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Laws of the Republic of Korea |
1
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
Act No. 5374, Aug. 28, 1997
Amended by Act No. 5505, Jan. 13, 1998
Act No. 5741, Feb. 1, 1999
Act No. 5819, Feb. 8, 1999
Act No. 5982, May 24, 1999
Act No. 6316, Dec. 29, 2000
Act No. 6430, Mar. 28, 2001
Act No. 6681, Mar. 30, 2002
Act No. 6705, Aug. 26, 2002
Act No. 6909, May 29, 2003
Act No. 7065, Jan. 20, 2004
Act No. 7343, Jan. 27, 2005
Act No. 7344, Jan. 27, 2005
Act No. 7428, Mar. 31, 2005
Act No. 7531, May 31, 2005
Act No. 7929, Apr. 28, 2006
Act No. 8265, Jan. 26, 2007
Act No. 8313, Mar. 29, 2007
Act No. 8356, Apr. 11, 2007
Act No. 8525, Jul. 19, 2007
Act No. 8852, Feb. 29, 2008
Act No. 8863, Feb. 29, 2008
CHAPTER GENERAL PROVISIONS
Article 1 (Objective)
The purpose of this Act is to seek financial conveniences for the people and to contribute to the growth of the national economy by supporting sound and initiative development of credit card business, facilities leasing business, installment financing business, and venture capital business. Article 2 (Definitions)
The definitions of terms used in this Act shall be as follows:
1. "Specialized credit financial business" means credit card business,
facilities leasing business, installment financing business,
and venture
capital business;
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
2
2. "Credit card business" means operation as a business of two or more
functions from among those falling under any of the following
items,
including that of item (b):
(a) Issuance and management of credit cards;
(b) Settlement of charges in respect of the use of credit cards; or
(c) Establishment and maintenance of merchant networks of credit
cards;
2-2. "Credit card company" means a person who has obtained a license,
or made a registration, for credit card business under Article
3 (1):
Provided, That where the person falling under Article 3 (3) 1 engages
in the business under Article 13 (1) 2 and 3, he shall
be deemed as
a credit card company insofar as the business is concerned;
3. "Credit card" means a card issued by a credit card company (including
persons who carry on the credit card business in a foreign
country),
which authorizes the holder to purchase goods or procure services
repeatedly by presenting it to a credit card merchant,
or to settle
the matters as prescribed by Ordinance of the Prime Minister;
4. "Credit card holder" means an individual who is issued a credit card
through a contract with the credit card company;
5. "Credit card merchant" means a person falling under any of the fol-
lowing items:
(a) A person who sells goods or provides services, etc. to credit card
holders, debit card holders, or pre-paid card holders (hereinafter
referred to as the "credit card holders, etc.") through the trans-
actions by means of a credit card, debit card, or pre-paid card
(hereinafter referred to as the "credit card, etc.") in compliance
with the contract with the credit card company; and
(b) A person
acting for the transactions by means of a credit card,
etc. (hereinafter referred to as the "agency for settlements") for
the persons
who sell goods or provide services, etc. to credit card
holders, etc. in compliance with the contract with the credit card
company;
6. "Debit card" means a card issued by the credit card company (exclud-
ing the card which enables to obtain a loan of fund) whereby
the
provision of goods and services and payment therefor can be done si-
multaneously by means of an electronic or magnetic fund
transfer
between the bank accounts of the debit card holders and the credit
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
3
card merchants;
7. "Debit card holder" means a person who is issued a debit card under
a contract with the credit card company;
8. "Pre-paid card" means a card which is issued by the credit card company
upon receipt of a set amount beforehand and on which the
set amount
is recorded (through electronic or magnetic means) and against the
presentation of which by a debit card holder the
credit card merchant
provides goods and services within the set amount;
9. "Facilities leasing business" means to carry on facilities leasing as a
business;
10. "Facilities leasing" means a financing method whereby goods spec-
ified by Presidential Decree (hereinafter referred to as "specified
goods") newly purchased or leased are leased to others for use for a
certain period against payment therefor receivable periodically
in
installments. The disposal of the goods at the end of that period shall
be decided by an agreement between the parties concerned;
11. "Deferred payment sale" means a financing method whereby newly
acquired specified goods are delivered to the other party for
use, against
payment of the price plus interest, etc., by periodic installments for
a period equal to or more than the period prescribed
by Presidential
Decree. The time of ownership transfer and other conditions shall be
decided by an agreement between the parties
concerned;
12. "Installment financing business" means operation as a business of
installment financing;
13. "Installment financing" means a method of financing whereby a sum
of money lent to a buyer for purchase of goods or services
is paid to
the seller, and the principal and interest thereon are collected from
the buyer in installments, by means of an agreement
with the buyer
and the seller;
14. "Venture capital business" means operation as a business of various
services referred to in each of subparagraphs of Article
41 (1);
15. "Specialized credit financial business companies" means persons ex-
clusively carrying on services referred to in subparagraphs
of Article
46 (1), who are licensed by the Financial Services Commission or
registered with the Financial Services Commission in
accordance with
the provisions of Article 3 (1) or (2) for a specialized credit financial
business;
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
4
16. "Concurrent loan service providers" means those other than special-
ized credit financial business companies, who are licensed
by the
Financial Services Commission or registered with the Financial
Services Commission in accordance with the proviso of Article
3 (3)
for a specialized credit financial business;
17. "Major shareholder" means a shareholder who falls under any of the
following subparagraphs:
(a) The largest shareholder: A person who holds the greatest number
of outstanding voting stocks of a specialized credit financial
business company when the number of stocks held by himself as
a principal and the number of stocks held by any person specially
related with the principal as further prescribed by Presidential
Decree (hereinafter referred to as a "specially related person")
on
the principal's account are summed up, no matter whose name the
account stands in: or
(b) Principal shareholder: A person who holds 10/100 or more of total
number of outstanding voting stocks of a specialized credit
financial
business company on his account, no matter whose name the account
stands in, or a shareholder who exercises de facto
influence over
important matters concerning management of the specialized credit
financial business company through appointment
and dismissal of
officers, etc., as further specified by Presidential Decree;
18. "Credit extension" means grant of loans, guarantee of payment,
purchase of securities to supply funds, or other direct or indirect
transactions of a specialized credit financial business company which
involve a certain amount of financial risk and which are
prescribed
by Presidential Decree: and
19. "Equity capital" means the total amount of paid-in capitals, capital
surplus and surplus earnings, as prescribed by Presidential
Decree.
CHAPTER LICENSE OR REGISTRATION
Article 3 (License or Registration of Business)
(1) A person who wishes to perform a credit card business shall obtain
a license from the Financial Services Commission: Provided,
That persons
falling under paragraph (3) 2 may carry on a credit card business by
registering with the Financial Services Commission.
5
(2) A person who is carrying out or wishes to carry out a facilities leasing
business, installment financing business or venture
capital business, and
wishes to avail himself of the provisions of this Act, shall register with
the Financial Services Commission
according to each category of business.
1. A financial institution established by the provisions of other Acts or
one designated by Presidential Decree from among financial
in-
stitutions with authorization or license from the Financial Services
Commission; or
2. Persons designated by Presidential Decree as appropriate to combine
a credit card business with others in terms of the nature
of business
performed by them.
(4) The Financial Services Commission may attach the conditions to the
license under paragraph (1).
