ENFORCEMENT DECREE OF THE TRUST BUSINESS ACT

Article 1(Purpose) #

The purpose of this Decree is to provide for matters delegated by the Trust Business Act and those necessary for the enforcement thereof. <Amended by Presidential Decree No. 18946, July 15, 2005>

Article 2(Application for Business Authorization) #

(1)Any written application submitted to the Financial Services Commission by any person applying for authorization of trust business under Article 3 (3) of the Trust Business Act (hereinafter referred to as the "Act") shall state matters falling under each of the following subparagraphs: <Amended by Presidential Decree No. 18946, Jul. 21, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. Trade name

2. Seat of main office;

3. Names, resident registration numbers and addresses of the representative and executives;

4. Matters relating to capital stock;

5. Matters relating to facilities, equipment and manpower; and

6. Types of business for which authorization is sought.

(2) Application for authorization under paragraph (1) shall be accompanied by documents falling under any of the following subparagraphs: Provided, That in cases where information with respect to such attached documents may be confirmed via joint utilization of administrative information under Article 21 (1) of the Act on Promotion of the Digitalization of Administrative Affairs, etc. for Creation of Electronic Government, such confirmation may substitute for attaching such documents: <Amended by Presidential Decree No. 18312, Mar. 17, 2004; Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. Articles of association;

2. Documents stating types and methods of business (hereinafter referred to as "documents stating business types, etc.");

3. Business plans for three years after commencing business (including estimated financial statements) and estimated revenue and expenditure statement;

4. Documents stating the locations and names of the head office, branch offices, etc;

5. Certified transcript of the company register;

6. Financial statements and documents appurtenant thereto,

7. Personal resumes and career certificates of the executives and promoters;

8. Minutes of meetings of promoters;

9. Joint venture contracts (limited to cases seeking to operate trust business via a joint venture with a foreigner)

10. Documents verifying payment of capital stock under Article 3 (2) of the Act;

11. Documents stating the names or titles of stockholders holding 1/100 or more of the total number of outstanding stocks as at the date authorization when is applied for (the end of the latest business year in cases of applying for authorization to operate trust business concurrently) and the number of stocks they hold; and

12. Other documents prescribed by the Financial Services Commission as necessary for the examination of requirements for authorization under the Act or this Decree.

[This Article Wholly Amended by Presidential Decree No. 16895, Jul. 10, 2000]

Article 2-2(Detailed Requirements, etc. for Authorization) #

(1) Detailed requirements of manpower and physical facilities which a person seeking authorization for trust business under Article 3-3 (1) 1 of the Act is required to be equipped with shall be as set out in any of the following subparagraphs; <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 19137, Nov. 25, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. He/she shall secure at least five people specialized in managing trust asserts (hereinafter referred to as "manpower specialized in operation") as full-time executives and employees. In such cases, such manpower specialized in operation shall be persons who do not fall under any one of the subparagraphs of Article 8-2 of the Act, but falls under any of the following items:

(a) A person who has career experience in business operating trust asserts at a trust company for at least two years;

(b) A person who has worked in an institution related to securities under Article 2 (17) of the Securities and Exchange Act (hereinafter referred to as an "institution related to securities") for at least three years and has career experience in business operating trust property or business entrusting investment (hereinafter referred to as "business specialized in operation") for at least two years, or a person falling under Article 144 (1) 3 of the Enforcement Decree of the Indirect Investment Asset Management Business Act;

(c) A person who holds a master's degree or higher in a finance-related area and has career experience in business specialized in operation for at least two years in an institution related to securities;

(d) A person who has career experience in business for operation of trust property for at least two years in a foreign financial institution of a scale of 10 trillion won or more of operating asserts as a foreign financial institution carrying on operation of trust property as business;

(e) A person who has passed an examination recognized by the Financial Services Commission as a test able to verify ability of manpower specialized in operation; and

(f) A person who has worked in an insurance company under subparagraph 5 of Article 2 of the Insurance Business Act for at least three years and has career experience in business for operation of assets for at least two years; and

2. He/she shall be equipped with a computer system determined and publicly notified by the Financial Services Commission which can properly carry out authorized business.

Article 2-3(Requirements to Operate Business for Acceptance of Money Trust for Land Development Projects) #

(1) Detailed requirements for managerial conditions and managerial and operational systems of trust property which a person seeking to operate business for acceptance of trust money for land development projects under Article 10 (4) of the Act pursuant to Article 3-3 (3) of the Act (hereinafter referred to as "money trust") is required to meet shall be as set out in the following subparagraphs: <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

1. Financial conditions, including capital and liabilities, shall be adequate so that the ratio of total liabilities to total equity capital satisfies the ratio determined by the Financial Services Commission within the extent of 200/100, plans for capital adequacy maintenance are plausible and operational income is realized for a certain period;

2. Managerial and operational systems of trust property, such as business facilities necessary to operate money trust, risk management systems and internal control standards, are reasonable; and

3. None of the executives have been penalized under Article 26-2 of the Act or ordered to suspend execution of duties under Article 28 within two years before an application for authorization.

