ENFORCEMENT DECREE OF THE SPECIAL ACT ON THE PROMOTION OF BUSINESS CONVERSION IN SMALL AND MEDIUM ENTERPRISES
Presidential Decree No. 19667, Aug. 29, 2006
Amended by Presidential Decree No. 20137, jun. 29, 2007
Presidential Decree No. 20728, Feb. 29, 2008
Presidential Decree No. 20947, Jul. 29, 2008
Presidential Decree No. 21343, Feb. 27, 2009
Presidential Decree No. 21835, Nov. 20, 2009
Presidential Decree No. 24697, Aug. 27, 2013
Presidential Decree No. 25050, Dec. 30, 2013
Presidential Decree No. 27205, May 31, 2016
Presidential Decree No. 28213, Jul. 26, 2017
Presidential Decree No. 30380, Jan. 29, 2020
Presidential Decree No. 31380, Jan. 5, 2021
Presidential Decree No. 31611, Apr. 6, 2021
Presidential Decree No. 33321, Mar. 7, 2023
Presidential Decree No. 33459, May 9, 2023
Presidential Decree No. 33853, Nov. 7, 2023
| Article 2 (Scope of Business Conversion) |
| (2) | "Level higher than the one prescribed by Presidential Decree" in subparagraph 2 (c) of Article 2 of the Act means that the turnover of the relevant business becomes 30/100 or more of the total sales within three years after the commencement of the relevant business under subparagraph 2 (c) of Article 2 of the Act, or is applied to the relevant business. Where the number of full-time employees is not less than 30/100 of the total number of employees. <Newly Inserted on Nov. 7, 2023> |
| (3) | The types of business used in this Decree shall be classified according to the Korean Standard Industrial Classification prepared and publicly notified by the Commissioner of the Statistics Korea pursuant to Article 22 of the Statistics Act. <Amended on Nov. 7, 2023> |
[This Article Wholly Amended on Feb. 27, 2009]
| Article 2-2 (Field of New Business) |
In Article 2, paragraph 3 of the Act, "business fields prescribed by Presidential Decree" in subparagraph 3 (f) of Article 2 of the Act means a business field that utilizes national strategic technology according to attached Table 7-2 of the Enforcement Decree of the Act on Regulation of Tax Reduction and Exemption. [This Article Newly Inserted on Nov. 7, 2023]
| Article 3 (Scope of Application) |
"Standards prescribed by Presidential Decree" in Article 3 of the Act means that business conversion is made by a small and medium business operator with at least five full-time workers, as prescribed and publicly announced by the Minister of SMEs and Startups. <Amended on Jul. 26, 2017; Nov. 7, 2023> [This Article Wholly Amended on Feb. 27, 2009]
| Article 4 (Establishment and Implementation of Plans for Promotion of Business Conversion in Small and Medium Enterprises) |
The Minister of SMEs and Startups may conduct a demand survey of small and medium enterprises or agencies or organizations assisting small and medium enterprises when necessary for establishing a plan for the promotion of business conversion in small and medium enterprises (hereinafter referred to as "plan for the promotion of business conversion") pursuant to Article 4 (1) of the Act. <Amended on Jul. 26, 2017> [This Article Wholly Amended on Feb. 27, 2009]
| Article 5 (Composition and Operation of Business Conversion Deliberative Committee) |
| (1) | "Heads of the relevant central administrative agencies prescribed by Presidential Decree" in Article 5 (3) 1 of the Act means the following heads of the central administrative agencies: |
| 1. | The Minister of Strategy and Finance; |
| 2. | The Minister of Science and ICT; |
| 3. | The Minister of Employment and Labor; |
| 4. | The Chairperson of the Financial Services Commission. |
| (2) | The Minister of SMEs and Startups shall commission the members of the Deliberative Committee on Business Conversion (hereinafter referred to as the "Deliberation Committee") under Article 5 (1) of the Act from among the following persons pursuant to Article 5 (3) 2 of the Act: |
| 1. | A person who holds or held office as at least associate professor at a university under subparagraphs 1 through 6 of Article 2 of the Higher Education Act or the office equivalent thereto at an officially recognized research institute, who has at least ten years experience in research related to industrial and company policy, company reorganization, etc.; |
| 2. | Other persons who have abundant knowledge and experience in small and medium enterprises or industries. |
| (3) | Quorum for the meetings of the Review Committee shall be the simple majority of members on the register, and a resolution is deemed to be passed if approved by a majority of members present. |
