Decree No. 16409, Jun. 30, 1999]
Article 5-2 (Reasons for Disqualification
of Outside Directors)
(1) The "corporation which has major business relationship with the mer-
chant bank as prescribed by Presidential
Decree, or is a competitor or
collaborator of the merchant bank" as referred to in Article 5 (4) 10 means
any of the following
corporations (excluding institutional investors pursuant
to Article 17-2 (8) of the Enforcement Decree of the Corporate Tax Act,
and foreign financial institutions corresponding thereto):
1. A corporation of which total amount of transaction with the relevant
merchant bank is at least 10/100 of the total assets (referring
to total
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
11
assets in current balance sheets of the relevant merchant bank as of
the latest fiscal year) or the total sales (referring to the
total sales
in current statement of profit and loss of the relevant merchant bank
as of the latest fiscal year) in the latest three
years;
2. A corporation which has entered a single contract of at least 10/100
of the total sales with the relevant merchant bank in the
latest fiscal
year;
3. A corporation of which the sum of money, stocks, other securities or
bonds that has been lent to or borrowed from the relevant
merchant
bank, and guarantee of liabilities such as providing security is at least
10/100 of its capital (referring to capital
in current balance sheets
of the relevant corporation as of the latest fiscal year);
4. A corporation for which the relevant merchant bank has invested at
least 5/100 of the capital (referring to the capital of a corporation
funded by the relevant merchant bank) as of a general meeting of stock-
holders;
5. A corporation that has been entered into a contract of technical coopera-
tion with the relevant merchant bank;
6. An accounting firm which has been appointed as auditor of the relevant
merchant bank; or
7. A corporation that has been entered into such consultation contract
as legal consultation, business consultation, etc.
(2) The
"person as prescribed by Presidential Decree" as referred to in
Article 5 (4) 12 means any of the following persons:
1. A person who is working as an outside director, non-standing director
or non-standing auditor at two or more corporations that
are listed
on the stock market (referring to corporations listed on the stock market
under the Securities Exchange Act; hereinafter
the same applies) or
on KOSDAQ (referring to corporations listed on KOSDAQ under the
Securities Exchange Act; hereinafter the same
applies) other than the
relevant merchant bank;
2. An attorney-at law, certified public accountant, tax attorney or con-
sultant, who is an auditor or tax agent of the relevant
merchant bank,
or who is under contract providing such services as legal consultation,
business consultation, etc;
3. A stockholder who holds 1/100 or more of total stocks issued by the
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
12
relevant merchant bank (referring to holding pursuant to Article 21
(1) of the Securities Exchange Act); or
4. An entity whose remaining balance of transactions (excluding ordinary
transactions pursuant to standardized contracts under Article
2 (1)
the Regulation of Standardized Contracts Act with the relevant merchant
bank) with the relevant merchant bank is 100 million
won or more.
[This Article Newly Inserted by Presidential Decree No. 20554, Jan. 18, 2008]
Article 5-3 (Scope of Specialists in
Finance or Accounting)
The "specialists in finance or accounting determined by Presidential Decree"
as referred to in Article 5-2
(2) 2 of the Act means any of the following
persons: 1. A certified public accountant who has been engaged in the fields related
to such certification for at least five years upon obtaining
such certifi-
cation;
2. A person who holds a master's degree or higher in finance or accounting,
and has been worked as a researcher, full-time lecturer
or higher position
in the fields related to finance or accounting at research institutions
or universities for at least five years
upon obtaining such degree;
3. A person who has worked for a corporation listed on the stock market
or on KOSDAQ, for five years as an executive, or for ten
years an
executive or employee;
4. A person who has been engaged in the fields related to finance or
accounting or supervision thereon for at least five years for
the State
or local governments, public agencies under the Act on the Management
of Public Agencies, the Financial Services Commission,
Korea Securities
and Futures Exchange under the Korea Securities and Futures Exchange
Act or securities-related institutions under
Article 2 (17) of the Securities
Exchange Act; or
5. A person who has been engaged in the field related to finance or
accounting for at least five years for an institution subject
to examina-
tion under Article 38 of the Act on the Establishment, etc. of Financial
Services Commission (including foreign institutions
corresponding
thereto).
