ENFORCEMENT RULE OF THE FINANCIAL INVESTMENT SERVICES AND CAPITAL MARKETS ACT
Ordinance of the Prime Minister No. 885, Aug. 4, 2008
Amended by Ordinance of the Prime Minister No. 949, Feb. 7, 2011
Ordinance of the Prime Minister No. 973, Mar. 2, 2012
Ordinance of the Prime Minister No. 1028, Jul. 5, 2013
Ordinance of the Prime Minister No. 1031, Aug. 29, 2013
| Article 1-2 (Exclusion of Financial Investment Business from Application) |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
| Article 2 (Duration not Included in Period for Examination for Authorization) |
| 1. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 12 (2) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defects in an authorization application pursuant to the last sentence of Article 13 (2) of the Act, if such supplementary correction has been demanded; |
| 3. | A period required for concluding all proceedings for a lawsuit or an investigation, inspection, etc., in cases where criminal procedures are pending against any person who intends to obtain authorization for a financial investment business, a major shareholder (referring to a major shareholder defined in Article 12 (2) 6 (a) of the Act; the same shall apply hereinafter) of any person who intends to obtain authorization for a financial investment business, or a foreign financial investment business entity defined in Article 12 (2) 1 (b) of the Act (hereinafter referred to as "foreign financial investment business entity"), or proceedings of an investigation, inspection, etc. conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, any prosecutor's office, the Financial Supervisory Service (hereinafter referred to as the "Financial Supervisory Service) established under the Act on the Establishment, etc. of Financial Services Commission, or any similar agency (including a similar supervisory agency in the home country of a foreign financial investment business entity, if a foreign financial investment business entity is involved) are pending, and it is deemed that the results of the lawsuit or the investigation, inspection, etc. will significantly affect the examination for the authorization. |
| Article 3 (Duration not Included in Period for Examination for Preliminary Authorization) |
"Duration specified by Ordinance of the Prime Minister" in Article 14 (3) of the Act means any of the following periods: <Amended by Ordinance of the Prime Minister No. 949, Feb. 7, 2011> | 1. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 12 (2) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defect in a preliminary authorization application pursuant to the last sentence of Article 14 (2) of the Act, if such supplementary correction has been demanded; |
| 3. | A period required for concluding all proceedings of a lawsuit or an investigation, an inspection, etc., in cases where criminal procedures are pending against any person who intends to obtain preliminary authorization, a major shareholder of any person who intends to obtain a preliminary authorization, or a foreign financial investment business entity, or proceedings of an investigation, inspection, etc. conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, any prosecutor's office, the Financial Supervisory Service, or any similar agency (including a similar supervisory agency in the home country of a foreign financial investment business entity, if a foreign financial investment business entity is involved) are pending, and it is deemed that the results of the lawsuit or the investigation, inspection, etc. will significantly affect the examination for the preliminary authorization. |
| Article 4 (Duration not Included in Period for Examination for Registration) |
"Duration specified by Ordinance of the Prime Minister" in Article 19 (3) of the Act means any of the following periods: <Amended by Ordinance of the Prime Minister No. 949, Feb. 7, 2011> | 1. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 18 (2) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defects in a registration application pursuant to the last sentence of Article 19 (2) of the Act, if such supplementary correction has been demanded; |
| 3. | A period required for concluding all proceedings of a lawsuit, an investigation, or an inspection, in cases where a criminal suit is pending against any person who intends to register a financial investment business or a major shareholder of any person who intends to register a financial investment business or a foreign investment advisory business operator (hereinafter referred to as "foreign investment advisory business operator") as defined in the proviso to the part above the items of Article 18 (2) 1 of the Act or a foreign discretionary investment business operator (hereinafter referred to as "foreign discretionary investment business operator") as defined in the proviso to the part above the items of the aforesaid subparagraph , or proceedings of an investigation or inspection conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, any Prosecutor's Office, the Financial Supervisory Service, or any similar agency (including a similar supervisory agency in the home country of a foreign investment advisory business operator or a foreign discretionary investment business operator, if a foreign investment advisory business operator or a foreign discretionary investment business operator is involved) are pending, and it is deemed that the results of the lawsuit, investigation, or inspection will significantly affect the examination for the registration. |
| Article 5 (Maintenance of Financial Soundness) |
| 1. | Bad debt allowances established for current assets; |
| 2. | Subordinated borrowings; |
| 3. | Capital lease liabilities; |
| 4. | Gain on valuation of assets; |
| 5. | Items specified and publicly notified by the Financial Services Commission as necessary to include in net operating capital under Article 30 (1) of the Act (hereinafter referred to as "net operating capital"), such as liabilities in the nature of capital, in addition to those specified in subparagraphs 1 through 4. |
| 3. | Prepaid corporate tax; |
| 4. | Losses on valuation of assets; |
| 5. | Items specified and publicly notified by the Financial Services Commission as necessary to exclude from net operating capital, such as assets that can be difficult to liquidate within a short time, in addition to those specified in subparagraphs 1 through 4. |
| Article 6 (Accounting Period, etc.) |
| (1) | "Period prescribed by Ordinance of the Prime Minister" in Article 32 (1) 1 of the Act (including cases of application mutatis mutandis pursuant to Article 350 and 357 (2) of the Act) means periods classified in the following subparagraphs: <Amended by Ordinance of the Prime Minister No. 949, Feb. 7, 2011> |
