ASSET-BACKED SECURITIZATION ACT
Act No. 5555, Sep. 16, 1998
Amended by Act No. 6073, Dec. 31, 1999
Act No. 6181, Jan. 21, 2000
Act No. 6275, Oct. 23, 2000
Act No. 6429, Mar. 28, 2001
Act No. 6642, Jan. 26, 2002
Act No. 6916, May 29, 2003
Act No. 7428, Mar. 31, 2005
Act No. 7615, Jul. 29, 2005
Act No. 8635, Aug. 3, 2007
Act No. 8703, Dec. 21, 2007
Act No. 8863, Feb. 29, 2008
Act No. 9071, Mar. 28, 2008
Act No. 9258, Dec. 26, 2008
Act No. 9617, Apr. 1, 2009
Act No. 10303, May 17, 2010
Act No. 10522, Mar. 31, 2011
Act No. 10580, Apr. 12, 2011
Act No. 10682, May 19, 2011
Act No. 10692, May 19, 2011
Act No. 10924, Jul. 25, 2011
Act No. 11599, Dec. 18, 2012
Act No. 12989, Jan. 6, 2015
Act No. 13797, Jan. 19, 2016
Act No. 14131, Mar. 29, 2016
Act No. 14242, May 29, 2016
Act No. 15148, Nov. 28, 2017
Act No. 16652, Nov. 26, 2019
Act No. 16957, Feb. 4, 2020
Act No. 18129, Apr. 20, 2021
Act No. 19533, Jul. 11, 2023
CHAPTER I GENERAL PROVISIONS
The purpose of this Act is to enhance the soundness of the financial structure of financial institutions and general enterprises, etc. by facilitating their financing activities, and to expand the housing finance infrastructure through stable supply of long-term housing loans with the establishment of a system of asset-backed securitization, as well as to protect investors in asset-backed securities issued through asset-backed securitization, therefore contributing to the sound development of the national economy.
[This Article Wholly Amended on Jul. 11, 2023]
The terms used in this Act are defined as follows:
| 1. | The term "asset-backed securitization" means the following acts: |
| (a) | A series of acts involving issuance of asset-backed securities by a special purpose company (including foreign corporations specialized in the business of asset-backed securitization) using underlying assets transferred from the originator as the basis, and payment of the principal and interest or dividends with respect to the asset-backed securities out of the earnings or loans, etc. accruing from the management, operation, or disposition of the relevant underlying assets; |
| (b) | A series of acts involving issuance of asset-backed securities by a trust business entity under the Financial Investment Services and Capital Markets Act (hereinafter referred to as "trust business entity") using underlying assets entrusted by the originator as the basis, and payment of the proceeds of the asset-backed securities out of the earnings or loans, etc. accruing from the management, operation, or disposition of the relevant underlying assets; |
| (c) | A series of acts involving acquisition by a trust business entity of underlying assets by transfer from the originator, using the funds received in trust through issuance of asset-backed securities, and payment of the proceeds of the asset-backed securities out of the earnings or loans, etc. accruing from the management, operation, or disposition of the underlying assets; |
| (d) | A series of acts involving issuance of asset-backed securities by a special purpose company or a trust business entity using underlying assets, or asset-backed securities issued on the basis of such underlying assets as the basis, which are transferred or entrusted to the special purpose company by another special purpose company or trust business entity, and payment of principal and interest, dividends, or returns of the asset-backed securities issued by itself out of the earnings or loans, etc. accruing from the management, operation, or disposition of the underlying assets or asset-backed securities initially transferred or entrusted; |
| 2. | The term "originator" means the following persons who hold underlying assets: |
| (n) | A company that meets the standards determined and publicly notified by the Financial Services Commission in consideration of the scale of assets, financial standing, etc., among companies subject to an external audit under Article 4 (1) 1 or 3 of the Act on External Audit of Stock Companies (including a foreign corporation subject to an audit under the statutes and regulations of its own country, among foreign corporations equivalent to the relevant company); |
| (r) | Any other person prescribed by Presidential Decree, who corresponds to items (a) through (q); |
| 3. | The term "underlying assets" means claims (including future claims regardless of whether the debtor is specified), real estate, intellectual property rights, and other property rights, which are subject to asset-backed securitization; |
| 4. | The term "asset-backed securities" means stock certificates, subscription certificates, bonds, beneficiary certificates, and other securities or certificates issued under an asset-backed securitization plan under Article 3; |
| 5. | The term "special purpose company" means a company established pursuant to Articles 17 and 20, engaging in the business of asset-backed securitization. |
[This Article Wholly Amended on Jul. 11, 2023]
CHAPTER II REGISTRATION OF ASSET-BACKED SECURITIZATION PLAN AND TRANSFER OF UNDERLYING ASSETS
| Article 3 (Registration of Asset-Backed Securitization Plan) |
| (1) | If a special purpose company, a trust business entity, and a foreign corporation specialized in the business of asset-backed securitization (hereinafter referred to as "special purpose company, etc.") seek to be subject to this Act with respect to asset-backed securitization, they shall file for registration of a plan for asset-backed securitization including the methods for managing underlying assets (hereinafter referred to as "asset-backed securitization plan") with the Financial Services Commission. The same shall apply to any modification to an asset-backed securitization plan (excluding any change of minor matters prescribed by Presidential Decree). |
| (2) | The number of asset-backed securitization plans that can be registered by a special purpose company, etc. (excluding trust business entities) pursuant to paragraph (1) shall be limited to one, regardless of the number of underlying assets and originators. |
