ENFORCEMENT DECREE OF THE SHIP INVESTMENT COMPANY ACT
Presidential Decree No. 17750, Sep. 26, 2002
Amended by Presidential Decree No. 18120, Nov. 4, 2003
Presidential Decree No. 18312, Mar. 17, 2004
Presidential Decree No. 19186, Dec. 26, 2005
Presidential Decree No. 19507, jun. 12, 2006
Presidential Decree No. 20300, Sep. 28, 2007
Presidential Decree No. 20544, Jan. 11, 2008
Presidential Decree No. 20722, Feb. 29, 2008
Presidential Decree No. 20947, Jul. 29, 2008
Presidential Decree No. 21610, Jul. 1, 2009
Presidential Decree No. 22151, May 4, 2010
Presidential Decree No. 23373, Dec. 13, 2011
Presidential Decree No. 24443, Mar. 23, 2013
Presidential Decree No. 24697, Aug. 27, 2013
Presidential Decree No. 24786, Oct. 4, 2013
Presidential Decree No. 25050, Dec. 30, 2013
Presidential Decree No. 25840, Dec. 9, 2014
Presidential Decree No. 27414, Jul. 28, 2016
Presidential Decree No. 27751, Dec. 30, 2016
Presidential Decree No. 27960, Mar. 27, 2017
Presidential Decree No. 29849, jun. 11, 2019
Presidential Decree No. 30509, Mar. 3, 2020
Presidential Decree No. 31212, Dec. 1, 2020
Presidential Decree No. 31380, Jan. 5, 2021
Presidential Decree No. 31553, Mar. 23, 2021
The purpose of this Decree is to prescribe matters mandated by the Ship Investment Company Act and matters necessary for enforcing that Act. [This Article Wholly Amended on Jul. 1, 2009]
| Article 2 (Statutes related to Marine Transportation and Finance) |
| (1) | "Statutes related to marine transportation or finance prescribed by Presidential Decree" under Article 7 (1) 3 of the Ship Investment Company Act (hereinafter referred to as the “Act”) means the following: <Amended on Dec. 13, 2011; Jul. 28, 2016; Dec. 1, 2020; Mar. 23, 2021> |
| 3. | Shipowners’ Mutual Protection and Indemnity Association Act; |
| (2) | "Person prescribed by Presidential Decree" in Article 7 (1) 6 of the Act means any of the following persons who were executive officers or employees at the time the grounds for revocation of permission, authorization, registration, etc. of business arose: <Amended on Mar. 23, 2013> |
| 1. | An auditor or a member of the audit committee; |
| 2. | An executive officer on whom suspension of performance of duties, request for dismissal, or other measures were imposed or an employee on whom request for suspension from office or heavier measures were imposed by the Minister of Oceans and Fisheries, the Financial Services Commission, or the Governor of the Financial Supervisory Service established under the Act on the Establishment, etc. of Financial Services Commission (hereinafter referred to as the “Governor of the Financial Supervisory Service”), due to an unlawful or unjust conduct that gave rise to the revocation of permission, authorization, registration, etc.; |
| 3. | A person to whom a disciplinary measure under subparagraph 2 was applicable but who resigned or retired from office before that measure was imposed. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 3 (Acquisition of Stocks by Promoters) |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 4 (Matters to be Stated in Articles of Incorporation) |
| 1. | Matters regarding the general meeting of shareholders and the board of directors; |
| 2. | Matters regarding executive officers; |
| 3. | Matters regarding evaluation of assets and accounting; |
| 4. | Matters regarding entrustment of duties; |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 5 (Matters to be Stated in Investment Prospectus) |
| 1. | Company name, purpose of establishment of the ship investment company, and location of the head office; |
| 2. | Overview of the chartering plan; |
| 3. | Overview of the investment plan; |
| 4. | Types and numbers of the stocks to be issued; |
| 5. | Matters regarding specifications and management of the ships; |
| 6. | Major financial status (ship purchase costs, capital procurement methods, etc.) |
| 7. | Overview of the ship investment management company and its management achievements; |
| 8. | Income distribution plan; |
| 9. | Whether the stocks are listed or registered; |
| 10. | Other matters necessary for investors, such as shipping-related market conditions. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 6 (Registration of Establishment) |
| 1. | Articles of incorporation; |
| 2. | Documents evidencing the acquisition of securities; |
| 3. | Subscription form for stocks; |
| 4. | Investigation report on the establishment of the company prepared by a director; |
| 5. | Minutes of the inaugural general meeting; |
| 6. | Documents evidencing a director's or an auditor's acceptance of appointment; |
| 7. | Documents evidencing the entrustment of the transfer of title; |
| 8. | Certificate of storage of payment for stocks by a financial institution such as a bank in charge of receiving the payment for stocks. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 7 Deleted. <Jul. 1, 2009> |
| Article 8 (Issuance of Stocks) |
| 3. | Total number of stocks issued and their issue prices; |
| 4. | The number of stocks to be subscribed and the amount of the subscription deposits; |
| 5. | Methods of allocation of stocks and the due date for the payment for stocks. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 8-2 (Additional Issuance of Stocks) |
