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ENFORCEMENT DECREE OF THE FRAMEWORK ACT ON SMALL AND MEDIUM ENTERPRISES

Wholly Amended by Presidential Decree No. 20260, Sep. 10, 2007

Amended by Presidential Decree No. 21368, Mar. 25, 2009

Presidential Decree No. 21831, Nov. 19, 2009

Presidential Decree No. 21969, Dec. 31, 2009

Presidential Decree No. 22652, Jan. 28, 2011

Presidential Decree No. 23412, Dec. 28, 2011

Presidential Decree No. 23527, Jan. 25, 2012

Presidential Decree No. 24638, jun. 28, 2013

Presidential Decree No. 24799, Oct. 16, 2013

Presidential Decree No. 25050, Dec. 30, 2013

Presidential Decree No. 25302, Apr. 14, 2014

Presidential Decree No. 26356, jun. 30, 2015

Presidential Decree No. 26774, Dec. 30, 2015

Presidential Decree No. 27087, Apr. 5, 2016

Presidential Decree No. 27106, Apr. 26, 2016

Presidential Decree No. 28213, Jul. 26, 2017

Presidential Decree No. 28378, Oct. 17, 2017

Presidential Decree No. 28560, Dec. 29, 2017

 Article 1 (Purpose)
The purpose of this Decree is to provide for the matters delegated by the Framework Act on Small and Medium Enterprises and those necessary for the enforcement thereof.
 Article 2 (Definitions)
The terms used in this Decree shall be defined as follows: <Amended by Presidential Decree No. 21368, Mar. 25, 2009; Presidential Decree No. 22625, Jan. 28, 2011; Presidential Decree No. 23412, Dec. 28, 2011; Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 24799, Oct 16, 2013; Presidential Decree No. 24638, Jun. 28, 2013; Presidential Decree No. 27087, Apr. 5, 2016>
1. The term "date of establishment" means any of the following dates:
(a) For a business entity which is a juristic person: The date of registration of its incorporation;
(b) For a business entity for which the business registration has been completed in accordance with Article 168 of the Income Tax Act or Article 8 of the Value-Added Tax Act (referring to any business entity, other than a corporation; hereafter the same shall apply in this Article): The date of its business registration;
2. The term "date of merger or demerger" means any of the following dates:
(a) For a business entity which is a juristic person: The date on which the incorporation of the corporation established as a result of the merger or demerger, or the change in the corporation surviving after such merger or demerger is registered;
(b) For a business entity for which the business registration has been completed in accordance with Article 168 of the Income Tax Act or Article 8 of the Value-Added Tax Act: The date on which the business registration of the common place of business is completed or the date on which the business registration is completed separately from the common place of business;
3. The term "related corporation" means a group of corporations with which a company subject to external audit under Article 2 of the Act on External Audit of Stock Companies (hereinafter referred to as "company subject to external audit") is in a parent-subsidiary relationship by taking control of other domestic companies, as provided for in Article 3-2;
4. The term “shares, etc.” means a total number of shares issued for an incorporated company (excluding shares with no voting rights), or the total investment amount for companies other than incorporated ones;
5. The term “relatives” means spouses (including those who are in a de facto marital relationship), blood relatives only including persons related as second cousins or closer, or relatives by marriage only including persons related as first cousins or closer;
6. The term “executive officers” means any of the following persons:
(a) Incorporated companies or limited liability companies: Registered directors (excluding outside directors);
(b) Companies except those falling under (a): Partners with unlimited liability or business executors.
 Article 3 (Scope of Small and Medium Enterprises)
(1) A small and medium enterprises as defined in Article 2 (1) 1 of the Framework Act on Small and Medium Enterprises (hereinafter referred to as the "Act") shall be a business entity that meets all the standards set forth in the following subparagraphs: <Amended by Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree No. 26356, Jun. 30, 2015; Presidential Decree No. 27087, Apr. 5, 2016; Presidential Decree No. 27106, Apr. 26, 2016; Presidential Decree No. 28378, Oct. 17, 2017>
1. A business entity that meets all the standards set forth in the following items:
(a) The main type of business in which the business entity is engaged and its average sales or annual sales (hereinafter “average sales, etc.”) shall meet the standards set forth in attached Table 1;
(b) A corporation whose total assets are less than 500 billion won;
2. A business entity whose actual separation of its management and ownership does not fall under any of the following:
(a) A company that belongs to a conglomerate subject to restrictions on mutual investment under Article 14 (1) of the Monopoly Regulation and Fair Trade Act (hereafter “conglomerate subject to restrictions on mutual investment” in this subparagraph) or a company that belongs to a conglomerate subject to restrictions on mutual investment, etc. among companies deemed notified as those incorporated as an affiliate into a conglomerate subject to disclosure pursuant to Article 14-3 of the same Act;
(b) A corporation whose total assets are at least 500 billion won (including a foreign corporation, with the exception of a non-profit corporation and the one falling under any of the subparagraphs in Article 3-2 (3)) which is the largest shareholder, directly or indirectly owning 30 percent or more of the total outstanding stocks, etc. The largest shareholder referred to in such cases means a corporation or an individual owning the largest share of the relevant company independently or jointly with any of the following, and Article 2 (2) of the Enforcement Decree of the Adjustment of International Taxes Act shall apply mutatis mutandis to the calculation of the ratio of indirectly owned outstanding stocks, etc.:
(i) If the shareholder is a corporation: Executive officers of the corporation;
(ii) If the shareholder is an individual who does not fall under (i): Relatives by blood of such individual;
