Law Viewer

Back Home

LOCAL PUBLIC ENTERPRISES ACT

Act No. 2101, Jan. 29, 1969

Amended by Act No. 3233, Jan. 4, 1980

Act No. 4371, May 31, 1991

Act No. 4517, Dec. 8, 1992

Act No. 5200, Dec. 30, 1996

Act No. 5708, Jan. 29, 1999

Act No. 6665, Mar. 25, 2002

Act No. 7260, Dec. 30, 2004

Act No. 7409, Mar. 24, 2005

Act No. 7428, Mar. 31, 2005

Act No. 7589, Jul. 13, 2005

Act No. 8028, Oct. 4, 2006

Act No. 8246, Jan. 19, 2007

Act No. 8423, May 11, 2007

Act No. 8450, May 17, 2007

Act No. 8852, Feb. 29, 2008

Act No. 9575, Apr. 1, 2009

Act No. 10990, Aug. 4, 2011

Act No. 11690, Mar. 23, 2013

Act No. 11852, jun. 4, 2013

Act No. 12507, Mar. 24, 2014

Act No. 12727, jun. 3, 2014

Act No. 12844, Nov. 19, 2014

Act No. 13568, Dec. 15, 2015

Act No. 13633, Dec. 29, 2015

Act No. 14839, Jul. 26, 2017

Act No. 14917, Oct. 24, 2017

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Act is to prescribe matters necessary to operate enterprises established and managed directly or through the establishment of corporations by local governments in order to rationalize their management, thereby contributing to the development of local autonomy and the promotion of the welfare for their residents.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 2 (Scope of Application)
(1) This Act shall apply to the following business (including other business incidental to them; hereinafter the same shall apply) established and managed by local governments pursuant to Article 5, which are higher than the standards prescribed by Presidential Decree (hereinafter referred to as "local government-directly operated enterprises") and other business managed by local government-invested public corporations and public agencies established under Chapter III and IV of this Act, respectively:
1. The water supply business (excluding the village tap water business);
2. The industrial water supply business;
3. The tramway business (including the urban railway business);
4. The automobile transportation business;
5. The local road business (limited to the toll road business);
6. The sewerage business;
7. The housing business;
8. The land development business;
(2) Local governments may apply this Act to any of the following business as prescribed by municipal ordinances if such projects are managed by the local government-directly operated enterprises, local government-invested public corporations and public agencies, and not less than 50 percent of their operating costs are met by their ordinary revenues:
1. Business which is considered to be hard for private enterprisers to manage, but is believed to contribute to promoting the welfare of residents, revitalizing the local economy, and precipitating the local development;
2. Business among the business under the subparagraphs or paragraph (1), which falls short of the standards prescribed by Presidential Decree pursuant to the same paragraph excluding the subparagraphs;
3. The athletic facilities business under the Installation and Utilization of Sports Facilities Act;
4. The tourism business (excluding the travel business and casino business) under the Tourism Promotion Act.
(3) The heads of local governments may apply Article 22 mutatis mutandis to any business among the business under the subparagraphs of the paragraph (1), which falls short of the standards prescribed by Presidential Decree pursuant to the same paragraph excluding the subparagraphs.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 3 (Basic Principle for Management)
(1) Local government-directly operated enterprises, local government-invested public corporations, and public agencies (hereinafter referred to as the "local public enterprises") shall be managed and operated in such a way as to increase both the economic efficiency of enterprises and the public welfare at all times.
(2) Local governments shall endeavor not to lead the economy of the private sector to contract, to impede the fair and free order of the economy and to damage the environment when they launch, set up or manage their local public enterprises.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 4 (Enactment and Enforcement of Statutes, etc. Governing Local Public Enterprises)
The statutes, municipal ordinances, municipal rules, and other regulations concerning local public enterprises shall be governed by the basic principles referred to in Article 3.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
CHAPTER II LOCAL GOVERNMENT-DIRECTLY OPERATED ENTERPRISES
SECTION 1 General Principles
 Article 5 (Establishment of Local Government-Directly Operated Enterprises)
When a local government intends to establish and manage local government-directly operated enterprises, it shall prescribe basic matters concerning their establishment and management by its municipal ordinance.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 6 (Application of Local Autonomy Act, etc.)
A local government-directly operated enterprise shall be governed by the Local Autonomy Act, the Local Finance Act, and other related statutes, except as prescribed by this Act.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
SECTION 2 Organization Structure
 Article 7 (Manager)
(1) The local government shall appoint a manager for each enterprise to manage and execute the business affairs of a local government-directly operated enterprise: Provided, That the local government may appoint one manager for two or more enterprises which are identical to or similar to one another as prescribed by municipal ordinances.
(2) The head of the local government shall appoint the manager from among its public officials who have abundant experience and knowledge in the management of a local government-directly operated enterprise, as prescribed by Presidential Decree, and the tenure of office may be fixed.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 8 (Authority of Manager)
The manager shall control and execute the business affairs of a local government-directly operated enterprise except those matters specified in the following subparagraphs: Provided, That if it is specially prescribed in this Act, this shall not apply:
1. The presentation of the budget plan to the local council;
2. The presentation of the settlement of accounts to the local council for approval;
3. The presentation of bills to the local council which require a resolution of the local council;
4. Imposition of administrative fines under Article 139 (2) of the Local Autonomy Act.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 9 (Obligations of Manager)
The primary tasks of which the manager is in charge pursuant to Article 8 are as follows:
1. The preparation of the drafts of municipal ordinances and rules concerning a local government-directly operated enterprise and the presentation thereof to the head of the local government;
2. The preparation of the operational plan and budget plan for a local government-directly operated enterprise and the presentation thereof to the head of the local government;
3. The preparation of the settlement of accounts and the presentation thereof to the head of the local government;
4. The acquisition, management, and disposal of assets of a local government-directly operated enterprise;
5. The conclusion of contracts;
6. The collection of charges, commissions or other fees;
7. Temporary borrowing of money in the case of a shortage of cash for expenditures within the limits of the allocated budget, and other matters concerning the execution of budgets;
8. Receipts and disbursements, and other matters concerning the accounting;
9. The custody of documentary evidence and official documents;
10. Matters concerning organization of the local government-directly operated enterprise, matters concerning its personnel, and other matters belonging to authority of the manager under other statutes, or municipal ordinance and rules of the local government concerned.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 9-2 (Formulation of Medium- to Long-Term Business Management Plans of Local Government-Directly Operated Enterprises)
(1) The manager of a local government-directly operated enterprise meeting standards prescribed by Presidential Decree, in consideration of the assets and liabilities, etc. thereof shall formulate a medium- to long-term business management plan spanning five fiscal years including the relevant year (hereinafter referred to as "medium- to long-term business management plan") each year, and submit it to the head of the local government and the local council within a deadline prescribed by Presidential Decree.
(2) A medium- to long-term business management plan formulated under paragraph (1) shall include the following matters:
1. Medium- to long-term management objectives spanning at least five fiscal years;
2. Business plans and financial management plans;
3. A business management plan including prospect for increase or decrease of deficit in operating deficit, grounds therefor, plans for improvement, and plans for rationalization of charges;
4. Evaluation and analysis of changes in the current medium- to long-term business management plan, compared with that of the previous year, causes thereof, management plans, etc.;
5. Other matters prescribed by Presidential Decree, which are related to the management of the local government-directly operated enterprise.
[This Article Newly Inserted by Act No. 13568, Dec. 15, 2015]
 Article 10 (Relationship between Manager and Head of Local Government)
The head of the local government shall direct and supervise the manager concerning the following matters:
1. Master plan for the management of a local government-directly operated enterprise;
2. Matters concerning the performance of the business affairs of a local government-directly operated enterprise, which are deemed to exert great influence on the welfare of the residents of the local government;
3. Matters concerning adjustment of both business affairs of a local government-directly operated enterprise and other affairs.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 10-2 (Employees of Enterprise)
If necessary for the specialization of the management of a local government-directly operated enterprise, posts of expert officials may be installed for the public officials under the management of a local government-directly operated enterprise as prescribed by the Local Public Officials Act.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 11 (Management Regulations of Enterprise)
The manager may establish management regulations of the enterprise concerning business affairs of a local government-directly operated enterprise, unless the said enterprise does not violate statutes or municipal ordinances and municipal rules.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 12 (Delegation, etc. of Authority)
(1) If the manager is unable to perform his/her duties due to unavoidable circumstances, high-echelon public officials working for a local government-directly operated enterprise may act on behalf of the said manager as prescribed by the rules of the relevant local government.
(2) The manager may delegate or entrust some of his/her authority to public officials working for a local government-directly operated enterprise or to the manager of the public agency operated by the relevant local government or to the manager of any other local government-directly managed enterprise operated by the local government: Provided, That if said authority is entrusted to the manager of a public agency operated by the local government concerned or to the manager of any local government-directly managed enterprise operated by the local government, prior approval from the head of the local government shall be obtained.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
SECTION 3 Finance
 Article 13 (Special Accounting)
The local government shall establish special accounts of each enterprise falling under Article 2: Provided, That if only one manager is appointed for more than two enterprises pursuant to the proviso to Article 7 (1), it may establish one special accounts for more than two enterprises.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 14 (Autonomous Accounting System)
(1) In the special accounts of a local government-directly operated enterprise, revenues of the enterprise concerned shall cover expenses for the enterprise: Provided, That the following expenses for local government-directly operated enterprises, which are selected by Presidential Decree, shall be paid out of general accounts of the local government concerned or of special accounts under which contributions are disbursed or other methods are used:
1. Expenses which are not suitable to be covered by the revenue of a local government-directly operated enterprise in view of the nature of the said expenses;