| 1. | For investment trading business, investment brokerage business, collective investment business, investment advisory business, and discretionary investment business: the period beginning on April 1 each year and ending on March 1 of the following year: Provided, That in cases determined and publicly announced by the Financial Services Commission, such as cases where the relevant financial investment business entity has introduced accounting standards under Article 13 (1) 1 of the Act on External Audit of Stock Companies, the accounting period may be set from January 1 to December 31; |
| 2. | For trust business, a merchant bank, and a financial brokerage company: a period specified by articles of incorporation. |
| (2) | "Investors' property prescribed by Ordinance of the Prime Minister" in Article 32 (1) 2 of the Act means investors' property specified in the following subparagraphs: |
| 1. | Property deposited by investors; |
| 2. | Collective investment property; |
| 3. | Investors' property determined and publicly announced by the Financial Services Commission as necessary to precisely separate from own property, trust property, and the property specified in subparagraphs 1 and 2 for the purpose of accounting, in addition to those specified in subparagraphs 1 and 2. |
| Article 7 (Duration not Included in Period for Examination for Registration) |
| 1. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 51 (1) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defects in an application for registration pursuant to the last sentence of Article 51 (5) of the Act, if such supplementary correction has been demanded. |
| Article 7-2 (Cases where Acquired Securities need not be Deposited) |
"Cases prescribed by Ordinance of the Prime Minister" in Article 63 (2) 4 of the Decree means any of the followings: | 1. | Where the relevant securities are investment contract securities; |
| 2. | Where the relevant securities indicate investment shares in a limited partnership company, limited liability company, limited partnership association or undisclosed association established under the Commercial Act: Provided, That collective investment securities shall be excluded therefrom; |
| 3. | Where the relevant securities are promissory notes that mature within three days from the date of issuance thereof. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
| Article 7-3 (Trades Where Guidelines for Best Execution are not Applicable) |
"Financial investment instruments specified by Ordinance of the Prime Minister" in the part other than each item of Article 66-2 (1) 3 of the Decree means any of the following: | 2. | Equity securities (excluding stock certificates); |
| 3. | Beneficiary certificates; |
| 4. | Investment contract securities; |
| 5. | Derivative-linked securities; |
| 6. | Depository receipts (excluding depository receipts related to stock certificates); |
| 7. | Exchange-traded derivatives. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
| Article 7-4 (Duration not Included in Period for Examination for Designation) |
"Duration for making a supplementary correction of defects in an application for designation, or other duration prescribed by Ordinance of the Prime Minister" in Article 77-3 (5) of the Decree means either of the following periods: | 1. | A period required for receiving necessary materials from other agencies, etc. to verify whether the criteria provided for in the subparagraphs of Article 77-2 (1) of the Act are satisfied; |
| 2. | A period for making a supplementary correction of any defect in an application for designation, if such supplementary correction has been requested pursuant to the latter part of Article 77-3 (4) of the Decree. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
| Article 7-5 (Scope of Credit Offering) |
"Period prescribed by Ordinance of the Prime Minister" in Article 77-5 (2) 2 of the Decree means six months. [This Article Newly Inserted by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
| Article 8 (Exceptions to Restrictions on Shareholding) |
"Financial institution and institution related to financial investment business prescribed by Ordinance of the Prime Minister" in Article 78 (6) 2 of the Decree means the following institutions: | 1. | Financial institutions referred to in the subparagraphs of Article 10 (2) of the Decree; |
| 3. | The Korea Securities Depository established pursuant to Article 294 of the Act (hereinafter referred to as the "Securities Depository"). |
[This Article Wholly Amended by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
| Article 9 (Account Books and Documents concerning Details of Distribution of Assets) |
| (1) | Any collective investment business operator of an investment trust shall, whenever it intends to acquire or dispose of any asset for investment in accordance with the last sentence of Article 80 (3) of the Act, prepare a written order for acquisition or disposition, describing the amount, price, and quantity of the order for the property (hereinafter referred to as "investment trust property") of each investment trust (hereinafter referred to as "investment trust") under Article 9 (18) 1 of the Act, and a statement of assets distribution, describing the details of assets distribution to each investment trust property, before it acquires or disposes of such assets for investment. The same applies to the cases where an order for acquisition or disposition or the details of distribution is modified. |
| (2) | The compliance officer (referring to the compliance officer under Article 28 (2) of the Act) of a collective investment business operator shall verify whether an order for acquisition or disposition and a statement of assets distribution under paragraph (1) have been properly prepared and appropriately carried out. |
| Article 10 (Method of Distribution of Assets) |
| (1) | Any collective investment business operator of an investment trust shall, whenever it distributes an outcome of acquisition or disposition to each investment trust property in accordance with Article 80 (3) of the Act, comply with the following guidelines: |
| 1. | Assets for investment acquired or disposed of shall be distributed at an equal price; |
| 2. | If the quantity of assets for investment acquired or disposed of does not reach the quantity ordered for acquisition or disposition, the asset for investment shall be distributed in accordance with the details of assets distribution prescribed in advance. |
| (2) | Any collective investment business operator of an investment trust shall, whenever it intends to prescribe matters concerning details of assets distribution, bring the case to the assessment committee under Article 238 (2) of the Act for resolution and comply with the following guidelines: |
| 1. | The distribution shall not be favorable nor unfavorable to any specific beneficiary or any specific investment trust property; |
| 2. | Records of orders for acquisition or disposition and statements of assets distribution to each investment trust property shall be kept and maintained by an electronic computer system. |
| (3) | Any collective investment business operator of an investment trust shall disclose matters concerning the details of assets distribution under paragraph (2) to the public through its internet homepage or any other similar means. |
