CHAPTER I GENERAL PROVISIONS
The purpose of this Act is to create a framework for developing the defense industry and to strengthen its competitiveness with an aim to establish a framework for self-reliant national defense, and to contribute further to developing the national economy, by providing for matters necessary to develop and support the defense industry.
| (1) | The terms used in this Act are defined as follows: |
| 1. | The term "defense material or similar material" means any of the following: |
| (c) | Any strategic item requiring an export permit of the Minister of the Defense Acquisition Program Administration among the strategic items designated and publicly notified under Article 19 of the Foreign Trade Act; |
| (d) | Any other materials designated and publicly notified by the Minister of the Defense Acquisition Program Administration to facilitate an investment in and to expand an export market for the defense industry; |
| 2. | The term "defense industry" means any industry involved in the research and development, or production (which includes manufacture, repair, processing, assembling, testing, maintenance, recycling, improvement, or remodeling: hereinafter the same shall apply) of any defense material or similar material (hereinafter referred as “defense material or similar material”); |
| 3. | The term "defense contractor or similar entity" means any of the following: |
| 5. | The term "export-industrial cooperation" means a cooperative relationship formed when a defense contractor defined in subparagraph 9 of Article 3 of the Defense Acquisition Program Act (hereinafter referred to as “defense contractor”) exports defense materials or similar materials to a foreign country on such conditions that the defense contractor transfers relevant knowledge, technology, etc. to the contracting party, imports weapons, equipment, components, etc. from the contracting party, economically cooperates with the importing state or otherwise provides a certain benefit in return for such export. |
| Article 3 (Responsibilities of the State) |
| (1) | The State shall establish and implement a comprehensive policy necessary to support the development of the defense industry. |
| (2) | The State shall develop an administrative and financial assistance plan, such as securing the necessary budget, to fulfill its responsibility under paragraph (1). |
| Article 4 (Relationship to Other Statutes) |
This Act shall govern in respect of the development of and support for the defense industry, except as otherwise provided in other statutes.
CHAPTER II CREATING FRAMEWORK FOR DEVELOPING DEFENSE INDUSTRY
| Article 5 (Establishment of Master Plans to Develop Defense Industry) |
| (1) | For the development of and support for the defense industry, the Minister of the Defense Acquisition Program Administration shall establish a master plan to develop the defense industry (hereinafter referred to as “master plan”) every five years. |
| (2) | Master plans shall include the following: |
| 1. | Matters concerning the basic policy to develop the defense industry; |
| 2. | Matters concerning trends in, the current state of, and prospect for, the defense industry in Korea and overseas; |
| 3. | Matters concerning management and promotion of use of information on the defense industry; |
| 4. | Matters concerning standards for designation of, and support for, national-policy projects in the defense industry; |
| 5. | Matters concerning the research and development and domestic development of defense materials or similar materials; |
| 7. | Matters concerning the promotion of, and support for, defense-related small and medium enterprises or venture businesses; |
| 8. | Matters concerning the training of professional personnel in the defense industry under Article 14; |
| 9. | Matters concerning international cooperation and export in the defense industry; |
| 10. | Other matters determined by the Minister of the Defense Acquisition Program Administration to be necessary to develop the defense industry. |
| (3) | The Minister of the Defense Acquisition Program Administration shall establish and implement an implementation plan to develop the defense industry (hereinafter referred to as “implementation plan”) each year in accordance with the master plan. |
| (4) | To establish a master plan or implementation plan, the Minister of the Defense Acquisition Program Administration shall submit the plan or implementation plan to the Defense Acquisition Program Promotion Committee established under Article 9 of the Defense Acquisition Program Act (hereinafter referred to as the “Committee”) for deliberation. |
| (5) | Matters concerning the establishment of master plans and implementation plans shall be prescribed by Presidential Decree. |
| Article 6 (Investigation into Present Conditions of Defense Industry) |
| (1) | To establish the master plans effectively, the Minister of the Defense Acquisition Program Administration may investigate the present conditions of the defense industry (hereinafter referred to as “investigation”) in respect of the following: |
| 1. | Matters concerning market trends and competitiveness of the defense industry in Korea and overseas; |
