LOCAL PUBLIC ENTERPRISES ACT
Act No. 2101, Jan. 29, 1969
Amended by Act No. 3233, Jan. 4, 1980
Act No. 4371, May 31, 1991
Act No. 4517, Dec. 8, 1992
Act No. 5200, Dec. 30, 1996
Act No. 5708, Jan. 29, 1999
Act No. 6665, Mar. 25, 2002
Act No. 7260, Dec. 30, 2004
Act No. 7409, Mar. 24, 2005
Act No. 7428, Mar. 31, 2005
Act No. 7589, Jul. 13, 2005
Act No. 8028, Oct. 4, 2006
Act No. 8246, Jan. 19, 2007
Act No. 8423, May 11, 2007
Act No. 8450, May 17, 2007
Act No. 8852, Feb. 29, 2008
Act No. 9575, Apr. 1, 2009
Act No. 10990, Aug. 4, 2011
Act No. 11690, Mar. 23, 2013
Act No. 11852, jun. 4, 2013
Act No. 12507, Mar. 24, 2014
Act No. 12727, jun. 3, 2014
Act No. 12844, Nov. 19, 2014
Act No. 13568, Dec. 15, 2015
Act No. 13633, Dec. 29, 2015
Act No. 14839, Jul. 26, 2017
Act No. 14917, Oct. 24, 2017
Act No. 16664, Dec. 3, 2019
Act No. 17387, jun. 9, 2020
Act No. 17522, Oct. 20, 2020
CHAPTER I GENERAL PROVISIONS
The purpose of this Act is to prescribe matters necessary to operate enterprises established and managed directly or through the establishment of corporations by local governments in order to rationalize their management, thereby contributing to the development of local autonomy and the promotion of the welfare for their residents.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 2 (Scope of Application) |
| (1) | This Act shall apply to the following business (including other business incidental to them; hereinafter the same shall apply) established and managed by local governments pursuant to Article 5, which is higher than the standards prescribed by Presidential Decree (hereinafter referred to as "local government-directly operated enterprises") and other business managed by local government-invested public corporations and local public agencies established under Chapters III and IV of this Act, respectively: <Amended on Dec. 3, 2019> |
| 1. | The water supply business (excluding the village tap water business); |
| 2. | The industrial water supply business; |
| 3. | The tramway business (including the urban railway business); |
| 4. | The automobile transportation business; |
| 5. | The local road business (limited to the toll road business); |
| 6. | The sewerage business; |
| 8. | The land development business; |
| 9. | Acceptance of the entrustment of management, etc. of housing (including public welfare facilities prescribed by Presidential Decree), land, or buildings for official or public purposes. |
| (2) | Local governments may apply this Act to any of the following business as prescribed by municipal ordinances if such projects are managed by the local government-directly operated enterprises, local government-invested public corporations, or local public agencies, and not less than 50 percent of their operating costs are met by their ordinary revenues: |
| 1. | Business which is considered to be hard for private enterprisers to manage, but is believed to contribute to promoting the welfare of residents, facilitating the local economy, and precipitating the local development; |
| 2. | Business among the businesses falling under any subparagraph of paragraph (1), which falls short of the standards prescribed by Presidential Decree pursuant to that paragraph with the exception of its subparagraphs; |
| 4. | The tourism business (excluding the travel business and casino business) under the Tourism Promotion Act. |
| (3) | The heads of local governments may apply Article 22 mutatis mutandis to business among the businesses falling under any subparagraph of paragraph (1), which falls short of the standards prescribed by Presidential Decree pursuant to that paragraph with the exception of its subparagraphs. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 3 (Basic Principle of Management) |
| (1) | Local government-directly operated enterprises, local government-invested public corporations, and public agencies (hereinafter referred to as the "local public enterprises") shall be managed and operated in such a way as to increase both the economic efficiency of enterprises and the public welfare at all times. |
| (2) | Local governments shall endeavor not to lead the private sector of the economy to contract, to impede the fair and free economic order and to damage the environment when they launch, set up, or manage their local public enterprises. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 4 (Enactment and Enforcement of Statutes or Regulations Governing Local Public Enterprises) |
The statutes, municipal ordinances, municipal rules, and other regulations concerning local public enterprises shall be governed by the basic principles referred to in Article 3. [This Article Wholly Amended on Aug. 4, 2011]
CHAPTER II LOCAL GOVERNMENT-DIRECTLY OPERATED ENTERPRISES
SECTION 1 General Principles
| Article 5 (Establishment of Local Government-Directly Operated Enterprises) |
When a local government intends to establish and manage local government-directly operated enterprises, it shall prescribe basic matters concerning their establishment and management by its municipal ordinance.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 6 (Application of Local Autonomy Act) |
A local government-directly operated enterprise shall be governed by the Local Autonomy Act, the Local Finance Act, and other related statutes or regulations, except as prescribed by this Act. [This Article Wholly Amended on Aug. 4, 2011]
SECTION 2 Organization Structure
| (1) | A local government shall appoint a manager for each business to manage and execute the business affairs of a local government-directly operated enterprise: Provided, That the local government may appoint one manager for two or more enterprises which are identical to or similar to one another as prescribed by municipal ordinances. |
| (2) | The head of a local government shall appoint a manager from among its public officials who have abundant experience in and knowledge of the management of a local government-directly operated enterprise, as prescribed by Presidential Decree, and his or her tenure of office may be fixed. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 8 (Authority of Manager) |
The manager shall control and execute the business affairs of a local government-directly operated enterprise except those matters specified in the following subparagraphs: Provided, That This shall not apply, except as otherwise provided in this Act:
| 1. | The presentation of the budget plan to the local council; |
| 2. | The presentation of the settlement of accounts to the local council for approval; |
| 3. | The presentation of bills to the local council which require a resolution of the local council; |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 9 (Obligations of Manager) |
The primary tasks of which the manager is in charge pursuant to Article 8 are as follows: | 1. | The preparation of the drafts of municipal ordinances and rules concerning a local government-directly operated enterprise and the presentation thereof to the head of a local government; |
| 2. | The preparation of an operational plan and budget plan for a local government-directly operated enterprise and the presentation thereof to the head of a local government; |
| 3. | The preparation of the settlement of accounts and the presentation thereof to the head of a local government; |
| 4. | The acquisition, management, and disposal of assets of a local government-directly operated enterprise; |
| 5. | The conclusion of contracts; |
| 6. | The collection of charges, commissions or other fees; |
| 7. | Temporary borrowing of money in the case of a shortage of cash for expenditures within the limits of the allocated budget, and other matters concerning execution of budgets; |
| 8. | Receipts and disbursements, and other matters concerning the accounting; |
| 9. | The custody of documentary evidence and official documents; |
| 10. | Matters concerning organization of the local government-directly operated enterprise, matters concerning its personnel, and other matters belonging to authority of the manager under other statutes or regulations, or municipal ordinance and rules of the local government concerned. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 9-2 (Formulation of Medium- to Long-Term Business Management Plans of Local Government-Directly Operated Enterprises) |
| (1) | The manager of a local government-directly operated enterprise meeting standards prescribed by Presidential Decree, in consideration of the assets, liabilities, etc. thereof shall formulate a medium- to long-term business management plan spanning five fiscal years including the relevant year (hereinafter referred to as "medium- to long-term business management plan") each year, and submit it to the head of the local government and the local council within a deadline prescribed by Presidential Decree. |
| (2) | A medium- to long-term business management plan formulated under paragraph (1) shall include the following matters: |
| 1. | Medium- to long-term management objectives for at least the next five fiscal years; |
| 2. | Business plans and financial management plans; |
| 3. | A business management plan including prospect of an increase or decrease in operating deficit, grounds therefor, plans for improvement, and plans for rationalization of charges; |
| 4. | Evaluation and analysis of changes in the current medium- to long-term business management plan, compared with that of the previous year, causes thereof, management plans, etc.; |
| 5. | Other matters prescribed by Presidential Decree, which are related to the management of the local government-directly operated enterprise. |
[This Article Newly Inserted on Dec. 15, 2015]
| Article 10 (Relationship between Manager and Head of Local Government) |
The head of a local government shall direct and supervise the manager concerning the following matters:
| 1. | Master plan for the management of a local government-directly operated enterprise; |
| 2. | Matters concerning performance of the business affairs of a local government-directly operated enterprise, which are deemed to exert great influence on the welfare of the residents of the local government; |
| 3. | Matters concerning adjustment of both business affairs of a local government-directly operated enterprise and other affairs. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 10-2 (Employees of Enterprise) |
If necessary for specialized management of a local government-directly operated enterprise, posts of expert officials may be established to be selected among public officials who belong to a local government-directly operated enterprise as prescribed by the Local Public Officials Act. [This Article Wholly Amended on Aug. 4, 2011]
| Article 11 (Enterprise Management Regulations) |
A manager may establish enterprise management regulations concerning business affairs of a local government-directly operated enterprise, unless said enterprise does not violate statutes, regulations, or municipal ordinances and municipal rules.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 12 (Delegation of Authority) |
| (1) | If a manager is unable to perform his or her duties due to unavoidable circumstances, high-echelon public officials working for a local government-directly operated enterprise may act on behalf of said manager as prescribed by rule of a relevant local government. |
| (2) | A manager may delegate or entrust some of his or her authority to public officials working for a local government-directly operated enterprise or to the manager of a public agency operated by a relevant local government or to the manager of any other local government-directly managed enterprise operated by the local government: Provided, That if said authority is entrusted to the manager of a public agency operated by the local government concerned or to the manager of any local government-directly managed enterprise operated by the local government, prior approval shall be obtained from the head of the local government. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 13 (Special Accounting) |
The local government shall establish special accounts of each business falling under Article 2: Provided, That if only one manager is appointed for more than two businesses pursuant to the proviso of Article 7 (1), it may establish one special accounts for more than two businesses. [This Article Wholly Amended on Aug. 4, 2011]
| Article 14 (Autonomous Accounting System) |
| (1) | In the special accounts of a local government-directly operated enterprise, revenues of the enterprise concerned shall cover expenses for the enterprise: Provided, That the following expenses for local government-directly operated enterprises, which are prescribed by Presidential Decree, shall be paid out of general accounts of the local government concerned or of special accounts under which contributions are disbursed or other methods are used: |
| 1. | Expenses which are not suitable to be covered by the revenue of a local government-directly operated enterprise in view of the nature of said expenses; |
| 2. | Expenses which, in an objective view, are deemed difficult to be covered only with the revenue of a local government-directly operated enterprise as derived from the operation of said enterprise, considering the nature of the local government-directly operated enterprise concerned. |
| (2) | Special accounts of a local government-directly operated enterprise may receive financial support from general accounts or special accounts of the local government concerned within the limits of the allocated budget, if necessary due to natural disaster, restoration work, or other extraordinary circumstances. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 15 (Business Year) |
The business year of a local government-directly operated enterprise shall correspond to the fiscal year of general accounts of the local government.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 16 (Principles of Accounting) |
| (1) | The special accounts of a local government-directly operated enterprise shall record increases, decreases, or changes in assets (hereinafter referred to as "accounting transactions"), as they arise, to clearly reflect the management performance and the financial status. |
| (2) | Each accounting transaction of a local government-directly operated enterprise shall be assigned to a specific fiscal year, as prescribed by Presidential Decree. |
| (3) | Special accounts of a local government-directly operated enterprise shall include balance sheet accounts which include assets, liabilities, and capital, and income statement accounts which include revenues and expenses. |
| (4) | Details of assets, liabilities and capital under paragraph (3) shall be clearly accounted for as prescribed by Presidential Decree. |
| (5) | In special accounts of a local government-directly operated enterprise, an auxiliary account prescribed by Presidential Decree may be established. |
[This Article Wholly Amended on Aug. 4, 2011]
| (1) | General accounts or special accounts of a local government may make necessary investments in special accounts of a local government-directly operated enterprise. |
| (2) | Special accounts of a local government-directly operated enterprise which have received the investments pursuant to paragraph (1) may contribute some of the profits earned in the previous year to the account which made the investment within the limit of the budget in consideration of the status of its profits. |
| (3) | Where special grounds exist, such as the restoration of disasters, the construction of infrastructural facilities, and other reasons prescribed by Presidential Decree, part of the profits of the preceding year in the budget may be transferred from the special accounts of any local government-directly operated enterprise that runs the business specified in Article 2 (1) 7 or 8 to the general accounts of the relevant local government. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 18 (Long-Term Loans) |
| (1) | General accounts or special accounts of a local government may provide a long-term loan to the special accounts of a local government-directly operated enterprise according to the budget. |
| (2) | If special accounts of a local government-directly operated enterprise have obtained a long-term loan referred to in paragraph (1), the relevant enterprise shall pay reasonable interest to the account under which the enterprise obtained the loan. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 19 (Municipal Bonds) |
| (1) | A local government may issue municipal bonds, the issuance expenses of which shall be borne by special accounts of a relevant local government-directly operated enterprises in any of the following cases: |
| 1. | Where it is necessary to appropriate funds to the current working capital; |
| 2. | Where it is necessary to appropriate funds to the revolving fund; |
| 3. | Where it is necessary to appropriate funds to construction or improvement expenses or to use funds for purchasing similar business. |
