Oct 5, 2007

Korean Foreign Investment Promotion Act

FOREIGN INVESTMENT PROMOTION ACT


INTRODUCTION

Details of Enactment and Amendment

- Enactment: This Act was enacted on September 16, 1998 as Act No. 5559, repealing the previously enforced Foreign Investment and Foreign Capital Inducement Act, in order to widely ease the regulations and restrictions on investment by foreigners and expand the tax incentives therefor, and to reorganize from all sides the systems related with foreign investment such as designation of foreign investment zones.
- Amendment: This Act has taken its present form after going through the amendments of 3 occasions (excluding the amendments by other Acts) since its enactment. Those matters concerning tax benefit which were provided in this Act are provided in the Restriction of Special Taxation Act by the amendment (on May 24, 1999) of the Government Organization Act resulting in the alteration of government organization.


Main Contents

- Any foreigner who intends to make an investment in any corporation, etc. of the Republic of Korea shall make a report thereon to the Minister of Commerce, Industry and Energy, who, in turn, shall, without delay, deliver a certificate of completion of report to the foreigner.
- The objects which may be invested by a foreigner include cash, capital goods, industrial property rights, intellectual property rights, stocks, immovables, etc.
- State-owned or public properties may be leased or sold, by contract ad libitum, to foreign capital invested companies or the operators of establishments built to improve foreign-investment environment who operate the establishments built to improve foreign-investment environment, such as foreign schools and hospitals, and for a lease of a state-owned or public property, the term of the lease can be up to fifty years.
- For the expenses that the local governments bear in their foreign capital inducement activities, such as for formation of foreign investment zones, reduction or exemption of rent for foreign capital invested companies and payment of subsidies, financial support is provided from the national treasury.
- With respect to any foreign investment including the construction of new factories, etc. which may contribute to the sound development of national economy, the State may furnish the foreigner with any fund in cash required for the construction of new factories, etc. within a certain percentage of the amount of money invested by the foreigner, taking into account the effect of transferring high technology, the size of job creation, etc.
- The Korea Investment Service Center established under the Korea Trade and Investment Promotion Agency provides comprehensive supportive services such as investment consultation for foreign investors and foreign capital invested companies and representation in civil petition related affairs.
- Mayors or Do governors may designate foreign investment zones in order to attract large-scale foreign investments, and a foreign investment zone may be developed as a local industrial complex if a necessity to develope it as a site for establishment of factories etc. exists.
- The Foreign Investment Commission which is composed of the heads of competent Ministries and Agencies and the relevant Mayors or Do governors is established under the Ministry of Finance and Economy and deliberates on major matters concerning foreign investment.




FOREIGN INVESTMENT PROMOTION ACT

Act No. 5559, Sep. 16, 1998
Amended by Act No. 5654, Jan. 21, 1999
Act No. 5758, Feb. 5, 1999
Act No. 5827, Feb. 8, 1999
Act No. 5893, Feb. 8, 1999
Act No. 5911, Feb. 8, 1999
Act No. 5914, Feb. 8, 1999
Act No. 5982, May 24, 1999
Act No. 6095, Dec. 31, 1999
Act No. 6193, Jan. 21, 2000
Act No. 6317, Dec. 29, 2000
Act No. 6406, Jan. 29, 2001
Act No. 6452, Mar. 28, 2001
Act No. 6460, Apr. 7, 2001
Act No. 6642, Jan. 26, 2002
Act No. 6643, Jan. 26, 2002
Act No. 6842, Dec. 30, 2002
Act No. 7039, Dec. 31, 2003
Act No. 7281, Dec. 31, 2004
Act No. 7678, Aug. 4, 2005



CHAPTER I GENERAL PROVISIONS


Article 1 (Purpose)
The purpose of this Act is to promote foreign investment in this nation by providing necessary support and convenience, with the ultimate view of contributing to the sound development of this nation’s economy.

Article 2 (Definitions)
(1) The definitions of the terms used in this Act are as follows:
1.The term “foreigner” shall refer to an individual of a foreign nationality, a corporation established in accordance with a foreign law (hereinafter referred to as a “foreign corporation”) or an international economic cooperative organization as prescribed by the Presidential Decree;
2.The term “national of the Republic of Korea” shall refer to an individual possessing the nationality of the Republic of Korea;
3.The term “Korean corporation” shall refer to a corporation established in accordance with the laws of the Republic of Korea;
4.The term “foreign investment” shall refer to one of the following:
(a) Where a foreigner purchases, under the conditions as prescribed by the Presidential Decree, stocks or stakes (hereinafter referred to as “stocks”) of a Korean corporation (including a Korean corporation in the process of being established) or a company run by a national of the Republic of Korea, for the purpose of establishing a continuous economic relationship with and participating in the management of the said Korean corporation or company in accordance with this Act; and
(b) Where a loan with the maturity of not less than five years is extended to a foreign-capital invested company by its overseas holding company or by a company in a relationship with the said holding company of capital investment as prescribed by the Presidential Decree;
5.The term “foreign investor” shall refer to a foreigner who is in possession of stocks under the conditions as prescribed by this Act;
6.The term “foreign-capital invested company” shall refer to a company a foreign investor has financed;
6-2.The term “operator of establishments built to improve foreign-investment environment” shall refer to any person who operates establishments, including schools and medical institutions, etc. for foreigners, which are prescribed by the Presidential Decree, in order to improve foreign-investment environment;
7.The term “object of investment” shall refer to that in which a foreign investor invests in order to possess stocks under the conditions as prescribed by this Act, and whose actual examples are one of the following:
(a) Foreign means of payment as prescribed by the Foreign Exchange Transactions Act or domestic means of payment by the exchange of the said foreign means of payment;
(b) Capital goods;
(c) Proceeds from the stocks acquired under the conditions as prescribed by this Act;
(d) Industrial property rights, intellectual property rights as prescribed by the Presidential Decree, other technologies corresponding thereto, and rights pertaining to the use of such rights or technologies;
(e) Where a foreigner closes his own branch company or office and then converts the branch company or office into another domestic corporation, or where a domestic corporation whose stocks are possessed by a foreigner is dissolved, the residual property allotted to the said foreigner upon the liquidation of the said branch company, office, or corporation;
(f) The amount of redemption of loans as prescribed by the provisions of subparagraph 4 (b) or of other loans from foreign countries;
(g) Stocks as prescribed by the Presidential Decree;
(h) Real estates located at home; and
(i) Other domestic payment means as prescribed by the Presidential Decree;
8.The term “capital goods” shall refer to machinery, facilities, equipment, parts, accessories as industrial facilities (including vessels, motor vehicles, aircraft, etc.), to livestock, breeds or seeds, trees, fishes and shellfishes which are necessary for the development of agriculture, forestry, and fisheries, to such raw materials and reserve supply as are deemed necessary by the competent Minister (referring to the head of the central administrative agency in control of the project concerned; hereinafter the same shall apply) for the initial test (including pilot projects) of the facilities concerned, and to the fees for transportation and insurance required for the introduction thereof and other know-how or service necessary therefor; and
9.The term “contract for the introduction of technology” shall refer to a contract by means of which a national of the Republic of Korea or a Korean corporation takes over industrial property rights or other technologies from a foreigner or introduces the rights concerning the use thereof.
(2)With respect to an individual who is of Korean nationality but holds permanent residentship of a foreign country, the provisions of this Act concerning foreigners shall apply in addition to other provisions of this Act.