| (4) | Except as otherwise provided for in paragraphs (1) through (3), matters necessary for the organization and operation of the Deliberative Committee shall be determined by the Minister of SMEs and Startups through a resolution of the Deliberative Committee. |
[This Article Newly Inserted on Nov. 7, 2023]
| Article 5-2 (Exclusion, Challenge and Evasion of Committee Members) |
| (1) | Any member of the Deliberative Committee (hereinafter referred to as "member") who falls under any of the following shall be excluded from deliberation and resolution by the Deliberative Committee: |
| 1. | Where a member, or his or her current or former spouse becomes a party to the relevant agenda item or is holding any right or duty jointly with a party to such agenda item; |
| 2. | Where a Committee member is a current or former relative of a party to the relevant agenda; |
| 3. | If the member has provided testimony, statement, consultation, research, service, or expert opinion in regards to the relevant agenda; |
| 4. | Where a member or a legal person or organization, etc. to which he or she belongs is or was an agent of a party to the case at issue; |
| (2) | Where there exists any cause for exclusion specified in paragraph (1) or the circumstances indicate that it would be impracticable to expect fair deliberations and decisions of a member, any party may file a request for a challenge to the member with the Deliberative Committee, which shall determine whether to accept such request by resolution. In such cases, the member against whom the request is filed shall not participate in the resolution. |
| (3) | Where a committee member falls under any grounds specified in paragraph (1) or (2), the committee member shall voluntarily recuse oneself from the deliberation and resolution on the relevant agenda. |
| (4) | Where a member referred to in Article 5 (2) falls under any of the following cases, the Minister of SMEs and Startups may dismiss the relevant member: |
| 1. | Where the member is no longer able to perform his or her duties due to mental or physical weakness; |
| 2. | Where any corruption or illegality has occurred in relation to his/her duties as a member; |
| 3. | Where the member is deemed unsuitable as a member due to delinquency of duties, injury to dignity, or any other reason; |
| 4. | Where the member voluntarily declares that it is impracticable for him or her to perform his or her duties; |
| 5. | Where the member fails to avoid it despite falling under any subparagraph of paragraph (1). |
[This Article Newly Inserted on Nov. 7, 2023]
| Article 5-3 (Composition and Operation of Specialized Committee) |
| (1) | The Deliberative Committee may establish a specialized committee under the Deliberative Committee to examine matters on deliberation under each subparagraph of Article 5 (1) of the Act in a professional manner. |
| (2) | Matters necessary for the composition and operation of the specialized committee under paragraph (1) shall be determined and publicly notified by the Minister of SMEs and Startups. |
[This Article Newly Inserted on Nov. 7, 2023]
| Article 6 (Establishment of Support Center for Business Conversion in Small and Medium Enterprises) |
| (1) | Standards for designating institutions or organizations supporting small and medium enterprises which establish and operate a support center for the business conversion of small and medium enterprises (hereinafter referred to as "support center") in accordance with Article 6 (1) of the Act are as follows: <Amended on Nov. 20, 2009; Jul. 26, 2017; Apr. 6, 2021> |
| 1. | It shall be a corporation; |
| 2. | The scope of business of the corporation shall include the affairs concerning business conversion; |
| 3. | It shall have an organization exclusively dedicated to supporting the business conversion in small and medium enterprises; |
| 4. | It shall retain at least three experts who fall under any of the following: |
| (a) | A person who has been engaged in business conversion-related planning, analysis, evaluation, or assistance for at least three years at an agency or organization assisting small and medium enterprises; |
| (c) | A person who is recognized and publicly notified by the Minister of SMEs and Startups as having a career equivalent to that of a person referred to in item (a) or (b). |
| (2) | Upon designation of an agency or organization assisting small and medium enterprises which should establish and operate a support center (hereinafter referred to as "corporation that establishes and operates a support center") pursuant to Article 6 (1) of the Act, the Minister of SMEs and Startups shall give public notice thereof. <Amended on Jul. 26, 2017> |
