Article 1(Purpose) #
The purpose of this Act is to promote the rationalization of operations of government-invested institutions and efficient administration of government investment therein by prescribing fundamental matters concerning an autonomous and responsible operation system of such invested institutions. <Amended by Act No. 5812, Feb. 5, 1999>
Article 2(Scope of Application) #
(1) Government-invested institutions which are subject to this Act (hereinafter referred to as the "invested institutions") shall be corporations in which the Government invests 50 percent or more of paid-in capital. <Amended by Act No. 3980, Nov, 28, 1987; Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999>
(2) Notwithstanding the provisions of paragraph (1), this Act shall not apply to the Korea Broadcasting System established under the Broadcasting Act, the Educational Broadcasting System established under the Educational Broadcasting System Act, the Korea Development Bank established under the Korea Development Bank Act, the Industrial Bank of Korea established under the Industrial Bank of Korea Act, the ExportImport Bank of Korea established under the Export-Import Bank of Korea Act, and financial institutions as prescribed in Articles 2 and 5 of the Banking Act. <Newly Inserted by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 6136, Jan. 12, 2000; Act No. 6256, Jan. 28, 2000>
Article 3(Guarantee of Autonomy in Operation) #
In order to establish any responsible operation system in the invested institutions, autonomy in operation thereof shall be guaranteed.
Article 4(Government-Invested Institution Management Committee) #
(1) The Government-Invested Institution Management Committee (hereinafter referred to as the "Management Committee") shall be established in the Ministry of Planning and Budget in order to deliberate and resolve matters concerning the management of the invested institutions. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
(2) The following matters concerning the invested institutions shall be referred to the Management Committee for a resolution: <Amended by Act No. 5812, Feb. 5, 1999>
1. Evaluation of actual results of operations;
2. Proposal for removal of the president and a full-time director from their office under Article 7 (5);
3. Appointment and removal of a part-time director under Article 13-2 (2);
4. Recommendation for appointment of an audit under Article 13-2 (3);
5. Matters concerning public announcement of operations under Article 26-2 (1) 6; and
6. Other matters concerning the management of the invested institutions as prescribed by the Presidential Decree.
(3) The Management Committee shall be comprised of the following persons: <Amended by Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
1. Minister of Planning and Budget;
2. Vice-Minister of Finance and Economy;
3. Vice-Minister of any Ministry which has competence over affairs of an invested institution (hereinafter referred to as the "competent Ministry");
4. Deleted; and <by Act No. 5982, May 24, 1999>
5. Five non-governmental members designated by the President from among persons who have a great store of learning and experience.
(4) The chairman of the Management Committee shall be the Minister of Planning and Budget, and the vice-chairman shall be the Vice-Minister of Finance and Economy. <Newly Inserted by Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
(5) A non-governmental member as prescribed in paragraph (3) 5 shall be part-time, and his term of office shall be three years. <Newly Inserted by Act No. 5812, Feb. 5, 1999>
(6) The Minister of Planning and Budget may operate a performance review group of the government-invested institutions which is composed of the experts concerned (hereinafter referred to as the "performance review group") if it is deemed necessary to conduct researches or provide advice on the special matters subject to deliberation or resolution of the Management Committee. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
(7) Necessary matters concerning the organization and operation of the Management Committee and the performance review group shall be determined by the Presidential Decree. <Amended by Act No. 5812, Feb. 5, 1999>
Article 5(Establishment of Operational Objectives) #
(1) Deleted. <by Act No. 5376, Aug. 28, 1997>
(2) The president of an invested institution shall establish the operational objectives of the following year, and submit them to the Minister of Planning and Budget and the competent Minister by October 31. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
(3) Deleted. <by Act No. 5376, Aug. 28, 1997>
(4) If an invested institution modifies its operational objectives, the president of said invested institution shall report such modified matters to the Minister of Planning and Budget and the competent Minister within thirty days. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
Article 6(Report on Actual Results of Operation) #
(1) The president of an invested institution shall prepare annual reports on actual results of operation and on fulfillment of a contract concluded under Article 13-5 and submit them to the National Assembly, the Minister of Planning and Budget and the competent Minister by March 20 in the following year. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
(2) Reports on actual results of operation under paragraph (1) shall include the following documents: <Amended by Act No. 5812, Feb. 5, 1999>
