ACT ON FACILITATION OF PURCHASE OF SMALL AND MEDIUM ENTERPRISE-MANUFACTURED PRODUCTS AND SUPPORT FOR DEVELOPMENT OF THEIR MARKETS
Act No. 9685, May 21, 2009
Amended by Act No. 9894, Dec. 30, 2009
Act No. 10228, Apr. 5, 2010
Act No. 10504, Mar. 30, 2011
Act No. 10951, Jul. 25, 2011
Act No. 11462, jun. 1, 2012
Act No. 11690, Mar. 23, 2013
Act No. 12008, Aug. 6, 2013
Act No. 12499, Mar. 18, 2014
Act No. 12844, Nov. 19, 2014
Act No. 13094, Jan. 28, 2015
Act No. 13743, Jan. 6, 2016
Act No. 13866, Jan. 27, 2016
Act No. 14684, Mar. 21, 2017
Act No. 14839, Jul. 26, 2017
Act No. 15138, Nov. 28, 2017
CHAPTER I GENERAL PROVISIONS
The purpose of this Act is to contribute to the enhancement of the competitiveness of small and medium enterprises and to the management stability thereof by facilitating the purchase of small and medium enterprise-manufactured products and supporting the development of markets therefor.
The terms used in this Act shall be defined as follows: <Amended by Act No. 10951, Jul. 25, 2011; Act No. 14684, Mar. 21, 2017>
| 1. | The term "small or medium enterprise" means any of the following persons: |
| 2. | The term "public institution" means any of the following institutions or corporations: |
| (a) | National institutions; |
| (c) | Corporations established under Special Acts, which are prescribed by Presidential Decree; |
| 3. | The term "modernization of logistics" means the installation or improvement of distribution facilities for the purposes of facilitating the smooth distribution of products manufactured by small and medium enterprises and reducing logistical costs; |
| 4. | The term "maintenance, repair and operations (MRO) materials" means all kinds of indirect materials, such as office supplies excluding raw materials directly used for production, or industrial materials, etc. purchased by companies to produce other products or services; |
| 6. | The term "small or medium MRO supply business" means business conducted by small and medium enterprises carrying out wholesale or retail business under the Korea Standard Industrial Classification to purchase MRO materials required by companies, etc. from domestic manufacturers, etc. and supply them to such companies, etc. |
| Article 3 (Relationship with other Acts) |
Except as otherwise expressly provided for in other Acts, this Act shall apply where the head of a public institution enters into a contract for procurement of small and medium enterprise-manufactured products or provides support for the development of markets therefor. <Amended by Act No. 12008, Aug. 6, 2013>
CHAPTER II FACILITATING PURCHASE OF SMALL AND MEDIUM ENTERPRISE-MANUFACTURED PRODUCTS AND OPERATING COMPETITIVE SYSTEM BETWEEN SMALL AND MEDIUM ENTERPRISES
| Article 4 (Increasing Purchase) |
| (1) | When the heads of public institutions intend to conclude contracts for the procurement of goods, services or construction works (hereinafter referred to as “products”), they shall ensure that small and medium enterprises are given more opportunities to win a contract. |
| (2) | With respect to goods or services (excluding competing products among small and medium enterprises designated by the Minister of SMEs and Startups pursuant to Article 6 (1)), the value of which is below the amount publicly notified by the Minister of Strategy and Finance pursuant to Article 4 (1) of the Act on Contracts to which the State is a Party, the heads of public institutions shall preferentially conclude a contract for procurement with small and medium enterprises, as prescribed by Presidential Decree. <Newly Inserted by Act No. 11462, Jun. 1, 2012; Act No. 14839, Jul. 26, 2017> |
| (3) | The Minister of SMEs and Startups may recommend to preferentially purchase small and medium enterprise-manufactured products where an institution or a corporation that has received government subsides of an amount exceeding the amount prescribed by Presidential Decree intends to purchase products in relation to subsidized projects. <Newly Inserted by Act No. 14684, Mar. 21, 2017; Amended by Act No. 14839, Jul. 26, 2017> |
| Article 5 (Preparation of Purchase Plans and Purchase Records) |
| (1) | The head of a public institution prescribed by Presidential Decree shall notify the Minister of SMEs and Startups of purchase plans to increase the purchase of small and medium enterprise-manufactured products and purchase records of the previous year, in consideration of budget and project plans. In such cases, purchase plans shall include the target ratio prescribed by Presidential Decree for the purchase of small and medium enterprise-manufactured products. <Amended by Act No. 9894, Dec. 30, 2009; Act No. 14839, Jul. 26, 2017> |
| (2) | The Minister of SMEs and Startups shall prepare guidelines for formulating plans for purchase of small and medium enterprise-manufactured products and those for keeping purchase records and notify the heads of public institutions thereof in order to promote purchase of small and medium enterprise-manufactured products, such as by implementing the purchase plans pursuant to paragraph (1), and support public institutions for their effective purchase. <Newly Inserted by Act No. 15138, Nov. 28, 2017> |
| (3) | The Minister of SMEs and Startups shall hear the opinion of the Korea Federation of Small and Medium Businesses under the Small and Medium Enterprise Cooperatives Act (hereinafter referred to as the "Federation") and then integrate purchase plans and purchase records under paragraph (1) and publicly announce and submit them to the National Assembly, after undergoing deliberation thereon by the State Council, in consultation with the head of each central government agency under Article 6 of the National Finance Act in the case of the State; with the Minister of the Interior and Safety in the case of local governments; and with the head of related central administrative agency in the case of other public institutions. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12844, Nov. 19, 2014; Act No. 13743, Jan. 6, 2016; Act No. 14839, Jul. 26, 2017> |
| (4) | For the purposes of monitoring the implementation of purchase plans, the Minister of SMEs and Startups may request the head of a public institution under paragraph (1) to submit records of the purchase of small and medium enterprise-manufactured products and, in such cases, the head of a public institution shall comply therewith unless extenuating circumstances exist. <Newly Inserted by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
| (5) | Matters necessary for the notification of and requests for the submission of purchase plans and purchase records under paragraphs (1) and (4) shall be prescribed by Presidential Decree. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 15138, Nov. 28, 2017> |
| Article 6 (Designation of Competing Products among Small and Medium Enterprises) |
| (1) | The Minister of SMEs and Startups may designate any product, directly manufactured and supplied by a small or medium enterprise, which is deemed necessary to expand markets, as a competing product among small and medium enterprises (hereinafter referred to as "competing product"). <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | Where the Minister of SMEs and Startups intends to designate competing products pursuant to paragraph (1), he/she shall consult in advance with the heads of relevant cental administrative agencies. In such cases, the Minister of SMEs and Startups shall not designate the products for which exclusion is requested by the heads of relevant central administrative agencies, in the absence of extenuating circumstances. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | Matters necessary for the designation of competing products shall be prescribed by Presidential Decree. |
| Article 7 (Method of Contracting for Competing Products) |
| (1) | The heads of public institutions shall conclude procurement contracts for competing products through a limited competitive tendering procedure open only to small and medium enterprises or a selective competitive tendering procedure open only to invited small and medium enterprises (hereinafter referred to as "competitive tendering procedure open only to small and medium enterprises"), except in extenuating circumstances prescribed by Presidential Decree. |
| (2) | In order to ensure the quality of products and the stabilization of procurement prices in a competitive tendering procedure open only to small and medium enterprises provided for in paragraph (1), the head of each public institution shall determine the counter-party to a contract after examining the capabilities of the relevant small or medium enterprise to fulfill the contract: Provided, That where necessary to enhance the efficiency of purchasing or to increase the purchase of small and medium enterprise-manufactured products, the counter-party to a contract may be selected by the method prescribed by Presidential Decree. |
| (3) | In selecting the counter-party to a contract pursuant to paragraph (2), the head of a public institution may accord preferential treatment to a contracting consortium which meets the requirements prescribed by Presidential Decree and is comprised of at least five small and medium enterprises, in order to increase opportunities for small enterprises defined in Article 2 (2) of the Framework Act on Small and Medium Enterprises (hereinafter referred to as "small enterprises") and micro enterprises defined in Article 2 of the Act on the Protection of and Support for Micro Enterprises (hereinafter referred to as "micro enterprises") to be jointly awarded a contract. <Amended by Act No. 13094, Jan. 28, 2015> |
| (4) | The Minister of SMEs and Startups shall determine and announce detailed standards for evaluating capabilities to fulfill contracts under the main sentence of paragraph (2) after consultation with the head of a relevant central administrative agency. In such cases, detailed standards for evaluating capabilities to fulfill contracts shall be separately determined for small and medium enterprise cooperatives or other entities prescribed by Presidential Decree. <Amended by Act No. 14839, Jul. 26, 2017> |