Article 3 (Protection of Foreign Investment)
(1)With respect to the proceeds that come from the stocks, acquired by a foreign investor, proceeds from the sale of stocks, the principal, interest and service charges paid in accordance with the contract for such a loan as prescribed by the provisions of Article 2 (1) 4 (b), and the compensation paid in accordance with a contract for the introduction of technology, their remittance to foreign countries shall be guaranteed in accordance with the contents of the permission or report of the contract for foreign investment or for the introduction of technology, as of the time for the said remittance.
(2)Except as otherwise prescribed by the Acts of the Republic of Korea, foreign investors and foreign-capital invested companies shall be treated in the same way as nationals of the Republic of Korea and Korean corporations are treated in business operation.
(3)Except as otherwise prescribed by the Acts of the Republic of Korea, the provisions concerning the abatement or exemption of taxes among the tax laws applying to nationals of the Republic of Korea or Korean corporations shall also apply to foreign investors, foreign-capital invested corporations, persons who have extended loans as prescribed by the provisions of Article 2 (1) 4 (b), and persons who have provided technology in accordance with the provisions of Article 25.

Article 4 (Liberalization of Foreign Investment)
(1)Except as otherwise prescribed by the Acts of the Republic of Korea, a foreigner may conduct, without restraint, various activities of foreign investment in the Republic of Korea.
(2)Except for the following cases, a foreigner shall not be restricted in any such investment as prescribed in this Act:
1.Where it threatens the maintenance of national safety and public order;
2.Where it has harmful effects on public hygiene or the environmental preservation of the Republic of Korea or is against Korean morals and custom; and
3.Where it violates the Acts and subordinate statutes of the Republic of Korea.
(3)The categories of business in which foreign investment is restricted in accordance with one of subparagraphs of paragraph (2), and the contents of the restriction, shall be prescribed by the Presidential Decree.
(4) The Minister of Commerce, Industry and Energy shall, in case where the head of the relevant administrative agency restricts foreign investment, such as treating foreigners or foreign-capital invested companies unfavorably compared to Korean nationals or Korean corporations, or charging additional liabilities to foreigners or foreign-capital invested companies, in other Acts and subordinate statutes or public notifications than this Act, combine and publicly notify the contents thereof every year under the conditions as prescribed by the Presidential Decree. If the head of the relevant administrative agency intends to amend or supplement them, he shall consult in advance with the Minister of Commerce, Industry and Energy.



CHAPTER II FOREIGNINVESTMENT PROCEDURES


Article 5 (Foreign Investment by Means of Purchasing Newly Issued Stocks)
(1)Where a foreigner intends to make an investment by means of purchasing stocks newly issued by a Korean corporation (including a Korean corporation in the process of being established) or by a company run by a national of the Republic of Korea, the foreigner shall report, in advance, what he intends to do to the Minister of Commerce, Industry and Energy under the conditions as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy. This provision shall also apply where alterations are sought on reported contents as prescribed by the Presidential Decree such as the amount of foreign investment and the ratio of foreign investment (referring to the percentage of the stocks owned by foreign investors against the total stocks of a company; hereinafter the same shall apply).
(2)Where a report has been made under paragraph (1), the Minister of Commerce, Industry and Energy shall issue the reporter a certificate of completion of report without delay.

Article 6 (Foreign Investment by Means of Purchasing Existing Stocks)
(1)Where a foreigner (including such persons of special relationship as prescribed by the Presidential Decree; hereafter in this Article the same shall apply) intends to make investment by means of purchasing stocks or stakes which have already been issued by a company run by a national of the Republic of Korea or a Korean corporation (hereinafter referred to as “existing stocks”), the foreigner shall report, in advance, what he intends to do to the Minister of Commerce, Industry and Energy under the conditions as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy. This provision shall also apply where alterations are sought on such reported matters as prescribed by the Presidential Decree such as the amount of foreign investment and the ratio of foreign investment.
(2)Where a report has been made in accordance with the provisions of paragraph (1), the Minister of Commerce, Industry and Energy shall issue the reporter a certificate of completion of report without delay.
(3)Where a foreigner intends to make investment by means of purchasing the existing stocks of a defense industry company as prescribed by the Presidential Decree, the foreigner shall, notwithstanding the provisions of paragraph (1), obtain in advance the permission of the Minister of Commerce, Industry and Energy under the conditions as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy. This provision shall also apply where alterations are sought on permitted matters as prescribed by the Presidential Decree such as the amount of foreign investment and the ratio of foreign investment.
(4)Where an application has been made for the permission as prescribed in the provisions of paragraph (3), the Minister of Commerce, Industry and Energy shall determine whether to give the permission or not, and notify the applicant of his determination within a period as prescribed by the Presidential Decree.
(5)The Minister of Commerce, Industry and Energy shall consult with the competent minister before he makes the determination on permission under the provisions of paragraph (4).
(6)Where the Minister of Commerce, Industry and Energy deems it necessary, he may attach conditions to the permission under the provisions of paragraph (4).
(7)The person who has acquired existing stocks in violation of the provisons of paragraphs (3) and (6) may not exercise voting rights accompanying the existing stocks, and the Minister of Commerce, Industry and Energy may order the said person to transfer the relevant existing stocks to a third party under the conditions as prescribed by the Presidential Decree.
(8)Necessary matters concerning the acquisition of existing stocks by a foreigner other than those as prescribed by the provisions of paragraphs (1) through (7) shall be prescribed by the Presidential Decree.

Article 7 (Acquisition of Stocks by Means of Mergers)
(1)Where a foreigner makes foreign investment by one of the following means, he shall report to the Minister of Commerce, Industry and Energy:
1.Where a foreign investor has acquired stocks issued upon the capitalization of the surplus reserve or reevaluation reserve of the foreign-capital invested company in which he has been involved, or of reserve funds as prescribed by other Acts and subordinate statutes;
2.Where a foreign investor acquires the stocks of a newly incorporated corporation or a surviving corporation after a merger, the comprehensive exchange of stock, the transfer of stock and a company division with the stock he possesses at the time when the relevant foreign-invested company is merged, the stock is comprehensively swapped, the stock is transferred or the company is divided;
3.Where a foreigner has acquired stocks of a foreign-capital invested company registered in accordance with the provisions of Article 21 by means of purchase, inheritance, testamentary gift, or gift from a foreign investor;
4.Where a foreign investor has acquired stocks by means of investing the proceeds from the stocks which were acquired under the conditions as prescribed by law; and
5.Where a foreigner has acquired stocks using convertible bonds, exchangeable bonds, stock depositary receipts, and such other similar ones as may be converted into, available for the acceptance of, or exchanged for stocks.
(2)Where a report has been made in accordance with the provisions of paragraph (1), the Minister of Commerce, Industry and Energy shall issue the reporter a certificate of completion of report without delay.

Article 8 (Foreign Investment in Form of Long-Term Loan)
(1)Where a foreigner intends to make foreign investment as prescribed by the provisions of Article 2 (1) 4 (b), he shall in advance report what he intends to do to the Minister of Commerce, Industry and Energy under the conditions as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy. This provision shall also apply where alterations are sought on such reported matters as prescribed by the Presidential Decree, such as the amount of loan inducement, loan conditions, etc.
(2)Where a report has been made in accordance with the provisions of paragraph (1), the Minister of Commerce, Industry and Energy shall issue the reporter a relevant certificate of completion of report without delay.



CHAPTER III MEASURES FOR SUPPORTING FOREIGN INVESTMENT


Article 9 (Tax Abatement and Exemption for Foreign Investments)
For foreign investments, taxes such as corporate tax, income tax, acquisition tax, registration tax, property tax and aggregate land tax may be abated or exempted under the conditions as prescribed by the Restriction of Special Taxation Act.
[This Article Wholly Amended by Act No. 5982, May 24, 1999]

Articles 10 through 12 Deleted.








