CHAPTER I GENERAL PROVISIONS
The purpose of this Act is to contribute to promoting public interests by prescribing the special provisions on the Trust Act with respect to the creation, operation, supervision, etc., of public-purpose trusts, thereby facilitating public services through such trusts.
The definitions of terms used in this Act shall be as follows:
| 1. | The term “public services” means the following: |
| (a) | Business for promoting knowledge, science, technology, culture and arts; |
| (b) | Business for support or the welfare promotion for the invalid, elderly, or persons in difficult circumstances due to finances and health problems; |
| (c) | Business for nurturing children and youths healthily; |
| (d) | Business for promoting the employment and improving the livelihood of workers; |
| (e) | Business for preventing accidents, disaster, and crime, and supporting victims of such; |
| (f) | Business for educating and reforming inmates; |
| (g) | Business for developing sound mind and body, and cultivating abundant humanity through education, sports, etc.; |
| (h) | Business for preventing the unfair discrimination and prejudice on grounds of race, gender, or other grounds, and enhancing egalitarian society; |
| (i) | Business for promoting and defending freedom of thought, conscience, religion, and expression; |
| (j) | Business for the unification of South and North Korea, establishment of peace, promotion of international mutual understanding, or economical cooperation for developing countries; |
| (k) | Business for the environmental protection and maintenance, and the enhancement of public health and safety; |
| (l) | Business for the sound development of regional communities; |
| (m) | Business for free and fair economic activity and the enhancement of consumers’ interests; |
| (n) | Business for enhancing other public interests, prescribed by Presidential Decree; |
| 2. | The term “public trust” means the trust defined in the Public Trust Act for providing public services, approval for which has been obtained by the Minister of Justice pursuant to Article 3; |
| 3. | The term “for-profit business” means business other than public services which a trustee of the public trust carries out within the necessary extent to pursue the purposes of the trust by the calculation of trust property; |
| 4. | The term “remuneration, etc.” means the financial profit paid in return for performing the affairs, regardless of its name, such as remuneration, bonuses, various benefits, payroll, etc. |
CHAPTER II AUTHORIZATION, OPERATION, ETC. OF PUBLIC TRUSTS
SECTION 1 REQUIREMENTS AND PROCEDURES FOR AUTHORIZATION OF PUBLIC TRUSTS
| Article 3 (Authorization of Public Trusts) |
| (1) | A trustee who intends to take over the trust for the purpose of the public services shall obtain approval from the Minister of Justice. |
| (2) | A person who intends to obtain approval pursuant to paragraph (1) shall submit a written application for approval to the Minister of Justice, as prescribed by Presidential Decree. |
| Article 4 (Requirements for Approval) |
Where an application filed under Article 3 (2) meets all the following requirements, the Minister of Justice shall grant authorization for the public trust: | 1. | Where the relevant trust has the main purpose of providing public services as a trust pursuant to the Trust Act; |
| 2. | Where the words “public service” are used with the name of the trust; |
| 3. | Where a trustee falls under neither of the following: |
| (b) | A person directly responsible for the occurrence of a reason for revocation directly, or correspondingly thereto among trustees or trust administrators of public trust whose authorization has been revoked pursuant to Article 22, and for whom five years have yet passed from the date the disposition of revocation is issued; |
| (d) | A person sentenced to imprisonment without labor or heavier punishment, for whom the execution of the sentence is completed (including where the execution of the sentence is deemed completed) or three years have yet passed from the date it is exempted; |
| 4. | Where the number of persons in a special relationship prescribed by Presidential Decree of trustees does not exceed one fifth of a total number of trustees; |
| 5. | Where the number of persons in a special relationship prescribed by Presidential Decree of trust administrators does not exceed one fifth of the total number of trust administrators; |
| 6. | Where a trust administrator and a trustee do not have a special relationship as prescribed by Presidential Decree; |
| 7. | Where the trust property is held to provide the public services effectively; |
| 8. | Where matters determined by a business plan and a deed of trust do not violate the following items: |
| (a) | Where no benefit shall be offered to a trustor, a trustee, a trust administrator, an employee, other person related to trust and any person specially related to him/her, as prescribed by Presidential Decree; |