| (5) | When determining detailed standards for evaluation prescribed in paragraph (4), the Minister of SMEs and Startups shall take into account the results of fulfilling contracts, technical capabilities, financial conditions, etc. of small and medium enterprises. <Amended by Act No. 14839, Jul. 26, 2017> |
| Article 7-2 (Special Cases on Contracts for Procurement of Competing Products with Small or Micro Enterprises) |
| (1) | Notwithstanding Article 7 (1), the head of a public institution may enter into a contract for procurement of goods or services designated by the Minister of SMEs and Startups among competing products, through a limited competitive tendering procedure open only to small or micro enterprises. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | Notwithstanding Article 7 (1), where at least three small or micro enterprises have commercialized goods or services (hereinafter referred to as "goods, etc.") falling under competing products by conducting joint venture business prescribed by Ordinance of the Ministry of SMEs and Startups (hereinafter referred to as "joint venture business") with the cooperative, the head of a public institution may enter into a contract for procurement of the relevant goods, etc. according to any of the following tendering procedures: <Amended by Act No. 14839, Jul. 26, 2017> |
| 1. | Limited competitive tendering procedure open only to small or micro enterprises that have participated in the relevant joint venture business; |
| 2. | Selective competitive tendering procedure open only to small or micro enterprises (limited to those who can supply the relevant goods, etc.) recommended by the cooperative upon the request of the head of a public institution. |
[This Article Newly Inserted by Act No. 13094, Jan. 28, 2015]
| Article 8 (Eligibility for Participating in Competitive Tendering Procedures) |
| (1) | The eligibility of small and medium enterprises to participate in a competitive tendering procedure open only to small and medium enterprises under Article 7 (hereafter referred to as "participation eligibility" in this Article) shall be prescribed by Presidential Decree in consideration of their scales, management records, etc. <Amended by Act No. 10504, Mar. 30, 2011> |
| (2) | Cooperatives that intend to participate in a competitive tendering procedure open only to small and medium enterprises shall request the confirmation of participation eligibility from the Minister of SMEs and Startups in accordance with the procedures determined by the Minister of SMEs and Startups, who shall in turn verify such eligibility. <Newly Inserted by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
| (3) | Where a small or medium enterprise participating in a competitive tendering procedure open only to small and medium enterprises is in any of the following cases, the Minister of SMEs and Startups may revoke such enterprise’s participation eligibility or suspend it for up to one year: Provided, That if such enterprise falls under subparagraph 1, 2 or 3, the Minister of SMEs and Startups shall revoke the enterprise’s participation eligibility: <Amended by Act No. 10504, Mar. 30, 2011; Act No. 13866, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017> |
| 1. | Where participation eligibility has been acquired by fraudulent or other wrongful means; |
| 2. | Where participation eligibility has been lost; |
| 3. | Where the enterprise has engaged in any unjust act, such as collusion; |
| 4. | Other cases determined by Presidential Decree as inappropriate for participating in a competitive tendering procedure open only to small and medium enterprises. |
| (4) | Where the Minister of SMEs and Startups intends to revoke or suspend participation eligibility pursuant to paragraph (3), he/she shall hold a hearing. <Newly Inserted by Act No. 13866, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017> |
| (5) | Where the Minister of SMEs and Startups revokes participation eligibility, he/she may restrict the relevant small and medium enterprise from acquiring participation eligibility for up to one year from the date of the revocation thereof. <Newly Inserted by Act No. 13866, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017> |
| (6) | The period for suspending participation eligibility under paragraph (3) and the period for restricting the acquisition of participation eligibility under paragraph (5) shall be prescribed by Ordinance of the Ministry of SMEs and Startups. <Newly Inserted by Act No. 10504, Mar. 30, 2011; Act No. 11690, Mar. 23, 2013; Act No. 13866, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017> |
| Article 8-2 (Restrictions, etc. on Participation in Competitive Tendering Procedure Open Only to Small and Medium Enterprises) |
| (1) | The head of a public institution shall restrict the participation of any of the following small and medium businesses to ensure fair competition in a competitive tendering procedure open only to small and medium enterprises: <Amended by Act No. 12499, Mar. 18, 2014; Act No. 14839, Jul. 26, 2017> |
| 1. | A small or medium enterprise that is established after separation from any of the following companies through division, merger after division, or physical division (hereafter referred to as “division, etc.” in this Article) pursuant to Articles 530-2 and 530-12 of the Commercial Act, and operates the same kind of business as a company surviving such division, etc.: |
| (a) | A conglomerate (including where a company established after division, etc., or a surviving company becomes a conglomerate within four years from the year following the year in which a division, merger after division, or physical division occurs); |
| (b) | A small or medium enterprise recognized by the Minister of SMEs and Startups, as divided, etc. for the purpose of maintaining eligibility to participate in a competitive tendering procedure open only to small and medium enterprises or expanding market share in a public procurement market; |
| 2. | A small or medium enterprise belonging to a large business group in a dominant or subordinate relationship prescribed by Presidential Decree with a conglomerate; |
| 3. | A small or medium enterprise that refuses to undergo an investigation under paragraph (3) by the Minister of SMEs and Startups, without just cause. |
| (2) | A small or medium enterprise (excluding a cooperative) that intends to participate in a competitive tendering procedure open only to small and medium enterprises shall request the Minister of SMEs and Startups to confirm whether it is subject to restriction on participation in a competitive tendering procedure open only to small and medium enterprises in accordance with procedures prescribed and announced by the Minister of SMEs and Startups, who shall in turn verify such restriction. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | The Minister of SMEs and Startups may request a small or medium enterprise that has requested confirmation under paragraph (2) to submit necessary data, such as the current status of assets and business conditions of the relevant small or medium business. In such cases, the small or medium enterprise in receipt of a request to submit data shall cooperate in the request except in extenuating circumstances. <Newly Inserted by Act No. 12499, Mar. 18, 2014; Act No. 14839, Jul. 26, 2017> |
| (4) | The Minister of SMEs and Startups may investigate whether a small or medium enterprise confirmed under paragraph (2) was exempt from restrictions on participation in a competitive tendering procedure open only to small and medium enterprises under paragraph (1) 1 and 2 by fraudulent or other wrongful means. <Amended by Act No. 12499, Mar. 18, 2014; Act No. 14839, Jul. 26, 2017> |
| (5) | The same kind of business prescribed in paragraph (1) 1 shall be limited to the business of producing competing products, and the scope of the same kind of business shall be prescribed by Presidential Decree. <Amended by Act No. 12499, Mar. 18, 2014> |
| (6) | Where the Minister of SMEs and Startups determines whether he/she gives recognition referred to in paragraph (1) 1 (b), he/she shall comprehensively take into account the matters prescribed by Presidential Decree, including division, etc. due to extenuating circumstances, such as inheritance or a court ruling. In such cases, the Minister of SMEs and Startups may hear opinions of the relevant public officials, experts, or other persons. <Amended by Act No. 14839, Jul. 26, 2017> |
| (7) | Procedures, methods, and other necessary matters to determine whether to give recognition under paragraph (6), shall be prescribed by Ordinance of the Ministry of SMEs and Startups. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 12499, Mar. 18, 2014; Act No. 14839, Jul. 26, 2017> |
[This Article Newly Inserted by Act No. 11462, Jun. 1, 2012]
| Article 8-3 (Special Cases on Middle-Standing Enterprises' Participation in Competitive Tendering Procedures Open Only to Small and Medium Enterprises) |
| 1. | The relevant middle-standing enterprise shall have past records of procurement made by participating in competitive tendering procedures open only to small and medium enterprises for at least three consecutive years until the year during which the period prescribed in Article 2 (3) of the Framework Act on Small and Medium Enterprises has ended; |
| (2) | Any middle-standing enterprise that intends to participate in a competitive tendering procedure open only to small and medium enterprises shall request the confirmation of its participation eligibility from the Minister of SMEs and Startups, along with the data proving that it falls under both subparagraphs of paragraph (1). <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | The Minister of SMEs and Startups may investigate whether a middle-standing enterprise, which was confirmed to have participation eligibility pursuant to paragraph (2), was confirmed by fraudulent or other wrongful means or whether it participated in a competitive tendering procedure open only to small and medium enterprises, in violation of the standards prescribed by Presidential Decree under paragraph (1) in the period during which it was entitled to participate. <Amended by Act No. 14839, Jul. 26, 2017> |