Article 13 (Lease and Sale of State and Public Properties, etc.)
(1)The Minister of Finance and Economy, administrative agencies in charge of managing State properties, the heads of local governments, the heads of government-invested institutions established pursuant to the Framework Act on the Management of Government-Invested Institutions (hereinafter referred to as “government-invested institutions”) or the heads of local public enterprises established pursuant to the Local Public Enterprises Act (excluding any enterprise that is run directly by any local government and hereafter in this Article referred to as “local public enterprises”) may allow foreign-invested companies or the operators of establishments built to improve foreign-investment environment (hereafter in this Article and Article 14 referred to as “foreign-invested companies, etc.”) to use, profit from or lease or sell (hereinafter referred to as “lease”) lands, factories and other properties (hereinafter referred to as the “land, etc.”) owned by the State, local governments, government-invested institutions or local public enterprises, or may sell the land, etc. to foreign-invested companies or the operators of establishments built to improve foreign-investment environment, through free contracts, notwithstanding the relevant provisions of the State Properties Act, the Local Finance Act or the Framework Act on the Management of Government-Invested Institutions.
(2)Where the land, etc. owned by the central government or a local government is leased in accordance with the provisions of paragraph (1), the rental period may be up to fifty years notwithstanding the provisions of Articles 27 (1) and 36 (1) of the State Properties Act and of Articles 82 (2) and 83 (2) of the Local Finance Act.
(3)Where the land owned by the central government or a local government is leased in accordance with the provisions of paragraph (1), the building of a factory and/or other permanent facilities on the land may be allowed, notwithstanding the provisions of Article 24 (3) of the State Properties Act and of Articles 82 (2) and 83 (2) of the Local Finance Act. In this case, the land may be leased on condition that the factory and/or other facilities in question be given free of charge to the central government or a local government, or be removed completely so that the land may be given back to the central government or a local government in its original state at the time of the completion of the rental period of the land under consideration, in consideration of the type of factory and/or other facilities concerned.
(4)Notwithstanding the provisions of Articles 25 (1) and 38 of the State Properties Act and of Articles 82 (2) and 83 (2) of the Local Finance Act, the rental fee of the land, etc. which has been leased in accordance with the provisions of paragraph (1) shall be prescribed by the Presidential Decree and may be indicated in a foreign currency where necessary.
(5)Where a foreign-capital invested company which wishes to purchase the land in accordance with the provisions of paragraph (1), is acknowledged to have difficulty in making a lump-sum payment of the purchase price, the payment may be deferred or made in installments, under the conditions as prescribed by the Presidential Decree, notwithstanding the provisions of Article 40 (1) of the State Properties Act, Article 83 (2) of the Local Finance Act and Article 20 (3) of the Framework Act on the Management of Government-Invested Institutions.
(6)Where a foreign-capital invested company operating businesses prescribed by the Presidential Decree leases state-owned land, etc. which falls under one of the following subparagraphs, the Minister of Finance and Economy or the administrative agency in charge of managing the State properties may reduce or exempt the rental fee of the land, under the conditions as prescribed by the Presidential Decree after consulting thereabout with the Minister of Commerce, Industry and Energy, notwithstanding the provisions of Article 38 of the Industrial Sites and Development Act:
1.Land, etc. located within a foreign investment zone as prescribed by the provisions of Article 18;
2.Deleted;
3.Land, etc. located within a national industrial complex as prescribed by the provisions of Article 6 of the Industrial Sites and Development Act (hereinafter referred to as the “national industrial complex”); and
4.Land, etc. that are located in general industrial complexes, urban high-tech complexes and agro-industrial complexes provided for in Articles 7, 7-2 and 8 of the Industrial Sites and Development Act.
(7)In the event that the State-owned land, etc. are leased to any operator of establishments built to improve foreign-investment environment, the Minister of Finance and Economy or the administrative agency in charge of managing the State properties may reduce or exempt rentals for the relevant land, etc. under the conditions as prescribed by the Presidential Decree, notwithstanding the provisions of Articles 25 (1) and 38 (1) of the State Properties Act.
(8)Where the head of a local government rents the land, etc. owned by his local government to any foreign-invested company, etc., he may reduce or exempt the rental fee of the land, etc. concerned under the conditions as prescribed by the Presidential Decree, notwithstanding the provisions of Articles 82 (2) and 83 (2) of the Local Finance Act.
(9)Where the land, etc. which is rented to any foreign-invested company, etc. with its rental fee reduced or exempted in accordance with the provisions of paragraphs (6) through (8) is located within an industrial complex prescribed by the provisions of subparagraph 5 of Article 2 of the Industrial Sites and Development Act, the rental period may be up to fifty years notwithstanding the provisions of Article 38 of the said Act.
(10)The rental period under the provisions of paragraphs (2) and (9) may be renewed. The renewed rental period in this case may not exceed the period as prescribed by the provisions of paragraphs (2) and (9) for each time the renewal is made.

Article 14 (Support Measures for Foreign Investment Inducement Activities of Local Governments)
(1)Where a local government requests the State to provide funds necessary for the formation of a foreign investment zone prescribed by the provisions of Article 18, for a loan for the purchase of land to be rented to any foreign invested company, etc., for the reduction or exemption of the rental fee of land, etc., and the reduction of lot prices (including where a local government provides the money, where any person prescribed by the Presidential Decree rents the land, etc. to any foreign invested company, etc. with the rental fee reduced or exempted or sells at a price lower than the land formation fee, for the portion corresponding to the amount of the rental fee reduced or exempted or to the difference between the land formation fee and the lot price), for the payment of various kinds of subsidies such as the education and training subsidy, and for foreign investment inducement projects, the State shall provide funds to the maximum extent possible.
(2)The criteria and procedures for the providing of funds by the State to a local government in accordance with the provisions of paragraph (1) shall be determined by the Foreign Investment Committee as prescribed by the provisions of Article 27 under the conditions as prescribed by the Presidential Decree. For the determination of the criteria for the providing of funds in this case, the degree of efforts made by a local government for the inducement of foreign investment and the actual results thereof shall be taken into consideration.
(3)Each year, the State shall estimate the amount of the funds to be provided in accordance with the provisions of paragraph (1) and then appropriate the estimated amount in its budget.
(4)Where necessary for the purpose of promoting the inducement of foreign investment, a local government may pay a foreign-capital invested company an employment subsidy as determined by the Presidential Decree under the conditions as prescribed by its Municipal Ordinance.

Article 14-2 (Support in Cash for Foreign Investments)
(1)In the event that any foreigner makes the foreign investment falling under each of the following subparagraphs, the State and local governments may furnish to the foreigner any fund in cash required for the uses, including the construction of new factories, which are prescribed by the Presidential Decree, taking into account whether the relevant foreign investment accompanies high technology, the effect of technology transfer, the size of job creation, whether the foreign investment overlaps any domestic investment and the relevancy, etc. of the location in which the foreign investment is made:
1.Where the amount of the foreign investment is not less than 10 million U.S. dollars that is to be used for newly installing or expanding factory facilities (referring to the workplace in the case of other business than the manufacturing business) in order to run the business provided for in Article 121-2 (1) 1 of the Restriction of Special Taxation Act;
2.Where the amount of the foreign investment is not less than 10 million U.S. dollars that is to be used for newly installing or expanding factory facilities in order to produce components and raw materials that are provided for in subparagraph 1 of Article 2 of the Act on Special Measures for the Promotion of Specialized Enterprises, etc. for Component and Material and prescribed by the Presidential Decree; and
3.Where research facilities are newly installed or expanded in order to carry out research and development activities for the project provided for in Article 121-2 (1) 1 of the Restriction of Special Taxation Act (hereafter in this subparagraph referred to as the “project”) after meeting the requirements falling under each of the following items:
(a)The amount of foreign investment is required to be not less than 5 million U.S. dollars; and
(b)The number of full-time researcher manpower with master’s degrees or higher or bachelor’s degrees or higher related to the project and not less than 3 years of research career is required to be not less than 20.
(2)The amount of the financial support in cash referred to in paragraph (1) shall be set after going through negotiations with the relevant foreigner investor and deliberation of the Foreign Investment Committee that is set up pursuant to Article 27.
(3)Necessary matters concerning ways and procedures, etc. for furnishing fund in cash referred to in paragraph (1) shall be prescribed by the Presidential Decree.
(4) In the event that any local government provides any foreigner with the fund in cash referred to in paragraph (1), such local government may prescribe matters concerning the decision on the provision of the fund in cash, the limited amount of the fund in cash, the methods of calculating limits on the fund in cash, procedures for negotiating the investment support with foreigners, etc. and other necessary matters in its ordinance.
[This Article Newly Inserted by Act No. 7039, Dec. 31, 2003]