| (1) | "Cases prescribed by Presidential Decree, such as where it is necessary for the normalization of operation of a ship or the protection of investors" in the proviso of Article 15 (2) of the Act means cases where the funds, raised through additional issuance of stocks in order to normalize the operation of a ship, normalize the management of the ship investment company, or otherwise protect the investors, are intended to be used for any of the following expenses: |
| 1. | Fuel cost, repair cost, and remodeling cost of ships, and other expenses for the management of ships; |
| 2. | Expenses related to cases where derivatives are traded for the purpose of hedging exchange risk; |
| 3. | Insurance premiums, taxes, and public charges; |
| 4. | Accounts payable related to the operation of ships; |
| 5. | Other expenses necessary for protecting investors, such as expenses incurred for normal operation of ships. |
| (2) | "Scope prescribed by Presidential Decree including the ratio, etc. of additional issuance of stocks" in the proviso of Article 15 (2) of the Act means complying with all of the following: |
| 1. | The number of additional issuance of stocks shall not exceed three times; |
| 2. | The cumulative amount of the par value of the additionally issued stocks shall not exceed 30 percent of the total par value of the stocks issued before the additional issuance of stocks. |
[This Article Newly Inserted on Oct. 4, 2013]
| Article 9 (Issue Price of Stocks) |
The issue price of stocks under Article 16 (2) of the Act shall be calculated in accordance with Article 176-8 (2) of the Enforcement Decree of the Financial Investment Services and Capital Markets Act: Provided, That where the stocks of the relevant ship investment company are not listed on the securities market, it shall be calculated by subtracting the current debts from the aggregate value of individual assets calculated by type in accordance with the following methods and then dividing the sum by the total number of stocks issued, with the base date for calculation being the day before the date of the meeting of the board of directors where the capital increase was decided: <Amended on Aug. 27, 2013> | 1. | Price of a ship: The acquisition price: Provided, if one year has passed since acquisition, it shall be the price at which the ship can be sold, taking into consideration the market conditions, etc; |
| 2. | Revenues from chartering ships: The amount at the time of the contract; |
| 4. | Deposits to financial institutions: The aggregate sum of principal and interest up until the base date for calculation; |
| 5. | Other assets: Amounts shown on the balance sheet. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 10 (Scope of Specially Related Persons) |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 11 (Exceptions to Acquisition of Treasury Stocks and Pledge) |
| (1) | Cases where a ship investment company may acquire its own stocks pursuant to Article 19 of the Act are as follows: |
| 1. | Where stocks are acquired for retirement; |
| 2. | Where stocks are acquired for disposition of odd-lot stocks; |
| 3. | Where stocks are acquired at no cost; |
| 4. | Where stocks are acquired by exercising the pledge established under paragraph (2). |
| (2) | Cases where a ship investment company may provide its own stocks as a pledge pursuant to Article 19 of the Act are limited to where it is deemed necessary in order to secure and exercise claims for the sale price of ships, charterage, etc. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 12 (Scope of Business) |
"Affairs prescribed by Presidential Decree" in Article 24 (1) 6 of the Act means affairs incidental to those under subparagraphs 1 through 5 of the same paragraph, such as an insurance contract in preparation for cases where the sale price of ships, charterage, etc. fluctuate according to the exchange rate. [This Article Wholly Amended on Jul. 1, 2009]
| Article 13 (Borrowing of Funds and Issuance of Bonds) |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 14 Deleted. <Jul. 1, 2009> |
| Article 15 (Ship Inspection Institutions) |
| 1. | The Korea Maritime Transportation Safety Authority established under the Korea Maritime Transportation Safety Authority Act and the classification society under Article 60 (2) of the Ship Safety Act; |
| 2. | A regular member of the International Association Classification Societies. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 16 (Scope of Persons Having a Special Relationship) |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 17 (Permission of Ship Investment Management Company) |
| (1) | Any person intending to obtain permission as a ship investment management company pursuant to Article 31 (1) of the Act shall file with the Minister of Oceans and Fisheries an application (including an application in electronic form) stating the following: <Amended on Mar. 23, 2013> |
| 1. | Company name and location; |
| 2. | Matters regarding capital; |
| 3. | Matters regarding executive officers; |
| 4. | Matters regarding business intended for constructive authorization if a person intends to obtain a constructive authorization for investment trading business or investment brokerage business pursuant to the proviso of Article 30 (2) of the Act. |