(2) The Financial Services Commission shall prescribe specific standards for requirements referred to in paragraph (1) 1 and 2 and publicly announce them. <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

[This Article Newly Inserted by Presidential Decree No. 18946, Jul. 15, 2005]

Article 3(Statement on Type of Business) #

(1) A document stating business type, etc. shall state the type of trust business sought for operation according to divisions of property provided for in each subparagraph of Article 10 (1) of the Act: Provided, That in cases where trust is accepted by combining two or more items of property from a truster under one trust contract pursuant to Article 10 (2) of the Act, it shall commerce as one type of trust business. <Amended by Presidential Decree No. 18946, Jul. 15, 2005>

(2) In stating type of trust business under paragraph (1), money trust shall be stated in accordance with divisions set out in the following subparagraphs: <Amended by Presidential Decree No. 18946, Jul. 15, 2005>

1. Specified money trust: Money trust in which a truster designates methods of operation of money as trust property; and

2. Unspecified money trust: Money trust in which a truster does not designate methods of operation of money which is trust property.

(3) A trust company seeking to operate any incidental business under Article 13 (1) of the Act shall state in a document stating business types, etc. the type of such incidental business sought for operation according to divisions set out in each subparagraph of the same Article.

Article 4(Statement of Business Methods) #

A document stating business type, etc. shall state matters determined and publicly notified by the Financial Services Commission with regard to methods of trust business sought for operation. <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

[This Article Wholly Amended by Presidential Decree No. 18946, Jul. 15, 2005]

Article 5(Authorization for Merger, etc.) #

(1) The Financial Services Commission shall, when it intends to authorize any merger or dissolution of a trust company or any discontinuance of trust business under Article 8 (1) of the Act (hereinafter referred to as "merger, etc."), examine as to whether such merger, etc. conforms to standards set out in the following subparagraphs: <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. No merger, etc. shall harm sound financial order;

2. Investors shall not suffer undue disadvantage caused by any merger, etc.; and

3. Procedures and details of any merger, etc. shall be fully compliant the Act, the Commercial Act, the Monopoly Regulation and Fair Trade Act and other Acts and subordinate statutes relating to finance.

(2) When a trust company seeks to obtain authorization for merger, etc., it shall submit to the Financial Services Commission an application for authorization by attaching documents falling under each of the following subparagraphs: <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>.

1. Minutes of meeting of a general meeting of stockholders or employees which has passed a resolution for merger;

2. A contract of merger;

3. Articles of association and a document stating business type, etc. of the trust company which survives the merger or established from the merger;

4. An inventory of property and a balance sheet after a merger;

5. Documents verifying that public notification and notice have been completed under Article 232 (1) of the Commercial Act; and

6. Other documents necessary for examining as to whether it conforms to standards for authorization examination under paragraph (1) as determined by the Financial Services Commission.

(3) When a trust company seeks to obtain authorization for dissolution or discontinuance of trust business, it shall submit to the Financial Services Commission an application for authorization by attaching documents falling under each of the following subparagraphs: <Amended by Presidential Decree No. 20653, Feb. 29, 2008>.

1. A statement of grounds for dissolution or discontinuance of trust business;

2. Minutes of meeting of a general meeting of stockholders which has passed a resolution for dissolution or discontinuance of trust business;

Article 6 #

Deleted. <by Presidential Decree No. 16895, Jul. 10, 2000>

Article 7 #

Deleted. <by Presidential Decree No. 16895, Jul. 10, 2000>

Article 8(Places of Business, etc.) #

(1) The term "place of business" in Article 8 (3) of the Act shall mean a place where a trust company equipped with human resources and physical facilities and continuously and systematically operate business for acceptance of trust of property under Article 10 (1) of the Act and the whole or part of incidental business under Article 13 of the Act.

(2) The term "office of business" in Article 8 (3) of the Act shall mean a place where a trust company permanently stations employees, without business purpose, for conducting surveys on trends of trust business in the pertinent region, for maintaining liaison, etc. with the head office, branch offices, agencies and other places of business.