| (4) | Any collective investment business operator of an investment trust shall, when it carries out business affairs for acquisition or disposition of assets for investment in accordance with Article 80 (3) of the Act, separate employees in charge of management of collective investment property from employees in charge of practices for acquisition and disposition of assets for investment: Provided, That the foregoing shall not apply to any of the following cases: |
| 1. | Concerning securities, where the collective investment property of a collective investment organization that is run with an objective to manage in linkage to changes of an index that indicates comprehensively the level of prices of many issues of a type of securities is acquired or disposed of; |
| 2. | Where the Financial Services Commission prescribes and publicly notifies in addition to the cases specified in subparagraph 1. |
| Article 11 (Requirements for Person in Charge of Domestic Liaison) |
"Person in charge of liaison who shall meet the requirements prescribed by Ordinance of the Prime Minister" in Article 100 (2) of the Act means any of the following persons, who acts as an agent of an offshore investment advisory business operator or an offshore discretionary investment business operator under Article 100 (1) of the Act: | 1. | Any of the following institutions: |
| (e) | A financial investment business operator (excluding any concurrently-run financial investment business operator under Article 22 of the Act); |
| (f) | A securities finance company which has obtained authorization pursuant to Article 324 (1) of the Act (hereinafter referred to as "securities finance company"); |
| 2. | Any of the following persons: |
| (d) | An attorney-at-law who belongs to a joint place of business, if a law firm under the Attorney-at-Law Act is registered as a joint place of business in accordance with the Income Tax Act; |
| Article 12 (Effective Date of Registration Statement) |
| (1) | A securities registration under Article 120 (1) of the Act shall become effective from the day on which the following periods elapse after the acceptance date of the registration statement: <Amended by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013> |
| 1. | Seven days for a public offering or public sale of debt securities: Provided, That the period shall be five days for any of the following debt securities: |
| (b) | Guaranteed corporate bonds under Article 362 (8) of the Decree; |
| (d) | Debt securities publicly offered or sold in accordance with a universal shelf registration statement under Article 119 (2) of the Act; |
| 2. | Fifteen days for a public offering or public sale of equity securities: Provided, That the period shall be ten days for a public offering or public sale of stocks of a listed-stock corporation [excluding an investment company referred to in Article 9 (18) 2 of the Act (hereinafter referred to as "investment company")] and seven days for an offering or sale of stocks (excluding stocks of an investment company) by allocating to shareholders or third parties; |
| 3. | Ten days for a public offering or public sale of collective investment securities of a closed-end fund under Article 230 (1) of the Act (hereinafter referred to as "closed-end fund"), listed on the securities market, and seven days for an offering or sale of collective investment securities of a closed-end fund by allocating to investors, such as shareholders, etc., or beneficiaries; |
| 4. | Fifteen days for an offering or sale of any securities other than those listed in subparagraphs 1 through 3. |
| (2) | In any of the following cases, the registration of the relevant securities shall become effective on each of the following days, notwithstanding each subparagraph of paragraph (1): Provided, That each subparagraph of paragraph (1) shall apply where the day specified in each of the following subparagraphs is earlier than the day specified in each subparagraph of paragraph (1): |
| 1. | The day on which three days elapse from the acceptance date of a corrective registration statement, where a corrective registration statement is submitted due to changes in the offering price, selling price, issuance interest rate, or any related matter; |
| 2. | The day on which a corrective registration statement is accepted, where a corrective registration statement is submitted in order to change any registered fact under Article 182 (1) of the Act (only applicable to a collective investment scheme); |
| (3) | Where it is necessary to advance an effective date of a securities registration on the ground that any of the following subparagraphs is met, the Financial Services Commission may shorten the period specified in each subparagraph of paragraphs (1) and (2) and otherwise set an effective date and publicly announce the effective date: |
| 1. | The details of the relevant registration statement have been widely known to the general public or can be easily understood; |
| 2. | The issuer of the relevant securities is an entity directly established under any Act specified in the subparagraphs of Article 119 (1) of the Decree, a person whose business activities are supervised by the State or a local government, or an international organization or an organization determined and publicly announced by the Financial Services Commission, the objectives of which have been widely recognized by the general public as pursuing the public good. |
| (4) | Where it is necessary to postpone the effective date of securities registration under Article 120 (1) of the Act (including a corrective registration under Article 122 (1) or (3) of the Act) for the protection of investors or for the establishment of healthy transaction order because an issuer of securities falls under any of the following, the Financial Services Commission may postpone the effective date under each subparagraph of paragraphs (1) and (2) by three days: Provided, That this shall not apply where a public offering or public sale of debt securities falling under paragraph (1) 1 (a), (b) or (d) is made, and where an unlisted corporation makes a public offering or public sale of equity securities in order to list them on the securities market: <Newly Inserted by Ordinance of the Prime Minister No. 973, Mar. 2, 2012> |
| 2. | Where the entire amount of capital in a business report, semiannual report or quarterly report of the latest business year submitted by a corporation subject to submission of a business report (hereinafter referred to as "corporation subject to submission of a business report") under the main sentence of Article 159 (1) of the Act has been encroached; |
| 3. | Where a corporation subject to submission of a business report has failed to submit a business report, semiannual report or quarterly report within the legal period; |
| 4. | Where the Financial Services Commission determines and publicly announces that it is necessary to postpone the effective date for the protection of investors or for the establishment of healthy transaction order. |