Article 4 (Application for License or Registration)
A person who wishes to obtain license or make registration according
to the
provisions of Article 3 (1) or (2) shall submit to the Financial
Services Commission an application for license or registration
indicating
the following, accompanied by documents prescribed by Presidential
Decree: 1. Trade name and the location of main office;
2. Capital stock, and the names or titles of contributors and their
respective shares (excluding minority contributors prescribed
by
Ordinance of the Prime Minister);
3. Names of directors or officers;
4. Category of specialized credit financial business to be performed;
5. Purposes for which the person wishes to be a specialized credit fi-
nancial business company; and
6. Contents of business being carried out by the person who wishes to
be a concurrent loan service provider.
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
6
Article 5 (Capital Stock)
(1) A person who is eligible to be a specialized credit financial business
company by being licensed or registered for specialized
credit financial
business shall be restricted to a stock corporation, whose capital stock
exceeds the amount of money referred
to in any of the following sub-
paragraphs:
1. 20 billion won where he wishes to operate two or less kinds of spe-
cialized credit financial businesses; and
2. 40 billion won where he wishes to operate three or more kinds of spe-
cialized credit financial businesses.
(2) Concurrent loan service providers eligible to make a registration for
the credit card business pursuant to the provisions of
Article 3 (3) 2 shall
be restricted to stock corporations with capital stock and equity capital
exceeding 2 billion won.
Article 6 (Requirements for License or Registration)
(1) No person who falls under any of the following subparagraphs shall
obtain
license or make a registration under Article 3: 1. A corporation for which three years have not passed since its
registration was revoked or its license was cancelled under Article
10 or 57 (2) and (3), or a person who has been an investor of such
corporation, determined by Presidential Decree, at the time
of the
revocation or cancellation and for whom three years have not passed
thereafter;
2. A company for which the rehabilitation procedures under the Debtor
Rehabilitation and Bankruptcy Act is underway and an investor
determined by Presidential Decree among investors in such company;
3. A person who has not repaid his debt within the agreed time of a
business deal, such as financial transaction, and is prescribed
by
Presidential Decree;
4. A person who has been subject to a fine or heavier punishment in
violation of any finance-related Acts and subordinate statutes
as
determined by Presidential Decree in the most recent three years on
the basis of the date of application for license or registration;
5. A person who falls short of the standards for financial soundness as
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
7
determined by Presidential Decree (limited to the case of license);
and
6. A corporation in which any person falling under any of subparagraphs
1 through 5 is an investor and which is determined by Presidential
Decree.
(2) Any person who seeks a license for credit card business under the
main sentence of Article 3 (1) shall meet the following requirements:
1. He shall hold the capital stock under Article 5;
2. He shall be capable of protecting the transactors and be equipped
with specialists and physical facilities sufficient to deal
with the
intended business;
3. His business plans shall be proper and sound; and
4. His major shareholders (including shareholders specially related to
the largest shareholder; in cases where the largest shareholder
is a
corporation, shareholders, determined by Presidential Decree, who
excercise de facto influence over major affairs concerning
management
of such corporation shall be included) shall have sufficient investment
capability, sound financial status, and social
credits.
(3) Any person who intends to be a major shareholder of a specialized
credit financial business company (limited to a
company which runs the
credit card business after obtaining a license pursuant to the main sentence
of Article 3 (1)) by acquiring
its stocks, shall meet the requirements,
determined by Presidential Decree for sound management, among the
requirements for major
shareholder under paragraphs (2) 4 and (6), and
then obtain prior approval from the Financial Services Commission.
8
by Presidential Decree.
Article 7 (Administration of License or Registration)
(1) In cases of receipt of an application for license pursuant to the
provisions
of Article 4, the Financial Services Commission shall notify
the applicant within 3 months from the date of receipt as to whether
he
grants the license or not.
(2) Where the applicant for registration pursuant to the provisions of
Article 4 does not violate the provisions of Articles 5 and
6, the Financial
Services Commission shall forthwith administer registration and notify
the applicant.
(3) Where documents submitted under Article 4 are defective, the Fi-
nancial Services Commission may request such documents to be
sup-
plemented within 10 days from the date of receipt. In such cases, necessary
period for supplementation shall not be added
to the period referred to
in paragraph (1).
Articles 8 and 9 Deleted.
(2) The Financial Services Commission shall, upon receipt of a request
under paragraph (1) above, without delay revoke the relevant
registration.
The Financial Services Commission shall, where the cases falling under
any of the following subparagraphs occur, notify of such
fact on the official
gazette, and make it known to the public by computer communications,
etc. without delay:
1. Where granting the license or registration under Article 3 (1) or (2);
2. Where revoking the registration pursuant to Article 10 (2); and
3. Where ordering the business suspension or revoking the license or
registration pursuant to Article 57 (1) through (3).
[This
Article Newly Inserted by Act No. 6430, Mar. 28, 2001]
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
9
CHAPTER SPECIALIZED CREDIT
FINANCIAL BUSINESS
SECTION 1 Credit Card Business
Article 12 (Scope of Application)
This Section shall apply to credit card business conducted by credit card
companies and their incidental business in accordance
with the provi-
sions of Article 13.
Article 13 (Incidental Business of Credit Card Companies)
(1) A credit card company may conduct incidental businesses referred
to in the following subparagraphs according to the standards determined
by Presidential Decree:
1. Financing to the credit card holders;
2. Issue of debit cards and settlement of payments; and
3. Issue and sale of pre-paid cards and settlement of payments.
(2) The credit card company may allow a third party to perform the
busi-
ness referred to in paragraph (1) under the conditions as determined
by Presidential Decree.
(3) Deleted.
Article 14 (Issuance of Credit Cards or Debit Cards)
(1) A credit card company may issue a credit card or debit card only upon
application: Provided, That this shall not apply to the case where the
credit card holders or debit card holders have consented
to renew or reissue
the issued credit card or debit card under the conditions as prescribed
by Presidential Decree.
1. It shall be an application made by the principal; and
2. It shall be within the individual credit limit pursuant to the standards
for computing credit limits set by the credit card company.
In this
case, the said standards shall contain matters falling under each of
the following items:
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
10
(a) Matters concerning the income and assets;
(b) Matters concerning the guarantee for payments to others;
(c) Matters concerning the capability to settle the amounts of using
credit cards;
(d) Matters concerning the amount of credit offering which has been
received by an applicant from another financial institution
at the
time of issuing a credit card; and
(e) Other matters as prescribed by Presidential Decree, which are
important matters for computing the credit limits.
(3) A credit
card company may issue credit cards to persons who satisfy
the requirements falling under each of the following subparagraphs:
1. Persons who satisfy the requirements falling under each of paragraph
(2);
2. Persons who are above the ages as prescribed by Presidential Decree
on the date of applying for the issuance of credit cards;
and
3. Persons who satisfy the requirements as prescribed by Presidential
Decree, which are other important matters for issuing the credit
cards.
(4) A credit card company shall not recruit any credit card members
by the methods falling under each of the following subparagraphs:
1. Recruitments through a multi-level sale under the provisions of sub-
paragraph 5 of Article 2 of the Door-to-Door Sales, etc.
Act;
2. Recruitments through the Internet, which are prescribed by the Pres-
idential Decree; and
3. Other recruitments as prescribed by Presidential Decree.
(5) Where any credit card company issues credit cards or debit cards,
it shall deliver in writing to the applicants the matters necessary for
protecting the rights and benefits of credit card members
or debit card
members, which are prescribed by Presidential Decree, along with the
terms and conditions for the relevant credit
cards or debit cards: Provided,
That where there exists a consent of the applicant, it may be substituted
with a delivery by the
facsimile transmission or electronic documents
(referring to the electronic documents under the provisions of sub-
paragraph 1
of Article 2 of the Framework Act on Electronic Commerce.