[This Article Newly Inserted by Presidential Decree No. 20554, Jan. 18, 2008]
Article 6 (Internal Control Standards)
(1) The internal control standards as prescribed in Article 5-3 (1) of
the Act (hereinafter referred to as the "internal control
standards") shall
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
13
include the matters falling under each of the following subparagraphs:
1. Matters relating to the division of work and organizational structure;
2. Matters relating to the control of risks arising from the course of operating
assets and running the business;
3. Matters relating to procedures for executives and employees to observe
when they perform their duties;
4. Matters relating to the building of a system under which information
necessary for making decisions with respect to management
is efficiently
transmitted;
5. Matters relating to procedures and methods of confirming whether the
internal control standards are observed and the handling
of any officer
or any employee who has violated such internal control standards;
6. Matters relating to the report on details of securities trading by
any executive or any employee and procedures or standards for
pre-
venting any executive or any employee from being engaged in the act
of unfair financial transactions;
7. Matters relating to procedures for setting or altering the internal control
standards;
8. Matters relating to procedures for appointing and dismissing any com-
pliance officer (hereinafter referred to as a "compliance
officer") under
Article 5-3 (2) of the Act; and
9. Matters relating to specific standards for the matters of subpara-
graphs 1 through 8, which are set by the Financial Services
Com-
mission.
(2) Any merchant bank shall, where it intends to set or alter its internal
control standards, go through a resolution of the boards
of directors.
(3) With respect to any merchant bank which is found to have violated
Acts and subordinate statutes as a result of
the audit conducted by the
Governor of the Financial Supervisory Service in accordance with Article
25 of the Act, the Financial
Services Commission may urge the merchant
bank in question to alter its internal control standards for the purpose of
preventing
a recurrence of such violation of the Acts and subordinate
statutes.
(1) Any merchant bank shall, when it intends to appoint or dismiss
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
14
any compliance officer, go through a resolution of the boards of directors.
(2) Any compliance officer shall meet requirements falling
under each
of the following subparagraphs: 1. He/She shall have a career falling under any of the following items:
(a) A person who has worked for the Bank of Korea or an institution
subject to the audit under Article 38 of the Act on the Establish-
ment, etc. of the Financial Services Commission for not less
than
two years;
(b) A person with a master's degree or higher in the finance-related
field who has worked for a university as a full-time lecturer
or
higher, or an research institute as a researcher or higher for not
less than two years;
(c) A person with the qualification of an attorney-at-law or certified
public accountant who has been engaged in the service related
to
such qualification for not less than two years; and
(d) A person who has worked for the Ministry of Strategy and Finance,
the
Financial Services Commission, the Securities and Futures
Commission, or the Financial Supervisory Service for not less than
two
years and for whom two years have not yet to elapsed since
the date of resignation or retirement;
2. He/She shall not fall under any subparagraph of Article 3-4 of the
Act; and
3. He/She shall not have been subjected to the measure falling under
demand for caution or warning or a heavier censure from the
Financial
Services Commission or the Governor of the Financial Supervisory
Service for violating finance-related Acts and subordinate
statutes
for the immediately preceding three years.
(3) Any merchant bank shall, when it appoints or dismisses any compliance
officer, file a notice thereof with the Financial Services
Commission.
1. The business of operating assets;
2. The business of a merchant bank under Article 7 (1) of the Act;
and
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
15
3. The business concurrently run by the merchant bank concerned under
Article 7 (2) of the Act.
(5) Any merchant bank shall, where a compliance officer asks any executive
or any employee of the merchant bank concerned for data
or information
to perform his/her duties, make such executive or such employee sincerely
comply with the request.
(6) Any merchant bank shall be prohibited from unfairly disadvantaging
any former compliance officer in the personnel affairs on
the grounds of
his/her past duties.
[This Article Newly Inserted by Presidential Decree No. 16897, Jul. 10, 2000]
Article 6-3 (Exercise of Minority Stockholders' Rights)
(1) The "persons holding stocks under the conditions as prescribed by
Presidential Decree" in Article 5-4 (1) through (4) of the
Act means
persons who hold stocks in a manner falling under each of the following
subparagraphs:
1. Owing of stocks;
2. Acquisition of letters of attorney with respect to the exercise of stock-
holders' rights; and
3. Joint exercise of stockholders' rights by not less than two stock-
holders.
(2) The "merchant bank prescribed by Presidential Decree" in Article
5-4 (2) through (4) of the Act means a merchant bank that held
not
less than 2 trillion won in the sum total of assets as of the end of the
immediately preceding business year.
[This Article Newly Inserted by Presidential Decree No. 16897, Jul. 10, 2000]
Article 6-4 (Scope of Ancillary Business, etc.)