| (5) | Days falling under the subparagraphs of Article 153 (1) of the Decree shall not be included in the periods under paragraphs (1) through (4): Provided, That this shall not apply to collective investment securities. <Newly Inserted by Ordinance of the Prime Minister No. 973, Mar. 2, 2012> |
| Article 13 (Making Investment Prospectus Available for Inspection) |
| (1) | "Places specified by Ordinance of the Prime Minister" in Article 123 (1) and the main text in the part above of subparagraphs of paragraph (3) of the same Article of the Act means each of the following places: |
| 1. | The head office of the issuer of the securities concerned; |
| 2. | The Financial Services Commission; |
| 3. | The Korea Exchange established pursuant to Article 373 of the Act (hereinafter referred to as the "Exchange"); |
| 4. | A place in which affairs relating to subscription are handled. |
| Article 14 (Method of Calculating Number of Stocks subject to Public Tender Offer) |
| (1) | The number of stocks or similar under Article 133 (3) of the Act in determining whether to make a public tender offer for stocks or similar in accordance with Article 133 (1) of the Act (hereinafter referred to as "stocks or similar") shall be calculated in accordance with the following classification: |
| 1. | For stock certificates: the number of relevant stocks; |
| 2. | For instruments representing a preemptive right to new stocks: the number of stocks subject to the preemptive right (referring to the number obtained by dividing the total issue value of stocks subject to the preemptive right by the issue price, if the total issue value and issue price of such stocks are indicated therein); |
| 3. | For convertible corporate bonds: the number obtained by dividing the face value by the issue price of stocks to be issued under conversion. In such cases, any fractional stock less than one shall not be included in calculation; |
| 4. | For corporate bonds with warrant: the number of stocks subject to a preemptive right to new stocks; |
| 5. | For exchangeable bonds: any of the following numbers: |
| (a) | If securities subject to exchange are those under any of subparagraphs 1 through 4, 6, and 7: the number prescribed in the subparagraph applicable to the securities subject to exchange among subparagraphs 1 through 4, 6, and 7; |
| (b) | If securities subject to exchange are exchangeable bonds: the number prescribed in the subparagraph applicable to the securities subject to exchange among subparagraphs 1 through 4, 6, and 7, based on the exchangeable bonds subject to exchange; |
| 6. | For derivative-linked securities: any of the following numbers: |
| (a) | If securities that constitute underlying assets are the securities under any of subparagraphs 1 through 5 and 7: the number prescribed in the subparagraph applicable to the securities that constitute the underlying asset among subparagraphs 1 through 5 and 7; |
| (b) | If securities that constitute underlying assets are derivative-linked securities: the number prescribed in the subparagraph applicable to the securities that constitute the underlying asset among subparagraphs 1 through 5 and 7, based on the derivative-linked securities that constitute underlying assets; |
| 7. | For depository receipts: the number prescribed in the subparagraph applicable to the securities that underlie the depository receipts, among subparagraphs 1 through 6. |
| (2) | The total number of stocks or similar under Article 133 (3) of the Act in determining whether to make a public tender offer for the stocks or similar shall be calculated by aggregating the total number of outstanding voting stocks and the number of stocks or similar [excluding stock certificates, stock certificates subject to exchange with exchangeable bonds (excluding treasury stocks), stock certificates that constitute underlying assets of derivative-linked securities (excluding treasury stocks), and stock certificates that underlie depository receipts] held (referring to held as defined in Article 133 (3) of the Act; the same shall apply hereinafter) by a person and his/her specially related persons (referring to specially related persons under Article 133 (3) of the Act; hereinafter the same shall apply) after purchasing or otherwise acquiring (referring to purchasing or otherwise acquiring as defined in Article 133 (2) of the Act; hereinafter the same shall apply) the stocks or similar at issue. |
| (3) | If a stock option has been granted, the number of voting stocks that will be purchased upon the exercise of the stock option (including treasury stocks) shall be added to the number of stocks or similar under paragraph (1) and the total number of stocks or similar under paragraph (2). |
| Article 15 (Submission of Corrective Registration Statement) |
"Cases prescribed by Ordinance of the Prime Minister" in the main text of Article 136 (3) of the Act means any of the following cases: | 1. | Where any description or content of a tender statement (hereinafter referred to as "tender statement") under Article 134 (2) is vague or ambiguous and thus it is likely to cause any person who relies upon the tender statement to make a substantial mistake; |
| 2. | Where any information unfavorable to a tender offeror under Article 134 (2) of the Act (hereinafter referred to as "tender offeror") is omitted, information only favorable to the tender offeror is emphasized, or any exaggerated claims are made. |
| Article 16 (Prospectus for Tender Offer) |
"Place designated by Ordinance of the Prime Minister" in the first sentence of Article 137 (1) of the Act means the following places: | 1. | The head office, a branch office, or any other place of business of a person who handles business affairs for public tender offer in accordance with Article 133 (2) of the Act; |
| 2. | The Financial Services Commission; |
| Article 17 (Method of Calculating Number of Stocks or Similar Held in Bulk) |
| (1) | The number of stocks or similar under Article 147 (1) of the Act for the purpose of judging whether stocks or similar are held in bulk shall be calculated in accordance with the following classification: |
| 1. | For stock certificates: the number of the stocks; |
| 2. | Instruments representing a preemptive right to new stocks: the number of stocks subject to the preemptive right to new stocks (referring to the number obtained by dividing the total issuance value of stocks subject to a preemptive right by the issue price, if the total issuance value and issue price of such stocks are indicated therein); |
| 3. | For convertible corporate bonds: the number obtained by dividing the face value by the issue price of stocks to be issued under conversion. In such cases, any fractional stock less than one shall not be included in calculation; |
| 4. | For corporate bonds with warrant: The number of stocks subject to the preemptive right to new stocks; |
| 5. | For exchangeable bonds: any of the following numbers: |
