ENFORCEMENT DECREE OF THE ACT ON CORPORATE GOVERNANCE OF FINANCIAL COMPANIES
Presidential Decree No. 27414, Jul. 28, 2016
Amended by Presidential Decree No. 27472, Aug. 31, 2016
Presidential Decree No. 27556, Oct. 25, 2016
Presidential Decree No. 28283, Sep. 5, 2017
Presidential Decree No. 28381, Oct. 17, 2017
Presidential Decree No. 28391, Oct. 17, 2017
CHAPTER I GENERAL PROVISIONS
| Article 2 (Scope of Financial Companies) |
| Article 3 (Scope of Affiliated Persons, etc.) |
| (1) | "Persons who have a special relationship specified by Presidential Decree" in subparagraph 6 (a) of Article 2 of the Act means any of the following persons (hereinafter referred to as "affiliated persons"): |
| (a) | The spouse (including a person in a de facto marital relationship therewith; the same shall apply hereinafter); |
| (b) | A blood relative within the sixth degree; |
| (c) | A relative by marriage within the fourth degree; |
| (d) | A lineal ascendant from the biological family of an adoptee; |
| (e) | A child adopted into another family, the spouse of such child, and lineal descendants of the adopting family; |
| (f) | The biological mother of a child born outside of wedlock; |
| (g) | A person who maintains livelihood with money or any other asset of the principal or a person who resides with the principal; |
| (h) | A corporation or organization, the principal of which, alone or together with persons in any of the relationships referred to in items (a) through (g), has invested in at least 30/100 of the capital, or over which the principal, alone or together with persons in any of the relationships referred to in items (a) through (g), exercises de facto control in important matters related to the management of the corporation or organization, such as the appointment or dismissal of executive officers (excluding operating officers; the same shall apply hereafter in this Article), and executive officers of such corporation or organization (executive officers of such a corporation or organization are excluded herefrom, if it is verified by the principal's written statement of confirmation, etc. that the principal, alone or together with the persons who are in any of the relationships referred to in items (a) through (g), does not exercise de facto control in important matters of the corporation or organization through the appointment or dismissal of executive officers, etc.); |
| (i) | A corporation or organization, the principal of which, alone or together with persons in any of the relationships referred to in items (a) through (h), has invested in at least 30/100 of the capital or over which the principal, alone or together with persons in any of the relationships referred to in items (a) through (h), exercises de facto control over important matters related to the management of the corporation or organization, such as the appointment or dismissal of executive officers, and executive officers of such corporation or organization (executive officers of such a corporation or organization are excluded herefrom, if it is verified by the principal's written statement of confirmation, etc. that the principal, alone or together with persons in any of the relationships referred to in items (a) through (h), does not exercise de facto control in important matters of the corporation or organization through the appointment or dismissal of executive officers, etc.); |
| 2. | If the principal is a corporation or an organization: Any of the following persons: |
| (c) | An individual (including persons who have any of the relationships referred to in subparagraph 1 with the individual; hereafter the same shall apply in this subparagraph), who, alone or together with persons in any of the relationships referred to in subparagraph 1 with the individual, has invested at least 30/100 of the capital in the principal or who exercises de facto control over the principal in important matters related to the management of the principal, such as the appointment or dismissal of executive officers, or a corporation (excluding affiliated companies; the same shall apply hereafter in this subparagraph), an organization, and executive officers of such corporation or organization; |
| (d) | A corporation or organization in which the principal, alone or together with persons in any of the relationships referred to in items (a) through (c) with the principal, has invested at least 30/100 of the capital or over, or exercises de facto control over important matters related to the management of the corporation or organization, such as the appointment or dismissal of executive officers, and executive officers of such corporation or organization (executive officers of such a corporation or organization are excluded herefrom, if it is verified by the principal's written statement of confirmation, etc. that the principal does not exercise de facto control over the corporation or organization in important matters of the corporation or organization through the appointment or dismissal of executive officers, etc.). |
| (2) | Notwithstanding paragraph (1), if the relevant financial company is a bank under the Banking Act (including the persons specified in Article 2; hereinafter referred to as "bank") or a financial holding company under the Financial Holding Companies Act (hereinafter referred to as "financial holding company"), the following persons shall be deemed the affiliated persons: <Amended by Presidential Decree No. 28391, Oct. 17, 2017> |
| 3. | Deleted. <by residential Decree No. 28391, Oct. 17, 2017> |
| Article 4 (Scope of Major Shareholders) |
"Any of the persons specified by Presidential Decree" in subparagraph 6 (b) (ii) of Article 2 of the Act means any of the following persons: | 1. | A shareholder who, alone or together with other shareholders under an arrangement or agreement, appoints the representative director or a majority of directors; |
| 2. | Any of the following shareholders: |
| (i) | If the financial investment business entity does not concurrently run any financial investment business in addition to the investment advisory business, discretionary investment business, collective investment business, the investment trading business or investment brokerage business limited to collective investment securities, or the on-line small investment brokerage business, as defined by the Financial Investment Services and Capital Markets Act: A shareholder who is an executive officer (including the persons specified in Article 401-2 (1) of the Commercial Act; the same shall apply hereafter in this subparagraph) and holds at least 5/100 of the total number of outstanding voting shares; |
| (ii) | If the financial investment business entity runs any financial investment business in addition to the investment advisory business, discretionary investment business, collective investment business or the investment trading business or investment brokerage business limited to collective investment securities or the on-line small investment brokerage business, as defined by the Financial Investment Services and Capital Markets Act: A shareholder who is an executive officer and holds at least 1/100 of the total number of outstanding voting shares; |
| (b) | If the financial company is not a financial investment business entity: Any of the shareholders identified and publicly notified by the Financial Services Commission as those who have dominant influence over decision-making on important matters or execution of affairs of the financial company (including subsidiaries and second-tier subsidiary companies, etc. of a financial holding company, as defined by Article 2 (1) 2 and 3 of the Financial Holding Companies Act), including management strategy and reorganization. |
| Article 5 (Finance-Related Statutes) |
"Finance-related statutes specified by Presidential Decree" in subparagraph 7 of Article 2 of the Act means this Decree and the following statutes (hereinafter referred to as "finance-related statutes"): <Amended by Presidential Decree No. 27472, Aug. 31, 2016>
| Article 6 (Scope of Application) |
| (2) | "Persons specified by Presidential Decree" in Article 3 (2) of the Act means persons who execute business affairs at a domestic branch defined in the aforesaid paragraph with any title identifiable as a person with authority to execute business affairs, such as honorary chairperson, chairperson, president, vice president, representative, deputy president, senior executive director, managing director, and director. |
| (3) | "A financial company specified by Presidential Decree" in the main sentence of Article 3 (3) of the Act means any of the following persons: Provided, That a financial company is excluded herefrom, if it is a stock-listed corporation (referring to a stock-listed corporation defined by Article 9 (15) 3 of the Financial Investment Services and Capital Markets Act; the same shall apply hereinafter) and its total assets as at the end of the latest business year is at least two trillion won: <Amended by Presidential Decree No. 28283, Sep. 5, 2017; Presidential Decree No. 28391, Oct. 17, 2017> |
| 1. | A mutual savings bank under the Mutual Savings Banks Act (hereinafter referred to as "mutual savings bank"), if the value of its total assets as at the end of the latest business year is less than 700 billion won; |
| 3. | An insurance company referred to in the Insurance Business Act (hereinafter referred to as "insurance company"), if the value of its total assets as at the end of the latest business year is less than five trillion won; |
| 4. | A specialized credit finance company referred to in the Specialized Credit Finance Business Act (hereinafter referred to as "specialized credit finance company"), if the value of its total assets as at the end of the latest business year is less than five trillion won; |
| 5. | Other persons specified and publicly notified by the Financial Services Commission, taking into consideration the scale of assets, financial services provided, etc. |
CHAPTER II EXECUTIVE OFFICERS
| Article 7 (Qualification for Executive Officers) |