(1) Every merchant bank shall be permitted to run the ancillary business
falling under each of the following subparagraphs under
Article 7 (1)
8 of the Act:
1. The business of bill management accounts;
2. The factoring business (referring to the purchase and recovery of
sales debentures of a company and other related business);
3. Trading under subparagraph 5 (b) or (c) of Article 2-3 of the
Enforcement Decree of the Securities and Exchange Act (limited
to the trading for the stock exchange index);
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
16
4. Acceptance, trading and brokerage of transferable deposit certifi-
cates;
5. Acceptance, trading and brokerage of securities subject to open mar-
ket operations under Article 68 of the Bank of Korea Act;
6. Bills issued by the merchant bank concerned and loans extended to
individuals who hold bills issued by the merchant bank concerned
or debentures on bill management accounts of the merchant bank
concerned by using such debentures as security;
7. The business of pre-shipment trade bills;
8. Leasing business-use real estate; and
9. The business, prescribed by Ordinance of the Prime Minister, which
is conducted through business alliance with other financial
institutions.
(2) The "other businesses prescribed by Presidential Decree" in Article 7 (2)
6 of the Act means businesses listed
in the following subparagraphs: 1. The futures business under the Futures Trading Act;
2. The business of credit information under the Use and Protection of
Credit Information Act;
3. The business of managing securitized assets under the Asset-Backed
Securitization Act;
4. The business of operating assets under the Indirect Investment Asset
Management Business Act;
5. The business of securitizing bonds under the Special Purpose Companies
for Mortgage-Backed Bonds Act;
5-2. The business of investment counsel under subparagraph 5 of Article
2 of the Indirect Investment Asset Management Business Act;
5-3. The business of electronic fund transfer under the Electronic
Financial Transaction Act [excluding the business of electronic
fund
transfer in a method in which it becomes an organization participating
in the settlement relay system under subparagraph 6
of Article 2
of the same Act, or in which it goes through the representative of
participating organizations under Article 15 (2)
2 of the Enforcement
Decree of the same Act]; and
6. Other business, prescribed by Ordinance of the Prime Minister, which
is related to the business of merchant bank.
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
17
[This Article Newly Inserted by Presidential Decree No. 16897, Jul. 10, 2000]
Article 7 (Authorization of Dissolution, etc.)
(1) Where a merchant bank intends to gain authorization of the dissolution
or business closure under Article 8 (1) of the Act, it
shall submit the
following documents, within one month from the date when the reason
for such dissolution or closure of the whole
of its business occurs, and
apply for authorization to the Financial Services Commission:
1. Balance sheet which has been completed based on the statistics by
the end of the month preceding the application;
2. Written decision of the board of directors; and
3. The concerned merchant bank's plan to organize its assets and debts.
(2) Where a merchant bank has obtained the authorization
under par
agraph (1), it shall, without delay, post the matter at the concerned
merchant bank's main office and branch offices
and announce the matter
in one or more daily newspapers issued in the Seoul Special Metropolitan
City.
[This Article Wholly Amended by Presidential Decree No. 16409, Jun. 30, 1999]
Article 8 (Incorporation of Fund Brokerage Companies)
(1) Deleted.
(3) The provisions of Articles 3, 3-4, 7, 13, 17 (2) and (4), 17-2, 18, and
19 shall apply mutatis mutandis to the fund brokerage
company under
paragraph (2). In this case, the term "merchant bank" shall be deemed
to read "fund brokerage company."
(1) In issuing bonds under Article 10 (1) of the Act, even if the actual
amount subscribed falls short of the amount to be issued
by a merchant
bank in the bonds subscription form, the total amount actually subscribed
shall be deemed the amount to be issued.
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
18
(2) Where a merchant bank issues bonds in excess of its limit pursuant to
Article 10 (2) of the Act, it shall bring them in line
with the limit referred
to in Article 10 (1) of the Act within one month after issuance thereof.
(3) Where a merchant bank issues
bonds by means of sale, it may not
prepare a written subscription therefor.
(4) The following matters shall be entered in bonds issued through sale
by a merchant bank:
1. Trade name;
2. Par value of bonds;
3. Interest rate of bonds;
4. Method of payment of interest and deadline thereof;
5. Method of redemption of bonds and deadline thereof; and
6. Serial number of bonds.
(5) The following matters shall be publicly announced in advance where
a merchant bank issues bonds by
means of sale:
1. Period of sale;
2. Total amount of bonds;
3. Issue price or, minimum price of bonds; and
4. Matters provided in paragraph (4) 1 through 5.
Article 9-2 (Scope of Persons Sharing Credit Risk)
The "person with whom it shares
credit risk" as prescribed in Article 15
(1) of the Act means the parties corresponding to the following:
1. Parties having relevance to any of subparagraphs of Article 3 of the
Monopoly Regulation and Fair Trade Act; and
2. Parties who are certain to become default in case another individual
or corporation becomes default, in the absence of a special
reason
otherwise.