| (a) | If securities subject to the exchange are those under any of subparagraphs 1 through 4, 6, and 7: The number prescribed in the subparagraph applicable to securities subject to exchange, among subparagraphs 1 through 4, 6, and 7; |
| (b) | If securities subject to the exchange are exchangeable bonds: The number prescribed in the subparagraph applicable to securities subject to exchange among subparagraphs 1 through 4, 6, and 7, based on the exchangeable bonds subject to the exchange; |
| 6. | For derivative-linked securities: any of the following numbers: |
| (a) | If securities that constitute underlying assets are securities under any of subparagraphs 1 through 5 and 7: the number prescribed in the subparagraph applicable to securities that constitute underlying assets, among subparagraphs 1 through 5 and 7; |
| (b) | If securities that constitute an underlying asset are derivative-linked securities: the number prescribed in the subparagraph applicable to securities that constitute underlying assets among subparagraphs 1 through 5 and 7, based on the derivative-linked securities that constitute underlying assets; |
| 7. | For depository receipts: the number prescribed in the subparagraph applicable to securities that underlie the depository receipts among subparagraphs 1 through 6. |
| (2) | The total number of stocks or similar under Article 147 (1) of the Act in judging whether stocks or similar are held in bulk shall be calculated by aggregating the total number of outstanding voting stocks and the number of stocks or similar [excluding stock certificates, stock certificates subject to exchange with exchangeable bonds (excluding treasury stocks), stock certificates that constitute underlying assets of derivative-linked securities (excluding treasury stocks), and stock certificates that underlie depository receipts] held by a person and his/her specially related persons as on the day on which stocks or similar are held in bulk, as defined in Article 147 (1) of the Act. |
| (3) | If there a stock option has been granted, the number of voting stocks that will be purchased upon the exercise of the stock option (including treasury stocks) shall be added to the number of stocks or similar under paragraph (1) and the total number of stocks or similar under paragraph (2). |
| Article 18 (Place where Proxy Forms and Reference Documents shall be Made Available) |
"Place designated by Ordinance of the Prime Minister" in Article 153 of the Act means any of the following places: | 1. | The head office, a branch office, or any other place of business of a stock-listed corporation; |
| 3. | The Financial Services Commission; |
| Article 19 (Duration not Included in Period for Examination for Registration) |
| 1. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 182 (2) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defects in a registration application pursuant to the last sentence of Article 182 (4) of the Act, if such supplementary correction has been demanded. |
| Article 20 (Dispatch of Reference Documents for Voting in Writing) |
| (1) | Pursuant to Article 220 (3) of the Decree, the Korea Securities Depository shall dispatch the following documents to beneficiaries: |
| 1. | Materials describing the purpose and details of an amendment, if the purpose of the general meeting of beneficiaries is to amend a trust contract; |
| 2. | Materials describing the purpose and course of a merger and critical points of the merger agreement and documents specified in subparagraphs of Article 193 (4) of the Act, if the purpose of the general meeting of beneficiaries is about the merger. |
| (2) | Describing the details already notified publicly through the Official Gazette, a newspaper, or any similar medium among the matters specified in subparagraphs of paragraph (1) may be substituted by stating the name of the Official Gazette or newspaper and the date of such public notification in a material. |
| Article 21 (Deadline for Preparation of List of Property subject to Liquidation, etc) |
Pursuant to Article 203 (1) of the Act, liquidators shall prepare a list of assets and a balance sheet and submit them to the liquidators' meeting within 15 days from the day on which they take office as liquidators.
| Article 22 (Delisting of Exchange-Traded Fund) |
"Period prescribed by Ordinance of the Prime Minister" in the first sentence of Article 250 (3) of Decree means ten days.
| Article 23 (Method of Claiming Redemption) |
| (1) | Pursuant to the proviso to Article 235 (2) of the Act, any investor may claim redemption directly to the relevant collective investment business operator or through an investment trader or broker determined through consultation between the investment trader to whom the relevant collective investment business operator has sold relevant collective investment securities and broker. |
| (2) | Any collective investment business operator may use human resources, physical facilities such as an electronic computer system, and information about investors of an investment trader or broker to the extent necessary for responding to a claim of an investor for redemption under paragraph (1), if the investment trader or broker is unable to respond to a claim for redemption due to dissolution or any other cause under Article 235 (2) of the Act. |
| Article 24 (Examination, etc. of Trust Business Operator) |
| (1) | Pursuant to the Article 247 (1) and (2), any trust business operator shall examine the matters under subparagraphs of Article 247 (5) of the Act without delay, and shall, if it discovers as a result of the examination that there is a violation of any Act or subordinate statute, demand to remedy the violation or report the fact of violation to the supervisory director of the investment company without delay. |
| (2) | When a trust business operator examines whether a base price under Article 247 (5) 5 of the Act has been calculated appropriately, the base price is deemed to have been calculated appropriately, if the deviation between the base price calculated by an investment trust or a collective investment business operator of an undisclosed investment association under Article 9 (18) 6 of the Act or an investment company or a similar entity under Article 182 (1) of the Act and the base price calculated by the trust business operator is not more than 3/1000, but the trust business operator shall, if such deviation exceeds 3/1000, demand the collective investment business operator (excluding a collective investment business operator that acts as a corporate director of an investment company) to remedy it or report it to the supervisory director of the investment company. |