Article 9(Standards, etc. for Establishment of Branch Offices) #

The Financial Services Commission shall, when it determines standards and procedures in regard to relocation of the head office of a trust company and new establishment, closedown and relocation of branch offices, agencies and other places of business or offices of business of such trust company, take matters falling under any of the following subparagraphs into account:

1. Adequacy of asset structure of the trust company;

2. Efficiency of management of the trust company; and

3. Protection of interested persons, such as trusters and beneficiaries.

Article 9-2(Qualifications, etc. for Executives) #

(1) The term "finance-related Acts and subordinate statutes prescribed by Presidential Decree" in subparagraphs 4, 6 and 7 of Article 8-2 of the Act shall mean Acts falling under any of the following subparagraphs:

1. Bank of Korea Act;

2 Banking Act;

3. Korea Development Bank Act;

4. Industrial Bank of Korea Act;

5. Long Term Credit Bank Act;

6. Export-Import Bank of Korea Act;

7. Securities and Exchange Act;

8. Korea Securities and Futures Exchange Act;

9. Insurance Business Act;

10. Merchant Banks Act;

11. Indirect Investment Asset Management Business Act;

12. Mutual Savings Banks Act;

13. Specialized Credit Financial Business Act;

14. Credit Guarantee Fund Act;

15. Korea Technology Credit Guarantee Fund Act;

16. Credit Unions Act;

17. Agricultural Cooperatives Act;

18. Fisheries Cooperatives Act;

19. Community Credit Cooperatives Act;

20. Support for Small and Medium Enterprise Establishment Act;

21. Use and Protection of Credit Information Act;

22. Futures Trading Act;

23. Foreign Exchange Transactions Act;

24. Act on the Establishment, etc. of Financial Services Commission;

25. Asset-Backed Securitization Act;

26. Special Purpose Companies for Mortgage-Backed Bonds Act;

27. Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation;

Article 10(Terms and Conditions of Trust Transactions) #

Standards determined by the Financial Services Commission under Article 10 (3) of the Act shall be standards relating to matters falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. Matters relating to period of trust and partway termination;

2. Matters relating to replenishment of principal and gains;

3. Matters relating to trust returns paid to trusters and trust remuneration received from trusters; and

4. Other necessary manners relating to trust transactions between a trust company and a truster.

Article 10-2(Project Costs) #

Project costs under Article 10 (4) of the Act shall include all expenses required for a land development project, including construction expenses, advertizement expenses and sale expenses: Provided, That the purchase price of land itself, registration expenses thereof and other incidental expenses related to the purchase of land shall be excluded.

[This Article Newly Inserted by Presidential Decree No. 18946, Jul. 15, 2005]

Article 10-3(Time, etc. for Financial Audit of Trust Property) #

(1) Each trust company shall undergo a financial audit in respect of each trust property within two months after the close of each business year of the relevant trust company: Provided, That in cases of trust property for which the maturity date of trust is the same for all beneficiaries and the period of trust deed does not exceed three years, such financial audit shall be conducted two months before the maturity date of trust thereof.

(2) The term "case prescribed by Presidential Decree" in the proviso to Article 12-2 (1) of the Act shall mean a case of money trust falling under any of the following subparagraphs or a case of trust of property under Article 10 (1) 2 through 6 of the Act;

1. Specified money trust;

2. Money trust for which a contract for replenishment of gains is made; and

3. Money trust, principal in trust of which is less than 30 billion won as at the base date for auditing.

[This Article Newly Inserted by Presidential Decree No. 16895, Jul. 10, 2000]

Article 10-4(Appointment, etc. of Auditor) #

(1) In cases where a trust company seeks to appoint or replace an auditor under Article 3 (1) of the Act on External Audit of Stock Companies (hereinafter referred to as an "auditor") pursuant to Article 12-2 (4) of the Act, it shall undergo a resolution by an audit committee (in cases where no audit committee is organized, it refers to consent by an inspector) <Amended by Presidential Decree No. 18946, Jul. 15, 2005>

(2) Whenever a trust company appoints or replaces an auditor, it shall report to the Financial Services Commission thereon within one week from the date of appointment or replacement. <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

[This Article Newly Inserted by Presidential Decree No. 16895, Jul. 10, 2000]

Article 10-5(Standards for Auditing) #

Standards for auditing trust property under Article 12-2 (4) of the Act shall be determined by the Financial Services Commission via deliberation by the Securities and Futures Commission. <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

[This Article Newly Inserted by Presidential Decree No. 16895, Jul. 10, 2000]

Article 10-6(Power, etc. of Auditor) #

(1) An auditor may request access to or copies of relevant material, such as account ledgers of trust property, from a trust company, or require such trust company to submit data necessary for auditing. In such cases, the trust company shall comply with such request without delay.

