Law Viewer

Back Home

ENFORCEMENT DECREE OF THE DEFENSE INDUSTRY DEVELOPMENT AND SUPPORT ACT

Presidential Decree No. 31424, Feb. 2, 2021

Amended by Presidential Decree No. 31557, Mar. 30, 2021

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Decree is to prescribe matters delegated by the Defense Industry Development and Support Act and the matters necessary for the enforcement of the said Act.
CHAPTER II CREATING FRAMEWORK FOR DEVELOPING DEFENSE INDUSTRY
 Article 2 (Establishment of the Defense Industry Development Master Plan)
(1) Where the Minister of Defense Acquisition Program Administration formulates a master plan for development of the defense industry (hereinafter referred to as "master plan") pursuant to Article 5 (1) of the Defense Industry Development and Support Act (hereinafter referred to as the "Act"), the Minister shall consult with the heads of relevant central administrative agencies in the relevant subparagraph according to the following classification:
1. Matters under Article 5 (2) 5 or 9 of the Act: The Minister of Trade, Industry and Energy;
2. Matters under Article 5 (2) 7 of the Act: The Minister of SMEs and Startups.
(2) Where the Minister of Defense Acquisition Program Administration intends to formulate a master plan pursuant to paragraph (1), the Minister may hold a public hearing, etc. in advance to hear opinions of interested persons, related experts, etc.
(3) Where it is necessary to modify or supplement the master plan, the Minister of the Defense Acquisition Program Administration may modify or supplement it on a yearly basis.
 Article 3 (Time of Investigation on Defense Industry)
(1) An investigation on the defense industry pursuant to Article 6 (1) of the Act (hereinafter referred to as "investigation") shall be conducted once every year: Provided, That If deemed necessary, it may be additionally conducted.
(2) Where the Minister of the Defense Acquisition Program Administration requests submission of materials or statement of opinions pursuant to Article 6 (2) of the Act, the Minister shall notify an investigation plan including the time, purpose, details, methods, etc. of the investigation.
(3) The materials that the Minister of the Defense Acquisition Program Administration (including agencies, associations, or organizations entrusted with the affairs of the Minister of the Defense Acquisition Program Administration pursuant to Article 34 (2)) may request in relation to Article 6 (1) 3of the Act under paragraph (2) of the same Article, and the institutions and organizations subject to such request shall be classified as follows:
1. The data on statements of appropriation of earnings surplus under the Corporate Tax Act, data for business registration, the standard balance sheet, standard income statement and the accessory detailed statement of the standard income statement under the Enforcement Decree of the same Act (limited to the statement of manufacturing cost, the statement of construction cost, and other statement of raw cost): the Commissioner of the National Tax Service;
2. A report on tax exemption, a statement of export performance, a statement of the electronic issuance of the relevant local letter of credit or a certificate of purchase, and a detailed statement of the submission of documents attached to the zero tax rate under the Value-Added Tax Act, and a statement of sales of the zero tax rate under the Enforcement Decree of the same Act: The Commissioner of the National Tax Service;
3. Monthly remuneration data: The President of the National Health Insurance Service under the National Health Insurance Act;
4. Employment insurance data: The President of the Korea Employment Information Service under the Framework Act on Employment Policy;
5. Data about export and import declarations: The Commissioner of the Korea Customs Service.
 Article 4 (Management and Promotion of Use of the Defense Industry Information Provision System)
(1) The Minister of the Defense Acquisition Program Administration may process the following affairs through an information provision system (hereinafter referred to as "information provision system") pursuant to Article 7 (1) of the Act:
1. Management of information related to the defense industry (hereinafter referred to as "information on the defense industry") collected through an investigation;
2. Disclosure of defense industry information under Article 7 (2) of the Act;
(2) The Minister of Defense Acquisition Program Administration may perform the following duties to manage and operate the information provision system:
1. Cooperation at home and abroad for the management of information on the defense industry;
2. Development, operation, improvement, etc. of the information provision system;
3. Training of specialized personnel related to the information provision system;
4. Other matters recognized by the Minister of the Defense Acquisition Program Administration as necessary for the efficient management of information on the defense industry and the systematic operation of an information provision system.
CHAPTER III SUPPORT SYSTEM FOR ENHANCING COMPETITIVENESS OF DEFENSE INDUSTRY
 Article 5 (Persons Eligible for Designation as National-Policy Projects in Defense Industry and Procedures therefor)
(1) Any institution which the Minister of the Defense Acquisition Program Administration may designate and publicly notify as a national-policy project in the defense industry pursuant to Article 8 (1) of the Act shall be as follows: <Amended on Mar. 30, 2021>
1. A project that falls under the field of strategic research and development for national defense science and technology innovation, included in the basic plan for national defense science and technology innovation pursuant to Article 6 (1) of the Defense Science and Technology Innovation Promotion Act;
2. A project with a significant impact on industrial and economic sectors, among projects with a total project cost exceeding 500 billion won;
3. A project with a significant impact on technology and industry, among projects implemented with participation by at least two central administrative agencies;
4. Other projects deemed by the Minister of the Defense Acquisition Program Administration as dangerous for participation by defense contractors (hereinafter referred to as "defense contractors") under subparagraph 9 of Article 3 of the Defense Acquisition Program Act.
(2) The examination committee for national-policy projects in the defense industry shall be established in the Defense Acquisition Program Administration to examine whether the projects under paragraph (1) meet the designation standards referred to in Article 5 (2) 4 of the Act.