| (3) | A collective investment business operator (excluding a collective investment business operator that acts as a corporate director of an investment company) or the supervisory director of an investment company shall, upon receiving a demand for remedy or a report under paragraph (2), give a separate notice (including notice by electronic mail, if an investor expressed his/her intention to receive it by electronic mail) of the fact to each investor through the investment trader or broker who sold relevant collective investment securities and shall also disclose the fact to the public through internet homepages, etc. of the collective investment business operator, the investment trader or broker, and the Korea Financial Investment Association established pursuant to Article 283 of the Act. |
| (4) | Notwithstanding paragraph (3), a collective investment business operator (excluding a collective investment business operator that acts as a corporate director of an investment company) or the supervisory director of an investment company may omit to give a separate notice to each investor through the investment trader or broker in any of the following cases: |
| 1. | If an investor has expressed his/her intention in advance to refuse to receive any notice; |
| 2. | If an investor has not made any additional purchase, or any claim for redemption, of collective investment securities of the collective investment organization at issue. |
| Article 25 (Duration not Included in Period for Examination for Registration) |
| 1. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 254 (2) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defects in a registration application pursuant to the last sentence of Article 254 (4) of the Act, if such supplementary correction has been demanded. |
| Article 26 (Duration not Included in Period for Examination for Registration) |
| 1. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 258 (2) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defects in a registration application pursuant to the last sentence of Article 258 (4) of the Act, if such supplementary correction has been demanded. |
| Article 27 (Duration not Included in Period for Examination for Registration) |
| 1. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 263 (2) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defects in a registration application pursuant to the last sentence of Article 263 (4) of the Act, if such supplementary correction has been demanded. |
| Article 28 (Duration not Included in Period for Examination for Registration) |
| 1. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 268 (4) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defects in a registration application pursuant to the last sentence of Article 268 (6) of the Act, if such supplementary correction has been demanded. |
| Article 28-2 (Duration not Included in Period for Examination for Registration) |
"Duration for making a supplementary correction of defects in a registration application, or other duration specified by Ordinance of the Prime Minister" in Article 272-2 (4) of the Act means either of the following periods: | 1. | A period required for receiving necessary materials from other agencies, etc. to verify whether the requirements provided for in the subparagraphs of Article 272-2 (1) of the Act are satisfied; |
| 2. | A period required for making supplementary corrections of any defects in a registration application, if such supplementary correction has been requested pursuant to the latter part of Article 272-2 (3) of the Act. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
| Article 29 (Descriptions of Register of Depositors' Accounts) |
| 1. | Causes of increase and decrease in the quantity of depository receipts or similar under Article 309 (3) 2 of the Act (hereinafter referred to as "depository receipts or similar"); |
| 2. | The name and address of a pledgee, if depository receipts or similar are pledged; |
| 3. | An indication that depository receipts or similar belong to trust property, if they belong to trust property; |
| 4. | Details of any restriction on disposition, if depository receipts or similar are subject to any restriction on disposition. |
| Article 30 (Descriptions of Register of Investors' Accounts) |
| 1. | Causes of increase and decrease in the quantity of depository receipts or similar; |
| 2. | The name and address of a pledgee, if depository receipts or similar are put to pledge; |
| 3. | An indication that depository receipts belong to trust property, if they belong to trust property; |
| 4. | Details of any restriction on disposition, if depository receipts or similar are subject to any restriction on disposition. |
| Article 31 (Restriction on Return, etc. of Investors' Depository Receipts, etc.) |
| (1) | Whenever the Securities Depository poses any restriction on return of investors' deposits or inter-account transfer pursuant to Article 312 (3) of the Act, it shall give public notice of details thereof in advance. <Amended by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013> |
| (2) | The Securities Depository may pose restrictions on return of investors' deposits or inter-account transfer for each type of depository receipts, if approved by the Financial Services Commission. |
| Article 32 (Issuance of Certificate of Actual shareholder) |
| (1) | The Securities Depository shall, upon receiving an application for issuing a certificate of actual shareholder pursuant to Article 318 (1) of the Act, issue a certificate of actual shareholder, for the depositor's own portion, in accordance with the register of the depositor's account or, for the portion deposited for an investor, in accordance with the register of the investor's account as notified to the Securities Depository by the relevant depositor. |
| (2) | A certificate of actual shareholder under paragraph (1) shall contain the following descriptions: |
| 1. | The name or title and address of the actual shareholder; |
| 2. | The class and number of stocks owned; |
| 3. | Details of the shareholder's right that is intended to be exercised; |
| 4. | The period during which a shareholder's right is to be exercised. |
| (3) | When the Securities Depository issues a certificate of actual shareholder, the Securities Depository shall enter, in the register of a depositor's account, an indication that the disposition of relevant stocks is restricted during the period in which a shareholder's right is to be exercised under paragraph (2) 4 if the stocks are the depositor's own portion, or the depositor shall enter such an indication in the register of an investor's account if the stocks are the portion deposited for the investor, while the indication that disposition is restricted shall be deleted if the certificate of actual shareholder is returned before the end of the period during which the shareholder's right is to be exercised. |
| Article 33 (Issuance of Certificate of Actual Beneficiary) |
The provisions of Article 32 shall apply mutatis mutandis to the issuance of a certificate of actual beneficiary under Article 319 (8) of the Act. In such cases, "certificate of actual shareholder" shall be construed as "certificate of actual beneficiary," "actual shareholder" as "actual beneficiary," "stocks" as "beneficiary certificates of an investment trust," and "shareholder's right" as "beneficial interest in an investment trust."