2. Expenses which, in an objective view, are deemed difficult to cover only with the revenue of a local government-directly operated enterprise as derived from the operation of the said enterprise, considering the nature of the local government-directly operated enterprise concerned.
(2) Special accounts of a local government-directly operated enterprise may receive financial support from general accounts or special accounts of the local government concerned within the limits of the allocated budget, if necessary due to natural disaster, restoration work, or other extraordinary circumstances.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 15 (Business Year)
The business year of a local government-directly operated enterprise shall correspond to the fiscal year of general accounts of the local government.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 16 (Principles of Accounting)
(1) The special accounts of a local government-directly operated enterprise shall record increases, decreases, or changes in assets (hereinafter referred to as "accounting transactions"), as they arise, to clearly reflect the management performance and the financial status.
(2) The fiscal years shall be assigned to the accounting transactions of a local government-directly operated enterprise, as prescribed by Presidential Decree.
(3) Special accounts of a local government-directly operated enterprise shall include balance sheet accounts which are assets, liabilities and capital, and income statement accounts which are revenues and expenses.
(4) Details of assets, liabilities and capital under paragraph (3) shall be clearly recorded as prescribed by Presidential Decree.
(5) In special accounts of a local government-directly operated enterprise, an auxiliary account prescribed by Presidential Decree may be established.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 17 (Contribution, etc.)
(1) General accounts or special accounts of a local government may make necessary contribution to special accounts of a local government-directly operated enterprise.
(2) Special accounts of a local government-directly operated enterprise which have received the contribution pursuant to paragraph (1) may expend some of the profits earned in the previous year to the account which made the contribution under the budget in consideration of the status of its profits.
(3) Where special grounds exist, such as the restoration of disasters, the construction of infrastructural facilities, and other reasons prescribed by Presidential Decree, part of the profits of the preceding year in the budget may be transferred from the special accounts of any local government-directly operated enterprise that runs the business specified in Article 2 (1) 7 or 8 to the general accounts of the relevant local government.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 18 (Long-Term Loans)
(1) General accounts or special accounts of a local government may provide a long-term loan to the special accounts of a local government-directly operated enterprise according to the budget.
(2) If special accounts of a local government-directly operated enterprise have received a long-term loan referred to in paragraph (1), the relevant enterprise shall pay reasonable interest to the account which made the loan to it.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 19 (Municipal Bonds, etc.)
(1) The local government may issue municipal bonds, the issuance expenses of which shall be borne by special accounts of the relevant local government-directly operated enterprises in any of the following cases:
1. Where it is necessary to appropriate funds for current working capital;
2. Where it is necessary to appropriate funds for the revolving fund;
3. Where it is necessary to appropriate funds for construction or improvement expenses or to use funds for purchasing similar business.
(2) The Special Metropolitan City, Metropolitan City, Special Self-Governing City, Dos, and Special Self-Governing Province (hereinafter referred to as "City/Do") or a large city other than the Special Metropolitan City, Metropolitan City or Special Self-Governing City with a population of at least one million (hereinafter referred to as "large city") may issue municipal development bonds after obtaining approval from the local council in order to secure finances for investment in businesses prescribed in Article 2 or to raise funds for regional development, notwithstanding paragraph (1). <Amended by Act No. 11852, Jun. 4, 2013>
(3) Persons designated by municipal ordinances from among the following persons shall purchase the municipal development bonds:
1. Persons who obtain a license, permission or authorization from the local government or who apply for or report registration to the local government;
2. Persons who conclude a contract for construction works with the local government or with a corporation for which a local government has invested or contributed to the whole amount of equity capital;
3. Persons who conclude a contract for service or for goods purchase, repair or manufacturing with the local government or with a corporation for which a local government has invested or contributed to the whole amount of equity capital.
(4) Procedures for purchasing municipal development bonds, the amount by purchase object, methods of registering bonds, interest rates, redemption and other necessary matters shall be prescribed by municipal ordinance of each City/Do or large city.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 20 (Temporary Loans)
(1) When a shortage of cash occurs for expenditures within the allocated budget, a manager may obtain temporary loans which shall be covered by the special accounts of the local government-directly operated enterprise concerned.
(2) The temporary loans under paragraph (1) shall be repaid within the pertinent year.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 20-2 (Advances)
A local government-directly operated enterprise may receive in advance part or all of the funds from those who intend to be allotted property created by such an enterprise, who intend to use facilities of such an enterprise, or who intend to receive services of such an enterprise, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 21 (Calculation of Cost)
Special accounts of a local government-directly operated enterprise shall calculate the cost for each function and for each performance, as prescribed by Presidential Decree, in order to provide the basis for the efficient promotion of business, the management of business, and the determination of the fees.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 22 (Fees)
(1) A local government may collect fees for the services or performance from a local government-directly operated enterprise, as prescribed by its municipal ordinance.
(2) Fees under paragraph (1) shall be reasonable, maintain an equitable level between regions, and be determined in such a way as to compensate for the costs of the services or the performance provided by such an enterprise and to maintain continuity of such an enterprise.
(3) The method of calculating fees under paragraph (1) shall be prescribed by Presidential Decree, taking into account operating costs and capital costs.
(4) The collection of fees shall follow the examples of collection of local taxes.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 23 (Drawing up Budget)
(1) A local government-directly operated enterprise shall calculate expenses in accordance with reasonable cost standards and appropriate them in the budget.
(2) The revenues and expenditures of the budget shall be reasonably appropriated, in consideration of the financial status of the relevant enterprise during the corresponding year.
(3) The head of each local government shall prepare guiding principles for drawing up the budget of a local government-directly operated enterprise for each business year pursuant to standards determined by the Minister of the Interior and Safety, separately from guiding principles for drawing up the budget of the general account and other special accounts of the local government, and shall notify the local government-directly operated enterprise thereof by no later than July 31 of the preceding year. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 24 (Classification of Budgets)
Budgets of local government-directly operated enterprises shall be classified in accordance with the operational plans and functions of the business activities thereof.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 25 (Details of Budgets)
The details of the budget of a local government-directly operated enterprise shall consist of the following matters prepared in accordance with the operational plans of the relevant local government-directly operated enterprise:
1. An estimate of the revenue incomes and expenditures concerning income and expenses of the pertinent business year (hereinafter referred to as "business budget");
2. An estimate concerning the capital revenues and expenditures concerning the newly increased or decreased assets, liabilities and capital of the pertinent business year (hereinafter referred to as "capital budget");
3. Operational plans for managing funds related to the business budget and capital budget.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 26 (Presentation of Budget Bill)
(1) The head of a local government shall adjust and submit a budget bill prepared by the manager of a local government-directly operated enterprise to the local council prior to the commencement of the business year and then shall obtain approval from its local council.
(2) The head of a local government shall consult the manager, when revising the budget bill prepared by the said manager.
(3) When the head of a local government submits the budget for a local government-directly operated enterprise to the local council, he/she shall submit the operational plan of the enterprise accompanied by other documents prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 27 (Expenditures for Earning Revenue)
Where a shortage of funds to be used for expenses occurs owing to expansion of business, the manager may use money the amount of which is equivalent to the increased revenue resulting from the said expansion for direct expenses of the business activities related to the increased revenue. In such cases, the manager shall report such spending to the head of the local government and the local council.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 28 (Execution of Budgets)
(1) The manager shall execute his/her duties in accordance with the budgets of the pertinent year.
(2) Expenditures directly related to the disbursement of funds, such as purchase of the inventory assets and contracts for construction, shall be executed in accordance with the operational plans for funds prepared on the basis of the business budget and the capital budget of the pertinent year.
(3) When budgets are executed under paragraph (2), an account for control of budgets shall be established, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 29 (Diversion of Budgets)
Where it is necessary for the execution of budgets, the manager may divert expenses specified in each detailed item and sub-item of the expenditure budgets for other uses, except those expenses specified in the items and sub-items prescribed by the general provisions of the said budgets.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 30 (Carrying Forward of Budgets)
(1) The expenditure budget of each business year shall not be carried over to the following year for the purpose of its expenditure: Provided, That the amount of the following costs of the expenditure budget may be carried over to the following fiscal year for their expenditure: <Amended by Act No. 10990, Aug. 4, 2011>
1. Costs of which approval is obtained from the head of the relevant local government from among the costs necessary to construct or renovate the facilities of local government directly-operated enterprises, for which the act of causing expenditure is not peformed during the relevant year;
2. Costs which are not expended during the relevant year on inevitable grounds although the act of causing their expenditure is performed during the relevant year and other incidental costs for the expenditure of which the act of causing expenditure is not performed during the relevant year.
(2) and (3) Deleted. <by Act No. 6665, Mar. 25, 2002>
(4) The manager may carry forward and use the amount of the expenses not used in the pertinent year out of the annual required expenses of the continuing expenditure in due order until the year when the business activities are completed. <Amended by Act No. 10990, Aug. 4, 2011>
(5) Where budget is carried forward under paragraphs (1) and (4), the amount of money for each item, which is carried forward, shall be considered to have been allocated as the budget carried forward. <Amended by Act No. 10990, Aug. 4, 2011>