| (2) | The application under paragraph (1) shall be accompanied by the following documents; and upon receipt of the application, the Minister of Oceans and Fisheries shall verify a certified copy of the corporate register through the joint use of administrative information pursuant to Article 36 (1) of the Electronic Government Act: <Amended on May 4, 2010; Mar. 23, 2013> |
| 1. | Articles of incorporation; |
| 2. | Documents evidencing payment of capital; |
| 3. | Documents stating the names or titles of stockholders and the number of stocks owned by each of them; |
| 4. | Documents stating the name and location of the head office and branch offices; |
| 5. | A business plan and a statement of estimated earnings and expenses for two business years following the commencement of business; |
| 6. | The curriculum vitae and career certificates of ship management specialists and finance specialists; |
| (3) | Upon receipt of an application for permission filed under paragraph (1), the Minister of Oceans and Fisheries shall issue a permit stating the following if the applicant is deemed to meet all the requirements for permission: <Amended on Mar. 23, 2013> |
| 3. | Company name and location; |
| 4. | Name of the representative; |
| 5. | If concurrent business is approved under paragraph (4), details of the business.. |
| (4) | If a person intending to obtain permission as a ship investment management company also intends to obtain approval under the proviso of Article 32 (1) of the Act to concurrently engage in other business, he or she shall state the details of such other business in an application under paragraph (1) and submit relevant documents. In such cases, an application for approval of concurrent business shall be deemed filed. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 18 (Requirements for Permission of Ship Investment Management Company) |
| (2) | Ship management specialists and finance specialists under Article 31 (2) 3 of the Act shall have one of the following experiences or qualifications: |
| 1. | A person who has at least five years’ work experience in finance, building, chartering, etc. of ships in marine transportation business defined in subparagraph 1 of Article 2 of the Marine Transportation Act; in such cases, experience of working in the same kind of business at a ship investment management company shall be aggregated; |
| 3. | A person qualified as an attorney-at-law or with experience in the shipbuilding industry who is deemed by the Minister of Oceans and Fisheries to be equivalent to the person under subparagraph 1 or 2. |
| (3) | "Number prescribed by Presidential Decree" in Article 31 (2) 3 of the Act means six persons. In such cases, the number of persons falling under paragraph (2) 1 or 2 shall be at least two each. |
| (4) | Cases where a business plan is substantially insufficient to secure the soundness of management as provided in Article 31 (2) 4 of the Act mean cases not meeting the following requirements: |
| 1. | Prospects for earnings and expenses of the business plan shall be reasonable and feasible; |
| 2. | The business plan shall not violate statutes or regulations and shall not pose a threat to the sound financial order. |
| (5) | "Major shareholders prescribed by Presidential Decree" in Article 31 (2) 6 of the Act means shareholders who own at least 10/100 of the total number of issued stocks with voting rights on their own account, under whoever's name, or exercise de facto control over major management matters of a ship investment management company, such as the appointment and dismissal of executives (hereinafter referred to as "major shareholders"). |
| (6) | "Sufficient investment capacity and sound financial status prescribed by Presidential Decree" in Article 31 (2) 6 of the Act means that, if a major shareholder is a corporation, the amount calculated by subtracting total liabilities from total assets on the balance sheet as at the end of the immediately preceding business year is at least three times the amount of investment. |
[This Article Wholly Amended on Oct. 4, 2013]
| Article 19 (Rules of Conduct of Ship Investment Management Company) |
| 1. | Borrowing money from or lending money to a ship investment company entrusted with business; |
| 2. | Manipulating the securities prices of the ship investment company entrusted with business. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 19-2 (Minimum Amount of Net Assets of Ship Investment Management Company) |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 20 (Entrustment of Asset Custody) |
| (1) | Pursuant to Article 36 (1) of the Act, a ship investment company shall entrust business related to the safekeeping of assets such as ships to a custody company in accordance with the following classifications: |
| 1. | Ships and real property: Immediately upon acquisition, registration of ownership in the name of the company shall be made, and the safekeeping of the relevant documents shall be entrusted to the custody company. |
| 2. | Securities, cash, and other assets: Immediately upon acquisition, their safekeeping shall be entrusted to the custody company. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 21 (Methods to Enter into Asset Custody Agreement) |
| (1) | Any asset custody agreement entered into by a ship investment company with a custody company to entrust safekeeping of assets under Article 36 (1) of the Act shall include the following: |
| 1. | Name of the custody company; |
| 2. | Matters regarding the scope of business, responsibilities, and authority of the custody company; |
