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ENFORCEMENT DECREE OF THE SPECIAL ACT ON THE PROMOTION OF GROWTH AND THE STRENGTHENING OF COMPETITIVENESS OF MIDDLE-STANDING ENTERPRISES

Presidential Decree No. 25495, Jul. 21, 2014

Amended by Presidential Decree No. 27467, Aug. 29, 2016

Presidential Decree No. 28094, jun. 2, 2017

Presidential Decree No. 28213, Jul. 26, 2017

Presidential Decree No. 28471, Dec. 12, 2017

 Article 1 (Purpose)
The purpose of this Decree is to provide for matters delegated by the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises and those necessary for the enforcement of the said matters.
 Article 2 (Scope of Middle-Standing Enterprises and Prospective Middle-Standing Enterprises)
(1) “Public institution referred to in Article 4 of the Act on the Management of Public Institutions or a local public enterprise referred to in the Local Public Enterprises Act” in subparagraph 1 (b) of Article 2 of the Special Act on the Promotion of Growth and the Strengthening of Competitiveness of Middle-Standing Enterprises (hereinafter referred to as the “Act”), means any of the following institutions: <Newly Inserted by Presidential Decree No. 27467, Aug. 29, 2016>
2. A local public enterprise prescribed in the Local Public Enterprises Act.
(2) “Any other enterprise, the ownership of shares, investment relationship, etc., of which meet the standards prescribed by Presidential Decree” in subparagraph 1 (c) of Article 2 of the Act, means an enterprise that meets the following requirements: <Amended by Presidential Decree No. 27467, Aug. 29, 2016>
1. It shall be an enterprise whose actual separation of management and ownership is inapplicable to any of the following:
(a)  An enterprise that belongs to an enterprise group subject to limitations on mutual investment or an enterprise group subject to limitations on debt guarantees pursuant to Article 14 (1) of the Monopoly Regulation and Fair Trade Act;
(b) An enterprise or corporation (including a foreign corporation; hereinafter the same shall apply), with total assets of at least the amount prescribed as the criteria for designating an enterprise group subject to limitations on mutual investment in Article 17 (1) of the Monopoly Regulation and Fair Trade Act, being the largest investor of the relevant enterprise, directly or indirectly owning at least 30 percent of its stocks (excluding stocks without voting rights referred to in Article 344-3 of the Commercial Act) or investment shares (hereinafter referred to as “stocks, etc.”). In such cases, the largest investor means a corporation or individual who owns the largest share of the stocks, etc., of the relevant enterprise 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 stocks, etc.:
(i) Where a person who owns stocks, etc. is a corporation: Executive officers of such corporation;
(ii) Where a person who owns stocks, etc. is an individual: Blood-relatives of such individual;
2. It shall not be engaged in any of the following businesses classified in accordance the Korean Standard Industrial Classification publicly notified by the Commissioner of the Statistics Korea pursuant to Article 22 of the Statistics Act:
(a) The finance business;
(b) The insurance or pension business;
(c) The finance and insurance-related service business;
3. It shall not be a non-profit corporation incorporated under Article 32 of the Civil Act.
(3) Any of the following enterprises shall be excluded from the definition of enterprises falling under paragraph (2) 1 (b): <Newly Inserted by Presidential Decree No. 27467, Aug. 29, 2016>
1. An enterprise, the largest investor of which is a privately placed fund (including foreign privately placed funds registered under Article 279 of the Financial Investment Services and Capital Markets Act) referred to in Article 9 (19) of the same Act;
2. Any of the following enterprises, whose largest investor is a creditor financial institution defined in subparagraph 3 of Article 2 of the Corporate Restructuring Promotion Act:
(a) An enterprise with a sign of insolvency defined in subparagraph 7 of Article 2 of the Corporate Restructuring Promotion Act;
(b) An enterprise undergoing joint administrative proceedings commenced by the council of financial creditors prescribed in Article 8 of the Corporate Restructuring Promotion Act;
(c) An enterprise undergoing the rehabilitation procedures commenced pursuant to the Debtor Rehabilitation and Bankruptcy Act.