(3) Except as otherwise provided in paragraphs (1) and (2), matters necessary for the designation, etc. of national-policy projects in the defense industry shall be determined and publicly announced by the Minister of the Defense Acquisition Program Administration.
 Article 6 (Benefits Following Designation of National-Policy Projects in Defense Industry)
(1) The Minister of the Defense Acquisition Program Administration may grant the following benefits, pursuant to Article 8 (2) of the Act, to persons who implement national-policy projects in the defense industry designated pursuant to Article 8 (1) of the Act:
1. A total amount of liquidated damages for delay paid pursuant to Article 74 (1) and (2) of the Enforcement Decree of the Act on Contracts to Which the State Is a Party shall be limited to 10/100 of the contract amount (where the already-completed part or the already-supplied part is taken over through examination, the amount thereof is deducted from the contract amount);
2. Where it is deemed that the performance of a contract is delayed due to any cause attributable to the procuring agency, the number of days delayed shall be excluded from inclusion in the number of delayed days under Article 74 (1) of the Enforcement Decree of the Act on Contracts to Which the State Is a Party, even where the other party to the contract is liable;
3. In cases of Article 27 (1) 1 of the Act on Contracts to Which the State Is a Party (limited to cases where the implementation of a contract is poor or crude), the period for restriction on the qualification for participation in a tendering procedure shall be reduced by 1/2 of the period prescribed by Ordinance of the Ministry of Economy and Finance pursuant to Article 76 (3) of the Enforcement Decree of the same Act: Provided, That the punishment may be aggravated or mitigated in accordance with the criteria prescribed by Ordinance of the Ministry of Economy and Finance based on the period reduced by 1/2, and if the period of the punishment is less than one month, the punishment shall be exempted;
4. Where the amount of liquidated damages for delay reaches the upper limit specified in subparagraph 1, the extension of the contract period on the condition that the liquidated damages for delay in the upper limit amount are imposed.
 Article 7 (Establishment and Implementation of Component Management Policies)
(1) The policy to manage components for weapons systems pursuant to Article 9 (1) of the Act (hereinafter referred to as "weapons system components management policy") shall include the following:
1. Matters concerning the domestic development of components of weapons systems;
2. Enhancement of the reliability of components of weapons systems;
3. Matters concerning the discontinuation management of components of weapons systems;
4. Other matters concerning the management of components of weapons systems necessary for the stable operation of weapons systems and the preparation for combat advancement.
(2) In order to efficiently establish and implement weapons system components management policy, the Minister of National Defense shall organize and operate consultative bodies with the Defense Acquisition Program Administration, each armed force, the Agency for Defense Development under the Act on the Agency for Defense Development (hereinafter referred to as the "Agency for Defense Development"), and the Agency for Defense Technology and Quality established under Article 32 of the Defense Acquisition Program Act (hereinafter referred to as the "Agency for Defense Technology and Quality").
(3) The Minister of the Defense Acquisition Program Administration and the Chiefs of Staff of the respective armed forces shall ensure that the components of weapons systems are acquired and managed in compliance with the weapons system components management policy.
(4) The Minister of National Defense shall prescribe matters necessary for the formulation and implementation of the weapons system components management policy and the composition and operation of the consultative bodies under paragraph (2).
 Article 8 (Requirements for Selection of Business Entity for Domestic Development of Components)
(1) Pursuant to Article 9 (2) of the Act, the Minister of the Defense Acquisition Program Administration may select a person who meets each of the following requirements as a business entity to domestically develop components:
1. The development validity of components shall exist when considering the feasibility of development and the necessity to secure technology;
2. Technical personnel, facilities, and equipment necessary for performing development tasks shall be secured.
(2) The Minister of the Defense Acquisition Program Administration shall conclude an agreement including the following matters with a person selected as a business entity to domestically develop components pursuant to Article 9 (2) of the Act (hereinafter referred to as "business entity to domestically develop components"): Provided, That matters prescribed in subparagraphs 3 through 6 shall be limited to where the Minister of the Defense Acquisition Program Administration contributes pursuant to Article 9 (3) of the Act:
1. The task of the development project;
2. Persons in charge of development projects;
3. An amount contributed pursuant to Article 9 (3) of the Act (hereinafter referred to as "contribution");
4. Matters concerning the utilization of the development outcomes and the payment of royalties;
5. Matters concerning the settlement of expenses incurred in the development project;
6. Matters concerning the recovery of contributions;
7. Matters concerning the amendment to the agreement;
8. Other matters prescribed by the Minister of the Defense Acquisition Program Administration regarding the domestic development of components.
(3) "Any other research institute or organization prescribed by Presidential Decree" in Article 9 (3) 5 of the Act means the following institutes or organizations:
1. A university, industrial college, junior college, or technical college under subparagraph 1, 2, 4, or 6 of Article 2 of the Higher Education Act;
2. The Gwangju Institute of Science and Technology established under the Gwangju Institute of Science and Technology Act;
3. The Daegu Gyeongbuk Institute of Science and Technology established under the Daegu Gyeongbuk Institute of Science and Technology Act;
4. Ulsan National Institute of Science and Technology under the Ulsan National Institute of Science and Technology Act;
5. The Korea Advanced Institute of Science and Technology established under the Korea Advanced Institute of Science and Technology Act;
6. A specialized research institute in subparagraph 10 of Article 3 of the Defense Acquisition Program Act (hereinafter referred to as “specialized research institute”);
7. Other institutions recognized by the Minister of the Defense Acquisition Program Administration as having expertise in the domestic development of components.