| (b) | Where the details of business shall not include the contribution to the specific individual or organization or the provision of other benefits. Provided, That this shall not apply where necessary for providing public services of the relevant public trust, in cases of providing benefits to another public trust or public interest corporations (hereinafter referred to as the “public trust, etc.”) pursuant to the Act on the Establishment and Operation of Public Interest Corporations; |
| (c) | Where there is no concern about doing harm to good morals and other social order, such as speculative trading and loan at high interest; |
| (d) | Where it does not obstruct providing the public services due to for-profit business; |
| (e) | Where matters concerning the operation of trust property do not violate Article 11; |
| (f) | Where matters concerning the use of income derived from operation do not violate Article 12; |
| (g) | Where other matters do not violate this and other Acts and subordinate statute; |
| 9. | Where the following items are determined by the deed of trust: |
| (a) | Where the authorization for the public trust is revoked under Article 22 (1) or the public trust is terminated by a reason prescribed in the Trust Act, the purpose of transferring the remaining assets to another public trust, etc., or the State or local governments aiming at the similar public service; |
| (b) | Where essential assets for providing public services exist, matters concerning the fact and the restriction of disposition; |
| (c) | Where any remuneration, etc. is paid to a trustee and a trust administrator, matters concerning the criteria for payment; |
| 10. | Where the authorization and permission shall be obtained as prescribed in the Act and subordinate statute to conduct a business; |
| 11. | Where a disposition for default is issued pursuant to the National Tax Collection Act for the relevant trust property and a trustee, three years shall elapse from the date the disposition of default is complete. |
| Article 5 (Procedures for Authorization) |
| (1) | Where the Minister of Justice receives an application for authorization pursuant to Article 3 (2), he/she shall determine whether to grant authorization or not within three months, and immediately notify the applicant of the results thereof and grounds therefor in writing. |
| (2) | Matters necessary for the methods, procedures, etc. for the examination of authorization of the public trust, except for matters provided for in paragraph (1), shall be prescribed by Presidential Decree. |
| Article 6 (Condition of Authorization) |
| (1) | When granting authorization pursuant to Article 5, the Minister of Justice may attach conditions necessary for providing the public services. |
| (2) | Where conditions are attached to the authorization, a trustee of a public trust may apply for the cancellation or change of conditions to the Minister of Justice, in extenuating circumstances. In such cases, the Minister of Justice shall determine whether to cancel or change conditions within two months, and immediately notify applicants of such determination in writing. |
| Article 7 (Authorization for Modification) |
| (1) | If a trustee intends to modify any of the following matters, approved under Article 5, he/she shall obtain authorization from the Minister of Justice: |
| 1. | Types and details of public services; |
| 2. | Types and details of for-profit business; |
| 3. | Matters prescribed by the deed of trust prescribed in subparagraph 9 of Article 4; |
| 4. | A trustee or a trust administrator; |
| 5. | Method of providing funds necessary for providing the public services; |
| 6. | Modifying a limited liability trusts. |
| (2) | A trustee who intends to obtain authorization for modification pursuant to paragraph (1), shall submit an application for modification authorization to the Minister of Justice. |
| (3) | Matters necessary for the application for the modification authorization such as stated matters and accompanying documents pursuant to paragraph (2), and matters necessary for the methods, procedures, etc. for examinations on the modification authorization shall be prescribed by Presidential Decree. |
| Article 8 (Reports on Modification) |
| (1) | Where matters prescribed by Presidential Decree such as the title, etc. of the public trust among matters approved under Article 5 are changed, a trustee shall submit modified mattes to the Minister of Justice within 14 days from the date a ground therefor occurs. |
| (2) | A trustee of the public trust who intends to make a report pursuant to paragraph (1) shall submit a report on modification, including modified matters and the ground therefor to the Minister of Justice. |
| Article 9 (Name and Registration of Public Trusts) |