11
be those falling under any of the following subparagraphs:
1. Officers or employees of the relevant credit card company;
2. Persons making any mediation for concluding a contract for issuing
credit cards for the credit card company (hereinafter referred
to as
the "recruiters"); and
3. Persons who have concluded with a credit card company a contract
for business cooperation to recruit credit card members (excluding
those who recruit credit card members as its principal business), and
their officers and employees.
(2) Matters to be observed by the recruiters in recruiting credit card
members and those necessary for the recruiting method shall
be prescribed
by Presidential Decree.
[This Article Newly Inserted by Act No. 7065, Jan. 20, 2004]
Article 14-3 (Registration of Recruiters)
(1) Any person who intends to become a recruiter shall make a registration
to the Financial Services Commission.
1. An incompetent or quasi-incompetent;
2. A person who has been declared bankrupt by a court and is not yet
rehabilitated;
3. A person for whom two years have not elapsed from the day on which
his sentence execution has been terminated (including the case
where
it is deemed to have been terminated) or has been exempted, after
he was sentenced to a fine or a heavier punishment under
this Act;
4. A person for whom two years have not elapsed from the day on which
his registration of recruiter has been revoked under this Act;
5. A minor who has failed to have the ability identical with the adult
pertaining to the business, and whose legal representative
falls under
any of subparagraphs 1 through 4; and
6. A corporation or an incorporate body or foundation which is not a
corporation, in which there exists a person falling under any
of sub-
paragraphs 1 through 4 among its officers or managers.
(3) The Financial Services Commission shall entrust the head of
spe-
cialized credit financial business association under the provisions of Article
62 (1) with the business of recruiters' registration
under the provisions
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
12
of paragraph (1).
(1) When any recruiter falls under any of the following subparagraphs,
the Financial Services Commission may order a suspension
of his business
with fixing the period of less than six months or revoke his registration:
1. When he has violated any orders issued or dispositions made under
this Act; and
2. When he has violated any provisions of this Act pertaining to the
recruitment.
(2) When any recruiter falls under any of the following subparagraphs,
the Financial Services Commission shall revoke his registration:
1. When he comes to fall under any subparagraph of Article 14-3 (2);
2. When it has been found that he was a person falling under any
subparagraph of Article 14-3 (2) at the time of registration; and
3. When he has made a registration under the provisions of Article 14-3
(1) by falsity or other illegal means.
(3) When the Financial Services Commission intends to order a sus-
pension of business or revoke a registration under the provisions
of
paragraph (1) or (2), it shall provide the recruiter with an opportunity
to present his opinions of elucidation.
[This Article Newly Inserted by Act No. 7065, Jan. 20, 2004]
Article 15 (Prohibition of Transfer, etc. of Credit Cards)
A credit
card may not be transferred, assigned, or pledged.
Article 16 (Liability to Credit Card Holders, etc.)
(1) Where a credit card
holder or a debit card holder reports to a credit
card company on loss or theft of the card, from that time, the credit card
company
shall be liable to the credit card holder or the debit card holder
for use of the credit card or the debit card.
(2) A credit card company shall assume the responsibility for using a
credit card which has occurred prior to the notification under
the provisions
of paragraph (1), within the limit of a period as prescribed by Presidential
Decree.
13
(3) Notwithstanding the provisions of paragraph (2), when a credit card
company has concluded a contract to the effect that it may
hold a credit
card member responsible for the whole or part of loss or theft of the credit
card, it may have the relevant credit
card member assume the responsi-
bility pursuant to the contents of such a contract: Provided, That the
same shall not apply to
the case where the credit card member has no
intention nor negligence, such as a divulgence of secret number due to
an irresistible
violence or a danger to the life or body of himself or rela-
tives.
(5) A credit card company shall be liable to a credit card holder, etc.
for the use of false or forged credit cards, etc.
(6) Notwithstanding the provisions of paragraph (5), where a credit card
company enters into an agreement with a holder of credit
card, etc. to
the effect that if the said company provides evidences of the existence
of an intent or a serious negligence on the
part of such credit card holder,
etc. in respect of forgery or alteration of credit card, etc., the whole or
part of such liabilities
may be attributed to the holder of credit card,
etc., the said company may make the said holder to be liable for the de-
tails
of such contract.
(7) Such an agreement referred to in paragraphs (3) and (6) shall be
effective only where it is made in writing, and a serious negligence
on
the part of the credit card holder, etc. shall be restricted to what are
specifically indicated in the agreement.
(8) A credit card company shall take measures including purchase of
insurances or subscription to mutual associations or maintenance
of
reserve funds, etc. so as to bear liabilities under the provisions of para-
graphs (1), (2), (5) and Article 17.
14
objection in writing against the amount of using his credit card, be unable
to receive the relevant amount from such credit card
holder not later than
the time when any investigation thereon is completed.
Article 16-2 (Recruiting Credit Card Merchants)
A credit card company shall, where recruiting credit card merchants,
visit the business places of persons who intend to become such
merchants,
and confirm whether or not such business is undertaken.
[This Article Newly Inserted by Act No. 6430, Mar. 28, 2001]
Article 17 (Liability against Credit Card Merchants)
(1) A credit card company may not transfer to credit card merchants
losses
out of transactions falling within each of the following subpara-
graphs, except where a credit card company enters into an agreement
with them to the effect that the latter is responsible for losses, in whole
or in part, where the former provides evidences of
the existence of an
intent or a serious negligence on the part of the latter in respect of such
transactions: 1. Transactions by lost or stolen credit cards; or
2. Transactions by false or forged credit cards.
(2) The provisions of Article 16 (7) shall apply mutatis mutandis to an
agreement
or a serious negligence on the part of credit card merchants
under the proviso to paragraph (1).
Article 18 (Duty to Notify Transaction Conditions)
The credit card company shall notify the credit card holders, etc. and
credit
card merchants of the following matters, by methods as prescribed
by Ordinance of the Prime Minister:
1. The interest rate, discount rate, and overdue interest rate and other
rates set by the credit card company;
2. Settlement method of the amount of the credit card and the debit
card used;
3. Responsibility to credit card holders, etc. referred to in Article 16;
4. Responsibility to credit card merchants and matters to be observed
by credit card merchants as referred to in Articles 17 and
19; and
5. Other matters prescribed by Ordinance of the Prime Minister.
Article 19 (Matters to be Observed by Credit Card Merchants)
(1)
The credit card merchants shall not refuse to sell goods or to provide
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
15
services, etc. or treat card holders unfavorably, because of transaction
by credit card.
(3) The credit card merchant may not pass the merchant fees to the credit
card holder. 1. Practices of pretending a transaction by credit cards without actual
sales of goods or provision of services, etc.;
2. Practices of making a transaction by using credit cards in excess of
the actual amount of sales;
3. Practices of making a transaction by using credit cards in the name
of another credit card merchant;
4. Practices of lending a credit card merchant's name to another mer-
chant; or
5. Practices of acting for a transaction by using credit cards.
(5) An agency for settlements shall observe the matters as prescribed
by Presidential Decree, such as a provision, to the credit card company,
of credit information on the person who sells goods or
provides services,
etc. and the details of acting for credit card transactions.
Article 20 (Prohibition of Transfer of Sales Claims)
(1) Sales claims generated from transactions shall not be transferred
to any
entity other than a credit card company, and a person other than
a credit card company shall not purchase these claims.
(2) A person who is not a credit card merchant shall not make transac-
tions by credit cards, etc. in the name of a credit card
merchant.
Article 21 (Obligation of Terminating Credit Card Merchant Agreement)
A credit card company shall terminate without any delay the
credit card
merchant agreement when the credit card merchant falls under the causes
as prescribed by Presidential Decree, such
as being sentenced to
punishments etc. in contravention of the provisions of Article 19 or 20
SPECIALIZED CREDIT FINANCIAL BUSINESS
ACT
16
(1), or receiving a written notice from the related administrative agency
of the fact of violating the said provisions etc.