 Article 9 (Payment, Use, and Management of Contributions)
(1) Where the Minister of the Defense Acquisition Program Administration contributes funds for a domestic development project of components pursuant to Article 9 (3) of the Act, he or she may contribute such funds in installments in consideration of the progress status, etc. of the relevant project.
(2) Upon receipt of contributions under Article 9 (3) of the Act, a business entity to domestically develop components shall establish a separate account for the contributions and manage them.
(3) Where a business entity to domestically develop components receives contributions pursuant to Article 9 (3) of the Act, he or she shall use such contributions only to cover expenses incurred in implementing the domestic development project of components, as prescribed by the Minister of the Defense Acquisition Program Administration.
(4) Where a business entity to domestically develop components uses contributions for other purposes in violation of paragraph (3), the Minister of the Defense Acquisition Program Administration may recover all or some of the contributions in accordance with the agreement under Article 8 (2).
 Article 10 (Support for Test and Evaluation of Domestic Development Project of Components)
(1) In cases where a business entity to domestically develop components intends to receive support under the subparagraphs of Article 9 (5) of the Act, the entity shall submit an application for technical support or an application for examination and evaluation support, including the following matters to the Minister of National Defense, the Minister of the Defense Acquisition Program Administration, the Chief of Staff of each armed force, the President of the Agency for Defense Development (hereinafter referred to as the "President of the Agency for Defense Development") or the President of the Defense Agency for Technology and Quality (hereinafter referred to as the "President of the Defense Agency for Technology and Quality"):
1. Details and period of support;
2. Details and conditions of cost sharing.
(2) Upon receipt of an application for support for test and evaluation under paragraph (1), the Minister of the Defense Acquisition Program Administration may request the Chiefs of Staff, the President of the Agency for Defense Development, or the President of the Defense Agency for Technology and Quality to provide support for the following matters to a business entity to domestically develop components:
1. Lease and transfer of weapons systems;
2. Testing of system installation of domestically developed components;
3. Other matters determined by the Minister of the Defense Acquisition Program Administration to be necessary for test and evaluation of domestically developed components.
(3) Upon receipt of a request from the head of the Defense Acquisition Program Administration pursuant to paragraph (2), the Chiefs of Staff, the President of the Agency for Defense Development, or the President of the Defense Agency for Technology and Quality shall comply with the request unless there is a justifiable reason.
 Article 11 (Preferential Application of Domestically Developed Components)
(1) The Minister of the Defense Acquisition Program Administration shall notify the Chiefs of Staff, the President of the Agency for Defense Development, defense enterprises, etc. (hereinafter referred to as "defense enterprises, etc.") of a list of components under domestic development or of which development is completed (hereinafter referred to as "domestically developed components") and frequently notify changes in the domestically developed components.
(2) The Minister of the Defense Acquisition Program Administration and the Chiefs of Staff of the respective armed forces shall preferentially reflect the list of domestically developed components notified pursuant to paragraph (1) in a project plan for the research and development of weapons systems and the operation of military power.
(3) When the Minister of the Defense Acquisition Program Administration and the Chiefs of Staff of the respective armed forces conclude a contract for the acquisition of weapons systems or a contract for improvement and components necessary for the operation of weapons systems, they shall preferentially check the domestically developed components notified under paragraph (1) and include them in the contract.
(4) Defense contractors, etc. shall endeavor to minimize the quantity of imported goods by monitoring the domestically developed components notified pursuant to paragraph (1).
 Article 12 (Support for Growth of Defense-Related Small and Medium Enterprises or Venture Businesses)
(1) The following matters shall be included in the policies necessary to support the growth of defense-related small and medium enterprises or venture businesses established by the Minister of the Defense Acquisition Program Administration pursuant to Article 10 (1) of the Act:
1. Basic direction and goals for the growth of defense-related small and medium enterprises or venture businesses;
2. Details and implementation plans for each project referred to in the subparagraphs of Article 10 (2) of the Act.
(2) “Matters prescribed by Presidential Decree” in Article 10 (2) 4 of the Act means the following:
1. Support for domestic and international market development;
2. Provision of information, education and consulting on technology, management, administration, law, etc. related to the defense industry;
3. Support for joint utilization of research facilities and equipment;
4. Support for technologies for domestic development of components promoted in cooperation with central administrative agencies, local governments, academic circles, research institutes, etc.;
5. Operation of the support center for the growth of defense-related small and medium enterprises or venture businesses promoted in cooperation with central administrative agencies or local governments;
6. Other matters that the Minister of the Defense Acquisition Program Administration recognizes as necessary for the support for the growth of defense-related small and medium enterprises or venture businesses.
(3) A person who intends to receive assistance with projects under Article 10 (2) of the Act shall apply for assistance to the Minister of the Defense Acquisition Program Administration, as prescribed by the Minister of the Defense Acquisition Program Administration.
(4) Matters concerning the procedures for filing an application under paragraph (3) and the procedures for selection based on such application shall be determined and publicly notified by the Minister of the Defense Acquisition Program Administration.
 Article 13 (Business Mediation System)
(1) The Minister of the Defense Acquisition Program Administration shall, when the Minister recommends agreement pursuant to the latter part of Article 11 (1), with the exception of the subparagraphs, of the Act, present a mutual agreement proposal in the form prescribed by Ordinance of the Ministry of National Defense.