[This Article Wholly Amended by Presidential Decree No. 16409, Jun. 30, 1999]
Article 9-3 (Credit Extension Ceiling for Related
Persons)
Merchant Banks shall not extend credit in excess of 15/100 of the said
merchant bank's equity capital to a person corresponding
to any of the
following subparagraphs and a person who shares credit risks with him,
under Article 15 (2) of the Act:
19
1. Deleted; 2. An executive of the relevant merchant bank, and a person who has
special relation, as prescribed by Article 2-8 of the Enforcement
Decree
of the Securities and Exchange Act, to an executive of such merchant
bank;
3. An affiliate of the said merchant bank (referring to those affiliates
which hold 15/100 or more of the said merchant bank's shares
with
voting rights; hereinafter the same shall apply); and
4. A person who has any relation, as referred to in subparagraphs of
Article 9-2, to an affiliate of the relevant merchant bank.
[This Article Wholly Amended by Presidential Decree No. 16409, Jun. 30, 1999]
Article 9-4 (Exceptions to Credit Extension Ceiling)
(1) The following cases may be in excess of credit extension ceiling
in accordance with the proviso to Article 15 (5) of the Act,
which is subject
to the approval of the Financial Services Commission:
1. A case falling under Article 15 (5) 1 of the Act, which also falls under
one of the following items:
(a) Cases of credit extension for corporations designated by the Fi-
nancial Services Commission which were established by the State,
a local government, or a special Act;
(b) Where a merchant bank loans money to spare through a fund
broker to another financial institution within a fixed period of not
more than three business days;
(c) Where an additional credit extension takes place for a company
which is in the process of management normalization by joint
finan-
cial institutions for corporate restructuring or for which the re-
habilitation procedure prescribed by the Debtor Rehabilitation
and
Bankruptcy Act is underway; and
(d) Where an additional credit extension takes place for a party which
underwrites a company corresponding to item (c) under the
terms
and conditions as prescribed by the underwriting contract;
2. The case of Article 15 (5) 2 of the Act, which falls under one of the
following items:
(a) Where due to fluctuations in won's value, the converted value of
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
20
won has increased;
(b) Where the said merchant bank's equity capital has been reduced;
(c) Where there are mergers or transfer of business among companies
that have received credit extension; and
(d) Where the Financial Services Commission recognizes that the
merchant bank concerned has extended credits in excess of the
credit
extension limits without any cause attributable to such
merchant bank due to an unavoidable cause such as a drastic change
in economic
conditions.
(2) Where a merchant bank has exceeded the credit extension ceiling
due to reasons under paragraph (1) 2, it shall, within a month
from the
generation of the reason therefor, submit its corrective plan to the Financial
Services Commission.
1. Where it is difficult to make recollection due to a credit extension for
which the time limit has yet to be exceeded; and
2. Where the recollection of the credit extension may incur great damage
to the managerial stability of the party which has been
given the credit
extension.
[This Article Wholly Amended by Presidential Decree No. 16409, Jun. 30, 1999]
Article 10 (Restriction on Transactions with Large
Stockholders)
(1) The "limit determined by Presidential Decree" as referred to in Article
16 (1) of the Act means the lesser between
15/100 of the capital of the
relevant merchant bank and the amount calculated by the number of
voting stocks of the merchant bank,
which are owned by the relevant
large stockholder (and specially related person to the stockholder; the
same shall apply hereafter
in this Article and Article 10-2), divided by
the total number of voting stocks issued by the merchant bank, and then
multiplied
by the capital of the merchant bank.
(2) The "amount determined by Presidential Decree" as referred to in
Article 16 (2) and (3) of the Act means that the lesser between
the
amount of a single transaction determined and publicly announced by
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
21
the Financial Services Commission, which is equivalent to 10/10,000
of the capital of the relevant merchant bank, and one billion
won: Provided,
That a transaction amount pursuant to a standardized contract under
Article 2 of the Regulation of Standardized
Contracts Act, among trans-
actions for ordinary business of the relevant merchant bank, shall be
excluded.