| (1) | "Persons specified by Presidential Decree" in the main sentence of Article 5 (1) 6 of the Act means the following persons, among executive officers and employees who are in service as at the time the event giving rise to the relevant measure occurs: |
| 1. | An auditor or a member of the audit committee under Article 19 of the Act (hereinafter referred to as "audit committee member"); |
| 2. | An executive officer (excluding operating officers; the same shall apply hereafter in this Article) who has been subjected to a caution, a warning, reprimand, suspension of performance of duties, a request for dismissal from office, or any similar measure from the Financial Services Commission or the Governor of the Financial Supervisory Service established under the Act on the Establishment, etc. of Financial Services Commission (hereinafter referred to as the "Governor of the Financial Supervisory Service") for an illegal or wrongful act committed in connection with the event giving rise to the measure specified in Article 5 (1) 6 (a) or (c) of the Act; |
| 3. | An executive officer who has been subject to suspension of performance of duties, a request for dismissal from office, or any similar measure from the Financial Services Commission or the Governor of the Financial Supervisory Service for an illegal or wrongful act committed in connection with the event giving rise to the measure specified in Article 5 (1) 6 (b) of the Act; |
| 4. | An employee (including operating officers; the same shall apply hereafter in this Article) who has been subject to a measure equivalent to or severer than a request for suspension of performance of duties or a request for suspension from office from the Financial Services Commission or the Governor of the Financial Supervisory Service for an illegal or wrongful act committed in connection with the event giving rise to the measure specified in any item of Article 5 (1) 6; |
| 5. | Any person who is subject to a disciplinary measure referred to in any provision of subparagraphs 2 through 4 but retired or resigned from office before he/she is subjected to such measure. |
| (2) | "The period specified by Presidential Decree" in Article 5 (1) 7 of the Act means the relevant period specified in any of the following subparagraphs: |
| 1. | The period specified in any of the following items for each type of disciplinary measure against executive officers: |
| (a) | Dismissal from office (including a request for dismissal or recommendation for dismissal): Five years from the date of dismissal (referring to the date the request for dismissal is made or the recommendation for dismissal is made, in cases of a request for dismissal or recommendation of dismissal); |
| (b) | Suspension of performance of duties (including a request for suspending performance of duties) or suspension of execution of operations: Four years from the end of the period of suspension of performance of duties (referring to the date the suspension of performance of duties is requested, in cases of a request for suspending performance of duties) or from the end of the period of suspension of execution of operations; |
| (c) | Reprimanding warning: Three years from the date of reprimanding warning; |
| 2. | The period specified in any of the following items for each type of disciplinary measure against employees: |
| (a) | A request for removal from office: Five years from the date on which removal from office is requested; |
| (b) | A request for suspension from office: Four years from the date on which suspension from office is requested; |
| (c) | A request for salary reduction: Three years from the date on which a salary reduction is requested; |
| 3. | The period specified in subparagraph 1 or 2 in cases where a person has a record of being subjected to a disciplinary measure imposed pursuant to subparagraph 1 or 2 by the institution to which he/she belonged or any supervisory or inspection agency other than the Financial Services Commission or the Governor of the Financial Supervisory Service in accordance with any finance-related statute while he/she was in service or employed; |
| 4. | The period specified in any of subparagraphs 1 through 3 from the date on which an executive officer or employee who had retired or resigned from office is notified of a measure to which the person is deemed to have been subjected in cases where the person is deemed to have been subject to the measure specified in any of subparagraphs 1 through 3, if the person was in service or in employment. |
| (3) | "A person specified by Presidential Decree" in Article 5 (1) 8 of the Act means any of the following persons: <Amended by Act No. 28283, Sep. 5, 2017> |
| 1. | If the relevant financial company is a bank: A person who has a special relationship with a company that has a loan transaction (referring to a loan, purchase of securities which is a guarantee of payment and funding in nature, and other direct and indirect transaction of a financial company that entails credit risks in financial transaction; hereinafter the same shall apply) with the relevant bank, a subsidiary company, etc. of the relevant bank (referring to a subsidiary company defined by the proviso to Article 37 (2) of the Banking Act; hereinafter referred to as "subsidiary company, etc. of the bank"), a subsidiary bank of the relevant bank (referring to a subsidiary bank defined by Article 37 (5) of the Banking Act; hereinafter referred to as "subsidiary bank of the bank"), the bank holding company that owns the relevant bank as a subsidiary company, or a subsidiary company, etc. of such bank holding company (referring to a subsidiary defined by Article 4 (1) 2 of the Financial Holding Companies Act; hereinafter referred to as "subsidiary company of the bank holding company") and who is likely to represent interests of a specific client company, etc. in connection with the management of assets of the relevant bank; |
| 2. | If the relevant financial company is a financial holding company: A person in a special relationship with a company that has loan transactions with the relevant financial holding company or a subsidiary company, etc. (referring to a subsidiary company as defined in Article 4 (1) 2 of the Financial Holding Companies Act; hereinafter referred to as “subsidiary company, etc. of a financial holding company”) of the relevant financial holding company and who is likely to represent interests of a specific client company in connection with the management of assets of the relevant financial holding company or a subsidiary company, etc. of the financial holding company; |
| 3. | If the relevant financial company is a financial company that is other than a bank or a financial holding company: A person who has a special relationship with a company whose loan transactions with the relevant financial company reach or exceed the standard level specified and publicly notified by the Financial Services Commission and who is likely to represent a specific client company in connection with the management of assets of the relevant financial company. |
| (4) | "Cases specified by Presidential Decree" in the proviso to Article 5 (2) of the Act means cases where a person has been subjected to a disciplinary measure not severer than the suspension of performance of duties, the suspension of execution of operations, or a request for suspension from office (including cases where a person is notified of a disciplinary measure that is deemed to have been imposed upon him/her if he/she was in service or in employment). |
| Article 8 (Qualifications for Outside Directors) |
| (1) | "A corporation in an important business relationship defined by Presidential Decree or a competitive or cooperative business relationship" in Article 6 (1) 6 of the Act means any of the following corporations: |
| 1. | A corporation where the sum of transactions made with the relevant financial company during the latest three business years is at least 10/100 of total assets (referring to the relevant financial company's total assets on the balance sheet as at the end of the latest business year) or operating income (referring to the relevant financial company's operating income on the profit and loss statement as at the end of the latest business year); |
| 2. | A corporation that signed a single contract with the relevant financial company during the latest business year for business transactions amounting to at least 10/100 of total sales (referring to total sales of the corporation that signed the contract for business transactions with the relevant financial company on its profit and loss statement as at the end of the latest business year); |
| 3. | A corporation where the sum of money, securities, and other instruments or certificates that the relevant financial company lent or borrowed, assets that the relevant financial company provided as collateral, and debt guarantees that the relevant financial company provided is at least 10/100 of the equity or capital specified in either of the following items: |
| (a) | If the relevant financial company is a bank, an insurance company, or a financial holding company: The equity of the relevant corporation on the balance sheet as at the end of the latest business year (referring to the capital of the relevant corporation, if the relevant financial company is an insurance company); |
| (b) | If the relevant financial company is a financial investment business entity, a mutual savings bank, or a specialized credit finance company: The capital of the relevant financial company on the balance sheet as at the end of the latest business year (referring to the equity of the relevant financial company, if the relevant financial company is a financial investment business entity); |
| 4. | A corporation where the sum of investments by the relevant financial company as of the date of the annual meeting of shareholders of the relevant financial company (referring to the date of the annual meeting of partners in cases of an insurance company in the form of a mutual company defined by subparagraph 7 of Article 2 of the Insurance Business Act) is at least 5/100 of the capital (referring to the capital of the corporation in which the relevant financial company has invested); |
