Article 14(Restrictions on Functions) #
(1) "Person as prescribed by Presidential Decree" in Article 21 (1) 3 of the Act means a person who has the following relationship with either a certified public accountant or his spouse: <Amended on Jun. 18, 2001; Apr. 1, 2004; Mar. 10, 2006; Feb. 29, 2008; Aug. 27, 2019; Apr. 19, 2022>
1. A person whose stocks or equity investments are owned by a certified public accountant or his or her spouse: Provided, That excluded herefrom shall be cases where stocks or equity investments are disposed of without delay after an involuntary acquisition of such stocks or equity investment due to merger, inheritance, lawsuit, etc. during the period of audit (referring to the period subject to a contract for auditing or attesting financial statements (including consolidated financial statements under the Act on External Audit of Stock Companies; hereinafter the same shall apply) under the provisions, with the exception of the subparagraphs, of Article 21 (2) of the Act; hereinafter the same shall apply);
2. A person who has a relationship of claims or obligations with a certified public accountant or his or her spouse: Provided, That the following claims or obligations shall be excluded:
(a) The claims directly connected with the service of the certified public accountant pursuant to the provisions of Article 2 of the Act;
(b) The following claims or obligations, out of those arising from a contract entered into on a financial product defined in the Act on the Protection of Financial Consumers under the terms and conditions defined in the Act on the Regulations of Terms and Conditions (hereinafter referred to as "terms and conditions"): Provided, That excluded herefrom shall be claims or obligations arising from a contract entered into on terms and conditions more favorable than general terms or conditions without good cause or from a contract entered into with a financial institution against which timely corrective measures have been taken or should be taken under Article 10 (2) of the Act on the Structural Improvement of the Financial Industry:
(i) Claims or obligations arising from a contract whose maturity is extended during the period of audit, out of the following claims or obligations:
(ii) Obligations arising from loan contracts concluded en bloc with a financial company defined in the Act on Corporate Governance of Financial Companies in connection with sale or supply, etc. of buildings or housing;
(iii) Obligations not overdue, out of the obligations whose due date for payment is within two months following the use of credit cards under the Specialized Credit Finance Business Act;
(iv) Claims or obligations, other than those specified in subitems (i) through (iii), which have arisen before a contract for auditing or attesting financial statements is entered into;
(c) Claims, such as membership and right to use facilities, which have been purchased under standardized terms and conditions or at an arm's length price before a contract for auditing or attesting financial statements is entered into;
(d) Claims, such as retirement pension under the Act on the Guarantee of Employees' Retirement Benefits;
(e) Deleted; <Apr. 19, 2022>
(f) Deleted; <Apr. 19, 2022>
(g) The claims or obligation occurred involuntarily from merger, inheritance or lawsuit, etc. during the period of audit;
(h) Claims or obligations of less than 30 million won, other than claims or obligations specified in items (a) through (g), which have arisen from a contract concluded in accordance with the terms and conditions for commercial transactions;
3. A person who provides a certified public accountant's office or commercial vehicles to the relevant certified public accountant, free of charge or at a price significantly lower than the normal transaction price;
4. A person who continues to remunerate a certified public accountant or to provide other special economic benefits with him or her for his or her services other than for what are considered as normal services by certified public accountants;
5. A person who has provided or committed to provide the stocks of his own firm, bonds with warrant, convertible bonds, or stock options to a certified public accountant as a price for rendering the services under Article 2 of the Act.
(2) Where a council of creditors has been organized for the purpose of collecting bad credits under the provisions, with the exception of the items, of Article 21 (2) 4 of the Act, said business provided for in Article 21 (2) 4 (hereinafter referred to as "business of inspection, etc.") conducted by the members of the council of creditors (hereinafter referred to as the "members") for the purpose of joint sale of assets, capital, and other rights (hereinafter referred to as "assets, etc.") which had been acquired through debt-for-equity swap or offering by the largest stockholder as security may be conducted by a certified public accountant. <Amended on Sep. 29, 2016>
(3) Notwithstanding paragraph (2), any of the following certified public accountants shall not perform business of inspection, etc. prescribed in paragraph (2): <Newly Inserted on Mar. 10, 2006; Sep. 29, 2016>
1. The certified public accountant rendering the service of auditing or attesting the members who have charge of the service of joint sale of assets, etc.;
2. The certified public accountant rendering the service of auditing or attesting the members who have 50/100 or more of the assets, etc. that are intended for joint sale;
3. The certified public accountant who renders the service of auditing or attesting the members whose sum total of the assets, etc. in possession are 50/100 or more of the assets, etc. intended for joint sale.
(4) "Procedures prescribed by Presidential Decree including internal control procedures, etc." in Article 21 (3) of the Act means procedures that a certified public accountant consults with an auditor (including the audit committee under Article 415-2 of the Commercial Act; hereafter in this Article referred to as the "auditor, etc.") of a company about its business prior to the conduct of any other business than those as referred to in any subparagraph of Article 21 (2) of the Act and seeks a consent of the auditor, etc. to such business as having the potential for causing the conflict of interest. <Newly Inserted on Apr. 1, 2004; Mar. 10, 2006; Sep. 29, 2016>
(5) With respect to the business dealt with pursuant to the procedures as referred to in paragraph (4), the certified public accountant concerned shall put on record the matters about which he has consulted with the auditor, etc. and to which he has obtained a consent from the auditor, etc., and keep it for eight years. <Newly Inserted on Apr. 1, 2004; Mar. 10, 2006; Sep. 29, 2016>