1. Statements of closing accounts: and
2. Financial statements and documents annexed thereto.
Article 7(Evaluation of Actual Results of Operation) #
(1) The Minister of Planning and Budget shall evaluate actual results of operation of invested institutions on the basis of reports on actual results of operation and on fulfillment of a contract concluded under Article 13-5 which are submitted by said invested institutions under Article 6. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
(2) The Minister of Planning and Budget may, if necessary for such evaluation as prescribed in paragraph (1), require the president of an invested institution to submit relevant materials. <Newly Inserted by Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
(3) The Minister of Planning and Budget shall determine a way to evaluate actual results of operation, in such a manner as to measure how the operating objective of the government-invested institutions was achieved in terms of their actual results, efficiency and concern for public interest. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
(4) The Minister of Planning and Budget shall finish the evaluation of actual results of the invested institutions by June 20 and report the results thereof to the National Assembly and the President. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
(5) The Minister of Planning and Budget may propose the removal of the president and a full-time director of an invested institution whose actual results of operation are unsatisfactory as a result of the evaluation thereof to a person having the authority to appoint and to remove them. <Amended by Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
(6) Other necessary matters concerning the evaluation of actual results of operation shall be prescribed by the Presidential Decree. <Amended by Act No. 5812, Feb. 5, 1999>
Article 8(Matters Stated in Articles of Incorporation) #
(1) The invested institutions shall draw up the articles of incorporation including the following matters and obtain an authroization of the competent Minister. The same shall also apply in case of amending the contents of articles of incorporation:
1. Objectives;
2. Name;
3. Location of the main office;
4. Matters concerning capitalization;
5. Matters concerning the shares of stock or their certificate;
6. Matters concerning officers and the staff;
7. Matters concerning the general meeting of shareholders or that of capital contributors;
8. Matters concerning the operation of the board of directors;
9. Matters concerning the business and the execution thereof;
10. Matters concerning accounting;
11. Matters concerning the method of public notice;
12. Matters concerning the issuance of debentures;
13. Matters concerning the amendment of the articles of incorporation; and
14. Other matters as prescribed by the Presidential Decree.
(2) Among matters stated in the articles of incorporation under the provisions of paragraph (1), matters not related to the invested institutions concerned in view of their characteristic shall not be required to be stated.
Article 9(Board of Directors) #
(1) The board of directors shall be established in an invested institution in order to deliberate and resolve the following matters:
1. Operational objectives, budget, finance and operating plan;
2. Use of reserve funds and carrying forward of the budget;
3. Closing accounts;
4. Acquisition and disposition of basic assets;
5. Borrowing of long-term funds, issuance of debentures and a plan for their redemption;
6. Selling price of products and services;
7. Disposition of surplus fund;
8. Equity investment in other companies;
9. Amendment of the articles of incorporation;
10. Enactment and amendment of bylaws; and
11. Other matters which are deemed necessary by the board of directors.
(2) The board of directors shall be composed of fifteen or less directors, including the president. <Amended by Act No. 5812, Feb. 5, 1999>
(3) The auditor may attend the meetings of the board of directors and state his opinion.
(4) The board of directors may, if deemed necessary, require the auditor to inspect an invested institution.
Article 10(Method of Resolution by Board of Directors) #
Any resolution in a meeting of the board of directors shall be made by the assent of a majority of the members.
Article 11(Officers of Government-invested Institution) #
(1) Officers of an invested institution shall comprise directors and auditor including the president. <Amended by Act No. 5376, Aug. 28, 1997>
(2) Directors shall be classified into full-time directors and part-time directors. <Amended by Act No. 5812, Feb. 5, 1999>
(3) The prescribed number of full-time directors including the president shall be less than 50/100 of that of all directors. <Amended by Act No. 5812, Feb. 5, 1999>
(4) Deleted. <by Act No. 5812, Feb. 5, 1999>
Article 12(Term of Service of Officers) #
(1) The term of service of officers shall be three years. <Amended by Act No. 5376, Aug. 28, 1997>
(2) Deleted. <by Act No. 5376, Aug. 28, 1997>
(3) The officers whose term of service expires, shall continuously perform their duties till the appointment of their successors.
Article 13(Duties of Officers) #
(1) The president shall convene a meeting of the board of directors, and shall be the chairperson of said meeting. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999>
(2) The president shall represent an invested institution, supervise the affairs thereof, and take the responsibility for the results of operation. <Amended by Act No. 5812, Feb. 5, 1999>
(3) If the president is not able to perform his duties for any inevitable reason, one person among full-time directors shall act on behalf of the president in accordance with the articles of incorporation. <Newly Inserted by Act No. 5812, Feb. 5, 1999>
(4) Directors shall deliberate on the agenda presented to the board of directors for discussion, and participate in the voting.
(5) The auditor shall inspect the affairs and accounts of an invested institution, and submit his views to the board of directors.