| (1) | No trust, other than a public trust, shall use the words “public trust” in its name or trade name, or any words which may be mistaken for a public trust. |
| (2) | No one shall use a name or trade name which may be mistaken for any other public trust, for unlawful purposes. |
| (3) | Where authorization is granted to public trust for limited liability trusts, the Minister of Justice shall immediately request the competent registry office to register the modification following the authorization. |
| Article 10 (Public Notice of Public Trusts) |
| (1) | The Minister of Justice shall notify the public of the following matters with respect to a public trust: |
| 1. | Matters concerning the authorization and cancellation of the relevant public trust; |
| 2. | Matters concerning the condition of authorization granted under Article 6; |
| 3. | Matters concerning authorization for modification and reporting on modification prescribed in Article 7 and 8; |
| 4. | Business plan and business report prescribed in Article 16; |
| 5. | Where the public trust has been terminated, the fact of such termination; |
| 6. | Matters necessary for the authorization of merger prescribed in Article 20; |
| 7. | Where the residual property has been disposed of under Article 24, the fact of such disposal. |
| (2) | The details and methods of giving public notice prescribed in paragraph (1), shall be prescribed by the Minister of Justice. |
SECTION 2 OPERATION OF PUBLIC TRUSTS
| Article 11 (Operation of Trust Property) |
| (1) | The money among the trust property of the public trust shall be managed only by the method prescribed in subparagraphs of Article 41 of the Trust Act. |
| (2) | No trustee shall acquire any trust property for any purpose other than money (including the property provided for in subparagraphs of Article 41 of the Trust Act) by the way other than the deed of trust. |
| (3) | No trustee shall commit an act prescribed in subparagraphs of Article 34 (1) of the Trust Act under any name: Provided, That this shall not apply where determined otherwise by the deed of trust or having obtained approval from the Minister of Justice. |
| (4) | No trustee shall use the trust property for other than the purpose of the public services and for-profit business (hereinafter referred to as the “public services” in this Article). |
| (5) | A trustee shall use the trust property for the public services, etc. within three years from the date the trust property is entrusted: Provided, That where any unavoidable ground exists, such as taking a long period in using for the public services, etc., its period may be extended upon receipt of approval from the Minister of Justice, as prescribed by Presidential Decree. |
| (6) | A trustee shall, if he/she intends to sell, give, lease, exchange, alter the purpose of use, provide as collateral the essential assets for providing the public services, or obtain long-term loan exceeding the amount of money prescribed by Presidential Decree, obtain approval from the Minister of Justice. |
| Article 12 (Use of Operating Income) |
| (1) | A trustee shall use at least 70/100 of the operating income of the trust property for public services. |
| (2) | The method of calculating the operating income referred to in paragraph (1) shall be prescribed by Presidential Decree. |
| Article 13 (Remunerations, etc. of Trustee, etc.) |
Neither trustee or a trust administrator shall not get paid the remuneration, etc. except as reimbursement of expenses incurred in performing the trust affairs. Provided, That this shall not apply where determined otherwise by the deed of trust.
| Article 14 (Delegation of Trust Affairs) |
| (1) | A trustee may delegate any of the following trust affairs to a person other than a trustee: Provided, That this shall not apply to cases determined otherwise by the deed of trust: |
| 1. | Affairs related to the management and operation of the trust property requiring expert knowledge; |
| 2. | Affairs related to fund-raising activities; |
| 3. | Affairs prescribed by Presidential Decree, as the trust affairs whose objectives are impracticable to achieve without any delegation to others, and its similar affairs. |
| (2) | A trustee may pay remuneration, etc. to a person entrusted with the trust affairs pursuant to paragraph (1). In such cases, the remuneration, etc. shall be determined as an appropriate amount, in consideration of the remuneration, etc. for a person employed in the similar affairs, the financial status of the relevant public trust, and other circumstances. |
| (3) | In cases prescribed in paragraph (1), a trustee shall take responsibility only for the appointment and supervision. |
| Article 15 (Classification of Account) |
The account of the public trust shall be classified by the account according to the provision of the public services and for-profit business.