| (4) | Where a middle-standing enterprise confirmed pursuant to paragraph (2) participates in a competitive tendering procedure open only to small and medium enterprises, in violation of the standards prescribed by Presidential Decree under paragraph (1), or falls under any subparagraph of Article 8 (3), the Minister of SMEs and Startups shall revoke such enterprise’s participation eligibility. <Amended by Act No. 14839, Jul. 26, 2017> |
| (5) | The Minister of SMEs and Startups shall determine and announce matters necessary for the confirmation, investigation, revocation of the confirmation, etc. referred to in paragraphs (2) through (4). <Amended by Act No. 14839, Jul. 26, 2017> |
| (6) | Articles 7 (2), (4) and (5), 8-2 (1), (3) and (5) through (7), 9 through 11, 23, 25, 35, and 36 shall apply mutatis mutandis to middle-standing enterprises' participation in competitive tendering procedures open only to small and medium enterprises. |
[This Article Newly Inserted by Act No. 13743, Jan. 6, 2016]
| Article 9 (Verification, etc. of Direct Production) |
| (1) | Where the head of a public institution intends to conclude a product procurement contract with a small or medium enterprise through a competitive tendering procedure open only to small and medium enterprises or to conclude a product procurement contract, the amount of which exceeds that prescribed by Presidential Decree in any of the following cases, the head of the public institution shall verify the direct production by the relevant small or medium enterprise: Provided, That this shall not apply where the Minister of SMEs and Startups has issued a document certifying the confirmation of direct production pursuant to paragraph (4): <Amended by Act No. 14839, Jul. 26, 2017> |
| 2. | Other cases where a negotiated contract for competing products is concluded with a person prescribed by Presidential Decree by means of a negotiated contract. |
| (2) | The Minister of SMEs and Startups shall determine and announce the requirements for confirming direct production under paragraph (1), such as requirements for production facilities, as prescribed by Presidential Decree. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | The head of a public institution, or a small and medium enterprise which intends to supply products to public institutions, may, where necessary, request the confirmation of direct production on the relevant products from the Minister of SMEs and Startups. <Amended by Act No. 14839, Jul. 26, 2017> |
| (4) | Upon receipt of a request under paragraph (3), the Minister of SMEs and Startups shall verify direct production and notify the relevant small and medium enterprise of the results thereof, and may issue a document certifying the confirmation of direct production (hereinafter referred to as "direct production confirmation certificate") in which the term of validity is indicated, to the small and medium enterprise confirmed: Provided, That the verification of direct production may be postponed where an investigation on the relevant small and medium enterprise is being conducted on the grounds referred to in each subparagraph of Article 11 (2). <Amended by Act No. 14839, Jul. 26, 2017> |
| (5) | Where a small or medium enterprise with a direct production confirmation certificate issued pursuant to paragraph (4) falls under any of the following cases, it shall request the confirmation of direct production again, as prescribed by Ordinance of the Ministry of SMEs and Startups: <Newly Inserted by Act No. 10504, Mar. 30, 2011; Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017> |
| 1. | Where the representative of the small or medium enterprise which is a sole proprietor (excluding comprehensive transfer or acquisition) is changed; |
| 2. | Where a factory confirmed pursuant to paragraph (4) is relocated; |
| 3. | Where business of the small or medium enterprise is transferred, acquired or merged (excluding comprehensive transfer or acquisition); |
| 4. | Other cases deemed as necessary by the Minister of SMEs and Startups. |
| (6) | Where a small or medium enterprise with a direct production confirmation certificate issued pursuant to paragraph (4) falls under any of the following cases, it shall be re-issued with a direct production confirmation certificate: <Newly Inserted by Act No. 10504, Mar. 30, 2011> |
| 1. | Where a change occurs in the name of the small or medium enterprise; |
| 2. | Where a change occurs in the representative of the small or medium enterprise which is a corporation; |
| 3. | Where business of the small or medium enterprise is comprehensively transferred or acquired. |
| (7) | Necessary matters concerning the procedures for confirming direct production and the term of validity and issuance of direct production confirmation certificates and other matters shall be prescribed by Ordinance of the Ministry of SMEs and Startups. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017> |
| Article 10 (Filing Objection against Confirmation of Direct Production, etc.) |
| (1) | Where a person who has been notified of the result of confirmation of direct production as prescribed in Article 9 (4) is dissatisfied with such result, he/she may file an objection with the Minister of SMEs and Startups in writing or by an electronic document within ten days from the date of receipt of such notification. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | The Minister of SMEs and Startups shall notify the applicant of the result of examination of an objection filed under paragraph (1) within ten days from the date of receipt of the objection. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | Necessary matters concerning the procedures for filing an objection, decision on objection, etc. shall be prescribed by Ordinance of the Ministry of SMEs and Startups. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017> |
| Article 11 (Revocation, etc. of Confirmation of Direct Production) |
| (1) | The Minister of SMEs and Startups may investigate whether a small or medium enterprise confirmed under Article 9 (4) meets requirements for the confirmation of direct production and directly produces the relevant products. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | Where the results of the investigation referred to in paragraph (1) show that a small or medium enterprise falls under any of the following cases, the Minister of SMEs and Startups shall revoke the confirmation of direct production such enterprise has received: <Amended by Act No. 10504, Mar. 30, 2011; Act No. 13094, Jan. 28, 2015; Act No. 14839, Jul. 26, 2017> |
| 1. | Where it receives the confirmation of direct production by fraudulent or other wrongful means; |
| 2. | Where it ceases to meet the requirements for confirmation specified in Article 9 (2) due to the lease, sales, etc. of its production facilities; |
| 3. | Where it supplies products it has not directly produced, such as products produced by a subcontractor or finished products purchased from another company, or supplies finished products it has directly produced, to which it has attached a trademark of another company, after entering into a supply contract with the head of a public institution; |
| 4. | Where it refuses an investigation as to whether it satisfies the requirements for confirmation and directly produces the relevant products without just cause; |
| 5. | Where it falls under any subparagraph of Article 9 (5). |
| (3) | The Minister of SMEs and Startups shall revoke the confirmation of all products the small or medium enterprise has directly produced, in cases falling under paragraph (2) 1, 3, and 4; and revoke the confirmation of the relevant product the small or medium enterprise has directly produced, in cases falling under paragraph (2) 2 and 5. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
| (4) | Where a small or medium enterprise which has received the confirmation of direct production ceases to meet requirements for the confirmation of direct production, it shall return the direct production confirmation certificate on relevant product, as prescribed by Ordinance of the Ministry of SMEs and Startups. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017> |
| (5) | A small or medium enterprise falling under paragraph (2) shall not request the confirmation of direct production from the date of the revocation of such confirmation, and the products and period for which the request for the confirmation of direct production is restricted shall be as follows. In such cases, a person for whom the term of validity of a direct production confirmation certificate has expired shall not request the confirmation of direct production from the date on which it is confirmed that such expiration gives rise to a reason for revocation. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017> |
| 1. | In cases falling under paragraph (2) 1: One year for all products; |
| 2. | In cases falling under paragraph (2) 2, where it has participated in a competitive tendering procedure open only to small and medium enterprises or failed to return its direct production confirmation certificate within the period prescribed by Ordinance of the Ministry of SMEs and Startups: Six months for products for which the confirmation of direct production is revoked; |
| 3. | In cases falling under paragraph (2) 3 and 4: Six months for all products; |
| 4. | In cases falling under paragraph (2) 5, where it has failed to request the confirmation of direct production again within the period prescribed by Ordinance of the Ministry of SMEs and Startups: Up to three months for products for which the confirmation of direct production is revoked. |
| (6) | Where the confirmation of direct production is revoked for a small or medium enterprise with which a procurement contract has been concluded, the head of a public institution shall fully or partially rescind or cancel such procurement contract: Provided, That this shall not apply where it is impracticable to change the counter-party to the contract due to extraordinary grounds, such as the nature of contracted products, progress in implementing the contract, or purchase schedule. |