(4) “Enterprise prescribed by Presidential Decree” in subparagraph 2 of Article 2 of the Act means any of the following enterprises: <Amended by Presidential Decree No. 27467, Aug. 29, 2016>
1. An enterprise deemed a small and medium enterprise pursuant to the main sentence of Article 2 (3) of the Framework Act on Small and Medium Enterprises;
2. Any of the following enterprises, as a small and medium enterprise whose main business and turnover of the immediately preceding business year meet the standards prescribed in attached Table 1. In such cases, where an enterprise is engaged in at least two different businesses, the type of business that takes up the largest portion of its sales of the immediately preceding business year shall be deemed its main business:
(a) An enterprise whose annual average growth rate of turnover during the immediately preceding three business years, as calculated pursuant to attached Table 2, is at least 15/100;
(b) An enterprise whose average ratio of research and development investment to turnover during the immediately preceding three business years is at least 2/100.
(5) With respect to calculating total assets referred to in paragraph (2) 1 (b), Article 7-2 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises shall apply mutatis mutandis. <Amended by Presidential Decree No. 27467, Aug. 29, 2016>
(6) With respect to the scope of executive officers and relatives referred to in paragraph (2) 1 (b) (i) and (ii), subparagraphs 5 and 6 of Article 2 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises shall apply mutatis mutandis. <Amended by Presidential Decree No. 27467, Aug. 29, 2016>
(7) With respect to the calculation of turnover referred to in paragraph (4) 2, Article 7 (1) shall apply mutatis mutandis. <Amended by Presidential Decree No. 27467, Aug. 29, 2016>
 Article 3 (Procedures for Formulating Master Plans)
Where the Minister of Trade, Industry and Energy formulates a master plan for promoting the growth of middle-standing enterprises referred to in Article 5 (1) of the Act (hereinafter referred to as “master plan”), he/she shall notify details of such plan to the heads of central administrative agencies related to the business affairs for promoting the growth and strengthening the competitiveness of middle-standing enterprises (hereinafter referred to as “relevant central administrative agencies”) and the heads of local governments, and post the same on the website of the Ministry of Trade, Industry and Energy. The same shall apply where major matters of a master plan are amended. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 4 (Procedures for Formulating Implementation Plans)
(1) The Minister of Trade, Industry and Energy shall formulate an implementation plan to promote the growth of middle-standing enterprises referred to in Article 6 (1) of the Act (hereinafter referred to as “implementation plan”) by no later than December 31 of each year, and notify details thereof to the heads of the relevant central administrative agencies and the heads of local governments. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(2) Where it is necessary to formulate an implementation plan or to evaluate the performance and outcome of the implementation plan of the previous year, the Minister of Trade, Industry and Energy may request the heads of the relevant central administrative agencies or the heads of local governments to provide related materials. In such cases, the heads of the relevant central administrative agencies or local governments shall comply therewith, unless there is a compelling reason not to do so. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 5 (Procedures for Formulating Policies for Middle-Standing Enterprises by Business Category and by Region)
(1) In accordance with Articles 9 and 10 of the Act, the heads of the relevant central administrative agencies may formulate and implement policies for middle-standing enterprises by business category, or policies for middle-standing enterprises by region (hereinafter referred to as “policies for middle-standing enterprises”). In such cases, policies for middle-standing enterprises shall be formulated and implemented, based upon the relevant master plan.
(2) Where necessary to formulate policies for middle-standing enterprises, the head of any relevant central administrative agency may request the heads of any other relevant central administrative agencies or the heads of local governments to provide related materials.
(3) Where the head of any relevant central administrative agency formulates policies for middle-standing enterprises pursuant to paragraph (1), he/she shall notify the details of such policies to the heads of other relevant central administrative agencies and the heads of local governments.