Article 14-3 (Bounty for Inducing Foreign Investment)
(1)The head of every local government may pay a bounty to any person who is recognized as being greatly credited with inducing foreign investment according to his inducement records under the conditions as prescribed by the Municipal Ordinance of the relevant local government.
(2) The head of every government-invested institution may pay a bounty to any person who is recognized as being greatly credited with inducing foreign investment according to the standards that the Minister of Commerce, Industry and Energy sets after going through deliberation of the Foreign Investment Committee provided for in Article 27: Provided, That the bounty shall not be paid in the overlap of the bounty referred to in paragraph (1).
[This Article Newly Inserted by Act No. 7039, Dec. 31, 2003]

Article 15 (Establishment of Foreign Investment Support Center, etc.)
(1)A Foreign Investment Support Center (hereinafter referred to as the “Investment Support Center”) shall be established under the Korea Trade and Investment Promotion Agency as prescribed by the Korea Trade and Investment Promotion Agency Act (hereinafter referred to as the “Korea Trade and Investment Promotion Agency”) in order to provide or conduct consultations, guidance, advertisement, research, and treatment of civil petitions either directly or by proxy concerning foreign investment, the nurturing of business starts-up, etc. and comprehensive support measures for foreign investors and foreign-capital invested companies.
(2)Where necessary for the purpose of properly conducting business concerning foreign investment, the head of the Korea Trade and Investment Promotion Agency may request the relevant administrative agencies, corporations or organizations related to foreign investment (hereinafter referred to as “foreign-investment related agencies”) to dispatch their public officials or officers and employees to render service at the Investment Support Center: Provided, That where the service of public officials is required, prior consultation with the competent minister shall be made.
(3)The Investment Support Center shall be run mainly by officers and employees of the Korea Trade and Investment Promotion Agency who are equipped with considerable knowledge and experience in foreign investment, and public officials or the officers and employees of foreign-investment related agencies who have been dispatched to the Investment Support Center in accordance with the provisions of paragraph (2) (hereinafter referred to as “dispatched officers”) shall render their support for the business matters of the Investment Support Center.
(4)The head of the relevant administrative agency or the head of a foreign-investment related agency to whom a request for the dispatch of public officials or officers or employees has been made in accordance with the provisions of paragraph (2) shall select those who are well-suited for the business matters in question and dispatch them, unless he is justified for not doing so on some special ground, and where he intends to stop the dispatched service before the period of service expires, he shall consult in advance with the head of the Korea Trade and Investment Promotion Agency.
(5)The head of the relevant administrative agency or the head of a foreign-investment related agency who dispatches public officials or officers or employees under his jurisdiction in accordance with the provisions of paragraph (2) shall not disadvantageously treat the dispatched officers in terms of their promotion, position transfer, rewards, and welfare measures.
(6)Where necessary to conduct the business as prescribed by the provisions of paragraph (1), the head of the Korea Trade and Investment Promotion Agency may request the relevant administrative agency or the foreign-investment related agency to render cooperation, and the head of the agency thus requested shall comply with the request, unless he is justified for not doing so on some special ground.
(7)In order to help solve difficulties experienced by foreign-capital invested companies, a grievance settlement organ shall be established in the Korea Trade and Investment Promotion Agency.
(8)Necessary matters concerning the organization and operation of the Investment Support Center and the grievance settlement organ shall be prescribed by the Presidential Decree.

Article 15-2 (Ombudsman for Foreign Investment)
(1) For the purpose of supporting the affairs of grievance settlement in foreign-capital invested companies, the ombudsmen for foreign investment may be commissioned from among the persons of abundant learning and experience in the foreign investment business.
(2) The ombudsmen for foreign investment under paragraph (1) shall be commissioned by the President on a recommendation of the Minister of Commerce, Industry and Energy, via the deliberation of the Foreign Investment Committee under Article 27.
[This Article Newly Inserted by Act No. 6317, Dec. 29, 2000]

Article 16 (Foreign Investment Promotion Offices)
(1)Every central administrative agency, the Special Metropolitan City, the Metropolitan City, Do and Si/Gun/Gu (referring to the autonomous Gu) may each designate its office in charge of foreign investment work as the foreign investment promotion office, or install the foreign investment promotion office, for the purpose of rendering support for foreign investment by properly supervising the treatment of civil petitions concerning permission, authorization, licensing, approval, designation, cancellation, report, recommendation, and consultation related to foreign investment (hereinafter referred to as “permission”) and establishing cooperative systems with related agencies.
(2)Where a cooperation request has been made by a relevant administrative agency or the Investment Support Center with respect to civil petitions concerning foreign investment, foreign investment promotion officials shall cooperate in a positive manner.
(3)Necessary matters concerning the functions and business of the foreign investment promotion office, other than those as prescribed by the provisions of paragraphs (1) and (2), shall be prescribed by the Presidential Decree.