| 5. | A corporation who has entered into an agreement with the relevant financial company for technical alliance; |
| 7. | A corporation that has entered into an agreement with the relevant financial company for advisory services as a main legal advisor or business consultant. |
| (2) | Notwithstanding paragraph (1), the following corporations and foreign corporations equivalent thereto shall be excluded: |
| 1. | A person who works or worked, during the latest two years, as a full-time executive officer or employee for a corporation (excluding the corporations specified in any subparagraph of paragraph (2)) that has the relationship specified in any subparagraph of paragraph (1) with the largest shareholder of the relevant financial company. In such cases, "relevant financial company" in paragraph (1) shall be construed as "largest shareholder of the relevant financial company”; |
| 2. | If the relevant financial company is a bank: |
| (a) | A person having a special relationship with a major shareholder who is not the largest shareholder; |
| (b) | A person who works or worked, during the latest two years, as a full-time executive officer or employee for a corporation (excluding the corporations specified in any subparagraph of paragraph (2)) in a relationship specified in any subparagraph of paragraph (1) with any of the following entities: |
| (i) | The relevant bank or its subsidiary company, etc. or subsidiary bank of such bank; |
| (ii) | The bank holding company that owns the relevant bank as one of its subsidiary company or a subsidiary company, etc. of such bank holding company; |
| (c) | The spouse or lineal ascendant or descendant of a person who works or worked, during the latest two years, as a full-time executive officer or employee as referred to in item (b) (i) or (ii); |
| 3. | A person who works or worked, during the latest two years, as a full-time executive officer or employee for a corporation (excluding the corporations specified in any subparagraph of paragraph (2)) in a relationship specified in any subparagraph of paragraph (1) with a subsidiary company, etc. of the relevant financial holding company, if the relevant financial company is a financial holding company; |
| 4. | A person who works as an outside director, non-standing director, or non-standing auditor for two or more listed corporations in addition to the relevant financial company: Provided, That it refers to any of the following persons, if the relevant financial company is a listed corporation, bank, or bank holding company: |
| (a) | If the relevant financial company is a listed corporation: A person who works as a director, an operating officer, or an auditor for at least two companies in addition to the relevant financial company; |
| (b) | If the relevant financial company is a bank: A person who works as an outside director, a non-standing director, or a non-standing auditor for any other company (excluding subsidiary companies, etc. of the relevant bank, subsidiary banks of the relevant bank, the bank holding company that owns the relevant bank as one of subsidiaries, and subsidiary companies, etc. of such bank holding company) in addition to the relevant bank; |
| (c) | If the relevant financial company is a bank holding company: A person who works as an outside director, a non-standing director, or a non-standing auditor for any other company (excluding subsidiary companies, etc. of the relevant bank holding company) in addition to the bank holding company; |
| 5. | Any of the following persons: |
| (b) | A certified public accountant or a certified public tax accountant who serves as an accounting auditor or a tax agent for the relevant financial company or an attorney-at-law or any person who provides consulting services under a contract for advisory services as a major legal advisor or business consultant for the relevant financial company; |
| 8. | A person (referring to an executive officer or an employee of the relevant company or corporation, if the relevant financial company is a company or a corporation) registered with the centralized credit information collection agency under the Credit Information Use and Protection Act as a person who disturbed credit order or who did not repay debts by the agreed deadline; |
| (4) | "A person specified by Presidential Decree" in Article 6 (3) of the Act means a person whom the relevant financial company deems a person who has abundant expertise or practical work experience as necessary for performing duties as an outside director, among persons who have work experience in research, survey, or service in an area related to the conduct of financial business of a financial company, such as finance, business administration, economy, law, accounting, consumer protection, or information technology. |
| Article 9 (Appointment, Dismissal, etc. of Main Operating Officers) |
Pursuant to Article 8 (1) of the Act, an operating officer responsible for the execution of the following major affairs (hereinafter referred to as "main operating officer") shall be appointed or dismissed by resolution of the board of directors: | 1. | Strategic planning, including formulation of business strategy; |
| 2. | Financial management, including finance, budgeting, and settlement of accounts; |
| 3. | Risk management in connection with asset management, etc. |
| Article 10 (Permission for Holding Concurrent Office) |
| 1. | If the financial company is a specialized credit finance company: Where there is no conflict of interest with clients of the relevant financial company and the person is unlikely to undermine sound management of the financial company and is engaged in full-time service for another company; |
| 2. | If the financial company is a financial holding company: Where there is no conflict of interest with clients of subsidiary companies, etc. of the relevant financial holding company and the person is unlikely to undermine sound management of the subsidiary companies, etc. and is engaged in full-time service for a company that does not fall into any of the following categories: Provided, That excluded herefrom are cases where the company falling into any of the following categories is a subsidiary company, etc. of the relevant financial holding company: |
| (a) | The company that is the largest shareholder or a major shareholder of the relevant financial holding company; |
| (b) | An affiliated company of the relevant financial holding company; |
| Article 11 (Approval, Reporting, etc. of Concurrent Office) |
| (1) | "Standards prescribed by Presidential Decree" in the main sentence of Article 11 (1) of the Act means the following standards: |
| 1. | Guidelines are established for the management of concurrent office of executive officers and employees of the financial company, including guidelines for the following matters (hereinafter referred to as "standards for the management of concurrent office of executive officers and employees"): |
| (a) | Management and assessment of risks ensuing from concurrent office held by executive officers and employees; |
| (b) | The procedure for commencing and terminating concurrent office of executive officers and employees; |
| (c) | Management and supervision of executive officers and employees holding concurrent office; |
| (e) | A system for preventing conflicts of interest caused by concurrent office held by executive officers and employees; |
| (f) | The scope of duties of executive officers and employees holding concurrent office; |
| (g) | The scope of liability of executive officers and employees holding concurrent office of the relevant financial company (referring to the financial holding company and its subsidiary companies, etc., if the relevant financial company is a financial holding company) in connection with concurrent office of executive officers and employees; |
| (h) | Formulation of a contingency plan in preparation for conflicts of interest with clients, methods for resolving disputes, and the relevant financial company's liability for damages; |
| (i) | Other matters specified and publicly notified by the Financial Services Commission as those necessary for the prevention of conflicts of interest caused as a consequence of holding concurrent office, the robustness of the financial company, etc.; |
| 2. | The financial company in which executive officers and employees hold office concurrently shall prepare respective certificates for each of the following matters (hereafter referred to as "certificate" in this Article): |
| (a) | The scope of tasks that the executive officer or employee performs in the company in which he/she holds office concurrently; |
| (b) | Maintenance of records of the tasks performed while holding office concurrently; |
| (c) | Objectives for holding concurrent office; |
| (d) | Period of concurrent office: |
| (e) | Other matters specified and publicly notified by the Financial Services Commission as those necessary for the prevention of conflicts of interest, the robustness of the financial company, etc. |
| (2) | "Cases specified by Presidential Decree" in the main sentence of Article 11 (1) of the Act means cases not falling into any of the following categories: <Amended by Act No. 28283, Sep. 5, 2017> |
| 1. | Where the representative director, representative executive director (referring to the representative executive director under Article 408-5 (1) of the Commercial Act; hereinafter the same shall apply), executive director, or a main operating officer of the relevant financial company intends to hold office concurrently as an executive officer or employee engaged in full-time service for another company: Provided, That the following cases are excluded herefrom: |
| (a) | Where an office is concurrently held between a financial holding company and a subsidiary company, etc. of the relevant financial holding company; |