(2) An auditor shall, when he/she has found a violation of any Act or subordinate statute relating to finance or an investment plan contained in a trust deed in connection with accounting of trust property or other management, operation and disposal of trust property by a trust company while performing his/her duties, report such fact to the audit committee (in cases where no audit committee is organized, referring to an inspector).

[This Article Newly Inserted by Presidential Decree No. 16895, Jul. 10, 2000]

Article 10-7(Submission of Audit Report and Making It Accessible to Public) #

(1) When an auditor has completed auditing with respect to trust property under Article 12-2 (4) of the Act, he/she shall formulate an audit report, including matters set out in the following subparagraphs and submit it forthwith to the trust company: <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

1. A balance sheet of trust property;

2. An income statement of trust property;

3. A yield statement of trust property;

4. Details of transactions between a trust company and its specially related persons; and

5. Other matters prescribed by Ordinance of the Prime Minister which are directly related to protection of beneficiaries.

(2) A trust company shall, upon receiving an audit report under paragraph (1), forthwith submit three copies of such audit report to the Financial Services Commission. <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

(3) Trust companies shall make audit reports accessible to beneficiaries as prescribed by the Financial Services Commission. <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

[This Article Newly Inserted by Presidential Decree No. 16895, Jul. 10, 2000]

Article 10-8(Incidental Business) #

The term "business prescribed by Presidential Decree" in Article 13 (1) 9 of the Act shall mean business falling under any of the following subparagraphs:

1. Business relating to adjustment and distribution of inherited property;

2. Counseling business relating to business falling under any item of Article 13 (1) 8 of the Act; and

3. Operation and management business under Article 15 of the Guarantee of Workers' Retirement Benefits.

Article 10-9(Scope of Financial Institutions Eligible to Induce Inherent Funds) #

The term "financial institutions prescribed by Presidential Decree" in Article 15 (1) 8 of the Act shall mean financial institutions falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18946, Jul. 15, 2005>

1. Financial institutions under the Banking Act;

2. The Korea Development Bank established under the Korea Development Bank Act;

3. The Industrial Bank of Korea established under the Industrial Bank of Korea Act;

4. The Long-Term Credit Bank under the Long-Term Credit Bank Act;

5. Merchant banks under the Merchant Banks Act;

6. Mutual savings banks under the Mutual Savings Banks Act;

7. Credit unions under the Credit Unions Act;

8. Agricultural cooperatives under the Agricultural Cooperatives Act; and

9. Fisheries cooperatives under the Fisheries Cooperatives Act.

[This Article Newly Inserted by Presidential Decree No. 16895, Jul. 10, 2000]

Article 11(Operational Methods of Trust Funds) #

(1) The term "methods as prescribed by Presidential Decree" in Article 15-2 (1) 3 of the Act shall mean methods falling under any of the following subparagraphs: Provided, That the operation of trust funds by any method of subparagraphs 1 and 9 shall be limited to cases of financial institutions under the Banking Act, securities companies under the Securities and Exchange Act or insurance companies under the Insurance Business Act which combine the operation of trust business (hereinafter referred to as "financial institutions combining operation of trust"): <Amended by Presidential Decree No. 16895, Jul. 10, 2000; Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 19137, Nov. 25, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. Loaning of temporary funds with respect to an inherent account of the relevant trust company (referring to an account controlling inherent property of a trust company; hereinafter the same shall apply): Provided, That it shall be limited to cases where operation in any other method is not possible due to the size of amount or limitation of time;

2. Loaning of short-term funds through brokerage by a fund brokerage company under Article 9 of the Merchant Banks Act;

3. Purchase and development of immovable property;

4. Subscription for, purchase or acceptance of bills issued, sold or mediated by a financial institution determined and publicly notified by the Financial Services Commission and bills issued by a juridical person determined and publicly notified by the Financial Services Commission;

5. Purchase of certificates of deposit issued by a financial institution under the Banking Act;

6. Operation of real assets under subparagraph 1 (d) of Article 2 of the Indirect Investment Asset Management Business Act;

7. Operation of assets falling under any of the following items (including those denominated in a foreign currency which are issued or circulated in a foreign country or similar thereto):

(a) Rights to benefit from trust under Article 10 (1) and (2) of the Act;

(b) Investment shares or rights to receive profits accruing from a specific project;

(c) Association equities under an association contract pursuant to subparagraph 7 of Article 3 of the Enforcement Decree of the Indirect Investment Asset Management Business Act; and

(d) Rights to use immovable property, such as superfices, rights to lease on a deposit basis or rights of lease; and

Article 12(Detailed Scope of Operational Methods of Trust Funds) #

(1) Deleted. <by Presidential Decree No. 18946, Jul. 15, 2005>

(2) The scope of loans under Article 15-2 (1) 2 of the Act shall be loans falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18946, Jul. 15, 2005>