Article 17 (Special Cases concerning Treatment of Civil Petitions by Foreign Investors)
(1)Where a foreign investor or a foreign-capital invested company has been issued the permission in the left column of attached Table 1, he or it shall be regarded as having been issued the permission in the right column of Table 1.
(2)Deleted.
(3)A foreign investor or a foreign-capital invested company may request the Investment Support Center to vicariously carry out matters of civil petition such as the filling out and submission of application forms relating to civil affairs. The head of the Investment Support Center receiving such a request shall select civil petitions related to the permission which appears on attached Table 1 (hereinafter referred to as “civil petitions to be treated in bulk”) and civil petitions related to foreign investment which appears on attached Table 2 to be individually treated (hereinafter referred to as “civil petitions to be individually treated”), and transfer them to the head of the relevant civil affairs administrative agency for disposition, and notify the foreign investment promotion official under his jurisdiction.
(4)The head of a civil affairs administrative agency to whom an application form relating to civil affairs has been transferred in accordance with the provisions of paragraph (3), or who has received an application form relating to civil affairs from a foreign investor or a foreign-capital invested company, shall without delay consult with the head of the relevant administrative agency, and the head of the relevant administrative agency shall submit his opinion within the period as prescribed by the provisions of paragraph (5). If the head of the relevant administrative agency disagrees, he shall explicitly express his reasons, and if the head of the relevant administrative agency has not submitted his opinion within the period as prescribed by the provisions of paragraph (5), he shall be regarded as having no opinion on the matter.
(5)Notwithstanding the relevant provisions of other Acts and subordinate statutes, the head of a civil affairs administrative agency or the dispatched officer shall treat civil petitions to be treated in bulk (referring to those civil petitions relating to the permission which appears on the right column of attached Table 1 which he has received individually), civil petitions to be individually treated, and civil petitions to be directly treated, within the treatment period as prescribed by the Presidential Decree, and where the head of a civil affairs administrative agency or the dispatched officer has not notified the relevant person of his rejection of the application for permission within the treatment period, the permission shall be regarded as having been granted as of the day immediately following the last day of the treatment period. In this case, if the head of a civil affairs administrative agency or the dispatched officer intends to reject the application for permission within the treatment period, he shall notify the relevant foreign investment promotion official, foreign investor, or foreign-capital invested company in writing of his reasons for the rejection under the conditions as prescribed by the Presidential Decree.
(6)Where permission is regarded as having been granted in accordance with the provisions of the former part of paragraph (5) above, the head of a civil affairs administrative agency or the dispatched officer shall issue, without delay, upon the request of the foreign investor or foreign-capital invested company concerned, a document certifying the grant of the permission.
(7)Where the foreign investor or foreign-capital invested company that was notified of the rejection of his application for the permission in accordance with the provisions of the latter part of paragraph (5) eliminates the reasons for the rejection and submits a document which certifies that he satisfies the conditions for the grant of the permission as prescribed by the relevant Acts and subordinate statutes, the head of a civil affairs administrative agency or the dispatched officer shall grant the permission within the period as prescribed by the Presidential Decree. In this case, the head of a civil affairs administrative agency or the dispatched officer shall not refuse to grant the permission for reasons other than the ones given before.
(8)The provisions of paragraph (7) shall apply mutatis mutandis to the consultation as prescribed by the provisions of paragraph (4).
(9)Where a foreign investor or a foreign-capital invested company desires to obtain the permission relating to civil petitions to be treated in bulk, civil petitions to be individually treated, and civil petitions to be directly treated in accordance with the provisions of paragraphs (2) through (8) above, he shall submit application documents as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy, notwithstanding the provisions of other Acts and subordinate statutes.
(10)Even when, with respect to the permission relating to civil petitions to be treated in bulk, some of the requirements for the grant of the said permission, such as documents to be attached, have not been met, the head of a civil affairs administrative agency may grant, under the conditions as prescribed by the Presidential Decree, the permission on the condition that the requirements which have not been met be completed.
(11)Where Acts and subordinate statutes other than this Act contain provisions concerning civil affairs which affect the realization of the goal a foreign-capital invested company is able to pursue only with the permission granted in accordance with the relevant Acts and subordinate statutes from the time when the fact of foreign investment was reported to the time of launching the business, and which do not fall under one of the following categories, the provisions shall not apply to the foreign investor or to the foreign investment business of the foreign-capital invested company:
1.Civil petitions to be treated in bulk;
2.Civil petitions to be individually treated;
3.Civil petitions to be directly treated; and
4.Civil petitions relating to the permission as prescribed by the provisions, other than those of subparagraphs 1 through 3.
(12)Deleted.
(13)Necessary matters, other than those prescribed by the provisions of paragraphs (1) through (10), concerning the treatment of civil petitions relating to foreign investment shall be determined by the Presidential Decree.



CHAPTER IV FOREIGN INVESTMENT ZONE


Article 18 (Designation and Development of Foreign Investment Zone)
(1)The Special Metropolitan City Mayor, Metropolitan City Mayor, and Do governor (hereinafter referred to as the “Mayor/Do governor”) may designate the zone falling under each of the following subparagraphs, after going through deliberation thereon of the Foreign Investment Committee provided for in the provisions of Article 27, as the foreign investment zone (hereinafter referred to as the “foreign investment zone”). In this case, if the foreign investment zone falling under subparagraph 2 is intended to be developed into a local industrial complex as prescribed by the provisions of Articles 7 and 7-2 of the Industrial Sites and Development Act (hereinafter referred to as the “local industrial complex”), a development plan shall be established:
1.The zone that is designated exclusively for the purpose of renting or transferring lands therein to foreign-invested enterprises from among national industrial complexes provided for in Article 6 of the Industrial Sites and Development Act and general local industrial complexes provided for in Article 7 of the same Act; and
2.The zone in which any foreign investor hopes to make his investment that meets the standards that are set by the Presidential Decree.
(2) In case where two or more foreign investors intend to obtain the designation of a zone as a foreign investment zone referred to in paragraph (1) 2 in accordance with the former part of paragraph (1) from the Mayor/Do governor, the business classification and zone of the investment by relevant foreign investors shall satisfy the standards as prescribed by the Presidential Decree.
(3)Where the Mayor/Do governor designates a foreign investment zone pursuant to the provisions of paragraphs (1) and (2), he shall make public notice of the following matters:
1.The official title, location, and area of the foreign investment zone;
2.The method of development or management;
3.The matters to be publicly announced under Article 7-3 of the Industrial Sites and Development Act (limited to where the foreign investment zone is to be developed into a local industrial complex); and
4.Other matters as prescribed by the Presidential Decree.
(4)Any foreign investment zone that is designated in any national industrial complex from among the industrial complexes shall be managed by the management agency of the relevant national industrial complex, any foreign investment zone that is designated in any industrial complex other than the national industrial complexes shall be managed by the competent Mayor/Do governor and any foreign investment zone that is designated in an area other than industrial complexes shall be developed and managed by the competent Mayor/Do governor.
(5)Where a region designated as a foreign investment zone needs the formation of a new site for the establishment of a factory, etc., the relevant foreign investment zone may be developed into a local industrial complex.
(6)Where a foreign investment zone is to be developed into a local industrial complex in accordance with the provisions of paragraph (5), the foreign investment zone designated as such in accordance with the provisions of paragraphs (1) and (2) shall be regarded as having been designated as a local industrial complex. In this case, the development plan as prescribed by the provisions of the latter part of paragraph (1) shall be regarded as the development plan which is prescribed by the provisions of Articles 7 (2) and 7-2 (3) of the Industrial Sites and Development Act, and the public notice as prescribed by the provisions of paragraph (3) shall be regarded as the public notice which is prescribed by the provisions of Article 7-3 of the said Act.
(7)Where the designation and the public notice as prescribed by the provisions of paragraphs (1) through (3) have been made with respect to the development of a foreign investment zone into a local industrial complex in accordance with the provisions of paragraph (5), the term “a region designated and publicly announced as an industrial complex” in Article 12 (1) of the Industrial Sites and Development Act shall be deemed “a region designated and publicly announced as a foreign investment zone,” and the term “the time when the designation and the public notice of a national industrial complex or local industrial complex have been made” in Article 22 (2) of the said Act, shall mean “the time when the designation and the public notice of a foreign investment zone have been made.”
(8)The provisions of Article 19 (1) shall not apply where a part or all of a national industrial complex or local industrial complex, the development of which has already been completed, has been designated as a foreign investment zone.
(9)Necessary matters concerning the procedures and method of the designation of a foreign investment zone shall be prescribed by the Presidential Decree.
(10) Necessary matters concerning the development and management referred to in paragraph (4) shall be prescribed by the Presidential Decree.

Article 18-2 (Cancellation of Designation of Foreign Investment Zones)
(1) The Mayor/Do governor shall, in case where a foreign-capital invested company comes not to satisfy the standards as prescribed by the Presidential Decree under Article 18 (1) and (2), cancel the designation of foreign investment zone, via the deliberation of the Foreign Investment Committee under Article 27.
(2) Necessary matters concerning the procedures, etc. of the cancellation of designation of a foreign investment zone under paragraph (1) shall be prescribed by the Presidential Decree.
[This Article Newly Inserted by Act No. 6317, Dec. 29, 2000]

Article 19 (Support Measures for Foreign Investment Zones)
(1)With respect to responsibility for the costs of the development of a foreign investment zone and to support for infrastructures as harbors, roads, water-supply facilities, railways, communications, and electric facilities which are needed for the efficient formation of a foreign investment zone, the provisions of Articles 28 and 29 of the Industrial Sites and Development Act shall apply mutatis mutandis.
(2)With respect to building, such as the facilities, in a foreign investment zone, the traffic generation charge as prescribed by the provisions of Article 18 of the Urban Traffic Readjustment Promotion Act shall be exempted.
(3)Deleted.