| Article 34 (Matters Notified to Securities Depository) |
| 1. | The time of issuance, denomination, and serial number of securities under Article 294 (1) of the Act (hereafter referred to as "securities" in this Article); |
| 2. | Total value of issuance; |
| 3. | Terms and conditions of issuance; |
| 4. | Matters deemed necessary and so requested by the Securities Depository in connection with information about the issuance of securities in addition to the matters prescribed in subparagraphs 1 through 3. |
| 1. | The time of issuance, denomination, and serial number of securities concerning which an incident report under Article 323 (2) of the Act (hereafter referred to as "incident report" in this paragraph) is filed; |
| 2. | The name and address of the person who files an accident report; |
| 3. | Matters deemed necessary and so requested by the Securities Depository in connection with information about the incident report on securities in addition to the matters prescribed in subparagraphs 1 and 2. |
| Article 34-2 (Duration Not Included in Period for Examination for Authorization) |
"Duration for making a supplementary correction of a deficiency in the application for authorization, or other duration specified by Ordinance of the Prime Minister" in Article 323-4 (3) of the Act means any of the following periods: | 1. | A period required for receiving necessary data from other institutions, etc. to verify whether the requirements under subparagraphs of Article 323-3 (2) of the Act are fulfilled; |
| 2. | Where supplementary correction of a deficiency in the application for authorization is requested under the latter part of Article 323-4 (2) of the Act, a period for such supplement; |
| 3. | Where criminal procedures are being taken or procedures for an investigation, inspection, etc. are being conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, a prosecutor's office, the Financial Supervisory Service, etc. against an entity that intends to obtain authorization for central counterparty clearing business or a major shareholder of an entity that intends to obtain authorization for central counterparty clearing business, and the content of such litigation or such investigation, inspection, etc. is deemed likely to seriously affect the examination for the authorization, a period required for the completion of procedures for such litigation or such investigation, inspection, etc. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1028, Jul. 5, 2013]
| Article 34-3 (Duration Not Included in Period for Examination for Preliminary Authorization) |
"Duration for supplementing a deficiency in the application for preliminary authorization, or other duration specified by Ordinance of the Prime Minister" in Article 323-5 (3) of the Act means any of the following periods: | 1. | A period required for receiving necessary data from other institutions, etc. to verify whether the requirements under subparagraphs of Article 323-3 (2) of the Act are fulfilled; |
| 2. | Where supplementary correction of a deficiency in the application for preliminary authorization is requested under the latter part of Article 323-5 (2) of the Act, a period for such supplement; |
| 3. | Where criminal procedures are being taken or procedures for an investigation, inspection, etc. are being conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, a prosecutor's office, the Financial Supervisory Service, etc. against an entity that intends to obtain preliminary authorization or a major shareholder of an entity that intends to obtain preliminary authorization, and the content of such litigation or such investigation, inspection, etc. is deemed likely to seriously affect the examination for the preliminary authorization, a period required for the completion of procedures for such litigation or such investigation, inspection, etc. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1028, Jul. 5, 2013]
| Article 34-4 (Matters to be Reported by Central Counterparty) |
"Matter prescribed by Ordinance of the Prime Minister" in Article 318-9 (4) of the Decree means any of the following matters: | 1. | Failure to make payment by a business entity subject to clearing (referring to a business entity subject to clearing under Article 9 (25) of the Act; hereinafter the same shall apply) to a central counterparty (referring to an entity which has obtained authorization for central counterparty clearing business under Article 323-3 of the Act); |
| 2. | Failure to make payment of guarantee money for clearing or joint compensation fund prescribed by the rules on clearing business (referring to the rules on clearing business under Article 323-11 of the Act; hereinafter the same shall apply) by a business entity subject to clearing; |
| 3. | Failure in financial standing of a business entity subject to clearing to fulfill the requirements for acquiring or sustaining the status of the business entity subject to clearing which are prescribed by the rules on clearing business; |
| 4. | Violation of the limit on holding unsettled agreements prescribed by the rules on clearing business by a business entity subject to clearing. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1028, Jul. 5, 2013]
| Article 34-5 (Exceptions to Restrictions on Ownership of Shares) |
"Financial institution or institution related to financial investment business prescribed by Ordinance of the Prime Minister" in Article 318-10 (4) of the Decree means any of the following institutions: | 1. | The Securities Depository; |
| 2. | A securities finance company. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1028, Jul. 5, 2013]
| Article 35 (Duration not Included in Period for Examination for Authorization) |
| 1. | A period required for concluding all proceedings of a lawsuit or an investigation, inspection, etc., in cases where criminal procedures are pending against a major shareholder of any person who intends to obtain authorization under Article 324 (1) of the Act, or proceedings of an investigation, inspection, etc. conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, any prosecutor's office, the Financial Supervisory Service, or any similar agency are pending, and it is deemed that the results of the lawsuit or the investigation, inspection, etc. will significantly affect the examination for the authorization; |
| 2. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 324 (2) of the Act are satisfied; |
| 3. | A period required for making a supplementary correction of any defects in an authorization application pursuant to the last sentence of Article 324 (4) of the Act, if such supplementary correction has been demanded. |
| Article 36 (Financial Investment business operator's Deposit of Fund) |
| 1. | The State or a local government; |
| 2. | A fund established pursuant to the Act or a corporation responsible for the management and operation of such a fund; |
| 5. | A person who has an account with a financial investment business operator. |
| (2) | "Method prescribed by Ordinance of the Prime Minister" in Article 330 (2) of the Act means the method of issuing a note with a maturity of one year or less. |
| Article 36-2 (Duration not Included in Period for Examination for Authorization) |
"Duration for making a supplementary correction of defects in an application for authorization or other duration specified by Ordinance of the Prime Minister" in Article 335-4 (3) of the Act means any of the following periods: | 1. | A period required for receiving necessary materials from other agencies, etc. to verify whether the requirements under each subparagraph of Article 335-3 (2) of the Act are satisfied; |
| 2. | A period required for making supplementary corrections of any defects in an application for authorization, if such supplementary correction has been requested pursuant to the latter part of Article 335-4 (2) of the Act; |
| 3. | Where criminal procedures are being taken or procedures for an investigation, inspection, etc. are being conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, a prosecutor's office, the Financial Supervisory Service, etc. against a person that intends to obtain authorization for credit rating business or a major shareholder of a person that intends to obtain authorization for credit rating business, and the outcomes of such litigation or investigation, inspection, etc. are deemed likely to seriously affect the examination for authorization, a period required for completing procedures for such litigation or investigation, inspection, etc. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