[This Article Wholly Amended by Act No. 6430, Mar. 28, 2001]
Article 22 Deleted.
(1) The scope of credit card merchants which may be solicited by a con-
current loan service provider with a registration of credit
card business
pursuant to the provisions of Article 3 (1) (proviso) shall be prescribed
by Presidential Decree.
(3) Where orders are made for joint uses of credit card merchants pursuant
to the provisions of paragraph (2), the Financial Services
Commission
shall ensure a fair competition between credit card companies by allowing
member fees charged to credit card merchants
to be determined freely
by each credit card company, or by allowing payments made between credit
card companies to be determined
at a reasonable level, etc. 1. Maximum limit of cash services by credit cards;
2. Maximum amount per use or per day of debit cards; or
3. Gross maximum number of pre-paid cards and maximum limit of the
face amount thereof.
Article 25 (Deposit)
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
17
(1) The Financial Services Commission may order a credit card company,
who issued pre-paid cards, to deposit an amount prescribed
by Presidential
Decree, not exceeding 10/100 of the total pre-paid card amount issued.
(3) When the entity fulfills the deposit order, in accordance with para-
graph (1), it shall report without delay to the Financial
Services Com-
mission.
(5) The types of goods to be deposited, timing thereof, and other conditions
needed on the deposit referred to in paragraph (1),
shall be prescribed
by Ordinance of the Prime Minister.
Article 26 (Distribution of Deposited Articles)
(1) When a credit card company, which made a deposit as referred to
in Article 25, is not able to refund the pre-paid card payment
to the credit
card merchant who supplied goods and services and the unredeemed
prepaid card amount, the Financial Services Commission
shall designate
an executor (hereinafter referred to as a "rights executor") who shall
withdraw the credit card company's deposit
and distribute to the credit
card merchants and unredeemed pre-paid card holders (hereinafter
referred to as "unredeemed creditors")
and give public notice under the
conditions as prescribed by Ordinance of the Prime Minister.
(3) The unredeemed creditors may receive distribution by reporting the
unredeemed amount to the rights executor.
(4) The rights executor shall give public announcement on the period,
method, and location of the report under paragraph (3) in
compliance
with Ordinance of the Prime Minister.
(5) The rights executor may, in priority to other claims, withdraw the
deposit with the approval of the Financial Services Commission,
within
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
18
the scope of the total amount reported in accordance with paragraph (3)
above and the expenditures therefor.
(6) The deposit withdrawn by the rights executor shall be distributed in
compliance with the methods and procedures set by the Financial
Services
Commission to the unredeemed creditors.
(7) The credit card company which made a deposit in accordance with
Article 25 shall not be able to get the deposit returned prior
to the com-
pletion of the distribution procedures referred to in paragraphs (1)
through (6).
Article 27 (Prohibition on Usage of Similar Names)
An entity other than a credit card company may not use the word "credit
card"
or a similar designation in its trade name.
SECTION 2 Facilities Leasing Business
Article 28 (Scope of Application)
This Section shall apply to facilities leasing businesses and deferred pay-
ment sales services provided by a person registered
for carrying out a
facilities leasing business (hereinafter referred to as the "lessor") pursuant
to the provisions of Article
3 (2).
In case where a person who has concluded a leasing or deferred pay-
ment sale contract with a lessor (hereinafter referred to as
a "lessee")
is qualified to be financed with funds being provided for the purpose of
support for investment in facilities, the
lessor may borrow from the funds
concerned on behalf of the lessee, acquire specified objects and execute
leasing or deferred payment
sale (hereinafter referred to as the "leasing,
etc.").
Article 30 (Special Cases to Foreign Trade Act)
(1) Deleted.
(2) In case where specified objects leased by a lessor are facilities or
equipment to be used for the purpose of earning foreign
currency, the
"foreign currency corresponding to the amount of import" under Article
16 of the Foreign Trade Act shall be earned
by the lessee.
19
(1) Notwithstanding the provisions of Article 14 (4) of the Medical Ap-
pliances Act, a lessor may import medical appliances that
are specified
objects imported for the purpose of leasing, etc., if they are tested by
using the facilities and equipment of the
person designated by the Min-
ister of Health and Welfare.
(2) Notwithstanding the provisions of Article 16 of the Medical Appli-
ances Act, a lessor may transfer the medical appliances that
are specified
objects imported under paragraph (1).
Article 32 (Special Cases to Administrative Dispositions)
In case where a lessee satisfies the requirements for permission, approval,
recommendations and other administrative dispositions that should be met
by a lessor under Acts and subordinate statutes in addition
to the provisions
of Articles 30 and 31, the lessor shall be deemed to satisfy such re-
quirements.
Article 33 (Special Cases to Registry and Registration)
(1) In case where a lessor executes leasing, etc. of construction mach-
inery or vehicles, the registration may be made in the name of the lessee
(in the case of deferred payment sale, the person who
acquires the own-
ership of specified objects shall be excluded; hereinafter the same shall
apply), notwithstanding the provisions
of the Construction Machinery
Management Act or the Automobile Management Act.
(2) In case where a lessor wishes to register the ships or aircraft under
his ownership for the purpose of leasing, etc., if the
lessee satisfies the
registration requirements under Article 2 of the Ship Act or Article 6
of the Aviation Act, the lessor shall
be regarded as satisfying the re-
quirements for such registration during the period of use thereof.
Article 34 (Special Cases to Performance of Duties)
(1) In case where a lessee uses specified objects through leasing, various
duties imposed in accordance with the provisions of other Acts and sub-
ordinate statutes on the owner of the specified objects
such as the
maintenance, management and inspection of the objects shall be performed
by the lessee as the party concerned.
(2) When duties under paragraph (1) are imposed on the lessor, the
lessor shall inform the lessee of the imposition without delay.
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
20
Article 35 (Liability for Indemnity for Damage Caused by Automobiles,
etc.)
In case where a lessee who operates construction machinery or automo-
biles acquired by leasing, etc. them under this Act, causes
damages to
another person by an illegal act, the lessor shall not be regarded as the
person who operates automobile for his own
sake when Article 3 of the
Guarantee of Automobile Accident Compensation Act applies.
Article 36 (Identification of Leasing, etc.)
(1) A lessor shall attach to specified objects the tags indicating that
they are leased (except where the ownership of the specified
objects is
transferred by deferred payment sale) under the conditions as prescribed
by Ordinance of the Prime Minister.
(2) Tags under paragraph (1) shall not be damaged, removed, modified
or relocated by other persons than the lessor who executed
leasing, etc.
of such specified objects.
Article 37 (Support for Small or Medium Enterprises)
(1) The Financial Services Commission, subject to Presidential Decree,
may
order the lessor to spend a certain ratio or higher of the yearly
execution amount of leasing, etc. for small or medium enterprises
(referring
to small or medium enterprises pursuant to the provisions of Article 2
of the Framework Act on Small and Medium Enterprises).
Article 38 (Scope of Application)
This Section shall apply to installment financing businesses performed
by a person registered therefor (hereinafter referred to
as the "install-
ment financing company") pursuant to the provisions of Article 3 (2).