 Article 31 (Reserve)
The special account of any local government-directly operated enterprise shall allocate as reserve in the budget the amount deemed appropriate for covering unpredictable spendings or other spendings in excess of the budget.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 32 (Special Cases in Disbursement of Expenses not Requiring Cash)
(1) The manager may appropriate expenses not requiring cash in the budget as they are incurred, notwithstanding Article 23 (1).
(2) The scope of expenses not requiring cash referred to in paragraph (1) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 33 (Receipts, Disbursements, and Custody of Cash)
(1) The manager shall handle receipts and disbursements regarding the business affairs of a local government-directly operated enterprise: Provided, That if it is necessary for the management and execution of the business affairs of a local government-directly operated enterprise, the manager may have a financial company, etc. designated by the manager with approval from the head of the local government concerned (hereinafter referred to as "designated financial company" in this Article), which has been chosen from among the financial companies, etc. which are banks under the Banking Act or other institutions performing financial affairs pursuant to other Acts as prescribed by Presidential Decree (hereinafter referred to as "financial companies, etc."), handle part of the receipts and the disbursements of cash.
(2) The manager shall take the cash related to a local government-directly operated enterprise into the custody of the designated financial company: Provided, That the manager may directly keep the amount of money which does not exceed the limit determined by the head of the local government, and may deposit extra money at other financial companies, etc. in order to increase interest revenues.
(3) When the head of the local government has approved the designation of the financial companies, etc. pursuant to the proviso to paragraph (1), he/she shall give public notice thereof.
(4) The manager may inspect the actual conditions of receipts and disbursements of cash, which is handled by the designated financial company, and may require the designated financial company to take corrective measures if necessary, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 34 (Overall Control of Account)
(1) The manager shall have the general control and supervision of the affairs related to the account of a local government-directly operated enterprise.
(2) If it is necessary to handle the affairs related to the account, the manager may appoint a cashier, a cash handler of the enterprise, or other public official in charge of accounting as prescribed by Presidential Decree.
(3) The manager shall appoint the public official in charge of accounting under paragraph (2) from among the public officials working for the local government-directly operated enterprise concerned.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 34-2 (Support for Development and Operation of Budget and Accounting Information Processing System)
For the efficient management of affairs related to the budget and accounting of local government-directly operated enterprises, the Minister of the Interior and Safety may support the development and operation of a budget and accounting information processing system. <Amended by Act No. 14839, Jul. 26, 2017>
[This Article Newly Inserted by Act No. 13568, Dec. 15, 2015]
 Article 35 (Settlement of Accounts)
(1) The manager shall close all books and settle the accounts as at the end of each business year.
(2) The manager shall prepare a statement of settlement of accounts of a local government-directly operated enterprise within two months after the end of each business year, and shall submit to the head of the local government the statement accompanied by the report on the business performance of the pertinent year and other documents prescribed by Presidential Decree.
(3) The head of the local government shall submit the statement of the settlement of accounts and the report on the business performance and other documents under paragraph (2) as well as an auditor’s report prepared by a certified public accountant to the local council in the following year for its approval.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 36 (Report on Condition of Accounting)
The manager shall prepare a trial balance sheet, a report on the operation of funds, and documents necessary for clearly showing the condition of the accounting for the relevant enterprise as at the end of each month, and shall submit them to the head of the local government by not later than the 20th day of the following month.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 37 (Disposition of Gains)
(1) Where any gains are incurred in the pertinent business year and where any deficit has been carried over from the preceding business year, a local government-directly operated enterprise shall make up for the deficit with the gains and reserve any balance accruing after making up for the said deficit, more than 1/10 of the balance, as profit reserve, as prescribed by Presidential Decree, and it may deposit the remainder of the balance as the sinking fund reserve or the reserve fund for the improvement of construction as prescribed by municipal ordinances, or use it for the payment and the transferred amount under Article 17 (2) and (3).
(2) No profit reserve under paragraph (1) shall be used for any purpose other than compensation for deficit.
(3) No sinking fund reserve under paragraph (1) shall be used for any purpose other than the redemption of municipal bonds.
(4) No reserve fund for the improvement of construction under paragraph (1) shall be used for any purpose other than the improvement of construction.
(5) The capital surplus of each business year shall be reserved for each item showing the details thereof for each source.
(6) No capital surplus under paragraph (5) shall be disposed of, except as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 38 (Disposition of Losses)
Where any loss has been incurred in the pertinent business year and where any gains have been carried over from the preceding business year, a local government-directly operated enterprise shall make up for the deficit with the gains, and shall carry over any remaining deficit as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 39 (Revolving Fund)
(1) If necessary to efficiently operate the enterprise, a local government-directly operated enterprise may establish the revolving fund, as prescribed by municipal ordinances.
(2) The revolving fund under paragraph (1) shall be established in accordance with the budget of the special account of the local government-directly operated enterprise concerned.
(3) The revolving fund under paragraph (1) shall not be operated in accordance with the business budget and capital budget, but shall be operated as prescribed by municipal ordinances.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 40 (Acquisition and Disposal of Important Assets)
(1) The acquisition and disposal of important assets prescribed by Presidential Decree among the assets of a local government-directly operated enterprise shall be earmarked in the budget and require a resolution by the local council. <Amended by Act No. 11852, Jun. 4, 2013>
(2) Where the resolution of the local council has been obtained under paragraph (1), the resolution by the local council shall be deemed obtained under Article 10 (1) of the Public Property and Commodity Management Act and Article 39 (1) 6 of the Local Autonomy Act.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 41 (Management of Enterprise Assets)
Public assets and goods held and managed by a local government-directly operated enterprise as well as the credits, securities, and cash held by the related enterprise shall be deemed the assets of such an enterprise, and the matters concerning the management and operation thereof shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 42 (Contracts)
When the manager enters into a contract for sale, purchase, borrowing, lending, or other contracts, he/she shall give notice thereof to put it up for an ordinary competition, as prescribed by Presidential Decree: Provided, That he/she may adopt the designated competition or a negotiated contract as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 43 (Provisions on Delegation)
Matters necessary for the finance of a local government-directly operated enterprise, other than those prescribed in this Section, shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
SECTION 4 Special Cases for Association of Local Government
 Article 44 (Special Cases for Organization of Cooperative of Local Government)
Where necessary to deal with affairs concerning the management of a local government-directly operated enterprise in wider regions, a local government may determine the regulations to organize the cooperative of local governments (hereinafter referred to as "cooperative") together with other local governments.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 45 (Special Provisions for Organization)
(1) Notwithstanding Article 7 (1), no manager shall be appointed for a local government-directly operated enterprise and the authority of the manager shall be exercised by the head of the cooperative.
(2) The head of the cooperative shall be jointly appointed by the heads of the relevant local governments and Article 7 (2) shall be applied mutatis mutandis to the qualifications and the term of office for the head of the cooperative.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
SECTION 5 Supplementary Provisions
 Article 46 (Publication, etc. of Status of Business Operation)
(1) The manager shall submit documents concerning the business operation of a local government-directly operated enterprise to the head of the local government at least twice each business year, as prescribed by municipal ordinances. In such cases, the head of the local government shall give public notice thereof without delay.
(2) The manager shall publicly notify residents of the statement of the settlement of accounts, the financial statements, the yearly business goals, the outcomes of business performance evaluation and other important matters concerning the business management, as prescribed by Presidential Decree.
(3) The Minister of the Interior and Safety may standardize significant matters publicly notified by each local government-directly operated enterprise pursuant to paragraph (2), and integrate and give public notice of such matters (hereafter referred to as "integrated notice" in this Article). <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(4) The Minister of the Interior and Safety may request local government-directly operated enterprises to submit materials necessary for integrated notification, and the local government-directly operated enterprises so requested shall comply therewith, except in extenuating circumstances. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(5) Where any local government-directly operated enterprise fails to faithfully perform the duty of publicly notifying its business operation under paragraph (2) and the duty of submitting materials for integrated notice prescribed in paragraph (4), or publicly notifies any false information or submits false materials, the Minister of the Interior and Safety may notify the head of the relevant local government thereof and demand that the false information, etc. be corrected. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(6) Matters necessary for the standards and methods, etc. of integrated notice shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 47 (Adjustment of Business)
(1) Where local governments fail to reach an agreement on the management of a local government-directly operated enterprise and thus make a request for mediation, the Special Metropolitan City Mayor, Metropolitan City Mayor or Do Governor shall mediate differences between Sis/Guns/autonomous Gus; the Minister of the Interior and Safety shall mediate differences between Cities/Dos. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 11852, Jun. 4, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(2) Where the Minister of the Interior and Safety intends to mediate differences pursuant to paragraph (1), he/she shall hold a consultation with the competent Minister. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 48 (Obligation for Compensation)