| 2. | Where an audit committee member (including auditors; the same shall apply hereafter in this Article), a compliance officer under Article 25 (1) of the Act (hereinafter referred to as "compliance officer"), or a risk manager under Article 28 (1) of the Act (hereinafter referred to as "risk manager" hereinafter) of the relevant financial company intends to hold office concurrently as an audit committee member, a compliance officer, or a risk manager of another financial company: Provided, That excluded herefrom are cases where the relevant financial company is a financial holding company and the person intends to hold office concurrently in a subsidiary company, etc. of the financial holding company for the same work as that which he/she performs in the relevant financial company; |
| 3. | Where an executive officer (excluding the executive officers referred to in subparagraph 1) or an employee of the relevant financial company intends to hold office concurrently as an executive officer or an employee engaged in regular business of another financial company and the work for which the executive officer or employee intends to hold office concurrently falls into either of the following categories: |
| 4. | Where an executive officer or an employee of a non-life insurance company (referring to a non-life insurance company under the Insurance Business Act; the same shall apply hereinafter) intends to hold office concurrently as an executive officer or an employee of a life insurance company (referring to a life insurance company under the Insurance Business Act; the same shall apply hereinafter) or where an executive officer or an employee of a life insurance company intends to hold office concurrently as an executive officer or an employee of a non-life insurance company. |
| (3) | Notwithstanding paragraph (2), a financial company may report a person's concurrent holding of office to the Financial Services Commission in either of the following cases: |
| 1. | Where an executive officer or an employee of the relevant financial company, whose concurrent holding of office was approved during the latest three years under the main sentence of Article 11 (1) of the Act, is replaced with another person and the work and the company for which the person replacing the former executive officers or employee are the same as the work and the company for which his/her predecessor has concurrently held office; |
| 2. | Where an executive officer or an employee of the relevant financial company intends to hold office concurrently as an executive officer or an employee of a subsidiary company, etc. in a foreign country. |
| (4) | A financial company that wishes to obtain approval to concurrently hold office pursuant to the main sentence of Article 11 (1) of the Act shall file an application for approval (hereinafter referred to as "approval application") in the form prescribed and publicly notified by the Financial Services Commission, along with the following documents: |
| 1. | Guidelines for managing concurrently held office of executive officers and employees; |
| 4. | A report issued by the compliance officer of the relevant financial company that the holding of concurrent office by the executive officer or employee meets the following criteria: |
| (a) | It does not harm the stability of financial markets; |
| (b) | It does not undermine the soundness of management of the financial company; |
| (c) | It does not cause any conflict of interest with clients; |
| (d) | It does not disturb the order of financial transactions; |
| (e) | It does not contravene the guidelines for the management of concurrent office of executive officers and employees or the internal control standards under Article 24 (1). |
| (5) | Upon receipt of an approval application under paragraph (4), the Financial Services Commission shall examine the application to ascertain whether the concurrently held office of the relevant executive officer or employee meets the criteria under paragraph (4) 4, decide whether to approve it within 30 days from the filing date of the application, and notify the relevant financial company of the result thereof and the reason therefor in writing, without delay. If any defect exists in the approval application, the Financial Services Commission may request the applicant to amend it. |
| (6) | For the purpose of counting the period for examination under paragraph (5), the period specified and publicly notified by the Financial Services Commission, including the period set for rectifying a defect in an approval application, shall not be included in the period of examination. |
| (7) | When a financial company makes a report under the proviso to Article 11 (1) of the Act, it shall submit a report on the status of current office for each semi-annual term to the Financial Services Commission within one month after the end of the semi-annual term, along with the documents specified and publicly notified by the Financial Services Commission. |
| 1. | The purpose of concurrent office; |
| 2. | The period of concurrent office; |
| 3. | Other matters specified and publicly notified by the Financial Services Commission as those necessary for preventing conflicts of interest or for maintaining robustness of a financial company. |
| (9) | "Cases specified by Presidential Decree, from among cases where an executive officer of a financial company concurrently holds office as an executive officer of another financial company (excluding cases of concurrent office under Article 10)" in Article 11 (2) of the Act means cases where an outside director, non-standing director, or non-standing auditor of the relevant financial company holds office concurrently as an executive officer of another financial company. In such cases, the financial company shall submit a report on the current status of concurrent office for each semi-annual term to the Financial Services Commission within one month after the end of the semi-annual term, along with the documents specified and publicly notified by the Financial Services Commission. <Amended by Act No. 28283, Sep. 5, 2017> |
| (10) | Except as otherwise expressly provided for in paragraphs (1) through (9), details necessary for the method and procedure for the approval and reporting of concurrent office taken by executive officers and employees shall be prescribed and publicly notified by the Financial Services Commission. |
CHAPTER III BOARD OF DIRECTORS
| Article 12 (Composition of Board of Directors) |
| 2. | A mutual savings bank with total assets amounting to at least 300 billion won as at the end of the latest business year; |
| 3. | A financial investment business entity or a merchant bank with total assets amounting to at least 300 billion won as at the end of the latest business year; |
| 4. | An insurance company with total assets amounting to at least 300 billion won as at the end of the latest business year; |
| 5. | A specialized credit finance company with total assets amounting to at least 300 billion won as at the end of the latest business year (if a specialized credit finance company does not engage in credit card business under the Specialized Credit Finance Business Act, its total assets as at the end of the latest business year shall be at least two trillion won). |
| Article 13 (Internal Rules on Governance Structure, etc.) |
| (1) | The internal rules on governance structure under Article 14 (1) of the Act (hereinafter referred to as "governance structure") shall include the following matters: |
| 1. | Matters concerning the composition and operation of the board of directors: |
| (a) | The method and procedure for constituting the board of directors; |
| (b) | The procedure for calling a directors' meeting and the method for exercising voting rights; |
| (c) | Matters concerning evaluating results, etc. of the operation of the board of directors; |
| (d) | Authority and responsibility of the board of directors and those of directors; |
| (e) | Qualifications for directors; |
| (f) | The criteria and procedure for the appointment and retirement of directors; |
| 2. | Matters concerning the establishment and operation of committees (referring to the committees under Article 16 (1) of the Act and committees composed of executive officers; the same shall apply hereafter in this Article) within the board of directors: |
| (a) | The kinds of committees within the board of directors and the procedure for the formation, functioning, and operation of the committees; |
| (b) | Matters concerning the evaluation of results, etc. of the operation of committees within the board of directors; |
| 3. | Matters concerning executive officers: |
| (a) | Qualifications for executive officers; |
| (b) | Authority and responsibilities of executive officers; |
| (c) | Criteria and the procedure for the appointment and retirement of executive officers, including a plan for transferring business control under subparagraph 4; |
| (d) | Training system for executive officers and candidates for executive officers (limited to executive officers and employees of the relevant financial company); |
| (e) | Matters concerning evaluating performance of executive officers and the method of paying remunerations; |
| 4. | Matters concerning the transfer of business control, including qualifications for chief executive officer (referring to the representative director or the representative executive director; the same shall apply hereinafter): |
| (a) | The principle of the transfer of business control of the chief executive officer; |
| (b) | Qualifications for chief executive officer; |
| (c) | The procedure for recommending candidates for the chief executive officer; |
| (d) | Public disclosure related to the recommendation of candidates for the chief executive officer; |
| (e) | Establishment of an accountable management system. |
| (2) | A financial holding company may prescribe principles, procedures, etc. that its subsidiary companies, etc. shall reflect in their internal rules on governance structure through deliberation and resolution by its board of directors. |
| (3) | Except as otherwise expressly provided for in paragraph (1), matters necessary for internal rules on governance structure shall be prescribed and publicly notified by the Financial Services Commission. |
| Article 14 (Establishment of Remuneration Committee) |
"Financial companies" in the proviso to Article 16 (2) of the Act means financial companies having total assets as at the end of the latest business year amounting to at least five trillion won.