| (3) | If a special purpose company, etc. intend to file for registration or registration of modification pursuant to paragraph (1), they shall also submit the documents determined and publicly notified by the Financial Services Commission. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 4 (Asset-Backed Securitization Plan) |
An asset-backed securitization plan shall contain the following:
| 1. | The name of the special purpose company, etc. and the location of their main offices; |
| 3. | The planning period of the asset-backed securitization; |
| 4. | Types, total amount, and the details of valuation of underlying assets; |
| 5. | Types, total amount, and conditions of issuance of asset-backed securities; |
| 6. | Management, operation, and disposal of underlying assets; |
| 7. | A person entrusted with the management of underlying assets pursuant to Article 10 (1); |
| 8. | Other matters prescribed by Presidential Decree as necessary for asset-backed securitization. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 5 (Refusal of Registration) |
| (1) | In any of the following cases, the Financial Services Commission may refuse the registration of an asset-backed securitization plan or require a modification to the details thereof: |
| 1. | Where a registration application has been falsely entered or necessary matters are omitted therefrom; |
| 2. | Where the asset-backed securitization plan contains matters that are in contravention of statutes or regulations; |
| 3. | Where there is a violation of statutes or regulations in relation to the establishment of a special purpose company. |
| (2) | If the Financial Services Commission intends to refuse the registration of an asset-backed securitization plan or to request a modification to the plan pursuant to paragraph (1), it shall notify the relevant special purpose company, etc. of the reasons therefor without delay. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 6 (Registration of Asset Transfer) |
| (1) | If there is a transfer, entrustment, or return of underlying assets (including a right to reclaim underlying assets against a third party if such assets are held by the third party; hereafter in this Article, the same shall apply) under an asset-backed securitization plan, an originator or a special purpose company, etc. shall without delay file for registration of such fact with the Financial Services Commission according to the following classifications: |
| 1. | An originator: If the originator transfers underlying assets to a special purpose company, etc. or entrusts underlying assets to a trust business entity in accordance with the asset-backed securitization plan; |
| 2. | A special purpose company, etc.: If the special purpose company, etc. transfer underlying assets to another special purpose company, etc. or reclaim transferred underlying assets in accordance with the asset-backed securitization plan. |
| (2) | Where a special purpose company, etc. fall under any of the following circumstances, they may file for registration of such circumstances with the Financial Services Commission: |
| 1. | Where the special purpose company, etc. transfer underlying assets to the originator, or return such assets to the originator due to the cancellation of transfer, etc. in accordance with the asset-backed securitization plan (including cases where the trust business entity has returned the underlying assets on grounds of the termination of trust); |
| 2. | Where the special purpose company, etc. create or cancel a pledge or mortgage on the underlying assets against a third party in favor of the investors of the asset-backed securities, in accordance with the asset-backed securitization plan; |
| 3. | Where the special purpose company, etc. trust underlying assets to a third party for the investors of asset-backed securitization securities or reclaim such assets on the grounds of the termination, etc. of trust, in accordance with the asset-backed securitization plan. |
| (3) | If intending to file for registration pursuant to paragraphs (1) and (2), an originator or a special purpose company, etc. shall submit an application for registration in the form determined and publicly notified by the Financial Services Commission along with documents evidencing the relevant grounds for registration to the Financial Services Commission. |
| (4) | The following matters shall be stated in an application for registration under paragraph (3), and the matter specified in subparagraph 1 shall be prepared and submitted by means of an electronic record or a method equivalent thereto: |
| 1. | Specification of underlying assets; |
| 2. | The methods and schedule for the transfer, trust, or return of underlying assets, and methods for payment thereof; |
| 3. | If the underlying assets are claims, whether or not the requirements for setting up against the transfer of such claims are satisfied; |
| 4. | Requisites for revocation of a contract for transfer, etc. of underlying assets; |
| 5. | Whether the transferor, etc. have preferential right of purchase where the transferee disposes of the relevant underlying assets; |
| 6. | Other matters determined and publicly notified by the Financial Services Commission as necessary for protecting investors. |
| (5) | A special purpose company, etc. shall retain and manage a contract for the transfer, etc. of underlying assets, a registration certificate, a notification of information on registration, a registration card, and other evidentiary documents, as prescribed by Presidential Decree. |
| (6) | Upon receipt of a request from the Financial Services Commission or an investor of asset-backed securities for the inspection of documents retained and managed pursuant to Article 5, a special purpose company, etc. shall comply with such request. |
| (7) | The procedures and methods for filing for registration under paragraphs (1) and (2) and other necessary matters shall be determined and publicly notified by the Financial Services Commission. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 7 (Special Cases for Requisite for Setting-up against Transfer of Claims) |