(1) If the manager, his/her agent or the person taking partial charge of the manager’s duties causes any damage or loss to any local government, either deliberately or by gross negligence, in collection of revenues, performance of activities such as conclusion of contracts which is accompanied by expenditures, management of goods, or the disbursement of expenditure, he/she shall be obliged to compensate for such damage or loss.
(2) If any cash or any goods in the custody of the manager, his/her agent or the person taking partial charge of the manager’s duties are missing or damaged on the grounds of his/her failure to manage the cash or the goods with the care of a good manager, he/she shall be held responsible for compensating for such missing or damaged cash or goods.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
CHAPTER III LOCAL GOVERNMENT-INVESTED PUBLIC CORPORATION
SECTION 1 Establishment
 Article 49 (Establishment)
(1) If any need arises to efficiently conduct a business prescribed in Article 2, a local government may establish a local government-invested public corporation (hereinafter referred to as "corporation"). In such cases, before establishing a corporation, the Special Metropolitan City Mayor, Metropolitan City Mayor, Special Self-Governing City Mayor, Do Governor and a Special Self-Governing Province Governor (hereinafter referred to as "Mayor/Do Governor") shall hold a consultation with the Minister of the Interior and Safety; the head of a Si/Gun/Gu (referring to the head of an autonomous Gu) shall hold a consultation with the competent Special Metropolitan City Mayor, Metropolitan City Mayor or Do Governor. <Amended by Act No. 11852, Jun. 4, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(2) When the local government intends to establish a corporation, it shall prescribe basic matters concerning the establishment, the business affairs, and operation in its municipal ordinance.
(3) Where a local government establishes a corporation, it shall, in advance, examine whether the corporation is appropriate as a local public enterprise, such as the corporation’s influence on the welfare of residents and the local economy, business prospect, etc. as prescribed by Presidential Decree, and disclose outcomes of an examination to the public. <Amended by Act No. 11852, Jun. 4, 2013>
(4) The examination of feasibility under paragraph (3) shall be conducted by entrusting it to an institution designated and publicly notified by the Minister of the Interior and Safety, which is a specialized institution satisfying the requirements prescribed by Presidential Decree, such as professional human resources and examination and research capability. <Newly Inserted by Act No. 13633, Dec. 29, 2015; Act No. 14839, Jul. 26, 2017>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 50 (Joint Organization)
(1) A local government may determine common regulations to jointly establish a corporation with other local governments. <Amended by Act No.10990, Aug. 4, 2011>
(2) Deleted. <by Act No. 5708, Jan. 29, 1999>
(3) The regulations referred to in paragraph (1) shall include each of the following matters: <Amended by Act No. 10990, Aug. 4, 2011>
1. The name of the corporation;
2. The location of its offices;
3. The name of the local government establishing the corporation;
4. The details of its business activities;
5. Common matters to be handled;
6. The method of electing the representative of the decision making organization;
7. The methods of investment;
8. Other necessary matters.
[ This Article Newly Inserted by Act No. 3233, Jan. 4, 1980]
 Article 51 (Corporate Personality)
The corporation shall be a juristic person.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 52 (Offices)
(1) The location of the principal office of the corporation shall be determined by its articles of incorporation.
(2) The corporation may establish its local offices or branch offices with the approval of the head of the local government.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 53 (Investment)
(1) The whole capital stock of the corporation shall be formed by the investment of the local government either in cash or in kind.
(2) Where necessary for the operation of the corporation notwithstanding paragraph (1), any person (including any foreigner and any foreign corporation), other than the local government, may be allowed to make the investment not exceeding 1/2 of its capital stock in the corporation. The foregoing shall also apply to the increased capital.
(3) In cases under paragraph (2), the capital stock of the corporation shall be divided and used for the issuance of shares. In such cases, the type of the shares issued, the par value of a share, the issuance date of the shares, the total number of the issued shares, the payment period of the share subscription, and the method of payment shall be determined by municipal ordinances.
(4) Where the corporation receives investment from other corporations established by the relevant local government pursuant to paragraph (2) or makes an investment in other corporations established by the relevant local government pursuant to Article 54, the investment shall be deemed made by the relevant local government.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 54 (Investment in other Corporations)
(1) With the approval of the head of a local government, a corporation may make an investment in a corporation outside the local government in order to efficiently carry on a business relating to its business. <Amended by Act No. 11852, Jun. 4, 2013>
(2) In order to make an investment under paragraph (1), the head of a corporation shall examine the necessity and feasibility of investment in accordance with the methods and procedures prescribed by Presidential Decree, make a report to the head of local government and obtain a resolution from the council. <Newly Inserted by Act No. 11852, Jun. 4, 2013>
(3) The limit of investment under paragraph (1) shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 11852, Jun. 4, 2013>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 55 (Exercise of Shareholder’s Rights of Local Government)
The shareholder’s rights for the shares held by the local government shall be exercised by the head of the local government or by the public official under his/her management designated by the head of the local government.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 56 (Articles of Incorporation)
(1) The articles of incorporation of the corporation shall include the following matters:
1. Purpose;
2. Name;
3. Location of its offices;
4. Matters concerning its business activities;
5. Matters concerning the executive officers and employees;
6. Matters concerning the board of directors;
7. Matters concerning the financial affairs and accounting;
8. Matters concerning the publication;
9. Matters concerning its capital stock;
10. Matters concerning the issuance of bonds;
11. Matters concerning the amendments to its article of incorporation;
12. Other matters prescribed by Presidential Decree.
(2) The articles of incorporation of the corporation prescribed in Article 53 (2) shall include the following matters, in addition to the matters indicated in any subparagraphs of paragraph (1):
1. Matters concerning the issuance of shares;
2. Matters concerning the general shareholders’ meeting.
(3) If the articles of incorporation is to be amended, the authorization from the head of the local government shall be obtained: Provided, That in the case of a corporation established under Article 50 (1), any amendment to the articles of incorporation shall be dealt with in accordance with an arrangement concluded between the local governments.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 57 (Registration)
(1) The corporation shall be established by effecting the registration of its incorporation in the place in which its head office is located.
(2) The registration of incorporation of the corporation and other matters concerning its registration shall be prescribed by Presidential Decree
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 57-2 (Dissolution)
The corporation shall be dissolved if it falls under any of the following grounds: <Amended by Act No. 14839, Jul. 26, 2017>
1. Grounds for dissolution prescribed in Article 517 of the Commercial Act;
2. Demand for dissolution made by the Minister of the Interior and Safety under Article 78-3.
[This Article Newly Inserted by Act No. 13633, Dec. 29, 2015]
SECTION 2 Executive Officers and Employees
 Article 58 (Appointment, Dismissal, etc. of Executive Officers)
(1) The executive officers of a corporation shall be directors (classified into permanent directors and non-permanent directors) and auditors, including the president, and the number of such executive officers shall be prescribed by the articles of incorporation.
(2) The president and auditors shall be appointed or dismissed by the head of the local government, from among persons who have professional knowledge and abilities with regard to the management of local public enterprises, as prescribed by Presidential Decree: Provided, That in cases of a corporation established under Article 50 (1), appointment and dismissal of the president and auditors shall be dealt with in accordance with an agreement concluded between local governments.
(3) In appointing a president and an auditor pursuant to paragraph (2) (excluding a person who is to be appointed as an auditor ipso facto, as prescribed by municipal ordinances or the articles of incorporation), the head of a local government shall appoint a person from among those recommended by the executive officer recommendation committee prescribed by Presidential Decree (hereinafter referred to as the "executive officer recommendation committee" in this Article): Provided, That where the head of the local government intends to reappoint the president pursuant to paragraph (4), he/she shall undergo the deliberation of the executive officer recommendation committee.
(4) The head of a local government may dismiss the president during his/her term, depending on the outcomes of his/her management, or reappoint him/her notwithstanding the completion of his/her term. In such cases, the head of the local government shall take the following matters into consideration: <Amended by Act No. 11852, Jun. 4, 2013>
1. Compliance with a performance-based contract concluded under Article 58-2;
2. Results of management evaluation conducted under Article 78 (1) and (2);
3. Results of evaluation of the president’s performance of duties prescribed in Article 78 (4).
(5) The head of a local government may dismiss the president during the president's term of office in any of the following cases: <Newly Inserted by Act No. 13568, Dec. 15, 2015>
1. Where the president fails to comply with an order to improve management issued under Article 78-2 (3) without any justifiable rason;
2. Other cases where the president violates any related statutes seriously and obviously in the course of performing his/her duties.
(6) Matters necessary for establishing criteria, etc. for reappointment or dismissal of the president prescribed in paragraph (4) shall be prescribed by Presidential Decree.
(7) Directors (excluding a person who is to be appointed as a director ipso facto, as prescribed by municipal ordinances or the articles of incorporation) shall be appointed from among those recommended by the executive officer recommendation committee, but permanent directors are appointed or dismissed by the president and non-permanent directors by the head of the local government. In such cases, matters necessary for the appointment and dismissal of directors shall be prescribed by Presidential Decree.
(8) Where the executive officer recommendation committee intends to recommend a candidate for executive officers, it shall publicly recruit candidates, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 58-2 (Performance-Based Contracts with President)
(1) Where the head of a local government appoints the president, he/she shall conclude a performance-based contract with the president.
(2) The performance-based contract with the president under paragraph (1) shall include the management target to be achieved by the president during his/her term of office, the compensation pursuant to the performance and the responsibilities.
(3) Matters necessary for the methods of and procedures, etc. for concluding the performance-based contract under paragraphs (1) and (2) shall be prescribed by Ordinance of the Ministry of the Interior and Safety. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 59 (Term of Office and Duties)
(1) The term of office for the president, directors and auditors of the corporation shall be three years. In such cases, the head of the local government may have the executive officers, whose term of office have expired, perform their duties until their successors are appointed, as prescribed by Presidential Decree.
(2) Presidents, directors and auditors of the corporation may be reappointed for a one-year term.