Article 39 (Obligatory Notice of Terms of Transaction)
Any installment financing company shall notify in writing the buyer of
goods
and services who has entered an installment financing contract
with the relevant financing company (hereinafter referred to as the
"customer of installment financing services") of the following matters:
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
21
Provided, That in case where an agreement is obtained from the customer
of installment financing services, such notification may
be served by means
of facsimile or electronic document (referring to the electronic document
provided for in the provisions of
subparagraph 1 of Article 2 of the
Framework Act on Electronic Commerce): 1. Original interest rates or overdue interest rates, or other various rates
determined by the installment financing company. In
this case, the
various rates shall be calculated by including the amount that is paid
by the customer of installment financing
services to the installment
financing company notwithstanding its terms such as service fees,
etc.;
2. Ways to redeem the loan extended by the installment financing com-
pany (hereinafter referred to as the "financed capital"); and
3. Other matters prescribed by Ordinance of the Prime Minister.
Article 40 (Code of Practice of Installment Financing Company)
(1)
No installment financing company shall be allowed to make a loan
to customers of installment goods and services moneys exceeding
the
amount of purchase price of goods and services to be financed.
(2) The installment financing company shall make direct payment of fi-
nanced capital to the seller of the goods and services to
be financed.
SECTION 4 Venture Capital Business
Article 41 (Scope of Application)
(1) This Section shall apply to services falling under each of the follow-
ing subparagraphs, which are provided by a person registered
for car-
rying out a venture capital business (hereinafter referred to as a "ven-
ture capitalist") pursuant to the provisions
of Article 3 (2):
1. Investment in venture businessmen;
2. Provision of loans to venture businessmen;
3. Provision of managerial and technical assistance to venture busi-
nessmen;
4. Establishment of venture business investment association; or
5. Administration or operation of funds of venture business investment
association.
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
22
(2) The term "venture businessmen" in paragraph (1) means new tech-
nology venture businessmen under the provisions of subparagraph
1 of
Article 2 of the Korea Technology Credit Guarantee Fund Act. 1. Associations, established by venture capitalists together with those
who are not venture capitalists; or
2. Associations whose funds are administered or operated by venture
capitalists.
Article 42 (Borrowing of Money)
A venture capitalist may borrow money for investment in or loans to venture
businessmen from the Government or the funds prescribed
by Presi-
dential Decree, notwithstanding the provisions of Article 47 (1).
Article 43 (Tax Support)
Subject to the provisions of the Restriction of Special Taxation Act, the
Government may provide tax support to venture capitalists
or their in-
vestors, venture business investment associations and their members for
the development of venture capital business.
Article 44 (Venture Business Investment Associations)
(1) The bylaws of a venture business investment association (hereafter
referred
to as the "association" in this Article) shall include matters falling
under each of the following subparagraphs:
1. The fact that venture capitalists are administering and operating
funds of the association. In such cases, venture capitalists
may entrust
the operation of funds of the association, in whole or in part, to those
who are not venture capitalists, by making
agreements therefor with
the association; or
2. The fact that funds of the association shall be invested into venture
businessmen.
(2) The association may pay to the venture capitalist a fee for its services
not exceeding 20/100 of investment profits generated
by the ad-
ministration and operation of funds as set out in its bylaws.
(3) Where there occurs a loss from the administration
and operation of
its funds, the association may determine the loss distribution rate favor-
ably to those who are not venture capitalists,
as set out in its bylaws.
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
23
Article 45 (Matters to be Observed by Venture Capitalists)
Where venture capitalists perform loan services pursuant to the provisions
of Article 41 (1) 2, they shall not exceed the limit of loans as determined
by Ordinance of the Prime Minister.
FINANCIAL BUSINESS
COMPANY
Article 46 (Business)
(1) Business performed by a specialized credit financial business company
shall be limited as follows:
1. Licensed or registered specialized credit financial business under the
provisions of Article 3 (including the deferred payment
sale business
in case where a registration of facility leasing business has been
made);
2. Business of takeover, management or collection of trade credits (in-
cluding the bills) acquired by enterprises in exchange for
provision
of goods and services;
3. Loan business (including the discount business of bills; hereafter in
this Article, the same shall apply);
4. Business incidental to the credit card company under the provisions
of Article 13 (1) 2 and 3 (limited to the case of obtaining
a license
for credit card business);
5. Other businesses relating to subparagraphs 1 through 4, which are
prescribed by Presidential Decree;
6. Credit investigation and incidental business relating to businesses
of subparagraphs 1 through 4; and
7. Businesses utilizing human resources, assets or facilities owned, which
are prescribed by the Financial Services Commission.
(2) Loan business under the provisions of paragraph (1) 3 shall be carried
out in accordance with the standard as prescribed by
Presidential Decree.
[This Article Wholly Amended by Act No. 7065, Jan. 20, 2004]
Article 47 (Ways of Raising Money)
(1) Ways by which a specialized credit financial business company raises
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
24
money shall be restricted to those prescribed in each of the following
subparagraphs: 1. Borrowing from financial institutions established by the provisions
of other Acts or authorized or licensed by the Financial Services
Commission;
2. Issuance of bonds or bills;
3. Sales of securities held;
4. Transfer of loaned credit held; or
5. Other ways prescribed by Presidential Decree.
(2) The issuance of bonds or bills pursuant to paragraph (1) 2 and the
sale of
securities held pursuant to subparagraph 3 of the same para-
graph may be restricted in the method of issuance or sale and target
persons thereof under the conditions as prescribed by Presidential Decree.
Article 48 (Special Cases of Issuance of Bonds)
(1) A specialized credit financial business company may issue bon(1) A
specialized credit financial business company may issue bonds
up to the
amount ten times as much as its equity capital, notwithstanding the
provisions of Article 470 of the Commercial Act.
(2) A specialized credit financial business company may issue bonds
temporarily exceeding the maximum limit in order to repay the
bonds
issued according to the provisions of paragraph (1). In such cases, the
repayment shall be made within a month after the
bonds are issued.
(3) Where bonds issued by a specialized credit financial business com-
pany in accordance with the provisions
of paragraphs (1) and (2) are
subject to the application of the provisions of the Securities and Exchange
Act, they shall be treated
as bonds under the provisions of Article 2 (1)
3 of the said Act.
1. Main or branch offices, or other offices;
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
25
2. Housing or dormitories for officers and employees, and employees'
training center; or
3. Other real estates prescribed by Ordinance of the Prime Minister as
needed for the business.
(2) The Financial Services Commission may restrict the total value of
real estate used for business which a specialized credit financial
business
company is allowed to acquire pursuant to paragraph (1) to a certain ratio
exceeding 10/100 of its equity capital, where
it is deemed necessary to
restrain excessive acquisition of real estate.
(3) The total value of real estate used for business pursuant to the pro-
visions of paragraph (2) shall be computed upon the basis
of book value.
(4) A specialized credit financial business company may be allowed to
acquire real estate falling under any of the
following in addition to that
used for business:
1. The real estate which is the object leased or subject to deferred pay-
ment sales; or
2. The real estate acquired by exercise of secured rights.
(5) Deleted.
Article 50 (Restrictions on Transactions, etc. with Major Shareholder)
(1) The total amount of credit extension which a specialized
credit finan-
cial business company is allowed to grant to its major shareholder
(including any specially related person to major
shareholder who is pre-
scribed by Presidential Decree; hereafter the same shall apply in this
Article) shall not exceed 100/100
of the equity capital of such specialized
credit financial business company, while the major shareholder shall not
receive credit
extension from such company above the extension limit.
(2) Where any specialized credit financial business company intends to
make
any credit extension (including transactions prescribed by Pres-
idential Decree; hereafter the same shall apply in this Article)
in excess
of the amount which is determined by Presidential Decree within the
extension limit of paragraph (1), or to acquire stocks
issued by its major
shareholder in excess of the amount which is determined by Presidential
Decree, such company shall refer the
case to its board of directors in
advance for resolution. In this case, the board of directors shall adopt
such resolution by unanimous
consent of all the directors enrolled.