 Article 6 (Scope of Middle-Standing Enterprises Deemed Commissioned Enterprises)
“Middle-standing enterprises prescribed by Presidential Decree” in Article 13 of the Act means middle-standing enterprises, the average turnover or annual turnover of which (hereinafter referred to as “average sales, etc.”) is less than 300 billion won.
 Article 7 (Calculation of Average Turnover, etc.)
(1) Where the average turnover, etc. are calculated, the amount of turnover shall refer to the turnover presented on an income statement, which shall be prepared in compliance with accounting practices generally deemed fair and appropriate: Provided, That in cases of a business entity that uses operating revenue, etc. which is deemed equivalent to the turnover due to the nature of the business it operates, the turnover shall refer to its operating revenue, etc. <Amended by Presidential Decree No. 27467, Aug. 29, 2016>
(2) The average turnover, etc. shall be calculated using the formulas classified as follows:
1. When the total period of business of the immediately preceding three business years is 36 months: the Amount obtained by dividing the total sales recorded in the immediately preceding three business years by three;
2. When the total period of business is between 12 months and 36 months as of the last day of the immediately preceeding business year (excluding cases where a business entity was established, merged, or divided in the immediately preceeding business year, and at least 12 months have elapsed from the date of its establishment, merger, or division): The amount obtained by dividing the total sales recorded for the business years with business period of 12 months by the number of business years whose business period is 12 months;
3. When a business entity not falling under subparagraph 2, was established, merged, or divided in the immediately preceding business year or the relevant business year: The amount converted into annual sales by any of the following computation:
(a) Where at least 12 months have passed from the date a business entity was established, merged or divided: The aggregate monthly turnover during a period of 12 months, counting retrospectively from the month immediately preceding the month of the calculation base date;
(b) When 12 months have not yet passed from the date a business entity was established, merged or divided: The amount calculated by dividing the aggregate monthly sales during the period, beginning with the month immediately following the month in which a business entity was established, merged or divided falls and ending with the month immediately preceding the month in which the date of calculation falls, by the corresponding number of months, and then multiplying the resulting value by 12: Provided, That where the business entity falls under any of the following cases, the computation shall be conducted 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 resulting value by 365:
(i) When the date of calculation falls in the month in which the date of establishment, merger or division falls;
(ii) When the date of calculation falls in the month immediately following the month in which the date of establishment, merger or division falls.
(3) Where the average sales, etc. are computed pursuant to paragraph (2), subparagraphs 1 and 2 of Article 2 of the Enforcement Decree of the Framework Act on Small and Medium Enterprises shall apply mutatis mutandis to the date of establishment, merger or division.
 Article 8 (Scope of Middle-Standing Enterprises Excluded from E-Learning Business Operators which are Large Enterprises)
“Middle-standing enterprises prescribed by Presidential Decree” in Article 14 of the Act means a middle-standing enterprise that meets the following requirements:
1. Its average sales, etc. shall be less than 150 billion won;
2. It shall have been less than three years after the period during which it is treated as a small and medium enterprise pursuant to the main sentence of Article 2 (3) of the Framework Act on Small and Medium Enterprises.
[This Article Wholly Amended by Presidential Decree No. 27467, Aug. 29, 2016]
 Article 9 (Scope of Middle-Standing Enterprises subject to Special Cases concerning Family Business Succession Support)
(1) “Middle-standing enterprise prescribed by Presidential Decree” in Article 15 of the Act means a middle-standing enterprise, the turnover of which for the immediately preceding business year is less than 300 billion won.
(2) Article 7 (1) shall apply mutatis mutandis to the calculation of turnover referred to in paragraph (1).
