Oct 5, 2007

Korean Foreign Investment Promotion Act (Enforcement Decree)

ENFORCEMENT DECREE OF THE FOREIGN INVESTMENT PROMOTION ACT


INTRODUCTION

Details of Enactment and Amendment

- Enactment: This Decree was enacted on November 14, 1998, following the enactment of the Foreign Investment Promotion Act, as the Presidential Decree No. 15931, in order to prescribe the matters mandated by the same Act and the matters necessary for the enforcement thereof.
- Amendment: This Decree has taken its present form after going through thirteen amendments, including the latest amendment made on March 8, 2005, since its enactment.


Main Contents

- When a foreign capital invested company purchases a State-owned property, the purchase price may be paid in installments for up to twenty years or the time period for its payment may be extended for up to one year, and for the purchase of a publicly owned property, an installment purchase or an extension of payment period may be allowed pursuant to the municipal ordinances.
- When a local government requests financial support for the expenses of its foreign investment inducement projects, the State provides the financial support in consideration of the potential economic effects that will be brought about by foreign investment, such as creation of jobs and transfer of technologies, and the targeted region and in accordance with the criteria determined by the Foreign Investment Commission.
- The Decree prescribes the scope of civil petition services, from among the civil petition services related with foreign investment, that the public officials or officers/employees of foreign investment related agencies dispatched to the Korea Investment Service Center may handle directly.
- Conditions of the designation of a foreign investment zone are provided as follows:
- Factory facilities are being newly installed in order to conduct a manufacturing business, an industrial support service business, or a business accompanying advanced technologies, in which the amount of foreign investment is not less than thirty million US Dollars; and that a part or the whole of a national industrial complex or local industrial complex the development of which is already completed is being designated as a foreign investment zone, in which the amount of foreign investment is not less than thirty million US Dollars and the scale of new regular employment is not less than three hundred persons;
- Tourist hotel facilities, floating tourist hotels, universal recreation facilities or international conference facilities are being newly installed, in which the amount of foreign investment is not less than twenty million US Dollars;
- Facilities for carrying on a combined cargo terminal business, creating and operating a joint collection and delivery complex, or operating harbor facilities, airports or physical distribution business are being newly installed, in which the amount of foreign investment is not less than ten million US Dollars;
- Facilities for the business of creating infrastructure facilities are being newly installed; or
- Research facilities are being newly established or added to conduct research and development activities for an industrial support service business or a business accompanying advanced technologies in which the amount of foreign investment is not less than five million US Dollars and the scale of the regular employment of the manpower having a degree of master or higher degree concerning such business and a three-year or more research career, exclusively charged for research, is not less than 10 persons.
- A foreigner who intends to receive a cash grant shall submit a written application for such a cash grant with the attachment of a written investment plan comprising the total investment amount and contents thereof, the size of employment, the effect of technology diffusion, the extent of contribution to the local economy, etc.
- A foreigner who receives a cash grant within a certain percentage of his amount of investment shall use it for the following:
- Purchase cost or rental fee of the land for establishing a factory facility or research facility;
- Building cost of a factory facility or research facility;
- Purchase cost of capital goods, research equipment and materials to be used for the purpose of a project or research at a factory facility or research facility;
- Installation cost of infrastructure, such as electricity and communications facilities, necessary for installing a new factory facility or research facility; and
- Grants for employment or educational training.
- The Decree prescribes matters relating to the composition and operation of the Foreign Investment Working Committee which is established in order to examine/coordinate the items to be deliberated by the Foreign Investment Commission.
- The president of the Korea Trade-Investment Promotion Agency may designate a project manager by foreign investor or foreign-capital invested company in order to efficiently support the investment affairs of such a foreign investor or foreign-capital invested company.
- At the request of a foreign investor or foreign-capital invested company, a project manager shall perform the collection and offer of data or information and the mediation of interview, the vicarious execution of civil affairs, the assistance to settlement of living, etc.