| Article 16 (Submission of Business Plans, etc.) |
| (1) | A trustee shall prepare the business plan for the corresponding business year by up to one month prior to the commencement date of every fiscal year and other documents prescribed by Presidential Decree, and submit them to the Minister of Justice. |
| (2) | A trustee shall prepare the business report for the corresponding business year within two months after the close of the relevant fiscal year along with other documents prescribed by Presidential Decree, and submit them to the Minister of Justice. |
| Article 17 (External Audit of Trust Property) |
Where the total amount of assets of the trust property as at the end of the immediately preceding business year meets at least the amount prescribed by Presidential Decree, a trustee shall be audited in accordance with the Act on External Audit of Stock Companies. <Amended by Act No. 15022, Oct. 31, 2017>
| Article 18 (Power and Duties of Trust Administrators, etc.) |
| (1) | When he/she discovers any misconduct of a trustee and a person (hereinafter referred to as a “trustee, etc.” in this passage) entrusted with the trust affairs pursuant to Article 14, and the fact of violation prescribed by the Act and subordinate statute or the deed of trust in the pursuit of his/her affairs, a trust administrator shall immediately report to the Minister of Justice, and take necessary measures such as a claim for compensation to a trustee, etc. |
| (2) | Where a trustee, etc. violates or is likely to violate any matter prescribed by the Act and subordinate statute or the act of trust, or is likely to cause an irreparable damage to the public trust due to the relevant conduct, a trust administrator may apply to the court to maintain its claim against the trustee, etc. |
| (3) | A trustee shall report to the trust administrator before submitting the application for modification authorization prescribed in Article 7 (2), a report for modification prescribed in Article 8 (2), the business plan and the business report prescribed in Article 16, and an application for merger authorization prescribed in Article 20 (3). |
| (4) | A trust administrator may apply to a trustee for a written application pursuant to paragraph (3) and the inspection and reproduction of the relevant documents, and request an explanation concerning handling of the trust affairs. |
| Article 19 (Report to Trust Administrators) |
| (1) | An auditor prescribed in Article 17 shall, when he/she discovers the unjustifiable act of a trustee, etc. and the violation of matters prescribed by the Act and subordinate statute or the act of trust in pursuit of his/her affairs, immediately report to the trust administrator. |
| (2) | If necessary for performing the affairs, a trust administrator may request the auditor to provide the audit report pursuant to paragraph (1). |
SECTION 3 MERGER AND TERMINATION OF PUBLIC TRUST
| Article 20 (Authorization of Merger) |
| (1) | A public trust may effect a merger with another public trust in accordance with the following methods: |
| 1. | Merger between a public trust and a public trust; |
| 2. | Merger between a public trust and a trust except for a public trust. |
| (2) | The merger pursuant to paragraph (1) shall be authorized by the Minister of Justice. |
| (3) | A trustee who intends to obtain authorization pursuant to paragraph (2) shall submit the application for merger authorization to the Minister of Justice. |
| (4) | Matters necessary for applications for merger authorization, such as matters stated in an application for merger authorization pursuant to paragraph (3) and accompanying documents, and matters necessary for the methods, procedures, etc. on the examination of merger authorization, shall be prescribed by Presidential Decree. |
| (5) | Where the public trust which has received the merger authorization pursuant to paragraph (2) is a limited liability trust, the Minister of Justice shall immediately commission the competent registry office to register the merger. |
| Article 21 (Restrictions on Division of Public Trust) |
| Article 22 (Revocation of Authorization for Public Trust) |
| (1) | Where the public trust falls under any of the following subparagraphs, the Minister of Justice may revoke the authorization for the public trust: |
| 1. | Where it fails to satisfy any of the requirements prescribed in subparagraphs of Article 4; |
| 2. | Where it has acquired the authorization or approval by false or other unlawful methods; |
| 3. | Where the revocation of authorization for the public trust prescribed in Article 3 (1) from the trustee has been applied for; |
| 4. | Where the condition for authorization prescribed in Article 6 (1) has been violated; |
| 5. | Where the trust property has been operated, in violation of Article 11; |
| 6. | Where the operating income has been used, in violation of Article 12; |
| 7. | Where the audit classification prescribed in Article 15 has been omitted or has been processed fraudulently; |
| 8. | Where business is performed in violation of other Act and subordinate statute, or it fails to comply with the disposition of an administrative agency. |