(3) The duties of the president, directors and auditors of the corporation shall be prescribed by the articles of incorporation.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 60 (Disqualifications for Executive Officers)
(1) Neither of the following persons shall be allowed to become an executive officer of a corporation: <Amended by Act No. 13568, Dec. 15, 2015>
1. A person who is not a national of the Republic of Korea;
2. A person who is a minor;
3. A person who falls under any subparagraph of Article 31 of the Local Public Officials Act;
4. A person for whom three years have yet to elapse since he/she was dismissed under Article 58 (4) or (5);
5. A person who has been sentenced to a fine for violating this Act and for whom two years have yet to elapse since such sentence was given;
6. Deleted. <by Act No. 13568, Dec. 15, 2015>
(2) Where any executive officer of the corporation falls under any subparagraph of paragraph (1) or is found to fall under any subparagraph of paragraph (1) as at the time of his/her appointment, he/she shall ipso facto resign from his/her office.
(3) Any act in which any executive officer who resigns from his/her office pursuant to paragraph (2) has been involved prior to his/her resignation shall not lose its effect.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 61 (Restrictions on Executive Officers and Employees Concurrently Holding Second Office)
(1) The executive officers and employees of a corporation shall not engage in any profit-making business outside their duties; executive officers shall not hold an additional position without obtaining permission from the head of a local government, and employees shall not hold an additional position without obtaining permission from the president: Provided, That this shall not apply to an executive officer who does not work full time. <Amended by Act No. 11852, Jun. 4, 2013>
(2) The term "profit-making business" in paragraph (1) means a business prescribed by Presidential Decree, etc., which are likely to have unfair influence on duties or to reduce efficiency of duties if one engages in such business. <Newly Inserted by Act No. 11852, Jun. 4, 2013>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 62 (Board of Directors)
(1) The board of directors shall be established by the corporation in order to decide the important matters concerning the business affairs of the corporation.
(2) The board of directors shall consist of the directors including the president.
(3) The matters necessary for the operation and authority of the board of directors shall be prescribed by the articles of incorporation.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 63 (Appointment and Dismissal of Employees)
(1) The employees of a corporation shall be appointed or dismissed by the president according to the articles of incorporation.
(2) Any employee of the corporation shall be appointed according to examination results, performance rating and other proven capabilities.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 63-2 (Education and Training for Executive Officers and Employees)
The president of the corporation shall conduct necessary education and training for the executive officers and employees in order to comply with the basic principles of the management under Article 3.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 63-3 (Remuneration of Executive Officers and Employees)
Remuneration standards for the executive officers and employees of the corporation shall be set in a manner that the operating results thereof are reflected.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 63-4 (Exercise of Right and Selection and Appointment of Agent)
Any executive officer or any employee designated by the president of the corporation in accordance with the articles of incorporation may perform all acts involving or not involving trial that are necessary to execute the business of the corporation.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 63-5 (Common Standards for Personnel Management)
The Minister of the Interior and Safety may prepare standards for the matters to be commonly applied to the personnel management of corporations and notify them to the heads of local governments. <Amended by Act No. 14839, Jul. 26, 2017>
[This Article Newly Inserted by Act No. 13568, Dec. 15, 2015]
 Article 63-6 (Demand for Disciplinary Actions, etc.)
(1) A corporation may take disciplinary actions against executive officer officers and employees of the corporation, as specified by its articles of incorporation.
(2) Where a person who holds an authority to take disciplinary actions in a corporation takes any disciplinary action against an executive officer officer or employee on grounds of receiving money, valuables, or entertainments, or of embezzlement or misappropriation of public funds, he/she may impose a surcharge for the disciplinary action in the amount not exceeding five times the amount of money, valuables and entertainments received or the amount of public funds embezzled or misappropriated.
(3) Where any executive officer or employee of a corporation has received a criminal penalty or has fulfilled his/her liability for compensation, etc. under any other Act and subordinate statutes on grounds of receiving money, valuables, or entertainments, or of embezzlement or misappropriation of public funds (including cases where any confiscation or additional collection has been made), the total of the amount corresponding to the fine, compensation money and the amount confiscated or additionally collected and the amount specified in paragraph (2) shall not exceed five times the amount of money, valuables, or entertainments received, or the amount of public funds embezzled or misappropriated.
(4) Where a person who holds an authority to take disciplinary actions in a corporation fails to take necessary measures despite that the imposition of a disciplinary action or surcharge for disciplinary action prescribed in paragraph (1) or (2) is required, the head of the local government may request the authority holder of the corporation to take a disciplinary action or to impose a surcharge for the disciplinary action.
(5) No disciplinary action or surcharge for a disciplinary action may be imposed if three years (or five years, in cases of receipt of money, valuables or entertainments, or embezzlement or misappropriation of public funds) have elapsed from the date of occurrence of the ground therefor.
[This Article Newly Inserted by Act No. 13568, Dec. 15, 2015]
SECTION 3 Financial Accounting
 Article 64 (Business Year)
The business year of a corporation shall comply with the fiscal year of the ordinary account of the local government.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 64-2 (Principles of Accounting, etc.)
(1) The corporation shall keep accounts of financial transactions on the accrual basis according to standards for corporate accounting in order to clearly show the outcomes of business operation and its financial status.
(2) The corporation may keep separate accounting for each business.
(3) Where a corporation intends to enter into a contract, it shall adopt competitive bidding: Provided, That it may put a contract to competition after restricting the eligibility of bidders or after designating bidders in consideration of the purpose, character, scale, etc. of the contract, or conclude a negotiated contract. <Newly Inserted by Act No. 11852, Jun. 4, 2013>
(4) Where a corporation enters into a contract, it may restrict the eligibility of a bidder judged undoubtedly detrimental to fair competition and appropriate execution of a contract, within two years.
(5) No corporation shall conclude a negotiated contract with a person whose eligibility for bidding is restricted pursuant to paragraph (4); Provided, That this shall not apply where unavoidable grounds exist, such as that no appropriate builder or manufacturer exists, etc., except for those whose eligibility for bidding is restricted pursuant to paragraph (4). <Amended by Act No. 11852, Jun. 4, 2013>
(6) Matters necessary for accounting, standards and procedures for concluding a contract, and restrictions on the eligibility for bidding, etc. prescribed in paragraphs (1) through (5) shall be prescribed by Presidential Decree. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 11852, Jun. 4, 2013>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 64-3 (Establishment, etc. of Medium- to Long-Term Financial Management Plans)
(1) The president of a corporation meeting standards prescribed by Presidential Decree, in consideration of the size of assets and liabilities, etc. shall, every year, establish a medium- to long-term financial management plan spanning five fiscal years including relevant year (hereinafter referred to as "medium- to long-term financial management plan"), finalize it after obtaining a resolution by the board of directors and submit it to the head of a local government and the local council within a deadline prescribed by Presidential Decree.
(2) A medium- to long-term financial management plan shall include the following matters:
1. Medium- to long-term management objectives spanning at least five fiscal years;
2. Business plans and the direction of investment;
3. Financial prospect, grounds therefor and management plans;
4. A liability management plan including outlook for increase or decrease in liability, grounds therefor, management plans, etc.;
5. Evaluation and analysis of changes in the current medium- to long-term management plan, compared with that of the previous year, chief cause thereof, management plans, etc.
[This Article Newly Inserted by Act No. 11852, Jun. 4, 2013]
 Article 65 (Budget)
(1) The president of a corporation shall compile the business plan and budget of each business year before the relevant business year commences.
(2) The budget compiled under paragraph (1) shall be made definite by the resolution of the board of directors. The same shall also apply to cases where the budget is revised for inevitable reasons after it has been made definite.
(3) When the budget was enacted or revised under paragraph (2), the president of a corporation shall report this fact to the head of the local government without delay.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 65-2 (Execution of Budget when Budget Fails to be Finalized)
(1) If the budget fails to be finalized until the commencement of the fiscal year owing to inevitable circumstances, the corporation shall execute the budget according to the budget of the preceding year.
(2) The budget executed under paragraph (1) shall be deemed executed according to the same budget finalized for the pertinent year.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 65-3 (Examination of Feasibility of New Investment Business)
(1) If the president of a corporation intends to conduct a new investment business of a size not less than the one prescribed by Presidential Decree, he/she shall examine the necessity of the business, feasibility of a business plan, etc. according to the methods and procedures prescribed by Presidential Decree, and report to the head of a local government and obtain resolution from the local council. <Amended by Act No. 13633, Dec. 29, 2015>
(2) The examination of feasibility prescribed in paragraph (1) shall be entrusted to an institution designated and publicly notified by the Minister of the Interior and Safety, which is a specialized institution satisfying the requirements prescribed by Presidential Decree, such as professional human resources, and examination and research capability. <Newly Inserted by Act No. 13633, Dec. 29, 2015; Act No. 14839, Jul. 26, 2017>
[This Article Newly Inserted by Act No. 11852, Jun. 4, 2013]
 Article 65-4 (Business Management in Real Names and Disclosure Thereof)
(1) The president of a corporation shall, with respect to new investment business referred to in Article 65-3 (1), record, manage and disclose the persons who have participated therein and other matters, relating to the details of the business, decision-making or the execution of the business: Provided, That he/she may choose not to disclose any information subject to non-disclosure prescribed in Article 9 of the Official Information Disclosure Act until the need for non-disclosure becomes non-existent due to lapse of the period, etc.
(2) Matters necessary for the scope of the record, management and disclosure prescribed in paragraph (1), and the methods, procedures, etc. therefor shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13633, Dec. 29, 2015]
 Article 65-5 (Restrictions on Debt Guarantee Contracts, etc.)
A corporation shall not be entitled to enter into any of the following contracts:
1. A contract which includes guarantee for redemption of a debt;