| (7) | Procedures for revoking the confirmation of direct production under paragraph (2) and other matters, shall be prescribed by Ordinance of the Ministry of SMEs and Startups. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017> |
| (8) | Where the Minister of SMEs and Startups intends to revoke the confirmation of direct production pursuant to paragraph (2), he/she shall hold a hearing. <Amended by Act No. 14839, Jul. 26, 2017> |
| Article 11-2 (Penalty Surcharges) |
| (1) | The Minister of SMEs and Startups may impose upon any of the following persons a penalty surcharge not exceeding 30/100 of the turnover which he/she has derived from the relevant violation: <Amended by Act No. 14839, Jul. 26, 2017> |
| 1. | A person who receives confirmation from the Minister of SMEs and Startups that he/she is not subject to restrictions on participation in a competitive tendering procedure open only to small and medium enterprises referred to in Article 8-2 (1) 1 or 2, by fraudulent or other wrongful means; |
| 2. | A person for whom the confirmation of direct production is revoked because he/she falls under Article 11 (2) 1 or 3. |
| (2) | Where a person liable to pay a penalty surcharge under paragraph (1) fails to pay it by the payment deadline, the Minister of SMEs and Startups shall collect it in the same manner as delinquent national taxes are collected. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | The calculation of the turnover, standards and procedures for imposing penalty surcharges under paragraph (1), and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Newly Inserted by Act No. 13743, Jan. 6, 2016]
| Article 12 (Increase in Direct Purchase of Construction Materials) |
| (1) | The Minister of SMEs and Startups may take necessary measures to increase the purchase of construction materials designated as competing products. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | In consultation with the heads of relevant central administrative agencies, the Minister of SMEs and Startups shall select and announce products necessary for a construction project for which any public institution has placed an order, and which is deemed suitable for the public institution's direct purchase and supply, to the extent not impairing the quality and efficiency of the construction project. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
| (3) | The head of a public institution who intends to place an order for the construction project in an amount equivalent to or larger than that prescribed by Presidential Decree shall examine whether he/she directly purchases the products announced by the Minister of SMEs and Startups under paragraph (2), and take measures necessary for directly purchasing such products: Provided, That the foregoing shall not apply where the Minister of SMEs and Startups has announced that direct purchase cannot be executed for a certain reason after consultation with the heads of relevant central administrative agencies. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
CHAPTER III ASSISTANCE IN PREFERENTIAL PURCHASE OF PRODUCTS MANUFACTURED WITH TECHNOLOGY DEVELOPED BY SMALL AND MEDIUM ENTERPRISES
| Article 13 (Preferential Purchase of Products, etc. Manufactured with Technology Developed by Small and Medium Enterprises) |
| (1) | In order to create demand for products manufactured with technology developed by small and medium enterprises, the Government shall establish necessary supporting policies, such as preferential purchase of such products. <Amended by Act No. 10504, Mar. 30, 2011> |
| (2) | In order to increase purchase of products manufactured with technology developed by small and medium enterprises, the Minister of SMEs and Startups or the head of any relevant central administrative agency may request public institutions or other persons prescribed by Presidential Decree to take necessary measures, such as preferential purchase. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | Where a public institution in receipt of a request prescribed in paragraph (2) is not able to take measures, such as preferentially purchasing the relevant products in accordance with the request, it shall notify the reasons therefor to the Minister of SMEs and Startups and the heads of relevant central agencies within the period prescribed by Presidential Decree. <Amended by Act No. 14684, Mar. 21, 2017; Act No. 14839, Jul. 26, 2017> |
| (4) | Where the head of a public institution carries out a large-scale national project that conforms to the standards, etc. for the amount prescribed by Presidential Decree, it shall examine, in advance, demand for products manufactured with technology developed by small and medium enterprises, and prepare measures to encourage participation by small and medium enterprises. <Newly Inserted by Act No. 13743, Jan. 6, 2016> |
| (5) | Prior examination of demand, preparation of measures to encourage participation by small and medium enterprises under paragraph (4), and other necessary matters shall be prescribed by Ordinance of the Ministry of SMEs and Startups. <Newly Inserted by Act No. 13743, Jan. 6, 2016; Act No. 14839, Jul. 26, 2017> |
| Article 13-2 (Establishment and Operation of Support Centers for Preferential Purchase of Products Manufactured with Technology Developed by Small and Medium Enterprises) |
| (1) | The Minister of SMEs and Startups may establish and operate support centers for the preferential purchase of products manufactured with technology developed by small and medium enterprises which perform the following duties, in order to facilitate the purchase of such products by public institutions: <Amended by Act No. 14839, Jul. 26, 2017> |
| 1. | Providing necessary assistance for the request for necessary measures, such as preferential purchase, referred to in Article 13 (2); |
| 2. | Publicizing products manufactured with technology developed by small and medium enterprises subject to preferential purchase referred to in Article 14 (2); |
| 3. | Providing advice and consultations to purchase products manufactured with technology developed by small and medium enterprises; |
| 4. | Any other duties necessary for facilitating the preferential purchase of products manufactured with technology developed by small and medium enterprises. |
| (2) | Matters necessary for establishing and operating support centers for the preferential purchase of products manufactured with technology developed by small and medium enterprises shall be prescribed by Presidential Decree. |
[This Article Newly Inserted by Act No. 13743, Jan. 6, 2016]
| Article 14 (Designation, etc. of Products Manufactured with Technology Developed by Small and Medium Enterprises Subject to Preferential Purchase) |
| (1) | The Minister of SMEs and Startups shall designate and announce products manufactured with technology developed by small and medium enterprises which meet the specific requirements prescribed by Presidential Decree, such as performance-certified products (hereinafter referred to as "products manufactured with technology developed by small and medium enterprises subject to preferential purchase"). <Amended by Act No. 9894, Dec. 30, 2009; Act No. 14839, Jul. 26, 2017> |
| (2) | The Minister of SMEs and Startups shall publicize products manufactured with technology developed by small and medium enterprises subject to preferential purchase, which are announced under paragraph (1), to public institutions defined in subparagraph 2 of Article 2. <Newly Inserted by Act No. 9894, Dec, 30, 2009; Act No. 14839, Jul. 26, 2017> |
| (3) | No person in charge of purchase at a public institution which has awarded a contract to preferentially purchase products manufactured with technology developed by small and medium enterprises shall be responsible for any loss incurred from the purchase of such products unless his/her intent or gross negligence is proved. <Amended by Act No. 10504, Mar. 30, 2011> |
| Article 15 (Performance Certification of Small and Medium Enterprise-Manufactured Products) |
| (1) | The Minister of SMEs and Startups may certify the performance of products manufactured with technology developed by small and medium enterprises and prescribed by Ordinance of the Ministry of Trade, Industry and Energy. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017> |
| (2) | Each small or medium enterprise which intends to obtain performance certification under paragraph (1), shall apply for performance certification to the Minister of SMEs and Startups: Provided, That no person for whom performance certification has been revoked because he/she falls under Article 17 (1) 1 shall apply for performance certification for one year from the date of the revocation of performance certification. <Amended by Act No. 13866, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017> |
| (3) | The Minister of SMEs and Startups in receipt of an application for the performance certification under paragraph (2), shall assess conformity to verify the distinction of performance of products; inspect factories; conduct a performance test on products; and grant performance certification if such products conform to the standards for performance certification. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
| (4) | The Minister of SMEs and Startups may allow small and medium enterprises that have obtained performance certification under paragraph (3) to use marks prescribed by Ordinance of the Ministry of Trade, Industry and Energy on their certified products or packages, containers, and promotional materials, etc. <Amended by Act No. 11690, Mar. 23, 2013: Act No. 14839, Jul. 26, 2017> |
| (5) | No person who has failed to obtain performance certification under paragraph (3) shall use marks provided for in paragraph (4). |