| (2) | The Special Metropolitan City, a Metropolitan City, a Special Self-Governing City, Dos, and a Special Self-Governing Province (hereinafter referred to as "City/Do") or a large city other than the Special Metropolitan City, Metropolitan City, or Special Self-Governing City with a population of at least one million (hereinafter referred to as "large city") may issue municipal development bonds after obtaining approval from a local council in order to secure finances for investment in businesses prescribed in Article 2 or to raise funds for regional development, notwithstanding paragraph (1). <Amended on Jun. 4, 2013> |
| (3) | Persons designated by municipal ordinances from among the following persons shall purchase the municipal development bonds: |
| 1. | Persons who obtain a license, permission, or authorization from a local government or who apply for or report registration to a local government; |
| 2. | Persons who conclude a contract for construction works with a local government or with a corporation to which a local government has invested or contributed to the whole amount of equity capital; |
| 3. | Persons who conclude a contract for service or for goods purchase, repair or manufacturing with a local government or with a corporation for which a local government has invested or contributed the whole amount of equity capital. |
| (4) | Procedures for purchasing municipal development bonds, the amount by purchase object, methods of registering bonds, interest rates, redemption and other necessary matters shall be prescribed by municipal ordinance of each City/Do or large city. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 20 (Temporary Loans) |
| (1) | When a shortage of cash occurs for expenditures within the allocated budget, a manager may obtain temporary loans which shall be covered by the special accounts of a local government-directly operated enterprise concerned. |
| (2) | The temporary loans under paragraph (1) shall be repaid within the pertinent year. |
[This Article Wholly Amended on Aug. 4, 2011]
A local government-directly operated enterprise may receive in advance part or all of the funds from those who intend to purchase property created by such an enterprise, use facilities of such enterprise, or receive services provided by such enterprise, as prescribed by Presidential Decree.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 21 (Calculation of Cost) |
Special accounts of a local government-directly operated enterprise shall be set up to calculate the cost of each function and of each performance, as prescribed by Presidential Decree, in order to provide a basis for the efficient promotion of business, the management of business, and the determination of the fees.
[This Article Wholly Amended on Aug. 4, 2011]
| (1) | A local government may collect fees for the performance from a local government-directly operated enterprise, as prescribed by its municipal ordinance. |
| (2) | Fees under paragraph (1) shall be reasonable, maintain equity between regions, and be determined in such a way as to compensate for the costs of the performance provided by such enterprise and to maintain continuity of such an enterprise. |
| (3) | The method of calculating fees under paragraph (1) shall be prescribed by Presidential Decree, taking into account operating costs, capital costs, etc. |
| (4) | If an entity that shall pay fees under paragraph (1) fails to do so by the deadline for payment, the competent local government may collect the fees after adding arrears thereto within the extent of 3/100 of the fees to be paid, as stipulated by a relevant municipal ordinance. <Newly Inserted on Dec. 3, 2019> |
| (5) | Fees and arrears shall be collected in the same manner as local taxes and delinquent local taxes are collected. <Amended on Dec. 3, 2019> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 23 (Preparation of Budget) |
| (1) | A local government-directly operated enterprise shall calculate expenses in accordance with reasonable cost standards and appropriate them in the budget. |
| (2) | The revenues and expenditures of the budget shall be reasonably appropriated, in consideration of the financial status of a relevant enterprise during the corresponding year. |
| (3) | The head of each local government shall prepare guiding principles for the preparation of the budget of a local government-directly operated enterprise for each business year pursuant to standards determined by the Minister of the Interior and Safety, separately from guiding principles for the preparation of the budget of the general account and other special accounts of the local government, and shall notify the local government-directly operated enterprise thereof by no later than July 31 of the preceding year. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 24 (Classification of Budgets) |
Budgets of local government-directly operated enterprises shall be classified in accordance with the operational plans and functions of the business thereof.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 25 (Details of Budgets) |
Details of the budget of a local government-directly operated enterprise shall consist of the following prepared in accordance with the operational plans of a relevant local government-directly operated enterprise:
| 1. | An estimate of the revenue and expenditure concerning income and expenses for the pertinent business year (hereinafter referred to as "business budget"); |
| 2. | An estimate concerning the capital revenue and expenditure concerning the newly increased or decreased assets, liabilities and capital for the pertinent business year (hereinafter referred to as "capital budget"); |
| 3. | Operational plans for managing funds related to the business budget and capital budget. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 26 (Submission of Budget Bill) |
| (1) | The head of a local government shall adjust and submit a budget bill prepared by the manager of a local government-directly operated enterprise to a local council prior to the commencement of the business year and then shall obtain approval from its local council. |
| (2) | The head of a local government shall consult the manager, when revising the budget bill prepared by said manager. |
| (3) | When the head of a local government submits the budget for a local government-directly operated enterprise to the local council, he or she shall submit the operational plan of the enterprise accompanied by other documents prescribed by Presidential Decree. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 27 (Expenditures to Earn Revenue) |
Where expansion of business leads to a shortage of expenses, a manager may use the amount equivalent to the increased revenue resulting from said expansion to cover direct expenses of the business activities related to the added revenue. In such cases, the manager shall report such spending to the head of a local government and a local council.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 28 (Execution of Budgets) |
| (1) | A manager shall execute his or her duties in accordance with the budgets for the pertinent year. |
| (2) | Expenditures directly related to the disbursement of funds, such as purchase of the inventory assets and contracts for construction, shall be executed in accordance with the operational plans for funds prepared on the basis of the business budget and the capital budget for the pertinent year. |
| (3) | When budgets are executed under paragraph (2), an account for control of budgets shall be established, as prescribed by Presidential Decree. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 29 (Diversion of Budgets) |
Where necessary for the execution of budgets, a manager may divert expenses specified in each detailed item and sub-item of the expenditure budgets for other uses, except those expenses specified in the items and sub-items prescribed by the general provisions of said budgets.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 30 (Carrying Forward of Budgets) |
| (1) | The expenditure budget for each business year shall not be carried over to the following year for expenditure: Provided, That the amount of the following costs of the expenditure budget may be carried over to the following fiscal year for expenditure: <Amended on Aug. 4, 2011> |
| 1. | Costs of which approval is obtained from the head of a relevant local government from among the costs necessary to construct or renovate the facilities of local government directly-operated enterprises, for which an encumbrance was not created during the relevant year; |
| 2. | Costs which are not expended during the relevant year on inevitable grounds although an encumbrance was created during the relevant year and other incidental costs for the expenditure for which an encumbrance was not created during the relevant year. |
| (2) | Deleted. <Mar. 25, 2002> |
| (3) | Deleted. <Mar. 25, 2002> |
| (4) | The manager may carry forward and use the amount of the expenses not used in the pertinent year out of the annual required expenses of the continuing expenditure in due order until the year when the business activities are completed. <Amended on Aug. 4, 2011> |
| (5) | Where budget is carried forward under paragraphs (1) and (4), the amount of money for each item, which is carried forward, shall be considered to have been allocated as the budget carried forward. <Amended on Aug. 4, 2011> |
[Title Amended on Aug. 4, 2011]
The amount of money deemed adequate to cover unpredictable spending or other spending in the special account of any local government-directly operated enterprise shall be appropriate as reserve in the budget.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 32 (Special Cases concerning Disbursement of Expenses not Requiring Cash) |
| (1) | A manager may appropriate expenses not requiring cash in the budget as they are incurred, notwithstanding Article 23 (1). |
| (2) | The scope of expenses not requiring cash referred to in paragraph (1) shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 33 (Receipts, Disbursements, and Custody of Cash) |
| (1) | A manager shall handle receipts and disbursements regarding the business affairs of a local government-directly operated enterprise: Provided, That if it is necessary for the management and execution of the business affairs of a local government-directly operated enterprise, a manager may have a financial company, etc. designated thereby with approval from the head of the local government concerned (hereafter referred to as "designated financial company" in this Article), which has been chosen from among the financial companies, etc. which are banks under the Banking Act or other institutions performing financial affairs pursuant to other statutes as prescribed by Presidential Decree (hereinafter referred to as "financial companies, etc."), handle part of the receipts and the disbursements of cash. |
| (2) | A manager shall take the cash related to a local government-directly operated enterprise into the custody of the designated financial company: Provided, That the manager may directly keep the amount of money which does not exceed the limit determined by the head of a local government, and may deposit extra money in other financial companies, etc. in order to increase interest revenues. |
| (3) | When the head of a local government has approved designation of the financial companies, etc. pursuant to the proviso of paragraph (1), he or she shall give public notice thereof. |
| (4) | A manager may inspect the actual conditions of receipts and disbursements of cash, which are handled by a designated financial company, and may require the designated financial company to take corrective measures if necessary, as prescribed by Presidential Decree. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 34 (Overall Control of Account) |
| (1) | A manager shall have the general control and supervision of the affairs related to the account of a local government-directly operated enterprise. |
| (2) | If it is necessary to handle the affairs related to the account, a manager may appoint a cashier, a cash handler of the enterprise, or other public official in charge of accounting as prescribed by Presidential Decree. |
| (3) | A manager shall appoint a public official in charge of accounting under paragraph (2) from among the public officials working for the local government-directly operated enterprise concerned. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 34-2 (Support for Development and Operation of Budget and Accounting Information Processing System) |
For the efficient management of affairs related to the budget and accounting of local government-directly operated enterprises, the Minister of the Interior and Safety may support the development and operation of a budget and accounting information processing system. <Amended on Jul. 26, 2017>
[This Article Newly Inserted on Dec. 15, 2015]
| Article 35 (Settlement of Accounts) |
| (1) | A manager shall close all books and settle the accounts as at the end of each business year. |
| (2) | A manager shall prepare a settlement of accounts of a local government-directly operated enterprise within two months after the end of each business year, and shall submit to the head of the local government the statement accompanied by a report on the business performance in the pertinent year and other documents prescribed by Presidential Decree. |
| (3) | The head of a local government shall submit the settlement of accounts and the report on the business performance and other documents under paragraph (2) as well as an auditor’s report prepared by a certified public accountant to the local council in the following year for its approval. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 36 (Report on Condition of Accounting) |
A manager shall prepare a trial balance sheet, a report on the operation of funds, and documents necessary for clearly showing the condition of the accounting for a relevant enterprise as at the end of each month, and shall submit them to the head of the local government by not later than the 20th day of the following month.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 37 (Accounting of Gains) |
| (1) | Where any gains are incurred in the pertinent business year and where any deficit has been carried over from the preceding business year, a local government-directly operated enterprise shall use the gains to make up for the deficit and reserve any balance accruing after making up for said deficit, an amount equivalent to at least 1/10 of the balance, as profit reserve, as prescribed by Presidential Decree, and it may deposit the remainder of the balance as the sinking fund reserve or the reserve fund for the improvement of construction as prescribed by municipal ordinances, or use it for the payment and the transferred amount under Article 17 (2) and (3). |
| (2) | No profit reserve under paragraph (1) shall be used for any purpose other than compensation for deficit. |
| (3) | No sinking fund reserve under paragraph (1) shall be used for any purpose other than the redemption of municipal bonds. |
| (4) | No reserve fund for the improvement of construction under paragraph (1) shall be used for any purpose other than the improvement of construction. |
| (5) | The capital surplus of each business year shall be reserved for each item showing the details thereof for each source. |
| (6) | No capital surplus under paragraph (5) shall be disposed of, except as prescribed by Presidential Decree. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 38 (Accounting of Losses) |
Where any loss has been incurred in the pertinent business year and where any gains have been carried over from the preceding business year, a local government-directly operated enterprise shall use the gains to make up for the deficit, and shall carry over any remaining deficit as prescribed by Presidential Decree.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 39 (Revolving Fund) |
| (1) | If necessary to efficiently operate an enterprise, a local government-directly operated enterprise may establish a revolving fund, as prescribed by municipal ordinances. |
| (2) | The revolving fund under paragraph (1) shall be established in accordance with the budget in the special account of the local government-directly operated enterprise concerned. |
| (3) | Instead of being operated in accordance with the business budget and capital budget, the revolving fund under paragraph (1) shall be operated as prescribed by municipal ordinances. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 40 (Acquisition and Disposal of Important Assets) |
| (1) | The acquisition and disposal of important assets prescribed by Presidential Decree among the assets of a local government-directly operated enterprise shall be appropriated in the budget and require a resolution by a local council. <Amended on Jun. 4, 2013> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 41 (Management of Enterprise Assets) |
Public assets and goods held and managed by a local government-directly operated enterprise as well as the credits, securities, and cash held by the relevant enterprise shall be deemed the assets of such an enterprise, and matters regarding the management and operation thereof shall be prescribed by Presidential Decree.
