Article 1(Purpose) #
The purpose of this Act is to protect and foster a sound short-term financing business and to regulate the business rationally, and thereby to contribute to establishment of on orderly credit market.
Article 2(Definition of Terms) #
(1) For the purpose of this Act, the term “short-term financing business” means a business carrying services of issuing, discounting, selling and purchasing, brokeraging, accepting and guaranteeing of the bills and such debt instrument as prescribed by the Ordinance of the Ministry of Finance and Economy (hereinafter referred to as “debt instrument”). In this case, the scope of the bills and debt instrument shall be those which become due within the period determined by the Minister of Finance and Economy not exceeding one year. <Amended by Act No. 4681, Dec. 31, 1993>
(2) For the purpose of this Act, the term “securities” means those referred to in Article 2 (1) of the Securities and Exchange Act.
Article 3(Approval of Business) #
(1) No person shall carry on a short-term financing business without obtaining approval of the Minister of Finance and Economy, except otherwise specified in other Acts.
(2) Any person who wishes to obtain approval under paragraph (1), shall submit to the Minister of Finance and Economy an application for approval with the articles of incorporation and statement of operational guidelines attached thereto. <Amended by Act No. 4681, Dec. 31, 1993>
Article 4(Restrictions on Business Body) #
A short-term financing business may be operated only by a joint-stock corporation whose paid-up capital is five hundred million won or more.
Article 5(Commencement of Business) #
(1) Any person who has obtained an approval for a short-term financing business under Article 3 (hereinafter referred to as “short-term financing corporation”) shall commence the business within six months of the date of approval.
(2) If there are justifiable reasons, the Minister of Finance and Economy may, upon request, extend the period referred to in paragraph (1).
Article 6(Matters for Approval) #
If a short-term finance corporation desires to perform an act falling under any of the following subparagraphs, it shall obtain approval of the Minister of Finance and Economy:
1. Change in the articles of incorporation;
2. Change in methods of business;
3. Establishment of places of business or change in location or abolition thereof;
4. Merger or dissolution; and
5. Termination of all or a part of the business.
Article 7(Affairs) #
(1) A short-term finance corporation may operate the following affairs:
1. Issuance of bills and debt instrument;
2. Discount, sale and purchase of bills;
3. Acceptance and guarantee of bills;
4. Intermediation for sale and purchase of bills; and
5. Other affairs incidental to the affairs under subparagraphs 1 through 4, which are approved by the Minister of Finance and Economy.
(2) A short-term finance corporation may, with approval of the Minister of Finance and Economy, perform the following affairs:
1. Sale and purchase of securities;
2. Consignment sale and purchase of securities;
3. Brokerage or agency for sale and purchase of securities;
4. Acceptance of securities;
5. Acting as intermediary for subscription or public offering of securities;
6. Intermediation, brokerage or agency for consignment sale and purchase in the securities market; and
7. Other affairs incidental to those as referred to in subparagraphs 1 through 6.
(3) Where a short-term finance corporation engages in the business referred to in paragraph (2), the provisions of Chapter 5 (Securities Business) of the Securities and Exchange Act shall apply mutatis mutandis: Provided, That this shall not apply in cases of the provisions of Articles 28 (3) through (7), 33, 47 and 62 of the same Act. <Amended by Act No. 4681, Dec. 31, 1993>
Article 8(Maximum Limits of Various Rates) #
A short-term finance corporation shall independently determine the rates of interest for payment and acceptance, discount rates, service fee rates and other fees: Provided, That the Minister of Finance and Economy may determine such limits after consulting with the Monetary Board Committee, if there is an urgent need to determine the maximum limits of such rates, taking into consideration the economic condition, status on incomes and expenditures, etc.
Article 9(Unit of Issuance) #
The minimum amount of a bill or a debt instrument which a short-term finance corporation may issue, shall be one million won or more: Provided, That if it is deemed necessary, the Minister of Finance and Economy may raise the amount.
Article 10(Limits on Issuance, Acceptance, Guarantee and Sale and Purchase of Bills) #
A short-term finance corporation shall not issue bills and debt instrument, accept and guarantee bills, nor sell and buy bills with endorsement, exceeding in aggregate an amount of 15 times as much as the total of their capital, reserve fund and other surplus funds: Provided, That if it is deemed necessary, the Minister of Finance and Economy may lower such limits.
Article 11(Limits on Employment of Funds towards Same Person) #
Except for the cases approved by the Minister of Finance and Economy, a short-term finance corporation shall not employ funds towards the same person, exceeding an amount of twenty-five percent of the total of their capital, reserve fund and other surplus funds.
Article 12(Confirmation of Soundness of Customers) #
When discounting, accepting, guaranteeing of bills and giving other credits to customers, a short-term finance corporation shall ensure credit worthiness of the customers and soundness of their assets, etc.
Article 13(Limit of Investment in Securities) #
No short-term finance company may invest in the securities in excess of 100/100 of the total of its capital, reserve and other surplus funds: Provided, That any investment in the national debt and the currency stabilization bonds issued by the Bank of Korea shall be excluded therefrom.
[This Article Wholly Amended by Act No. 4681, Dec. 31, 1993]
Article 13-2(Holding of Reserve Assets for Payment) #
A short-term finance company shall maintain reserve assets for payment to ensure liquidity and to provide for any urgent drawing of funds, in accordance with the provisions of the Presidential Decree.