(c) In the case of a corporation belonging to a related company, a corporation whose average sales, etc. calculated according to Article 7-4 does not satisfy the standards under Attached Table 1;
(d) Deleted. <by Presidential Decree No. 28560, Dec. 29, 2017>
(2) “A social enterprise prescribed by Presidential Decree” under Article 2 (1) 2 shall be a social enterprise whose primary purpose does not lie in profit making and which satisfies all of the following requirements: <Amended by Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree No. 27106, Apr. 26, 2016>
1. The social enterprise shall meet all the standards set forth in each item under paragraph (1) 1;
2. Deleted; <by Presidential Decree No. 25302, Apr. 14, 2014>
3. The social enterprise shall not fall under paragraph (1) 2 (a) or (b).
(3) “Those prescribed by Presidential Decree” referred to in Article 2 (1) 3 of the Act shall mean the cooperatives, federations of cooperatives, social cooperatives, and federations of social cooperatives satisfying all the standards prescribed in each subparagraph of paragraph (2). <Newly Inserted by Presidential No. 27106, Apr. 26, 2016>
(4) Deleted. <by Presidential Decree No. 27106, Apr. 26, 2016>
[This Article Wholly Amended by Presidential Decree No. 23412, Dec. 28, 2011]
 Article 3-2 (Parent-Subsidiary Relationship)
(1) "Parent-subsidiary relationship between related companies" means, if a company or individual controls another company as prescribed in any of the following subparagraphs as at the end of the relevant business year, the relationship between the company (hereinafter referred to as "parent company") and the other company (hereinafter referred to as "subsidiary company"): Provided, That a stock-listed corporation under Article 9 (15) of the Financial Investment Services and Capital Markets Act that is obligated to prepare consolidated financial statements according to Article 1 (2) 2 of the Act on the External Audit of Stock Companies and Article 1 (3) of the Enforcement Decree of the Act, and domestic companies included in such consolidated financial statements are considered to be in a parent-subsidiary relationship: <Amended by Presidential Decree No. 23412, Dec. 28, 2011; Presidential Decree No. 25302, Apr. 14, 2014>
1. Where a parent company independently, or jointly with a person who is in any of the following relationships with the parent company, owns at least 30 percent of the stocks of the subsidiary company, and is the largest investor:
(a) A person who owns at least 30 percent of the stocks, etc. independently or jointly with relatives by blood;
(b) A relative of the person under (a);
2. Where a parent company owns at least 30 percent of the stocks of a subsidiary company jointly with a subsidiary company that falls under subparagraph 1 (hereinafter referred to as a “subsidiary”) or jointly with a person who falls under any of the items of subparagraph 1, and is the largest investor;
3. Where a subsidiary owns not less than 30 percent of the stocks, etc. of its parent company independently or jointly with another subsidiary, and is the largest investor;
4. Where a person who falls under any of the items of subparagraph 1 owns at least 30 percent of the stocks, etc. of his/her subsidiary company jointly with the subsidiary company, and is the largest investor.
(2) Notwithstanding the main sentence of the part other than each subparagraph of paragraph (1), in cases of falling under any of the following subparagraphs, the parent-subsidiary relationship prescribed in each subparagraph of paragraph (1) may be determined based on the date prescribed in each subparagraph: <Newly Inserted by Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree No. 28378, Oct. 17, 2017>
1. Where a company establishes, merges, divides, or closes its business after the last day of the immediately preceeding business year: the date of business establishment, merger, or division or the date of business closure prescribed in Article 7 of the Enforcement Decree of the Value-Added Tax Act;
2. Where a company that falls under Article 3 (1) 2 (c) and therefore excluded from small and medium enterprises experiences any change in its ownership of stocks, etc. after the last day of the immediately preceding business year: the date of change in ownership of stocks, etc.
(3) Where any of the following persons owns stocks, etc. of another domestic company, such company and the domestic company shall not be deemed parent and subsidiary companies, respectively, provided for in paragraph (1): <Amended by Presidential Decree No. 23412, Dec. 28, 2011; Presidential Decree No. 23527, Jan. 25, 2012; Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree 26356, Jun. 30, 2015; Presidential Decree No. 28213, Jul. 26, 2017>
1. An investment company for the establishment of a small and medium enterprise under the Support for Small and Medium Enterprise Establishment Act;
2. A new technology venture capitalist under the Specialized Credit Financial Business Act;
3. A company specializing in the start-up of new technology-based business under the Act on Special Measures for the Promotion of Venture Businesses;
4. An industry-academic cooperation technology holding company under the Industrial Education Enhancement and Industry-Academia-Research Cooperation Promotion Act;
5. A person appointed and notified by the Minister of SMEs and Startups in order to foster small and medium enterprises falling under cases equivalent to subparagraphs 1 through 4.
[This Article Newly Inserted by Presidential Decree No. 21368, Mar. 25, 2009]
 Article 3-3 (Period for Recognition of Small and Medium Enterprises, etc.)
(1) The period for the recognition of small and medium enterprises under Article 3 shall be one year, starting from the date on which three months elapse after the last day of the immediately preceeding business year: Provided, That where a company which was excluded from small and medium enterprises experiences due to its falling under Article 3 (1) 2 (c) experiences any change in its ownership of stocks, etc. after the last day of the immediately preceding business year and becomes a small and medium enterprise, the period for the recognition of small and medium enterprises shall be from the date of such change to the date on which three months elapse after the last day of the immediately preceeding business year. <Amended by Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree No. 28378, Oct. 17, 2017>