(2) A person who intends to apply for business mediation pursuant to Article 11 (1) 2 of the Act shall present an application to the Minister of the Defense Acquisition Program Administration along with documents prescribed by Ordinance of the Ministry of National Defense attached thereto.
 Article 14 (Methods of Fact-Finding Investigation)
(1) Where the Minister of the Defense Acquisition Program Administration conducts a fact-finding investigation for business mediation pursuant to Article 11 (4) of the Act, the Minister shall serve the relevant large enterprises, small and medium enterprises, or defense contractors (hereinafter referred to as "person subject to investigation") with documents stating the following matters at least 10 days prior to the commencement of such investigation: Provided, That in cases where the Minister conducts such investigation by obtaining voluntary cooperation of the person subject to investigation, the Minister may present the following matters at the time of commencement of the investigation or orally notify objects of the investigation, etc.:
1. Purposes of the investigation;
2. Time period and venue of the investigation;
3. Name and position of the investigator;
4. Scope and content of the investigation;
5. Materials to be submitted;
6. Other necessary matters in connection with the fact-finding investigation.
(2) No fact-finding investigation under paragraph (1) shall be conducted before sunrise or after sunset: Provided, That this shall not apply in cases of the following cases:
1. Where the person subject to investigation has agreed thereto;
2. Where fact-finding is conducted during business hours of an office or place of business, etc.;
3. Where the purpose of the investigation cannot be achieved by conducting a fact-finding investigation from sunrise to sunset.
(3) The persons conducting the investigation under paragraph (1) shall carry a certificate of their authority and shall produce it to the person subject to investigation.
(4) Where a person conducts a fact-finding investigation pursuant to paragraph (1), when he or she conducts such investigation by having access to an office or a place of business of the person subject to investigation, he or she shall have the relevant persons be present at the relevant office or place of business, and in cases where he or she listens to a statement of the relevant persons in the process of the fact-finding investigation, he or she shall prepare the details thereof on record.
(5) The Minister of the Defense Acquisition Program Administration shall notify a person subject to investigation of the result thereof within seven days from the date when the result of the investigation has been confirmed.
(6) Where necessary for conducting fact-finding investigations pursuant to paragraph (1), the Minister of Defense Acquisition Program Administration may have the following persons participate therein:
1. A person who is qualified as a certified public accountant;
2. A person who is qualified as an attorney at law;
3. A specialist at a specialized research institution.
 Article 15 (Method of Publication of Recommendations for Implementation)
(1) When the Minister of the Defense Acquisition Program Administration publishes recommendations for implementation pursuant to Article 11 (5) of the Act, the Minister shall post such recommendations on the website, etc., and notify the relevant large enterprises or defense contractors of the details thereof in writing.
(2) Where the Minister of the Defense Acquisition Program Administration orders the implementation of recommended matters to the large enterprises or defense contractors pursuant to Article 11 (5) of the Act, the Minister shall notify them in writing and confirm the status of implementation.
(3) When the Minister of the Defense Acquisition Program Administration has withdrawn the whole or part of the details of mediation pursuant to Article 11 (7) of the Act, the Minister shall notify the relevant large enterprises or defense contractors of the details thereof in writing and publicly announce the withdrawal office on the website, etc.
(4) When the Minister of the Defense Acquisition Program Administration has recommended takeover, commencement, or expansion of a business or temporary suspension of investment pursuant to Article 11 (8) of the Act, the Minister shall notify the relevant large enterprises or defense contractors of the details thereof in writing.
 Article 16 (Application Procedures for Loans)
(1) Where a defense contractor, etc. intends to obtain a loan pursuant to Article 12 of the Act, it shall apply for a loan to a financial institution that handles the relevant loan, on the recommendation of the Minister of the Defense Acquisition Program Administration.
(2) Matters concerning the interest determined by the Minister of the Defense Acquisition Program Administration pursuant to Article 12 (1) of the Act and the methods, procedures, etc. for recommending loans under paragraph (1) shall be determined and publicly notified by the Minister of the Defense Acquisition Program Administration.
 Article 17 (Provision of Subsidy)
(1) Subsidy that the Minister of Defense Acquisition Program Administration may grant to foster the defense industry pursuant to Article 13 (1) 4 of the Act shall be as follows:
1. Expenses incurred in the relocation of facilities of the defense industry pursuant to orders under Article 49 (1) of the Defense Acquisition Program Act;
2. Interest on funds required for reserving raw materials pursuant to Article 55 of the Defense Acquisition Program Act;
3. Labor expenses for personnel or maintenance of equipment idle by the Government suspending the procurement of defense industrial goods (hereinafter referred to as "defense materials") under subparagraph 7 of Article 3 of the Defense Acquisition Program Act or significantly reducing the order volume of orders;
4. Expenses for restoration of destroyed or lost defense facilities or defense materials or purchase of new ones due to natural disaster or other accidents;
5. Expenses incurred in removing or disposing of facilities and equipment exclusively for the production of defense products idle in accordance with the Government's restructuring plan for the defense industry.
(2) A defense contractor, etc. or specialized research institute which intends to receive a subsidy pursuant to Article 13 (1) of the Act shall submit an application prescribed by Ordinance of the Ministry of National Defense to the Minister of the Defense Acquisition Program Administration along with documents prescribed by Ordinance of the Ministry of National Defense.
(3) When the Minister of the Defense Acquisition Program Administration grants subsidies, the Minister may attach conditions to return all or part of the subsidies to the State where substantial profits are generated from the subsidies to defense contractor, etc. or specialized research institutes.