1. Loans on credit;

2. Loans secured by a mortgage or a right of pledge;

3. Loans secured by a letter of guarantee falling under any one of the following items:

(a) Letters of payment guarantee issued by a financial institution under the Banking Act;

(b) Letters of credit guarantee issued by a guarantee insurance company under the Insurance Business Act, a credit guarantee fund under the Credit Guarantee Fund Act, a technology credit guarantee fund under the Korea Technology Credit Guarantee Fund Act or a housing finance credit guarantee fund under the Korea Housing Finance Corporation Act; and

4. Acceptance of private placement bonds.

[This Article Wholly Amended by Act No. 5502. Jan. 13, 1998]

Article 13(Operational Standards of Trust Funds) #

Standards which the Financial Services Commission may determine under Article 15-2 (3) of the Act shall be as set out in the following subparagraphs:

1. Matters on limits on loans that may be provided to the same individual or juridical person by a trust company and exceptions thereto;

2. Matters on purchase and retention of stocks or limits on operation and use of funds in trust under Article 11 (1) 9 and 10;

3. Matters on conditions for loaning funds from an inherent account;

4. Matters on purchase and development of immovable property; and

5. Other matters deemed necessary for the protection of trust property and sound development of the national economy.

Article 13-2(Operation of Surplus Funds) #

(1) The term "financial institutions prescribed by Presidential Decree" in subparagraph 1 of Article 15-3 of the Act shall mean financial institutions falling under any item of Article 10-9. <Amended by Presidential Decree No. 18946, Jul. 15, 2005>

(2) The term "other manners prescribed by Presidential Decree" in subparagraph 4 of Article 15-3 of the Act shall mean methods falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. Loaning of short-term funds performed via mediation by a fund brokerage company under Article 9 of the Merchant Banks Act; and

2. Other methods that do not harm stability and profitability of immovable property trust business as determined and publicly notified by the Financial Services Commission.

[This Article Newly Inserted by Presidential Decree No. 16895, Jul. 10, 2000]

Article 13-3(Restrictions on Exercise of Voting Rights) #

(1) The term "a person in a special relation as prescribed by Presidential Decree" in Article 17-8 (1) 1 (a) of the Act shall mean specially related persons and joint holders under Article 10-3 (2) and (4) of the Enforcement Decree of the Securities Exchange Act. <Amended by Presidential Decree No. 18946, Jul. 15, 2005>

(2) The term "a person prescribed by Presidential Decree" in Article 17-8 (1) 1 (b) of the Act shall mean a major investors of a trust company.

(3) The term "where it is in a relation as prescribed by Presidential Decree" in Article 17-8 (1) 2 (b) of the Act shall mean cases where a juridical person which has issued stocks as trust property is a major investor.

[This Article Newly Inserted by Presidential Decree No. 16895, Jul. 10, 2000]

Article 14(Business Reports and Operational Reports) #

(1) The forms, types, time for submission, etc. of business reports and operational reports under the main sentence of Article 19 of the Act shall be determined by the Financial Services Commission. <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

(2) Where a financial institution combining operation of trust makes report on the same content under other Acts, the Financial Services Commission may allow waiver of the submission of reports under paragraph (1) is omitted pursuant to the proviso to Article 19 of the Act. <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

Article 15(Accounting Standards) #

(1) Accounting in regard of trust business of a trust company under Article 20 of the Act shall comply with principles falling under any of the following subparagraphs: <Amended by Presidential Decree No. 16895, Jul. 10, 2000>

1. Property acquired by managing, disposing of, etc. trust property shall belong to trust property;

2. Trust property shall be protected by keeping an account separate and independent from an inherent account; and

3. Each trust property shall be classified and treated according to its distinctive quality as a subject.

(2) In representing the current status and operating results of trust property under principles referred to in paragraph (1), the Financial Services Commission may provide useful information on accounting to interested parties and determine under Article 20 (2) of the Act accounting standards in detail regard matters falling under any of the following subparagraphs so that continuity and objectivity in accounting may be maintained. <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

1. Methods for appraisal of trust property;

2. Methods for properly treating operational profits of trust property, business expenses, etc; and

3. Methods for settlement of accounts and other matters regard the current status and operation results of trust property.

(3) In determining accounting standards under paragraph (2), the Financial Services Commission may, when it is deemed as necessary for maintaining managerial soundness of a trust company and soundness of trust assets, such as cases where a trust company has concluded a contract for replenishing principal or interest, cause such trust company to set aside reserve funds. In such cases, the Financial Services Commission shall determine necessary matters regard types, methods of reservation, etc. of such reserve funds.