(2) The Minister of SMEs and Startups shall review the appropriateness of the standards set forth in Article 3 (1) 1 every five years in order to secure effectiveness of the standards. <Amended by Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree No. 28213, Jul. 26, 2017>
(3) Where the Minister of SMEs and Startups reviews the appropriateness of the standards pursuant to paragraph (2), he/she may hear the opinions of external professionals with extensive knowledge of and experience in small and medium enterprises. <Newly Inserted by Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree No. 28213, Jul. 26, 2017>
(4) Except as otherwise provided for in paragraphs (1) through (3), details concerning judgment on the recognition of small and medium enterprises, etc. shall be prescribed and notified by the Minister of SMEs and Startups. <Newly Inserted by Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 23412, Dec. 28, 2011]
 Article 4 (Criteria for Main Business)
(1) Where a business entity engages in at least two different types of businesses, the business that takes up the largest portion of the average sales, etc. computed in accordance with Article 7 shall be deemed its main business. <Amended by Presidential Decree No. 25302, Apr. 14, 2014>
(2) In the case of Article 3 (1) 2. (c), the main business of either a parent company or subsidiary whose average sales, etc. are higher shall be considered a main business. <Amended by Presidential Decree No. 25302, Apr. 14, 2014>
[This Article Wholly Amended by Presidential Decree No. 23412, Dec. 28, 2011]
 Articles 5 and 6 Deleted. <by Presidential Decree No. 25302, Apr. 14, 2014>
 Article 7 (Computation of Average Sales, etc.)
(1) Where the average sales, etc. are calculated pursuant to Articles 3 (1) 1 (a) and 8 (1), the amount of sales shall refer to the sales shown on the income statement, which shall be prepared in compliance with the accounting practice generally deemed fair and appropriate (hereinafter referred to as “accounting practice”): Provided, That in the case of a business entity that uses operating revenue, which is deemed equivalent to the sales due to the nature of the business, sales refers to the operating revenue. <Amended by Presidential Decree No. 23412, Dec. 28, 2011; Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree 26356, Jun. 30, 2015>
(2) The average sales, etc. shall be computed using any of the following formulas: <Amended by Presidential Decree No. 23412, Dec. 28, 2011; Presidential Decree No. 25302, Apr. 14, 2014>
1. If the business entity has engaged in its business for at least thirty six months during the immediately preceding three business years: Amount of sales calculated by dividing total sales recorded in the immediately preceding three business years by three;
2. Where the total period of business is at least twelve months and shorter than thirty six months as of the last day of the immediately preceeding business year (excluding cases where the said business was established, merged, or divided during the immediately preceeding business year and at least twelve months has elapsed from the date of its business establishment, merger, or division): Amount obtained by dividing the total sales recorded for the business year whose business period is 12 months by the number of business years whose business period is 12 months;
3. If the business entity was established, merged, or divided in the immediately preceding year or the relevant year and does not fall under subparagraph 2: Amount computed in accordance with the following classification and converted into annual sales:
(a) Where at least twelve months have passed from the date of establishment, merger, or division of the business entity: The aggregate monthly sales during a period of twelve months, counting retrospectively from the month immediately preceding the month in which the date when a decision is made on whether or not an entity qualifies as a small and medium enterprise under Article 3 (hereinafter referred to as “date of computation”) falls;
(b) If twelve months have not yet passed from the date of its establishment, merger or division: Amount computed by dividing the aggregate monthly sales during the period, beginning with the month immediately following the month in which the date of establishment, merger or division falls and ending with the month immediately preceding the month in which the date of computation falls, by the corresponding number of months and then multiplying the sum by 12: Provided, That where the business entity falls under any of the following cases, the sales shall be the amount computed by dividing the aggregate sales earned during the period, beginning with the date of establishment, merger or division and ending with the date of computation, by the corresponding number of days and then multiplying the sum by 365:
(i) If the date of computation falls in the month in which the date of establishment, merger or division falls;
(ii) If the date of computation falls in the month immediately following the month in which the date of establishment, merger or division falls.
 Article 7-2 (Total Assets)
(1) The total assets under Article 3 (1) 1 (b) and 2 (b) shall be the total assets shown on the present financial statements on the last day of the immediately preceding business year. <Amended by Presidential Decree No. 25302, Apr. 14, 2014>
(2) Notwithstanding paragraph (1), total assets of a corporation established, merged or divided in the year shall be the total assets as of the date of its establishment, merger or division.
(3) When the total assets of a foreign corporation under Article 3 (1) 2 (b) are converted into Korean won, the average exchange rate for the immediately preceding five business years shall apply to such conversion. <Amended by Presidential Decree No. 25302, Apr. 14, 2014>
[This Article Newly Inserted by Presidential Decree No. 23412, Dec. 28, 2011]