(4) Except as otherwise provided for in paragraphs (1) through (3), matters necessary for granting subsidies, such as the standards for granting subsidies, shall be determined and publicly notified by the Minister of the Defense Acquisition Program Administration.
 Article 18 (Transfer of Assets by Subsidies)
(1) Where a defense contractor, etc. or a specialized research institute intends to obtain approval for the transfer, exchange or lease of assets acquired with subsidies or whose utility has increased pursuant to Article 13 (2) of the Act, it shall submit an application prescribed by Ordinance of the Ministry of National Defense to the Minister of the Defense Acquisition Program Administration, along with documents prescribed by Ordinance of the Ministry of National Defense.
(2) Upon receipt of an application under paragraph (1), the Minister of the Defense Acquisition Program Administration shall determine whether to approve it within two months from the date of application and notify the applicant thereof.
 Article 19 (Training Professionals in the Defense Industry)
(1) In order to nurture professional human resources necessary for developing the defense industry (hereinafter referred to as "professional human resources for the defense industry") pursuant to Article 14 (1) 3 of the Act, the Minister of Defense Acquisition Program Administration may implement the following measures:
1. Support for training specialists in the defense industry and re-education;
2. Support for training of human resources specializing in the defense industry and connecting jobs;
3. On-line training in the defense industry.
(2) The Minister of the Defense Acquisition Program Administration may designate any of the following research institutes, etc. as a training institution for professional personnel in the defense industry under Article 14 (2) of the Act (hereinafter referred to as "training institution for professional personnel in the defense industry"):
1. Government-funded research institutes under the Act on the Establishment, Operation and Fostering of Government-Funded Research Institutes;
2. A school under Article 2 of the Higher Education Act;
3. Schools specified in Article 2 of the Elementary and Secondary Education Act;
4. Other educational and training institutions related to the defense industry deemed necessary by the Minister of the Defense Acquisition Program Administration.
(3) When the Minister of the Defense Acquisition Program Administration designates an institution for training specialized personnel in the defense industry pursuant to paragraph (2), the Minister shall consider the following matters:
1. Appropriateness of educational facilities and professional faculty;
2. Status of necessary educational equipment;
3. Appropriateness of the subsidy utilization plan;
4. Appropriateness of curriculum and contents of education according to the subject of education.
(4) A research institute, etc. which intends to be designated as a training institution for professional personnel in the defense industry shall submit an application prescribed by Ordinance of the Ministry of National Defense to the Minister of the Defense Acquisition Program Administration, attaching the following documents: In such cases, the Minister of the Defense Acquisition Program Administration shall verify the corporation registration certificate through administrative data matching under Article 36 (1) of the Electronic Government Act:
1. Articles of association;
2. Status of faculty members and status of human resources, facilities and equipment for support;
3. An education plan;
4. A financing plan for operating expenses and a plan for utilizing subsidies;
5. Education regulations.
(5) When the Minister of the Defense Acquisition Program Administration designates a training institution for professional personnel in the defense industry pursuant to paragraph (2), the Minister shall publicly announce such fact on the website, etc.
 Article 20 (Measures for Export Assistance)
(1) "Measures prescribed by Presidential Decree" in Article 15 (1) 6 of the Act means the following measures:
1. Facilitation of technological development, such as core components for export;
2. Transfer, lease, etc. of defense materials, etc. (hereinafter referred to as "defense materials, etc.") held by the Government;
3. Convention on sale of defense materials, etc. for export;
4. Tax deductions or exemptions for defense materials, etc. to be exported;
5. Model operations of each armed force of defense materials, etc. developed by defense contractors, etc. autonomously for export.
(2) Pursuant to Article 15 (2) of the Act, the Minister of the Defense Acquisition Program Administration may provide the following support for the promotion of exports of defense materials, etc.:
1. Subsidizing expenses incurred in holding and participating in exhibitions and academic conferences both domestically and internationally for promoting export;
2. Support for educational costs to train export professionals;
3. Support for visits to purchasing countries for export negotiations and invitation of key figures from purchasing countries;
4. Support for investigation and analysis of foreign markets, discovery of promising export items, and development of technologies for strengthening export competitiveness of defense contractors, etc.;
5. Other assistance recognized by the Minister of the Defense Acquisition Program Administration as necessary for promoting export.
(3) Where a person who exports defense materials, etc. intends to receive measures for follow-on logistics support following the export of defense materials, etc. pursuant to Article 15 (3) 1 of the Act, the person shall submit a plan for comprehensive management of s follow-on logistics support to the Minister of the Defense Acquisition Program Administration, including the following matters:
1. The outline and scope of export;
2. The scope of follow-on logistics support requested by the government of a purchasing country;
3. A plan for follow-on logistics support of an exporting enterprise (including a plan in preparation for the discontinuance of components);
4. Targets, timing, equipment necessary for support, methods of repayment of consideration, etc. to be supported by the Government or related agencies.
(4) Where a person who exports foreign governments and defense materials, etc. requests technical support for the modification and development of export defense materials, etc. pursuant to Article 15 (3) 2 of the Act, the person may file an application for technology transfer with the head of a technology holding agency under Article 16 (1) of the Enforcement Decree of the Defense Science and Technology Innovation Promotion Act. <Amended on Mar. 30, 2021>
(5) Where necessary for the test and evaluation (including the test and evaluation of materials that have been remodeled or developed into the existing defense materials, etc. for export) pursuant to Article 15 (3) 3 of the Act, the Minister of the Defense Acquisition Program Administration may request the Agency for Defense Development, the Agency for Defense Technology and Quality, armed forces, relevant government offices, etc. to provide support.