(4) The "matters prescribed by Presidential Decree" as referred to in the
first sentence of Article 16 (4) of the Act mean as follows:
1. In cases of credit extension under Article 16 (3) of the Act:
(a) The scope of credit extension as of the end of a quarter;
(b)
Increase and decrease in the amount of credit extension in a quarter;
(c) Conditions on credit extension; and
(d) Other matters determined and publicly announced by the Financial
Services Commission; or
2. In cases of acquisition of stocks issued by stockholders under Article
16 (3):
(a) The scope of acquisition as of the end of a quarter;
(b) The details of increase and decrease in the amount of acquisition
in a quarter;
(c) The prices of acquisitions or sales; and
(d) Other matters determined and publicly announced by the Financial
Services Commission.
(5) The "period determined by Presidential Decree" as referred to in Article
16 (5) of the Act means one year.
[This Article Newly Inserted by Presidential Decree No. 20554, Jan. 18, 2008]
Article 10-2 (Scope of Wrongful Influence)
The "act prescribed by Presidential Decree" as referred to in subparagraph
3 of Article 16-2 of the Act means as follows:
1. Forcing a merchant bank to commit an illegal behavior; or
2. Demanding the conditions of business, which are different from the
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
22
ordinary conditions of business in interest rates, fees, security, etc.,
with the large stockholder himself/herself or a third party.
[This Article Newly Inserted by Presidential Decree No. 20554, Jan. 18, 2008]
Article 10-3 (Grounds for Restrictions on Credit
Extension for Insolvent
Large Stockholders)
The "case prescribed by Presidential Decree" as referred to in subparagraph
3 of Article 16-2 of the Act means any of the following
cases:
1. Where the liability of the relevant stockholder exceeds his/her assets;
or
2. Where the relevant stockholder is rated as non-investment grade by
two or more credit ratings agencies among credit ratings agencies
pursuant to the Use and Protection of Credit Information Act.
[This Article Newly Inserted by Presidential Decree No. 20554, Jan.
18, 2008]
Article 10-4 (Report on Changes in Stockholder's Equity)
A merchant bank shall immediately report to the Financial Services
Commission, in cases falling under any subparagraphs of Article 16-4 of
the Act: Provided, That the Financial Commission may determine
the period
of such report differently, according to its importance.
[This Article Newly Inserted by Presidential Decree No. 20554, Jan. 18, 2008]
Article 11 (Investment Limit on Securities)
(1) The "cases as prescribed by Presidential Decree" referred to in Article
17 (1) of the Act means any of the following cases:
1. Where it holds securities in the course of the operations prescribed
by Article 7 (1) 1 and 3 and (2) 2 and 3 of the Act;
2. Where it holds bonds the payment of the principal and interest of
which is guaranteed by the State;
3. Where it holds securities in the course of exercise of the stockholders
rights and security interest (excluding cases where the
duration of
holding exceeds one year);
4. Where it holds a corporate bond (including securities or certificates
issued by a foreign corporation, etc.) with a maturity of
remaining
three years;
5. Where it holds an existing credit extension amount by equity swap
(including convertible bonds) under the terms as determined
by the
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
23
Financial Services Commission;
6. Where it holds securitized securities which have been issued based
on the assets held by the said merchant bank under the Asset-Backed
Securitization Act; and
7. Where it holds beneficiary certificates which are determined by the
Financial Services Commission from among the beneficiary certificates
under the Indirect Investment Asset Management Business Act.
(2) Investment limits may be fixed separately for the securities falling
under each of the following subparagraphs in accordance with Article 17 (2)
of the Act: 1. Stocks issued by the same company;
2. Stocks issued by the large stockholders and specially related persons
of a merchant bank; and
3. Unlisted securities sold by the large stockholders and specially re-
lated persons of a merchant bank.
Article 12 (Holding of Reserve Requirement Assets)
(1) The reserve requirement assets to be held by merchant bank under
Article
18 of the Act shall be the equivalent to 5/100 of the aggregate
amount set forth in the following subparagraphs:
1. Amount of issued bills and debentures;
2. Amount deposited in cash management accounts; and
3. Par value of commercial papers sold guaranteed by it.
(2) The reserve requirement assets prescribed by paragraph (1) include
the following assets which have not been offered as mortgage for another
person: 1. Cash;
2. National and public bonds;
3. Currency stabilization bonds issued by the Bank of Korea; and
4. Bonds the payment of the principal and interest of which was guaranteed
by the State.