| (6) | The Minister of SMEs and Startups may authorize any corporation or organization, the main duty of which is to examine conditions for manufacturing products or the quality of products and which is designated by the Minister of SMEs and Startups (hereinafter referred to as "testing institute"), or any testing agency affiliated to a national institution, to vicariously perform the duty of inspecting factories and conducting performance tests on products under paragraph (3). <Amended by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
| (7) | Where the Minister of SMEs and Startups or a testing institute grants performance certification, it may collect fees to cover expenses incurred in inspecting factories, conducting performance tests on products, and maintaining and managing performance certification, as prescribed by Presidential Decree. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
| (8) | Procedures and standards for performance certification, requirements and procedures for designating testing institutes, and other necessary matters shall be prescribed by Ordinance of the Ministry of SMEs and Startups. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017> |
| Article 16 (Term of Validity of Performance Certification) |
The term of validity of performance certification referred to in Article 15 (1) shall be three years from the date of the receipt of the performance certification: Provided, That the Minister of SMEs and Startups may extend such term of validity by a further period of up to three years if it is necessary for the commercialization, etc. of products. <Amended by Act No. 14839, Jul. 26, 2017>
| Article 17 (Revocation, etc. of Performance Certification) |
| (1) | Where a small or medium enterprise that has obtained performance certification pursuant to Article 15 (hereinafter referred to as "certified enterprise") falls under any of the following cases, the Minister of SMEs and Startups may revoke such certification: Provided, That where it falls under subparagraph 1, such certification shall be revoked: <Amended by Act No. 14839, Jul. 26, 2017> |
| 1. | Where it obtains performance certification by fraudulent or other wrongful means; |
| 2. | Where it ceases to meet the standards for performance certification referred to in Article 15 (8). |
| (2) | Where a testing institute falls under any of the following cases, the Minister of SMEs and Startups may revoke its designation under Article 15 (6) or order suspension of, or restrictions on, its business for up to six months: Provided, That where it falls under subparagraph 1 or 2, such designation shall be revoked: <Amended by Act No. 14839, Jul. 26, 2017> |
| 1. | Where it obtains designation by fraudulent or other wrongful means; |
| 2. | Where it grants performance certification during the period of business suspension; |
| 3. | Where it ceases to meet the requirements for designation referred to in Article 15 (8); |
| 4. | Where it refuses to grant performance certification without just cause. |
| (3) | Where the Minister of SMEs and Startups intends to make a disposition under paragraph (1) or (2), he/she may require the relevant certified enterprise or testing institute to appear at the designated time and place to state its opinion or to submit documents. <Amended by Act No. 14839, Jul. 26, 2017> |
| (4) | Where a certified enterprise falls under any of the following cases, it shall apply for the re-issuance of a certificate. In such cases, where it falls under subparagraph 2 or 3, its factories and products may undergo inspections or performance tests, respectively, pursuant to Article 15 (3): <Amended by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
| 1. | Where a change occurs in its trade name or representative; |
| 2. | Where its factory which has passed an inspection referred to in Article 15 (3) is relocated; |
| 3. | Where transfer or acquisition of business, or merger with any other company occurs; |
| 4. | Other cases deemed necessary by the Minister of SMEs and Startups, such as the loss, destruction, etc. of a certificate. |
| Article 18 (Provision of Performance Insurance Services) |
| (1) | Any entity which falls under any of the following cases may provide insurance services to cover losses suffered by a public institution due to the purchase of products under Article 14 (1) (hereinafter referred to as "performance insurance services"): <Amended by Act No. 10228, Apr. 5, 2010> |
| 3. | Other entities entitled to conduct insurance business under other statutes. |
| (2) | Where any entity which provides performance insurance services provided for in paragraph (1) (hereinafter referred to as "performance insurer") deems it necessary for the business operations, it may request the submission of necessary data from an agency or organization prescribed by Ordinance of the Ministry of SMEs and Startups, including testing institutes, etc. In such cases, the agency or organization so requested shall comply with such request in the absence of extenuating circumstances. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017> |
| (3) | Where the Government subsidizes funds required for performance insurance services prescribed in Article 19, the scope of coverage of such performance insurance shall be prescribed by Presidential Decree, and matters concerning its operation and other necessary matters shall be determined and announced by the Minister of SMEs and Startups. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
| Article 19 (Assistance to Performance Certification and Performance Insurance Services) |
| (1) | Where a small or medium enterprise undergoes an inspection on its factories or a performance test on its products from a testing institute or a testing agency affiliated to a national institution pursuant to Article 15 (6), the Government may subsidize expenses incurred therein and expenses incurred in providing performance insurance services under Article 18 within budgetary limits. <Amended by Act No. 10504, Mar. 30, 2011> |
| (2) | Necessary matters concerning the payment procedures, use, management, etc. of subsidies referred to in paragraph (1) shall be prescribed by Presidential Decree. <Amended by Act No. 10504, Mar. 30, 2011> |
| Article 20 (Assistance in Cost Accounting of Products Manufactured with Technology Developed by Small and Medium Enterprises subject to Preferential Purchase, etc.) |
| (1) | In order to assist the heads of public institutions in purchasing products manufactured with technology developed by small and medium enterprises at a reasonable price, the Minister of SMEs and Startups may subsidize some of expenses for cost accounting of products manufactured with technology developed by small and medium enterprises subject to preferential purchase, within budgetary limits, upon the request of small and medium enterprises. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | Necessary matters concerning subsidization under paragraph (1) shall be prescribed by Presidential Decree. |
| (3) | The Minister of SMEs and Startups may take necessary measures to ensure that the results of the cost accounting of products manufactured with technology developed by small and medium enterprises subject to preferential purchase is included in the public institutions' purchase of such products. <Amended by Act No. 14839, Jul. 26, 2017> |
| (4) | The heads of public institutions may use the results of the cost accounting determined under paragraph (1) for the calculation of the budget price. |
CHAPTER IV ENHANCING EFFICIENCY OF PURCHASE AND SECURING IMPLEMENTATION CAPACITY
| Article 21 (Designation, etc. of Public Procurement Assistance Managers) |
| (1) | In order to facilitate the purchase of small and medium enterprise-manufactured products, such as the implementation of purchase plans specified in Article 5 (3), and to support efficient purchase by public institutions, the Minister of SMEs and Startups shall designate as public procurement assistance managers public officials under his/her jurisdiction or persons in charge of business related to small and medium enterprises recommended by the heads of public institutions, etc.. In such cases, the duties of, and requirements for qualification of, public procurement assistance managers shall be prescribed by Presidential Decree. <Amended by Act No. 9894, Dec, 30, 2009; Act No. 14839, Jul. 26, 2017; Act No. 15138, Nov. 28, 2017> |
| (2) | Each public procurement assistance manager designated under paragraph (1) shall examine the propriety of the purchase of small and medium enterprise-manufactured products, such as plans for ordering products, purchase records, etc. of the relevant public institution, and report the result of such examination to the Minister of SMEs and Startups, who may advise the head of the relevant public institution about the propriety of the purchase of small and medium enterprise-manufactured products. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | The head of a public institution in receipt of advice pursuant to paragraph (2) shall suspend the tendering procedure on the date of receipt of such advice and notify the Minister of SMEs and Startups of the result thereof within 15 days. <Amended by Act No. 12499, Mar. 18, 2014; Act No. 14839, Jul. 26, 2017> |
| (4) | When providing advice pursuant to paragraph (2), the Minister of SMEs and Startups may issue an order to suspend the relevant tendering procedure for a given period not exceeding one month from the date of providing advice, if necessary to secure the effectiveness of advice: Provided, That where the head of a public institution follows the advice, during a period of suspension of the tendering procedure, the Minister of SMEs and Startups shall cancel the suspension of the relevant tendering procedure. <Newly Inserted by Act No. 12499, Mar. 18, 2014; Act No. 13743, Jan. 6, 2016; Act No. 14839, Jul. 26, 2017> |
| (5) | The Minister of SMEs and Startups shall gather the findings as to whether advice is followed to and whether the order to suspend the relevant tendering procedure is complied with; announce them following deliberation by the State Council under Article 5 (3); and submit them to the National Assembly. <Amended by Act No. 13743, Jan. 6, 2016; Act No. 14839, Jul. 26, 2017; Act No. 15138, Nov. 28, 2017> |