| (1) | With regard to the transfer, trust, or return of claims under an asset-backed securitization plan, if the transferor (including a trustor; hereinafter the same shall apply) or transferee (including a trustee; hereinafter the same shall apply) notifies the debtor or if the debtor does not consent thereto, he or she may not set up against the debtor: Provided, That where the transferor or transferee has sent the notification of the transfer of claims (including the trust or return of claims; hereafter in this Article the same shall apply) by means of contents-certified mail at least twice to an address according to the following classifications but the notification has been returned due to unknown whereabouts, etc., if he or she makes a public announcement the transfer of claims in two or more daily newspapers (including at least one daily newspaper with nationwide circulation) that have their major circulation area in the location of the debtor's address, it shall be deemed that he or she has notified the transfer of claims to the debtor on the date of such public announcement: |
| 1. | The debtor's address stated in the register or registry of the relevant mortgage (where the address stated in the register or registry is not the last address of the debtor and the transferor or transferee knows the debtor's last address, referring to that last address); |
| 2. | The last address of the debtor, if there is no address shown on the register or registry of the relevant mortgage or there is no such register or registry, and if the transferor or transferee knows the last address of the debtor. |
| (2) | If an originator or a special purpose company, etc. file for registration of the transfer, trust, or return of claims pursuant to Article 6 (1) and (2), the originator or the special purpose company, etc. shall be deemed to meet the requisite for setting up against a third party, other than the debtor (including a third person who possesses the underlying assets, if the right to request the return of the underlying assets is transferred; hereinafter the same shall apply) of the relevant claims, under Article 450 (2) of the Civil Act at the time the registration is filed. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 7-2 (Confirmation Claims Secured by Right to Open-End Mortgage) |
If underlying assets to be transferred or entrusted under an asset-backed securitization plan are claims secured by the right to open-end mortgage, when the originator sends the debtor a notice by means of contents-certified mail to the effect that he or she will transfer or entrust the entirety of the claims without generating an additional claim while confirming the amount of claims secured by the right to open-end mortgage, the relevant claims shall be deemed confirmed on the day following the date the notice is sent: Provided, That if the debtor files an objection within 10 days, the relevant claims shall not be deemed confirmed.
[This Article Wholly Amended on Jul. 11, 2023]
| Article 8 (Special Cases concerning Acquisition of Mortgage) |
| (1) | If the originator or a special purpose company, etc. file for registration of the transfer, trust, or return of the claims secured by pledge or mortgage in accordance with an asset-backed securitization plan under Article 6 (1) and (2), the originator or the special purpose company, etc. (including a third person entrusted with underlying assets under Article 6 (2) 3) shall acquire the relevant pledge or mortgage upon filing for such registration. |
| (2) | When the Korea Asset Management Corporation or the Korea Land and Housing Corporation, in accordance with an asset-backed securitization plan, transfers or entrusts to a special purpose company, etc. immovable property acquired for the resolution of non-performing assets of a financial institution, for the support of a self-rescue plan of a failing company or for the restructuring of a company, the special purpose company, etc. shall acquire the ownership of such property upon filing for such registration under Article 6 (1). |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 9 (Public Disclosure of Registered Documents) |
| (1) | The Financial Services Commission shall disclose documents regarding registration or registration of modification under Articles 3 and 6 and documents regarding revocation of registration under Article 38-2 (1) by means determined and publicly notified by the Financial Services Commission. |
| (2) | A trust business entity, a person entrusted with the management of underlying assets pursuant to Article 10 (1), and a person entrusted with business affairs pursuant to Article 23 (1) shall prepare and keep documents regarding the specification and the current status of the underlying assets and make them available for perusal by investors in the relevant special purpose company, etc. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 10 (Entrustment of Asset Management) |
| (1) | A special purpose company, etc. (excluding a trust business entity) shall entrust any of the following persons (hereinafter referred to as "servicer") with the management of underlying assets in accordance with an asset management entrustment contract: |
| 4. | Other persons specialized in the management of assets, who meet the requirements prescribed by Presidential Decree. |
| (3) | A special purpose company, etc. may not set up against the debtors of the claims constituting underlying assets on the ground that the servicer's right to receive repayments ceases to exist due to the termination of an asset management entrustment contract: Provided, That this shall not apply where the debtor knew or should have known that the servicer's right to receive repayments has ceased to exist. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 11 (Management of Underlying Assets) |
| (1) | A servicer shall manage underlying assets entrusted for management pursuant to Article 10 (1) (including property rights, such as money acquired in the course of managing, operating, or disposing of the underlying assets; hereafter in this Article, Article 12, and subparagraph 1 of Article 40, the same shall apply) with the reasonable care of a good manager, and shall protect the interest of the investors in the underlying assets. |