| 2. | Matters concerning human resources and capital investment in, and technological levels and research and development of, the defense industry; |
| 3. | Matters concerning contracts, production, sales, import and export of defense contractors or similar entities (hereinafter referred to as “defense contractor or similar entity”); |
| 4. | Matters concerning items requiring components to be domestically developed; |
| 5. | Other matters requiring an investigation as determined by the Minister of the Defense Acquisition Program Administration. |
| (2) | The Minister of the Defense Acquisition Program Administration may request the head of a central administrative agency, a local government, a defense contractor or similar entity, a specialized research institute or general research institute defined in subparagraph 10 or 10-2 of Article 3 of the Defense Acquisition Program Act, an association or organization established under Article 19 of this Act, a mutual-benefit association established under Article 20, the Agency for Defense Development established under the Act on the Agency for Defense Development, the Defense Agency for Technology and Quality established under Article 32 of the Defense Acquisition Program Act or any other relevant agencies to submit materials or state opinions or make other requests necessary for the investigation. In such cases, the person in receipt of a request shall cooperate therein, unless there is a compelling reason not to do so. |
| (3) | Except as provided in paragraphs (1) and (2), matters concerning the time and method for conducting investigations shall be prescribed by Presidential Decree. |
| Article 7 (Management and Promotion of Use of Information concerning Defense Industry) |
| (1) | The Minister of the Defense Acquisition Program Administration may establish and operate the system for providing information in order to systematically manage the findings of investigations and to ensure the effective use of information concerning the defense industry. |
| (2) | The Minister of the Defense Acquisition Program Administration may disclose information concerning the defense industry under the Official Information Disclosure Act in order to enhance the competitiveness of defense contractors or similar entities and to encourage companies having advanced technology to enter the defense industry. |
| (3) | Matters necessary concerning the establishment and operation of the system for providing information under paragraph (1) and the disclosure of information under paragraph (2) shall be prescribed by Presidential Decree. |
CHAPTER III SUPPORT SYSTEM FOR ENHANCING COMPETITIVENESS OF DEFENSE INDUSTRY
| Article 8 (Designation of National-Policy Projects in Defense Industry) |
| (1) | The Minister of the Defense Acquisition Program Administration may designate a project that is too risky for defense contractors to participate in since the project requires high level technological development or a large investment as a national-policy project in the defense industry following deliberation by the Committee if the Minister determines that such project is necessary to conduct research and development under Article 8 of the Special Act on Innovation in Science and Technology. <Amended on Mar. 31, 2020> |
| (2) | The Minister of the Defense Acquisition Program Administration may provide a person who conducts a project designated as a national-policy project in the defense industry under paragraph (1) with such benefit as reducing or not charging liquidated damages for delay, lifting restrictions on the eligibility to bid, or extending the research and development period, notwithstanding Article 26 and Article 27 (1) 1 of the Act on Contracts to Which the State Is a Party (only applicable in a case in which such person is negligent or unfaithful in performing the relevant contract). |
| (3) | Procedures for designating national-policy project in the defense industry and benefits under paragraph (2) and other relevant matters shall be prescribed by Presidential Decree. |
| Article 9 (Formulation of Components Management Policy and Promotion of Domestic Development of Components) |
| (1) | The Minister of National Defense shall formulate a policy to manage components for weapons systems necessary to operate the weapons systems in a stable manner and to establish combat readiness, and the Minister of the Defense Acquisition Program Administration and the Chiefs of Staff of the armed forces shall identify requirements for development of components necessary for the research and development and operation of weapons systems. |
| (2) | To develop a component identified under paragraph (1), the Minister of the Defense Acquisition Program Administration may select any of the following entities as a business entity to domestically develop the component to implement a project for domestically developing such component: |
| 1. | A defense contractor or similar entity; |
| 2. | A national or public research institute; |
| 5. | Any other research institute or organization prescribed by Presidential Decree. |