| (6) | The Minister of SMEs and Startups may evaluate the results, etc. of the purchase of small and medium enterprise-manufactured products by public institutions, and take necessary measures, such as providing awards to exemplary public institutions in public procurement and persons who have rendered distinguished service for public procurement. <Amended by Act No. 9894, Dec, 30, 2009; Act No. 14839, Jul. 26, 2017> |
| (7) | Where public institutions purchase small and medium enterprise-manufactured products at a lower ratio than that prescribed in the latter part of Article 5 (1), the Minister of SMEs and Startups may investigate the reasons therefor and take necessary measures to increase the purchase of such products. <Newly Inserted by Act No. 9894, Dec, 30, 2009; Act No. 14839, Jul. 26, 2017> |
| (8) | The Minister of SMEs and Startups may request the heads of the relevant institutions or organizations to include the results, etc. of the purchase of small and medium enterprise-manufactured products by public institutions, in any of the following evaluations: <Newly Inserted by Act No. 13743, Jan. 6, 2016; Act No. 14839, Jul. 26, 2017> |
| Article 22 (Protection of Small and Medium Subcontractors) |
Where a business entity which has concluded a contract with a public institution to supply or deliver (hereafter in this Article referred to as "supply") products manufactured, repaired, or constructed, the value of which exceeds the amount prescribed by Presidential Decree (hereinafter referred to as "prime contractor") awards a subcontract for all or part of the supply to a small or medium enterprise, the head of a public institution under Article 5 (1) shall notify the relevant administrative agencies of a violation by the prime contractor of any of the following provisions: <Amended by Act No. 13743, Jan. 6, 2016>
| Article 23 (Quality, etc. Guaranteed by Small and Medium Enterprises) |
| (1) | Where a small or medium enterprise supplies products to a public institution, it shall guarantee the quality of the products as requested by the institution. |
| (2) | Where a small or medium enterprise fails to meet the requirements required by a public institution, such as a violation of the duty to guarantee the quality of competing products pursuant to paragraph (1) or a failure to implement the relevant contract, the public institution may restrict such small or medium enterprise from concluding a contract with the public institution for a period of at least one month, but not exceeding two years. In such cases, the public institution shall notify the Minister of SMEs and Startups of such restriction. <Amended by Act No. 14839, Jul. 26, 2017> |
| Article 24 (Support for Projects to Secure Raw Materials and to Improve Quality) |
The Minister of SMEs and Startups or the head of a central administrative agency in charge of cooperatives may take necessary measures, such as support for projects that cooperatives implement to enable their members to secure raw materials, improve quality, develop technology, and find new markets. <Amended by Act No. 14839, Jul. 26, 2017>
| Article 25 (Provision of Information on Small and Medium Enterprises, etc.) |
| (1) | In order to enhance the efficiency of procurement by public institutions, the Minister of SMEs and Startups shall collect information prescribed by Presidential Decree, such as whether an business entity is a small or medium enterprise; information on the capabilities of small and medium enterprises to manufacture and supply products; information on the contract performance, etc.; and information on the purchase plans of and placement of orders by public institutions, tendering, successful tendering, etc., and provide such information to public institutions and small and medium enterprises. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | In order to collect and provide information under paragraph (1), the Minister of SMEs and Startups shall construct and operate a comprehensive information network for public procurement of small and medium-manufactured products (hereinafter referred to as "purchase information network"), and may require the heads of public institutions; credit information companies engaging in business defined in Article 4 (1) 1 or 4 of the Credit Information Use and Protection Act; and small and medium enterprises which wish to be registered as a member of the purchase information network, to provide necessary information, connect their own information network with the purchase information network, or provide cooperation, etc. In such cases, a person in receipt of a request from the Minister of SMEs and Startups shall provide information as requested, except in any extenuating circumstance relating to the protection of personal information, security of information, etc. <Amended by Act No. 14839, Jul. 26, 2017> |
CHAPTER V SUPPORT TO SMALL AND MEDIUM ENTERPRISES FOR DEVELOPMENT OF MARKETS, ETC.
| Article 26 (Projects to Support Market Development) |
| (1) | The Minister of SMEs and Startups may perform the following projects to assist small and medium enterprises in finding domestic and overseas markets and securing a client base: <Amended by Act No. 14839, Jul. 26, 2017> |
| 1. | Projects for creating distribution networks for small and medium enterprise-manufactured products, and supporting publicity, marketing or follow-up management thereof; |
| 2. | Projects for supporting small and medium enterprises for opening exhibitions and expositions in Korea and abroad, or participation therein; |
| 3. | Projects for building and operating information networks for arranging transactions in Korea and abroad and for the publicity of products; |
| 4. | Projects for supporting small and medium enterprises for the improvement of their marketing capabilities in Korea and abroad; |
| 5. | Projects for supporting small and medium enterprises for the entry into the overseas procurement and distribution markets; |
| 6. | Projects for supporting small and medium enterprises to dispatch overseas market development teams and secure bridgeheads for their overseas expansion; |
| 7. | Projects for providing small and medium enterprises with interpretation, translation and consultancy services for their overseas expansion; |
| 8. | Other projects deemed as necessary for the expansion of trade infrastructure and development of markets for small and medium enterprises. |
| (2) | Where the Minister of SMEs and Startups deems it necessary to implement projects to support domestic and overseas market development, he/she may outsource such projects to agencies or organizations prescribed by Presidential Decree, or require them to provide cooperation, such as provision of relevant data and information and research of domestic and overseas markets. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | Where the Minister of SMEs and Startups outsources projects pursuant to paragraph (2), he/she may subsidize all or some of the expenses incurred in implementing such projects to the outsourced agencies or organizations. <Amended by Act No. 14839, Jul. 26, 2017> |
| (4) | Where the Minister of SMEs and Startups deems it necessary to strengthen the competitiveness of small and medium enterprises, he/she may conduct projects to support domestic and overseas market development jointly with the Special Metropolitan City Mayor, a Metropolitan City Mayor, a Do Governor, and the Governor of a Special Self-Governing Province (hereinafter referred to as "Mayor/Do Governor") every year. <Amended by Act No. 14839, Jul. 26, 2017> |
| Article 26-2 (Establishment, etc. of Dedicated Shops for Small and Medium Enterprise-Manufactured Products) |
| (1) | The Minister of SMEs and Startups may establish and operate dedicated shops for small and medium enterprise-manufactured products, to facilitate the sale of, and expand markets for, such products. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | Where the Minister of SMEs and Startups establishes dedicated shops for small and medium enterprise-manufactured products pursuant to paragraph (1), he/she may request necessary facilities or space from a public institution that has facilities or space meeting the standards prescribed by Ordinance of the Ministry of Trade, Industry, and Energy for the location and sales room; and the public institution in receipt of such request shall provide cooperation therein, except in extenuating circumstances. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | The Minister of SMEs and Startups may outsource affairs concerning the establishment and operation of dedicated shops for small and medium enterprise-manufactured products, to a distribution company for small and medium enterprise-manufactured products established pursuant to Article 69 of the Small and Medium Enterprises Promotion Act or to an institution prescribed by Presidential Decree. <Amended by Act No. 14839, Jul. 26, 2017> |
| (4) | The Minister of SMEs and Startups may subsidize expenses incurred in establishing and operating dedicated shops for small and medium enterprise-manufactured products, to a distribution company for small and medium enterprise-manufactured products or an institution outsourced under paragraph (3). <Amended by Act No. 14839, Jul. 26, 2017> |
[This Article Newly Inserted by Act No. 12008, Aug. 6, 2013]
| Article 27 (Formulation and Implementation of Plans for Supporting Development of Overseas Markets for Small and Medium Enterprises) |
| (1) | The Minister of SMEs and Startups shall, every year, announce a plan that incorporates plans for supporting the development of overseas markets for small and medium enterprises prepared by the central administrative agencies, local governments, and agencies or organizations referred to in Article 26 (2). <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | The Minister of SMEs and Startups may request agencies or organizations described in paragraph (1) to formulate and submit their plans for supporting the development of overseas markets for small and medium enterprises. In such cases, the heads of the agencies or organizations in receipt of a request shall comply with such request, in the absence of extenuating circumstances. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | Deleted. <by Act No. 14839, Jul. 26, 2017> |