Article 20 (Special Case with Respect to Other Acts)
(1)The provisions of the following subparagraphs shall not apply to the partitioning of land within a foreign investment zone:
1.Article 56 (1) 4 of the Act on the Utilization and Management of the National Territory;
2.Deleted;
3.and 4.Deleted; and

5.Article 5 (1) 4 of the Act on Special Measures for Construction of the Provisional Administrative Capital.
(2)With respect to a foreign-capital invested company that moves into a foreign investment zone, the restrictions on the exportation or importation may be relaxed under the conditions as determined by the Minister of Commerce, Industry and Energy, notwithstanding the provisions of Article 14 of the Foreign Trade Act.
(3)With respect to any foreign-capital invested company that moves into a foreign investment zone, the provisions of the following subparagraphs shall not apply:
1.Articles 4 and 12 (2) of the Act on the Protection of the Business Sphere of Small and Medium Enterprises and Promotion of Their Cooperation; and
2.Article 33-2 (1) of the Act on the Honorable Treatment of and Support for Persons of Distinguished Services to the State, Article 24-2 (1) of the Act on the Honorable Treatment of Persons of Distinguished Services to the May 18 Democratization Movement and Article 21 (2) of the Act on Assistance to the Persons Engaged in Special Military Mission.




CHAPTER V FOLLOW-UPMANAGEMENT OF FOREIGN INVESTMENT


Article 21 (Follow-Up Management of Foreign Investment)
(1)A foreign investor or a foreign-capital invested company, where he or it falls under one of the following cases (including where he or it comes to fall under one of the following cases due to capital increase), shall effect the registration of a foreign-capital invested company under the conditions as prescribed by the Presidential Decree:
1.Where he or it has completed the payment of the object of investment;
2.Where he or it has acquired the existing stocks (referring to having paid for the existing stocks) in accordance with the provisions of Article 6; and
3.Where he or it has acquired stocks under Article 7 (1) 5.
(2) Any foreign investor or any foreign-capital invested company may, even prior to the completion of payment of the object of investment under paragraph (1) 1 or even prior to the settlement of the price for the acquisition of the existing stocks under paragraph (1) 2 in case where he or it has made a foreign investment corresponding to Article 2 (1) 4 (a), effect the registration of a foreign-capital invested company.
(3)Where a foreign investor or a foreign-capital invested company falls under one of the following cases, the Minister of Commerce, Industry and Energy may revoke the permission or cancel the registration thereof:
1.Where a foreign-capital invested company which was registered in accordance with the provisions of paragraph (1) has gone out of business or has not conducted its business activities for two consecutive years or more;
2.Where a foreign-capital invested company which was registered in accordance with the provisions of paragraph (1) or a foreign investor who was granted permission in accordance with the provisions of Article 6 (3) has not complied with a correction order or has not carried out other necessary measures in accordance with the provisions of Article 28 (4);
3.Where there are reasons for the dissolution of a foreign-capital invested company which was registered in accordance with the provisions of paragraph (1);
4.Where a foreign investor has applied for the cancellation of registration under the conditions as prescribed by the Presidential Decree;
5.Where he has conveyed or lent the registration certificate of a foreign-capital invested company to another person; and
6.Where he has effected the registration of a foreign-capital invested company in disguise of the payment of the object of investment.

Article 22 (Restrictions on Disposal of Capital Goods)
(1)Where a foreign investor or a foreign-capital invested company intends to convey or lend or use capital goods which he or it introduced into this nation with their customs duties, etc. exempted in accordance with the provisions of Article 9 for purposes other than those reported, he shall report his intentions in advance to the Minister of Commerce, Industry and Energy, except for such cases as prescribed by the Presidential Decree.
(2)Where a report as prescribed by the provisions of paragraph (1) has been made, the Minister of Commerce, Industry and Energy shall issue the reporter a certificate of completion of report without delay.
(3)Except for cases which meet the criteria prescribed by the Presidential Decree, a foreign-capital invested company which has been registered shall not conduct the following actions:
1.Conducting, beyond its allowed limit, business in which foreign investment is restricted in accordance with the provisions of Article 4 (3); and
2.Acquiring, beyond the allowed limit, stocks of a domestic company which conducts business in which foreign investment is restricted in accordance with the provisions of Article 4 (3).
(4)A foreign investor or a foreign-capital invested company shall not use his investment funds for purposes other than those reported on or permitted.

Article 23 (Conveyance of Stocks)
(1)Where a foreign investor intends to transfer to a third party the stocks he acquired in accordance with the provisions of Articles 5 through 7, or intends to decrease the stocks he owns due to a decrease in his own capital, he shall report his intention to the Minister of Commerce, Industry and Energy under the conditions as prescribed by the Presidential Decree.
(2)A foreign investor, where his permission has been revoked or his registration has been cancelled in accordance with the provisions of each of the subparagraphs of Article 21 (2), shall convey the stocks he owns to a national of the Republic of Korea or a Korean corporation within six months from the day on which the permission is revoked or the registration is cancelled: Provided, That he may extend, with the approval of the Minister of Commerce, Industry and Energy, the conveyance period up to six months, where there exists an unavoidable reason for doing so.
(3)Where a foreign investor who did not perform the registration as prescribed by the provisions of Article 21 (1) has not complied with the correction order as prescribed by the provisions of Article 28 (4), he shall convey the stocks he owns to a national of the Republic of Korea or a Korean corporation within six months from the day on which the period for carrying out the said correction order expires: Provided, That he may extend, with the approval of the Minister of Commerce, Industry and Energy, the conveyance period up to six months, where there exists an unavoidable reason for doing so.

Article 24 (Collection and Preparation of Statistics on Foreign Investment)
(1)The Minister of Commerce, Industry and Energy may request the Mayor/Do governor, the head of Korea Trade and Investment Promotion Agency, and foreign-capital invested companies to provide necessary materials and statistics for the analysis of the effects of foreign investment on the nation’s economy in terms of the economic growth, balance of international payment, and employment.
(2)The Mayors/Do governors, the head of Korea Trade and Investment Promotion Agency, and foreign-capital invested companies requested to provide materials and statistics as prescribed by the provisions of paragraph (1) shall comply with the request unless there is a justifiable reason.
(3)The public officials who collect and prepare materials and statistics on foreign investment in accordance with the provisions of paragraphs (1) and (2) shall not reveal business secrets of the companies concerned.



CHAPTER VI CONTRACTSFOR INTRODUCTIONOF TECHNOLOGY


Article 25 (Report on Contracts for Introduction of Technology)
(1)Where a national of the Republic of Korea or a Korean corporation has concluded with a foreigner a contract for the introduction of technology as prescribed by the Presidential Decree, he shall report to the Minister of Commerce, Industry and Energy under the conditions as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy. This provision shall also apply where an alteration has been made on the reported contents of a contract for the introduction of technology.
(2)Where a report as prescribed by the provisions of paragraph (1) has been made, the Minister of Commerce, Industry and Energy shall issue the reporter a certificate of completion of report within the period as prescribed by the Presidential Decree.
(3)The contract for the introduction of technology which shall be reported in accordance with the provisions of paragraph (1) shall be the one that comes into effect within the period of six months from the day on which the report is made, and where a contract for the introduction of technology which was reported has not come into effect within the said period, the effect of the report shall be regarded as void: Provided, That this provision shall not apply where a certain period within which the contract comes into effect was approved in advance by the Minister of Commerce, Industry and Energy.
(4)If the introduction of technology falls under one of subparagraphs of Article 4 (2), the introduction of technology shall not be conducted.