Article 13-2(Appointment and Removal of Officers) #
(1) The president shall be appointed and removed by the President on a proposal of the competent Minister according to the recommendation of the president recommendation committee under Article 13-3.
(2) Full-time directors other than the president shall be appointed and removed by the competent Minister on a proposal of the president, and part-time directors shall be appointed and removed by the Minister of Planning and Budget via a resolution of the Management Committee according to a proposal of the president among non-governmental experts having a great store of learning and experience on operation. <Amended by Act No. 5982, May 24, 1999>
(3) The auditor shall be appointed and removed by the President on a proposal of the Minister of Planning and Budget via a resolution of the Management Committee. In this case, the Minister of Planning and Budget shall consult with the Minister of Finance and Economy thereon. <Amended by Act No. 5982, May 24, 1999>
(4) The president shall not be removed from his office during his term of office unless a proposal for removal is made under Article 7 (5) or there exist other justifiable reasons.
[This Article Newly Inserted by Act No. 5812, Feb. 5, 1999]
Article 13-3(President Recommendation Committee) #
(1) An invested institution shall, for the purpose of recommending a candidate for the president thereof, organize and operate the president recommendation committee (hereinafter referred to as the "recommendation committee").
(2) The recommendation committee shall be comprised of part-time directors and members designated by the board of directors.
(3) Officers or the staff (excluding part-time directors) of the invested institution concerned and public officials (excluding teachers as prescribed in the Public Educational Officials Act) shall not be members of the recommendation committee.
(4) The prescribed number of members who are part-time directors among members of the recommendation committee shall be a majority of the prescribed number of all members.
(5) The chairman of the recommendation committee shall be elected from among the members who are part-time directors.
(6) Other necessary matters concerning the organization and operation of the recommendation committee shall be prescribed by the Presidential Decree.
[This Article Newly Inserted by Act No. 5812, Feb. 5, 1999]
Article 13-4(Procedures for Recommendation of Candidate for President) #
(1) The recommendation committee shall recommend a person who has a great store of learning and experience on the operation of an enterprise and affairs of the invested institution concerned and who has any capability for a chief executive officer as a candidate for the president.
(2) In selecting a candidate for the president, the recommendation committee shall consult with a person who is to be recommended as a candidate for the president on a contract bill determined in a meeting of the board of directors. In this case, the recommendation committee may, if necessary for such consultation, modify the terms of contract.
(3) Matters concerning an operating objective and piece rate system which the president has to attain during his term of office, shall be included in a contract bill as prescribed in paragraph (2).
(4) The president may not attend a meeting of the board of directors in which a contract bill is determined under paragraph (2). In this case, a part-time director who is the chairman of the recommendation committee shall be the chairperson of the said meeting.
(5) The recommendation committee shall obtain the approval of a contract bill on which it consults with a candidate for the president under paragraph (2) from the competent Minister.
[This Article Newly Inserted by Act No. 5812, Feb. 5, 1999]
Article 13-5(Contract with President) #
If the president is appointed, an invested institution shall make a contract with him in accordance with a contract bill approved by the competent Minister. In this case, a part-time director who is the chairman of the recommendation committee shall sign a written contract as a representative of the said invested institution.
[This Article Newly Inserted by Act No. 5812, Feb. 5, 1999]
Article 13-6(Requirement of Submission of Materials by Part-time Director) #
A part-time director may require the president of the invested institution concerned to submit materials necessary for the performance of duties. In this case, the president shall comply with such requirement unless there exists any special reason.
[This Article Newly Inserted by Act No. 5812, Feb. 5, 1999]
Article 13-7(Liability of Director) #
(1) The provisions of Articles 399 through 401 of the Commercial Act concerning the liability of a director shall apply mutatis mutandis to a director of an invested institution.
(2) The provisions of Articles 414 and 415 (limited to any case to which the provisions of Article 400 shall apply mutatis mutandis) of the Commercial Act concerning the liability of an auditor shall apply mutatis mutandis to an auditor of an invested institution.
[This Article Newly Inserted by Act No. 5812, Feb. 5, 1999]
Article 14(Disqualifications for Officers) #
A person who falls under any subparagraph of Article 33 of the State Public Officials Act shall not be an officer of an invested institution.
[This Article Wholly Amended by Act No. 5812, Feb. 5, 1999]
Article 15(Appointment of Staff) #
(1) The staff of an invested institution shall be appointed and removed by the president in accordance with the articles of incorporation. <Amended by Act No. 5812, Feb. 5, 1999>
(2) The appointment of the staff shall be based on the examination score, work performance and other capacity.