(6) The Minister of the Defense Acquisition Program Administration may take the following measures to support quality certification of defense materials, etc. for export pursuant to Article 15 (3) 4 of the Act:
1. Support for the quality assurance of exported munitions where an export enterprise or a purchasing country makes a request;
2. Granting the Government quality certification for munitions.
 Article 21 (Standards for Subsidization Export-Industrial Cooperation)
(1) Any person who intends to obtain support for the transfer of national defense science and technology (hereinafter referred to as "technology transfer") pursuant to Article 16 (1) 1 of the Act shall file an application for technology transfer with the agency holding the relevant national defense science and technology, along with documents stating the following matters: Provided, That with respect to intellectual property rights jointly owned pursuant to Article 10 (2) of the Act on the Promotion of National Defense Science and Technology Innovation, an application for technology transfer shall be filed with each of the joint owners: <Amended on Mar. 30, 2021>
1. Purpose and subject of technology transfer;
2. National defense science and technology subject to technology transfer;
3. Plan for utilization of the defense science and technology subject to technology transfer.
(2) The head of an agency that holds national defense science and technology who has received an application for technology transfer under paragraph (1) shall examine the following matters and send the outcomes thereof to the Minister of the Defense Acquisition Program Administration within one month from receipt of the application:
1. The extent and details of technology transfer;
2. Eligibility of a person subject to technology transfer;
3. The necessity of technology transfer;
4. The royalties for technology;
5. The procedures and issues for technology transfer;
6. Matters that the organizations, etc. that receive technology transfer shall abide by at the time of technology transfer;
7. Other matters determined and publicly notified by the Minister of the Defense Acquisition Program Administration.
(3) The Minister of the Defense Acquisition Program Administration in receipt of the results of review under paragraph (2) shall notify the head of the agency that holds defense science and technology of whether to provide support, after obtaining approval from the Minister of National Defense within two months from the date of receipt of the results.
(4) Where the head of the agency that holds defense science and technology is notified of support for technology transfer pursuant to paragraph (3), the head shall conclude a contract for technology transfer with a person eligible for technology transfer. In such cases, matters to be included in the contract, the collection and use of technical fees for technology transfer, etc. shall be determined and publicly notified by the Minister of the Defense Acquisition Program Administration.
(5) A person who intends to receive support under Article 16 (1) 2 of the Act shall submit an application prescribed by Ordinance of the Ministry of National Defense to the Minister of the Defense Acquisition Program Administration.
(6) Upon receipt of an application under paragraph (5), the Minister of the Defense Acquisition Program Administration shall examine the following matters, and notify the applicant of whether to provide support within two months from the receipt of the application with approval from the Minister of National Defense:
1. The duty to provide offset trade (hereinafter referred to as "offset trade") under Article 20 of the Defense Acquisition Program Act, which a purchasing country shall carry out in the Republic of Korea;
2. Duty of the defense contractors of the Republic of Korea to carry out export-industrial cooperation in the purchasing country;
3. The rate of application of offset trade and export-industrial cooperation between the Republic of Korea and purchasing countries.
(7) A person who intends to receive support under Article 16 (1) 3 of the Act shall submit an application prescribed by Ordinance of the Ministry of National Defense to the Minister of the Defense Acquisition Program Administration. In such cases, the application shall contain the following information:
1. A foreign company which has an intention to carry out the obligation of export-industrial cooperation on behalf of the defense contractors of the Republic of Korea, among foreign companies liable to perform the obligation of offset trade in the Republic of Korea;
2. Activities by which the enterprise under subparagraph 1 intends to transfer to a purchasing country on behalf of the defense contractor of the Republic of Korea;
3. Details of prior consultations between the Korean defense contractors and the purchasing countries on the matters under subparagraphs 1 and 2.
(8) Upon receipt of an application under paragraph (7), the Minister of the Defense Acquisition Program Administration shall examine whether an act specified in subparagraph 2 of the same paragraph falls under any subparagraph of Article 20 (3) of the Defense Acquisition Program Act and notify the relevant defense contractors, purchasing countries, and enterprises referred to in paragraph (6) 1 of whether to provide support, after obtaining approval from the Minister of National Defense.
(9) Except as otherwise provided for in paragraphs (1) through (8), the standards and procedures for supporting export-industrial cooperation shall be determined and publicly notified by the Minister of the Defense Acquisition Program Administration.
 Article 22 (Defense Industry Development Council)
(1) The Defense Industry Development Council (hereinafter referred to as the "Council") shall be established under the Ministry of National Defense to consult on the following matters for the development of the defense industry, export support, etc.:
1. Matters regarding the development of the defense industry, such as promotion of the domestic development of weapons systems, support for the growth of defense contractors, etc. and small and medium national defense and venture businesses;
2. Matters regarding support for the expansion of export of defense materials, etc. and defense science and technology, etc.;
3. Other matters deemed necessary by the chairperson of the Council (hereinafter referred to as the "chairperson") for the development of the defense industry, export support, etc.