Article 26 (Tax Reduction and Exemption for Contract for Introduction of Technology)
For the contract for introduction of technology, taxes such as corporate tax or income tax may be reduced or exempted under the conditions as prescribed by the Restriction of Special Taxation Act.
[This Article Wholly Amended by Act No. 5982, May 24, 1999]



CHAPTER VII SUPPLEMENTARY PROVISIONS


Article 27 (Foreign Investment Committee)
(1)For the deliberation of the following matters, a Foreign Investment Committee (hereinafter referred to as the “Committee”) shall be established at the Ministry of Finance and Economy:
1.Important matters concerning the basic policy and institutions for foreign investment;
2.Integration and adjustment of the counterplans by competent Ministry concerning the improvement of the environment for foreign investment;
3.Matters concerning the criteria for the abatement or exemption of taxes with respect to foreign-capital invested companies;
4.Matters concerning cooperation with and adjustment of different opinions of central administrative agencies, Special Metropolitan City, Metropolitan Cities or Dos with respect to foreign investment;
5.Matters concerning support measures for local governments as prescribed by the provisions of Article 14;
6.Matters concerning the designation of and the support for foreign investment zones as prescribed by the provisions of Articles 18 and 19;
6-2.Matters concerning the furnishing of the fund in cash provided for in Article 14-2;
6-3. Matters concerning the payment of the bounty for inducing foreign investment provided for in Article 14-3 (2); and
7.Other important matters concerning the inducement of foreign investment.
(2)The Minister of Finance and Economy shall be the chairman of the Committee, and the following persons shall be the members of the Committee:
1.The Minister of Foreign Affairs and Trade, the Minister of Government Administration and Home Affairs, the Minister of Science and Technology, the Minister of Culture and Tourism, the Minister of Agriculture and Forestry, the Minister of Commerce, Industry and Energy, the Minister of Information and Communication, the Minister of Environment, the Minister of Labor, the Minister of Construction and Transportation, the Minister of Maritime Affairs and Fisheries, and the Minister of Planning and Budget;
2.The head of the central administrative agency and the Mayor/Do governor involving the agenda to be put on the Committee; and
3.Deleted.
(3)For the review and readjustment of matters to be deliberated by the Committee and for the treatment of matters entrusted by the Committee, a Foreign Investment Working Committee (hereinafter referred to as the “Working Committee”) shall be established.
(4)The Minister of Commerce, Industry and Energy shall make a report to the Committee on the current status of promotion of the improvement of the environment for foreign investment under paragraph (1) 2.
(5)Necessary matters, other than those as prescribed by the provisions of paragraphs (1) through (3), concerning the composition and operation of the Commission and the Working Committee shall be prescribed by the Presidential Decree.

Article 28 (Report, Investigation, and Correction)
(1)The Minister of Commerce, Industry and Energy and the competent Minister may have foreign investors, foreign-capital invested companies, those who introduce technology into this nation, the head of the Korea Trade and Investment Promotion Agency, the heads of the relevant financial institutions, and other interested parties make reports on matters deemed necessary concerning the foreign investment and the introduction of technology as prescribed by this Act.
(2)Where it is deemed necessary for the proper enforcement of this Act, the Minister of Commerce, Industry and Energy may have public officials under his jurisdiction or the head of the relevant administrative agency carry out investigations into the following matters:
1.Matters concerning the introduction, use, and disposal of the funds (including objects of investment; hereafter in this Article the same shall apply) and capital goods which a foreigner invested;
2.Circumstances concerning the introduction of technology; and
3.Matters concerning the implementation of the contents permitted or reported in accordance with this Act.
(3)The person who carries out the investigation in accordance with the provisions of paragraph (2) shall carry a voucher of his authority with him and show it to relevant persons.
(4)In the following cases, the Minister of Commerce, Industry and Energy may issue a correction order or take other necessary measures against those who introduce technology into this nation or use funds or capital goods invested by foreigners, those who introduce technology into this nation, and other interested parties:
1.Where the person concerned has not implemented such matters as permitted or reported under this Act, or where what he has implemented is illegal or unjust; and
2.Where a fact which corresponds to one of subparagraphs of Article 4 (2) has been detected.
(5)Where a person who introduced funds and capital goods into this nation for the purpose of foreign investment has not cleared the capital goods through the customs or has not taken possession of them within the storage period as prescribed by the Customs Act, the superintendent of customs may sell them under the conditions as prescribed by the Presidential Decree.

Article 29 (Examination and Confirmation of Capital Goods Introduced)
(1)Where a foreign investor or a foreign-capital invested company has introduced capital goods which meet the criteria as prescribed by the Presidential Decree such as capital goods introduced into this nation under this Act which are subject to the reduction or exemption of taxes, the investor or company may obtain the examination and confirmation of the capital goods introduced from the competent Minister.
(2)With respect to capital goods examined and confirmed by the competent Minister in accordance with the provisions of paragraph (1), the examination and confirmation shall be regarded as the importation approval under the Foreign Trade Act.

Article 30 (Relation with Other Acts and International Treaties)
(1)Except as otherwise provided by this Act, matters concerning foreign exchange and foreign trade shall be governed by the Foreign Exchange Transactions Act.
(2)Notwithstanding the proviso of Article 462-2 (1) of the Commercial Act, a foreign-capital invested company may pay dividends with its newly issued stocks up to the total dividend amount of its profits to be divided, where a special resolution as prescribed by the provisions of Article 434 of the Commercial Act has been passed.
(3)Where a foreign investor makes an investment in kind with the capital goods under Article 2 (1) 7 (b), the written confirmation of the completion of the investment in kind for which the Administrator of the Korea Customs Service confirmed the implementation of the investment in kind and the type, volume, and price of the objects of the investment in kind shall be regarded as a written report of investigation by an investigator as prescribed by the provisions of Article 203 of the Non-Contentious Case Litigation Procedure Act, notwithstanding the provisions of Article 299 of the Commercial Act.
(4)Where a technology evaluation agency as prescribed by the Presidential Decree has evaluated the price of an industrial property right under Article 2 (1) 7 (d), the evaluation contents shall be regarded as having been appraised by a publicly certified appraiser in accordance with the provisions of Article 299-2 of the Commercial Act.
(5)A national of the Republic of Korea or Korean corporation who desires to operate a business jointly with a foreign investor who has reported in accordance with the provisions of Article 5 (1) may designate the first day of every month as the reevaluation day and conduct re-evaluation of the objects of investment concerned, notwithstanding the provisions of Article 4 of the Assets Reevaluation Act.
(6)This Act shall not be interpreted as revising or limiting the contents of international treaties which the Republic of Korea has contracted and promulgated.

Article 31 (Delegation of Rights)
Under the conditions as prescribed by the Presidential Decree, the Minister of Commerce, Industry and Energy, the competent minister, or the Mayor/Do governor may delegate or entrust part of his authority as prescribed by this Act to the Commissioner of the National Tax Administration, the Administrator of the Korea Customs Service, the head of the Korea Trade and Investment Promotion Agency and the heads of management agencies of foreign-investment zones.



CHAPTER VIII PENAL PROVISIONS


Article 32 (Penal Provisions)
A person who has instituted the illegal transfer of foreign currency funds into a foreign country on the occasion of an external remittance, foreign investment, or technology introduction as prescribed by this Act (in case of a company, including its representative), shall be sentenced to imprisonment for not less than one year or to a fine not less than twice and not more than ten times the amount of the illegal transfer. In this case, the foreign currency funds illegally transferred shall be confiscated, and if confiscation is not possible, the corresponding value shall be collected.

Article 33 (Penal Provisions)
A person who has not reported on the disposal of capital goods in violation of the provisions of Article 22 shall be sentenced to imprisonment for not more than five years or to a fine not exceeding fifty million won.

Article 34 (Penal Provisions)
A person who has submitted false documents with respect to permission or report as prescribed by this Act shall be sentenced to imprisonment for not more than three years or to a fine not exceeding thirty million won.