Article 16(Restriction on Concurrent Positions of Officers and Staff) #
Full-time officers and the staff of an invested institution shall not be engaged in any other work for the purpose of profit making besides the duties concerned, and full-time officers shall not hold any other position concurrently without permission of the competent Minister and the staff shall not do so without permission of the president of the invested institution concerned.
Article 17(Remuneration of Officers) #
(1) Results of operation of an invested institution shall be reflected in remuneration standards for the president and a full-time director among those for officers determined in a meeting of the board of directors, and the contents of a contract with the president shall be reflected in remuneration standards for the president.
(2) An interested officer may not attend a meeting of the board of directors in which remuneration standards for officers are determined.
[This Article Wholly Amended by Act No. 5812, Feb. 5, 1999]
Article 18(Legal Fiction as Public Official in Application of Penal Provisions) #
The officers of an invested institution and the staff thereof determined by the Presidential Decree shall be regarded as public officials in the application of Articles 129 through 132 of the Criminal Act.
Article 19(Fiscal Year) #
The fiscal year of an invested institution shall correspond to that of the Government.
Article 20(Accounting Principles) #
(1) The accounts of the invested institutions shall be settled according to the accounting principles of enterprises in order to reflect increase and decrease of assets and their changing conditions as a consequence of management results.
(2) With respect to a person who is deemed to clearly violate fair competition or appropriate fulfillment of a contract in making said contract, an invested institution may restrict qualifications for participation in a bid for a prescribed period within the scope of 2 years. <Amended by Act No. 5812, Feb. 5, 1999; Act No. 8049, Oct. 4, 2006>
<This paragraph was amended by Act No. 8049, October 4, 2006 following the decision of incompatibility with the Constitution which was made by the Constitutional Court on April 28, 2005>
(3) Necessary matters concerning standards and procedures for the settlement of accounts and a contract and restrictions of qualifications for participation in a bid under paragraphs (1) and (2), shall be prescribed by the Ordinance of the Ministry of Finance and Economy. <Newly Inserted by Act No. 5812, Feb. 5, 1999>
<The part "necessary matters concerning …<Omitted.>… restrictions of qualifications for participation in a bid under paragraphs …<Omitted.>… and (2), shall be prescribed by the Ordinance of the Ministry of Finance and Economy" in this paragraph, is effective until the legislator amends it by the deadline of April 30, 2006 following the decision of incompatibility with the Constitution which was made by the Constitutional Court on April 28, 2005>
Article 21(Guiding Principle in Making Budget) #
The Minister of Planning and Budget may draw up a guiding principle in making the budget of an invested institution and notify the president of an invested institution. <Amended by Act No. 5982, May 24, 1999>
[This Article Wholly Amended by Act No. 5812, Feb. 5, 1999]
Article 22(Budgetting) #
(1) The budget of an invested institution shall be composed of the general budget rules, estimated statement of profit and loss, balance sheet and fund statement.
(2) The president of an invested institution shall make and establish its budget for the following fiscal year before the beginning of the fiscal year concerned in accordance with operational objectives under the provisions of Article 5 and a guiding principle under the provisions of Article 21.
(3) The budget made by the president of an invested institution in accordance with the provisions of paragraph (1) shall be established through the resolution of the board of directors. The same shall also apply in case of the amendment of the budget due to any modification in the operational objectives or other inevitable reasons which take place after the budget is established.
(4) When the budget is established or amended, the president of an invested institution shall, without delay, report the details to the Minister of Planning and Budget, the competent Minister and the Board of Audit and Inspection. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
Article 23(Quasi-budget) #
(1) In case where the budget of any invested institution concerned is not established until the beginning of the fiscal year due to the natural calamity and other inevitable reasons, the president of the invested institution may compile and operate quasi-budget in the light of the budget of the previous fiscal year.
(2) The quasi-budget shall lose its effect once the budget of the year concerned is established. In this case, the account executed under the quasibudget shall be regarded as one executed under the budget of the year concerned.
Article 24(Establishment of Operating Plan) #
(1) When the budget is established under the provisions of Article 22, the president of an invested institution shall, without delay, establish an operating plan pursuant to the budget of the year concerned through the resolution of the board of directors.