| Article 15 (Provision of Information to Outside Directors) |
A financial company shall provide an outside director with data or information by any of the following methods in accordance with Article 18 (1) of the Act: | 1. | The financial company shall provide an outside director with data or information on business operations, finance, other status of business performance, etc. on regularly at least once a year so that he/she can grasp the actual situation of business management of the company efficiently; |
| 2. | The financial company shall provide an outside director with data or information, without delay, as requested, in the absence of good cause to the contrary, if the outside director requests the financial company to provide data or information through the chairperson or senior outside director of the board of directors under Article 13 of the Act for efficient performance of his/her duties; |
| 3. | The financial company shall provide materials for a meeting of the board of directors or of a committee within the board of directors (hereinafter referred to as "the board of directors, etc.") by not later than two weeks before holding the meeting: Provided, That a different period may be set by articles of incorporation or regulations of the board of directors of the relevant financial company. |
| Article 16 (Qualifications for and Appointment of Audit Committee Members) |
| (1) | "An expert in accounting or finance, as prescribed by Presidential Decree" in the latter part of Article 19 (1) of the Act means a person who falls into any of the following categories: |
| 1. | A certified public accountant who at least five years’ work experience in an area related to his/her qualification after he/she obtained the qualification; |
| 2. | A person who possesses at least a master’s degree in finance or accounting and who has at least five years’ post-qualification experience as a researcher or an assistant professor or higher-ranking professor in finance or accounting in a research institute or a university; |
| 3. | A person who has at least five years’s work experience as an executive officer or at least ten years’s work experience as an officer or employee in an area related to finance or accounting in a listed corporation; |
| 6. | Other qualified persons specified and publicly notified by the Financial Services Commission as equivalent to those specified in subparagraphs 1 through 5. |
| (2) | "Persons specified by Presidential Decree" in the main sentence of Article 19 (7) of the Act means the following persons: |
| 1. | A person who holds shares on the account of the largest shareholder or any person specially related to the shareholder; |
| 2. | A person who delegates his/her voting right (including the authority to instruct the exercise of the voting right) to the largest shareholder or any person specially related to the shareholder (limited to the delegated right). |
| (3) | "A financial company specified by Presidential Decree" in the main sentence of Article 19 (8) of the Act means a financial company with total assets as at the end of the latest business year amounting to at least 100 billion won (referring to cases where the total assets as at the end of the latest business year amount to at least two trillion won, if the financial company is a specialized credit finance company that does not engage in credit card business under the Specialized Credit Finance Business Act as a listed corporation): Provided, That excluded herefrom is a financial company falling into any of the following categories: |
| 1. | A domestic branch or any other business office of a foreign financial company; |
| 2. | A financial company that disappears as a consequence of a merger or any similar event within six months from the date of a general meeting of shareholders or of partners; |
| 4. | A financial company that has passed a resolution to be dissolved. |
| Article 17 (Preparation of Remuneration System, etc.) |
| (1) | "Executive officers and employees prescribed by Presidential Decree" in the main sentence of Article 22 (1) of the Act means any of the following persons: |
| 1. | Executive officers (excluding outside directors, non-standing directors, audit committee members, compliance officers, and risk managers); |
| 2. | Persons determined following deliberation and a resolution by the Remuneration Committee pursuant to Article 22 (1) from among employees in charge of the planning, sales, and management of securities or derivatives under the Financial Investment Services and Capital Markets Act (hereafter in this Article referred to as "persons in charge of financial investment"). |
| (2) | "Executive officers and employees specified by Presidential Decree" in the forepart of Article 22 (3) and Article 22 (4) of the Act means any of the following persons: <Amended by Act No. 28283, Sep. 5, 2017> |
| 1. | Executive officers (excluding auditors, audit committee members, compliance officers, and risk managers); |
| 2. | Financial investment business managers; |
| 3. | Among the employees engaged in the business affairs falling under any of the following that may have side effects, such as pursuit of excessive risks, if bonus is given based on short-term performance, those who receive part of the profit arising from his/her business affairs as bonus according to the labor contract (the employees specified and publicly notified by the Financial Services Commission and the fixed-term or part-time workers defined by the Act on the Protection, etc. of Fixed-Term and Part-Time Workers may be excluded herefrom; the same shall apply hereafter in this Article): |
| (a) | Business affairs regarding loan, payment guarantee, discounting and acceptance of bills, and factoring; |
| (b) | Business affairs of developing insurance products and undertaking insurance contracts; |
| (c) | Receiving sale credit and issuing credit cards; |
| (d) | Other business affairs determined and designated by a financial company as those that may entail side effects if bonus is given based on short-term performance. |
| (3) | Pursuant to the latter part of Article 22 (3) of the Act, a financial company shall pay remunerations determined by the calculation formula prescribed beforehand in proportion to performance (hereinafter referred to as "bonus") in accordance with the following standards: <Amended by Act No. 28283, Sep. 5, 2017> |
| 2. | The period for deferment of at least 40 percent of bonus for executive officers (excluding outside directors and non-standing directors) and persons in charge of financial investment shall be at least three years, taking into consideration the investment risk of the relevant business, the duration of existence of such risk, etc.: Provided, That, if the duration of existence of investment risk of the relevant business is less than three years, the period for deferment of bonus may be reduced to less than three years; |
| 3. | Other standards prescribed and publicly notified by the Financial Services Commission with regard to matters necessary for bonuses. |
| 1. | The procedure for making decisions on the remuneration system shall be stated, including the procedure for the formation, deliberation, and resolution of the remuneration committee; |
| 2. | Other major issues on the remuneration system shall be addressed, including the measuring of performance of executive officers and employees, the method of linking remunerations to performance, and the deferment of bonus; |
| 3. | Other standards prescribed and publicly notified by the Financial Services Commission as detailed standards necessary for making annual reports. |
| (5) | Except as otherwise expressly provided for in paragraphs (1) through (4), matters necessary for determining bonus and making annual reports shall be prescribed and publicly notified by the Financial Services Commission. |
| Article 18 (Criteria for Transparency in Business Administration of Wholly-Owned Subsidiaries, etc. by Financial Holding Companies) |
"Where a subsidiary or a second-tier subsidiary meets the criteria specified by Presidential Decree, such as transparency in business administration" in Article 23 (1) of the Act means where each of the following criteria are met: | 1. | The following criteria for ensuring transparency of business administration of wholly-owned subsidiaries, etc. under Article 23 (1) of the Act (hereinafter referred to as "wholly-owned subsidiaries, etc."). In such cases, the relevant board of directors or audit committee shall observe the standards prescribed and publicly notified by the Financial Services Commission in relation to the following provisions: |
| (a) | If the board of directors of the financial holding company intends render advice or recommend remedial measures to a wholly-owned subsidiary, etc. and requests the wholly-owned subsidiary, etc. to submit data necessary therefor, the wholly-owned subsidiary shall comply with such request in good faith, except in extenuating circumstances; |
| (b) | If the audit committee of the financial holding company intends to audit business operations, financial structure, etc. of a wholly-owned subsidiary, etc. and requests the wholly-owned subsidiary, etc. to submit data necessary therefor, the wholly-owned subsidiary, etc. shall comply with such request in good faith, except in extenuating circumstances; |
| 2. | The following criteria for matters concerning the internal control system of the financial holding company, which are generally applicable to subsidiaries, etc., including wholly-owned subsidiaries, etc.: |
| (a) | The provisions prescribed and publicly notified by the Financial Services Commission shall be included in the internal control standards of the financial holding company under Article 24 (1) of the Act; |
| (b) | The relevant compliance officers, financial holding company, wholly-owned subsidiaries, etc. shall observe the standards prescribed and publicly notified by the Financial Services Commission in regard to oversight of compliance. |
CHAPTER IV INTERNAL CONTROLS, RISK MANAGEMENT, ETC.