| (2) | The Minister of Justice may request correction or supplementation before revoking the authorization prescribed in paragraph (1). |
| (3) | The Minister of Justice shall hold a hearing for revoking the authorization prescribed in paragraph (1). |
| (4) | If the authorization for the public trust is revoked under paragraph (1), the public trust shall be terminated; if the public trust is a limited liability trust, it shall be liquidated in accordance with the Trust Act. |
| (5) | The Minister of Justice shall, where the public trust revoked pursuant to paragraph (1) is a limited liability trust, immediately request the competent registry office to register the modification to the effect of deleting the letter of “public interest” from the name of the corresponding trust. |
| Article 23 (Termination of Public Trust) |
| (1) | Where a ground for termination of the trust occurs pursuant to the Trust Act, a trustee shall immediately report such fact to the Minister of Justice, and obtain approval from the Minister of Justice after making final settlement of the trust affairs. |
| (2) | Where the liquidation on the public trust as the limited liability trust has been terminated, paragraph 1 shall apply mutatis mutandis to the approval of a final settlement. |
| (3) | Where a final settlement is approved, the Minister of Justice shall immediately request the competent registry office to register the termination of the liquidation. |
| Article 24 (Rightful Claimant of Devolvement and Administrator for Custody and Trust) |
| (1) | Where the authorization of a public trust is revoked under Article 22 (1) or the public trust is terminated under Article 23, the other public trust, etc. provided for in subparagraph 9 (a) of Article 4, or the State or local governments shall be deemed a rightful claimant of devolvement pursuant to the Trust Act. |
| (2) | Where a rightful claimant of devolvement pursuant to paragraph (1) may not be ascertained, or unless there exists the corresponding rightful claimant of devolvement, the Minister of Justice shall donate or loan rent-free the trust property to the public trust, etc. for a similar purpose. |
| (3) | In cases prescribed in paragraph (2), the Minister of Justice may appoint an administrator for custody and trust, and donate or loan rent-free the trust property. In such cases, the method of appointment, qualifications for an administrator for custody and trust, and other necessary matters, shall be prescribed by Presidential Decree. |
| (4) | The State or local government on which the trust property has been devolved pursuant to paragraph (1) shall use the trust property for the public services, or donate or loan rent-free the trust property to the public trust, etc. for a similar purpose. |
CHAPTER III SUPERVISION OF PUBLIC TRUST
| Article 25 (Audit and Inspection, etc.) |
| (1) | The Minister of Justice shall maintain the optimum by ordering the submission of the business report to a trustee or auditing accounts for the effective supervision of the public trust, and instruct him/her to provide the public services smoothly. |
| (2) | The Minister of Justice may, when auditing pursuant to paragraph (1), issue an order to submit the relevant document, ledger and other reference materials to a trustee, and request public officials belonging thereto to inspect the affairs of the public trust and the state of property. |
| Article 26 (Requests for Submission, etc. of Data) |
The Minister of Justice may request the submission, etc. of data necessary for the relevant administrative agency, local governments and public institutions prescribed in the Act on the Management of Public Institutions for the exercise of rights prescribed in this Act, such as the authorization and cancellation of the public trust, and the corrective request. In such cases, the Minister of Justice may process the unique identifiable information prescribed in Article 24 of the Personal Information Protection Act, when it is necessary in order to perform the affairs, such as the authorization and cancellation of the public trust, and its supervision.
| Article 27 (Authority of the Trust Act) |
| (1) | The authority of the court prescribed in the Trust Act shall belong to the Minister of Justice, except in cases of the following authority: |
| (d) | The authority to publicly announce the appointment, etc. of an administrator for trust property, make a registration, or commission the revocation of its registration prescribed in Article 20 (1) and (2) of the Trust Act; |
| (2) | The Minister of Justice may ex officio exercise each of the following authorities: |
| 1. | The authority to remove a trustee, where a trustee violates any duty or there exist other extenuating circumstances; |
| 2. | The authority to appoint a replacement trustee, where duties of a trustee have been terminated. |
CHAPTER IV SUPPLEMENTARY PROVISIONS
| Article 28 (Tax Reduction, etc.) |
| Article 29 (Application mutatis mutandis to the Trust Act) |
The provisions of the Trust Act shall apply mutatis mutandis to the public trust within the extent of not contrary to its nature, except as otherwise expressly provided for in this Act.