 Article 7-3 Deleted. <by Presidential Decree No. 25302, Apr. 14, 2014>
 Article 7-4 (Calculation of Average Sales, etc. of Related Companies)
(1) The average sales, etc. of a parent company and subsidiary company which belong to related companies shall be calculated as provided for in attached Table 2. In this case, the average sales, etc. means the respective average sales, etc. of a parent company and subsidiary company calculated pursuant to Article 7. <Amended by Presidential Decree No. 23412, Dec. 28, 2011; Presidential Decree No. 25302, Apr. 14, 2014>
(2) Where a parent company and subsidiary company under subparagraph 1 own stocks with mutual voting rights, the larger ratio of the owned voting stocks shall be deemed the ratio owned by the parent company.
(3) Deleted. <by Presidential Decree No. 25302, Apr. 14, 2014>
[This Article Newly Inserted by Presidential Decree No. 21368, Mar. 25, 2009]
 Article 8 (Classification of Small Enterprises and Medium Enterprises)
(1) A "small enterprise" under Article 2 (2) of the Act shall be a business entity from among small and medium enterprises, of which the average sales, etc. of its major lines of business meet the standards specified in attached Table 3.
(2) A “medium enterprise” under Article 2 (2) of the Act shall be a business entity, from among small and medium enterprises, which is not a small enterprise under paragraph (1).
[This Article Wholly Amended by Presidential Decree No. 26356, Jun. 30, 2015]
 Article 9 (Dis-entitlement to Grace Period)
"Grounds as specified by Presidential Decree" in the proviso to Article 2 (3) of the Act means any of the following grounds: <Amended by Presidential Decree No. 21368, Mar. 25, 2009; Presidential Decree No. 23412, Dec. 28, 2011; Presidential Decree No. 24799, Oct 16, 2013; Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree No. 27087, Apr. 5, 2016; Presidential Decree No. 27106, Apr. 26, 2016; Presidential Decree No. 28560, Dec. 29, 2017>
1. Where a small and medium enterprise merges with another business entity that is under the period during which it is treated as a small and medium enterprise pursuant to the main body of Article 2 (3) of the Act, and where three years have passed from the year following the year when the grounds that made the business entity under the period during which it is treated as a small and medium enterprise no longer regarded as a small and medium enterprise arose;
2. Where a small and medium enterprise falls under Article 3 (1) 2 (a);
3. Where a business entity that was previously deemed a small and medium enterprise pursuant to the main body of Article 2 (3) of the Act becomes a small and medium enterprise under Article 2 (1) of the Act and thereafter loses its status as a small and medium enterprise due to an increase in its average sales, etc.;
4. Deleted. <by Presidential Decree No. 25302, Apr. 14, 2014>
 Article 10 (Method of Identification, etc.)
(1) The Minister of SMEs and Startups may, if considered necessary to identify whether a business entity falls under the scope of small and medium enterprises, prepare separate guidelines for such identification and make public notice thereof. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(2) Deleted. <by Presidential Decree No. 26356, Jun. 30, 2015>
(3) Deleted. <by Presidential Decree No. 26774, Dec. 30, 2015>
 Article 10-2 (Establishment of Small and Medium Enterprise Foster Plan and Annual Report)
(1) The Minister of SMEs and Startups shall prepare guidelines to formulate a plan regarding the policies for fostering small and medium enterprises referred to in Article 20 (1) of the Act (hereinafter referred to as “foster plan”) and shall notify such guidelines to the heads of relevant central administrative agencies by December 31 of every year. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(2) The heads of relevant central administrative agencies shall submit the budget related to the foster plan according to the guidelines to formulate a foster plan referred to in paragraph (1) by January 31 of every year, and submit the performance and results of the foster plan for the previous year by July 31 of every year, to the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 23412, Dec. 28, 2011]
 Article 10-3 (Establishment and Operation of Integrated Management System for Small and Medium Enterprise Aid Programs)
(1) The following duties shall be performed by the Minister of SMEs and Startups through the integrated management system for small and medium enterprise aid programs under Article 20-2 (1) of the Act (hereinafter referred to as “integrated management system”): <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Management of the status of applications filed for the small and medium enterprise aid programs, receipt of the applications, and the records of the said applications;
2. Management of the progress of the small and medium enterprise aid programs;
3. Creation and management of the statistics on the small and medium business enterprise programs;
4. Provision of the information concerning the small and medium enterprise aid programs;
5. Other affairs necessary to ensure the efficient performance of the small and medium enterprise aid programs.
(2) The Minister of SMEs and Startups shall annually determine the scope of the small and medium enterprise aid programs to be managed through the integrated management system, in consultation with the heads of the central administrative agencies and local governments in charge of the small and medium enterprise aid programs, by no later than March 31st of each year. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(3) Where the Minister of SMEs and Startups requests the heads of central administrative agencies, local governments, general credit information collection agencies, or other relevant agencies and groups (hereinafter referred to as “heads of central administrative agencies, etc.”) to provide the data or information falling under each subparagraph of Article 20-2 (2) of the Act, he/she may request that the aforementioned data or information be provided by means of linking the information system related to the requested data or information to the integrated management system. In this case, the heads of central administrative agencies, etc. so requested shall comply except under extenuating circumstances. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) If deemed necessary to keep the data or information received pursuant to Article 20-2 (2) of the Act up-to-date and accurate, the Minister of SMEs and Startups may submit his/her opinion to the heads of central administrative agencies, etc. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(5) A person who intends to possess or use the data or information in the integrated management system shall, in advance, consult with the Minister of SMEs and Startups about the scope of possession or use of the data or information. In such cases, the person may do so within the scope of consultation conducted with the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 25302, Apr. 14, 2014]