| Article 19 (Internal Control Standards, etc.) |
| (1) | The internal control standards under Article 24 (1) of the Act (hereinafter referred to as "internal control standards") shall include the following matters so as to ensure effective internal control of the relevant financial company: |
| 1. | Job allocation and organizational structure; |
| 2. | The procedure that executive officers and employees shall observe in performing their duties; |
| 3. | The roles that the board of directors, executive officers, and compliance officers shall serve in connection with internal control; |
| 4. | Human resources and support organizations with expertise in performance of internal control; |
| 5. | Establishment of a system that can efficiently convey information necessary for making decisions on business management; |
| 6. | The procedure and method for ascertaining whether executive officers and employees observe the internal control standards and measures to be taken against executive officers and employees who breach the internal control standards; |
| 7. | The procedure or standards for preventing violations of finance-related statutes by executive officers and employees (including the procedure or standards for preventing unfair conduct, including the reporting of details of transactions of financial investment products by executive officers and employees); |
| 8. | The procedure for establishing or amending the internal control standards; |
| 9. | The procedure for appointing or dismissing compliance officers; |
| 10. | The method, procedure, etc. for managing conflicts of interest (not applicable to cases where the relevant financial company is a financial holding company); |
| 11. | Rules on the production of advertisements of products or services and the contents of such advertisements; |
| 12. | Evaluation and management of concurrent office of executive officers and employees under Article 11 (1) of the Act to ascertain whether the criteria under Article 11 (4) 4 are met; |
| 13. | Other matters specified and publicly notified by the Financial Services Commission as those that shall be prescribed in detail by the internal control standards. |
| (2) | A financial company (excluding financial companies that fall under any subparagraph of Article 6 (3)) shall establish the internal control committee headed by the chief executive officer for the enforcement of the internal control standards. |
| (3) | A financial company shall have an organization exclusively in charge of internal control, as prescribed and publicly notified by the Financial Services Commission. |
| (4) | Except as otherwise expressly provided for in paragraphs (1) through (3), matters necessary for the internal control standards shall be prescribed and publicly notified by the Financial Services Commission. |
| Article 20 (Appointment, Dismissal, etc. of Compliance Officers) |
| (1) | "The investment advisory business entities and discretionary investment business entities specified by Presidential Decree" in Article 25 (1) of the Act means the persons who do not concurrently engage in any financial investment business other than the investment advisory business or the discretionary investment business under the Financial Investment Services and Capital Markets Act and who own property of less than 500 billion won for discretionary investment as at the end of the latest business year. |
| (2) | "A financial company specified by Presidential Decree" in the proviso to Article 25 (2) of the Act means any of the following persons: Provided, That a financial company shall be excluded herefrom, if it is a listed corporation with total assets as at the end of the latest business year amounting to at least two trillion won: |
| 1. | A mutual savings bank, if the value of its total assets as at the end of the latest business year is less than 700 billion won; |
| 2. | A financial investment business entity, if the value of its total assets as at the end of the latest business year is less than five trillion won: Provided, That a financial investment business entity is excluded herefrom, if the total sum of the collective investment property, the discretionary investment property, and the trust property, which are managed as at the end of the latest business year, are at least 20 trillion won; |
| 3. | An insurance company, if the value of its total assets as at the end of the latest business year is less than five trillion won; |
| 4. | A specialized credit financial company, if the value of its total assets as at the end of the latest business year is less than five trillion won; |
| 5. | Other persons specified and publicly notified by the Financial Services Commission, taking into consideration the scale of assets, financial services provided, etc. |
| Article 21 (Qualifications for Compliance Officers) |
| 1. | The institution to which the relevant executive officer or employee belonged or belongs; |
| 2. | The person who has the power to take measures under a finance-related statute, other than the Financial Services Commission and the Governor or the Financial Supervisory Service. |
| 1. | A person who has been engaged in a business related to his/her qualification for at least five years since he/she was qualified as an actuary (applicable only to compliance officers who work for an insurance company); |
| 2. | A person who has worked for at least seven years in any of the following institutions: |
| (g) | Other institutions specified and publicly notified by the Financial Services Commission from among the institutions similar to those specified in items (a) through (f). |
| Article 22 (Risk Management Standards, etc.) |
| (1) | The risk management standards under Article 27 (1) of the Act (hereinafter referred to as "risk management standards") shall include the following matters: |
| 1. | Basic policy on risk management; |
| 2. | Kinds of risks that are likely to arise in connection with the management, etc. of assets of a financial company and recognition, measuring, and management of such risks; |
| 3. | Establishment of the level of risks that can be taken by a financial company; |
| 4. | Approval of the ceiling on appropriate investment or tolerable losses; |
| 5. | The structure of the organization exclusively in charge of risk management and job allocation; |
| 6. | The risk management procedure that executive officers and employees shall observe in performing their duties; |
| 7. | The procedure and method for ascertaining whether executive officers and employees observe the risk management standards and measures to be taken against executive officers and employees who breach the risk management standards; |
| 8. | The procedure for establishing or amending the risk management standards; |
| 9. | The procedure for appointing or dismissing risk managers; |
| 10. | Other matters specified and publicly notified by the Financial Services Commission as those that shall be prescribed in detail by the risk management standards. |
| (2) | A financial company shall establish an organization exclusively in charge of risk management, as prescribed and publicly notified by the Financial Services Commission. |
| Article 23 (Appointment, Dismissal, etc. of Risk Managers) |
| (1) | "Investment advisory business entities and discretionary investment business entities specified by Presidential Decree" in Article 28 (1) of the Act means the persons specified in Article 20 (1). |
| (3) | "Persons specified by Presidential Decree" in Article 28 (3) 2 (d) of the Act means the persons who have been engaged for at least seven years in business affairs related to risk management at any of the institutions specified in Article 21 (2) 2. <Amended by Act No. 28283, Sep. 5, 2017> |
| Article 24 (Prohibition, etc. of Concurrent Office) |
| (1) | "Business affairs specified by Presidential Decree" in subparagraph 2 of Article 29 of the Act means the following business activities: |
| 3. | The following business activities from among business activities related to insurance products handled by the relevant insurance company pursuant to the Insurance Business Act: |
| (a) | Business activities for the development of insurance products; |
| (b) | Actuary services (excluding cases where the risk manager is the person in charge of the relevant services); |
| (c) | Business activities for soliciting and concluding insurance contracts; |
| (d) | Business activities for underwriting insurance contracts; |
| (e) | Business activities for the management of insurance contracts; |
| (f) | Business activities for the payment of insurance claims; |
| (g) | Business activities for reinsurance; |
| (h) | Other business activities specified and publicly notified by the Financial Services Commission as those for insurance; |
| (2) | "Business affairs specified by Presidential Decree" in subparagraph 5 of Article 29 of the Act means the following business activities: Provided, That a person may hold office concurrently for the following business activities in cases of a financial company and a domestic branch of a foreign financial company of which the total asset is less than 700 billion won (limited to cases of not concurrently running investment trading business regarding derivatives referred to in Article 3 (2) 2 of the Financial Investment Services and Capital Markets Act) under Article 20 (2): <Amended by Act No. 28283, Sep. 5, 2017> |
| 1. | Risk manager: Business activities for internal control conducted by compliance officers referred to in Article 25 (1) of the Act; |
| 2. | Compliance officer: Business activities for monitoring and management of risks of risk managers referred to in Article 28 (1) of the Act. |
| Article 25 (Reporting on Appointment or Dismissal of Compliance Officer or Risk Manager) |
| (1) | When a financial company appoints or dismisses a compliance officer or risk manager in accordance with Article 30 (2) of the Act, it shall report it to the Financial Services Commission by not later than seven business days from the date of such appointment or dismissal. |
| (2) | Matters necessary for the method, procedure, etc. for reporting under paragraph (1) shall be prescribed and publicly notified by the Financial Services Commission. |
CHAPTER V MAINTENANCE OF SOUNDNESS OF MAJOR SHAREHOLDERS
| Article 26 (Approval, etc. of Changes in Major Shareholders) |
| (1) | "Persons specified by Presidential Decree" in the main sentence of Article 31 (1) of the Act means the following persons: |
| 1. | The largest shareholder of the corporation that is the largest shareholder itself (including the person who has de facto control, if the person who has de facto control over important matters related to the management of the corporation that is the largest shareholder is obviously not the largest shareholder of the corporation); |
| 2. | The representative of the corporation that is the largest shareholder. |
| (2) | "Statutes specified by Presidential Decree" in the main sentence of Article 31 (1) of the Act means finance-related statutes. |
| (3) | "Requirements prescribed by Presidential Decree" in the main sentence of Article 31 (1) of the Act means the requirements specified in attached Table 1. |
| (4) | "Any person specified by Presidential Decree" in the proviso to Article 31 (1) of the Act means any of the following persons: |
| 4. | A person who intends to become a major shareholder of a hedge fund business entity or of an online small investment broker: Provided, That excluded herefrom is a person who intends to become a major shareholder of a person who possesses a licence issued for financial investment business under attached Table 1 of the Enforcement Decree of the Financial Investment Services and Capital Markets Act; |