| (2) | A servicer shall manage underlying assets entrusted for management pursuant to Article 10 (1) separately from his or her inherent property. |
| (3) | With respect to the underlying assets entrusted for management pursuant to Article 10 (1), a servicer shall prepare and keep separate books on the management thereof. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 12 (Bankruptcy of Servicer) |
| (1) | If a servicer becomes bankrupt, the underlying assets entrusted for management pursuant to Article 10 (1) shall not constitute the bankruptcy estate of the servicer, and a special purpose company, etc. may request the servicer or a bankruptcy trustee to transfer the underlying assets. |
| (3) | The creditor of a servicer may not perform forcible execution on underlying assets entrusted for management by the servicer pursuant to Article 10 (1), and the underlying assets shall not be subject to an order for injunctive relief or an order for discontinuation under the Debtor Rehabilitation and Bankruptcy Act. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 13 (Method of Transfer) |
A transfer of underlying assets shall be performed by the following means in accordance with an asset-backed securitization plan; in such cases, the transfer of the underlying assets shall not be deemed an establishment of security rights:
| 1. | The transfer shall be effected by means of sale and purchase or exchange; |
| 2. | The transferee shall have the right to make profits from and the right to dispose of the underlying assets; in such cases, even if the transferor has the right of first refusal to the underlying assets at the time when the transferee disposes of the assets, the right to make profits from and the right to dispose of the assets shall be deemed as held by the transferee; |
| 3. | The transferor shall not have the right to reclaim the underlying assets, and the transferee shall not have the right to reclaim the price paid for the transferred underlying assets; |
| 4. | The transferee shall accept the risks involved in the transferred assets: Provided, That excluded herefrom is the cases where the transferor bears the relevant risks involving the underlying assets during a specific period or a warranty liability for defects (including where the transferor of claims guarantees the solvency of the debtor). |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 14 (Amendment to or Termination of Facilities Lease Agreements) |
| (1) | When an originator has transferred or entrusted to a special purpose company, etc. claims under a facilities lease agreement or deferred payment sales agreement in accordance with an asset-backed securitization plan, he or she shall not amend or terminate the relevant facilities lease agreement or deferred payment sales agreement unless in accordance with the asset-backed securitization plan. The same shall also apply to the receiver, interim receiver, administrator, and interim administrator of the originator appointed pursuant to the Debtor Rehabilitation and Bankruptcy Act and any other persons performing similar duties. |
| (2) | When the debtor of claims under a facilities lease agreement or deferred payment sales agreement has received a notice of the fact that the originator has transferred or entrusted the relevant claims to the special purpose company, etc. or has consented to such transfer or entrustment in accordance with an asset-backed securitization plan, any amendment made to, or any termination of, the facilities lease agreement or deferred payment sales agreement in violation of paragraph (1) shall not have any effect. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 15 (Lease Receivables) |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 16 (Special Cases for Application of the Financial Investment Services and Capital Markets Act) |
| 1. | Where the trust business entity has acquired underlying assets by transfer in accordance with an asset-backed securitization plan; |
| 2. | Where the trust business entity manages surplus fund in accordance with an asset-backed securitization plan after acquiring underlying assets by transfer or being entrusted with such assets. |
| (3) | If a trust business entity manages and operates underlying assets, he or she shall manage the underlying assets separately from money that belongs to the inherent property or any other trust property, notwithstanding Article 37 (3) of the Trust Act. |
[This Article Wholly Amended on Jul. 11, 2023]
CHAPTER III SPECIAL PURPOSE COMPANIES
| Article 17 (Form of Company) |
| (1) | A special purpose company shall be a stock company or a private limited company. |
| (2) | Except as otherwise provided in this Act, Chapters IV and V of Part III of the Commercial Act shall apply to special purpose companies. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 18 Deleted. <Jul. 11, 2023> |
| Article 19 (General Meeting of Shareholders) |
| (1) | A resolution adopted at a general meeting of the shareholders or the members of a special purpose company (in cases of a stock company, limited to a stock company with a total capital of less than one billion won) may be adopted in writing, even without the consent of all stockholders or all members, notwithstanding Article 363 (4) or 577 (1) and (2) of the Commercial Act. |
| (2) | A resolution adopted at a general meeting of shareholders or members, which is contrary to the asset-backed securitization plan or detrimental to the interest of the holders of the asset-backed securities, shall be null and void. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 20 (Restriction on Concurrently Conducting Other Business) |
| (1) | No special purpose company shall engage in business affairs other than those provided in Article 22 (1). |
| (2) | A special purpose company shall not establish business places other than its headquarters, nor hire employees. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 21 (Prohibition against Use of Similar Names) |
No company, other than a special purpose company, shall use any name indicating a special purpose company in describing its trade name or type of business.