Article 12-2 (Restriction on Acquisition of Real Estate)
(1) A merchant bank shall dispose of real estate other than that for
its
own business and real estate acquired pursuant to the proviso of
Article 19 (1) of the Act within one year from the date on which
it
acquires, or request the Korea Asset Management Corporation established
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
24
under the Act on the Efficient Disposal of Non-Performing Assets, etc.
of Financial Institutions and the Establishment of Korea
Asset Management
Corporation to sell it pursuant to Article 19 (3) of the Act: Provided,
That this shall not apply in cases where
there exist unavoidable causes
to dispose of or to make a request for sale, as determined and announced
by the Financial Services
Commission.
(2) Real estate for business purpose referred to in Article 19 (4) of the
Act shall be the real estate which exclude that as prescribed
under
Article 49 (1) 1 of the Enforcement Decree of the Corporate Tax Act.
[This Article Newly Inserted by Presidential Decree No. 15760, Apr. 1, 2008]
Article 13 (Application for Permission of Holding Two
Positions)
The "other profit-making corporation as determined by Presidential Decree"
used in Article 20 of the Act means the following
corporations:
1. Financial institutions as prescribed under subparagraph 1 of Article
2 of the Act on the Structural Improvement of the Financial
Industry;
2. Corporations which are affiliates of a merchant bank, which are
required to write a consolidated financial statement in accordance
with the standards as determined by the Financial Futures Commis-
sion: Provided, That the cases falling under the following items
shall
be excluded:
(a) Where a staff member holds concurrently the office of an executive
of a financial institution which is an overseas affiliate,
or where
a staff member is dispatched to such an institution; and
(b) Where a staff member holds concurrently the office of an
executive
of an affiliate company or is dispatched to such company for the pur-
pose of facilitating management rationalization
or restructuring
of the affiliate company;
3. An accounting corporation as prescribed under Article 23 of the
Certified Public Accountant Act;
4. Major stockholder of the said merchant bank and those corporations
that share credit risk with him;
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
25
5. A corporation which has been given credit extension of 10/100 or
more of its equity capital from the said merchant bank; and
6. A profit-making corporation which does not fall under subparagraphs
1 to 5, which the Financial Services Commission recognizes
as that
where there is a risk of factors limiting competition in the related market
due to the concurrent holding of positions
of an executive of a merchant
bank.
[This Article Wholly Amended by Presidential Decree No. 16409, Jun. 30, 1999]
Article 14 (Standards for Management Guidance)
(1) The criteria of financial structure soundness to be determined by
the Financial Services Commission under Article 21-2 (1) 1
of the Act
shall include the following: 1. The ratio of minimum equity capital for weighed risk assets under
the standard of the Bank for International Settlements;
2. Assets and debt ratio the maturity of which is due within a given period
of time; and
3. Deleted.
1. Scope of assets subject to classification; and
2. Classification on asset soundness and criteria thereof.
(3) The criteria for accounting and settlement to be determined by the
Financial Services Commission under Article 21-2 (1) 3 of the Act shall
include the following: 1. Standard for indicating finance and profit-loss;
2. Standard for accumulation of appropriation money and reserve money;
and
3. Standard for disposition of bad debt expense of debentures.
(4) The criteria of risk management to be determined by the Financial
Services Commission under Article 21-2 (1) 4 of the Act shall include
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
26
the following: 1. Standard by which the following risks, which arise in financial transac-
tions of a merchant bank, may be confirmed and measured:
(a) The risk of loss incurred on the part of the merchant bank in case
the other party of the transaction can not carry out the
transactions
normally;
(b) Risk of loss incurred on the part of the merchant bank in case
of fluctuations in interest rates and exchange rates, etc.;
(c) Liquidity shortage risk generated as a result of failure of the
merchant bank to procure the necessary funds required for the
carry-
ing out financial transactions on time; and
(d) Risk of grave impact on the management of the merchant bank
due to legal disputes or financial accidents, etc.;
2. Designation of a ceiling on loss or ceiling on asset holding in order
to prevent the risks as prescribed under subparagraph 1;
and
3. Internal management system necessary for risk management.
[This Article Wholly Amended by Presidential Decree No. 16409, Jun.
30, 1999]
Article 15 Deleted. 1. The ratio corresponding to each subparagraph of Article 14 (1),
which is managerial indicators representing the financial soundness
of a merchant bank;
2. A managerial indicator representing the profitability and productivity
of a merchant bank; and
3. The amount which was subject to credit extension in excess of the
ceiling on credit extension under Article 15 (1) through (4)
and
Article 16 (1) of the Act.