| Article 36-3 (Duration Not Included in Period for Examination for Preliminary Authorization) |
"Duration for making a supplementary correction of defects relating to application for preliminary authorization, or other duration specified by Ordinance of the Prime Minister" under Article 335-5 (3) of the Act means any of the following periods: | 1. | A period required for receiving necessary materials from other agencies, etc. to verify whether the requirements provided for in the subparagraphs of Article 335-3 (2) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defects in an application for preliminary authorization, if such supplementary correction has been requested pursuant to the latter part of Article 335-5 (2) of the Act; |
| 3. | Where criminal procedures are being taken or procedures for an investigation, inspection, etc. are being conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, a prosecutor's office, the Financial Supervisory Service, etc. against a person that intends to obtain preliminary authorization or a major shareholder of a person that intends to obtain preliminary authorization, and the outcomes of such litigation or investigation, inspection, etc. are deemed likely to seriously affect the examination for preliminary authorization, a period required for completing procedures for such litigation or investigation, inspection, etc. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
| Article 37 (Duration not Included in Period for Examination for Authorization) |
| 1. | A period required for concluding all proceedings of a lawsuit or an investigation, inspection, etc., in cases where criminal procedures are pending against a major shareholder of any person who intends to obtain authorization under Article 355 (1) of the Act, or proceedings of an investigation, inspection, etc. conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, any prosecutor's office, the Financial Supervisory Service, or any similar agency are pending, and it is deemed that the results of the lawsuit or the investigation, inspection, etc. will significantly affect the examination for the authorization; |
| 2. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 355 (2) of the Act are satisfied; |
| 3. | A period required for making a supplementary correction of any defects in an authorization application pursuant to the last sentence of Article 355 (4) of the Act, if such supplementary correction has been demanded. |
| Article 38 (Duration Not Included in Time Period for Examination for Authorization) |
| 1. | A period required for concluding all proceedings of a lawsuit or an investigation, inspection, etc., in cases where criminal procedures are pending against a major shareholder of any person who intends to obtain authorization under Article 360 (1) of the Act, or proceedings of an investigation, inspection, etc. conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, any prosecutor's office, the Financial Supervisory Service, or any similar agency are pending, and it is deemed that the results of the lawsuit or the investigation, inspection, etc. will significantly affect the examination for the authorization; |
| 2. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 360 (2) of the Act are satisfied; |
| 3. | A period required for making a supplementary correction of any defects in an authorization application pursuant to the last sentence of Article 360 (4) of the Act, if such supplementary correction has been demanded. |
| Article 39 (Duration not Included in Period for Examination for Registration) |
| 1. | A period required for receiving necessary materials from other agencies to verify whether the requirements under subparagraphs of Article 365 (2) of the Act are satisfied; |
| 2. | A period required for making a supplementary correction of any defects in a registration application pursuant to the last sentence of Article 365 (4) of the Act, if such supplementary correction has been demanded. |
| Article 40 (Duration not Included in Period for Examination for Permission) |
"Duration for making a supplementary correction of defects in an application for permission, or other duration specified by Ordinance of the Prime Minister" under Article 373-3 (3) of the Act means any of the following periods: | 1. | A period required for receiving necessary materials from other agencies, etc. to verify whether the requirements provided for in the subparagraphs of Article 373-2 (2) of the Act are satisfied; |
| 2. | A period required for making supplementary corrections of any defects in an application for permission, if such supplementary correction has been requested pursuant to the latter part of Article 373-3 (2) of the Act; |
| 3. | Where criminal procedures are being taken or procedures for an investigation, inspection, etc. are being conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, a prosecutor's office, the Financial Supervisory Service, etc. against a person that intends to obtain permission for Exchange or a major shareholder of a person that intends to obtain permission for Exchange, and the outcomes of such litigation or investigation, inspection, etc. are deemed likely to seriously affect the examination for permission, a period required for completing procedures for such litigation or investigation, inspection, etc. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
| Article 41 (Duration Not Included in Period for Examination for Preliminary Permission) |
"Duration for making a supplementary correction of defects relating to an application for preliminary permission, or other duration specified by Ordinance of the Prime Minister" under Article 373-4 (3) of the Act means any of the following periods: | 1. | A period required for receiving necessary materials from other agencies, etc. to verify whether the requirements provided for in the subparagraphs of Article 373-2 (2) of the Act are satisfied; |
| 2. | A period required for making supplementary corrections of any defects in an application for preliminary permission, if such supplementary correction has been requested pursuant to the latter part of Article 373-4 (2) of the Act; |
| 3. | Where criminal procedures are being taken or procedures for an investigation, inspection, etc. are being conducted by the Financial Services Commission, the Fair Trade Commission, the National Tax Service, a prosecutor's office, the Financial Supervisory Service, etc. against a person that intends to obtain preliminary permission or a major shareholder of a person that intends to obtain preliminary permission, and the outcomes of such litigation or investigation, inspection, etc. are deemed likely to seriously affect the examination for preliminary permission, a period required for completing procedures for such litigation or investigation, inspection, etc. |
[This Article Newly Inserted by Ordinance of the Prime Minister No. 1031, Aug. 29, 2013]
ADDENDA
Article 1 (Enforcement Date)
This Rule shall enter into force on February 4 ,2009.
Article 2 (Repealed Subordinate Statutes)
The following subordinate statutes are hereby repealed:
Article 3 (General Transitional Measures)
Article 4 (Transitional Measures concerning Indirect Investment organizations)
| (2) | Foreign indirect investment securities already reported to the Financial Services Commission in accordance with the former Indirect Investment Asset Management Business Act when this Rule enters into force shall be governed by the former Enforcement Rule of the Indirect Investment Asset Management Business Act. |
Article 5 Omitted.
Article 6 (Relations to other Acts and Subordinate Statutes)
ADDENDUM <Ordinance of the Prime Minister No. 949, Feb. 7, 2011>
This Rule shall enter into force on the date of its promulgation: Provided, That the amended provisions of the proviso to Article 6 (1) 1 shall enter into force on April, 1, 2013.
ADDENDA <Ordinance of the Prime Minister No. 973, Mar. 2, 2012>
Article 1 (Enforcement Date)
This Rule shall enter into force on the date of its promulgation.
Article 2 (Applicability to Postponement, etc. of Effective Date of Securities Registration)
The amended provisions of Article 12 (4) and (5) shall apply from the first securities registration (including a corrective registration under Article 122 (1) or (3) of the Act) made after this Rule enters into force.
ADDENDUM <Ordinance of the Prime Minister No. 1028, Jul. 5, 2013>
This Rule shall enter into force on July 6, 2013.
ADDENDUM <Ordinance of the Prime Minister No. 1031, Aug. 29, 2013>
This Rule shall enter into force on August 29, 2013.