[This Article Wholly Amended on Jul. 11, 2023]
| Article 22 (Business Affairs) |
| (1) | A special purpose company shall perform the following business affairs in accordance with the asset-backed securitization plan: |
| 1. | Acquisition or assignment of underlying assets by transfer, or entrustment thereof to a trust business entity; |
| 2. | Management, operation, and disposal of underlying assets; |
| 3. | Issuance and redemption of asset-backed securities; |
| 4. | Conclusion of the contract necessary for the implementation of the asset-backed securitization plan; |
| 5. | Temporary borrowing of funds necessary for redemption, etc. of asset-backed securities; |
| 6. | Investment of surplus funds; |
| 7. | Other business affairs incidental to those specified in subparagraphs 1 through 6. |
| (2) | A special purpose company shall perform accounting in compliance with the accounting standards determined and publicly notified by the Financial Services Commission. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 23 (Entrustment of Business Affairs) |
| (1) | A special purpose company shall entrust its business affairs other than those regarding the following matters to the originator or other third parties in accordance with the asset-backed securitization plan: |
| 1. | Matters requiring a resolution adopted at a general meeting of shareholders or the members; |
| 2. | Matters within the authority of a director to represent the company; |
| 3. | Matters within the authority of a statutory auditor; |
| 4. | Matters relating to the management of the underlying assets; |
| 5. | Other matters prescribed by Presidential Decree as unfit for entrustment. |
| (2) | The scope of third parties to whom the business affairs can be entrusted under paragraph (1) may be limited as prescribed by Presidential Decree. |
| (3) | A person entrusted with the business affairs under paragraph (1) shall perform the entrusted business affairs with the reasonable care of a good manager and shall protect the interests of the investors in asset-backed securities. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 24 (Grounds for Dissolution) |
A special purpose company shall be dissolved on any of the following grounds:
| 1. | When any ground for dissolution as specified in its articles of incorporation or the asset-backed securitization plan arises; |
| 2. | When the asset-backed securities are repaid in full; |
| 3. | When it becomes bankrupt; |
| 4. | When there is an order or decision of a court. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 25 (Prohibition of Merger) |
A special purpose company may not merge with another company or change its structure to another company.
[This Article Wholly Amended on Jul. 11, 2023]
| Article 26 (Appointment of Liquidator) |
[This Article Wholly Amended on Jul. 11, 2023]
CHAPTER IV ISSUANCE OF ASSET-BACKED SECURITIES
| Article 27 (Application of the Commercial Act) |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 28 (Issuance of Subscription Certificates) |
| (1) | Notwithstanding Article 555 of the Commercial Act, a special purpose company which is a private limited company may issue subscription certificates in bearer form (hereinafter referred to as "subscription certificates") with respect to the shares of its equity holders in accordance with the asset-backed securitization plan. |
| (3) | Except as otherwise provided in the articles of incorporation, the members of a special purpose company which is a private limited company may request the retirement of their respective equity shares by indicating their intention not to issue or carry subscription certificates for their equity shares. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 29 (Required Information for Subscription Certificates) |
The following information shall be stated on a subscription certificate, and the directors shall affix their names and seals or sign thereon:
| 1. | The trade name of the company; |
| 2. | Date of incorporation of the company; |
| 3. | Total number of investment units; |
| 4. | Par value of investment unit; |
| 5. | Cases where there are provisions regarding various equity holdings for which dividends or distribution of property is different, the types and particulars of such equity holdings; |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 30 (Exceptions to Transfer of Subscription Certificates) |
| (2) | Notwithstanding Articles 462 and 462-3 of the Commercial Act (including cases applied mutatis mutandis in Article 583 of that Act), a special purpose company may distribute dividends in excess of its profits (referring to the amount obtained by subtracting liabilities, capital, and reserves from its assets on the statement of financial position), as prescribed by its articles of incorporation. |
| (3) | Notwithstanding Articles 439 (1) of the Commercial Act (including cases applied mutatis mutandis in Article 597 of that Act), a special purpose company may stipulate matters regarding the reduction or increase of its capital in its articles of incorporation. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 31 (Issuance of Bonds) |
| (1) | A special purpose company may issue bonds in accordance with the asset-backed securitization plan. |