CHAPTER V PENAL PROVISIONS
| Article 30 (Penal Provisions) |
Any of the following persons (including a person who has been entrusted under Article 14 (1)) shall be punished by imprisonment with labor for not more than three years or by a fine not exceeding 50 million won: | 2. | A person who has used trust property in violation of Article 11 (4); |
| 3. | A person who has sold, donated, leased, exchanged, altered the purpose of use, provided as collateral or borrowed for long-term the essential assets, in violation of Article 11 (6). |
| Article 31 (Penal Provisions) |
Any of the following persons shall be punished by imprisonment with labor for not more than one year or by a fine not exceeding 30 million won:
| 1. | A person who has operated funds, in violation of Article 11 (1); |
| 2. | A person who has issued the profit-making securities or trust bond, in violation of Article 11 (7); |
| 3. | A person who has used the operating income, in violation of Article 12 (1). |
| Article 32 (Joint Penal Provisions) |
When the representative of a corporation, or an agent, employee, or other servant of a corporation or individual violates Article 30 or 31 in relation to the business of such corporation or individual, not only shall such violator be punished, but the corporation or individual shall be punished by a fine under the relevant provisions: Provided, That this shall not apply where the corporation or the individual has not neglected to pay due attention concerning and supervised the relevant business in order to prevent such violation.
| Article 33 (Administrative Fines) |
| (1) | Any of the following persons shall be punished by a fine for negligence not exceeding 10 million won: |
| 1. | A person who has used the name "public trust" or the name or trade name which is likely to be mistaken for a public trust or other public trust, in violation of Article 9 (1); |
| 2. | A person who has used the name or trade name which is likely to be mistaken for other public trust for an unlawful purpose, in violation of Article 9 (2); |
| 3. | A person who refuses, hinders, or evades the audit conducted under Article 17. |
| (2) | Any of the following persons shall be punished by a fine for negligence not exceeding 5 million won: |
| 1. | A trustee who has failed to report on the modification, in violation of Article 8; |
| 2. | A trustee who has acquired the trust property, in violation of Article 11 (2); |
| 3. | A trustee who has failed to use a trust property for public services, etc. within its period, in violation of Article 11 (5); |
| 4. | A trustee who has failed to submit the business plan, business report, and other documents, in violation of Article 16; |
| 5. | A trustee who has refused a request for inspection and reproduction, and a request for the explanation prescribed in Article 18 (4) without just ground; |
| 6. | A trustee or a liquidator who has failed to make a report or obtain an approval, in violation of Article 23 (1) and (2). |
| (3) | The fine for negligence prescribed in paragraph (1) and (2) shall be imposed and collected by the Minister of Justice, as prescribed by Presidential Decree. |
| Article 34 (Violations of Duties by External Auditors) |
Where an external auditor is appointed under Article 17, the Act on External Audit of Stock Companies shall apply mutatis mutandis with respect to penalty provisions and administrative fines for violation of auditor’s duties. In such cases, “stock company” or “company” shall be construed as “trust.” <Amended by Act No. 15022, Oct. 31, 2017>
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Article 2 (Transitional Measures concerning Former Public Trust)
| (1) | A public trust permitted by the competent authority pursuant to Article 107 of the former Trust Act, as at the time this Act enters into force, shall be deemed a public trust authorized by the Minister of Justice pursuant to Article 3 (1): Provided, That such public trust shall be subject to authorization by the Minister of Justice upon satisfying the requirements provided for in Article 4 within six months from the date this Act enters into force. |
| (2) | The Minister of Justice may revoke the authorization of a public trust that is not subject to authorization within the period referred to in the proviso to paragraph (1), or that fails to satisfy any of the requirements for authorization provided for in Article 4. In such cases, the Minister of Justice shall hold a hearing before revoking any authorization. |
Article 3 Omitted.
Article 4 (Relationships with other Acts)
A citation of any provision concerning a public trust established under the former Trust Act by any Act, as at the time this Act enters into force, shall be deemed a citation of this Act or the corresponding provisions of this Act in lieu of the provisions of the former Trust Act, if such corresponding provisions exist herein.
ADDENDA <Act No. 15022, Oct. 31, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 15 Omitted.