Article 15-2(Prohibition on Holding More Than One Office) #

No standing executive of a trust company (limited to executives in charge of trust division in cases of financial institutions combining operation of trust) may engage in commercial affairs of companies falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 19137, Nov. 25, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. Institutions subject to inspection by the Financial Supervisory Service under Article 38 of the Act on the Establishment, etc. of Financial Services Commission;

2. The relevant trust company is a company required to formulate consolidated financial statements under subparagraph 2 of Article 1-2 of the Act on External Audit of Stock Companies (hereinafter referred to as a "subordinate company"): Provided, That cases falling under any of the following items shall be excluded;

(a) Where concurrently holding further position as an executive of a financial institution which is a subordinate company based in a foreign country or working by being accredited thereto; and

(b) Where concurrently holding an additional position as an executive of a subordinate company in order to smoothly promote managerial rationalization or structural adjustment of such subordinate company or working by being accredited thereto; and

3. A company which is the largest stockholder or a major stockholder of the relevant trust company;

4. A company which has received a loan of money amounting to 10/100 or more of the equity capital (referring to an amount obtained by subtracting total liabilities from total assets on a balance sheet) of the relevant company; and

5. Deleted. <by Presidential Decree No. 18946, Jul. 15, 2005>

[This Article Newly Inserted by Presidential Decree No. 16895, Jul. 10, 2000]

Article 15-3(Management Guidance Standards) #

Management guidance standards under Article 24-3 (1) of the Act shall include matters falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

1. Matters relating to standards for holding equity capital, such as ratio of net worth to assets;

2. Matters relating to standards for classifying soundness of assets owned by a trust company;

3. Matters relating to standards for holding current assets against current liabilities; and

4. Other matters having any substantial impact on managerial soundness of a trust company as determined by the Financial Services Commission.

[This Article Newly Inserted by Presidential Decree No. 16895, Jul. 10, 2000]

Article 15-4(Internal Control Standards) #

(1) Internal control standards under Article 24-4 of the Act shall include matters falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

1. Matters relating to schedule of work responsibility and structure of organization;

2. Matters relating to management of risks arising from conduct of trust business;

3. Matters relating to procedures which must be observed by executives and employees in their performing of duties;

4. Matters relating to construction of a system enabling efficient delivery of information required for making managerial decisions;

5. Procedures and methods for verifying whether executives and employes observe the internal control standards and matters relating to treatment of executives and employees who violate such internal control standards;

6. Matters relating to formulation of, or amendment to the internal control standards; and

7. Detailed standards relating to matters under subparagraphs 1 through

6 as determined and publicly notified by the Financial Services Commission.

(2) When a trust company seeks to formulate or amend such internal control standards, it shall undergo a resolution by its board of directors.

(3) The Financial Services Commission may recommend any trust company which has been disclosed as having violated any Act or subordinate statute as a result of investigation by the Financial Supervisory Service under Article 26 of the Act to amend internal control standards with a view to preventing recurrence of violation of Acts and subordinate statutes. <Amended

by Presidential Decree No. 20653, Feb. 29, 2008>

[This Article Newly Inserted by Presidential Decree No. 18946, Jul. 15, 2005]

Article 16(Orders to Report on or Amend Standard Contractual Terms and Conditions, etc.) #

(1) In cases where two or more trust companies jointly seek to report on formulation of or amendment to standardized draft of standard contractual terms and conditions, etc. under Article 25-2 (1) of the Act, they may make such report via an organization of business operators established by obtaining permission of the Financial Services Commission for helping cooperation and improvement of mutual business among such business operators, the Korea Securities Dealers Association established under Article 162 (1) of the Securities and Exchange Act or an insurance association established under Article 175 (1) of the Insurance Business Act. <Amended by Presidential Decree No. 19137, Nov. 25, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

(2) Any order for amendment of standard contractual terms and conditions, etc. under Article 25-2 (2) of the Act shall be issued within 10 days from the date of report under paragraph (1) of the same Article: Provided, That the Financial Services Commission may extend such period within the extent of 10 days if it deems necessary for examination of such standard contractual terms and conditions. <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

(3) The Financial Services Commission shall, when it has extended the date of order for amendment of standard contractual terms and conditions, etc. under the proviso to paragraph (2), notify the relevant trust company thereof. <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

Article 16-2(Public Notice of Business Operation) #

(1) A trust company shall publicly announce matters falling any of the following subparagraphs under Article 25-3 of the Act: <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. Matters relating to financial affairs, and profit and loss;

2. Matters on how to raise and operate funds;

3. In cases where any measure has been taken under Articles 28 and 29-2 of the Act, or Article 10 or 14 of the Act on the Structural Improvement of the Financial Industry, details thereof;

4. Current conditions of progress at each stage of trust business of immovable property; and

5. Other matters deemed as requiring public notice for the protection of beneficiaries as determined by the Financial Services Commission.