ENFORCEMENT DECREE OF THE FOREIGN INVESTMENT PROMOTION ACT

Presidential Decree No. 15931, Nov. 14, 1998
Amended by Presidential Decree No. 16330, May 24, 1999
Presidential Decree No. 16583, Oct. 27, 1999
Presidential Decree No. 16720, Feb. 23, 2000
Presidential Decree No. 17135, Feb. 24, 2001
Presidential Decree No. 17137, Feb. 24, 2001
Presidential Decree No. 17474, Dec. 31, 2001
Presidential Decree No. 17686, Jul. 27, 2002
Presidential Decree No. 17851, Dec. 30, 2002
Presidential Decree No. 18039, Jun. 30, 2003
Presidential Decree No. 18222, Jan. 13, 2004
Presidential Decree No. 18343, Mar. 29, 2004
Presidential Decree No. 18662, Dec. 31, 2004
Presidential Decree No. 18736, Mar. 8, 2005



CHAPTER I GENERAL PROVISIONS


Article 1 (Purpose)
The purpose of this Decree is to prescribe matters delegated by the Foreign Investment Promotion Act and matters necessary for the enforcement thereof.

Article 2 (Definitions of Foreign Investment, etc.)
(1)The term “international economic cooperative organization as prescribed by the Presidential Decree” in Article 2 (1) 1 of the Foreign Investment Promotion Act (hereinafter referred to as the “Act”) shall mean any of the following subparagraphs:
1.An agency which vicariously fulfills the foreign economic cooperation business of the government of a foreign country;
2.An international organization which deals with business matters concerning development finance, such as the International Bank for Reconstruction and Development, the International Financial Corporation, and the Asia Development Bank; and
3.An international organization which either directly or vicariously deals with business matters concerning external investment.
(2)The term “foreign investment” as prescribed in Article 2 (1) 4 (a) of the Act shall mean an investment which amounts (referring to the amount of acquisition in case where it acquires stocks, etc., and to the investment amount per capita in case where two foreigners or more jointly invest) to 50 million won or more and falls under any of the following subparagraphs:
1.A foreigner’s owning not less than 10 percent of the total number of the stocks with voting rights issued by, or of the total equity investment of, a Korean corporation (including Korean corporations in the process of being established; hereinafter the same shall apply) or a company run by a Korean citizen; and
2.A foreigner’s owning stocks or shares of a Korean corporation or a company run by a Korean citizen, and concluding a contract falling under any of the following items with the relevant corporation or company:
(a) A contract capable of dispatching or electing officers (referring to directors, representative directors, general partners, auditors or persons corresponding thereto holding a right to participate in an important decision making for business management; hereinafter the same shall apply);
(b) A contract to deliver or purchase the raw materials or products for not less than one year; and
(c) A contract for furnishing or introducing the technology or for the joint research and development.
(3)The term “company in a relationship of capital investment as prescribed by the Presidential Decree” in Article 2 (1) 4 (b) of the Act shall mean a company which falls under any of the following subparagraphs:
1.A company which holds not less than 50 percent of the total number of the stocks issued by, or of the total equity investment of, its overseas holding company; and
2.A foreign-capital invested company of which not less than 50 percent of the total number of the issued stocks or of the total equity investment is held by its overseas holding company, and which falls under any of the following:
(a) A company which holds not less than 10 percent of the total number of the stocks issued by, or of the total equity investment of, its overseas holding company; and
(b) A company of which not less than 50 percent of the total number of the issued stocks or of the total equity investment is held by its overseas holding company or a company under the provisions of subparagraph 1.
(4) The term “intellectual property rights as prescribed by the Presidential Decree” in Article 2 (1) 7 (d) of the Act shall mean the right to be utilized in the industrial activities from among the copyrights under the Copyright Act and the layout-design right under subparagraph 5 of Article 2 of the Act on the Layout-Designs of Semiconductor Integrated Circuits.
(5) The term “facilities prescribed by the Presidential Decree” in Article 2 (1) 6-2 of the Act shall mean a facility falling under any of the following subparagraphs:
1.A foreigners’ school under Article 60-2 of the Elementary and Secondary Education Act;
2.A general hospital, hospital, dental hospital, herb hospital, sanatorium, medical clinic, dental clinic, herb clinic and midwifery clinic under Article 3 (2) of the Medical Service Act;
3.A pharmacy under Article 2 (3) of the Pharmaceutical Affairs Act;
4.A housing under the provisions of subparagraph 1 of Article 2 of the Housing Act; and
5.Other facilities, such as a fosterage facility for start-up business for foreign investors, determined and publicly announced by the Minister of Commerce, Industry and Energy after undergoing a deliberation of the foreign investment commission (hereinafter referred to as the “Commission”) under Article 27 of the Act.
(6) The term “stocks as prescribed by the Presidential Decree” in Article 2 (1) 7 (g) of the Act shall mean the stocks falling under any of the following subparagraphs:
1.Stocks of foreign corporations listed or registered in the foreign securities markets; and
2.Stocks owned by foreigners under the Act or the Foreign Exchange Transactions Act.
(7)The term “other domestic payment means as prescribed by the Presidential Decree” in Article 2 (1) 7 (i) of the Act shall mean money coming from the sale of stocks or shares (hereinafter referred to as “stocks”) and real estate of a Korean corporation or a company run by a Korean citizen, held by a foreigner in accordance with the Act and the Foreign Exchange Transactions Act.