| (3) | A person who has been designated as a corporation that establishes and operates a support center pursuant to Article 6 (1) of the Act shall submit the support center’s operating performance of the previous year to the Minister of SMEs and Startups by no later than January 31 annually. <Amended on Jul. 26, 2017> |
[This Article Wholly Amended on Feb. 27, 2009]
| Article 7 (Investigation into Actual State of Business Conversion) |
When the Minister of SMEs and Startups has investigated the actual state of business conversion pursuant to Article 7 (1) of the Act, he or she shall publicly announce the result thereof and incorporate it in a plan for the promotion of business conversion. <Amended on Jul. 26, 2017>
| Article 8 (Standards for Approval of Business Conversion Plan) |
| (1) | The standards for approval of a plan for business conversion under Article 8 (1) of the Act (hereinafter referred to as “plan for business conversion) shall be as follows: <Amended on Nov. 7, 2023> |
| 1. | A business conversion plan shall fall under the scope of business conversion; |
| 2. | A small and medium business operator who intends to obtain approval of a business conversion plan shall fall under the scope of application referred to in Article 3 of the Act; |
| 3. | The type of business to be newly operated or added, newly added product or service, or a business related to a new way of supply (hereinafter referred to as a "business to be converted") shall be included in manufacturing or service business (referring to types of business under the Korean Standard Industrial Classification excluding agriculture; forestry; fishing; mining and quarrying; manufacturing; electricity, gas, and steam; water supply; and construction) and shall not fall under the types of business referred to in Article 4 of the Enforcement Decree of the Support for Small and Medium Enterprise Establishment Act; |
| 4. | The method of implementing a business conversion plan shall be specific and feasible. |
| (2) | Pursuant to Article 8 (2) of the Act, the Minister of SMEs and Startups may preferentially approve a business conversion plan that meets all of the following requirements from among the business conversion plans that meet the criteria for approval under paragraph (1) of this Article: <Newly Inserted on May 9, 2023; Nov. 7, 2023> |
| 1. | The field of business for the purpose of environmental protection, social responsibility, or improvement of the governance structure, or where the business to be converted shall fall under the new business field; |
| 2. | A plan which meets the standards determined and publicly notified by the Minister of SMEs and Startups, such as a plan for technology development and facility investment which is required for achieving the aim referred to in subparagraph 1. |
| (3) | A small and medium business operator who intends to obtain approval of a business conversion plan shall file with the Minister of SMEs and Startups an application for approval of a business conversion plan determined and publicly notified by the Minister of SMEs and Startups, attaching the business conversion plan thereto. <Amended on Jul. 26, 2017; May 9, 2023> |
| (4) | Upon receipt of an application for approval of a business conversion plan pursuant to paragraph (3), the Minister of SMEs and Startups shall decide whether to approve the plan, after conducting an on-site inspection of the relevant place of business: Provided, That such on-site inspection may be omitted if deemed unnecessary. <Amended on Jul. 26, 2017; Jan. 5, 2021; May 9, 2023> |
| (5) | The scope and method of, and procedure for an on-site inspection under paragraph (4), and other necessary matters shall be determined and publicly notified by the Minister of SMEs and Startups. <Amended on Jul. 26, 2017; Jan. 5, 2021; May 9, 2023> |
[This Article Wholly Amended on Feb. 27, 2009]
| Article 8-2 (Criteria for Approval for Plans for Joint Business Conversion Plan) |
| (1) | A small and medium enterprise that intends to convert a joint business under Article 8-2 (1) of the Act (hereinafter referred to as "joint business conversion") shall select a representative small and medium enterprise through consultation between the parties, and may apply for approval of a joint business conversion plan under that (hereinafter referred to as "joint business conversion plan"). |