| (2) | Section 8 of Chapter IV of Part III of the Commercial Act (excluding Article 469) shall apply mutatis mutandis to the bonds issued by private limited companies from among the bonds issued under paragraph (1). |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 32 (Issuance of Beneficiary Certificates) |
| (1) | A special purpose company may issue beneficiary certificates in accordance with the asset-backed securitization plan. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 33 (Issuing Limit of Asset-Backed Securities) |
The total amount of asset-backed securities to be issued shall not exceed the total amount of the purchase price or the valuation price of the underlying assets transferred or entrusted. In such cases, the amount of borrowing under Article 22 (1) 5 shall not be included in the total amount of issuance. [This Article Wholly Amended on Jul. 11, 2023]
| Article 33-2 (Disclosure of Issuance Details of Asset-Backed Securities) |
If a special purpose company, etc. (including companies which have not filed for registration of an asset-backed securitization plan under Article 3; hereafter in Article 33-3, the same shall apply) issue asset-backed securities (including securities equivalent to asset-backed securities issued by a company that has not filed for registration of an asset-backed securitization plan under Article 3; hereafter in this Article and Articles 33-3 and 38-3, the same shall apply), the special purpose company, etc. shall disclose the following matters, as prescribed by Presidential Decree: | 1. | Details of issuance, such as types, total amount, and conditions of issuance of asset-backed securities; |
| 2. | Information related to securitization, including underlying assets and asset holders; |
| 3. | The holding details of asset-backed securities under Article 33-3; |
| 4. | Other matters relating to the issuance of asset-backed securities, as prescribed by Presidential Decree. |
[This Article Newly Inserted on Jul. 11, 2023]
| Article 33-3 (Compulsory Holding of Asset-Backed Securities) |
If a special purpose company, etc. issue asset-backed securities, a person who transfers or entrust his or her assets to the special purpose company, etc. and other persons prescribed by Presidential Decree shall hold the asset-backed securities in accordance with the standards and procedures prescribed by Presidential Decree within the amount equivalent to 5/100 of the amount of asset-backed securities issued by the special purpose company, etc.: Provided, That any of the following asset-backed securities shall be excluded herefrom:
| 1. | Asset-backed securities for which the payment of principal and interest is guaranteed by the State, a local government, or a public institution determined and publicly notified by the Financial Services Commission; |
| 2. | Asset-backed securities prescribed by Presidential Decree as those that have a low credit risk or are less likely to cause conflicts of interest. |
[This Article Newly Inserted on Jul. 11, 2023]
CHAPTER V SUPPLEMENTARY PROVISIONS
| Article 34 (Investigation) |
| (1) | Where any violation of this Act or an order or disposition issued under this Act is found or if it is deemed necessary for the protection of investors or sound trade practice, the Financial Services Commission may order the following persons to submit a report or data for reference or may have the Governor of the Financial Supervisory Service investigate books, documents, or other articles: |
| 1. | A special purpose company, etc.; |
| 2. | A person entrusted with business affairs or asset management by a special purpose company, etc.; |
| 3. | A person who transfers or entrusts assets to a special purpose company, etc.; |
| 4. | Any other person who is suspected of a violation. |
| (2) | Where any violation of Article 33-2 or 33-3 is found in relation to securities equivalent to asset-backed securities issued by a company which has not filed for registration of an asset-backed securitization plan under Article 3, the Financial Services Commission may order a person equivalent to those specified in the subparagraphs of paragraph (1) to submit a report or data for reference or may have the Governor of the Financial Supervisory Service investigate books, documents, or other articles. |
| (4) | Where any violation of this Act is found as a result of an investigation under paragraphs (1) and (2), the Financial Services Commission may issue a corrective order or take other measures prescribed by Presidential Decree, and may determine and publicly notify the procedures and standards for measures necessary for the investigation and measures, and other necessary matters. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 35 (Order for Business Improvement) |
Where it is deemed that the management of business affairs conducted by a special purpose company, etc. or a servicer is likely to be detrimental to the interest of investors, the Financial Services Commission may order the special purpose company, etc. or the servicer to change the type and method of business, to deposit its property, or to take measures necessary to improve the management of business affairs, within the extent necessary for investor protection.