2. A contract having a condition to repurchase the asset of the corporation when it is sold;
3. A contract which includes commitment to purchase any unsold assets, if any assets remain unsold in conducting the business for housing construction and land development.
[This Article Newly Inserted by Act No. 13568, Dec. 15, 2015]
 Article 66 (Settlement of Accounts)
(1) The corporation shall settle the accounts of each business year within two months after the end of the pertinent business year.
(2) Upon settling the accounts, the corporation shall prepare financial statements and submit them, together with the documents prescribed by Presidential Decree and the auditor’s report prepared by a certified public accountant designated by the head of the local government, to the head of the local government without delay in order to have them approved by the head of the local government.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 66-2 (Common Standards for Budget and Settlement of Accounts)
(1) The Minister of the Interior and Safety may prepare and notify common standards for the budget and settlement of accounts of a corporation. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(2) Matters necessary for submitting and operating the budget and settlement of accounts of the corporation shall be prescribed by the head of a local government according to the common standards prescribed in paragraph (1).
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 67 (Management of Profits and Losses)
(1) If a corporation realizes profits as a result of account settlement, it shall manage such profits according to the following order of priority:
1. To make up for loss carried over from the preceding business year;
2. To deposit it as a reserve fund, as prescribed by Presidential Decree;
3. To deposit it as a sinking-fund reserve, as prescribed by Presidential Decree;
4. To distribute it as a dividend, or accumulate it, as prescribed by the articles of incorporation.
(2) No sinking-fund reserve in paragraph (1) 3 shall be used for a purpose other than the purpose of repaying the bonds of a corporation.
(3) If a corporation suffers loss as a result of account settlement, the corporation shall make up for the loss with the accumulated fund under paragraph (1) 4, and loss still not made up for with the accumulated fund shall be made up for with the reserve fund under paragraph (1) 2 or be carried over to the next business year.
[This Article Wholly Amended by Act No. 11852, Jun. 4, 2013]
 Article 68 (Issuance of Bonds and Loans)
(1) The corporation may issue bonds or obtain foreign loans with approval from the head of the local government. In such cases, the limit of issuing the bonds shall be prescribed by Presidential Decree. <Amended by Act No. 10990, Aug. 4, 2011>
(2) Deleted. <by Act No. 6665, Mar. 25, 2002>
(3) Where bonds to be issued pursuant to paragraph (1) are in excess of the limit prescribed by Presidential Decree, the head of the relevant local government shall grant approval prescribed in paragraph (1) after obtaining prior approval therefor from the Minister of the Interior and Safety. In such cases, the limit of issuing bonds set by Presidential Decree shall be applied by taking into consideration the debt ratio and operational results, etc. of the relevant corporation. <Amended by Act No. 10990, Aug. 4, 2011; Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(4) The local government may guarantee the redemption of bonds. <Amended by Act No. 10990, Aug. 4, 2011>
(5) Deleted. <by Act No. 6665, Mar. 25, 2002>
(6) Matters necessary for issuance, sale, and redemption of bonds shall be prescribed by municipal ordinances. <Amended by Act No.10990, Aug. 4, 2011>
(7) When the Financial Investment Services and Capital Markets Act is applied to bonds issued by a corporation established for constructing and managing urban railroads and for conducting housing construction projects, etc. pursuant to paragraphs (1) through (6), those bonds shall be deemed special bonds issued in accordance with Article 4 (3) of the same Act. <Amended by Act No. 10990, Aug. 4, 2011; Act No. 12727, Jun. 3, 2014>
[This Article Newly Inserted by Act No. 3233, Jan. 4, 1980]
 Article 69 (Operation of Surplus)
The corporation shall not operate any surplus by any means, other than the following:
1. Acquisition of state or local bonds;
2. Deposits in the Bank of Korea or other financial institutions under the Bank of Korea Act.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011 ]
 Article 70 Deleted. <by Act No. 5200, Dec. 30, 1996>
 Article 71 (Expenses Necessary for Vicarious Execution)
(1) The corporation may execute the business of the State or the local government. In such cases, necessary expenses shall be borne by the State or the local government.
(2) Matters necessary for expenses under paragraph (1), except for those matters prescribed by Presidential Decree, shall be prescribed by municipal ordinances.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 71-2 (Financial Support)
If deemed necessary for the operation of business, the local government may grant subsidies or give a long-term loan to the corporation.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 71-3 (Entrustment of Sale of Goods and Contract for Construction)
If deemed necessary, the corporation may entrust the purchase of goods or the conclusion of the contract for construction of facilities to the Administrator of Public Procurement Service.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 71-4 (Management of Goods)
In order to appropriately manage goods under its control, the corporation shall standardize the goods used by the corporation concerned, classify the goods according to their usage and purpose, and formulate a plan for management and control of the goods, including a plan for the demand and supply of goods.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 72 (Advance)
With regard to the advance related to the allotment sale of assets and the use of the facilities of the corporation, Article 20-2 shall apply mutatis mutandis.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
SECTION 4 Supervision
 Article 73 (Supervision, etc.)
(1) The head of a local government shall manage and supervise the affairs of a corporation, such as the establishment, operation, etc. thereof.
(2) The Minister of the Interior and Safety may inspect matters necessary for the affairs, accounting and property of a corporation and order it to make necessary reports. <Amended by Act No. 14839, Jul. 26, 2017>
[This Article Wholly Amended by Act No. 13568, Dec. 15, 2015]
 Article 74 Deleted. <by Act No. 13568, Dec. 15, 2015>
SECTION 5 Supplementary Provisions
 Article 75 (Application Mutatis Mutandis of the Commercial Act)
The provisions concerning joint-stock companies of the Commercial Act shall apply mutatis mutandis to the corporation unless it is contrary to its nature, unless otherwise prescribed by this Act: Provided, That Article 292 of the Commercial Act shall not apply mutatis mutandis to the corporation.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 75-2 (Publication of Status of Business Operation, etc.)
Article 46 shall apply mutatis mutandis to public announcement of the status of business operations, etc. In such cases, the "manager" shall be deemed the "president".
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 75-3 (Dispatch of and Concurrent Post by Public Officials)
Where necessary to support business activities performed by the corporation, the head of the local government may dispatch public officials under its management to the corporation or make them hold a concurrent post.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 75-4 (Entrustment of Authority)
Where necessary to achieve the objective of the corporation, the head of the local government may entrust some of his/her authority under this Act to the president of the corporation, as prescribed by its municipal ordinance.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 75-5 (Registries of Privatized Corporations as Stock Companies)
Where any corporation is sold pursuant to Article 53 (2) and (3), the buyer may file an application for effecting the registry of the corporation as his/her stock company without undergoing liquidation procedures under the Commercial Act. In such cases, the buyer shall be prohibited from using the title "corporation" in the firm title of his/her stock company.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 75-6 (Merger between Corporations and Public Institutions)
(1) A corporation may merge with a public institution designated as a public institution to be privatized according to a plan pursuant to Article 14 (1) of the Act on the Management of Public Institutions (including an institution, for which designation as a public institution has been revoked according to such plan) without following liquidation procedures under the Commercial Act.
(2) Where a corporation intends to conduct a merger under paragraph (1), it shall hold a consultation with the Minister of Strategy and Finance and obtain approval from the head of a local government before merger is registered: Provided, That where it merges with an institution, for which designation as a public institution has been revoked, procedures for holding a consultation may be omitted.
[This Article Newly Inserted by Act No. 11852, Jun. 4, 2013]
CHAPTER IV LOCAL PUBLIC AGENCY
 Article 76 (Establishment and Operation)
(1) Where necessary for the efficient performance of the business activities referred to in Article 2, the local government may establish a local public agency (hereinafter referred to as a "public agency").
(2) Articles 49 through 52, 53 (1), 56 (1) and (3), 57, 58, 58-2, 59 through 63, 63-2 through 63-6, 64, 64-2, 65, 65-2, 66, 66-2, 68, 69, 71, 71-2 through 71-4, 72 and 73, and 75-2 through 75-4 shall apply mutatis mutandis to the establishment and operation of the public agency. In such cases, the "corporation," "president", and "bonds" shall be deemed the "public agency", "chief director", and "corporation bonds," respectively. <Amended by Act No. 13568, Dec. 15, 2015>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 77 (Expenses)
The public agency may have the beneficiary of its business activities bear the expenses needed for the business with approval from the head of the local government.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 77-2 (Dissolution)
(1) Any public agency shall be dissolved on any of the following grounds: <Amended by Act No. 13633, Dec. 29, 2015; Act No. 14839, Jul. 26, 2017>
1. Attainment of the objectives of establishment, expiration of the term of existence and accrual of other grounds prescribed by the articles of incorporation;
2. Merger;
3. Bankruptcy;
4. Order given or ruling handed down by the court;
5. Resolution of the board of directors;
6. Demand for dissolution made by the Minister of the Interior and Safety prescribed in Article 78-3.
(2) The provisions governing the dissolution of a joint-stock company prescribed in the Commercial Act shall apply mutatis mutandis to the dissolution of any public agency.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
CHAPTER IV-II (Articles 77-3 through 77-7) Deleted.
CHAPTER V SUPPLEMENTARY PROVISIONS
 Article 78 (Evaluation of Management and Guidance)
(1) The Minister of the Interior and Safety shall evaluate the management of local public enterprises, as prescribed by Presidential Decree, in consideration of the basic management principles for local public enterprises prescribed in Article 3, and take necessary measures according to the outcomes of evaluation: Provided, That the Minister of the Interior and Safety may request the heads of local governments to evaluate the management of local public enterprises, when he/she deems it necessary. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 11852, Jun. 4, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(2) The evaluation of management prescribed in paragraph (1) shall include the evaluation with respect to the attainment of management goals, the efficiency of business, the nature of public interest and customer services, etc. of any local public enterprise.
