Article 635(Acts Subject to Administrative Fines) #
(1) If an incorporator, an incorporation member, a managing member, a manager, a director, an executive director, an auditor, a member of the audit committee of a company, a representative of a foreign company, inspector, notary public under Article 298 (3), 299-2, 310 (3) or 313 (2), an appraiser, a manager, a liquidator, a transfer agent, a company commissioned to offer bonds for subscription, its successor under Article 299-2, 310 (3), or 422 (1), or an acting director under Article 386 (2), 407 (1), 415, 542 (2) or 567 has committed any of the following acts, he/she shall be subject to an administrative fine not exceeding five million: Provided, That this shall not apply where a criminal penalty is imposed against such act: <Amended by Act No. 1212, Dec. 12, 1962; Act No. 3724, Dec. 1984; Act No. 5053, Dec. 29, 1995; Act No. 5591, Dec. 28, 1998; Act No. 6086, Dec. 31, 1999; Act No. 9362, Jan. 30, 2009; Act No. 10600, Apr. 14, 2011>
1. In cases of being negligent in making registration prescribed in this Part;
2. In cases of being negligent in giving any public notice or notification prescribed in this Part or making wrongful public notice or notification;
3. In cases of interfering with any inspection or investigation pursuant to this Part;
4. In cases of refusing to permit the inspection or copying of documents or to issue a transcript or an abstract thereof in contravention of this Part, without good cause;
5. In cases of making a false report to, or concealing facts from, a government authority, general meeting, or meeting of bondholders;
6. In cases of failure to state in share certificates, certificates of bonds or certificates for preemptive rights any of the required particulars or making a misstatement therein;
7. In cases of failure to effect entry of a change of holders in the register of shareholders, without good cause;
8. In cases of being negligent in taking procedures for the appointment of directors and auditors, if the remaining directors or auditors in office become fewer than the minimum number prescribed in the Acts or in the articles of incorporation;
9. In cases of failure to state any particulars to be stated in the articles of incorporation, the register of shareholders or the part of a set thereof, the register of members, the bond register or the part of a set thereof, the minutes, audit and inspection records, a list of assets, balance sheets, a business report, operation report, income statements, or other documents indicating financial status and management performance of the company and determined by Presidential Decree pursuant to Article 287-33 and 447 (1) 3, a report on the settlement of accounts, books of account, or supplementary statements or an audit report mentioned in Article 447, 534, 579 (1) or 613 (1), or making misstatements therein;
10. In cases of being negligent or refusing to hand over a business undertaking to a liquidator appointed by the court;
11. In cases of determining an unduly prolonged period set forth in Article 247 (3), 535 (1) or 613 (1), for the purpose of delaying the completion of liquidation;
12. In cases of being negligent in requesting adjudication of bankruptcy in contravention of Article 254 (4), 542 (1) or 613 (1);
13. In cases of inviting public subscriptions for investment in contravention of Article 589 (2);
14. In cases of a merger, division, or merger after division of a company, an organizational change, disposal of the company's assets or reduction of its capital, in contravention of Article 232, 247 (3), 439 (2), 527-5, 530 (2), 530-9 (4), 530-11 (2), 597, 603 or 608;
15. In cases of distribution of company's assets in contravention of Article 260, 542 (1) or 613 (1);
16. In cases of failure to prepare share or bond subscription forms, certificates of preemptive rights or to state therein the required particulars or making misstatements therein, in contravention of Article 302 (2), 347, 420, 420-2, 474 (2) or 514;
17. In cases of being negligent in taking procedures for cancellation of shares or equity interest or to dispose of pledge rights over the shares or equity interest, in contravention of Article 342 or 560 (1);
18. In cases of retirement of shares or units of investment in contravention of Article 343 (1) or 560 (1);
19. In cases of issuance of share certificates in contravention of Article 355 (1) and (2) or 618;
20. In cases of failure to enter in the register of shareholders, in contravention of Article 358-2 (2);
21. In cases of failure to make a shareholder's proposal an agenda item for a general meeting of shareholders, in contravention of Articles 363-2 (1), 542 (2) or Article 542-6 (2);
22. In cases of failure to convene a general meeting of shareholders in contravention of a court order issued in accordance with Article 365 (1) and (2), 578, 467 (3) or 582 (3) or convening a general meeting of shareholders at a place other than that set forth in the articles of incorporation, or convening such meeting in contravention of Article 363, 364 or 571 (2) and (3);
23. In cases of failure to give a notice or public notice on the contents and method of exercise of the appraisal right or giving an incomplete notice or public notice thereon, in contravention of Article 374 (2), 530 (2), or 530-11 (2);
24. In cases of failure to keep books or documents in contravention of Articles 287-34 (1), 396 (1), 448 (1), 510 (2), 522-2 (1), 527-6 (1), 530-7, 534 (3), 542 (2), 566 (1), 579-3, 603 or 613;
25. In cases of refusing investigation by an auditor or a member of the audit committee without good cause, in contravention of Article 412-5 (3);
26. In cases of failure to set aside a reserve or misusing such reserve, in contravention of Articles 458 through 460 or 583;
27. In cases of failure to pay a dividend within the period set forth in Article 464-2 (1);
28. In cases of issuing bond certificates in contravention of Article 478 (1) or 618;
29. In cases of repaying obligations in contravention of Article 536 or 613 (1);
30. In cases of appointing directors or auditors in violation of Article 542-5;
31. In cases of issuing order or bearer instruments with respect to equity interest, in contravention of Article 555;
32. In cases of failure to comply with a court order issued pursuant to Article 619 (1).
(2) The provisions of paragraph (1) shall also apply where an incorporator, director or executive director has transferred any right deriving from the subscription of share certificates. <Amended by Act No. 3724, Apr. 10, 1984; Act No. 10600, Apr. 14, 2011>
(3) In cases where any person specified in the part other than the subparagraphs of paragraph (1) commits any act falling under any of the following subparagraphs, he/she shall be subject to an administrative fine not exceeding 50 million won: <Newly Inserted by Act No. 9362, Jan. 30, 2009>
1. Failure to perform his/her duty to appoint outside directors, in violation of Article 542-8 (1);
2. Failure to establish a committee for recommending candidates for outside directors and to constitute the committee no less than half of the total members of which are outside directors, in violation of Article 542-8 (4);
3. Failure to appoint outside directors pursuant to Article 542-8 (5);
4. Engaging in transactions without the approval of directors, in violation of Article 542-9 (3);
5. Failure to establish an audit committee, in violation of Article 542-11 (1);
6. Failure to establish an audit committee that meets the requirements for establishment of the audit committee set forth in the subparagraphs of Articles 415-2 (2) and 542-11 (2), in violation of Article 542-11 (2);
7. Failure to ensure that the audit committee meets the requirements for establishment set forth in the subparagraphs of Articles 415-2 (2) and 542-11 (2), in violation of Article 542-11 (4) 1 and 2;
8. Failure to observe procedures for appointing members of the audit committee, in violation of Article 542-12 (2).
(4) When any person specified in the part other than the subparagraphs of paragraph (1) commits any act falling under any of the following subparagraphs, he/she shall be subject to an administrative fine not exceeding 10 million won: <Newly Inserted by Act No. 9362, Jan. 30, 2009>
1. Neglecting to give a notice or public notice of the convocation of a general meeting of shareholders under Article 542-4 or giving a notice or public notice in an illegitimate manner;
2. Failure to separately propose and resolve on a proposal, in violation of Article 542-7 (4) or 542-12 (5).