(2) The "matters as prescribed by Presidential Decree" under Article
24 (4) of the Act means one of the following:
1. Matters concerning the organization and human resources;
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
27
2. Matters concerning the financial matters as well as profit and loss;
3. Matters concerning the procurement and operation of funds;
4. Matters concerning risks for merchant banks under each item of Article
14 (4) 1;
5. Matters corresponding to each subparagraph of Article 14 (4) among
the work methods;
6. Matters regarding accounting standards;
7. Content of administrative disposition in case a merchant bank was
subject to administrative disposition, under Article 22 of the
Act or
Articles 10 and 14 of the Act on the Structural Improvement of the
Financial Industry; and
8. Content of financial accident or non-performing credit in excess of a
given scale as prescribed by the Chairman of the Financial
Services
Commission.
(3) Deleted.
Article 17-2 (Entrustment of Work)
(1) The Financial Services Commission shall entrust its work falling under
each of the following subparagraphs to the Governor of
the Financial
Supervisory Service under Article 26 (2) of the Act:
1. Acceptance of the report or the return under Article 8 (2) of the Act;
2. Request for submitting the report or acceptance of such report under
Article 24 (1) and (2) of the Act; and
3. Publication of major information pertaining to the financial soundness
and management state of merchant banks under Article 24
(3) of the
Act.
(2) The Chief Commissioner of the Financial Supervisory Service shall
report the results of the work entrusted under paragraph (1)
to the Financial
Services Commission as prescribed by the Financial Services Commission.
28
Article 18 (Contributions)
The sharing ratio, limit or other matters necessary for the payment of
contributions referred to in Article 26-2 (2) of the Act
shall be governed by
the provisions of Article 12 of the Enforcement Decree of the Act on the
Establishment, etc. of Financial
Services Commission. 1. At least 50/100 of the maximum amount of penalty surcharges under
Article 27-2 shall be imposed, in cases of any of the following
violations:
(a) Where the excess amount of credit extension is more than 5/100
of the capital of the relevant merchant bank; or
(b) Where a violation continues for not less than one year, or is repeated
three times or more; or
2. Any of the following violations are exempt from penalty surcharges:
(a) Minor violations: or
(b) Where a violation is corrected immediately.
(2) Where Financial Services Commission intends to impose penalty sur-
charges pursuant to Article 27-2 of the Act, it shall state
the following
matters, along with the types of violation and penalty surcharges thereof,
and then send a written notification to
request payment thereof:
1. Issuance number;
2. A person to pay penalty surcharge;
3. The date of violation;
4. The types of violation;
5. The amount of penalty surcharge;
6. The term for payment; and
7. Receiving agencies.
(3) A person who has received a notification pursuant to paragraph (2)
shall make a payment to a receiving
agency designated by the Financial
Services Commission within 60 days from the date of receiving such
notification.
29
prescribed by the Financial Services Commission.
[This Article Newly Inserted by Presidential Decree No. 20554, Jan. 18, 2008]
Article 19-2 (Extension of Terms for Payment and Installments)
(1) The extension of a term for payment pursuant to Article 27-6 (1)
shall not exceed one year from the day following the date
of expiry of
the term of payment.
(2) In cases where installment payments are allowed pursuant to Article
27-6 (1), each payment is made within intervals of six months,
and the
number of installment payments is three times or less.
(3) An application for the extension of the term of payment or installments
payment shall state the following matters. In cases of subparagraph 6,
evidentiary documents shall be accompanied thereto:
1. The issuance number of notification of penalty surcharge;
2. The date of violation;
3. The types of violation;
4. The amount of penalty surcharge;
5. The term for payment; and
6. Grounds for applying for extension of payment or installments payment.
(4) The format of applications pursuant to paragraph (3)
shall be decided
by the Financial Services Commission.
(5) The "cases where circumstances prescribed by Presidential Decree
exist" as referred to in Article 27-6 (3) 4 mean cases where
the Financial
Services Commission finds not needing to extend the term of payment
or to allow installment payments, due to changes
in conditions on the
assets of persons to pay penalty surcharges or in other circumstances.
The "Additional charge determined by Presidential Decree" as referred
to in Article 27-7 1 means the amount calculated by applying
six percent
annually to the amount of penalty surcharges in arrears.
[This Article Newly Inserted by Presidential Decree No. 20554,
Jan. 18, 2008]
Article 20 (Procedures of Imposition and Collection of Fine for Negligence)
(1) Where the Minister of Finance and
Economy or the Financial Services
Commission imposes a fine for negligence under Article 30 (1) of the
FORCEMENT DECREE OF THE
MERCHANT BANKS ACT
30
Act, he/she shall notify any person subject to the disposition of a fine
for negligence after investigating and confirming the offense
by specifying
in writing an offense and the amount of a fine for negligence.