(3) Where any specialized credit financial business company grants credit
SPECIALIZED CREDIT
FINANCIAL BUSINESS ACT
26
extension to its major shareholder in excess of the amount determined
by Presidential Decree or acquires stocks issued by its major
shareholder
in excess of the amount determined by Presidential Decree pursuant to
paragraph (2), it shall report such fact to the
Financial Services Com-
mission without delay, and also put such fact on its internet homepage,
etc. for public notification.
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
27
1. Act of holding the voting stocks under mutual crossing or providing
credit for the purpose of avoiding the extension limit under
Article
50;
2. Act of acquiring stocks under mutual crossing for the purpose of
avoiding the limit of acquiring its own stocks under Article
341 of
the Commercial Act or Article 189-2 of the Securities and Exchange
Act; or
3. Other acts as stipulated by Presidential Decree, which are likely to
harm greatly the interests of transactors.
(2) The stocks acquired in contravention of paragraph (1) shall not have
voting rights.
(3) The specialized credit financial business companies shall not per-
form the acts of granting credit for enabling to purchase
the stocks of
such specialized credit financial business companies, or of intermediating
funds for the purpose of avoiding the
extension limit under Article 50.
(4) The Financial Services Commission may take necessary measures,
such as ordering a specialized
credit financial business company, which
has acquired stocks or granted credit in contravention of paragraph (1)
or (3), to dispose
of relevant stocks or to recover the credit amount.
(5) The major shareholder of a specialized credit financial business
company (including any specially related person with the major
share-
holder: hereafter the same shall apply in this paragraph) shall not involve
in any of the following acts for his own benefits
against the specialized
credit financial business company's interests:
1. Demanding the specialized credit financial business company to furnish
him with undisclosed data or information with an intention
to exercise
undue influence: Provided, That this shall not apply to the cases of
Article 50-7 (3);
2. Exercising undue influence over personnel management or business
administration of the specialized credit financial business company
in
alliance with other shareholders under condition to provide any economic
benefit in exchange or such; or
3. Conducting other act prescribed by Presidential Decree as similar to
those under subparagraphs 1 and 2.
[This Article Newly Inserted by Act No. 6430, Mar. 28, 2001]
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
28
Article 50-3 (Qualifications of Officers)
Any person falling under any of the following subparagraphs shall not
become an officer of a specialized credit financial business
company
(referring to the director, auditor or a person actually in a position equiv-
alent to them who is prescribed by Presidential
Decree; hereafter in this
Article, the same shall apply). If any person comes to fall under any of
the following subparagraphs
after he has become the officer, he shall lose
his post: 1. A minor, quasi-incompetent or incompetent person;
2. A person who has been declared bankrupt by a court and is not yet
reinstated;
3. A person who has been sentenced to imprisonment without prison
labor or to a heavier punishment, and 5 years have not passed since
the execution (including the case where its execution is deemed to
be over) or the exemption from execution;
4. A person who has been sentenced to a fine or a heavier punishment
in contravention of this Act or the finance-related Acts and
subordinate
statutes as stipulated by Presidential Decree (hereafter in this Article,
referred to as "finance-related Acts and
subordinate statutes"), and
5 years have not passed since the execution (including the case where
its execution is deemed to be
over) or the exemption from execution;
5. A person who is under a grace period after having been sentenced
to the execution suspension of imprisonment without prison labor
or
to a heavier punishment;
6. A person for whom 5 years have not passed after a dismissal or a
disciplined discharge pursuant to this Act or the finance-related
Acts
and subordinate statutes;
7. An officer or employee of a corporation or company whose license,
authorization or registration of business has been revoked pursuant
to this Act, or the finance-related Acts and subordinate statutes
(limited to persons who are directly responsible or equivalently
re-
sponsible for the occurrence of causes for such revocations, and who
are stipulated in Presidential Decree), and 5 years have
not passed
since the date on which a revocation was made against the relevant
corporation or company;
8. Persons who hold office or have held office of the officers or employees
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
29
of the financial institution which has been subjected to a timely cor-
rective measure by the Financial Services Commission (limited
to
persons who are directly responsible for the causes of being subjected
to such timely corrective measures etc. or equivalent
thereto, and
who are stipulated in Presidential Decree) under the provisions of
Article 10 (1) of the Act on the Structural Improvement
of the Financial
Industry (referring to the financial institution under the provisions
of subparagraph 1 of Article 2 of the same
Act; hereafter in this
subparagraph, the same shall apply), or to an administrative dis-
position (hereinafter referred to as the
"timely corrective measure
etc."), such as a decision on a contract transfer etc. under the prosions
of Article 14 (2) of the same
Act, and for whom two years have not
elapsed from the date of being subjected to such timely corrective
measures etc.; and
9. Retired officers or employees who have been notified that they would
have been subjected to a disposition of dismissal or disciplinary
dis-
charge if they held office or had held office under this Act or the
finance-related Acts and subordinate statutes, and five
years have not
passed since the date of receiving such notice (where they have
exceeded five years from the date of receiving the
notice, or seven
years from the date of retirement or resignation, it shall be seven years
from the date of retirement or resignation).
[This Article Newly Inserted by Act No. 6430, Mar. 28, 2001]
Article 50-4 (Selection of Outside Director)
(1) A specialized credit financial business company (limited to a specialized
credit financial business company satisfying the criteria
as stipulated by
Presidential Decree taking into consideration the property, business, etc.
being conducted; hereafter in this
Article, the same shall apply), shall
assign 3 or more directors, other than those who fall under any subpara-
graphs of paragraph
(4), who are not engaged in the regular business
of the board of directors (hereinafter referred to as "outside directors").
In
this case, the outside directors shall be not less than one half of the
total number of directors.
30
this case, the committee for recommending the candidates for outside
directors shall consist of such outside directors as are to
be not less than
one half of the total members.
1. A person who is a minor, incompetent or quasi-incompetent;
2. A person who has been declared bankrupt and is not yet reinstated;
3. A person who has been sentenced to imprisonment without prison labor
or a heavier punishment and two years have yet passed since
the
expiration of the term of sentence, or since the decision to exempt
such sentence has been made;
4. A person for whom two years have yet passed since he was fired or
dismissed from office under this Act;
5. The largest shareholder;
6. Specially related person with the largest shareholder;
7. A principal shareholder and his/her spouse or a direct lineal ascendant
or descendant;
8. A person who is or has been, for last two years, a full-time officer
or employee of the specialized credit financial business
company or its
affiliate (referring to the affiliate under the Monopoly Regulation and
Fair Trade Act; hereinafter the same shall
apply);
9. A person who is the spouse or a direct lineal ascendant or descendant
of a full-time officer of the specialized credit financial
business company;
10. A person who is or has been, for last two years, a full-time officer
or employee of a corporation that is in an important business
relationship prescribed by Presidential Decree, a competitive rela-
tionship, or a cooperative relationship with the specialized
credit
financial business company;
11. A person who is a full-time officer or employee of a company for which
an officer or employee of the specialized credit financial
business
company works as a non-standing director; or
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
31
12. A person who has difficulty in faithfully performing his duties as an
outside director or a person who may exercise influence
over the
management of the specialized credit financial business company, as
prescribed by Presidential Decree.
(5) A specialized credit financial business company shall, where the
composition of the board of directors does not conform to the
requirements
under paragraph (1) due to such cause as a resignation or death, etc.
of outside directors, make the composition of
the board of directors conform
to the requirements under paragraph (1) at the general meeting of
shareholders convened for the
first time after the date on which such causes
occurred.