[This Article Wholly Amended on Aug. 4, 2011]
When a manager enters into a contract for sale, purchase, borrowing, lending, or other contracts, he or she shall give notice thereof to put it up for ordinary competition, as prescribed by Presidential Decree: Provided, That he or she may adopt designated competition or a negotiated contract as prescribed by Presidential Decree.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 43 (Provisions on Delegation) |
Necessary matters regarding finance of a local government-directly operated enterprise, other than those prescribed in this Section, shall be prescribed by Presidential Decree.
[This Article Wholly Amended on Aug. 4, 2011]
SECTION 4 Special Cases concerning Association of Local Governments
| Article 44 (Special Cases concerning Association of Local Governments) |
Where necessary to deal with affairs concerning the management of a local government-directly operated enterprise in wider regions, a local government may determine regulations to organize an association of local governments (hereinafter referred to as "association") together with other local governments.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 45 (Special Provisions concerning Organization) |
| (1) | Notwithstanding Article 7 (1), no manager shall be appointed for a local government-directly operated enterprise and the authority of a manager shall be exercised by the head of an association. |
| (2) | The head of an association shall be jointly appointed by the heads of the relevant local governments and Article 7 (2) shall be applied mutatis mutandis to the qualifications and the term of office of the head of the association. |
[This Article Wholly Amended on Aug. 4, 2011]
SECTION 5 Supplementary Provisions
| Article 46 (Publication of Status of Business Operation) |
| (1) | A manager shall submit documents concerning the business operation of a local government-directly operated enterprise to the head of a local government at least twice each business year, as prescribed by municipal ordinances. In such cases, the head of the local government shall give public notice thereof without delay. |
| (2) | A manager shall publicly notify residents of the settlement of accounts, the financial statements, the annual business goals, the outcomes of business performance evaluation, and other important matters concerning the business management, as prescribed by Presidential Decree. |
| (3) | The Minister of the Interior and Safety may standardize significant matters publicly notified by each local government-directly operated enterprise pursuant to paragraph (2), and integrate and disclose such matters (hereafter referred to as "integrated disclosure" in this Article). <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (4) | The Minister of the Interior and Safety may request local government-directly operated enterprises to submit materials necessary for integrated disclosure, and the local government-directly operated enterprises so requested shall comply therewith, except in extenuating circumstances. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (5) | Where any local government-directly operated enterprise fails to faithfully perform the duty of publicly notifying its business operation under paragraph (2) and the duty of submitting materials for integrated disclosure prescribed in paragraph (4), or publicly notifies any false information or submits false materials, the Minister of the Interior and Safety may notify the head of the relevant local government thereof and demand that the false information, etc. be corrected. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (6) | Matters necessary for the standards and methods, etc. of integrated disclosure shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 47 (Adjustment of Business) |
| (1) | Where local governments fail to reach an agreement on the management of a local government-directly operated enterprise and thus make a request for mediation, the Special Metropolitan City Mayor, Metropolitan City Mayor or Do Governor shall mediate differences between Sis/Guns/autonomous Gus; the Minister of the Interior and Safety shall mediate differences between Cities/Dos. <Amended on Mar. 23, 2013; Jun. 4, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (2) | Where the Minister of the Interior and Safety intends to mediate differences pursuant to paragraph (1), he or she shall hold a consultation with the competent Minister. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 48 (Obligation for Compensation) |
| (1) | If the manager, his or her agent or the person taking partial charge of the manager’s duties causes any damage or loss to any local government, either deliberately or by gross negligence, in collection of revenues, performance of activities such as conclusion of contracts which is accompanied by expenditures, management of goods, or the disbursement of expenditure, he or she shall be obliged to compensate for such damage or loss. |
| (2) | If any cash or any goods in the custody of the manager, his or her agent or the person taking partial charge of the manager’s duties are missing or damaged due to his or her failure to manage the cash or the goods with the care of a good manager, he or she shall be held responsible for compensating for such missing or damaged cash or goods. |
[This Article Wholly Amended on Aug. 4, 2011]
CHAPTER III LOCAL GOVERNMENT-INVESTED PUBLIC CORPORATION
| Article 49 (Establishment) |
| (1) | If any need arises to efficiently conduct a business prescribed in Article 2, a local government may establish a local government-invested public corporation (hereinafter referred to as "public corporation"). In such cases, before establishing a public corporation, the Special Metropolitan City Mayor, a Metropolitan City Mayor, a Special Self-Governing City Mayor, a Do Governor and a Special Self-Governing Province Governor (hereinafter referred to as the "Mayor/Do Governor") shall hold a consultation with the Minister of the Interior and Safety; the head of a Si/Gun/Gu (referring to the head of an autonomous Gu) shall hold a consultation with the competent Special Metropolitan City Mayor, Metropolitan City Mayor, or Do Governor. <Amended on Jun. 4, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (2) | When the local government intends to establish a public corporation, it shall prescribe basic matters concerning the establishment, the business affairs, and operation in its municipal ordinance. |
| (3) | Where a local government establishes a public corporation, it shall, in advance, examine whether the public corporation is feasible as a local public enterprise, such as the public corporation’s influence on the welfare of residents and the local economy, business prospect, etc. as prescribed by Presidential Decree, and disclose outcomes of an examination to the public. <Amended on Jun. 4, 2013> |
| (4) | The examination of feasibility under paragraph (3) shall be conducted by entrusting it to an institution designated and publicly notified by the Minister of the Interior and Safety, which is a specialized institution satisfying the requirements prescribed by Presidential Decree, such as professional human resources and examination and research capability. <Newly Inserted on Dec. 29, 2015; Jul. 26, 2017> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 50 (Joint Establishment) |
| (1) | A local government may determine common regulations to jointly establish a public corporation with other local governments. <Amended on Aug. 4, 2011> |
| (2) | Deleted. <Mar. 29, 1999> |
| (3) | The regulations referred to in paragraph (1) shall include each of the following matters: <Amended on Aug. 4, 2011> |
| 1. | The name of the public corporation; |
| 2. | The location of its offices; |
| 3. | The name of the local government establishing the public corporation; |
| 4. | The details of its business activities; |
| 5. | Common matters to be handled; |
| 6. | The method of electing the representative of the decision making-organization; |
| 7. | The methods of investment; |
| 8. | Other necessary matters. |
[This Article Newly Inserted on Jan. 4, 1980]
[Title Amended on Aug. 4, 2011]
| Article 51 (Corporate Personality) |
A public corporation shall be a juristic person.