(2) The president of an invested institution shall submit a plan of the year concerned to the Minister of Planning and Budget and the competent Minister within two months following the establishment of the budget. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999; Act No. 5982, May 24, 1999>
Article 25(Submission of Statements of Accounts) #
(1) The president of an invested institution shall settle the accounts by submitting the statements of accounts for the preceding fiscal year to the Minister of Finance and Economy with his approval within two months following the completion of the every fiscal year: Provided, That in case the invested institution hold a general meeting of shareholders or general meeting of investors, the accounts shall be resolved and settled in the general meeting of shareholders or general meeting of investors. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999>
(2) The following documents shall be attached to the statements of accounts submitted in accordance with paragraph (1):
1. Financial statements and the attached to them; and
2. Other documents necessary for clarifying the contents of the statement of accounts.
(3) The Minister of Finance and Economy shall collect the statements of accounts of the invested institutions, which were fixed in accordance with the provisions of paragraph (1), and submit them to the Board of Audit and Inspection by June 30. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999>
(4) The Board of Audit and Inspection shall audit the statements of accounts submitted under the provisions of paragraph (3) and transmit reports thereon to the Minister of Finance and Economy by September 31. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999>
(5) The Minister of Finance and Economy shall attach auditing reports of the Board of Audit and Inspection to the statements of accounts under the provisions of paragraph (3) and make a report to the State Council. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999>
Article 26(Disposition of Profit and Loss) #
Disposition of profit and loss from the statements of accounts of invested institutions shall be made in accordance with the pertinent Act for the establishment of each invested institution, other Acts and subordinate statutes, or the articles of incorporation of the invested institution concernned.
Article 26-2(Disclosure) #
(1) An invested institution shall disclose the following matters: <Amended by Act No. 5982, May 24, 1999>
1. Statements of closing accounts and financial statements;
2. Annual Operating objectives, budget and managerial plans;
3. Reports on evaluation of actual results of operation;
4. Articles of incorporation, debenture registers and minute books of the board of directors;
5. Inspection reports of an auditor, and if a disciplinary action, correction or improvement as prescribed in Articles 32 through 34-2 of the Board of Audit and Inspection Act is required or correction as prescribed in Article 16 of the Act on the Inspection and Investigation of State Administration is required, the contents thereof; and
6. Other important matters concerning operation which are required by the Minister of Planning and Budget via a resolution of the Management Committee.
(2) An invested institution shall prepare documents under paragraph (1) and if there exists a person who intends to peruse or transcribe them, it shall comply with such perusal or transcription.
(3) Necessary matters concerning the disclosure and so on under paragraphs (1) and (2) shall be prescribed by the Presidential Decree.
[This Article Newly Inserted Act No. 5812, Feb. 5, 1999]
Article 27(Purchase of Goods and Entrustment of Construction Contract) #
The president of an invested institution may, if deemed necessary, entrust the purchase of goods or the conclusion of construction contracts to the Administrator of the Supply Administration: Provided, That if those goods or contracts are prescribed by the Presidential Decree, their purchase or conclusion shall be entrusted to the Administrator of the Supply Administration.
Article 28 #
Deleted.<by Act No. 5812, Feb. 5, 1999>
Article 29(Inspection) #
(1) Inspection of an invested institution shall be divided into internal and external inspection.
(2) Internal inspection shall be performed by an auditor of an invested institution under the conditions as determined by the Minister of Finance and Economy. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999>
(3) External audit and inspection of the business and the settlement of accounts of an invested institution shall be performed by the Board of Audit and Inspection in accordance with the provisions of the Board of Audit and Inspection Act: Provided, That the competent Minister may, if deemed necessary, perform external inspection by mutual agreement with the Board of Audit and Inspection.
(4) The Board of Audit and Inspection may entrust the inspection as prescribed in the main sentence of paragraph (3) to the competent Minister or the head of an agency determined by the Presidential Decree.
(5) The head of an agency that has performed the inspection under the proviso of paragraph (3) and the provisions of paragraph (4) shall, if he deems that there are matters requiring correction as a result of the inspection, request the correction to the competent Minister or the president of invested institution concerned. In this case, the competent Minister or the president of the invested institution who was requested to make correction shall take measures necessary therefor.
Article 30(Method of Equity Investment, etc.) #
In case where the Government makes investment in the invested institutions, the Minister of Finance and Economy shall decide time and method of subscription. <Amended by Act No. 5376, Aug. 28, 1997; Act No. 5812, Feb. 5, 1999>
Article 31(Exercise of Minority Stockholders' Rights) #
The provisions of Articles 191-13 and 191-14 of the Securities and Exchange Act shall apply mutatis mutandis to the exercise of minority stockholders' rights and stockholders' proposal to an invested institution whose stocks are not listed on a securities market.
[This Article Wholly Amended by Act No. 5812, Feb. 5, 1999]