| 1. | The joint business conversion plan shall fall within the scope of the project conversion; in such cases, the turnover or the number of full-time workers shall be calculated by adding up all the small and medium enterprises participating in the joint business conversion plan; |
| 2. | The representative small and medium enterprise referred to in paragraph (1) shall be a small and medium enterprise referred to in Article 3 of the Act; |
| 4. | Methods of implementing the joint business conversion plan shall be concrete and feasible. |
| (3) | The provisions of Article 8 (3) through (5) shall apply mutatis mutandis to an application for approval of a joint business conversion plan, an on-site investigation, etc. In such cases, "business conversion plan" shall be construed as "joint business conversion plan", and "small and medium enterpriser" as "representative small and medium enterprise." |
[This Article Newly Inserted on Nov. 7, 2023]
| Article 9 Deleted. <Feb. 27, 2018> |
| Article 10 Deleted. <Feb. 27, 2018> |
| Article 11 (Investigation on Performance of Implementation of Business Conversion Plan or Joint Business Conversion Plan) |
| (1) | To investigate the actual implementation of a business conversion plan or joint business conversion plan pursuant to Article 10 (1) of the Act, the Minister of SMEs and Startups may request, in advance, the following data from a small and medium business operator who has obtained approval of such plan (hereinafter referred to as "approved enterprise"): <Amended on Jul. 26, 2017; Nov. 7, 2023 |
| 1. | Status of implementation of the business conversion plan or joint business conversion plan; |
| 3. | Other data necessary for the investigation of the performance of the business conversion plan or the joint business conversion plan. |
[This Article Wholly Amended on Feb. 27, 2009]
[Title Amended on Nov. 7, 2023]
| Article 12 (Approval for Modification of Business Conversion Plan or Joint Business Conversion Plan) |
| (1) | Where an approved enterprise intends to modify any of the following details of a business conversion plan or joint business conversion plan pursuant to Article 11 (1) of the Act, it shall file with the Minister of SMEs and Startups an application for modification of a business conversion plan or joint business conversion plan determined and publicly notified by the Minister of SMEs and Startups, attaching documents relating to the modification of such plans thereto: <Amended on Jul. 26, 2017; Nov. 7, 2023> |
| 1. | The type of business newly managed or added, new products or services, or a plan for a new method of provision thereof; |
| (2) | Where the Minister of SMEs and Startups receives an application for alteration of a business conversion plan or a joint project conversion plan pursuant to paragraph (1), he or she shall determine whether to approve the relevant place of business after conducting an on-site investigation: Provided, That if it is judged that it is not necessary to conduct an on-site inspection of the relevant place of business, it may be omitted. <Amended on Jul. 26, 2017; Jan. 5, 2021; Nov. 7. 2023> |
| (3) | The scope and method of, and procedure for an on-site inspection under paragraph (2), and other necessary matters shall be determined and publicly notified by the Minister of SMEs and Startups. <Amended on Jul. 26, 2017; Jan. 5, 2021> |
[This Article Wholly Amended on Feb. 27, 2009]
[Title Amended on Nov. 7, 2023]
| Article 13 (Recommendation on Modification or Suspension of Business Conversion Plan or Joint Business Conversion Plan) |
Where the Minister of SMEs and Startups intends to recommend an approved enterprise to modify or suspend its business conversion plan pursuant to Article 11 (2) of the Act, he or she shall do so in writing, specifying the details of such recommendation. <Amended on Jul. 26, 2017> [This Article Wholly Amended on Feb. 27, 2009]
[Title Amended on Nov. 7, 2023]
| Article 14 (Publicly Certified Appraisal Agency) |
"Publicly certified appraisal agency prescribed by Presidential Decree" in the former part of Article 14 (3) of the Act means each of the following institutions: <Amended on Aug. 27, 2013; May 31, 2016> [This Article Wholly Amended on Feb. 27, 2009]
| Article 14-2 (Performance Evaluation and Management) |
| (1) | The Minister of SMEs and Startups may annually evaluate the performance of an approved enterprise in consideration of the following matters pursuant to Article 29-4 (1) of the Act: |