[This Article Wholly Amended on Aug. 4, 2011]
| (1) | The location of the principal office of a public corporation shall be determined by its articles of incorporation. |
| (2) | A public corporation may establish its local offices or branch offices with the approval of the head of the local government. |
[This Article Wholly Amended on Aug. 4, 2011]
| (1) | The whole capital stock of the public corporation shall be formed by the investment of the local government either in cash or in kind. |
| (2) | Notwithstanding paragraph (1), where necessary for the operation of the public corporation, any person (including any foreigner and any foreign corporation), other than a local government, may be allowed to make an investment not exceeding 1/2 of its capital stock in the public corporation. The foregoing shall also apply to an increased capital. |
| (3) | In cases falling under paragraph (2), the capital stock of the public corporation shall be divided and used for the issuance of shares. In such cases, the type of the shares issued, the par value of a share, the issuance date of the shares, the total number of the issued shares, the payment period of the share subscription, and the method of payment shall be determined by municipal ordinances. |
| (4) | Where a public corporation receives investment from other public corporations established by a relevant local government pursuant to paragraph (2) or where a public corporation makes an investment in other corporations established by the relevant local government pursuant to Article 54, the investment shall be deemed made by a relevant local government. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 54 (Investment in other Corporations) |
| (1) | With the approval of the head of a local government, a public corporation may make an investment in a corporation other than the local government in order to efficiently carry on a business relating to its business. <Amended on Jun. 4, 2013> |
| (2) | In order to make an investment under paragraph (1), the head of a public corporation shall examine the necessity and feasibility of investment in accordance with the methods and procedures prescribed by Presidential Decree, make a report to the head of local government, and obtain a resolution from the council. <Newly Inserted on Jun. 4, 2013> |
| (3) | The limit on investment under paragraph (1) shall be prescribed by Presidential Decree. <Newly Inserted on Jun. 4, 2013> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 55 (Exercise of Shareholder’s Rights of Local Government) |
The shareholder’s rights for the shares held by a local government shall be exercised by the head of the local government or by a public official who belongs to the local government designated by the head of the local government.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 56 (Articles of Incorporation) |
| (1) | The articles of incorporation of a public corporation shall include the following matters: |
| 3. | Location of its offices; |
| 4. | Matters concerning its business activities; |
| 5. | Matters concerning the executive officers and employees; |
| 6. | Matters concerning the board of directors; |
| 7. | Matters concerning the financial affairs and accounting; |
| 8. | Matters concerning the publication; |
| 9. | Matters concerning its capital stock; |
| 10. | Matters concerning the issuance of bonds; |
| 11. | Matters concerning the amendments to its article of incorporation; |
| 12. | Other matters prescribed by Presidential Decree. |
| (2) | The articles of incorporation of a public corporation prescribed in Article 53 (2) shall include the following matters, in addition to the matters indicated in any subparagraphs of paragraph (1): |
| 1. | Matters concerning the issuance of shares; |
| 2. | Matters concerning the general shareholders’ meeting. |
| (3) | If the articles of incorporation is to be amended, the authorization from the head of a local government shall be obtained: Provided, That in the case of a public corporation established under Article 50 (1), any amendment to the articles of incorporation shall be dealt with in accordance with an arrangement concluded between the local governments. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 57 (Registration) |
| (1) | A public corporation shall be established by effecting the registration of its incorporation in the place in which its head office is located. |
| (2) | The registration of incorporation of a public corporation and other matters concerning its registration shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 57-2 (Dissolution) |
A public corporation shall be dissolved if it falls under any of the following: <Amended on Jul. 26, 2017>
| 2. | Demand for dissolution made by the Minister of the Interior and Safety under Article 78-3. |
[This Article Newly Inserted on Dec. 29, 2015]
SECTION 2 Executive Officers and Employees
| Article 58 (Appointment and Dismissal of Executive Officers) |
| (1) | The executive officers of a public corporation shall be directors (classified into permanent directors and non-permanent directors) and auditors, including the president, and the number of such executive officers shall be prescribed by the articles of incorporation. |
| (2) | The president and auditors shall be appointed or dismissed by the head of a local government, from among persons who have professional knowledge and abilities with regard to the management of local public enterprises, as prescribed by Presidential Decree: Provided, That in cases of a public corporation established under Article 50 (1), the appointment and dismissal of the president and auditors shall be dealt with in accordance with an agreement concluded between local governments. |
| (3) | In appointing a president and an auditor pursuant to paragraph (2) (excluding a person who is to be appointed as an auditor ipso facto, as prescribed by municipal ordinances or the articles of incorporation), the head of a local government shall appoint a person from among those recommended by the executive officer recommendation committee prescribed by Presidential Decree (hereinafter referred to as the "executive officer recommendation committee" in this Article): Provided, That where the head of the local government intends to reappoint the president pursuant to paragraph (4), he or she shall undergo the deliberation of the executive officer recommendation committee. |
| (4) | The head of a local government may dismiss the president during his or her term, depending on the outcomes of his or her management, or reappoint him or her, notwithstanding the completion of his or her term. In such cases, the head of the local government shall take the following matters into consideration: <Amended on Jun. 4, 2013> |
| 1. | Compliance with a performance-based contract concluded under Article 58-2; |
| 2. | Results of management evaluation conducted under Article 78 (1) and (2); |
| 3. | Results of evaluation of the president’s performance of duties prescribed in Article 78 (4). |
| (5) | The head of a local government may dismiss the president during the president's term of office in any of the following cases: <Newly Inserted on Dec. 15, 2015> |
| 1. | Where the president fails to comply with an order to improve management issued under Article 78-2 (3) without any justifiable reason; |
| 2. | Other cases where the president violates any related statutes or regulations seriously and obviously in the course of performing his or her duties. |
| (6) | Matters necessary for establishing criteria, etc. for reappointment or dismissal of the president prescribed in paragraph (4) shall be prescribed by Presidential Decree. <Amended on Dec. 15, 2015> |
| (7) | Directors (excluding a person who is to be appointed as a director ipso facto, as prescribed by municipal ordinances or the articles of incorporation) shall be appointed from among those recommended by the executive officer recommendation committee, but permanent directors are appointed or dismissed by the president and non-permanent directors by the head of the local government. In such cases, matters necessary for the appointment and dismissal of directors shall be prescribed by Presidential Decree. <Amended on Dec. 15, 2015> |
| (8) | Where the executive officer recommendation committee intends to recommend a candidate for executive officers, it shall publicly recruit candidates, as prescribed by Presidential Decree. <Amended on Dec. 15, 2015> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 58-2 (Performance-Based Contracts with President) |
| (1) | Where the head of a local government appoints the president, he or she shall conclude a performance-based contract with the president. |
| (2) | The performance-based contract with the president under paragraph (1) shall include the management target to be achieved by the president during his or her term of office, compensation based on performance, and responsibilities. |
| (3) | Matters necessary for the methods of and procedures, etc. for concluding a performance-based contract under paragraphs (1) and (2) shall be prescribed by Ordinance of the Ministry of the Interior and Safety. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 59 (Term of Office and Duties) |
| (1) | The term of office for the president, directors, and auditors of the public corporation shall be three years. In such cases, the head of a local government may have the executive officers, whose term of office have expired, perform their duties until their successors are appointed, as prescribed by Presidential Decree. |
| (2) | Presidents, directors, and auditors of a public corporation may be reappointed for a one-year term. |
| (3) | The duties of the president, directors, and auditors of a public corporation shall be prescribed by the articles of incorporation. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 60 (Grounds for Disqualification of Executive Officers) |
| (1) | None of the following persons shall be allowed to become an executive officer of a public corporation: <Amended on Dec. 15, 2015> |
| 1. | Deleted; <Dec. 3, 2019> |
| 2. | A person who is a minor; |
| 4. | A person for whom three years have yet to elapse since he or she was dismissed under Article 58 (4) or (5); |
| 5. | A person who has been sentenced to a fine for violating this Act and for whom two years have yet to elapse since such sentence was given; |
| 6. | Deleted. <Dec. 15, 2015> |
| (2) | Where any executive officer of a public corporation falls under any subparagraph of paragraph (1) or is found to fall under any subparagraph of paragraph (1) as at the time of his or her appointment, he or she shall ipso facto resign from his or her office. |
| (3) | Any act in which any executive officer who resigns from his or her office pursuant to paragraph (2) has been involved prior to his or her resignation shall not lose its effect. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 61 (Restrictions on Executive Officers and Employees Concurrently Holding Second Office) |
| (1) | The executive officers and employees of a public corporation shall not engage in any profit-making business outside their duties; executive officers shall not hold an additional position without obtaining permission from the head of a local government, and employees shall not hold an additional position without obtaining permission from the president: Provided, That this shall not apply to an executive officer who does not work full time. <Amended on Jun. 4, 2013> |
| (2) | "Profit-making business" in paragraph (1) means a business prescribed by Presidential Decree, etc., which is likely to have unfair influence on duties or to reduce efficiency of duties if one engages in such business. <Newly Inserted on Jun. 4, 2013> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 62 (Board of Directors) |
| (1) | A board of directors shall be established by a public corporation in order to decide on important matters concerning the business affairs of the public corporation. |
| (2) | A board of directors shall consist of the directors including the president. |
| (3) | Matters necessary for the operation and authority of the board of directors shall be prescribed by the articles of incorporation. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 63 (Appointment and Dismissal of Employees) |
| (1) | The employees of a public corporation shall be appointed or dismissed by the president according to the articles of incorporation. |
| (2) | Any employee of a public corporation shall be appointed according to examination results, performance rating, and other proven capabilities. |
| (3) | The president of a public corporation shall provide for matters concerning the procedures, methods, etc. for the employment of employees in advance, and disclose detailed procedures, methods, etc. through public announcement, etc. when he or she employs employees. <Newly Inserted on Oct. 20, 2020> |
| (4) | Where the president of a public corporation employs employees, he or she shall, in principle, employ them through an open competitive examination and shall not preferentially employ any person who is likely to undermine the fairness of employment, such as a person having interests with its executive officer or employee or any family member thereof. <Newly Inserted on Oct. 20, 2020> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 63-2 (Education and Training for Executive Officers and Employees) |
The president of a public corporation shall conduct necessary education and training for the executive officers and employees in order to comply with the basic principles of management under Article 3. [This Article Wholly Amended on Aug. 4, 2011]
| Article 63-3 (Remuneration of Executive Officers and Employees) |
Remuneration standards for the executive officers and employees of a public corporation shall be set in a manner to reflect the operating results thereof.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 63-4 (Exercise of Right and Selection and Appointment of Agent) |
Any executive officer or any employee designated by the president of a public corporation in accordance with the articles of incorporation may perform all judicial or extra-judicial acts that are necessary to execute the business of the corporation.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 63-5 (Common Standards for Personnel Management) |
The Minister of the Interior and Safety may prepare standards for the matters to be commonly applied to the personnel management of public corporations and notify them to the heads of local governments. <Amended on Jul. 26, 2017>
[This Article Newly Inserted on Dec. 15, 2015]
| Article 63-6 (Demand for Disciplinary Actions) |
| (1) | A public corporation may take disciplinary actions against executive officer officers and employees of the public corporation, as specified by its articles of incorporation. |