| (3) | The Minister of the Defense Acquisition Program Administration may contribute, in whole or in part, to a fund required for a person selected as a business entity to domestically develop a component under paragraph (2) (hereinafter referred to as “domestic developer of a component”) to implement a project for domestically developing such component within the budget. |
| (4) | The Minister of the Defense Acquisition Program Administration shall give preferential consideration to defense-related small and medium enterprises or venture businesses when selecting a domestic developer of a component under paragraph (2). |
| (5) | The Minister of National Defense, the Minister of the Defense Acquisition Program Administration, the Chiefs of Staff of the armed forces, the president of the Agency for Defense Development and the president of the Defense Agency for Technology and Quality may render following support if requested by a domestic developer of a component at the cost of the requesting domestic developer: |
| 2. | Support for the testing and evaluation of the outcomes of a domestically developed component. |
| (6) | The Minister of the Defense Acquisition Program Administration, the Chiefs of Staff of the armed forces, the president of the Agency for Defense Development, defense contractors and similar entities shall give preferential consideration to the application of any component domestically developed under paragraph (2) to weapons systems. |
| (7) | Requirements and procedures for selection of domestic developers of components and other relevant matters, the payment, use and management of contributions under paragraph (3) and other relevant matters shall be prescribed by Presidential Decree. |
| Article 10 (Support for Growth of Defense-Related Small and Medium Enterprises or Venture Businesses) |
| (1) | The Minister of the Defense Acquisition Program Administration shall establish a policy necessary to support the growth of defense-related small and medium enterprises or venture businesses. |
| (2) | The Minister of the Defense Acquisition Program Administration may perform the following functions if necessary to support the growth of defense-related small and medium enterprises or venture businesses under paragraph (1): |
| 1. | Encouraging startups and supporting their management; |
| 2. | Promoting research and development and commercializing research and development outcomes; |
| 3. | Promoting mutually beneficial cooperation with large enterprises; |
| 4. | Other matters prescribed by Presidential Decree to support the growth of defense-related small and medium enterprises or venture businesses. |
| Article 11 (Business Mediation System) |
| (1) | Where a defense-related company, which is a large enterprise defined in subparagraph 2 of Article 2 of the Act on the Promotion of Mutually Beneficial Cooperation between Large Enterprises and Small and Medium Enterprises (hereinafter referred to as “large entrepreneur”), intends to acquire or merge with a small and medium enterprise provided in Article 2 of the Framework Act on Small and Medium Enterprises (hereinafter referred to as “small and medium entrepreneur”), or an overlapping investment is made by defense contractors, the Minister of the Defense Acquisition Program Administration may conduct business mediation between the large entrepreneur and the small and medium entrepreneur or the defense contractors in consultation with the Minister of Trade, Industry and Energy where any of the following is applicable. In such cases, the Minister of the Defense Acquisition Program Administration may recommend that the parties concerned reach an agreement: |
| 1. | Where the Minister of the Defense Acquisition Program Administration determines that the acquisition, merger or overlapping investment is likely to substantially lower the efficiency of the defense industry; |
| 2. | Where the small and medium entrepreneur to be acquired or merged applies for business mediation. |
| (2) | In conducting business mediation under paragraph (1), the Minister of the Defense Acquisition Program Administration may make the following recommendations after the deliberation of the Committee: |
| 1. | A recommendation to the large entrepreneur to delay the timing it intends to acquire, commence or expand business for a specified period not to exceed three years, or to reduce the production items, production quantity or production facility or similar; |
| 2. | A recommendation to the defense contractors to adjust the timing or scale of their investment and to restrict an overlapping investment. |
| (3) | Where the Minister of the Defense Acquisition Program Administration determines that the large entrepreneur has engaged in unfair trade practices provided in Article 23 (1) of the Monopoly Regulation and Fair Trade Act, the Minister shall notify the Ministry of Trade, Industry and Energy thereof following deliberation by the Committee and may request the Fair Trade Commission to conduct an investigation under Article 50 of that Act and to take necessary measures under Articles 24 and 24-2 of that Act. In this case, the Fair Trade Commission shall conduct an investigation and take necessary measures without delay. |