 Article 10-4 (Designation and Operation of Organization Dedicated to Integrated Management System)
(1) The Minister of SMEs and Startups may designate a person satisfying all the conditions under each of the following subparagraphs as a manager of the integrated management system in accordance with Article 20-2 (6) of the Act (hereinafter referred to as “management agency”): <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Manpower: Required to possess at least two persons each of whom falls under each of the following items:
(a) A doctorate degree holder who has served at least five years as a full time researcher on small and medium enterprises at corporations prescribed in Article 16 (1) 2;
(b) A person engaged in the development, management, and operation of an information system for at least three years;
2. Facilities: Required to have the facilities satisfying the standards determined by the Minister of SMEs and Startups, with regard to the operation of an information system, statistic analysis thereof, and its information security.
(2) A person designated as a management agency shall perform each of the following duties: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Improvement and management of the functions of the integrated management system;
2. Management and provision of the data or information collected by the integrated management system;
3. Creation and analysis of the information and statistical data that are necessary to operate the small and medium enterprise aid programs;
4. Other duties that the Minister of SMEs and Startups deems necessary to maintain and manage the integrated management system.
(3) The Minister of SMEs and Startups may grant subsidies to help cover all or some of the costs necessary to operate the management agency. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) Except as otherwise provided for in paragraphs (1) through (3), other details concerning designation and supervision, etc. of the management agency shall be determined and publicly notified by the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 25302, Apr. 14, 2014]
 Article 11 (Scope of Consolidated Status Survey)
"Status surveys prescribed by Presidential Decree" in Article 21 (1) 5 of the Act means surveys specified in any of the following subparagraphs: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Surveys to learn the status of business conversion as provided for in Article 7 of the Special Act on the Promotion of Business Conversion in Small and Medium Enterprises;
2. Surveys to compile statistics on technology of small and medium enterprises as provided for in Article 8 of the Act on the Promotion of Technology Innovation of Small and Medium Enterprises;
3. Other surveys conducted by the Minister of SMEs and Startups in order to learn the status of the activities, funds, human resources, and management of small and medium enterprises.
[This Article Newly Inserted by Presidential Decree No. 21368, Mar. 25, 2009]
 Article 12 (Methods and Procedures, etc. for Status Survey)
(1) Status surveys on small and medium enterprises under Article 21 (1) of the Act shall include the following:
1. Matters concerning the general management of small and medium enterprises by region, characteristics of business type, and scope;
2. Matters concerning whether a small and medium enterprise has its own plant, its procurement of materials, investment in facilities, and financial structure;
3. Matters concerning sales of products, commissioning transactions, entrusting transactions, employment, and informatization of small and medium enterprises;
4. Other matters necessary to understand the status of small and medium enterprises.
(2) When conducting a consolidated survey on the status of small and medium enterprises as provided for in the latter part of Article 21 (1) of the Act, the Government shall devise an annual implementation plan for consolidated status surveys on small and medium enterprises and conduct them accordingly after hearing from small and medium entrepreneurs, organizations and institutions related to small and medium enterprises, relevant central administrative agencies, and experts in statistics.
(3) When devising a plan for consolidated status survey on small and medium enterprises under paragraph (2), the Government shall take the following into overall consideration:
1. Objective, characteristics, details, methods, and frequencies, etc. of the survey;
2. Matters concerning mutual utilization of the survey’s subject matter, simplification of survey items, uniformity of survey timing, representation and reliability of survey results and notification of survey results, etc.;
3. Matters concerning human resources and expenses necessary for survey planning, sample design, and result analysis, etc.;
4. Matters concerning designation of a survey agency;
5. Other matters necessary to reduce the burden of small and medium enterprises subject to survey.
[This Article Newly Inserted by Presidential Decree No. 21368, Mar. 25, 2009]
 Article 13 (Term of Office and Qualification of Ombudsman for Small and Medium Enterprises)
(1) The term of office for the Ombudsman under Article 22 (1) of the Act shall be three years, and he/she may be recommissioned only once.
(2) "Persons with extensive knowledge and experience" in Article 22 (3) of the Act means any of the following persons: <Amended by Presidential Decree No. 25302, Apr. 14, 2014; Presidential Decree No. 28213, Jul. 26, 2017>>