(3) When necessary for the evaluation of management prescribed in paragraph (1), the Minister of the Interior and Safety may request local public enterprises to submit relevant data, such as the list of customers, etc. In such cases, the local public enterprises, in receipt of such request, shall comply therewith, except in extenuating circumstances. <Newly Inserted by Act No. 11852, Jun. 4, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(4) The Minister of the Interior and Safety may evaluate the management performance of the presidents of local public enterprises, as prescribed by Presidential Decree, apart from the evaluation of management prescribed in paragraphs (1) and (2). In such cases, public interest shall be taken into consideration. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 11852, Jun. 4, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(5) The Minister of the Interior and Safety or Mayors/Do Governors (excluding the Special Metropolitan City Mayor and a Special Self-Governing Province Governor; hereafter the same shall apply in this paragraph) may provide guidance, counselling or recommendations to local public enterprises (limited to local public enterprises of a Si/Gun/autonomous Gu in cases of a Mayor/Do Governor) necessary for efficient management. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 11852, Jun. 4, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 78-2 (Analysis of Management and Order to Improve Management)
(1) When the head of a local government evaluates the business management under the proviso to Article 78 (1), he/she shall submit a report on the evaluation of business management, financial statements and other documents prescribed by Presidential Decree to the Minister of the Interior and Safety within one month after the evaluation of the business management is completed. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(2) Where any of the following local public enterprises is considered to require special measures based on the outcomes of management evaluation prescribed in the main sentence of Article 78 (1) or analysis of documents, etc. under paragraph (1), the Minister of the Interior and Safety may analyze their management and make public the results thereof, as prescribed by Presidential Decree: <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
1. A local public enterprise which has continuously posted the current net loss for at least three consecutive business years;
2. A local public enterprise which records a sharp fall in operating revenues over the preceding year without any special ground;
3. A local public enterprise which is required to restructure its management through the scaling back of its business size, the liquidation of a corporation or privatization in light of circumstances surrounding its management;
4. Other local public enterprises prescribed by Presidential Decree.
(3) When the Minister of the Interior and Safety deems it necessary based on the outcomes of the management analysis prescribed in paragraph (2), he/she may order the head of a local government, the president of a corporation or the president of a public agency to take measures to improve its management, such as dismissal of the executive officers of the relevant local public enterprise and its reorganization. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(4) In receipt of an order prescribed in paragraph (3), the head of a local government, the president of a corporation, or the president of a public agency shall comply therewith without delay, except in extenuating circumstances.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 78-3 (Requests for Dissolution of Financially-Troubled Local Public Enterprises)
(1) Where any public corporation or public agency falls under any of the following cases which are prescribed by Presidential Decree, the Minister of the Interior and Safety may request the head of a local government, the president of a public corporation, or the president of a public agency to dissolve it, following deliberation of the policy committee for local public enterprises prescribed in Article 78-5: <Amended by Act No. 14839, Jul. 26, 2017>
1. Where its ability to redeem debts is remarkably low;
2. Where it is difficult to revive due to lack of business prospect;
3. Where it is impracticable to achieve the purposes of its establishment.
(2) The head of a local government, the president of a corporation, or the president of a public agency, in receipt of a request for dissolution prescribed in paragraph (1), shall comply therewith without delay except in any extenuating circumstances. <Amended by Act No. 14839, Jul. 26, 2017>
[This Article Wholly Amended by Act No. 13633, Dec. 29, 2015]
 Article 78-4 (Establishment and Operation of Evaluation Institute of Regional Public Corporation)
(1) In order to support the evaluation of management of local public enterprises, research of related policies, education of executive officers and employees thereof, etc. in the professional manner, the Evaluation Institute of Regional Public Corporation (hereinafter referred to as the "Evaluation Institute") shall be established.
(2) The Evaluation Institute shall be a corporation, and shall be duly formed upon the completion of the registration of their establishment at a place where its principal office is located.
(3) In order to support the performance of the services of the Evaluation Institute, local governments or local public enterprises may make contributions to the Evaluation Institute. In such cases, matters necessary for the payment, use, management, etc. of the contributions shall be prescribed by Presidential Decree.
(4) The Evaluation Institute shall have a board of directors and one auditor.
(5) The board of director shall be comprised of not more than twelve directors, including one chairperson.
(6) The chairperson shall be appointed by the board of directors, following recommendation of the board of directors and approval from the Minister of the Interior and Safety. <Amended by Act No. 14839, Jul. 26, 2017>
(7) The term of office of the chairperson shall be three years and may be renewed only once.
(8) Other matters necessary for the establishment and operation of the Evaluation Institute, such as the terms of office of directors and an auditor and the methods of appointing them, shall be prescribed by the articles of incorporation.
(9) The Minister of the Interior and Safety shall guide and supervise the Evaluation Institute, and may request the Evaluation Institute to report the matters concerning its services or order to submit its data, etc., where necessary. <Amended by Act No. 14839, Jul. 26, 2017>
(10) Unless otherwise prescribed by this Act, the provisions of the Civil Act that are relevant to an incorporated foundation shall apply mutatis mutandis with regard to the Evaluation Institute.
[This Article Newly Inserted by Act No. 13633, Dec. 29, 2015]
 Article 78-5 (Policy Committee for Local Public Enterprises)
(1) The Minister of the Interior and Safety shall operate a policy committee for local public enterprises comprised of relevant experts in order to deliberate on major policies related to the local public enterprises, the assessment of business operations, the examination of business operations, and other matters with regard to the improvement of business operations. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
(2) A policy committee for local public enterprises shall have not more than 15 members including one chairperson.
(3) Matters necessary for the organization and management, etc. of a policy committee for local public enterprises shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 78-6 (Hearing Opinions of Residents, etc.)
(1) In any of the following cases, the head of a local government shall file a report to the local council and hear opinions of the residents and related experts, etc.: <Amended by Act No. 14839, Jul. 26, 2017>
1. Where he/she intends to establish a local public enterprise;
2. Where he/she receives an order from the Minister of the Interior and Safety to improve management prescribed in Article 78-2 or a request for dissolution prescribed in Article 78-3.
(2) Methods and procedures for hearing residents' opinions prescribed in paragraph (1) and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13633, Dec. 29, 2015]
 Article 78-7 (Reports to National Assembly)
The Minister of the Interior and Safety shall submit a report on local public enterprises, which stipulates the results of evaluation of management prescribed in Article 78, the outcomes of the management analysis and measures to improve management prescribed in Article 78-2, request for dissolution prescribed in Article 78-3, etc. each year within three months after management evaluation is conducted and measures to improve management are taken, to the competent Standing Committee of the National Assembly. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 13633, Dec. 29, 2015; Act No. 14839, Jul. 26, 2017>
[This Article Newly Inserted by Act No. 10990, Aug. 4, 2011]
 Article 79 (Subsidies from National Treasury)
Where it is deemed necessary for the smooth operation of local public enterprises, the State may subsidize part of the capital to be invested by the local government and any other expenses to be incurred to the local government.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 79-2 Deleted. <by Act No. 6665, Mar. 25, 2002>
 Article 79-3 (Delegation of Authority)
The authority of the Minister of the Interior and Safety prescribed in this Act may be partially delegated to Mayors/Do Governors, as prescribed by Presidential Decree. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 11852, Jun. 4, 2013; Act No. 12844, Nov. 19, 2014; Act No. 14839, Jul. 26, 2017>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 80 (Changes in Organization of Corporations and Public Agencies)
(1) A corporation or a public agency may, where necessary for the efficient business operation, change its organization from a corporation to a public agency, or from a public agency to a corporation, without going through the liquidation procedure.
(2) Where the president of a corporation or the president of a public agency intends to make an organizational change prescribed in paragraph (1), he/she shall obtain resolution of the council for the organizational change following approval from the head of the local government.
(3) Where a corporation invested by a person, other than a local government, intends to change its organization prescribed in Article 53 (2), it shall convert the amount invested by the person other than the local government to the investment of the local government, after obtaining resolution of a general assembly meeting adopted by concurrence of all shareholders before resolution of the council is adopted under paragraph (2).
(4) The president of a corporation or the president of a public agency shall notify the interested parties, including creditors, of the fact of the organizational change within 20 days from the date on which the council adopts the resolution prescribed in paragraph (2).
(5) Where a corporation or public agency obtains a resolution prescribed in paragraph (2), the former corporation or the former public agency shall file a registration of the dissolution, and the substitute corporation or substitute public agency shall file a registration of incorporation at the location of its principal office.
(6) The substitute corporation or the substitute public agency shall succeed, by universal title, to all property, claims and obligations, employment relationship, and other rights and obligations belonging to the former corporation or the former public agency on the date of registration of its establishment prescribed in paragraph (5).
(7) Except as prescribed in paragraphs (1) through (6), matters necessary for the methods and procedures for making organizational changes shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 13568, Dec. 15, 2015]
 Article 80-2 (Notification of Initiation or Completion of Investigation, etc. of Investigation Agencies, etc.)
When any of the following public agencies initiates or completes examination on or investigation into the duties of the executive officers or employees of a corporation or a public agency, it shall notify such fact and the results thereof to the president of a corporation or the president of a public agency within ten days from the date of initiation or completion:
1. The Board of Audit and Inspection;
2. Prosecutors, police, and other investigation agencies;
3. The Minister of the Interior and Safety;
4. The heads of local governments.
[This Article Newly Inserted by Act No. 14917, Oct. 24, 2017]
CHAPTER VI PENALTY PROVISIONS
 Article 81 (Penalty Provisions)
Where the executive officers (excluding auditors) of a corporation or public agency violate Articles 65 and 66 (2) (including cases applied mutatis mutandis in Article 76 (2)), they shall be punished by a fine not exceeding five million won.
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 82 (Administrative Fines)
(1) Any person who refuses, interferes with, or evades an inspection prescribed in Article 73 (2) (including cases applied mutatis mutandis in Article 76 (2)) without any just ground shall be subject to an administrative fine not exceeding two million won. <Amended by Act No. 13568, Dec. 15, 2015>