| 3. | Matters regarding the methods of safekeeping the assets; |
| 4. | Methods to calculate and time to pay the fees to the custody company; |
| 5. | Matters regarding the termination or rescission of the asset custody agreement; |
| 6. | In cases where the asset custody period is set, that period. |
| (2) | If a custody company enters into an asset custody agreement, it shall receive the following documents from the ship investment company and keep them: |
| 1. | Articles of incorporation; |
| 2. | A copy of the business registration certificate; |
| 3. | A certificate of corporate seal impression of the Chief Executive Officer; |
| 4. | Transaction seal impression report; |
| 5. | Minutes of the board of directors. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 22 (Obligations of Custody Companies) |
When a custody company determines necessary procedures and standards for the performance of its business pursuant to Article 37 (2) of the Act, the following shall be included: | 1. | A statement to the effect that executive officers and employees shall not provide any information or data acquired in connection with asset custody business to a third party without the approval of the relevant ship investment company and shall not use such information or data for purposes other than the business; |
| 2. | A statement to the effect that executive officers and employees of the custody company shall not use the assets entrusted for safekeeping for its own property; |
| 3. | A statement to the effect that the custody company shall designate a manager and personnel dedicated to each ship investment company and shall faithfully and promptly perform the asset custody procedures based on the asset management of the relevant ship investment company; |
| 4. | A statement to the effect that the custody company shall not serve as a ship investment management company for the relevant ship investment company; |
| 5. | A statement to the effect that the custody company shall keep records and books regarding asset custody business in order to ensure transparent dealing with administrative affairs and calculation regarding the custody. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 23 (Distribution of Profits) |
| (1) | "Operating expenses determined by Presidential Decree" in Article 41 (1) of the Act means any of the following: <Amended on Jan. 5, 2021> |
| 1. | Entrustment fees paid to the ship investment management company and the custody company; |
| 2. | Expenses incurred in the process of financing the acquisition of a ship; |
| 3. | All expenses incurred for building, sale, purchase, chartering, and management of a ship; |
| 4. | Expenses necessary for ship registration, ship inspection, etc.; |
| 5. | Insurance premiums, taxes, and public dues. |
| (2) | Profits accruing from the management of assets under Article 41 (1) of the Act shall include charterage, proceeds from sale of a ship, ship price discount, and other revenues. |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 24 (Supervision and Inspection) |
| 1. | Request for modification of the articles of incorporation (applicable to ship investment companies only); |
| 2. | Request for modification of an entrustment agreement entered into between the ship investment company and the ship investment management company; |
| 3. | Request for disposal of assets held by the ship investment company; |
| 4. | Request for compensation for damage to shareholders, etc.; |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 25 (Ship Investment Company Targeting Minority Investors) |
[This Article Wholly Amended on Jul. 1, 2009]
| Article 25-2 (Management of Personally Identifiable Information) |
[This Article Newly Inserted on Mar. 27, 2017]
| Article 26 (Re-Examination of Regulation) |
| (1) | The Minister of Oceans and Fisheries shall examine the validity of the following matters every three years from the following base dates (meaning by the day before the same date as the base date in every third year) and shall take necessary measures such as making improvements: <Amended on Dec. 9, 2014> |
| 1. | Deleted; <Dec. 30, 2016> |
| 2. | Exceptions to acquisition of treasury stocks and pledge under Article 11: January 1, 2014; |
| 3. | Scope of business under Article 12: January 1, 2014; |
| 4. | Borrowing of funds and issuance of bonds under Article 13: January 1, 2014; |
| 5. | Requirements for permission of a ship investment management company under Article 18: January 1, 2014; |
| 6. | Ship investment companies targeting minority under Article 25: January 1, 2014. |
| (2) | The Minister of Oceans and Fisheries shall examine the validity of the following matters every three years from the following base dates (meaning by the day before the same date as the base date in every third year) and shall take necessary measures such as making improvements: <Newly Inserted on Dec. 9, 2014; Dec. 30, 2016> |
| 1. | Deleted; <Dec. 30, 2016> |
| 2. | Matters to be stated in articles of incorporation under Article 4: January 1, 2017; |
| 3. | Additional issuance of stocks under Article 8-2: January 1, 2017; |
| 4. | Deleted. <Mar. 3, 2020> |
[This Article Newly Inserted on Dec. 30, 2013]
ADDENDUM <Presidential Decree No. 17750, Sep. 26, 2002>
This Decree shall enter into force on the date of its promulgation.