(2) The Financial Services Commission may determine detailed standards regard matters falling under paragraph (1) 1 through 4. <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

[This Article Wholly Amended by Presidential Decree No. 16895, Jul. 10, 2000]

Article 16-3(Authorization for Establishment of Branch Offices, etc. of Foreign Financial Institutions) #

(1) When a foreign financial institution seeks to obtain authorization for establishment of a branch office or any other place of business (hereinafter referred to as "branch, etc.") under Article 29-4 (1) of the Act, it shall submit to the Financial Services Commission an application for authorization together with documents falling under any of the following subparagraphs attached thereto: <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

1. Articles of association;

2. Documents stating business type, etc; and

3. Other documents necessary for examining for authorization to establishment branch, etc. of a foreign financial institution as determined by the Financial Services Commission.

(2) A financial institution seeking to obtain authorization for establishment of branch office, etc. shall satisfy requirements falling under subparagraph 4 (b) through (d) of the attached Table.

(3) The provisions of Article 2-2 (1) through (3) shall apply mutatis mutandis to authorization for establishment of branch office, etc. of a foreign financial institution. <Amended by Presidential Decree No. 18946, Jul. 15, 2005>

(4) The Financial Services Commission may determine detailed standards regard requirements for authorization referred to in paragraphs (2) and

(3). <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

[This Article Wholly Amended by Presidential Decree No. 16895, Jul. 10, 2000]

Article 16-4(Operating Funds, etc. of Branch, etc. of Foreign Financial Institution) #

(1) Any branch, etc. of a foreign financial institution shall have operating funds equivalent to or more than an amount determined by the Financial Services Commission under Article 29-5 of the Act. <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

(2) With respect to branch, etc. of a foreign financial institution, operating funds determined by the Financial Services Commission and falling under any one of the following subparagraphs shall be considered capital stock: Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. A won-denominated fund furnished to a branch office, etc. by selling foreign currency funds to the Bank of Korea or an agency dealing with foreign currency exchange business under the Foreign Exchange Transactions Act for a conduct of establishment and operation of branch, etc. of a foreign financial institution and business activities;

2. A fund transferred from a reserve fund of branch, etc. of a foreign financial institution under Article 21 of the Act;

3. A fund transferred from a carryover earned surplus of branch, etc. established already inside the Country in order to additionally establish branch, etc. of a foreign financial institution; and

4. A won-denominated fund raised by a branch, etc. of a foreign financial institution by selling foreign currency funds to the Bank of Korea or an agency dealing with foreign exchange business under the Foreign Exchange Transactions Act.

(3) Any branch, etc. of a foreign financial institution shall observe matters falling under any of the following subparagraphs: <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

1. It shall retain assets equivalent to operating funds within the Country;

2. It shall conduct settlement of accounts independently from its head office;

3. In cases where it violates subparagraph 1 as a result of the settlement of accounts, it shall recoup such deficit within 60 days from the date of such settlement of accounts; and

4. Other matters necessary for the protection of beneficiaries as determined by the Financial Services Commission.

(4) In cases where one foreign financial institution has two or more branch, etc. within the Republic of Korea, the relevant branch, etc. shall be deemed as one trust company.

Article 16-5(Authorization for Closure of Branch, etc. of Foreign Financial Institution) #

The provisions of Articles 5 (1), (3) and (4) shall apply mutatis mutandis regard authorization for closure of branch, etc. of a foreign financial institution under Article 29-4 (1) of the Act.

[This Article Newly Inserted by Presidential Decree No. 18946, Jul. 15, 2005]

Article 17(Request for Appointment or Dismissal of Liquidator) #

(1) A request for appointment or dismissal of a liquidator under Article 35 or 37 of the Act shall be made in writing.

(2) Documents for request under paragraph (1) shall be accompanied by documents verifying facts that such requester is an interested party.