[This Article Wholly Amended on Jul. 11, 2023]
| Article 35-2 (Reporting by Special Purpose Company) |
| (1) | If any of the following grounds arises, a special purpose company, etc. shall report thereon to the Financial Services Commission without delay: |
| 2. | Bankruptcy of the originator; |
| 3. | Other significant grounds prescribed by Presidential Decree for protecting investors. |
| (2) | Upon receipt of a report from a special purpose company, etc. under paragraph (1), the Financial Services Commission shall disclose the details thereof. |
[This Article Newly Inserted on Jul. 11, 2023]
| Article 36 (Special Cases for Disposal of Non-Performing Assets of Financial Institutions, Support for Self-Rescue Plans of Enterprises with Signs of Insolvency, and Restructuring of Enterprises) |
The following provisions shall not apply where the Korea Asset Management Corporation or the Korea Land and Housing Corporation transfers or entrusts to a special purpose company, etc. the real estate it has acquired for the disposal of non-performing assets of a financial institution, for the support of a self-rescue plan of an enterprise with a sign of insolvency, or for the restructuring of an enterprise, in accordance with an asset-backed securitization plan:
[This Article Wholly Amended on Jul. 11, 2023]
| Article 36-2 (Exemption from Duties to Purchase National Housing Bonds) |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 37 (Provision and Use of Information about Debtors) |
| (2) | No transferee of underlying assets or no person entrusted with such assets (including a person who has been entrusted with the relevant business affairs) under an asset-backed securitization plan shall use information on the solvency of a debtor of claims constituting underlying assets for any other purpose than for receiving repayment of the relevant claims. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 38 (Entrustment of Business Affairs) |
The Financial Services Commission may entrust all or part of the following business affairs to the Governor of Financial Supervisory Service, as prescribed by Presidential Decree:
| 1. | Registration of an asset-backed securitization plan under Article 3; |
| 2. | Refusal of registration of an asset-backed securitization plan or request for modification to such plan under Article 5; |
| 3. | Registration of transfer of assets, etc. under Article 6 (1) and (2); |
| 4. | Disclosure of registration documents, etc. under Article 9 (1); |
| 6. | Other business affairs prescribed by Presidential Decree. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 38-2 (Revocation of Registration of Asset-Backed Securitization Plan) |
| (1) | The Financial Services Commission may revoke the registration of an asset-backed securitization plan where the relevant special purpose company, etc. fall under any of the following cases: |
| 1. | Where registration or registration for modification under Article 3 (1) has been filed for by fraud or improper means; |
| 2. | Where the asset-backed securitization plan has been modified without registration for modification under the latter part of Article 3 (1); |
| 3. | Where registration under Article 6 (1) has not been filed for, or registration under paragraph (1) or (2) of that Article has been falsely filed for; |
| 4. | Where a special purpose company has engaged in business affairs other than those provided in Article 22 (1) in violation of Article 20 (1); |
| 5. | Where an order for business improvement under Article 35 has not been complied with. |
| (2) | Where the Financial Services Commission intends to revoke registration pursuant to paragraph (1), it shall hold a hearing. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 38-3 (Penalty Surcharges) |
| (1) | The Financial Services Commission may impose a penalty surcharge of up to 5/100 of the amount of issuance of asset-backed securities (referring to two billion won in cases exceeding two billion won), as prescribed by Presidential Decree, on a person who fails to hold asset-backed securities or to comply with the holding ratio of such securities by intent or gross negligence, in violation of Article 33-3. |
| (2) | No penalty surcharge under paragraph (1) shall be imposed after the lapse of five years from the date the relevant violation ceases. |
[This Article Newly Inserted on Jul. 11, 2023]
CHAPTER VI PENALTY PROVISIONS
| Article 39 (Penalty Provisions) |
Any of the following persons shall be punished by imprisonment for up to three years or by a fine not exceeding 20 million won:
| 1. | A person who falsely prepares an application for registration or documents evidencing grounds for registration under Article 6 (3); |
| 2. | A person who falsely prepares the documents under Article 9 (2) or has failed to make such documents available for inspection; |
| 3. | A person who uses the information on the solvency of a debtor for any other purpose than for receiving repayment of the relevant claims, in violation of Article 37 (2). |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 40 (Penalty Provisions) |
Any of the following persons shall be punished by imprisonment with labor for up to one year or by a fine not exceeding 10 million won:
| 1. | A person who fails to administer the entrusted underlying assets in distinction from its own assets, in violation of Article 11 (2); |
| 2. | A person who has borrowed funds or invested surplus funds without complying with the asset-backed securitization plan, in violation of Article 22; |
| 3. | A person who fails to comply with an order for business improvement under Article 35. |
[This Article Wholly Amended on Jul. 11, 2023]
| Article 41 (Joint Penalty Provisions) |
If the representative of a corporation, or an agent or an employee of, or any other person employed by, a corporation or individual commits a violation specified in Article 39 or 40 in conducting the business affairs of the corporation or individual, the corporation or individual shall, in addition to punishing the violators accordingly, be punished by a fine prescribed in the relevant Article: Provided, That this shall not apply where such corporation or individual has not been negligent in giving due attention and supervision concerning the relevant business affairs to prevent such violation. [This Article Wholly Amended on Dec. 26, 2008]
| Article 42 (Administrative Fines) |
| (1) | Any of the following persons shall be subject to an administrative fine not exceeding 10 million won: |
| 1. | A person who fails to prepare and keep books under Article 11 (3); |
| 2. | A person who uses a name indicating a special purpose company, in violation of Article 21; |
| 3. | A person who fails to make a disclosure under Article 33-2 or who makes a false disclosure; |
| 4. | A person who fails to file a report under Article 35-2 or who files a false report. |
| (2) | The Financial Services Commission shall impose and collect administrative fines under paragraph (1), as prescribed by Presidential Decree. |
[This Article Wholly Amended on Jul. 11, 2023]
ADDENDA <Act No. 5555, Sep. 16, 1998>
| (1) | (Enforcement Date) This Act shall enter into force on the date of its promulgation. |
ADDENDA <Act No. 6073, Dec. 31, 1999>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDUM <Act No. 6181, Jan. 21, 2000>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 6275, Oct. 23, 2000>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 and 3 Omitted.