| (2) | Where a person who holds an authority to take disciplinary action in a public corporation takes any disciplinary action against an executive officer or employee on grounds of receiving money, valuables, or entertainments, or of embezzlement or misappropriation of public funds, he or she may impose a surcharge in addition to disciplinary action in an amount not exceeding five times the amount of money, valuables, and entertainments received or the amount of public funds embezzled or misappropriated. |
| (3) | Where any executive officer or employee of a public corporation has received a criminal penalty or has fulfilled his or her liability for compensation, etc. under any other statutes on grounds of receiving money, valuables, or entertainments, or of embezzlement or misappropriation of public funds (including cases where any confiscation or additional collection has been made), the sum of the amount corresponding to the fine, compensation money, and the amount confiscated or additionally collected and the amount specified in paragraph (2) shall not exceed five times the amount of money, valuables, or entertainments received, or the amount of public funds embezzled or misappropriated. |
| (4) | Where a person who holds an authority to take disciplinary action in a public corporation fails to take necessary measures despite that the imposition of a disciplinary action or surcharge for a disciplinary action prescribed in paragraph (1) or (2) is required, the head of a local government may request the authority holder of the public corporation to take a disciplinary action or to impose a surcharge for the disciplinary action. |
| (5) | No disciplinary action or surcharge for a disciplinary action may be imposed if three years (or five years, in cases of receipt of money, valuables or entertainments, or embezzlement or misappropriation of public funds) have elapsed from the date of occurrence of the ground therefor. |
[This Article Newly Inserted on Dec. 15, 2015]
| Article 63-7 (Measures against Persons Who Commit Misconduct) |
| (1) | Each public corporation shall endeavor to strengthen ethical management, such as transparent and impartial personnel operation. |
| (2) | Where an executive officer of a public corporation has committed or is suspected of having committed any misconduct prescribed by Presidential Decree (hereinafter referred to as “misconduct”), such as misconduct providing or receiving money or valuables, a sex offense, or employment misconduct, and where such misconduct is deemed to have discouraged ethical management under paragraph (1), the head of the competent local government shall request an investigation agency, such as the prosecution or the police, and an audit and inspection agency such as the Board of Audit and Inspection (hereafter referred to as “investigation agency, etc.” in this Article) to conduct an investigation or an audit and inspection in regard to the relevant executive officer of the public corporation. In such cases, the head of the local government may suspend the duties of the relevant executive officer or request the president of the public corporation to do so. |
| (3) | Where necessary as a result of the investigation or the audit and inspection conducted by an investigation agency, etc. under paragraph (2), the Minister of the Interior and Safety may request the head of the competent local government to dismiss the relevant executive officer of the public corporation concerned, and the head of the local government may dismiss the executive officer or request the president of the public corporation to do so. |
| (4) | Where the conviction of an executive officer of a public corporation becomes final in relation to employment misconduct from among types of misconduct and where the executive officer is subject to aggravated punishment under Article 2 of the Act on the Aggravated Punishment of Specific Crimes, the head of the competent local government may disclose the executive officer’s personal information, the fact of his or her misconduct, etc., following deliberation and resolution by a deliberative and decision-making body of the local government which is prescribed by Presidential Decree. |
| (5) | Where the conviction of an executive officer or employee of a public corporation becomes final in relation to employment misconduct from among types of misconduct and where a person has passed an examination for employment, or has been promoted or appointed, due to the relevant employment misconduct, the head of the competent local government may request the president of the public corporation to revoke hir or her passing scores, promotion, or appointment or to take unfavorable personnel action against him or her (hereafter referred to as “revocation of passing scores, etc.” in this Article). In such cases, the president of the public corporation shall notify the relevant person of the details thereof and the reasons therefor to give him or her the opportunity to vindicate himself or herself. |
| (6) | Matters necessary for the specific details of and procedures, etc. for disclosure of a list under paragraph (4) and those necessary for the criteria for and details of revocation of passing an examination, etc., the procedures for vindication, etc. under paragraph (5) shall be prescribed by Presidential Decree. |
[This Article Newly Inserted on Dec. 3, 2019]
| Article 63-8 (Personnel Audit) |
| (1) | To eradicate, etc. employment misconduct from among types of misconduct, the head of a local government may conduct an audit of whether the personnel operation of a public corporation is appropriate (hereafter referred to as “personnel audit” in this Article), as prescribed by Presidential Decree, and may request the corporation to submit related documents if necessary. |
| (2) | If any illegal or unlawful fact is found as a result of a personnel audit, the head of a local government shall, without delay, request the president of a relevant public corporation to make a correction thereof and to take personnel action, etc. against the relevant person. |
| (3) | Upon receipt of a request under paragraph (2), the president of a public corporation shall comply with the request immediately unless there is good cause, and shall notify the head of the relevant local government of the results thereof. |
[This Article Newly Inserted on Dec. 3, 2019]
SECTION 3 Financial Accounting
| Article 64 (Business Year) |
The business year of a corporation shall comply with the fiscal year of the ordinary account of the local government.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 64-2 (Principles of Accounting) |
| (1) | A public corporation shall keep accounts of financial transactions on the accrual basis according to standards for corporate accounting in order to clearly show the outcomes of business operation and its financial status. |
| (2) | A public corporation may keep separate accounting for each business. |
| (3) | Where a public corporation intends to enter into a contract, it shall adopt competitive bidding: Provided, That it may put a contract to competition after restricting the eligibility of bidders or after designating bidders in consideration of the purpose, character, scale, etc. of the contract, or conclude a negotiated contract. <Newly Inserted on Jun. 4, 2013> |
| (4) | Where a public corporation enters into a contract, it may restrict the eligibility of a bidder judged undoubtedly detrimental to fair competition and appropriate execution of a contract, within two years. <Amended on Jun. 4, 2013> |
| (5) | No public corporation shall conclude a negotiated contract with a person whose eligibility for bidding is restricted pursuant to paragraph (4): Provided, That this shall not apply where unavoidable grounds exist, such as that no appropriate builder or manufacturer exists, etc., except for those whose eligibility for bidding is restricted pursuant to paragraph (4). <Amended on Jun. 4, 2013> |
| (6) | Matters necessary for accounting, standards and procedures for concluding a contract, and restrictions on the eligibility for bidding, etc. prescribed in paragraphs (1) through (5) shall be prescribed by Presidential Decree. <Amended on Mar. 23, 2013; Jun. 4, 2013> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 64-3 (Establishment of Medium- to Long-Term Financial Management Plans) |
| (1) | The president of a public corporation meeting standards prescribed by Presidential Decree, in consideration of the size of assets and liabilities, etc. shall, every year, establish a medium- to long-term financial management plan spanning five fiscal years including a relevant year (hereinafter referred to as "medium- to long-term financial management plan"), finalize it after resolution by the board of directors and submit it to the head of a local government and the local council within a deadline prescribed by Presidential Decree. |
| (2) | A medium- to long-term financial management plan shall include the following matters: |
| 1. | Medium- to long-term management objectives spanning at least five fiscal years; |
| 2. | Business plans and the direction of investment; |
| 3. | Financial prospect, grounds therefor and management plans; |
| 4. | A liability management plan including prospects for increase or decrease in liability, grounds therefor, management plans, etc.; |
| 5. | Evaluation and analysis of changes in the current medium- to long-term management plan, compared with that of the previous year, chief cause thereof, management plans, etc. |
[This Article Newly Inserted on Jun. 4, 2013]
| Article 64-4 (Submission of Written Integrity Pledge) |
| (1) | The head of a public corporation shall require bidders or parties to negotiated contracts to submit a written integrity pledge to enhance the transparency and fairness of contracts. |
| (2) | A written integrity pledge under paragraph (1) shall include the following matters: |
| 1. | Matters concerning prohibiting the provision of direct or indirect gratitude, donation, money, valuables, entertainment, and preferential treatment in employment related to bidding, successful bidding, conclusion or fulfillment of contracts, and any other process (including processes conducted after completion of work or supply of goods); |
| 2. | Matters concerning prohibiting any act that interferes with free competition in bidding or any unfair act, such as collusion for the successful bidding of a specific person; |
| 3. | Other matters prescribed by Presidential Decree to enhance the transparency and fairness of contracts. |
[This Article Newly Inserted on Jun. 9, 2020]
| Article 64-5 (Cancellation or Termination of Contracts upon Non-Compliance with Integrity Pledge) |
Where bidders or parties to negotiated contracts fail to comply with the details of a written integrity pledge under Article 64-4, such as providing the executive officers and employees of a public corporation with direct or indirect gratitude, donation, money, valuables, entertainment, and preferential treatment in employment in the course of bidding, negotiated contracts, or fulfillment of contracts, the public corporation shall revoke the determination of successful bidders, or cancel or terminate contracts, except in any of the following cases: . | 1. | Where other Acts particularly prohibit the revocation of the determination of successful bidders, or the cancellation or termination of contracts; |
| 2. | Cases prescribed by Presidential Decree, such as where it is difficult to achieve the purposes of contracts or the public corporation suffers losses if the determination of successful bidders are revoked, or contracts are canceled or terminated. |
[This Article Newly Inserted on Jun. 9, 2020]
| (1) | The president of a public corporation shall compile a business plan and budget of each business year before the relevant business year commences. |
| (2) | The budget compiled under paragraph (1) shall be made definite by the resolution of the board of directors. The same shall also apply to cases where the budget is revised for unavoidable reasons after it has been made definite. |
| (3) | When the budget was enacted or revised under paragraph (2), the president of a public corporation shall report this fact to the head of a local government without delay. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 65-2 (Execution of Budget when Budget Fails to be Finalized) |
| (1) | If a budget fails to be finalized until commencement of the fiscal year owing to unavoidable circumstances, the public corporation shall execute the budget according to the budget of the preceding year. |
| (2) | The budget executed under paragraph (1) shall be deemed executed according to the same budget finalized for the pertinent year. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 65-3 (Examination of Feasibility of New Investment Project) |
| (1) | If the president of a public corporation intends to conduct a new investment project of a size not less than the one prescribed by Presidential Decree, he or she shall examine the necessity of the project, the feasibility of a project plan, etc. (hereinafter referred to as “examination of the feasibility of a new investment project”) according to the methods and procedures prescribed by Presidential Decree, and report thereon to the head of the competent local government and obtain a resolution from a local council of the local government. <Amended on Dec. 29, 2015; Dec. 3, 2019> |
| (2) | Notwithstanding paragraph (1), any of the following projects shall be excluded from the examination of the feasibility of a new investment project, according to the procedures prescribed by Presidential Decree. In such cases, the president of a public corporation shall, without delay, report the details of the project excluded from such examination and the reasons therefor to the head and council of the competent local government: <Newly Inserted on Dec. 3, 2019> |
| 1. | A project which has undergone any of the following study, appraisal, etc. or has been excluded therefrom: |
| (b) | An investment appraisal under Article 37 of the Local Finance Act (limited to an investment appraisal conducted by the head of the local government that established the relevant public corporation); |
| 2. | A new investment project jointly implemented by at least two public corporations established by different local governments respectively, for which the president of at least one of the public corporations undergoes all the procedures under paragraph (1) and the council of the local government that established the other public corporation agrees not to conduct a separate examination of the feasibility of a new investment project; |