| (4) | To conduct business mediation under paragraph (1), the Minister of the Defense Acquisition Program Administration shall conduct a fact-finding investigation and report the outcomes to the Committee. |
| (5) | Where the large entrepreneur or defense contractors fail to implement a recommendation made by the Minister of the Defense Acquisition Program Administration under paragraph (2) without good cause, the Minister may publish the details thereof, and order the large entrepreneur or defense contractors to implement the recommendation if such large entrepreneur or defense contractors fail to implement such recommendation upon the expiration of the three-month period from the date of publication. |
| (6) | Details to be published in respect of a recommendation under paragraph (5) are: |
| 1. | The name of the company required to implement the recommendation; |
| 2. | Details of the recommendation to comply with; |
| 3. | Follow-up measures in the case of failure to implement the recommendation; |
| 4. | Other matters necessary to implement the recommendation. |
| (7) | Where the Minister of the Defense Acquisition Program Administration determines that after issuing an order of compliance under paragraph (5), the grounds for the order have changed or ceased before such order is complied with, the Minister shall withdraw, in whole or in part, the details of mediation following deliberation by the Committee. |
| (8) | To conduct business mediation under paragraph (1), the Minister of the Defense Acquisition Program Administration may recommend to the relevant large entrepreneur or defense contractors that it or they provisionally suspend the acquisition, commencement or expansion of business or investments following deliberation by the Committee. |
| (9) | Methods and procedures for the fact-finding investigation under paragraph (4) and publication under paragraph (5) and other necessary matters shall be prescribed by Presidential Decree. |
| (1) | The Government may provide a defense contract or similar entity with a loan (including a difference between the interest on a loan, if the defense contractor or similar entity receives such loan from a financial institution, and the interest set by the Minister of the Defense Acquisition Program Administration; hereinafter the same shall apply) at a long-term low interest for any of the following funds if necessary to develop the defense industry: |
| 1. | A fund necessary to build, relocate, replace, supplement or expand a defense facility; |
| 2. | A fund necessary to procure and stockpile raw materials; |
| 3. | A development fund to domestically develop defense materials and other munitions; |
| 4. | A fund to export defense materials or similar materials; |
| 5. | A fund necessary to develop critical technologies and components; |
| 6. | A fund necessary for research and development and for maintaining idle facilities; |
| 7. | A fund necessary for the operation, facilities, etc. of defense-related small and medium enterprises or venture businesses; |
| 8. | Any other fund necessary to operate defense contractors or similar entities. |
| (2) | Procedures for applying for loans under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree. |
| Article 13 (Provision of Subsidy) |
| (1) | The Minister of the Defense Acquisition Program Administration may subsidize a defense contractor, similar entity or specialized research institute within the budget to meet, in whole or in part, the costs required for the following activities if the Minister determines to be necessary to develop the defense industry: |
| 1. | Procurement or installation of equipment used exclusively for the defense industry; |
| 2. | Research and development or introduction of technology; |
| 3. | Quality inspection of munitions or quality management of defense materials; |
| 4. | Other matters prescribed by Presidential Decree for the development of the defense industry. |
| (2) | A defense contractor, similar entity or specialized research institute shall not transfer to, exchange with, or lend to, any other person any property that it has acquired or whose utility has increased with a subsidy provided under paragraph (1) without the approval of the Minister of the Defense Acquisition Program Administration. |
| Article 14 (Training of Professional Personnel) |
| (1) | The Minister of the Defense Acquisition Program Administration may implement the following policies to train professional personnel necessary to develop the defense industry (hereinafter referred to as “professional personnel in the defense industry”): |
| 1. | Supporting the development and distribution of education programs to train professional personnel in the defense industry; |
| 2. | Strengthening cooperation with academic circles, industries and public agencies to train professional personnel in the defense industry; |
| 3. | Other projects the Minister of the Defense Acquisition Program Administration determines to be necessary to train professional personnel in the defense industry. |