(2) Where the Financial Services Commission intends
to impose a fine
for negligence pursuant to paragraph (1), it shall give the person who
has been subject to the disposition of
a fine for negligence an opportunity
to state his/her opinion in writing (including electronic documents) or
verbally for a specified
period of not less than ten days. In this case, if
no opinion is stated within the designated date, he/she shall be deemed
to have
no opinion.
(3) In determining the amount of a fine for negligence, the Financial Services
Commission shall take into consideration the motives
and the consequence
of such offense.
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on April 1, 1996.
Article 2 (Transitional Measures)
(1) A merchant bank, among those deemed to have obtained authorization
under Article 2 (1) of the Addenda of the Act, which falls
short of the
capital requirements provided in Article 3 (2) of the Act, shall submit
a schedule for the increase of capital to
the Minister of Finance and Economy
within one month after this Decree enters into force.
(2) A merchant bank, among those which
have obtained an authorization
under Article 2 (2) of the Addenda of the Act, which falls short of the
capital requirements provided
in Article 3 (2) of the Act, shall submit
a schedule for the increase of capital to the Minister of Finance and
Economy within
one month after it has obtained an authorization on it.
(3) Those who wish to obtain an authorization on a merchant bank under
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
31
Article 2 (2) of the Addenda of the Act, may be exempt from some of
the documents specified under each subparagraph of Article 3
(2) of this
Decree.
ADDENDUM
ADDENDA
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDA
(2) (Abrogation of Other Subordinate Statutes) The Enforcement Decree
of the Short-Term Financing Business Act is abrogated hereby.
(3) (Transitional Measures) With regard to the credit extension amount
under the following subparagraphs, held by a merchant bank,
which is in
excess of the credit extension ceiling as of the day when this Decree takes
effect, it shall be deemed as having gained
the approval of the Financial
Services Commission under the amended provisions of Article 9-4 (1):
1. Credit extension for a company which has began the court receivership
or corporate reorganization procedure under the Composition
Act or
Company Reorganization Act; and
2. Credit extension for a company of which management normalization is
being pursued by joint financial institutions for restructuring
etc. pur-
poses.
(4) (Reduction of Amount in Excess of Credit Extension Ceiling in Stages)
A merchant bank shall reduce the amount in excess of its
credit extension
ceiling in stages under the following criteria according to the provisions of
Article 2 (4) of the Addenda of
the Act:
1. Where a credit extension by a merchant bank for the same borrower
under Article 15 (1) of the Act as of December 31, 1998 is in
excess
of 45/100 of its equity capital, it shall reduce 40/100 of the amount
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
32
in excess by June 30, 1999, and reduce to below 45/100 of the its
equity capital by June 30, 2000, and the amount which exceeds
the
limit under Article 15 (1) of the Act as of June 30, 2000 shall be reduced
in equal amounts each year by June 30, 2003;
2. Where a merchant bank exceeds the limit under Article 15 (2) of the
Act and Article 9-3 of this Decree as of December 31, 1998,
it shall
reduce 20/100 of the amount in excess by June 30, 1999, and 40/100
of the amount in excess by December 31, 1999;
3. Where a merchant bank exceeds the limit as prescribed under Article
15 (3) of the Act as of December 31, 1998, it shall reduce
the amount
to within the scope of seven times its equity capital by June 30, 1999,
and within the scope of six times its equity
capital by December 31,
1999; and
4. Where a merchant bank exceeds the limit as prescribed under Article
15 (4) of the Act as of December 31, 1998, it shall reduce
40/100 of
the amount in excess by June 30, 1999.
ADDENDA
This Decree shall enter into force on the date of its promulgation.
Article 2 Omitted.
ADDENDUM
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA
This Decree shall enter into force on March 1, 2004.
Articles 2 through 5 Omitted.
FORCEMENT DECREE OF THE MERCHANT BANKS ACT
33
ADDENDUM
This Decree shall enter into force on April 1, 2006.
Article 2 Omitted.
ADDENDUM
This Decree shall enter into force on January 20, 2008: Provided, That
the amended provisions of the attached Table 1 shall enter
into force on
March 20, 2008.
Article 2 (Applicability on Requirements for Authorization as Merchant
Bank)
The amended provisions of the attached Table 1 shall initially apply to
such a bank that submits an application to the Financial
Supervisory
Commission after this Decree enters into force.
ADDENDA
This Decree shall enter into force on the date of its promulgation. (Proviso
Omitted.)
Article 2 Omitted.
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