(6) With respect to a specialized credit financial business company which
is to assign the outside directors as it comes to fall
for the first time under
the requirements of paragraph (1), the provisions of the latter part of
paragraph (2) shall not be applicable.
[This Article Newly Inserted by Act No. 6430, Mar. 28, 2001]
Article 50-5 (Audit Committee)
(1) A specialized credit financial business company (limited to a spe-
cialized credit financial business company satisfying the
criteria as stip-
ulated by Presidential Decree taking into consideration the property,
business being conducted, etc.; hereafter
in this Article, the same shall
apply), shall establish the audit committee (referring to the audit com-
mittee under Article 415-2
of the Commercial Act; hereinafter the same
shall apply).
1. At least 2/3 of its total members shall be outside directors; and
2. At least one of its members shall be an accounting or finance specialist
prescribed by Presidential Decree.
(3) Any person who falls under any of the provisions of Article 50-4 (4)
1 through 4 and 7through 9 shall not become a non-outside-director
member of the audit committee, and a non-outside-director member shall
loss his position when he falls under any of such provisions
after becoming
the non-outside-director member: Provided, That any person who is an
incumbent standing auditor or an incumbent
non-outside-director member
of the audit committee may become a non-outside-director member of the
audit committee even if he falls
under the provision of Article 50-4 (4)
8.
32
(4) The audit committee shall, where its composition does not conform
to the requirements under paragraph (2) due to such cause
as a resig-
nation or death, etc. of the members of audit committee, make its com-
position conform to the requirements under paragraph
(2) at the stock-
holders' general meeting convened for the first time after the date on
which such causes occurred.
(5) The provisions of Article 415-2 (2) (proviso) of the Commercial Act
shall not be applicable to the composition of the audit
committee under
paragraph (1).
(1) A specialized credit financial business company shall set forth the
basic procedures and criteria to be observed by its officers
and employees
in performing their duties in order to comply with the Acts and subor-
dinate statutes, to make its property operation
sound, and to protect
customers (hereinafter referred to as the "criteria for internal control").
(2) A specialized credit financial
business company shall assign one or
more persons who are to check whether or not the criteria for internal
control are observed,
and to investigate the violations of said criteria,
and to report thereon to the auditor or the audit committee (hereinafter
referred
to as the "compliance officer").
(3) A specialized credit financial business company shall, where it in-
tends to appoint or dismiss the compliance officer, go through
a resolu-
tion of the board of directors.
(4) The compliance officer shall satisfy the following requirements:
1. He shall have the career falling under any of the following items:
(a) Any person who has the career of serving for not less than
10
years in the Bank of Korea, or the institutions subject to inspection
under Article 38 of the Act on the Establishment, etc.
of Financial
Services Commission (including foreign financial institutions equiv-
alent to them);
(b) Any person who holds a master's degree, or higher, in the finance-
related field and has the career of serving for not less
than 5 years
at posts of, or higher than, a researcher or full-time lecturer in
a research institution or a college or university;
(c) Any lawyer or certified public accountant, who has been engaging
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
33
in the affairs related to such qualifications for not less than 5 years;
and
(d) Any person who has the career of serving for not less than 5 years
in the Ministry of Strategy and Finance, the Financial Services
Commission, the Securities Futures Committee, or the Financial
Supervisory Service, and for whom 5 years have passed since he
retired or resigned from the relevant institution;
2. He shall not fall under any subparagraph of Article 50-3; and
3. He shall not have any facts of receiving such measures as falling under
the demand for caution or warning from the Financial Services
Com-
mission or the Chief Commissioner of Financial Services Commission
in violation of the finance-related Acts and subordinate
statutes for
recent 5 years.
(5) Matters necessary for the criteria for internal control under para-
graph (1) and the compliance officer under paragraph (2)
shall be
prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 6430, Mar. 28, 2001]
Article 50-7 (Exercise of Minority Shareholders' Rights)
(1) Any person
who has held not less than 5/100,000 of the total issued
stocks of the specialized credit financial business company (limited to
the specialized credit financial business company falling under the criteria
as stipulated by Presidential Decree taking into consideration
the property
and business being conducted, etc.; hereafter in this Article, the same
shall apply) for not less than 6 consecutive
months under the conditions
as prescribed by Presidential Decree, may exercise the shareholder's right
as stipulated under Article
403 of the Commercial Act (including the case
where Article 403 of the Commercial Act applies mutatis mutandis in
Articles 324,
415, 424-2, 467-2 and 542 of the same Act).
(2) Any person who has held not less than 250/1,000,000 of the total
issued stocks of the specialized credit financial business
company (not
less than 125/1,000,000 in the case of the specialized credit financial
business company which meets the criteria
as stipulated by Presidential
Decree) for not less than 6 consecutive months under the conditions as
prescribed by Presidential
Decree, may exercise the shareholders' rights
as stipulated under Article 402 of the Commercial Act.
(3) Any person who has held not less than 50/100,000 of the total issued
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
34
stocks of the specialized credit financial business company (not less
than 25/100,000 in the case of the specialized credit financial
business
company which meets the criteria as stipulated by Presidential Decree)
for not less than 6 consecutive months under the
conditions as prescribed
by Presidential Decree, may exercise the shareholders' rights as stipulated
under Article 466 of the Commercial
Act.
(4) Any person who has held not less than 250/100,000 of the total
issued stocks of the specialized credit financial business company
(not
less than 125/100,000 in the case of the specialized credit financial
business company which meets the criteria as stipulated
by Presidential
Decree) for not less than 6 consecutive months under the conditions as
prescribed by Presidential Decree, may exercise
the shareholders' rights
as stipulated under Articles 385 and 539 of the Commercial Act (including
the case where Article 385 of
the Commercial Act applies mutatis
mutandis in Article 415 of the same Act).
(5) Any person who has held not less than 50/10,000 of the total issued
stocks of the specialized credit financial business company
(not less
than 25/10,000 in the case of the specialized credit financial business
company which meets the criteria as stipulated
by Presidential Decree)
for not less than 6 consecutive months under the conditions as prescribed
by Presidential Decree, may exercise
the shareholders' rights as stipulated
under Article 363-2 of the Commercial Act. In this case, where exercising
the shareholders'
rights under Article 363-2 of the Commercial Act, it
shall be based upon the voting stocks.
(7) In case where the shareholder under paragraph (1) has instituted
a lawsuit under Article 403 of the Commercial Act (including
the case
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
35
where Article 403 of the Commercial Act applies mutatis mutandis in
Articles 324, 415, 424-2, 467-2 and 542 of the same Act) and
won the
case, he may request the specialized credit financial business company
to pay the expenses for such lawsuit and all other
costs on account of
the lawsuit.
(1) In cases where the Financial Services Commission suspects that any
specialized credit financial business company or its major
shareholder
has violated the provisions of Articles 50 (1) through (5) and 50-2 (1)
through (3) and (5), the Commission may demand
the specialized credit
financial business company or its major shareholder to submit such data
as may be necessary. 1. Placing a restriction on new credit extension to its major shareholder;
2. Placing a restriction on new acquisition of securities issued by its major
shareholder; or
3. Placing a limitation on transactions with its major shareholder to supply
funds, or such other measures as may be prescribed by
Presidential
Decree.
[This Article Newly Inserted by Act No. 8525 Jul. 19, 2007]
Article 51 (Prohibition against Use of Similar Trade Names)
A person
who is not a specialized credit financial business company may
not use the same or similar indication as credit, credit card, facilities
leasing, lease, installment financing, or venture capital business in his
trade name.