| (2) | To implement the policies under paragraph (1), the Minister of the Defense Acquisition Program Administration may designate a research institute, a university or any other institution or organization prescribed by Presidential Decree as a training institution for professional personnel in the defense industry to conduct education and training, and support the budget necessary for such education and training. |
| (3) | Matters concerning the designation of training institutions for professional personnel in the defense industry under paragraph (2) shall be prescribed by Presidential Decree. |
| Article 15 (Export Assistance) |
| (1) | The Minister of the Defense Acquisition Program Administration may take the following measures or request the heads of relevant administrative agencies or similar agencies to take necessary measures with the approval of the Minister of National Defense, as prescribed by Presidential Decree, in order to encourage investments in the defense industry and to expand an export market if the Minister determines to be necessary to promote the export of defense materials or similar materials and defense science and technology: |
| 1. | A counter-purchase and technology transfer requested by a purchasing country as a benefit in return for export of defense materials or similar materials; |
| 3. | Investigating challenges faced by defense contractors that entered an overseas market and manufacturer of defense materials or similar materials and supporting for tackling such challenges; |
| 4. | Civilian trade cooperation and industrial cooperation; |
| 5. | Supporting education and training and public relations activities; |
| 6. | Other measures prescribed by Presidential Decree as necessary to encourage investments in the defense industry and to expand an export market. |
| (2) | The Minister of the Defense Acquisition Program Administration may provide any of the following persons (limited to a corporation and an organization) with financial assistance or other assistance in terms of physical or human sources within the budget, as prescribed by Presidential Decree, if the Minister determines to be necessary to promote export under paragraph (1): |
| 1. | A person who carries out the export of defense materials or similar materials; |
| 2. | A person engaging in the business of providing advice, guidance, public relations, exhibition or training services, or recommending consulting services; |
| 3. | A person who installs and operates an exhibition hall related to defense materials or similar materials in Korea or overseas, or who displays defense materials or similar materials at an exhibition hall; |
| 4. | A person who carries out international cooperation to export defense materials or similar materials. |
| (3) | In taking measures under paragraph (1), the Minister of the Defense Acquisition Program Administration may, if requested by a foreign government or a person that exports defense materials or similar materials, take any of the following measures at the cost of the requesting party, as prescribed by Presidential Decree: |
| 1. | Supporting follow-on logistics support activities for the export of defense materials or similar materials; |
| 2. | Providing technical support for remodeling and development of defense materials or similar materials for export; |
| 3. | Test and evaluation for export; |
| 4. | Supporting quality certification for export. |
| (4) | The Minister of the Defense Acquisition Program Administration may send public officials of the Administration for export cooperation to key partner countries under the relevant statute or regulation if necessary to perform the duties under paragraphs (2) and (3). |
| (5) | The Minister of the Defense Acquisition Program Administration may choose not to reflect the export performance price set to secure export competitiveness in cost accounting under Article 46 (3) of the Defense Acquisition Program Act, as prescribed by Ordinance of the Ministry of National Defense. |
| Article 16 (Support for Export-Industrial Cooperation) |
| (1) | The Minister of the Defense Acquisition Program Administration may take the following measures for a defense contractor providing export-industrial cooperation with the approval of the Minister of National Defense if the Minister determines to be necessary to expand export of the defense industry: |
| 1. | Transferring defense science and technology; |
| 3. | Negotiating with a purchasing country about the actions for export-industrial cooperation that the other contracting party to offset trade under Article 20 of the Defense Acquisition Program Act requests the purchasing country to do on behalf of a defense contractor and other relevant matters. |
| (2) | Standards and procedures for the measures under paragraph (1) and other relevant matters shall be prescribed by Presidential Decree. |
| Article 17 (International Cooperation) |
To increase export by the defense industry, the Minister of National Defense and the Minister of the Defense Acquisition Program Administration shall promote international cooperation in the defense industry, and may provide defense contractors or similar entities with relevant information, consultation and guidance and with international exchanges of relevant technology and personnel.