Article 3 (Definition of Individual Who Holds Permanent Residentship of Foreign Country)
The term “individual who holds permanent residentship of a foreign country” in Article 2 (2) of the Act shall mean a person who has acquired permanent residentship, or a stay permit which can be substituted for permanent residentship, of the country in which he resides.

Article 4 (Remittance of Proceeds to Foreign Countries)
(1)Where a foreign investor, a person who borrows a loan as prescribed in Article 2 (1) 4 (b) of the Act, or a person who introduces technology by means of a contract for the introduction of technology as prescribed in subparagraph 9 of the said paragraph, intends to remit funds to a foreign country in accordance with the provisions of Article 3 (1) of the Act, he shall obtain confirmation of the remittance from the head of a foreign exchange bank as prescribed in the Foreign Exchange Transactions Act (hereinafter referred to as the “head of a foreign exchange bank”).
(2)Where the head of a foreign exchange bank intends to conduct a confirmation as prescribed in paragraph (1), he shall verify the legitimacy of the remittance to a foreign country under consideration.

Article 5 (Categories of Business in Which Foreign Investment is Restricted)
(1)The categories of business in which foreign investment is restricted, and the contents of the restriction, as prescribed in Article 4 (3) of the Act, shall be the following matters, publicly announced by the Minister of Commerce, Industry and Energy after consultation with the competent Minister, in view of the scope of the reserved contents concerning domestic direct investment by a non-resident in the field of the direct investment of Annex No. 1 (Reservations to the Code of Liberalization of Capital Movements) to the agreed invitation to join the Convention on the Organization for Economic Cooperation and Development for the Republic of Korea and of the reserved contents provided in the Annex to the Convention on the Organization for Economic Cooperation and Development concerning bilateral or multilateral investments:
1.A category of business (hereinafter referred to as the “restricted category of business”) in which foreign investment is not permitted or is only partially permitted;
2.The total ratio of investment permissible to foreigners (hereinafter referred to as the “ratio of investment permissible to foreigners”) by the category of business in which foreign investment is only partially permitted under subparagraph 1;
3.Qualifications of foreign investors and the parties concerned with respect to a domestic joint investment; and
4.Other standards for permission such as the time of permission for foreign investment.
(2) Notwithstanding paragraph (1), a foreigner may make an investment in a company of which the ratio of the turnover of a restricted category of business is not more than 1/100 of the total turnover, beyond the limit as set in paragraph (1).
(3) Where the ratio of the turnover of a restricted category of business of a company falling under paragraph (2) has come to exceed 1/100 of the total turnover of the company after a foreigner acquired stocks of the company, the stocks acquired in excess of the ratio of investment permissible to foreigners shall be transferred to a Korean citizen or a Korean corporation within 6 months from the date fixed for the settlement of accounts of the business year when such ratio is exceeded: Provided, That if there exist any inevitable reasons, the period of transfer may be extended within the maximum limit of 6 months with approval of the Minister of Commerce, Industry and Energy.
(4) A foreigner shall be prohibited from making an investment in any company running concurrently both a category of business in which foreign investment is not permitted and a category of business in which foreign investment is only partially permitted under paragraph (1) 1, and where intending to make an investment in any company running not less than two categories of business in which foreign investment is only partially permitted under paragraph (1) 1, he shall be prohibited from making an investment in the company in excess of the ratio of foreign investment in the category of business in which the ratio of investment permissible to foreigners is lowest.
(5)The head of the relevant administrative agency shall, where there exist any alterations in or any new additions to the contents concerning the restrictions on foreign investments which have been publicly notified by the Minister of Commerce, Industry and Energy in the preceding year under Article 4 (4) of the Act, prepare them as of the base date of January 1 and notify it to the Minister of Commerce, Industry and Energy not later than the end of January, and the Minister of Commerce, Industry and Energy shall integrate them and make a public notice of them not later than the last day of February each year.