| Article 28 (Projects to Support Connected Production, etc.) |
| (1) | In order to support the production and marketing of small and medium enterprise-manufactured products, the Minister of SMEs and Startups shall collect information on the placement and receipt of orders for the manufacturing, processing or repair thereof and provide such information to small and medium enterprises or shall take necessary measures prescribed by Presidential Decree, so that the production and marketing of small and medium enterprise-manufactured products can be connected each other. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | Where several small and medium enterprises intend to introduce or utilize a collective trademark to strengthen sales activities, the Minister of SMEs and Startups may support the following matters in accordance with the standards and procedures prescribed by Presidential Decree: <Amended by Act No. 14839, Jul. 26, 2017> |
| 1. | Expenses for the development of a collective trademark; |
| 2. | Facilities necessary for the sale of products under a collective trademark and operating funds therefor; |
| 3. | Improvement of quality of products under a collective trademark and development of design thereof; |
| 4. | Sale and export of products under a collective trademark; |
| 5. | Publicity of products under a collective trademark; |
| 6. | Other matters necessary for strengthening the sales activities of products under a collective trademark. |
| Article 29 (Support for Logistics Modernization Projects) |
| (1) | Where small and medium enterprises engaged in manufacturing business implement logistics modernization projects, such as projects for creating, establishing or improving logistics facilities for small and medium enterprise-manufactured products, raw or subsidiary materials, and projects incidental thereto, the Minister of SMEs and Startups may provide necessary support. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | Support for logistics modernization projects referred to in paragraph (1) shall include funding, guidance, training, and provision of information. |
| Article 30 (Designation of and Support to Small and Medium Exporting Enterprises and Promising Items) |
| (1) | In order to expand overseas markets for small and medium enterprises, the Minister of SMEs and Startups may designate the following small and medium enterprises or items and provide support therefor: <Amended by Act No. 14839, Jul. 26, 2017> |
| 1. | Small and medium enterprises which are domestic market-oriented; which prepare and promote export of their products; and which meet the standards prescribed by Presidential Decree; |
| 2. | Small and medium enterprises which are export-driven; which have promising export prospects or future growth potential; and which meet the standards prescribed by Presidential Decree; |
| 3. | Items the export of which is promising or having future growth potential; which are manufactured in a large portion by small and medium enterprises; and which meet the standards prescribed by Presidential Decree. |
| (2) | The Minister of SMEs and Startups may support the joint development of overseas markets for small and medium enterprises by agencies or organizations in charge of the items designated under paragraph (1) 3. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | The agencies or organizations described in Article 26 (2) shall provide preferential support to the small and medium enterprises or for items designated under paragraph (1). |
| (4) | The Minister of SMEs and Startups may request the submission of the details and results of support activities under paragraph (3). In such cases, the agencies or organizations in receipt of a request to submit the details and results of support activities shall comply with the request in the absence of extenuating circumstances. <Amended by Act No. 14839, Jul. 26, 2017> |
| (5) | Necessary matters concerning the designation of small and medium enterprises or items pursuant to paragraph (1) and procedures for providing support, etc. shall be determined and announced by the Minister of SMEs and Startups. <Amended by Act No. 14839, Jul. 26, 2017> |
| Article 31 (Analysis and Announcement of Export and Import Trends of Small and Medium Enterprises) |
| (1) | The Minister of SMEs and Startups shall analyze and announce the export and import trends of small and medium enterprises so as to formulate a policy on supporting small and medium enterprises to expand overseas markets. <Amended by Act No. 11462, Jun. 1, 2012; Act No. 14839, Jul. 26, 2017> |
| (2) | The Minister of SMEs and Startups may request data or information necessary for the analysis prescribed in paragraph (1) from the agencies or organizations prescribed by Presidential Decree, such as the Korea Customs Service, and in such cases, the agencies or organizations shall comply with such request, except in extenuating circumstances. <Amended by Act No. 14839, Jul. 26, 2017> |
| (3) | The Minister of SMEs and Startups may outsource the analysis prescribed in paragraph (1) to the agencies and organizations designated by the Minister of SMEs and Startups. <Amended by Act No. 14839, Jul. 26, 2017> |
CHAPTER V-II SUPPORT FOR SMALL AND MEDIUM MRO SUPPLY BUSINESS
| Article 31-2 (Responsibility of Public Institutions) |
Where both a large-scale MRO outsourcing business and a small or medium MRO supplier participate in competitive tendering for the purchase of MRO materials, the head of the relevant public institution shall award a contract preferentially to the small or medium MRO supplier.
[This Article Newly Inserted by Act No. 10951, Jul. 25, 2011]
| Article 31-3 (Establishment of Center to Support Small and Medium MRO Supply Business) |
| (1) | The Minister of SMEs and Startups shall establish a center to support small and medium MRO business (hereinafter referred to as "support center") within a distribution company established pursuant to Article 69 of the Small and Medium Enterprises Promotion Act, which provides information and counseling to support small and medium MRO supply business and other comprehensive services. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | The Government may subsidize funds, etc. necessary for the establishment and operation of support centers. |
| (3) | The support center that purchases and supplies products from a small or medium manufacturer or a small or medium MRO supplier shall be deemed a small or medium MRO supplier when the head of a public institution concludes a MRO supply contract pursuant to Article 31-2. |
[This Article Newly Inserted by Act No. 10951, Jul. 25, 2011]
| Article 31-4 (Investigation of Actual Status) |
| (1) | For the purposes of systematically nurturing small and medium MRO suppliers, the Minister of SMEs and Startups may, every two years, investigate the current status and actual status of small and medium MRO supply business and announce the results of such investigation. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | Where necessary to investigate actual status under paragraph (1), the Minister of SMEs and Startups may request materials or opinions from institutions or organizations related to small and medium MRO supply business. In such cases, the institutions or organizations in receipt of a request to submit materials or present opinions shall comply therewith unless extenuating circumstances exist. <Amended by Act No. 14839, Jul. 26, 2017> |
[This Article Newly Inserted by Act No. 10951, Jul. 25, 2011]
CHAPTER VI SUPPLEMENTARY PROVISIONS
| Article 32 (Reporting and Examination) |
| (1) | Where the Minister of SMEs and Startups deems it necessary for enforcing this Act, he/she may require any of the following persons to submit necessary data and reports, or require public officials under his/her jurisdiction to access relevant offices, places of business, etc., to examine books, documents, or articles relating to the performance of projects: <Amended by Act No. 13094, Jan. 28, 2015; Act No. 14839, Jul. 26, 2017> |
| 2. | Small and medium enterprises that have received the confirmation of direct production pursuant to Article 9; |
| 3. | Small and medium enterprises that have received performance certification pursuant to Article 15 (1); |
| 4. | The heads of testing institutes and the heads of testing agencies affiliated to a national institution specified in Article 15 (6); |
| 5. | Performance insurers provided for in Article 18 (2); |
| 7. | The heads of institutions or organizations to which the Minister of SMEs and Startups has outsourced projects to support domestic and overseas market development pursuant to Article 26 (2); |
| 8. | The heads of institutions or organizations to which the Minister of SMEs and Startups has provided support so that small and medium enterprises may jointly develop overseas markets pursuant to Article 30-2; |
| 9. | The heads of centers to support small and medium MRO supply business provided for in Article 31-3 (1). |
| (2) | Public officials who conduct examinations prescribed in paragraph (1) shall carry certificates indicating their authority and produce them to interested parties. |
| Article 33 (Special Corporations, etc. Deemed as Small and Medium Enterprises) |
| (1) | For the purpose of Articles 4 through 12, 22, 23 and 25, the following corporations or organizations entitled to conclude a supply contract by means of a negotiated contract with the State in accordance with the proviso to Article 7 of the Act on Contracts to which the State is a Party or any other statute shall be deemed small and medium enterprises: <Amended by Act No. 10504, Mar. 30, 2011; Act No. 13866, Jan. 27, 2016> |
| 1. | Corporations established in accordance with Special Acts, such as agricultural cooperatives; |
| 5. | Other corporations or organizations prescribed by Presidential Decree. |