| 5. | A person who is the largest shareholder or who is a shareholder specially related to the largest shareholder and holds less than 1/100 of total number of outstanding stocks or equity shares of a financial company: Provided, That excluded herefrom are the persons specified in any subparagraph of Article 4; |
| 8. | A person who has become a major shareholder with new shares allocated by the financial company with approval of the Financial Services Commission under a finance-related statute for a merger or division of the company. |
| (5) | A person who intends to apply for approval pursuant to Article 31 (2) of the Act shall file an application for approval with the Financial Services Commission within any of the following periods: |
| 1. | Where a person who becomes a major shareholder by acquiring or receiving shares (referring to having de facto control over the relevant shares; hereafter referred to as "acquiring" in this paragraph) through inheritance, bequest, gift, or gifts inter vivos after death of a deceased shareholder: Three months from the date of death of the deceased shareholder: Provided, That the period may be extended by not more than three months with approval of the Financial Services Commission, if compelling circumstances exist; |
| 2. | Where a person becomes a major shareholder by acquiring shares through the exercise of a security right, the receipt of a payment in kind, or any other similar cause or event specified and publicly notified by the Financial Services Commission: One months from the date of acquisition of shares; |
| 3. | Where a person becomes a major shareholder through capital reduction or disposal of shares by another shareholder. |
| (6) | A person who wishes to obtain approval pursuant to Article 31 (1) or (2) of the Act shall file an application for approval of changes in major shareholders (hereinafter referred to as "application for approval of changes") with the Financial Services Commission, stating the following information thereon: |
| 1. | Information about the applicant; |
| 2. | Current status of holdings of shares issued by the financial company, where the applicant intends to acquire shares of the financial company with intent to become a major shareholder; |
| 3. | A plan for acquisition of shares, where the person who intends to become a major shareholder pursuant to Article 31 (1) of the Act intends to acquire shares issued or to be issued by the financial company of which the person intends to acquire shares; |
| 4. | Other information specified and publicly notified by the Financial Services Commission as necessary for examining requirements for approval. |
| (7) | An application for approval of changes shall be accompanied by the following documents: |
| 1. | If the person who intends to become a major shareholder is a corporation: |
| (a) | Articles of incorporation; |
| (b) | Financial statements as at the end of the latest business year (or semi-annual financial statements for the pertinent year, if six months have passed since the end of the latest business year); |
| (c) | The audit report or review report issued by the accounting auditor on the financial statements referred to in item (b); |
| 2. | If the person who intends to become a major shareholder falls into any of the following categories: |
| (a) | If the person is a foreign corporation: A document equivalent to the certificate of corporate register; |
| (c) | If the person belongs to a corporate group subject to restriction on cross share-holding or subject to restriction on debt guarantee under the Monopoly Regulation and Fair Trade Act (hereinafter referred to as "corporate group subject to restriction on cross share-holding, etc.") or a principal obligor group under the Banking Act: A statement of calculation of the debt-to-equity ratio and a certificate issued by an accounting firm thereon; |
| 3. | Other documents specified and publicly notified by the Financial Services Commission as those necessary for examining requirements for approval. |
| (8) | Upon receipt of an application for approval of changes under paragraph (6), the Financial Services Commission shall verify the following administrative information by matching relevant information against the administrative information available for sharing pursuant to Article 36 (1) of the Electronic Government Act: Provided, That the applicant is required to submit a certified copy of his/her resident registration card or a copy of his/her business registration certificate, if the applicant does not consent to verification of either of the documents referred to in subparagraph 2 in such manner: |
| 1. | A certificate of corporate registration (applicable only to cases where the applicant is a domestic corporation); |
| 2. | A certified transcript of resident registration card or business registration certificate; |
| 3. | A certificate of corporate register of the financial company of which the applicant intends to acquire shares. |
| (9) | Upon receipt of an application for approval of changes under paragraph (6), the Financial Services Commission shall examine the contents of the application, decide whether to approve it within 60 days, and notify the applicant of the results thereof and the grounds therefor, in writing, without delay. If there is any defect in the application for approval of a change in such cases, the Financial Services Commission may request the applicant to amend it. |
| (10) | For the purposes of counting the period of examination under paragraph (9), the period specified and publicly notified by the Financial Services Commission, including the period given for amending a defect in an application for approval of changes, shall not be included in the period of examination. |
| (11) | When the Financial Services Commission issues an order to dispose of shares pursuant to Article 31 (3) of the Act, a written order shall be given, clearly stating the number of shares subject to the disposal, the deadline for the disposal, etc. |
| (12) | Except as otherwise expressly provided for in paragraphs (1) through (11), matters necessary for the approval of changes shall be prescribed and publicly notified by the Financial Services Commission. |
| Article 27 (Examination of Qualifications, etc. for Largest Shareholder) |
| (1) | "The largest investor specified by Presidential Decree" in Article 32 (1) of the Act means the person specified by the Financial Services Commission among the exact same person (referring to the exact same person defined by subparagraph 2 of Article 2 of the Monopoly Regulation and Fair Trade Act) of the corporate group to which a corporation in a structure of circular share-holding (referring to a corporate group defined by the aforesaid subparagraph) belongs or other similar persons: Provided, That it refers to a single largest investor among largest shareholders of the corporation, if the exact same person is a corporation, and the single largest investor shall be identified by applying the same method until an individual is identified as the single largest investor, if the largest investor is also a corporation. |
| (2) | "The period specified by Presidential Decree" in Article 32 (1) of the Act means two years: Provided, That the period may be reduced to less than two years, if the financial company reports to the Financial Services Commission in accordance with Article 32 (2) of the Act, if there is an indication that the financial company has an illegal business relationship with a person subject to examination of qualifications under Article 32 (1) of the Act (hereinafter referred to as "person subject to examination of qualifications"), or if it is deemed particularly necessary to reduce the period. |
| (3) | "Any finance-related statute specified by Presidential Decree" in Article 32 (1) of the Act means a finance-related statute. |
| 2. | The investor shall meet each of the following criteria: Provided, That excluded herefrom are cases where the degree of the violation is negligible or where it is not likely that the investor will hinder the relevant financial company from operating business in a sound manner: |
| (b) | The investor is not a major shareholder of a financial institution that is identified as an insolvent financial institution under the Act on the Structural Improvement of the Financial Industry or that has its permit, license, or registration for business operations revoked under any finance-related statute or a affiliated person of such major shareholder: Provided, That excluded herefrom are persons who meet the criteria prescribed and publicly notified by the Financial Services Commission, such as the persons who are found not liable for insolvency by a court judgment and the persons who take financial liability for insolvency; |
| (c) | The investor has been not subject to suspension of banking transactions imposed due to a default on payment or any similar event during the latest five years; |
| (d) | The investor has been not registered with the centralized credit information collection agency under the Credit Information Use and Protection Act as a customer who disrupted the financial system or as a person who did not pay a debt by the agreed due date; |
| (e) | The investor is the largest shareholder or a major shareholder of a company against whom proceedings of rehabilitation or bankruptcy have been pending under the Debtor Rehabilitation and Bankruptcy Act during the latest five years but is not found liable for giving rise to rehabilitation or bankruptcy of the company and is not involved directly or indirectly in such proceedings. |
| (5) | If a financial company becomes aware that the occurrence of a event makes the person subject to examination of qualifications cease to meet the requirements for maintaining qualifications under Article 32 (1) of the Act (hereinafter referred to as "requirements for maintaining qualifications"), it shall report the following matters to the Financial Services Commission within seven business days from the date it becomes aware of the occurrence of such event: |
| 1. | The details of the requirements that the person subject to examination of qualifications ceases to meet for maintaining qualifications and the reason why the person fails to meet the requirements; |
| 2. | Whether the person is expected to meet the requirements for maintaining qualifications in the future; |
| 3. | The business relationship between the person subject to examination of qualifications and the relevant financial company. |
| 1. | The reason why the person subject to examination of qualifications fails to meet the requirements for maintaining qualifications and matters related to the measures taken under Article 32 (4) 1 and 2 of the Act shall be publicly disclosed in the web-site, etc. so that shareholders of the relevant financial company and financial consumers are informed thereof; |
| 2. | Other measures prescribed and publicly notified by the Financial Services Commission as those deemed necessary for the soundness of business management of the financial company. |
| (7) | "The period specified by Presidential Decree" in the main sentence of Article 32 (5) of the Act means five years: Provided, That the Financial Services Commission may reduce the period, considering the degree of the violation of a statute by the person subject to examination of qualifications. |