| 4. | A project which shall be implemented in accordance with statutes and regulations; |
| 5. | A project satisfying all of the following requirements which needs to be implemented as a national policy in order to ensure balanced regional development, cope with urgent economic and social situations, etc.: |
| (a) | A project for which a detailed plan, including the purpose, scale, and implementation method of the project, is formulated; |
| (b) | A project determined by a meeting of the State Council because it needs to be implemented as a national policy. |
| (3) | The examination of the feasibility of a new investment project shall be entrusted to an institution designated and publicly notified by the Minister of the Interior and Safety, which is a specialized institution satisfying the requirements prescribed by Presidential Decree, such as professional human resources, and examination and research capability. <Newly Inserted on Dec. 29, 2015; Jul. 26, 2017; Dec. 3, 2019> |
[This Article Newly Inserted on Jun. 4, 2013]
| Article 65-4 (Business Management in Real Names and Disclosure Thereof) |
| (1) | The president of a public corporation shall, with respect to new investment business referred to in Article 65-3 (1), record, manage and disclose the persons who have participated therein and other matters, relating to the details of the business, decision-making, or the execution of the business: Provided, That he or she may choose not to disclose any information subject to non-disclosure prescribed in Article 9 of the Official Information Disclosure Act until the need for non-disclosure ceases to exist due to lapse of the period, etc. |
| (2) | Matters necessary for the scope of the record, management and disclosure prescribed in paragraph (1), and the methods, procedures, etc. therefor shall be prescribed by Presidential Decree. |
[This Article Newly Inserted on Dec. 29, 2015]
[Previous Article 65-4 moved to Article 65-5 <Dec. 29, 2015>]
| Article 65-5 (Restrictions on Debt Guarantee Contracts) |
A public corporation shall not be entitled to enter into any of the following contracts:
| 1. | A contract which includes guarantee for redemption of a debt; |
| 2. | A contract having a condition to repurchase the asset of the public corporation when it is sold; |
| 3. | A contract which includes commitment to purchase any unsold assets, if any assets remain unsold in conducting the business for housing construction, land development, etc. |
[This Article Newly Inserted on Dec. 15, 2015]
[Moved from Article 65-4 <Dec. 29, 2015>]
| Article 66 (Settlement of Accounts) |
| (1) | A public corporation shall settle the accounts of each business year within two months after the end of the pertinent business year. |
| (2) | Upon settling the accounts, a public corporation shall prepare financial statements and submit them, together with the documents prescribed by Presidential Decree and the auditor’s report prepared by a certified public accountant designated by the head of the local government, to the head of the local government without delay in order to have them approved by the head of a local government. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 66-2 (Common Standards for Budget and Settlement of Accounts) |
| (1) | The Minister of the Interior and Safety may prepare and notify common standards for the budget and settlement of accounts of a public corporation. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (2) | Matters necessary for submitting and operating the budget and settlement of accounts of a public corporation shall be prescribed by the head of a local government according to the common standards prescribed in paragraph (1). |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 67 (Accounting of Profits and Losses) |
| (1) | If a public corporation realizes profits as a result of account settlement, it shall account for such profits according to the following order of priority: |
| 1. | To make up for loss carried over from the preceding business year; |
| 2. | To deposit it as a reserve fund, as prescribed by Presidential Decree; |
| 3. | To deposit it as a sinking-fund reserve, as prescribed by Presidential Decree; |
| 4. | To distribute it as a dividend, or accumulate it, as prescribed by the articles of incorporation. |
| (2) | No sinking-fund reserve in paragraph (1) 3 shall be used for a purpose other than the purpose of repaying the bonds of a public corporation. |
| (3) | If a public corporation suffers a loss as a result of account settlement, the public corporation shall use the accumulated fund under paragraph (1) 4o to make up for the loss, and use the reserve fund under paragraph (1) 2 to make up for any loss remaining or carry the loss over to the next business year. |
[This Article Wholly Amended on Jun. 4, 2013]
| Article 68 (Issuance of Bonds and Loans) |
| (1) | A public corporation may issue bonds or obtain foreign loans with approval from the head of the local government. In such cases, the limit on issuance of the bonds shall be prescribed by Presidential Decree. <Amended on Aug. 4, 2011> |
| (2) | Deleted. <Mar. 25, 2002> |
| (3) | Where bonds to be issued pursuant to paragraph (1) are in excess of the limit prescribed by Presidential Decree, the head of a relevant local government shall grant approval prescribed in paragraph (1) after obtaining prior approval therefor from the Minister of the Interior and Safety. In such cases, the limit on issuance of bonds set by Presidential Decree shall be applied by taking into consideration the debt ratio, operational results, etc. of the relevant public corporation. <Amended on Aug. 4, 2011; Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (4) | A local government may guarantee the redemption of bonds. <Amended on Aug. 4, 2011> |
| (5) | Deleted. <Mar. 25, 2002> |
| (6) | Matters necessary for issuance, sale, and redemption of bonds shall be prescribed by municipal ordinances. <Amended on Aug. 4, 2011> |
| (7) | When the Financial Investment Services and Capital Markets Act is applied to bonds issued by a public corporation established for constructing and managing urban railroads and for conducting housing construction projects, etc. pursuant to paragraphs (1) through (6), those bonds shall be deemed special bonds issued in accordance with Article 4 (3) of that Act. <Amended on Aug. 4, 2011; Jun. 3, 2014> |
[This Article Newly Inserted on Jan. 4, 1980]
[Title Amended on Aug. 4, 2011]
| Article 69 (Operation of Surplus) |
A public corporation shall not operate any surplus by any means, other than the following:
| 1. | Acquisition of state or local bonds; |
| 2. | Deposits in the Bank of Korea or other financial institutions under the Bank of Korea Act. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 70 Deleted. <Dec. 30, 1996> |
| Article 71 (Expenses Necessary for Vicarious Execution) |
| (1) | A public corporation may execute the business of the State or a local government. In such cases, necessary expenses shall be borne by the State or the local government. |
| (2) | Matters necessary for expenses under paragraph (1), except for those matters prescribed by Presidential Decree, shall be prescribed by municipal ordinances. |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 71-2 (Financial Support) |
If deemed necessary for the operation of business, a local government may grant subsidies or give a long-term loan to a public corporation.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 71-3 (Entrustment of Sale of Goods and Contract for Construction) |
If deemed necessary, a public corporation may entrust the purchase of goods or the conclusion of the contract for construction of facilities to the Administrator of Public Procurement Service.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 71-4 (Management of Goods) |
In order to appropriately manage goods under its control, a public corporation shall standardize the goods used by the public corporation concerned, classify the goods according to their usage and purpose, and formulate a plan for the management and control of the goods, including a goods supply and demand plan.
[This Article Wholly Amended on Aug. 4, 2011]
With regard to the advance related to the allotment sale of assets and the use of the facilities of a public corporation, Article 20-2 shall apply mutatis mutandis. [This Article Wholly Amended on Aug. 4, 2011]
| (1) | The head of a local government shall manage and supervise the affairs of a public corporation, such as the establishment, operation, etc. thereof. |
| (2) | The Minister of the Interior and Safety may inspect matters necessary for the affairs, accounting, and property of a public corporation and order said public corporation to make necessary reports. <Amended on Jul. 26, 2017> |
[This Article Wholly Amended on Dec. 15, 2015]
| Article 74 Deleted. <Dec. 15, 2015> |
SECTION 5 Supplementary Provisions
| Article 75 (Application Mutatis Mutandis of the Commercial Act) |
The provisions concerning joint-stock companies of the Commercial Act shall apply mutatis mutandis to a public corporation unless it is contrary to its nature, unless otherwise prescribed by this Act: Provided, That Article 292 of the Commercial Act shall not apply mutatis mutandis to a public corporation. [This Article Wholly Amended on Aug. 4, 2011]
| Article 75-2 (Publication of Status of Business Operation, etc.) |
Article 46 shall apply mutatis mutandis to public announcement of the status of business operations, etc. of a public corporation In such cases, the "manager" shall be deemed the "president". [This Article Wholly Amended on Aug. 4, 2011]
| Article 75-3 (Dispatch of and Concurrent Post by Public Officials) |
Where necessary to support business activities performed by a public corporation, the head of a local government may dispatch public officials of the local government to the public corporation or make them hold a concurrent post.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 75-4 (Entrustment of Authority) |
Where necessary to achieve the objective of a public corporation, the head of a local government may entrust some of his or her authority under this Act to the president of the public corporation, as prescribed by its municipal ordinance.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 75-5 (Registries of Privatized Public Corporations as Stock Companies) |
Where any public corporation is sold pursuant to Article 53 (2) and (3), the buyer may file an application for registration of establishment thereof as a stock company without undergoing liquidation procedures under the Commercial Act. In such cases, the buyer shall be prohibited from using the title "public corporation" as the trade name of his or her stock company. [This Article Wholly Amended on Aug. 4, 2011]
| Article 75-6 (Merger between Public Corporations and Public Institutions) |
| (2) | Where a public corporation intends to conduct a merger under paragraph (1), it shall hold a consultation with the Minister of Economy and Finance and obtain approval from the head of a local government before a merger is registered: Provided, That where it merges with an institution whose designation as a public institution has been revoked, procedures for holding a consultation may be omitted. |
[This Article Newly Inserted on Jun. 4, 2013]
CHAPTER IV LOCAL PUBLIC AGENCY
| Article 76 (Establishment and Operation) |
| (1) | Where necessary for the efficient performance of the business activities referred to in Article 2, a local government may establish a local public agency (hereinafter referred to as a "public agency"). |
| (2) | Articles 49 through 52, 53 (1), 56 (1) and (3), 57, 58, 58-2, 59 through 63, 63-2 through 63-8, 64, 64-2, 64-4, 64-5, 65, 65-2, 66, 66-2, 68, 69, 71, 71-2 through 71-4, 72 and 73, and 75-2 through 75-4 shall apply mutatis mutandis to the establishment and operation of a public agency. In such cases, "public corporation", "president", and "bonds" shall be deemed "public agency", "president", and "corporation bonds", respectively. <Amended on Dec. 15, 2015; Dec. 3, 2019; Jun. 9, 2020> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 77 (Bearing of Expenses) |
A public agency may have the beneficiary of its business activities bear the expenses needed for the business with approval from the head of a local government.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 77-2 (Dissolution) |
| (1) | Any public agency shall be dissolved on any of the following grounds: <Amended on Dec. 29, 2015; Jul. 26, 2017> |
| 1. | Attainment of the objectives of establishment, expiration of the term of existence and accrual of other grounds prescribed by the articles of incorporation; |
| 4. | Order given or ruling handed down by the court; |
| 5. | Resolution of the board of directors; |
| 6. | Demand for dissolution made by the Minister of the Interior and Safety prescribed in Article 78-3. |
| (2) | The provisions governing the dissolution of a joint-stock company prescribed in the Commercial Act shall apply mutatis mutandis to the dissolution of any public agency. |
[This Article Wholly Amended on Aug. 4, 2011]
CHAPTER IV-2 INVESTED CORPORATION, OTHER THAN LOCAL GOVERNMENT-INVESTED PUBLIC CORPORATION AND LOCAL GOVERNMENT PUBLIC CORPORATION
| Article 77-4 Deleted. <Mar. 24, 2014> |
| Article 77-4 Deleted. <Mar. 24, 2014> |
| Article 77-5 Deleted. <Mar. 24, 2014> |
| Article 77-6 Deleted. <Mar. 24, 2014> |
| Article 77-7 Deleted. <Mar. 24, 2014> |
CHAPTER V SUPPLEMENTARY PROVISIONS
| Article 78 (Evaluation of Management and Guidance) |
| (1) | The Minister of the Interior and Safety shall evaluate the management of local public enterprises, as prescribed by Presidential Decree, in consideration of the basic management principles for local public enterprises prescribed in Article 3, and take necessary measures according to the outcomes of said evaluation: Provided, That the Minister of the Interior and Safety may request the heads of local governments to evaluate the management of local public enterprises, when he or she deems it necessary. <Amended on Mar. 23, 2013; Jun. 4, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (2) | The evaluation of management prescribed in paragraph (1) shall include the evaluation with respect to the attainment of management goals, the efficiency of business, the nature of public interest and customer services, etc. of any local public enterprise. |