 Article 9-2 (Scope of Middle-Standing Enterprises Subject to Special Cases concerning Prestigious Long-Lived Enterprises)
“Middle-standing enterprise prescribed by Presidential Decree” in Article 15-2 of the Act means a middle-standing enterprise that meets the following requirements: 
1. Its average sales, etc. shall be less than 300 billion won;
2. It shall meet the requirements referred to in Article 62-4 of the Small and Medium Enterprises Promotion Act.
[This Article Newly Inserted by Presidential Decree No. 28094, Jun. 2, 2017]
[Previous Article 9-2 moved to Article 9-3]
 Article 9-3 (Scope of Middle-Standing Enterprises Subject to Special Cases concerning Technology Protection Support)
“Middle-standing enterprise prescribed by Presidential Decree” in the main sentence of Article 17-2 of the Act means a middle-standing enterprise that meets the following requirements: 
1. Its average sales, etc. shall be less than 300 billion won;
2. It shall have been less than three years after the period during which it is treated as a small and medium enterprise pursuant to the main sentence of Article 2 (3) of the Framework Act on Small and Medium Enterprises.
[This Article Newly Inserted by Presidential Decree No. 27467, Aug. 29, 2016]
[Moved from Article 9-2; Previous Article 9-3 moved to Article 9-4]
 Article 9-4 (Scope of Middle-Standing Enterprises Subject to Special Cases concerning Human Resources Support, etc.)
“Middle-standing enterprise prescribed by Presidential Decree” in Article 17-3 of the Act means any middle-standing enterprise.
[This Article Newly Inserted by Presidential Decree No. 27467, Aug. 29, 2016]
[Moved from Article 9-3; Previous Article 9-4 moved to Article 9-5]
 Article 9-5 (Scope of Middle-Standing Enterprises Subject to Special Cases concerning Projects for Supporting Development of Overseas Markets)
“Middle-standing enterprise prescribed by Presidential Decree” in Article 17-4 of the Act means a middle-standing enterprise that meets the following requirements:
1. Its average sales, etc. shall be less than 300 billion won;
2. It shall have been less than three years after the period during which it is treated as a small and medium enterprise pursuant to the main sentence of Article 2 (3) of the Framework Act on Small and Medium Enterprises.
[This Article Newly Inserted by Presidential Decree No. 27467, Aug. 29, 2016]
[Moved from Article 9-4; Previous Article 9-5 moved to Article 9-6]
 Article 9-6 (Scope of Middle-Standing Enterprises Subject to Special Cases concerning Insurance for Trade Receivables)
“Middle-standing enterprise prescribed by Presidential Decree” in Article 17-5 of the Act means a middle-standing enterprise that meets the following requirements:
1. Its average sales, etc. shall be less than 300 billion won;
2. It shall have been less than three years after the period during which it is treated as a small and medium enterprise pursuant to the main sentence of Article 2 (3) of the Framework Act on Small and Medium Enterprises.
[This Article Newly Inserted by Presidential Decree No. 27467, Aug. 29, 2016]
[Moved from Article 9-5; Previous Article 9-6 moved to Article 9-7]
 Article 9-7 (Scope of Middle-Standing Enterprises Subject to Special Cases concerning Use of Fund for Establishment and Promotion of Small and Medium Enterprises)
“Middle-standing enterprise prescribed by Presidential Decree” in Article 17-6 of the Act means any middle-standing enterprise.
[This Article Newly Inserted by Presidential Decree No. 27467, Aug. 29, 2016]
[Moved from Article 9-6]
 Article 10 (Nurturing of Globally Promising Middle-Standing Enterprises)
(1) The Minister of Trade, Industry and Energy or the Minister of SMEs and Startups shall select middle-standing enterprises and prospective middle-standing enterprises which have significant influence on the national economy and outstanding innovative capacity and growth potential (hereinafter referred to as “globally promising middle-standing enterprises”), and implement projects for facilitating matters specified in the subparagraphs of Article 18 (1) of the Act. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(2) In order to select globally promising middle-standing enterprises referred to in paragraph (1), the Minister of Trade, Industry and Energy or the Minister of SMEs and Startups may evaluate enterprises by determining the criteria for evaluation, covering the following matters: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Corporate competence;
2. Boldness and creativity of strategies and action plans;
3. Feasibility of visions and goals;
4. Other matters deemed necessary for evaluation by the Minister of Trade, Industry and Energy or the Minister of SMEs and Startups in relation to the growth potential and innovative capacity of enterprises.