[This Article Newly Inserted by Act No. 4681, Dec. 31, 1993]
Article 14(Restrictions on Acquisition of Real Property) #
(1) A short-term finance corporation shall not purchase or own real property except for that for their business use: Provided, That the real property acquired through exercise of a security right shall be excepted.
(2) A short-term finance corporation shall not acquire real property for business use, exceeding an amount of the total of their capital, reserve funds and other surplus funds.
Article 15(Ban on Holding Concurrent Jobs) #
The full-time officers and staff of short-term finance corporations shall not engage in other profit-making business: Provided, That an additional job may be excepted when it is approved by the Minister of Finance and Economy.
Article 16(Minister in Charge of Short-term Financing Business) #
The Minister of Finance and Economy shall supervise the affairs of shortterm finance corporations.
Article 17(Cancellation of Approval, etc.) #
(1) Where a short-term finance corporation violates the provisions of Acts and subordinate statutes or articles of incorporation, or the condition of its property or management is not sound, and thus likely to harm the public interests, the Minister of Finance and Economy may suspend all or a part of its business, or order necessary measures or cancel the approval of the business, in accordance with the provisions of the Presidential Decree.
(2) If the Minister of Finance and Economy has cancelled the approval of the business under paragraph (1), the short-term finance corporation concerned shall be dissolved. <Amended by Act No. 4681, Dec. 31, 1993>
(3) If the Minister of Finance and Economy wishes to take the disposition referred to in paragraph (1), he shall give in advance the other party of the disposition or his representative an opportunity to state his opinion, and if necessary, hear the opinion of any interested person: Provided, That this shall not apply in cases where the other party of the disposition or his representative fails to comply with it without any justifiable reason, or it is impossible to give him an opportunity to state his opinion due to nonavailability of his address, etc. <Newly Inserted by Act No. 4681, Dec. 31, 1993>
Article 18(Submission of Reports, etc.) #
(1) If it is deemed necessary, the Minister of Finance and Economy may cause a short-term finance corporation to submit reports on its business and property status.
(2) A short-term finance corporation shall submit a monthly business report and an annual operation report to the Minister of Finance and Economy and the Governor of the Bank of Korea, in accordance with the provisions of the Ordinance of the Ministry of Finance and Economy.
Article 19(Inspection) #
(1) The Minister of Finance and Economy may, if necessary, cause his subordinate public officials to inspect the affairs and property condition of short-term finance corporations.
(2) The public officials who conduct the inspection under paragraph (1), shall show to the persons concerned certificates showing such authority. <Amended by Act No. 4681, Dec. 31, 1993>
Article 20(Delegation of Authority) #
The Minister of Finance and Economy may delegate part of his authority under this Act to the Superintendent of the Office of Bank Supervision.
Article 21(Exclusion of Application of Bank of Korea Act, etc.) #
The Bank of Korea Act and the Banking Act shall not apply to the shortterm finance corporations under this Act.
Article 22 #
Deleted.<by Act No. 4681, Dec. 31, 1993>
Article 23(Penal Provisions) #
(1) Any person who violates the provisions of Article 3, shall be punished by imprisonment for not more than two years, or a fine not exceeding twenty million won. <Amended by Act No. 4681, Dec. 31, 1993>
(2) Any person falling under any of the following subparagraphs shall be punished by imprisonment for not more than one year, or a fine not exceeding five million won: <Amended by Act No. 4681, Dec. 31, 1993>
1. A person who violates the provisions of Article 6;
2. A person who operates the affairs under Article 7 (2) without obtaining approval; and
3. A person who charges amounts at the rates exceeding the maximum limits determined by the Minister of Finance and Economy under the proviso of Article 8.
(3) Any person who violates the provisions of Article 10, 11, 13 or 14, shall be punished by a fine not exceeding two million won. <Amended by Act No. 4681, Dec. 31, 1993>
Article 24(Fine for Negligence) #
(1) Any person who falls under any of the following subparagraphs, shall be punished by a fine for negligence not exceeding two million won:
1. A person who violates the provisions of Article 13-2 or 15;
2. A person who fails to submit the report prescribed in Article 18, or who makes any false entries in the report; and
3. A person who refuses, interferes with, or evades the inspection prescribed in Article 19 (1).
(2) The fine for negligence referred to in paragraph (1) shall be imposed and collected by the Minister of Finance and Economy or a person who is authorized by him (hereinafter referred to as “person who is authorized to impose it”), in accordance with the provisions of the Presidential Decree.
(3) Any person who is dissatisfied with the disposition of fine for negligence referred to in paragraph (2), may make an objection with the person who is authorized to impose it, within thirty days after he is informed of such disposition.
(4) If the person who is subject to the disposition of a fine for negligence under paragraph (2), has made an objection under paragraph (3), the person who is authorized to impose it, shall notify it without delay to the competent court, which shall, upon receiving the notification, bring the case of fine for negligence to a trial under the Non-Contentious Case Litigation Procedure Act.
(5) If no objection is made, nor fine for negligence is paid, within the period referred to in paragraph (3), the fine for negligence shall be collected according to the procedures for collecting national taxes in arrears.
[This Article Wholly Amended by Act No. 4681, Dec. 31, 1993]
Article 25(Joint Penal Provisions) #
If representatives of juristic persons or agents, employees and other personnel of juristic persons or individuals have committed the acts falling under Articles 23 and 24, with respect to the business of the juristic persons or individuals, the fine or fine for negligence under the respective Article shall also be imposed on the juristic persons or individuals concerned.
Article 26(Decree) #
Matters necessary for the enforcement of this Act shall be prescribed by the Presidential Decree.