ADDENDA <Act No. 6429, Mar. 28, 2001>
Article 1 (Enforcement Date)
This Act shall enter into force on the date as prescribed by Presidential Decree within two years from the promulgation date of this Act. (Proviso Omitted.)
Articles 2 through 11 Omitted.
ADDENDA <Act No. 6642, Jan. 26, 2002>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 through 8 Omitted.
ADDENDA <Act No. 6916, May 29, 2003>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 13 Omitted.
ADDENDA <Act No. 7428, Mar. 31, 2005>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 6 Omitted.
ADDENDA <Act No. 7615, Jul. 29, 2005>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 Omitted.
ADDENDA <Act No. 8635, Aug. 3, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force one and a half years after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 44 Omitted.
ADDENDUM <Act No. 8703, Dec. 21, 2007>
This Act shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 8863, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDA <Act No. 9071, Mar. 28, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2009. (Proviso Omitted.)
Articles 2 through 11 Omitted.
ADDENDUM <Act No. 9258, Dec. 26, 2008>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 9617, Apr. 1, 2009>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 through 13 Omitted.
ADDENDA <Act No. 10303, May. 17, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 10 Omitted.
ADDENDA <Act No. 10522, Mar. 31, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force on March 2, 2012. (Proviso Omitted.)
Articles 2 through 28 Omitted.
ADDENDA <Act No. 10580, Apr. 12, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 5 Omitted.
ADDENDA <Act No. 10682, May 19, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 3 Omitted.
ADDENDUM <Act No. 10692, May 19, 2011>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 10924, Jul. 25, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDA <Act No. 11599, Dec. 18, 2012>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 4 Omitted.
ADDENDA <Act No. 12989, Jan. 6, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force on July 1, 2015.
Articles 2 through 6 Omitted.
ADDENDA <Act No. 13797, Jan. 19, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 11 Omitted.
ADDENDUM <Act No. 14131, Mar. 29, 2016>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 14242, May 29, 2016>
Article 1 (Enforcement Date)
This Act shall enter into force on December 1, 2016. (Proviso Omitted.)
Articles 2 through 22 Omitted.
ADDENDUM <Act No. 15148, Nov. 28, 2017>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 16652, Nov. 26, 2019>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Act No. 16957, Feb. 4, 2020>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 13 Omitted.
ADDENDUM <Act No. 18129, Apr. 20, 2021>
This Act shall enter into force three months after the date of its promulgation.
ADDENDA <Act No. 19533, Jul. 11, 2023>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Discretionary Registration of Transfer of Underlying Assets)
The amended provisions of Article 6 (2) shall also apply where any of the facts specified in the previous provisions of Article 6 (1) 2 (a) and (c) occurs before this Act enters into force (excluding where registration of the relevant fact has been filed for with the Financial Services Commission). Article 3 (Applicability to Acquisition of Mortgage or Pledge following Registration of Secured Claims)
The amended provisions of Article 8 (1) shall begin to apply where registration of the fact that the claims secured by pledge or mortgage are transferred or entrusted before this Act enters into force is filed for pursuant to the amended provisions of Article 6 (1) and (2) after this Act enters into force. Article 4 (Applicability to Disclosure of Details of Issuance of Asset-Backed Securities and Compulsory Holding)
| (1) | The amended provisions of Articles 33-2 and 33-3 shall begin to apply to cases where a special purpose company, etc. file for registration of an asset-backed securitization plan under the amended provisions of the former part of Article 3 (1) after this Act enters into force. |
| (2) | Notwithstanding paragraph (1), in cases of a company that has failed to file for registration of an asset-backed securitization plan under the amended provisions of the former part of Article 3 (1), the amended provisions of Articles 33-2 and 33-3 shall begin to apply where any of the following measures is taken to issue securities equivalent to asset-backed securities after this Act enters into force: |
Article 5 (Applicability to Reporting by Special Purpose Companies)
The amended provisions of Article 35-2 shall begin to apply to the grounds for reporting by a special purpose company, etc. that arise after this Act enters into force.