| (8) | "Case specified by Presidential Decree" in Article 32 (5) 2 of the Act means any of the following cases: Provided, That excluded herefrom are cases where the relevant event terminates within one month from the date of occurrence of the event in cases of subparagraphs 2 and 3: |
| 1. | Where the person fails to meet the criteria referred to in paragraph (4) 2 (b); |
| 2. | Where the person is subject to suspension of banking transactions for defaulting on payment or any other similar event during the latest five years; |
| 3. | Where the person is registered with the centralized credit information collection agency under the Credit Information Use and Protection Act as a customer who disrupted the financial system or as a person who did not pay a debt by the agreed due date. |
| (9) | When the Financial Services Commission requests the relevant financial company or the person subject to examination of qualifications to provide the following data or information pursuant to Article 32 (3) of the Act, the financial company or the person subject to examination of qualifications shall submit the data or information within ten business days or shall explain the reason why it is unable to submit the data or information, if it is unable to do so: |
| 1. | The financial company: The list of shareholders of the relevant financial company or of the corporation that is the largest investor, among the largest shareholders, and information about the person subject to examination of qualifications and its affiliated persons; |
| 2. | The person subject to examination of qualifications: A certificate of deposit of shares, copies of stock certificates, and documents necessary for determining the scope of affiliated persons; |
| 3. | Other data or information specified by the Financial Services Commission as necessary for examination. |
| (10) | Except as otherwise expressly provided for in paragraphs (1) through (9), details necessary for the examination of qualifications shall be prescribed and publicly notified by the Financial Services Commission. |
CHAPTER VI SPECIAL CASES CONCERNING EXERCISE OF MINORITY SHAREHOLDERS' RIGHTS
| Article 28 (Exercise of Minority Shareholders' Rights) |
| 2. | Obtaining proxy statements for exercising shareholder rights; |
| 3. | Jointly exercising shareholder’s rights of at least two shareholders. |
| 1. | A bank whose total assets as at the end of the latest business year amount to at least five trillion won; |
| 2. | A financial investment business entity whose total assets as at the end of the latest business year amount to at least 100 billion won; |
| 3. | An insurance company whose total assets as at the end of the latest business year amount to at least five trillion won and whose capital amounts to at least 100 billion won; |
| 4. | A mutual savings bank whose total assets as at the end of the latest business year amount to at least amount to at least 700 billion won; |
| 5. | A credit card business entity whose capital as at the end of the latest business year amounts to at least 100 billion won; |
| 6. | A financial holding company whose total assets as at the end of the latest business year amount to at least five trillion won and who has control over at least two subsidiary companies whose total assets as at the end of the latest business year amount to at least two trillion won. |
CHAPTER VII PROCEDURES FOR MEASURES AND SANCTIONS
| Article 29 (Measures against Financial Companies) |
| 1. | An order to publish or post the fact that the financial company is subject to a measure taken for a violation; |
| 2. | Request or advice for improving business management or operating methods; |
| 3. | Filing a complaint or information with the relevant investigative authorities, if the financial company violated the Act. |
CHAPTER VIII SUPPLEMENTARY PROVISIONS
| Article 30 (Entrustment of Tasks) |
| (1) | Pursuant to Article 40 of the Act, the Financial Services Commission shall entrust the following tasks to the Governor of the Financial Supervisory Service: <Amended by Presidential Decree No. 28381, Oct. 17, 2017> |
| 2. | Examination for approval of concurrent office of executive officers and employees under the main sentence of Article 11 (1) of the Act and receipt of reports on concurrently held office of executive officers and employees under the proviso to Article 11 (1) of the Act; |
| 11-2. | Determination and notification of the details of the measures taken under Article 35 (6) of the Act (limited to the determination and notification of the details of the measures taken under Article 35 (1) 3 (limited to cases where the financial company in question is a mutual savings bank) through 5, or determination and notification of the details of the measures where it is recognized that a financial company has received a request for taking measures under Article 35 (2) 2 through 5); |
| 14. | Examination of details of applications for approval of a change under the forepart of Article 26 (9) and requests for amending a defect in an application for approval of a change under the latter part of Article 26 (9); |
| 15. | Determination of the period of examination under the proviso to Article 27 (2) and request for submitting data or information under Article 27 (9); |
| 16. | Measures to be taken under subparagraph 2 of Article 29. |
| (2) | The Governor of the Financial Supervisory Service shall report the results of performance of the work entrusted under paragraph (1) to the Financial Services Commission, as prescribed by the Financial Services Commission. |
| Article 31 (Handling Sensitive Information and Personally Identifiable Information) |
| 1. | Administrative affairs for examining qualifications for executive officers under Article 5 of the Act; |
| 2. | Administrative affairs for examining qualifications for outside directors under Article 6 of the Act; |
| 3. | Administrative affairs for reporting as to whether an executive officer meets qualifications under Article 7 of the Act; |
| 4. | Administrative affairs for placing restrictions on concurrent office of executive officers and employees under Article 10 of the Act; |
| 5. | Administrative affairs for approval, reporting, etc. of concurrent office of executive officers and employees under Article 11 of the Act; |
| 6. | Administrative affairs for examining qualifications for audit committee members under Article 19 of the Act; |
| 7. | Administrative affairs for verifying compliance with the internal control standards, appointing or dismissing of compliance officers, and examining qualifications for compliance officers under Articles 24, 25, and 26 of the Act; |
| 8. | Administrative affairs for examining conformity with the risk management standards and appointing or dismissing risk managers under Articles 27 and 28 of the Act; |
| 10. | Administrative affairs for approving of changes, etc. in major shareholders under Article 31 of the Act; |
| 11. | Administrative affairs for examining qualifications for the largest shareholders under Article 32 of the Act; |
| 12. | Administrative affairs for measures to be taken against a financial company under Article 34 of the Act; |
| 13. | Administrative affairs for sanctions against executive officers and employees and notification of measures taken regarding retired executive officers or resigned employees under Article 35 of the Act; |
| 16. | Administrative affairs for keeping, maintaining, and managing measures taken under Article 38 of the Act; |
| Article 32 (Public Disclosure) |
Pursuant to Article 41 (1) of the Act, a financial company shall disclose the following matters to the public through its web-site within seven business days from the closing date of its general meeting of shareholders: | 1. | The rate of attendance of shareholders; |
| 2. | The ratio of shares approving or disapproving each item on the agenda; |
| 3. | The total number of outstanding shares and the number of shares exercising voting right. |
| Article 33 (Re-Examination of Regulation) |
The Financial Services Commission shall examine the appropriateness of the following matters every three years, counting from each base date specified in the following (referring to the period that ends on the day before the base date of every third year) and shall take measures, such as making improvements:
| 1. | The scope of qualifications for outside directors under Article 8 (3) 1: August 1, 2016; |
| 2. | Persons eligible for a bonus and criteria for the payment of bonuses under Article 17 (2) and (3): August 1, 2016. |
CHAPTER IX PENALTY PROVISIONS
| Article 34 (Guidelines for Imposition of Administrative Fines) |
ADDENDA
Article 1 (Enforcement Date)
Article 2 (Applicability to Approval of Changes in Major Shareholders)
| (2) | Article 26 (5) shall apply to cases where an event that gives rise to inheritance upon death of an existing shareholder or any similar event occurs after this Decree enters into force. |
Article 3 (Applicability to Public Disclosure)
Article 32 shall apply to general meetings of shareholders called after this Decree enters into force. Article 4 Omitted.
ADDENDA <Presidential Decree No. 27472, Aug. 31, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 1, 2016.
Article 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 27556, Oct. 25, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 1, 2016.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 28283, Sep. 5, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force three months after the date of its promulgation: Provided, That the amended provisions of the proviso to Article 6 (3) 2 and the proviso to the main sentence of Article 24 (2) and Article 6 of the Addenda shall enter into force on the date of the promulgation. Article 2 (Applicability to Deferment, etc. of Bonus)
The amended provisions of paragraph (2) and the main sentence of paragraph (3) 2 of Article 17 shall apply, starting with bonus calculated after this Decree enters into force. Article 3 (Transitional Measures concerning Approval, Reporting, etc. of Concurrent Office)
Notwithstanding the amended provisions of paragraphs (2) 1 and (9) of Article 11, a person who, as an executive director or non-standing auditor of a financial company, concurrently holds office of another company as at the time this Decree enters into force shall be deemed to have obtained approval of the Financial Services Commission or have reported to the Financial Services Commission pursuant to Article 11 of the Act until the day when the term of office of one of the concurrently-held offices expires. Article 4 (Transitional Measures concerning Qualification of Risk Managers)
Notwithstanding the amended provisions of Article 23 (3), former provisions shall apply to a risk manager appointed before this Decree enters into force. Article 5 (Transitional Measures concerning Prohibition of Concurrent Office)
Where a risk manager concurrently holds office of business affairs of a compliance officer related to internal control or where a compliance officer concurrently hold office of business affairs of a risk manager related to monitoring and management of risks, former provisions shall apply to cases of taking measures under Articles 34 and 35 of the Act or imposing administrative fines pursuant to Article 43 (2) 7 of the Act, notwithstanding the amended provisions of the proviso to the main sentence of Article 24 (2). Article 6 Omitted.
ADDENDUM <Presidential Decree No. 28381, Oct. 17, 2017>
This Decree shall enter into force on October 19, 2017.
ADDENDA <Presidential Decree No. 28391, Oct. 17, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on October 19, 2017.
Articles 2 and 3 Omitted.