| (3) | When necessary for the evaluation of management prescribed in paragraph (1), the Minister of the Interior and Safety may request local public enterprises to submit relevant data, such as the list of customers, etc. In such cases, the local public enterprises, in receipt of such request, shall comply therewith, except in extenuating circumstances. <Newly Inserted on Jun. 4, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (4) | The Minister of the Interior and Safety may evaluate the management performance of the presidents of local public enterprises, as prescribed by Presidential Decree, apart from the evaluation of management prescribed in paragraphs (1) and (2). In such cases, public interest shall be taken into consideration. <Amended on Mar. 23, 2013; Jun. 4, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (5) | The Minister of the Interior and Safety or the Mayor/Do Governor (excluding the Special Metropolitan City Mayor and a Special Self-Governing Province Governor; hereafter the same shall apply in this paragraph) may provide guidance, counselling, or recommendations to local public enterprises (limited to local public enterprises of a Si/Gun/autonomous Gu in cases of the Mayor/Do Governor) necessary for efficient management. <Amended on Mar. 23, 2013; Jun. 4, 2013; Nov. 19, 2014; Jul. 26, 2017> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 78-2 (Analysis of Management and Order to Improve Management) |
| (1) | When the head of a local government evaluates the management under the proviso of Article 78 (1), he or she shall submit a report on the evaluation of management, financial statements, and other documents prescribed by Presidential Decree to the Minister of the Interior and Safety within one month after the evaluation of management is completed. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (2) | Where any of the following local public enterprises is considered to require special measures based on the outcomes of management evaluation prescribed in the main clause of Article 78 (1) or analysis of documents, etc. under paragraph (1), the Minister of the Interior and Safety may analyze their management and make public the results thereof, as prescribed by Presidential Decree: <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| 1. | A local public enterprise which has continuously posted the current net loss for at least three consecutive business years; |
| 2. | A local public enterprise which records a sharp fall in operating revenues over the preceding year without any special ground; |
| 3. | A local public enterprise which is required to restructure its management through the scaling back of its business size, the liquidation of a corporation or privatization, etc. in light of circumstances surrounding its management; |
| 4. | Other local public enterprises prescribed by Presidential Decree. |
| (3) | When the Minister of the Interior and Safety deems it necessary based on the outcomes of the management analysis prescribed in paragraph (2), he or she may order the head of a local government, the president of a public corporation or the president of a public agency to take measures to improve its management, such as dismissal of the executive officers of the relevant local public enterprise and its reorganization. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (4) | In receipt of an order prescribed in paragraph (3), the head of a local government, the president of a public corporation, or the president of a public agency shall comply therewith without delay, except in extenuating circumstances. |
[This Article Wholly Amended on Aug. 4, 2011]
[Title Amended on Dec. 29, 2015]
| Article 78-3 (Requests for Dissolution of Distressed Local Public Enterprises) |
| (1) | Where any public corporation or public agency falls under any of the following cases which are prescribed by Presidential Decree, the Minister of the Interior and Safety may request the head of a local government, the president of a public corporation, or the president of a public agency to dissolve it, following deliberation of the policy committee for local public enterprises prescribed in Article 78-5: <Amended on Jul. 26, 2017> |
| 1. | Where its ability to redeem debts is remarkably low; |
| 2. | Where it is difficult to turn around its operations due to lack of business prospect; |
| 3. | Where it is impracticable to achieve the purposes of its establishment. |
| (2) | The head of a local government, the president of a public corporation, or the president of a public agency, in receipt of a request for dissolution prescribed in paragraph (1), shall comply therewith without delay except in any extenuating circumstances. <Amended on Jul. 26, 2017> |
[This Article Wholly Amended on Dec. 29, 2015]
| Article 78-4 (Establishment and Operation of Evaluation Institute of Regional Public Corporation) |
| (1) | In order to support the evaluation of management of local public enterprises, research on related policies, education of executive officers and employees thereof, etc. in a professional manner, the Evaluation Institute of Regional Public Corporation (hereinafter referred to as the "Evaluation Institute") shall be established. |
| (2) | The Evaluation Institute shall be a corporation, and shall be duly formed upon the completion of the registration of their establishment at a place where its principal office is located. |
| (3) | In order to support the performance of the services of the Evaluation Institute, local governments or local public enterprises may make contributions to the Evaluation Institute. In such cases, matters necessary for the payment, use, management, etc. of the contributions shall be prescribed by Presidential Decree. |
| (4) | The Evaluation Institute shall have a board of directors and one auditor. |
| (5) | The board of director shall be comprised of not more than 12 directors, including one chairperson. |
| (6) | The chairperson shall be appointed by the board of directors, following recommendation of the board of directors and approval from the Minister of the Interior and Safety. <Amended on Jul. 26, 2017> |
| (7) | The term of office of the chairperson shall be three years and may be renewed only once. |
| (8) | Other matters necessary for the establishment and operation of the Evaluation Institute, such as the terms of office of directors and an auditor and the methods of appointing them, shall be prescribed by the articles of incorporation. |
| (9) | The Minister of the Interior and Safety shall guide and supervise the Evaluation Institute, and may request the Evaluation Institute to report the matters concerning its services or order to submit its data, etc., where necessary. <Amended on Jul. 26, 2017> |
| (10) | Unless otherwise prescribed by this Act, the provisions of the Civil Act that are relevant to an incorporated foundation shall apply mutatis mutandis with regard to the Evaluation Institute. |
[This Article Newly Inserted on Dec. 29, 2015]
[Previous Article 78-4 moved to Article 78-5 <Dec. 29, 2015>]
| Article 78-5 (Policy Committee for Local Public Enterprises) |
| (1) | The Minister of the Interior and Safety shall operate a policy committee for local public enterprises comprised of relevant experts in order to deliberate on major policies related to the local public enterprises, the evaluation of management, the analysis of management, and other matters with regard to the improvement of management. <Amended on Mar. 23, 2013; Nov. 19, 2014; Jul. 26, 2017> |
| (2) | A policy committee for local public enterprises shall have not more than 15 members including one chairperson. |
| (3) | Matters necessary for the organization, operation, etc. of a policy committee for local public enterprises shall be prescribed by Presidential Decree. |
[This Article Wholly Amended on Aug. 4, 2011]
[Moved from Article 78-4; previous Article 78-5 moved to Article 78-7 <Dec. 29, 2015>]
| Article 78-6 (Hearing Opinions of Residents) |
| (1) | In any of the following cases, the head of a local government shall file a report to a local council and hear opinions of the residents, related experts, etc.: <Amended on Jul. 26, 2017> |
| 1. | Where he or she intends to establish a local public enterprise; |
| 2. | Where he or she receives an order from the Minister of the Interior and Safety to improve management prescribed in Article 78-2 or a request for dissolution prescribed in Article 78-3. |
| (2) | Methods and procedures for hearing residents' opinions prescribed in paragraph (1) and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Newly Inserted on Dec. 29, 2015]
| Article 78-7 (Reports to National Assembly) |
The Minister of the Interior and Safety shall submit a report on local public enterprises, which stipulates the results of evaluation of management prescribed in Article 78, the outcomes of the management analysis and measures to improve management prescribed in Article 78-2, request for dissolution prescribed in Article 78-3, etc. each year within three months after management evaluation is conducted and measures to improve management are taken, to the competent Standing Committee of the National Assembly. <Amended on Mar. 23, 2013; Nov. 19, 2014; Dec. 29, 2015; Jul. 26, 2017> [This Article Newly Inserted on Aug. 4, 2011]
[Moved from Article 78-5 <Dec. 29, 2015>]
| Article 79 (Subsidies from National Treasury) |
Where it is deemed necessary for the smooth operation of local public enterprises, the State may subsidize part of the capital to be invested by the local government and any other expenses to be incurred thereby a local government.
[This Article Wholly Amended on Aug. 4, 2011]
| Article 79-2 Deleted. <Mar. 25, 2002> |
| Article 79-3 (Delegation of Authority) |
Part of the authority of the Minister of the Interior and Safety prescribed in this Act may be delegated to the Mayor/Do Governor, as prescribed by Presidential Decree. <Amended on Mar. 23, 2013; Jun. 4, 2013; Nov. 19, 2014; Jul. 26, 2017>
[This Article Wholly Amended on Aug. 4, 2011]
| Article 80 (Changes in Organization of Public Corporations and Public Agencies) |
| (1) | A public corporation or a public agency may, where necessary for the efficient business operation, change its organization from a public corporation to a public agency, or from a public agency to a public corporation, without undergoing liquidation procedures. |
| (2) | Where the president of a public corporation or the president of a public agency intends to make an organizational change prescribed in paragraph (1), he or she shall obtain approval for matters relating to the organizational change from the head of the competent local government, and undergo a resolution thereon by the council of the local government, along with a draft of the municipal ordinance on the organizational change. <Amended on Dec. 3, 2019> |
| (3) | Where a public corporation invested by a person, other than a local government, intends to change its organization prescribed in Article 53 (2), it shall convert the amount invested by the person other than the local government to the investment of the local government, after obtaining resolution of a general assembly meeting adopted by concurrence of all shareholders before resolution of the council is adopted under paragraph (2). |
| (4) | The president of a public corporation or the president of a public agency shall notify the interested parties, including creditors, of the fact of the organizational change within 20 days from the date on which the council adopts the resolution prescribed in paragraph (2). |
| (5) | Where a public corporation or a public agency obtains a resolution prescribed in paragraph (2), the former public corporation or the former public agency shall file a registration of the dissolution, and the substitute public corporation or substitute public agency shall file a registration of incorporation at the location of its principal office. |
| (6) | The substitute public corporation or the substitute public agency shall succeed, by universal title, to all property, claims and obligations, employment relationship, and other rights and obligations belonging to the former public corporation or the former public agency on the date of registration of its establishment prescribed in paragraph (5). |
| (7) | Except as prescribed in paragraphs (1) through (6), matters necessary for the methods and procedures for making organizational changes shall be prescribed by Presidential Decree. |
[This Article Newly Inserted on Dec. 15, 2015]
| Article 80-2 (Notification of Initiation or Completion of Investigation of Investigation Agencies) |
When any of the following public agencies initiates or completes examination of or investigation into the duties of the executive officers or employees of a public corporation or a public agency, it shall notify such fact and the results thereof to the president of the public corporation or the president of the public agency within 10 days from the date of initiation or completion:
| 1. | The Board of Audit and Inspection; |
| 2. | Prosecutors, police, and other investigation agencies; |
| 3. | The Minister of the Interior and Safety; |
| 4. | The heads of local governments. |
[This Article Newly Inserted on Oct. 24, 2017]
CHAPTER VI? PENALTY PROVISIONS
| Article 81 (Penalty Provisions) |
Where the executive officers (excluding auditors) of a public corporation or public agency violate Articles 65 and 66 (2) (including cases applied mutatis mutandis in Article 76 (2)), they shall be punished by a fine not exceeding five million won. [This Article Wholly Amended on Aug. 4, 2011]
| Article 82 (Administrative Fines) |
| (1) | Any person who refuses, interferes with, or evades an inspection prescribed in Article 73 (2) (including cases applied mutatis mutandis in Article 76 (2)) without any just ground shall be subject to an administrative fine not exceeding two million won. <Amended on Dec. 15, 2015> |
| (2) | Administrative fines prescribed in paragraph (1) shall be imposed and collected by the Minister of the Interior and Safety, as prescribed by Presidential Decree. <Amended on Dec. 15, 2015; Jul. 26, 2017> |
[This Article Wholly Amended on Aug. 4, 2011]
| Article 83 (Legal Fiction as Public Officials in Application of Penalty Provisions) |
[This Article Wholly Amended on Aug. 4, 2011]
ADDENDA <Act No. 2101, Jan. 29, 1969>
| (1) | (Enforcement Date) This Act shall enter into force six months after the date of its promulgation. |
| (2) | (Evaluation of Assets) The assets of a local public enterprise shall be evaluated as prescribed by Presidential Decree in order to finalize the financial status and to establish the basis for the appropriate depreciation of assets. |
| (3) | (Primary Capital) The primary capital of a local public enterprise shall be the balance remaining after deducting the amount of liabilities as of the date this Act enters into force from the evaluated amount of the assets on the same date under the preceding paragraph. |
ADDENDUM <Act No. 3233, Jan. 4, 1980>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 4371, May 31, 1991>
Article 1 (Enforcement Date)
This Act shall enter into force on the organization date of the Council of the Special Metropolitan City.