1. A person who served or has been serving as a representative or standing executive officer for a small and medium enterprise for at least five years;
2. A person who has worked for an organization related to small and medium enterprises or administrative regulations for at least ten years;
3. A person who has been or was in the position of the head of a central government agency under the Article 2 of the Government Organization Act, the had of a local government under Article 2 (1) 1 of the Local Autonomy Act, or in an equivalent or higher position;
4. A person who has been or was in the position of an associate professor or in an equivalent or higher position at a school under Article 2 of the Higher Education Act (excluding subparagraph 7 of the same Article) or officially accredited research institute;
5. A person who served or has been serving as a judge, prosecutor, or lawyer for at least ten years;
6. Any other person deemed to have profound knowledge of and experience in such sectors as small and medium enterprises and regulations by the Minister of SMEs and Startups.
(3) No Ombudsman for small and medium enterprises shall be discharged from his/her duties against his/her will except for any of the following cases:
1. Where the fact that an Ombudsman has received money and any other article or entertainment related to his/her duties is ascertained;
2. Where an Ombudsman has been sentenced to imprisonment without labor or heavier punishment;
3. Where an Ombudsman is unable to perform his/her duties due to long-term mental or physical weakness;
4. Where there are other material reasons that prevent an Ombudsman from performing his/her duties, such as intentionally neglecting or avoiding his/her duties.
(4) No Ombudsman for a small and medium enterprise may concurrently hold the position of a member of the National Assembly or a local council.
[This Article Newly Inserted by Presidential Decree No. 21368, Mar. 25, 2009]
 Article 14 (Duties, etc. of Ombudsman for Small and Medium Enterprises)
(1) An Ombudsman for small and medium enterprises shall independently perform the following duties in accordance with Article 22 (2) of the Act: <Amended by Presidential Decree No. 25302, Apr. 14, 2014>
1. Resolution of grievances arising from unreasonable regulations, etc. raised by a small and medium enterprise;
2. Suggestion and recommendation made to the central and local governments, public institutions prescribed in Article 4 of the Act on the Management of Public Institutions, or a policy funds management agency for small and medium enterprises for the purpose of improving regulations and resolving the difficulties facing small and medium enterprises;
3. Investigation and analysis of the regulations and difficulties related to small and medium enterprises;
4. Assessment and analysis of deregulation and settlement of difficulties for small and medium enterprises;
5. Preparation of a report about the improvement of current regulations and settlement of difficulties influencing small and medium enterprises, and reporting thereof;
6. A case study and research on regulations, systems, and grievance settlement regarding regulation and difficulties related to small and medium enterprises;
7. Other matters necessary to improve regulations and address difficulties related to small and medium enterprises.
(2) Any Ombudsman for small and medium enterprises may publicly announce the details of his/her duties performed under paragraph (1) and the results thereof: Provided, That this shall not apply where the case concerns information subject to non-disclosure as provided for in Article 9 of the Official Information Disclosure Act.
(3) If deemed necessary to ensure the efficient performance of an Ombudsman’s duties for small and medium enterprises under paragraph (1), the Minister of SMEs and Startups may allow public officials under his/her control, or public officials or staff dispatched under Article 24 (1) to assist the Ombudsman in carrying out his/her affairs, or provide the Ombudsman with allowances, travel expenses, any other necessary expenses and office within budget limits. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 21368, Mar. 25, 2009]
 Article 15 (Management of Expert Advisors)
(1) The Minister of SMEs and Startups may employ experts from academics, organizations and institutions, etc. related to small and medium enterprises as expert advisors to support a specialized survey and study necessary to help the Ombudsmen for small and medium enterprises to better perform their duties under Article 14 (1). <Amended by Presidential Decree No. 23412, Dec. 28, 2011; Presidential Decree No. 28213, Jul. 26, 2017>
(2) The Minister of SMEs and Startups shall appoint or commission an expert advisor under paragraph (1) after hearing from the Ombudsman for small and medium enterprises. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(3) The Minister of SMEs and Startups may, within budget limits, support expert advisors under paragraph (1) with necessary expenses including allowances, travel expenses, costs for research and investigation, which would allow them to better perform their work. <Amended by Presidential Decree No. 23412, Dec. 28, 2011; Presidential Decree No. 28213, Jul. 26, 2017>>
[This Article Newly Inserted by Presidential Decree No. 21368, Mar. 25, 2009]
 Article 16 (Criteria for Designation of Specialized Research Institute)
(1) Any institute which wishes to be designated as a specialized research institute pursuant to Article 25 (1) of the Act (hereinafter referred to as a “specialized research institute”) shall satisfy all of the following requirements:
1. It shall be a corporation;
2. The primary purpose of its establishment is to conduct research on small and medium enterprises and such purpose shall be specified on its articles of incorporation;
3. It shall have at least 15 specialized researchers (doctorate degree holders who have engaged in research on small and medium enterprises, working for a corporation which falls under subparagraph 2 as a full-time worker for at least five years).