(2) Administrative fines prescribed in paragraph (1) shall be imposed and collected by the Minister of the Interior and Safety, as prescribed by Presidential Decree. <Amended by Act No. 13568, Dec. 15, 2015; Act No. 14839, Jul. 26, 2017>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
 Article 83 (Legal Fiction as Public Officials in Application of Penalty Provisions)
If Articles 129 through 132 of the Criminal Act are applicable, the executive officers and employees of corporations and public agencies shall be deemed public officials. <Amended by Act No. 11852, Jun. 4, 2013>
[This Article Wholly Amended by Act No. 10990, Aug. 4, 2011]
ADDENDA
(1) (Enforcement Date) This Act shall enter into force six months after its promulgation.
(2) (Evaluation of Assets) The assets of the local public enterprise shall be evaluated under Presidential Decree in order to finalize the financial status and to establish the basis for the appropriate depreciation of assets.
(3) (Primary Capital) The primary capital of the local public enterprise shall be the balance remaining after deducting the amount of liabilities on the date this Act enters into force from the evaluated amount of the assets on the same date under the preceding paragraph.
ADDENDUM <Act No. 3233, Jan. 4, 1980>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 4371, May 31, 1991>
Article 1 (Enforcement Date)
This Act shall enter into force on the organization date of the Council of the Special Metropolitan City.
Article 2 Omitted.
ADDENDUM <Act No. 4517, Dec. 8, 1992>
This Act shall enter into force on April 1, 1993.
ADDENDUM <Act No. 5200, Dec. 30, 1996>
This Act shall enter into force on April 1, 1997.
ADDENDA <Act No. 5708, Jan. 29, 1999>
(1) (Enforcement Date) This Act shall enter into force on April 1, 1999.
(2) (Transitional Measures concerning Terms of Office for Auditors) The term of office for the auditors of the local government-invested public corporation and the public agency, who are appointed under the previous provisions at the time this Act enters into force, shall be the remainder of the term of office for them set under the previous provisions.
ADDENDA <Act No. 6665, Mar. 25, 2002>
(1) (Enforcement Date) This Act shall enter into force on June 1, 2002.
(2) (Application Example concerning Guarantee Limits) The guarantee limits provided for in the amended provisions of Article 77-5 shall apply, starting with the portion of bonds or funds that are issued or borrowed for the first time after the enforcement of this Act.
(3) (Application Example concerning Management Evaluation) The amended provisions of Articles 78 and 78-2 shall apply, starting with the management evaluation that is conducted for the first time after the enforcement of this Act.
ADDENDUM <Act No. 7260, Dec. 30, 2004>
This Act shall enter into force three months after the date of its promulgation.
ADDENDUM <Act No. 7409, Mar. 24, 2005>
This Act shall enter into force on March 31, 2005.
ADDENDA <Act No. 7428, Mar. 31, 2005>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 6 Omitted.
ADDENDA <Act No. 7589, Jul. 13, 2005>
Article 1 (Enforcement Date)
This Act shall enter into force two months after the date of its promulgation.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 8028, Oct. 4, 2006>
(1) This Act shall enter into force on the date of its promulgation.
(2) (Transitional Measures concerning Results Contract) For the presidents of corporations and the chief directors of public agencies who are in office at the time this Act enters into force, the results contract under the amended provisions of Article 58-2 shall be concluded within six months from the enforcement date of this Act: Provided, That this shall not apply to the case where the remaining term falls short of six months.
ADDENDA <Act No. 8246, Jan. 19, 2007>
(1) This Act shall enter into force on the date of its promulgation.
(2) (Transitional Measures concerning Previously Privatized Corporations) The amended provisions of Article 75-5 shall also apply to a case where corporations under Article 53 (2) and (3) are privatized before this Act enters into force.
ADDENDA <Act No. 8423, May 11, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 13 Omitted.
ADDENDUM <Act No. 8450, May 17, 2007>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 8852, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That…(Omitted)…, amendments to Acts already promulgated but not yet enforced before this Act enters into force among Acts amended pursuant to Article 6 of the Addenda shall enter into force on the enforcement dates of the respective relevant Acts.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 9575, Apr. 1, 2009>
(1) (Enforcement Date) This Act shall enter into force six months after the date of its promulgation.
(2) (Applicability to Term of Office and Duties) The amended provisions of Article 59 (2) shall apply starting from the president, director and auditor to be first reappointed after this Act enters into force.
(3) (Transitional Measures concerning Appointment and Dismissal of Non-Permanent Directors) A non-permanent director who is incumbent at the time this Act enters into force shall be deemed appointed by the head of a local government under the amended provisions of Article 58 (6).
ADDENDUM <Act No. 10990, Aug. 4, 2011>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 11690, Mar. 23, 2013>
Article 1 (Enforcement Date)
(1) This Act shall enter into force on the date of its promulgation.
(2) Omitted.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 11852, Jun. 4, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 49, 54 (2), 61 (2), 64-2, 64-3, 65-3, 67, 77-3, 77-4 (4) and 77-6 (2) shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Management of Profits)
The amended provisions of Article 67 shall begin to apply to the account settlement for a business year which ends for the first time after such amended provisions enter into force.
Article 3 (Applicability to Establishment, etc. of Local Government Invested Corporations and Local Government Contributed Foundations)
The amended provisions of Article 77-3 (1) and (2) shall begin to apply to a local government invested corporation or local government contributed foundation established for the first time after such amended provisions enter into force.
Article 4 (Transitional Measures concerning Investment in Other Corporations and Procedures for Making New Investment)
The amended provisions of Articles 54 (2) and 65-3 shall not apply to cases in which feasibility study on investment or contribution is underway as at the time such amended provisions enter into force in accordance with a guideline for budget formulation of corporations determined by the heads of local governments.
Article 5 (Transitional Measures concerning Existing Local Government Invested Corporations and Local Government Contributed Foundations)
(1) Local government invested corporations or local government contributed foundations established pursuant to the previous provisions as at the time the amended provisions of Article 77-3 enter into force shall be deemed local government invested corporations or local government contributed foundations established pursuant to this Act.
(2) The amended provisions of Articles 77-6 (2) shall not apply to a local government invested corporation in which a local government has invested an amount under 1/10 of its capital as at the time this Act enters into force.
Article 6 (Transitional Measures concerning Limit of Guarantee for Repayment of Bonds, etc.)
Where a local government guarantees the issuance of bonds or borrowing of funds by a local government invested corporation pursuant to the previous provisions before this Act enters into force, lawful guarantee shall be deemed to have been given pursuant to the amended provisions of Article 77-5.
ADDENDA <Act No. 12507, Mar. 24, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 10 Omitted.
ADDENDUM <Act No. 12727, Jun. 3, 2014>
This Article shall enter into force on the date of its promulgation.
ADDENDA <Act No. 12844, Nov. 19, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended parts of the Acts which were promulgated before this Act enters into force but the enforcement dates of which have not arrived yet among the Acts amended pursuant to Article 6 of the Addenda shall respectively enter into force on the enforcement dates of such Acts.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 13568, Dec. 15, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 65-5 and 80 shall enter into force six months after the date of its promulgation. <Amended by Act No. 13633, Dec. 29, 2015>
Article 2 (Applicability to Formulation of Medium- to Long-Term Business Management Plans)
The amended provisions of Article 9-2 shall apply from the fiscal year that follows the fiscal year to which the enforcement date of this Act belongs.
Article 3 (Applicability to Restrictions on Requests for Disciplinary Actions, etc.)
The amended provisions of Article 63-6 (including the cases of application mutatis mutandis under Article 76 (2)) shall apply to cases where any ground for a disciplinary action occurs after this Act enters into force.
Article 4 (Applicability to Debt Guarantee Contracts, etc.)
The amended provisions of Article 65-4 shall apply to a contract that a corporation concludes on or after the enforcement date prescribed in the proviso to Article 1 of the Addenda.
Article 5 (Transitional Measures concerning Disqualifications for Executive Officers)
Notwithstanding the amended provisions of Article 60 (1) (including the cases of application mutatis mutandis under the amended provisions of Article 76 (2)), executive officers of a corporation and a public agency as at the time this Act enters into force shall be governed by the former provisions until the expiration of the relevant executive officers' terms of office.
ADDENDA <Act No. 13633, Dec. 29, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Article 2 (Applicability to Examination of Feasibility of Establishment of Public Corporation or Public Agency)
The amended provisions of Article 49 (4) (including the cases of application mutatis mutandis to a public agency prescribed in Article 76 (2)) shall apply to examination of feasibility conducted after this Act enters into force.
Article 3 (Applicability to Examination, etc. of Feasibility of New Investment Business)
The amended provisions of Article 65-3 (2) shall apply to examination of feasibility conducted after this Act enters into force.
Article 4 (Applicability to Business Management in Real Names and Disclosure Thereof)
The amended provisions of Article 65-4 shall apply to new investment business subject to the examination of feasibility conducted after this Act enters into force.
Article 5 (Applicability to Hearing Opinions of Residents, etc.)
The amended provisions of Article 78-6 shall apply to cases where a local government public enterprise is established or an order to improve management or a request for dissolution is received from the Minister of the Interior and Safety after this Act enters into force.
Article 6 (Transitional Measures concerning Corporations for Business Consultations)
(1) A corporation for business consultation established with the authorization of the Minister of the Interior and Safety for its establishment under the former provisons of Article 78-3 as at the time this Act enters into force (hereafter referred to as "corporation" in this Article) may request approval from the Minister of the Interior and Safety for the Evaluation Institute to succeed to all of its property, rights and obligations as resolved by its board of directors.
(2) When a corporation obtains approval from the Minister of the Interior and Safety under paragraph (1), it shall be deemed dissolved simultaneously with the establishment of the Evaluation Institute notwithstanding the provisions of the Civil Act relating to the dissolution and liquidation of a corporation, and the Evaluation Institute shall succeed to all the property, rights and obligations of the corporation by a universal title.
(3) The chairperson, directors, and auditor of the Evaluation Institute existing as at the time this Act enters into force shall be deemed appointed as the chairperson, directors, and auditor of the Evaluation Institute for the their remaining terms of office, respectively.
ADDENDA <Act No. 14839, Jul. 26, 2017>
Article 1 (Enforcement Date)
(1) This Act shall enter into force three months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 6 Omitted.
ADDENDA <Act No. 14917, Oct. 24, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicability to Notification of Initiation or Completion of Investigation, etc. of Investigation Agencies, etc.)
The amended provisions of Article 80-2 shall apply beginning with the examination or investigation initiated after this Act enters into force.