| (2) | Where the head of a public institution prepares purchase plans and purchase records pursuant to Article 5, distribution companies for small and medium enterprise-manufactured products established pursuant to Article 69 of the Small and Medium Enterprises Promotion Act shall be deemed small and medium enterprises. <Newly Inserted by Act No. 10504, Mar. 30, 2011> |
| Article 34 (Delegation and Entrustment of Authority) |
| (1) | Part of the authority of the Minister of SMEs and Startups under this Act may be delegated to the heads of its affiliated agencies or Mayors/Do Governors, or may be entrusted to the heads of other administrative agencies. <Amended by Act No. 14839, Jul. 26, 2017> |
| (2) | Part of the duties of the Minister of SMEs and Startups under Articles 8 (2), 9 (4), 10, 11, 13 (2), 25 and 26 may be entrusted to the National Federation or distribution companies for small and medium enterprise-manufactured products under Article 69 (1) of the Small and Medium Enterprises Promotion Act, as prescribed by Presidential Decree. <Amended by Act No. 10504, Mar. 30, 2011; Act No. 14839, Jul. 26, 2017> |
| (3) | The executives and employees of the National Federation or distribution companies for small and medium enterprise-manufactured products who conduct the duties entrusted by the Minister of SMEs and Startups pursuant to paragraph (2), shall be deemed public officials in the application of penalty provisions under Articles 129 through 132 of the Criminal Act. <Amended by Act No. 14839, Jul. 26, 2017> |
CHAPTER VII PENALTY PROVISIONS
| Article 35 (Penalty Provisions) |
| (1) | Any of the following persons shall be punished by imprisonment for not more than three years or by a fine not exceeding 30 million won: <Amended by Act No. 11462, Jun. 1, 2012; Act No. 12499, Mar. 18, 2014; Act No. 13866, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017> |
| 1. | A person who receives confirmation from the Minister of SMEs and Startups that he/she is not subject to restrictions on participation in a competitive tendering procedure open only to small and medium enterprises under Article 8-2 (1) 1 or 2, by fraudulent or other wrongful means; |
| 2. | A person who obtains performance certification referred to in Article 15 (1) by fraudulent or other wrongful means. |
| (2) | Any person who receives a direct production confirmation certificate under Article 11 (2) 1 and 3 shall be punished by imprisonment for not more than one year or by a fine not exceeding ten million won. <Newly Inserted by Act No. 12499, Mar. 18, 2014> |
| (3) | Any person who violates Article 15 (5) shall be punished by a fine not exceeding five million won. |
| Article 36 (Joint Penalty Provisions) |
If the representative of a corporation, or an agent, employee, or other servants of a corporation or individual commits an offense under Article 35 in connection with the duties of the corporation or individual, not only shall such offender be punished accordingly, but the corporation or individual shall also be punished by a fine under the relevant provisions: Provided, That the foregoing shall not apply where the corporation or individual has not been negligent in paying due attention and supervision regarding the relevant duties to prevent the occurrence of such offense.
| Article 37 (Administrative Fines) |
| (1) | Any person who fails to submit data or a report under Article 32; submits false data or a false report; or refuses, interferes with, or evades an examination, shall be punished by an administrative fine not exceeding three million won. <Amended by Act No. 13094, Jan. 28, 2015> |
| (2) | Administrative fines prescribed in paragraph (1) shall be imposed and collected by the Minister of SMEs and Startups, as prescribed by Presidential Decree. <Amended by Act No. 14839, Jul. 26, 2017> |
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (General Transitional Measures concerning Dispositions, etc.)
Article 3 (Transitional Measures concerning Tendering or Contracts)
Participation in tendering procedures or conclusion of contracts pursuant to the former Act before this Act enters into force shall be governed by the former Act.
Article 4 (Transitional Measures concerning Term of Validity of Quality Certificates)
Quality certification granted by the SME Minister of the SMBA pursuant to the former Act as at the time this Act enters into force shall be deemed valid until the term of validity of the quality certificate expires.
Article 5 (Transitional Measures concerning Special Corporations, etc. Deemed as Small and Medium Enterprises)
Special corporations, etc. under Article 33 shall be deemed small and medium enterprises under this Act until December 31, 2011, in applying Articles 13 through 18.
Article 6 (Transitional Measures concerning Penalties or Administrative Fines)
Acts conducted before this Act enters into force shall be governed by the former Act for the purpose of the application of penalty provisions or provisions on administrative fines.
Article 7 Omitted.
Article 8 (Relationship with other Acts)
The citation of the former Act or its provisions in other statutes as at the time this Act enters into force shall be, if the provisions corresponding thereto exist in this Act, deemed the citation of this Act or the relevant provisions of this Act instead of former provisions.
ADDENDUM <Act No. 9894, Dec. 30, 2009>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 10228, Apr. 5, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDUM <Act No. 10504, Mar. 30, 2011>
This Act shall enter into force three months after the date of its promulgation.
ADDENDUM <Act No. 10951, Jul. 25, 2011>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 11462, Jun. 1, 2012>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 8-2 (1) 1 shall enter into force on January 1, 2013.
Article 2 (Applicability to Division, etc.)
The amended provisions of Article 8-2 (1) 1 shall apply beginning with any company subject to division, merger after division, or physical division, on or after January 1, 2006.
ADDENDA <Act No. 11690, Mar. 23, 2013>
Article 1 (Enforcement Date)
| (1) | This Act shall enter into force on the date of its promulgation. |
Articles 2 through 7 Omitted.
ADDENDUM <Act No. 12008, Aug. 6, 2013>
This Act shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 12499, Mar. 18, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation:
Provided, That the amended provisions of Article 8-2 (3) through (7) shall enter into force on the date of their promulgation, and the amended provisons of Article 21 (3) through (7) shall enter into force three months after the date of their promulgation.
Article 2 (Transitional Measures concerning Enforcement Date)
"Paragraph (1) 1" in the amended provision of Article 8-2 (5) shall be construed as "paragraph (1) 1 and 2" until the amended provision of Article 8-2 (1) 2 enters into force.
Article 3 (Applicability to Submission of Data)
The amended provision of Article 8-2 (3) shall begin to apply to a small and medium enterprise that files an application for confirmation as to whether it is subject to restrictions on participation in a competitive tendering procedure open only to small and medium enterprises as at the time the aforesaid amended provision enters into force.
Article 4 (Applicability to Suspension of Contractual Procedures)
The amended provisions of Article 21 (3) and (4) shall begin to apply to the first public institution that receives advice to make improvements in relation to the purchase of small and medium enterprise-manufactured products after the aforesaid amended provisions enter into force.
ADDENDA <Act No. 12844, Nov. 19, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That among the Acts amended pursuant to Article 6 of this Addenda, amended parts of the Acts which were promulgated before this Act enters into force but the enforcement dates of which have not arrived, shall enter into force on the enforcement date of the relevant Act, respectively.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 13094, Jan. 28, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provision of Article 11 (2) 3 shall enter into force three months after the date of its promulgation, and the amended provisons of Articles 7 (3) and 7-2 shall enter into force on May 28, 2015.
Article 2 (Transitional Measures concerning Public Notice of Tender)
ADDENDA <Act No. 13743, Jan. 6, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Special Cases on Middle-Standing Enterprises' Participation in Competitive Tendering Procedures Open Only to Small and Medium Enterprises)
Article 3 (Applicability to Penalty Surcharges)
The amended provisions of Article 11-2 shall begin to apply to the first person who receives, by fraudulent or other wrongful means, confirmation from the SME Minister of the SMBA that he/she is not subject to restrictions on participation in a competitive tendering procedure open only to small and medium enterprises under Article 8-2 (1) 1 or 2, or to the first person for whom the confirmation of direct production is revoked because he/she falls under Article 11 (2) 1 or 3, after this Act enters into force.
ADDENDA <Act No. 13866, Jan. 27, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation: Provided, That the amended provisions of Article 33 (1) shall enter into force on the date of its promulgation.
Article 2 (Applicability to Restrictions on Application for Performance Certification of Small and Medium Enterprise-Manufactured Products)
The amended provisions of the proviso to Article 15 (2) shall apply from the person for whom performance certification is first revoked after this Act enters into force.
ADDENDUM <Act No. 14684, Mar. 21, 2017>
This Act shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 14839, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That among the Acts amended pursuant to Article 5 of this Addenda, amended parts of the Acts which were promulgated before this Act enters into force but the enforcement dates of which have not arrived, shall enter into force on the enforcement date of the relevant Act, respectively.
Articles 2 through 6 Omitted.
ADDENDUM <Act No. 15138, Nov. 28, 2017>
This Act shall enter into force three months after the date of its promulgation.