(2) Any organization that wishes to be designated as a specialized research institute shall prepare the following documents and submit them to the Minister of SMEs and Startups: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Achievements of research on small and medium enterprises over the past three years;
2. The number of specialized researchers;
3. Other matters necessary to conduct research on policies for small and medium enterprises.
(3) If a specialized research institute is designated, the Minister of SMEs and Startups shall post such designation on the web-site of the Ministry of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) Designation of a special research institute shall be effective for up to three years after the date of such designation.
[This Article Newly Inserted by Presidential Decree No. 23412, Dec. 28, 2011]
 Article 17 (Designation of Small and Medium Enterprises Week)
(1) The third week of every May shall be the small and medium enterprises week pursuant to Article 26 of the Act.
(2) The following events may be held during the small and medium enterprises week:
1. Commendation of small and medium enterprises of merit;
2. Commemorative events regarding small and medium enterprises;
3. Other events for the promotion of small and medium enterprises.
(3) The Minister of SMEs and Startups may, where deemed necessary, support the events under paragraph (2) within budgetary limits. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 23412, Dec. 28, 2011]
 Article 17-2 (Re-Examination of Regulation)
The Minister of SMEs and Startups shall examine the appropriateness of the grounds for dis-entitlement to the grace period under Article 9, once every five years from January 1, 2014 (referring to the period that ends on the day before January 1st of every fifth year), and shall take measures for improvement, etc. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
[This Article Newly Inserted by Presidential Decree No. 25050, Dec. 30, 2013]
 Article 18 (Administrative Fines)
Criteria for imposing administrative fines under Article 28 (1) of the Act shall be as specified in attached Table 4. <Amended by Presidential Decree No. 26356, Jun. 30, 2015>
[This Article Newly Inserted by Presidential Decree No. 23412, Dec. 28, 2011]
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Transitional Measures concerning Scope of Small and Medium Enterprises)
A business entity deemed to fall under the scope of a small and medium enterprise pursuant to paragraph (2) of the Addenda to the partial amendment to the Enforcement Decree of the Framework Act on Small and Medium Enterprises in force as of December 27, 2005 (Presidential Decree No. 19189) shall be deemed a small and medium enterprise until December 31, 2008. <Amended by Presidential Decree No. 21368, Mar. 25, 2009>
Article 3 Omitted.
Article 4 (Relations with Other Statutes)
A citation of any provisions of the former Enforcement Decree of the Framework Act on Small and Medium Enterprises by any other statute enforceable at the time this Decree enters into force, if any, shall be deemed a citation of corresponding provisions of this Decree in lieu of the former provisions, if such corresponding provisions exist herein.
ADDENDA <Presidential Decree No. 21368, Mar. 25, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions under the following subparagraphs shall enter into force on the date as follows:
1. The amended provisions of subparagraph 3 of Article 2, subparagraph 2 (c) of Article 3, Articles 3-2 and 7-2 and attached Table 2: January 1, 2011;
2. The amended provisions of subparagraph 1 (c) and (d) of Article 3, and subparagraph 3 of Article 9: January 1, 2012.
Article 2 (Transitional Measures)
Where a company falling under a small and medium enterprise as provided for in the previous provisions no longer qualifies as a small and medium enterprise due to the enforcement of this Decree, the company shall be deemed a small and medium enterprise until December 31, 2011: Provided, That this shall not apply where the company no longer qualifies as a small and medium enterprise under the amended provisions of subparagraph 3 of Article 2, subparagraph 2 (c) of Article 3, Articles 3-2 and 7-2.
ADDENDUM <Presidential Decree No. 21831, Nov. 19, 2009>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 21969, Dec. 31, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 8 Omitted.
ADDENDUM <Presidential Decree No. 22652, Jan. 28, 2011>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 22977, Jun. 24, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 23412, Dec. 28, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2012: Provided, That the amended provisions of Articles 3 (2), 10-2 and 15 through 18 shall enter into force on January 26, 2012.
Article 2 (Applicability to Acknowledgement as Small and Medium Enterprises)
The amended provision or Article 3-3 shall apply to a business year that starts after this Decree enters into force, and the former provisions shall govern for the first three months for the acknowledgement as small and medium enterprises.
Article 3 (Applicability to Scope of Small and Medium Enterprises)
Where enterprises which have been deemed small and medium enterprises pursuant to the former provisions before this Decree takes effect no longer qualify as small and medium enterprises, they shall be deemed small and medium enterprises until December 31, 2012: Provided, That this shall not apply to enterprises that no longer qualify as small and medium enterprises pursuant to the amended provisions of Article 3 (1) 1 (c) and (d).
ADDENDA <Presidential Decree No. 23527, Jan. 25, 2012>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 26, 2012. (Proviso Omitted.)
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 24638, Jun. 28, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2013. (Proviso Omitted.)
Articles 2 through 17 Omitted.
ADDENDA <Presidential Decree No. 24799, Oct. 16, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of the proviso to subparagraph 4 of Article 9 shall enter into force on January 1, 2014.
Article 2 (Applicability to Causes Deemed to be Small and Medium Enterprises)