CHAPTER IV ESTABLISHMENT OF SPECIALIZED INSTITUTION AND ASSOCIATION
| Article 18 (Support for Development of Defense Industry) |
| (1) | The Minister of the Defense Acquisition Program Administration may require the Defense Agency for Technology and Quality to perform the following functions in order to efficiently support the development of the defense industry: |
| 1. | Conducting investigations and research to establish the master plans; |
| 2. | A program to train professional personnel in the defense industry; |
| 3. | Providing technical support and project management for the domestic development of components; |
| 4. | Investigating, analyzing and disclosing items requiring components to be domestically developed; |
| 5. | Providing technical support for, and support for performance testing of, equipment and components developed by private entities; |
| 6. | Providing business support for programs to technically support and promote small and medium enterprises or venture businesses; |
| 7. | Investigating and analyzing items requiring small and medium enterprises to be preferentially selected; |
| 8. | Providing business support for consulting or loan programs; |
| 9. | Supporting the Minister of the Defense Acquisition Program Administration in his or her duties to promote export by the defense industry; |
| 10. | Analyzing, evaluating and post-managing the performance of the functions under subparagraphs 2 through 9; |
| 11. | Other functions entrusted by the Minister of National Defense and the Minister of the Defense Acquisition Program Administration in respect of development of the defense industry. |
| (2) | The Minister of the Defense Acquisition Program Administration may fund the Defense Agency for Technology and Quality to meet, in whole or in part, the costs of performing the functions under the subparagraphs of paragraph (1). |
| Article 19 (Establishment of Associations) |
| (1) | Defense contractors, similar entities, specialized research institutes, general research institutes, defense program-related societies and other relevant entities may establish an association or organization for the sound development of the defense industry, as prescribed by Presidential Decree. |
| (2) | Any association or organization established under paragraph (1) shall be a corporation. |
| (3) | A person who intends to establish an association or organization under paragraph (1) shall obtain the permission of the Minister of the Defense Acquisition Program Administration. |
| (4) | Except as provided in this Act, the provisions of the Civil Act governing incorporated foundations shall apply mutatis mutandis to any association or organization established under paragraph (1). |
| (5) | Functions and supervision of associations or organization established under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree. |
| Article 20 (Establishment of Mutual-Benefit Associations) |
| (1) | Defense contractors and similar entities may establish a mutual-benefit association for the defense industry (hereinafter referred to as “mutual-benefit association”) with authorization of the Minister of the Defense Acquisition Program Administration in order to encourage their autonomous economic activities and for the sound development of the defense industry. |
| (2) | A mutual-benefit association shall be a corporation and comes into existence at the time its establishment is registered at the location of its main office. |
| (3) | A defense contractor or general enterprise may join a mutual-benefit association as prescribed by the articles of such mutual-benefit association. |
| (4) | Every mutual-benefit association shall prescribe matters concerning membership eligibility, executive officers, investment and its operation and other relevant matters by the articles of association, and shall obtain the authorization of the Minister of the Defense Acquisition Program Administration to amend such articles of association with a resolution of the board of directors. |
| (5) | Matters to be entered in the articles of mutual-benefit associations and the operation and supervision of mutual-benefit associations and other relevant matters shall be prescribed by Presidential Decree. |
| Article 21 (Business Activities of Mutual-Benefit Associations) |
| (1) | Mutual-benefit associations shall conduct the following business activities: |
| 1. | Providing its members with a necessary guarantee in performing defense acquisition projects or exporting in respect of the defense industry; |
| 2. | Providing its members with mutual-benefit services in respect of manufacturing, production or research facilities, equipment, etc. which are necessary for such members to perform defense acquisition projects; |
| 3. | Providing mutual-benefit services improving the welfare of persons employed by its members to perform defense acquisition projects, and compensating for any injury caused by occupational accidents; |
| 4. | Providing mutual-benefit services guaranteeing its members’ responsibility to compensate for any loss or injury to be incurred in the course of performing defense acquisition projects; |
| 5. | Providing loans for, and assisting, its members in the procurement of equipment and materials necessary to perform defense acquisition projects; |
| 6. | Research and education related to defense acquisition projects; |
| 7. | Installing and operating facilities commonly used by its members and promoting the convenience of its members; |
| 8. | Managing information on defense acquisition projects performed by its members; |