(3) The Minister of Trade, Industry and Energy or the Minister of SMEs and Startups may identify and support an enterprise with high growth potential as a globally promising middle-standing enterprise, treating it as a globally promising middle-standing enterprise candidate. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) Notwithstanding paragraph (1), where necessary, the heads of the relevant central administrative agencies may separately implement a project to support globally promising middle-standing enterprises by taking into consideration special characteristics, etc. by business category and by region.
(5) Matters necessary for selecting globally promising middle-standing enterprises, operating support projects, etc. pursuant to paragraphs (1) through (3) shall be separately determined and publicly announced by the Minister of Trade, Industry and Energy or the Minister of SMEs and Startups. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 11 (Procedures for Implementing Projects for Supporting Middle-Standing Enterprises, etc.)
Where the head of any relevant central administrative agency intends to conduct any of the following support projects, he/she shall gather consensus from related companies, experts, etc., and consult with the heads of other relevant central administrative agencies:
1. Support projects prescribed in Article 19 (1) of the Act for enhancing the technological competence of middle-standing enterprises and prospective middle-standing enterprises (hereinafter referred to as “middle-standing enterprises, etc.”);
2. Support projects for securing and attracting human resources for middle-standing enterprises, etc. prescribed in Article 20 (1) of the Act;
3. Support projects for promoting internationalization of middle-standing enterprises, etc. prescribed in Article 21 (1) of the Act;
4. Support projects for promoting management innovation of middle-standing enterprises, etc. prescribed in Article 22 (1) of the Act.
 Article 11-2 (Specialized Institutions for Middle-Standing Enterprises)
“Institutions prescribed by Presidential Decree, including the Korea Institute for Advancement of Technology established under Article 38 of the Industrial Technology Innovation Promotion Act” in Article 23 (2) of the Act, means the following:
1. An Association of High Potential Enterprises of Korea (hereinafter referred to as the “Association”) prescribed in Article 27 of the Act;
2. The Korea Trade-Investment Promotion Agency established under the Korea Trade-Investment Promotion Agency Act;
3. The Korea Trade Insurance Corporation established under Article 37 of the Trade Insurance Act;
4. The Korea Institute for Advancement of Technology established under Article 38 of the Industrial Technology Innovation Promotion Act;
5. The Korea Institute of Design Promotion established under Article 11 of the Industrial Design Promotion Act;
6. The Korea Technology and Information Promotion Agency for SMEs established under Article 20 of the Act on the Promotion of Technology Innovation of Small and Medium Enterprises;
7. The Small and Medium Business Corporation established under Article 68 of the Small and Medium Enterprises Promotion Act.
[This Article Newly Inserted by Presidential Decree No. 27467, Aug. 29, 2016]
 Article 12 (Methods, Procedures, etc. for Conducting Fact-Finding Surveys and Statistical Research)
(1) Any fact-finding survey on middle-standing enterprises prescribed in Article 24 (1) of the Act, shall cover the following matters: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Matters related to funds, workforce, and management status;
2. Matters related to growth barriers;
3. Matters related to the status of using government assistance;
4. Matters related to technological innovation and research and development;
5. Matters related to entrustment/consignment transactions and mutual growth;
6. Other matters deemed necessary by the Minister of Trade, Industry and Energy to understand the status of middle-standing enterprises.