[This Article Wholly Amended by Act No. 5741, Feb. 1, 1999]
Article 52 (Relations with Other Acts)
(1) The provisions of the Bank of Korea Act and the Banking Act shall
not apply to a specialized credit financial business company
and a con-
current loan service provider pursuant to the provisions of Article 3 (3)
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
36
2.
(2) Only Articles 3 through 10, 11 (1), (4) and (5), 13-2, 14, 14-2 through
14-5, 14-7, 15 through 19, 24, 24-2, 24-3, 26 through
28 of the Act on
the Structural Improvement of Financial Industry shall apply to a spe-
cialized credit financial business company:
Provided, That Article 24 of
the same Act shall not apply to the case where a venture capitalist makes
an investment into a venture
businessman.
CHAPTER SUPERVISION
Article 53 (Supervision)
(1) The Financial Services Commission shall supervise whether a spe-
cialized credit financial business company or a concurrent
loan service
provider (hereinafter referred to as a "specialized credit financial business
company, etc.") observes this Act or
orders made thereunder.
(4) When the Financial Services Commission deems that there exist
concerns over impeding a sound operation of the specialized credit
financial
business companies, etc., as the said companies violate this Act or any
orders issued under this Act, it may take the
measures falling under any
of the following subparagraphs upon a recommendation of the Chief
Commissioner of Financial Services
Commission, or have the said Chief
Commissioner take the measures falling under subparagraph 1: 1. Demands for the attention or warning to the specialized credit financial
business companies, etc., or demand for the attention,
warning or
censure against their officers or employees;
2. Corrective orders against the relevant offenses; and
3. Advice on the dismissal of officers, or demands for a suspension of
their duties.
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
37
(5) Where the Financial Services Commission deems that if the retired
officers or employees of the specialized credit financial
business companies,
etc. had held office, they would have been subjected to the dispositions
falling under paragraph (4) 1 or 3,
it may have the Chief Commissioner
of Financial Services Commission notify the presidents of relevant spe-
cialized credit financial
business companies, etc. of the details of such
dispositions.
(6) The presidents of specialized credit financial business companies, etc.
in receipt of a notice under the provisions of paragraph
(5) shall notify
the relevant retired officers or employees thereof, and record them in the
personnel affairs register and keep
it.
Article 53-2 (Inspection)
(1) The Chief Commissioner of Financial Services Commission may have
the officials belonging to him inspect the business and asset
status of
the specialized credit financial business company, etc.
(2) The officials who make the inspection under paragraph (1)
shall
present their vouchers indicating their authority to the interested persons.
(3) The Chief Commissioner of Financial Services
Commission may request
the specialized credit financial business company, etc. to furnish the books,
recorded documents and other
data necessary for such inspection, or to
have the related persons attend to state their opinions.
(4) The Chief Commissioner of
Financial Services Commission may request
the external auditor selected by the specialized credit financial business
company, etc.
pursuant to the Act on External Audit of Stock Companies
to furnish the information and data relating to the soundness of man-
agement which have come to his knowledge as a result of audit of the
relevant specialized credit financial business company, etc.
[This Article Newly Inserted by Act No. 6430, Mar. 28, 2001]
Article 53-3 (Guidance of Sound Management)
(1) The Financial Services Commission may set forth the criteria for
management guidance falling under any of the following subparagraphs
under the conditions as prescribed by Presidential Decree, in order to guide
the sound management of the specialized credit financial
business company
and to prevent the financial troubles: 1. Matters on the adequacy of equity capital;
2. Matters on the soundness of property;
3. Matters on the liquidity; and
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
38
4. Other matters necessary for securing the soundness of management.
(2) When the specialized credit financial business company is
acknowl-
edgedly apprehended to harm the soundness of management, such as
failing to fulfill the criteria for management guidance
pursuant to the
provisions of paragraph (1), the Financial Services Commission may
demand it to take necessary measures for improving
its management,
such as increase of capital, limit to profit sharing. 1. When its trade name or title is changed;
2. When its executive is appointed or dismissed;
3. When its largest shareholder is changed; or
4. When there is change in the number of stocks held by its major
shareholder or persons specially related with its major shareholder
by 1/100 or more of total number of its outstanding voting stocks.
Article 54-2 (Disclosure of Operations)
(1) The Financial Services Commission may have a specialized credit
financial business company disclose important information and
data on
the conditions of operation.
A specialized credit financial business company, etc. shall administer
accounting of licensed or registered specialized credit financial
business
separately from that of other businesses so as to analyze fund management
and business performance.
Article 56 (Designation of Auditors)
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
39
Where a specialized credit financial business company falls under any cause
as determined by Presidential Decree such as the violation
of this Act,
the Financial Services Commission may designate an auditor of the
specialized credit financial business company after
deliberation by the
Securities Futures Commission. 1. Where, without satisfying requirements prescribed by Article 13 (1),
it performs incidental business referred to in each subparagraph
of
the same paragraph;
2. Where it violates the provisions of Article 14, 14-2, 16, 17, 18, 21,
23 (1), 25 (4) or 46; or
3. Where it fails to comply with orders or measures taken by the Financial
Services Commission pursuant to the provisions of Ar ticle
23 (2),
24, 25 (1), 53 (4), or 53-3 (2).
(2) Where a credit card company falls under each of the following sub-
paragraphs, the Financial Services Commission may revoke
its license or
registration: 1. Where it obtains a license or makes a registration under the provi-
sions of Article 3 (1) by fraud or unlawful ways;
2. Where it falls under the provisions of Article 6 (1) 2 through 4 (lim-
ited to a specialized credit financial business company);
3. Where it fails to comply with orders for suspension of business under
the provisions of paragraph (1);
4. Where it fails to continue to conduct its operations for one year or
more without any justifiable reason; and
5. Where it closes out virtually its operations due to a corporate merger,
bankruptcy, or closure of its operations.
(3) Where a facilities leasing service company, an installment financing
company, or a venture capitalist falls under each of the
following sub-
paragraphs, the Financial Services Commission may revoke its reg-
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
40
istration: 1. Where it registers under the provisions of Article 3 (2) by fraud or
unlawful ways;
2. Where it falls under the provisions of Article 6 (1) 2 through 4 (limited
to a specialized credit financial business company);
3. Where it fails to comply with orders or dispositions made by the Financial
Services Commission under the provisions of Article
53 (4) or 53-3
(2);
3-2. Deleted;
4. Where it fails to continue to conduct its operations for one year or
more without any justifiable reason; and
5. Where it closes out virtually its operations due to a corporate merger,
bankruptcy, or closure of its operations.
(4) Deleted.
Article 58 (Imposition of Penalty)
(1) Where a specialized credit financial business company violates the
provisions of Article 46, 47, 48, or 49 (1) and (4) or fails
to comply with
orders made by the Financial Services Commission pursuant to the
provisions of Article 49 (2), the Financial Services
Commission may impose
a penalty not exceeding 100 million won under the conditions as prescribed
by Presidential Decree.
1. Where a facilities leasing service company fails to comply with orders
made by the Financial Services Commission pursuant to the
provisions
of Article 37;
2. Where an installment financing company violates the provisions of
Article 39 or 40; or
3. Where a venture capitalist violates the provisions of Article 45.
SPECIALIZED CREDIT FINANCIAL BUSINESS ACT
41
(4) Where a specialized credit financial business company makes an credit
extension in violation of Article 50 (1), the Financial
Services Commission
may impose a penalty on such company within 20/100 of the amount of
credit extension made excessively.
(5) The types or degrees of breaches subject to the imposition of penalty
pursuant to the provisions of paragraphs (1) through (4)
or other necessary
matters shall be prescribed by Presidential Decree.