| 9. | Investing in relevant projects necessary to achieve the objectives of the mutual-benefit association; |
| 10. | Any project entrusted by the State, local governments, or public agencies prescribed by the articles of the mutual-benefit association; |
| 11. | Any other project prescribed by the Presidential Decree; |
| 12. | Any activity incidental to the business activities under subparagraphs 1 through 11, which is prescribed by the articles of the mutual-benefit association. |
| Article 22 (Guarantee Regulations and Mutual-Benefit Regulations) |
| (1) | A mutual-benefit association that intends to provide guarantee services under Article 21 (1) 1 shall prescribe guarantee regulations and submit the guarantee regulations to the Minister of the Defense Acquisition Program Administration. |
| (2) | Guarantee regulations prescribed under paragraph (1) shall contain the scope of guarantee services, the contents of guarantee contracts, guarantee fees, the reserves set aside for providing guarantees and other matters necessary to provide guarantee services. |
| (3) | A mutual-benefit association that intends to provide mutual-benefit services under Article 21 (1) 2 through 4 shall prescribe mutual-benefit regulations and submit the mutual-benefit regulations to the Minister of the Defense Acquisition Program Administration. |
| (4) | Mutual-benefit regulations prescribed under paragraph (3) shall contain the scope of mutual-benefit services, the contents of mutual-benefit contracts, service fees, mutual-benefit funds, the reserves set aside as mutual-benefit funds and other matters necessary to provide mutual-benefit services. |
| Article 23 (Transfer of Share in Mutual-Benefit Association) |
| (1) | A current or former member of a mutual-benefit association may transfer his or her share in the association to another member or a person who wants to be a member of such association. |
| (2) | A person who acquires a share under paragraph (1) shall succeed to the transferor’s rights and duties in respect of the share. |
| (3) | Transfer of shares and establishment of pledge rights shall be done in the same manner as stocks are transferred and pledge rights are established under the Commercial Act. |
| (4) | Provisional seizure or seizure of shares under the civil execution procedures or the collection procedures of delinquent national taxes shall be done in the same manner as a debt payable to order is provisionally seized or seized under Article 233 of the Civil Execution Act. |
| Article 24 (Acquisition of Share in Mutual-Benefit Association) |
| (1) | A mutual-benefit association may acquire a share held by a current or former member where any of the following is applicable: Provided, That the mutual-benefit association shall acquire such share in the case of subparagraph 1 or 3: |
| 1. | Where the mutual-benefit association intends to reduce its capital; |
| 2. | Where necessary for the mutual-benefit association to exercise its security right against the current or former member, as a rightful claimant; |
| 3. | Where a member who intends to withdraw requests the mutual-benefit association to acquire his or her share to recover his or her investment; |
| 4. | Where a fractional account occurs at the time the reserves are transferred to investments. |
| (2) | Upon acquiring a share under paragraph (1), a mutual-benefit association shall implement the following actions without delay: |
| 1. | Where the mutual-benefit association acquires a share on the ground set out in paragraph (1) 1: Procedures for reducing its capital; |
| 2. | Where the mutual-benefit association acquires a share on any of the grounds set out in paragraph (1) 2 through 4: Disposing of the share to another member or a person who wants to be its member. |
| (3) | No pledge right can be established against any share held by a member of a mutual-benefit association unless such share is furnished as collateral to a debt to the mutual-benefit association. |
| (4) | Upon acquiring a share under paragraph (1), a mutual-benefit association shall without delay pay an amount due to a current or former member. |
| (5) | A current or former member’s right to claim liquidation money as a mutual-benefit association acquires his or her share under paragraph (1) expires by prescription unless it is exercised for the five-year period beginning on the date on which the mutual-benefit association acquires such share. |
| Article 25 (Investigation and Inspection) |
| (1) | Where the Minister of the Defense Acquisition Program Administration determines to be necessary for such purposes as maintaining the financial solvency of a mutual-benefit association, the Minister may order the mutual-benefit association to report on, or submit materials about, its business activities, and may require a public official of the Administration to investigate the business conduct or accounting of the mutual-benefit association or to inspect any books or other documents. |
| (2) | Any public official who conducts an investigation or inspection under paragraph (1) shall carry a document verifying his or her authority and produce it to interested persons. |
CHAPTER V SUPPLEMENTARY PROVISIONS
| Article 26 (Delegation and Entrustment of Authority) |
| (1) | The Minister of National Defense may delegate part of his or her authority under this Act to the Minister of the Defense Acquisition Program Administration, as prescribed by Presidential Decree. |