Article 2 Omitted.
ADDENDUM <Act No. 4517, Dec. 8, 1992>
This Act shall enter into force on April 1, 1993.
ADDENDUM <Act No. 5200, Dec. 30, 1996>
This Act shall enter into force on April 1, 1997.
ADDENDA <Act No. 5708, Jan. 29, 1999>
| (1) | (Enforcement Date) This Act shall enter into force on April 1, 1999. |
| (2) | (Transitional Measures concerning Terms of Office for Auditors) The term of office for the auditors of a local government-invested public corporation and a public agency, who are appointed under the previous provisions as at the time this Act enters into force, shall be the remainder of the term of office for them set under the previous provisions. |
ADDENDA <Act No. 6665, Mar. 25, 2002>
| (1) | (Enforcement Date) This Act shall enter into force on June 1, 2002. |
| (2) | (Applicability to Guarantee Limits) The guarantee limits provided for in the amended provisions of Article 77-5 shall apply, starting with the portion of bonds or funds that are issued or borrowed for the first time after the enforcement of this Act. |
| (3) | (Applicability to Management Evaluation) The amended provisions of Articles 78 and 78-2 shall apply, starting with the management evaluation that is conducted for the first time after the enforcement of this Act. |
ADDENDUM <Act No. 7260, Dec. 30, 2004>
This Act shall enter into force three months after the date of its promulgation.
ADDENDUM <Act No. 7409, Mar. 24, 2005>
This Act shall enter into force on March 31, 2005.
ADDENDA <Act No. 7428, Mar. 31, 2005>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 6 Omitted.
ADDENDA <Act No. 7589, Jul. 13, 2005>
Article 1 (Enforcement Date)
This Act shall enter into force two months after the date of its promulgation.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 8028, Oct. 4, 2006>
| (1) | This Act shall enter into force on the date of its promulgation. |
| (2) | (Transitional Measures concerning Performance-Based Contract) For the presidents of public corporations and the chief directors of public agencies who are in office as at the time this Act enters into force, the performance-based contract under the amended provisions of Article 58-2 shall be concluded within six months from the enforcement date of this Act: Provided, That this shall not apply to the case where the remaining term is less than six months. |
ADDENDA <Act No. 8246, Jan. 19, 2007>
| (1) | This Act shall enter into force on the date of its promulgation. |
| (2) | (Transitional Measures concerning Previously Privatized Public Corporations) The amended provisions of Article 75-5 shall also apply to a case where public corporations under Article 53 (2) and (3) are privatized before this Act enters into force. |
ADDENDA <Act No. 8423, May 11, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 13 Omitted.
ADDENDUM <Act No. 8450, May 17, 2007>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 8852, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That ... <omitted> ... amendments to Acts already promulgated but not yet enforced before this Act enters into force among Acts amended pursuant to Article 6 of the Addenda shall enter into force on the enforcement dates of the respective relevant Acts.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 9575, Apr. 1, 2009>
| (1) | (Enforcement Date) This Act shall enter into force six months after the date of its promulgation. |
| (2) | (Applicability to Term of Office and Duties) The amended provisions of Article 59 (2) shall begin to apply from the president, director and auditor to be first reappointed after this Act enters into force. |
| (3) | (Transitional Measures concerning Appointment and Dismissal of Non-Permanent Directors) A non-permanent director who is incumbent as at the time this Act enters into force shall be deemed appointed by the head of a local government under the amended provisions of Article 58 (6). |
ADDENDUM <Act No. 10990, Aug. 4, 2011>
This Act shall enter into force on the date of its promulgation.
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.
ADDENDA <Act No. 11852, Jun. 4, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 49, 54 (2), 61 (2), 64-2, 64-3, 65-3, 67, 77-3, 77-4 (4), and 77-6 (2) shall enter into force six months after the date of its promulgation. Article 2 (Applicability to Accounting of Profits)
The amended provisions of Article 67 shall begin to apply from the account settlement for a business year which ends for the first time after such amended provisions enter into force. Article 3 (Applicability to Establishment of Local Government Invested Corporations and Local Government Contributed Foundations)
The amended provisions of Article 77-3 (1) and (2) shall begin to apply from a local government invested corporation or local government contributed foundation established for the first time after such amended provisions enter into force. Article 4 (Transitional Measures concerning Investment in Other Corporations and Procedures for Making New Investment)
The amended provisions of Articles 54 (2) and 65-3 shall not apply to cases in which feasibility study on investment or contribution is underway as at the time such amended provisions enter into force in accordance with guidelines for budget formulation of public corporations determined by the heads of local governments. Article 5 (Transitional Measures concerning Existing Local Government Invested Corporations and Local Government Contributed Foundations)
| (1) | Local government invested corporations or local government contributed foundations established pursuant to the previous provisions as at the time the amended provisions of Article 77-3 enter into force shall be deemed local government invested corporations or local government contributed foundations established pursuant to this Act. |
| (2) | The amended provisions of Articles 77-6 (2) shall not apply to a local government invested corporation in which a local government has invested an amount less than 1/10 of its capital as at the time this Act enters into force. |
Article 6 (Transitional Measures concerning Limit on Guarantee for Repayment of Bonds)
Where a local government guarantees the issuance of bonds or borrowing of funds by a local government invested corporation pursuant to the previous provisions before this Act enters into force, lawful guarantee shall be deemed to have been given pursuant to the amended provisions of Article 77-5.
ADDENDA <Act No. 12507, Mar. 24, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 10 Omitted.
ADDENDUM <Act No. 12727, Jun. 3, 2014>
This Article shall enter into force on the date of its promulgation.
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 the amended provisions of the Acts which were promulgated before this Act enters into force but the enforcement dates of which have not arrived yet among the Acts amended pursuant to Article 6 of the Addenda shall enter into force on the enforcement dates of such Acts.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 13568, Dec. 15, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 65-5 and 80 shall enter into force six months after the date of its promulgation. <Amended by Act No. 13633, Dec. 29, 2015> Article 2 (Applicability to Formulation of Medium- to Long-Term Business Management Plans)
The amended provisions of Article 9-2 shall begin to apply from the fiscal year that follows the fiscal year to which the enforcement date of this Act belongs. Article 3 (Applicability to Restrictions on Requests for Disciplinary Action)
The amended provisions of Article 63-6 (including the cases of application mutatis mutandis under Article 76 (2)) shall apply to cases where any ground for a disciplinary action occurs after this Act enters into force. Article 4 (Applicability to Debt Guarantee Contracts)
The amended provisions of Article 65-4 shall apply to a contract that a public corporation concludes on or after the enforcement date prescribed in the proviso of Article 1 of the Addenda. Article 5 (Transitional Measures concerning Grounds for Disqualification of Executive Officers)
Notwithstanding the amended provisions of Article 60 (1) (including the cases of application mutatis mutandis under the amended provisions of Article 76 (2)), executive officers of a public corporation and a public agency as at the time this Act enters into force shall be governed by the previous provisions until the expiration of relevant executive officers' terms of office.
ADDENDA <Act No. 13633, Dec. 29, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Article 2 (Applicability to Examination of Feasibility of Establishment of Public Corporation or Public Agency)
The amended provisions of Article 49 (4) (including cases applied mutatis mutandis to a public agency under Article 76 (2)) shall apply to examination of feasibility conducted after this Act enters into force. Article 3 (Applicability to Examination of Feasibility of New Investment Projects)
The amended provisions of Article 65-3 (2) shall apply to examination of feasibility conducted after this Act enters into force. Article 4 (Applicability to Business Management in Real Names and Disclosure Thereof)
The amended provisions of Article 65-4 shall apply to new investment project subject to the examination of feasibility conducted after this Act enters into force. Article 5 (Applicability to Hearing Opinions of Residents)
The amended provisions of Article 78-6 shall apply to cases where a local public enterprise is established or an order to improve management or a request for dissolution is received from the Minister of the Interior and Safety after this Act enters into force. Article 6 (Transitional Measures concerning Corporations for Business Consultations)
| (1) | A corporation for business consultation established with the authorization of the Minister of the Interior and Safety for its establishment under the previous provisons of Article 78-3 as at the time this Act enters into force (hereafter referred to as "corporation" in this Article) may request approval from the Minister of the Interior and Safety for the Evaluation Institute to succeed to all of its property, rights and obligations as resolved by its board of directors. |
| (2) | When a corporation obtains approval from the Minister of the Interior and Safety under paragraph (1), it shall be deemed dissolved simultaneously with the establishment of the Evaluation Institute, notwithstanding the provisions of the Civil Act relating to the dissolution and liquidation of a corporation, and the Evaluation Institute shall succeed to all the property, rights and obligations of the corporation by a universal title. |
| (3) | The chairperson, directors, and auditor of the Evaluation Institute existing as at the time this Act enters into force shall be deemed appointed as the chairperson, directors, and auditor of the Evaluation Institute for the their remaining terms of office, respectively. |
ADDENDA <Act No. 14839, Jul. 26, 2017>
Article 1 (Enforcement Date)
| (1) | This Act shall enter into force three months after the date of its promulgation: Provided, That ... <omitted> ... amendments to Acts already promulgated but not yet enforced before this Act enters into force among Acts amended pursuant to Article 6 of the Addenda shall enter into force on the enforcement dates of the respective relevant Acts. |
Articles 2 through 6 Omitted.
ADDENDA <Act No. 14917, Oct. 24, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicability to Notification of Initiation or Completion of Investigation by Investigation Agencies)
The amended provisions of Article 80-2 shall begin to apply from the examination or investigation initiated after this Act enters into force.
ADDENDA <Act No. 16664, Dec. 3, 2019>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation: Provided, That the amended provisions of Articles 2 (1) 9, 60 (1) 1, and 80 (2) shall enter into force on the date of its promulgation. Article 2 (Applicability to Collection of Arrears)
The amended provisions of Article 22 (4) and (5) shall begin to apply to arrears imposed after this Act enters into force. Article 3 (Applicability to Measures against Persons Who Commit Misconduct)
The amended provisions of Articles 63-7 and 63-8 shall begin to apply where misconduct under the amended provisions of Article 63-7 (2) is committed after this Act enters into force. Article 4 (Transitional Measures concerning Examination of Feasibility of New Investment Project)
Notwithstanding the amended provisions of Article 65-3, the previous provisions shall apply where an examination of the feasibility of a new investment project is in progress as at the time this Act enters into force.
ADDENDA <Act No. 17387, Jun. 9, 2020>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Submission of Written Integrity Pledge)
The amended provisions of Articles 64-4, 64-5, and 76 (2) shall begin to apply to bidding publicly announced or notified on or after the date this Act enters into force: Provided, That where a negotiated contract is concluded pursuant to the proviso of Article 64-2 (3), such amended provisions shall begin to apply to a contract concluded on or after the date this Act enters into force.
ADDENDUM <Act No. 17522, Oct. 20, 2020>
This Act shall enter into force three months after the date of its promulgation.