Article 17-2(Entrustment of Authority) #

Power falling under any of the following subparagraphs shall be entrusted to the Governor of the Financial Supervisory Service under Article 37-2 of the Act: <Amended by Presidential Decree No. 20653, Feb. 29, 2008>

1. Receipt of reports on amendment of articles of association or of documents stating business type, etc. under the former part of Article 8 (2) of the Act;

2. Demands to submit data and reports relating to an audit of trust property and orders for other necessary measures under Article 12-2 (2) of the Act ;

3. Receipt of reports relating to issuance of beneficiary certificates under Article 17-2 (2) of the Act;

4. Receipt of business reports and operational reports under Article 19 of the Act;

5. Establishment and amendment of detailed standards relating to accounting, etc. of trust business under Article 20 (2) of the Act; and

6. Demands to take measures to improve management under Article 24-3 (2) of the Act;

7. Receipt of reports on current conditions of business (limited to matters relating to deposits under Article 16 of the Act and matters relating to standards for classifying soundness of assets established or amended by a trust company under subparagraph 2 of Article 15-3 of the Decree) under Article 25 of the Act;

8. Receipt of reports on establishment or amendment of a standard contractual terms and conditions or a standard contract relating to trust transactions (hereinafter referred to as "standard contractual terms and conditions, etc.") under Article 25-2 (1) of the Act;

9. Orders to amend standard contractual terms and conditions, etc. under Article 25-2 (2) of the Act;

10. Establishment or amendment of standards relating to time, procedure, etc. of reports on establishment or amendment of standard contractual terms and conditions, etc. under Article 25-2 (3) of the Act;

11. Receipt of reports on appointment or replacement of an auditor under Article 10-4 (2);

12. Receipt of audit reports under Article 10-6 (2);

13. Establishment or amendment of types and forms of business reports and operational reports under Article 14; and

14. Examination of standard contractual terms and conditions, etc. under Article 16 (2).

Article 18(Trust Contracts) #

The term "matters prescribed by Presidential Decree" in Article 37-4 of the Act shall mean matters falling under any of the following subparagraphs: <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

1. Names or titles of trusters, beneficiaries and trust companies;

2. Matters relating to designation or change of beneficiaries;

3. Scope and qualifications to be eligible for beneficiaries and other matters necessary to determine such beneficiaries in cases where such beneficiaries have not been determined;

4. In cases where an expression of intent to receive trust income by a beneficiary is required, details thereof;

5. Types, quantities and prices of trust property;

6. Purpose of trust;

7. Registration and enrollment under Article 3 (1) of the Trust Act or representation and description of trust property under paragraph (2) of the same Article;

8. Duration of the deed;

9. In cases where property to be acquired via operation of trust property has been specified or designated, details thereof;

10. Types of trust property to be delivered to beneficiaries and methods for and timing of such delivery;

11. Matters relating to joint operation of money which is trust property and money which is other trust property or money which is inherent property;

12. Matters relating to ratio, etc. of recoupment in cases of concluding a contract for recouping principal or income;

13. Types of trust property which can be inherent property under Article 12-2 of the Act and methods for calculating prices thereof;

14. Matters relating to remuneration to receive by a trust company receives;

15. Public imposts, repair expenses and other expenses required for management of trust property;

16. Matters relating to cancellation of trust deed;

17. Matters relating to final calculation at the time of termination of trust;

18. Sealing or signing by the representative of a trust company; and 19.Other matters necessary for maintaining sound trust transaction order as determined and publicly notified by the Financial Services Commission.

Article 19(Share of Expenses) #

The provisions of Article 12 of the Enforcement Decree of the Act on the Establishment, etc. of Financial Services Commission shall govern rates to share the shares of expenses, limits, payment of such shares of expenses, etc. under Article 38-2 of the Act. <Amended by Presidential Decree No. 18946, Jul. 15, 2005; Presidential Decree No. 20653, Feb. 29, 2008>

Article 20(Notice of Implementation of Authorized Matters) #

When a trust company has implemented authorized matters, such as commencement of trust business, it shall notify without delay the relevant person having power for authorization.

Article 21(Imposition and Collection of Fines for Negligence) #

(1) In cases where intending to impose any fine for negligence under Article 43 (1) of the Act, the Financial Services Commission shall investigate and verify the relevant offense, specify the facts of violation, the amount of fine for negligence, etc. in writing and serve notice on the person subject to disposition of the fine for negligence to pay it.

(2) In cases where the Financial Services Commission intends to impose fine for negligence under paragraph (1), it shall provide the person subject to a disposition of fine for negligence with an opportunity to state his/her opinion orally or in writing by fixing a period which shall not be shorter than 10 days. In such cases where no opinion is stated by the designated date, it shall be deemed that such person has no opinion. <Amended by Presidential Decree No. 16323, May 24, 1999; Presidential Decree No. 20653, Feb. 29, 2008>

(3) The Financial Services Commission shall, when it determines an amount of fine for negligence, take into account the motives for the relevant offense and the results therefrom. <Amended by Presidential Decree No. 16323, May 24, 1999; Presidential Decree No. 20653, Feb. 29, 2008>

(4) Fines for negligence shall be collected in accordance with procedures relating to collection of revenues under Acts and subordinate statutes relating to national revenues. In such cases, a notice for payment shall also state methods for raising objections, period for raising objections, etc.