| (2) | The Minister of the Defense Acquisition Program Administration may entrust part of his or her authority under this Act to the president of the Defense Agency for Technology and Quality or any government-funded institution prescribed by Presidential Decree in respect of the defense industry under Article 4 of the Act on the Management of Public Institutions. |
| (3) | The Minister of the Defense Acquisition Program Administration may entrust the following duties to any association or organization established under Article 19: |
| 2. | Investigations related to the establishment of the master plans; |
| 3. | Analyses of entities eligible for loans under Article 12. |
| Article 27 (Penalty Provisions) |
| (1) | Any person who receives a loan under Article 12 (1) or a subsidy under Article 13 (1) by fraud or other improper means, or uses a loan or subsidy for any purpose other than the intended purpose shall be punished by imprisonment with labor for a term not exceeding 10 years or by a fine not exceeding 10 times the amount of the loan or subsidy. |
| (2) | A person who transfers to, exchanges with, or lends to, any other person any property without the approval of the Minister of the Defense Acquisition Program Administration in violation of Article 13 (2) shall be punished by imprisonment with labor for a term not exceeding three years or by a fine not exceeding 30 million won. |
| Article 28 (Joint Penalty Provisions) |
Where the representative of a corporation, or an agent, servant, or other employee of a corporation or individual has committed an offense provided for in Article 27 with regard to the affairs of the corporation or individual, such corporation or individual shall be fined pursuant to the provisions of Article 27, in addition to the punishment of the offender: Provided, That the same shall not apply where such corporation or individual has not been negligent in giving due attention and supervision concerning the relevant duties to prevent such offence.
ADDENDA <Act No. 16929, Feb. 4, 2020>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Article 2 (General Transitional Measures)
| (1) | Any application, declaration and reports made or any other act done against administrative agencies under the previous Defense Acquisition Program Act before this Act enters into force shall be deemed to be made or done under the corresponding provisions of this Act. |
| (2) | Any act done to establish the mater plans to promote the defense industry and the business mediation system, to provide loans and subsidies, to establish associations or similar organizations, and to support export of defense materials or similar materials under the previous Defense Acquisition Program Act before this Act enters into force shall be deemed to be done under the corresponding provisions of this Act. |
Article 3 (Transitional Measures concerning Fines and Joint Penalty Provisions)
Provisions of the previous Defense Acquisition Program Act shall apply where the penalty provisions or joint penalty provisions are to be applied to any violation committed before this Act enters into force. Article 4 (Transitional Measures concerning Guarantee Services of Korea Defense Industry Association)
| (1) | The Korea Defense Industry Association designated as the guaranteeing agency under Article 43 of the Defense Acquisition Program Act as at the time this Act enters into force shall be deemed to be a mutual-benefit association under Article 20 until before a mutual-benefit association is established under Article 20. In such cases, it shall obtain the authorization of the Minister of the Defense Acquisition Program Administration for establishing a mutual-benefit association within six months after this Act enters into force under Article 20. |
| (2) | All property, rights and duties related to guarantee services provided by the Korea Defense Industry Association under Article 43 of the Defense Acquisition Program Act and the former part of paragraph (1) as at the time this Act enters into force shall be succeeded to by the mutual-benefit association established under Article 20. |
| (3) | Any act done against or by the Korea Defense Industry Association before a mutual-benefit association succeeds to all property, rights and duties under paragraph (2) in respect of guarantee services of the Korea Defense Industry Association shall be deemed to be an act done against or by the mutual-benefit association established under Article 20. |
| (4) | Any member who contributed to the guarantee fund of the Korea Defense Industry Association in respect of guarantee services of the Korea Defense Industry Association shall be deemed to be a member who contributes to the guarantee fund of the mutual-benefit association established under Article 20. |
| (5) | Any contribution to the guarantee fund of the Korea Defense Industry Association in respect of guarantee services of the Korea Defense Industry Association shall be deemed to be a contribution to the guarantee fund of the mutual-benefit association established under Article 20. |
Article 5 Omitted.
Article 6 (Relationship to Other Statutes or Regulations)
A citation of the previous Defense Acquisition Program Act or any provision thereof in other statutes or regulations as at the time this Act enters into force shall be deemed to be a citation of this Act or the corresponding provision of this Act, in lieu of the previous Defense Acquisition Program Act or any provision thereof, if such corresponding provision exists herein.
ADDENDA <Act No. 17163, Mar. 31, 2020>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 11 Omitted.