ADDENDUM <Presidential Decree No. 18120, Nov. 4, 2003>
This Decree shall enter into force on the date of its promulgation.
ADDENDUM <Presidential Decree No. 18312, Mar. 17, 2004>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 19186, Dec. 26, 2005>
| (1) | (Enforcement Date) This Decree shall enter into force on the date of its promulgation. |
| (2) | (Transitional Measures regarding Permission of Ship Investment Management Company) As prescribed in Article 2 (2) of the Addenda to the partially amended Act of Ship Investment Company Act (Act number 7641), the scope of business not to be conducted by the former ship investment management company that failed to meet the requirements for permission within three months from the enforcement date of the amended Act means business of the ship investment management company under subparagraph 2 of Article 2 of the Act which is newly entrusted by the ship investment company. |
ADDENDUM <Presidential Decree No. 19507, Jun. 12, 2006>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 20300, Sep. 28, 2007>
Article 1 (Enforcement Date)
This Decree shall enter into force on November 4, 2007.
Articles 2 through 7 Omitted.
ADDENDA <Presidential Decree No. 20544, Jan. 11, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 20, 2008. (Proviso Omitted.)
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 20722, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation: Provided, That the parts of the Presidential Decrees amended under Article 6 of this Addenda which were promulgated before the enforcement of this Decree but have not yet entered into force shall enter into force on the date each relevant Presidential Decree enters into force. Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 20947, Jul. 29, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on February 4, 2009. (Proviso Omitted.)
Articles 2 through 28 Omitted.
ADDENDUM <Presidential Decree No. 21610, Jul. 1, 2009>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 22151, May 4, 2010>
Article 1 (Enforcement Date)
This Decree shall enter into force on May 5, 2010.
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 23373, Dec. 13, 2011>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 16, 2011.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 24443, Mar. 23, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 6 Omitted.
ADDENDA <Presidential Decree No. 24697, Aug. 27, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 29, 2013. (Proviso Omitted.)
Articles 2 through 13 Omitted.
ADDENDUM <Presidential Decree No. 24786, Oct. 4, 2013>
This Decree shall enter into force on October 6, 2013.
ADDENDUM <Presidential Decree No. 25050, Dec. 30, 2013>
This Decree shall enter into force on January 1, 2014. (Proviso Omitted.)
ADDENDUM <Presidential Decree No. 25840, Dec. 9, 2014>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2015.
Articles 2 through 16 Omitted.
ADDENDA <Presidential Decree No. 27414, Jul. 28, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on August 1, 2016. (Proviso Omitted.)
Articles 2 through 4 Omitted.
ADDENDA <Presidential Decree No. 27751, Dec. 30, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2017. (Proviso Omitted.)
Articles 2 through 12 Omitted.
ADDENDUM <Presidential Decree No. 27960, Mar. 27, 2017>
This Decree shall enter into force on March 30, 2017. (Proviso Omitted.)
ADDENDA <Presidential Decree No. 29849, Jun. 11, 2019>
Article 1 (Enforcement Date)
This Decree shall enter into force on July 1, 2019.
Article 2 Omitted.
ADDENDUM <Presidential Decree No. 30509, Mar. 3, 2020>
This Decree shall enter into force on the date of its promulgation.
ADDENDA <Presidential Decree No. 31212, Dec. 1, 2020>
Article 1 (Enforcement Date)
This Decree shall enter into force on December 4, 2020.
Articles 2 and 3 Omitted.
ADDENDUM <Presidential Decree No. 31380, Jan. 5, 2021>
This Decree shall enter into force on the date of its promulgation. (Proviso Omitted.)
ADDENDA <Presidential Decree No. 31553, Mar. 23, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on March 25, 2021. (Proviso Omitted.)
Article 2 Omitted.