| 1. | The degree of achievement of annual goals, such as an increase in the proportion of newly operated or added business; |
| 2. | Business performance, such as sales resulting from business conversion; |
| 3. | Management performance, such as improvement of the financial structure of the approved enterprise. |
| (2) | In order to evaluate the performance under paragraph (1), the Minister of SMEs and Startups may request an approved enterprise to cooperate, such as submitting data, and, if necessary, conduct an on-site investigation. |
| (3) | Methods and procedures for performance evaluation under paragraph (1) and other necessary matters shall be determined and publicly notified by the Minister of SMEs and Startups. |
[This Article Newly Inserted on Nov. 7, 2023]
| Article 15 (Cancellation of Approval) |
[This Article Wholly Amended on Feb. 27, 2009]
| Article 16 (Reporting and Inspections) |
| (1) | “Books, papers, etc. of approved enterprises prescribed by Presidential Decree” in the main sentence of Article 32 (1) of the Act means any of the following: <Amended on Nov. 7, 2023> |
| 1. | Account books related to the business conversion plan or the joint business conversion plan; |
| 2. | Documents related to the implementation of a business conversion plan or a joint business conversion plan; |
| 3. | Other documents related to business conversion or joint business conversion. |
| (2) | "Matters which are prescribed by Presidential Decree" in Article 32 (1) 3 of the Act means where an investigation into the actual state of operation of a support center is necessary. |
[This Article Wholly Amended on Feb. 27, 2009]
| Article 17 (Entrustment of Affairs) |
Pursuant to Article 33 (2) of the Act, the Minister of SMEs and Startups shall entrust the head of a corporation establishing and operating support centers to the following affairs: <Amended on November 7, 2023> | 2. | Investigation of the results of implementation of a project conversion plan or a joint project conversion plan under Article 10 of the Act; |
| 3. | Approval for modification of a business conversion plan or a joint project conversion plan under Article 11 of the Act; |
| 5. | Revocation of approval for a business conversion plan or joint business conversion plan under Article 31 of the Act; |
| 6. | Affairs regarding an inspection under Article 32 of the Act (limited to where necessary for performing the entrusted affairs). |
[This Article Wholly Amended on Jan 29, 2020]
| Article 18 Deleted. <Mar. 7, 2023> |
ADDENDA <Presidential Decree No. 19667, Oct. 29, 2006>
| (1) | (Enforcement Date) This Decree shall enter into force on September 4, 2006. |
Article 2 (3) shall be deleted.
ADDENDA <Presidential Decree No. 20137, Jun. 29, 2007>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Presidential Decree No. 20728, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 20947, Jul. 29, 2008>
Article 1 (Enforcement Date)
This Decree shall enter into force on February 4, 2009.
Articles 2 through 28 Omitted.
ADDENDA <Presidential Decree No. 21343, Feb. 27, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on March 1, 2009: Provided, That the amended provisions of Article 7 (3) shall enter into force on January 1, 2010. Article 2 Omitted.
ADDENDA <Presidential Decree No. 21835, Nov. 20, 2009>
Article 1 (Enforcement Date)
This Decree shall enter into force on November 22, 2009.
Articles 2 and 3 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. 25050, Dec. 30, 2013>
This Decree shall enter into force on January 1, 2014. (Proviso Omitted.)
ADDENDA <Presidential Decree No. 27205, May 31, 2016>
Article 1 (Enforcement Date)
This Decree shall enter into force on September 30, 2016. (Proviso Omitted.)
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 28213, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Articles 2 through 6 Omitted.
ADDENDUM <Presidential Decree No. 30380, Jan. 29, 2020>
This Decree shall enter into force on the date of its promulgation.
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. 31611, Apr. 6, 2021>
Article 1 (Enforcement Date)
This Decree shall enter into force on April 8, 2021.
Articles 2 through 6 Omitted.
ADDENDUM <Presidential Decree No. 33321, Mar. 7, 2023>
This Decree shall enter into force on the date of its promulgation.
ADDENDUM <Presidential Decree No. 33459, May 9, 2023>
This Decree shall enter into force on May 16, 2023.
ADDENDUM <Presidential Decree No. 33853, Nov. 7, 2023>
This Decree shall enter into force on November 17, 2023.