(2) The Minister of National Defense and the Minister of Trade, Industry and Energy shall be the chairpersons, the Minister of the Defense Acquisition Program Administration shall be the vice-chairperson of the Council, and the following persons shall be the members of the Council:
1. Public officials in general service belonging to the Senior Executive Service of the Ministry of Economy and Finance, Ministry of Science and ICT, Ministry of Foreign Affairs, Ministry of National Defense, and Ministry of Trade, Industry and Energy, designated by the head of the agency to which they belong, from among public officials whose grade of duties is grade A;
2. Public officials in general service belonging to the Senior Executive Service of a central administrative agency, such as the Office for Government Policy Coordination, the Ministry of SMEs and Startups, etc. that the chairperson deems necessary to participate in the Council in relation to the agenda of the Council and designated by the head of the agency to which they belong, from among public officials whose grade of duties is grade A.
(3) The Ministry of National Defense and the Ministry of Trade, Industry and Energy shall have one executive secretary to handle the affairs of the Council, and the executive secretary shall be a public official at the director-general level.
(4) The chairperson may commission advisors from among experts in the defense industry to provide advice on matters subject to consultation under paragraph (1).
(5) The Council may establish a working council to efficiently perform its affairs and to be supported for its affairs.
(6) Matters necessary for the composition, operation, etc. of the working council under paragraph (5) shall be prescribed by the Ordinance of the Ministry of National Defense.
 Article 23 (Request for Cooperation to Relevant Institutions or Agencies)
(1) Where necessary for efficient performance of the affairs of the Council prescribed in Article 22 (5), the chairperson may request a central administrative agency, an institution or organization related to the defense industry, or relevant experts to submit materials and opinions related to meeting agenda items.
(2) The chairperson may request public officials belonging to central administrative agencies, employees of an institution or organization related to the defense industry, relevant experts, etc. to attend a meeting and state opinions regarding the submission of materials and opinions pursuant to paragraph (1).
CHAPTER IV ESTABLISHMENT OF SPECIALIZED INSTITUTION AND ASSOCIATION
 Article 24 (Permission for Establishment of Associations)
(1) A person who intends to establish an association or organization (hereafter in this Article referred to as "association or organization") under Article 19 of the Act shall submit an application for permission for establishment to the Minister of the Defense Acquisition Program Administration, along with the following documents:
1. Purpose of establishment;
2. Articles of association;
3. A list of at least 20 members.
4. A business plan.
(2) The articles of association under paragraph (1) 1 shall include the following:
1. Title and objectives;
2. The location of the principal office;
3. Matters concerning affairs and the execution thereof;
4. Matters concerning executive officers;
5. Qualifications for membership;
6. Matters concerning modifications of the articles of association;
7. Other matters necessary for the operation of the association or organization.
(3) An association or organization shall perform the following duties:
1. Duties of survey and research regarding the defense industry;
2. Duties to improve the competitiveness of the defense industry;
3. Duties to promote exports by the defense industry;
4. Other matters determined by the Minister of the Defense Acquisition Program Administration to be necessary to develop the defense industry.
(4) Where an association or organization intends to modify its articles of association, it shall obtain permission from the Minister of the Defense Acquisition Program Administration.
(5) The Minister of the Defense Acquisition Program Administration may, if necessary for the guidance and supervision of an association or organization, have it report matters concerning its affairs or request the submission of data, etc.
 Article 25 (Procedures for Granting Authorization on Establishment of Mutual-Benefit Association)
(1) Where a defense contractor, etc. intends to establish a defense industry mutual-benefit association (hereinafter referred to as "mutual-benefit association") pursuant to Article 20 (1) of the Act, at least 10 persons who are eligible for membership shall apply for approval from the Minister of the Defense Acquisition Program Administration after voting on the articles of association at the inaugural general meeting with the consent of at least 20 members.
(2) Upon receipt of an application under paragraph (1), the Minister of the Defense Acquisition Program Administration shall authorize the establishment of a mutual-benefit association, publicly announce such fact on its website, etc.
 Article 26 (Registration of Mutual-Benefit Association)
(1) When the mutual-benefit association receives approval for establishment pursuant to Article 25 (1), it shall register the following matters at the location of the main office:
1. Purpose;
2. Name;
3. Business;
4. Location of the office;
5. Date of authorization for establishment;
6. Total value of investment;
7. Amount of one equity unit;
8. Methods of investment;
9. Matters concerning restrictions on the transfer of investment certificates;
10. Names and resident registration numbers of executive officers (in cases of the chief director, including the director's address);
11. Matters concerning restrictions on representation;
12. Matters concerning proxies;
13. The methods of public announcement.
(2) If the matters registered under paragraph (1) (excluding the location of the office) are changed, such change shall be registered within three weeks from the date of the change: Provided, That registration of modification of the total value of investment under paragraph (1) 6 may be registered within three months after the end of each fiscal year based on the end of each fiscal year.
 Article 27 (Matters Stated in Articles of Association)
The following shall be included in the articles of association of a mutual-benefit association pursuant to Article 20 (5) of the Act:
1. Purpose;
2. Name;
3. Location of the office;
4. Matters concerning amount per share, methods of contributing for such share and calculation of share;
5. Matters concerning the qualification and membership and withdrawal of members;
6. Matters concerning assets and accounting;
7. Matters regarding the general meeting and the board of directors;
8. Matters concerning Executive officers and staff;
9. Matters concerning duties and the performance thereof;
10. Matters concerning modifications of the articles of association;
11. Matters concerning the dissolution of a mutual-benefit association and the disposal of the remaining property thereof;
12. Matters concerning guarantee limits;
13. Subject to guarantee and details of guarantee of mutual-benefit associations;
14. The methods of public announcement.
 Article 28 (Operation of Certification Institutions)
(1) A mutual-benefit association shall ensure independence from an association or organization established pursuant to Article 19 of the Act in conducting its affairs.