(1) The amended provisions of the proviso to subparagraph 4 of Article 9 shall apply to any business entity which is excluded from the scope of small and medium enterprises because it falls under Article 3 (1) 2 (c).
(2) With respect to the business entity to which paragraph (1) applies, the period of time during which it is deemed a small and medium enterprise shall be, out of the period pursuant to the main body of Article 2 (3) of the Act, the period remaining after the enforcement date under the proviso to Article 1 of the Addenda.
ADDENDUM <Presidential Decree No. 25050, Dec. 30, 2013>
This Decree shall enter into force on January 1, 2014. (Proviso Omitted.)
ADDENDA <Presidential Decree No. 25302, Apr. 14, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2015: Provided, That the amended provisions of Articles 3 (3) and (4), 10-3, 10-4, 13, and 14 shall enter into force on April 15, 2014.
Article 2 (Special Cases concerning Existing Small and Medium Enterprises)
(1) Notwithstanding the amended provisions of Article 3 (1) and (2) and Attached Table 1, where a business entity which was previously deemed a small and medium enterprise pursuant to the former provisions before enforcement of this Decree falls short of the standards pursuant to the amended provisions of Article 3 (1) and (2) and Attached Table 1, it shall be deemed a small and medium enterprise until March 31, 2018.
(2) With respect to the business entity deemed to be a small and medium enterprise pursuant to paragraph (1), it shall not be treated as a small and medium enterprise under the main body of Article 2 (3) of the Act.
Article 3 (Special Cases concerning the Change in Scope of Deemed Small and Medium Enterprises)
Notwithstanding the amended provisions of subparagraph 3 of Article 9, where a business entity which was or is deemed a small and medium enterprise pursuant to the main body of Article 2 (3) of the Act before enforcement of this Decree, the aforementioned business entity may be deemed, only one time after the enforcement of this Decree, to be a small and medium enterprise regardless of the number of times it was deemed a small and medium enterprise before the enforcement of this Decree.
ADDENDA <Presidential Decree No. 26356, Jun. 30, 2015>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 8 and attached Table 3 shall enter into force on January 1, 2016.
Article 2 (Special Cases concerning Existing Small Enterprises)
Notwithstanding the amended provisions of Article 8 and attached Table 3, where a business which was a small enterprise under former provisions at the time this Decree enters into force becomes no more a small business under the amended provisions of Article 8 and attached Table 3, it shall be deemed a small enterprise until March 31, 2019.
Article 3 (Amendment of Other Statutes)
Part of the Enforcement Decree of the Basic Research Promotion and Technology Development Support Act shall be amended as follows: A “small enterprise” under Article 8 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises referred to in Article 16 (1) 1 shall be a “small enterprise” under Article 8 (1) of the Enforcement Decree of the Framework Act on Small and Medium Enterprises.
ADDENDUM <Presidential Decree No. 26774, Dec. 30, 2015>
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
ADDENDA <Presidential Decree No. 27087, Apr. 5, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Special Cases concerning Existing Small Enterprises)
The amended provisions of Article 3 (1) 2 (d) shall apply, starting from the case where the requirements prescribed in Article 3 of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act become fulfilled by acquisition or possession of the stocks pursuant to Article 3-2 (2) 4 (d) of the same Enforcement Decree after the enforcement date of the Enforcement Decree of the Monopoly Regulation and Fair Trade Act under Article 1 of the Addenda of Presidential Decree 27034.
Article 3 (Transitional Measures concerning Small and Medium Enterprises Entitled to Grace Period)
Where a small and medium enterprise merges with another business entity that is under the period during which it is treated as a small and medium enterprise pursuant to the main body of Article 2 (3) of the Act, the former provisions shall apply, notwithstanding the amended provisions of subparagraph 1 of Article 9.
ADDENDA <Presidential Decree No. 27106, Apr. 26, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on April 28, 2016.
Article 2 (Transitional Measures concerning Small and Medium Enterprises Excluded from Grace Period)
Former provisions shall apply to an enterprise which has failed to be a small and medium enterprise for falling under Article 3 (1) 2 (b) before this Decree enters into force, notwithstanding the amended provisions of subparagraph 2 of Article 9.
ADDENDA <Presidential Decree No. 28213, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 28378, Oct. 17, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Determination of Parent-Subsidiary Relationship)
The amended provisions of Article 3-2 (2) shall also apply to a company which was excluded from small and medium enterprises due to its falling under Article 3 (1) 2 (c) before this Decree enters into force.
Article 3 (Special Cases concerning Period for Recognition of Small and Medium Enterprises, etc.)
Where a company which was excluded from small and medium enterprises due to its falling under Article 3 (1) 2 (c) before this Decree enters into force becomes a small-and-medium enterprise pursuant to Article 2 of the Addenda after this Decree enters into force, the period for recognizing the relevant company as a small and medium enterprise shall be from the date of enforcement of this Decree to the date on which three months elapse from the last day of the relevant business year, notwithstanding the amended provisions of the proviso to Article 3-3 (1).
ADDENDA <Presidential Decree No. 28560, Dec. 29, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2018
Article 2 (Transitional Measures concerning Scope of Small and Medium Enterprises)
Notwithstanding the amended provisions of Article 3 (1) 2 (d), former provisions shall apply to a company that was excluded from small and medium enterprises due to its falling under Article 3 (1) 2 (d) before this Decree enters into force.