Article 35 (Penal Provisions)
A person who falls under one of the following subparagraphs (in case of a company, including its representative), shall be sentenced to imprisonment for not more than one year or to a fine not exceeding ten million won:
1.Deleted;
2.A person who has acquired existing stocks of a defense industry company without having obtained the necessary permission in violation of the provisions of Article 6 (3);
3.Deleted; and
4.A person who has not complied with a correction order as prescribed by the provisions of Article 28 (4).

Article 36 (Joint Penal Provisions)
Where the representative of a corporation or an agent, an employer or an employee of a corporation or individual, has committed, with respect to business matters of the corporation or individual, a violation as prescribed by the provisions of Articles 32 through 35, the corporation or individual shall be sentenced to the fine as prescribed by the provisions of the respective Articles, in addition to the punishment of the person who has actually committed the violation.

Article 37 (Fine for Negligence)
(1) Anyone who falls under any of the following subparagraphs shall be punished by a fine for negligence not exceeding 10 million won:
1. One who has acquired existing shares, etc. without making a report thereon in violation of the provisions of Article 6 (1); and
2.One who has refused, rejected, impeded or dodged the investigation provided for in Article 28 (2).
(2)The fine for negligence referred to in paragraph (1) shall be imposed and collected by the Minister of Commerce, Industry and Energy under the conditions as prescribed by the Presidential Decree.
(3) Anyone who is dissatisfied with a disposition taken to impose a fine for negligence on him under paragraph (2) may raise an objection to the Minister of Commerce, Industry and Energy within 30 days from the date on which he is notified of such disposition.
(4) When anyone who is subject to a disposition taken to impose a fine for negligence under paragraph (2) raises an objection in accordance with paragraph (3), the Minister of Commerce, Industry and Energy shall notify without delay the competent court of the fact, and the competent court shall, upon receiving the notification, put the case on trial in accordance with the Non-Contentious Case Litigation Procedure Act.
(5)If he does not raise an objection within the period referred to in paragraph (3) and fails to pay the fine for negligence, the fine for negligence in question shall be collected according to the example of a disposition taken to collect the national tax in arrears.
[This Article Newly Inserted by Act No. 7281, Dec. 31, 2004]



ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force two months after the date of its promulgation.

Article 2 (Application Date)
The provisions of Article 20 (3) 2 shall apply until December 31, 2003.

Article 3 (Abrogation of Other Laws)
The Act on Foreign Investment and Foreign Capital Inducement shall be abrogated.

Article 4 (Application Examples of Provisions concerning Reduction or Exemption of Taxes)
The reduction or exemption of taxes in accordance with the provisions of this Act shall begin to be applied to the first application for the reduction or exemption of taxes or the first application for the exemption of taxes after the enforcement of this Act: Provided, That an application for the reduction or exemption of taxes or for the exemption of taxes which had been filed in accordance with the Act on Foreign Investment and Foreign Capital Inducement before the enforcement of this Act but had not received a decision on the reduction or exemption of taxes or on the exemption of taxes by the enforcement date of this Act, shall be regarded as having been filed as of the enforcement date of this Act, so that it shall be governed by this Act.

Article 5 (Transitional Measures concerning Receipt of Reports)
(1)Cases for which the receipt of report was done, or the approval, permission, report, confirmation, or registration (hereinafter referred to as “approval”) was obtained or done in accordance with the previous Act on Foreign Investment and Foreign Capital Inducement before the enforcement date of this Act, shall be regarded as cases for which the report has been done or the approval has been obtained.
(2)Cases for which the report had been made or the application for the approval, permission, confirmation, or registration had been filed in accordance with the previous Act on Foreign Investment and Foreign Capital Inducement, and the necessary procedures thereupon were being taken at the time of the entry into force of this Act, shall be governed by the previous Act on Foreign Investment and Foreign Capital Inducement.
(3)Cases for which the decision on the reduction or exemption of taxes or on the exemption of taxes had been made in accordance with the previous Act on Foreign Investment and Foreign Capital Inducement before the enforcement of this Act shall be governed by the provisions of the previous Act on Foreign Investment and Foreign Capital Inducement, notwithstanding the provisions of Article 3 of this Addenda.

Article 6 (Transitional Measures concerning Free Export Zone)
The free export zone having already been established in accordance with the Establishment of the Free Export Zone Act at the time of the entry into force of this Act shall be regarded as the foreign investment zone in applying the reduction or exemption of taxes or rental fee as prescribed by this Act.

Article 7 (Transitional Measures concerning Penal Provisions)
The application of penal provisions to conduct committed before the enforcement date of this Act shall be governed by the previous Act on Foreign Investment and Foreign Capital Inducement.

Article 8 Omitted.


























Article 9 (Relation with Other Acts and Subordinate Statutes)
Where other Acts or Subordinate Statutes have cited provisions related to foreign investment from the previous Act on Foreign Investment and Foreign Capital Inducement and/or the Foreign Capital Inducement Act at the time of the entry into force of this Act, and where there are provisions in this Act corresponding to the cited provisions, those other laws or regulations shall be regarded as having cited the provisions in this Act corresponding to the cited provisions.



ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force two months after the date of its promulgation.

Articles 2 through 10 Omitted.












ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2000.

Articles 2 through 11 Omitted.











ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.

Articles 2 through 8 Omitted.









ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force six months after its promulgation.

Articles 2 through 6 Omitted.











ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force six months after its promulgation.

Articles 2 through 8 Omitted.










ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force six months after its promulgation.

Articles 2 through 5 Omitted.










ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)

Articles 2 through 6 Omitted.




















ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2001.

Articles 2 through 10 Omitted.










ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on July 1, 2000.

Articles 2 through 7 Omitted.








ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on February 1, 2001.

Article 2 (Applicable Cases for Report on Foreign Investment)
The report under the amendments to Article 7 (1) 5 shall be applicable to the portion of conversion, acceptance, or exchange of stocks, in terms of the convertible bonds, stock depositary receipts, and others similar to them, which is conducted on and after the enforcement date of this Act.

Article 3 (Transitional Measures on Grievance Settlement Organ)
The grievance settlement organ established in the Foreign Investment Support Center under the previous Article 15 (7) at the time of enforcement of this Act shall be regarded as the grievance settlement organ established in the Korea Trade and Investment Promotion Agency under the amendments to Article 15 (7).



ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on July 1, 2001.

Articles 2 and 3 Omitted.









ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2002.

Articles 2 through 6 Omitted.









ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on July 1, 2001.

Articles 2 through 4 Omitted.









ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force six months after its promulgation.

Articles 2 through 8 Omitted.











ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on April 1, 2002. (Proviso Omitted.)

Articles 2 through 17 Omitted.









ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on July 1, 2003.

Articles 2 through 8 Omitted.

















ADDENDA


(1)(Enforcement Date) This Act shall enter into force on January 1, 2004.
(2)(Application Example concerning Furnishing of Fund in Cash) The amended provisions of Article 14-2 shall apply, starting with the report that is made first on a foreign investment after the enforcement of this Act.



ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2005: Provided, That the amended provisions of Article 20 (3) 2 shall enter into force on the date of its promulgation.

Article 2 (Application Deadline)
The amended provisions of Article 20 (3) 2 shall apply until December 31, 2008.

Article 3 (Transitional Measures concerning Industrial Complex Exclusively for Foreign-Invested Enterprises)
Any industrial complex exclusively for foreign-invested enterprises, which is designated in accordance with the provisions of Article 35-3 of the previous Industrial Cluster Development and Factory Establishment Act shall be deemed designated in accordance with the amended provisions of Article 18 (1) of this Act.

Article 4 (Transitional Measures concerning Penal Provisons)
The application of the penal provisions to any act committed prior to the enforcement of this Act shall be governed by the previous provisions.

Article 5 Omitted.







ADDENDA


Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.

Articles 2 through 12 Omitted.


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SeanHayes@ipglegal.com