(2) Matters necessary for the operation of a mutual-benefit association shall be prescribed by articles of association.
 Article 29 (Projects of Mutual-Benefit Associations)
"Projects prescribed by Presidential Decree" in Article 21 (1) 11 of the Act means the following:
1. Investment or investment in the development of the defense industry in collective investment enterprises, collective investment organizations, etc. under the Financial Investment Services and Capital Markets Act;
2. Guarantee of payment for loans provided by its members when providing a loan pursuant to Article 12 (1) of the Act.
 Article 30 (Investment and Member's Liability)
(1) A mutual-benefit association shall issue investment securities indicating its investment to the members, as prescribed by the articles of association.
(2) The total amount of investment of a mutual-benefit association shall be the total amount of face values of equity securities issued by the mutual-benefit association according to contributions of its members.
(3) The amount of one investment unit must be uniform.
(4) The liability of a member shall be limited to the amount of share investment.
 Article 31 (Accumulation of Liability Reserve)
(1) A mutual-benefit association shall accumulate guarantee business and liability reserves for mutual-aid business as of the end of each business year to appropriate to the amount of subrogated payments at every period for the settlement of accounts.
(2) A mutual-benefit association shall accumulate emergency risk reserves at the end of each business year so as to ensure financial soundness in the event of a financial crisis.
 Article 32 (Handling of Personally Identifiable Numbers)
(2) A mutual-benefit association may process data which contain information on resident registration numbers or alien registration numbers under subparagraph 1 or 4 of Article 19 of the Enforcement Decree of the Personal Information Protection Act, if essential to perform the projects under Article 21 (1) of the Act.
 Article 33 (Change of Holders of Contribution Certificates)
(1) Where a member or former member intends to transfer the share to another member or a person who intends to become a member pursuant to Article 23 (1) of the Act, the member shall obtain a change in the name of the investment securities from the mutual-benefit association, as prescribed by the articles of association.
(2) Where a mutual-benefit association intends to dispose of share acquired for the reasons prescribed in Article 24 (1) 2 through 4 of the Act, it shall dispose of the relevant investment securities in the name of the mutual-benefit association.
CHAPTER V SUPPLEMENTARY PROVISIONS
 Article 34 (Entrustment of Affairs)
(1) The Minister of the Defense Acquisition Program Administration shall entrust the following affairs to the president of the Defense Agency for Technology and Quality pursuant to Article 26 (2) of the Act:
1. Establishing and operating the system for providing information under Article 7 (1) of the Act;
2. Support for the test and evaluation of the outcomes of a domestically developed component under Article 9 (5) 2 of the Act;
3. The following affairs related to loans under Article 12 of the Act:
(a) Preliminary review of defense contractors, etc. who have applied for a loan and examination of the appropriateness of support.
(b) Follow-up management through performance analysis, evaluation, and on-site verification of a company provided with loans;
4. Conducting tests regarding a test and evaluation prescribed in Article 15 (3) 3 of the Act;
5. Providing technical support for development and localization of components under Article 12 (2) 4;
6. Operating support centers and managing programs under Act 12 (2) 5;
7. Implementing policies to nurture professional human resources for the defense industry under Act 19 (1);
8. Support for investigation and analysis of foreign markets, discovery of promising export items, and development of technologies for strengthening export competitiveness under Article 20 (2) 4;
9. Support to promote export under Article 20 (2) 5;
10. Support for the quality assurance of exported munitions under Article 20 (6) 1.
(2) In accordance with Article 26 (2) and (3) of the Act, the Minister of Defense Acquisition Program Administration may entrust the investigation related to the formulation of a master plan to any of the following institutions, associations or organizations:
1. The President of the Agency for Defense Technology and Quality;
2. Government-funded research institutes established under the Act on the Establishment, Operation and Fostering of Government-Funded Research Institutes;
3. An association or organization as prescribed in Article 19 of the Act.
(2) When the Minister of the Defense Acquisition Program Administration entrusts affairs pursuant to paragraph (2), the Minister shall publicly announce the entrusted institution, association, or organization.
ADDENDA <Presidential Decree No. 31424, Feb. 2, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on February 5, 2021.
Article 2 (Applicability to Benefits of National-Policy Projects in Defense Industry)
Article 6 shall also apply to cases where liquidated damages for delay, restrictions on qualification for participation in a tendering procedure, an extension of the period for a contract, etc. occur because the period for the contract expires after this Decree enters into force, among projects deemed designated as national-policy projects in the defense industry pursuant to Article 3 of Addenda.
Article 3 (Transitional Measures concerning Designation of National-Policy Projects in Defense Industry)
Projects designated by the Minister of the Defense Acquisition Program Administration as national-policy projects in the defense industry before this Decree enters into force shall be deemed designated as national-policy projects in the defense industry pursuant to Article 8 of the Act and Article 5 of this Decree.
Article 4 Omitted.
Article 5 (Relationship to Other Statutes)
Where the previous Enforcement Decree of the Defense Acquisition Program Act or its provisions are cited by other Acts and subordinate statutes at the time of the enforcement of this Decree, it shall be deemed to have cited the relevant provisions of this Decree or this Decree in lieu of the previous provisions.
ADDENDA <Presidential Decree No. 31557, Mar. 30, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on April 1, 2021.
Articles 2 through 4 Omitted.