(2) Where it is necessary to conduct a fact-finding survey or statistical research (hereinafter referred to as “fact-finding survey, etc”) referred to in Article 24 (1) of the Act regarding middle-standing enterprises, the Minister of Trade, Industry and Energy may utilize enterprise information in a current information system for small and medium enterprises referred to in Article 79-3 of the Small and Medium Enterprises Promotion Act. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(3) The Minister of Trade, Industry and Energy may use electronic systems, such as the information and communications network or e-mail, in order to efficiently conduct a fact-finding survey, etc. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(4) Where the Minister of Trade, Industry and Energy conducts a fact-finding survey, etc., he/she shall post the outcomes thereof on the web-site of the Ministry of Trade, Industry and Energy. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 13 (Management, etc. of Personally Identifiable Information)
(1) The Minister of Trade, Industry and Energy (including a person entrusted with his/her duties prescribed in Article 29 (2) of the Act and Article 15 (2) 2 of this Decree) may manage data containing resident registration numbers, passport numbers, or alien registration numbers referred to in subparagraph 1, 2 or 4 of Article 19 of the Enforcement Decree of the Personal Information Protection Act, if inevitable to verify whether the relevant enterprise is a middle-standing enterprise prescribed in Article 25 (1) of the Act. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
(2) Matters necessary for the methods, procedures, etc. for applying for the issuance of a certificate as to whether a certain enterprise is a middle-standing enterprise referred to in Article 25 (1) of the Act shall be separately determined and announced by the Minister of Trade, Industry and Energy. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 14 (Operation of and Supervision over Association of High Potential Enterprises of Korea)
(1) The Minister of Trade, Industry and Energy may direct and supervise the business affairs of the Association of High Potential Enterprises of Korea. <Amended by Presidential Decree No. 27467, Aug. 29, 2016; Presidential Decree No. 28213, Jul. 26, 2017>
(2) Where deemed necessary to direct and supervise the business affairs of the Association of High Potential Enterprises of Korea prescribed in paragraph (1), the Minister of Trade, Industry and Energy may require it to submit documents or materials. In such cases, the Association shall comply therewith, unless there is a compelling reason not to do so. <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
 Article 15 (Outsourcing of Duties)
(1) In accordance with Article 29 (2) of the Act, the Minister of Trade, Industry and Energy shall outsource the following duties to the Korea Institute for Advancement of Technology established under Article 38 of the Industrial Technology Innovation Promotion Act: <Amended by Presidential Decree No. 28213, Jul. 26, 2017>
1. Implementing support projects prescribed in Article 18 (1) of the Act;
2. Evaluation prescribed in Article 10 (2).
(2) In accordance with Article 29 (2) of the Act, the Minister of Trade, Industry and Energy shall outsource the following duties to the Association: <Amended by Presidential Decree No. 28094, Jun. 2, 2017; Presidential Decree No. 28213, Jul. 26, 2017>
1. Duties concerning the certification of middle-standing enterprises subject to special cases under Article 15-2 of the Act as prestigious long-lived enterprises and the revocation of certification under Articles 62-5 and 62-6 of the Small and Medium Enterprises Promotion Act;
2. Conducting a fact-finding survey, etc. prescribed in Article 24 (1) of the Act;
3. Issuing a certificate as to whether a certain enterprise is a middle-standing enterprise prescribed in Article 25 (1) of the Act;
4. Establishing and operating the integrated middle-standing enterprise information system prescribed in Article 26 (1) of the Act.
 Article 16 (Standards for Imposing Administrative Fines)
The standards for imposing administrative fines provided for in Article 31 (2) of the Act shall be as prescribed in attached Table 3.
 Article 17 Deleted. <by Presidential Decree No. 28471, Dec. 12, 2017>
ADDENDA
Article 1 (Enforcement Date)
This Decree shall enter into force on July 22, 2014.
Article 2 Omitted.
ADDENDUM <Presidential Decree No. 27467, Aug. 29, 2016>
This Decree shall enter into force on August 30, 2016.
ADDENDUM <Presidential Decree No. 28094, Jun. 2, 2017>
This Decree shall enter into force on June 3, 2017.
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. 28471, Dec. 12, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2018.
Article 2 Omitted.