CHAPTER II PROCEDURESFORFOREIGN INVESTMENT


Article 6 (Matters to be Reported concerning Alterations in Contents of Foreign Investment)
The term “matters as prescribed by the Presidential Decree” in the latter parts of Articles 5 (1), 6 (1) and (3), and 8 (1) of the Act shall mean the following matters:
1.The trade name or title and nationality of the foreign investor concerned;
2.The amount of foreign investment, the ratio of foreign investment (the ratio of the stocks held by the foreign investor concerned to the total stocks of a foreign-capital invested company; hereinafter the same shall apply), and the method of investment;
3.The type of business desired to be operated;
3-2.The transferor of stocks;
3-3.The offerer, amount, and conditions of loans; and
4.Such other important matters concerning the contents of the report and permission as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy.

Article 7 (Procedures for Foreign Acquisition of Existing Stocks)
(1)The term “persons of special relationship as prescribed by the Presidential Decree” in the former part of Article 6 (1) of the Act shall mean persons falling under any of the following subparagraphs:
1.The spouse and the lineal ascendant and descendant of the foreigner concerned (including the lineal ascendant and descendant of the spouse of the foreigner concerned);
2.A foreign corporation, not less than fifty percent of the total number of the stocks issued by which, or not less than fifty percent of the total equity investment of which, is held together by the foreigner concerned and the persons in such relationship as prescribed in subparagraph 1 or 3, or a foreign corporation which is virtually being governed by the foreigner concerned and the said persons;
3.The employees of the foreigner concerned and persons as prescribed in subparagraph 2 or 4 (referring to officers in case of a corporation, to trade employees or other employed persons through an employment contract, in case of an individual, or to persons who maintain their livelihood by means of the money or property of the said individual); and
4.A foreign corporation, not less than fifty percent of the total number of the stocks issued by which, or not less than fifty percent of the total equity investment of which, is held together by such a corporation as prescribed in subparagraph 2, the foreigner concerned, and such persons as prescribed in subparagraphs 1 and 3.
(2)The term “defense industry company as prescribed by the Presidential Decree” in Article 6 (3) of the Act shall mean a defense industry company as prescribed in subparagraph 3 of Article 2 of the Act on Special Measures for Defense Industry.
(3)The period of decision on and issuance of the permission as prescribed in Article 6 (4) of the Act shall be fifteen days from the day on which the application for the permission is filed: Provided, That where there exists a compelling reason, the period may be extended one time for a maximum of fifteen days.
(4)Where supplement or correction is deemed necessary with respect to the application for the permission for foreign investment as prescribed in Article 6 (3) of the Act, the Minister of Commerce, Industry and Energy may designate the period for the supplement or correction and request the person concerned to perform the supplement or correction within the designated period. In this case, the period consumed for the complement or correction shall not be included in the period of decision on and issuance of the permission as prescribed in paragraph (3).
(5)In accordance with the provisions of Article 6 (7) of the Act, the Minister of Commerce, Industry and Energy shall order the person who acquired existing stocks in violation of the provisions of Article 6 (3) and (6) of the Act to convey the existing stocks to a Korean citizen or a Korean corporation within one month from the day on which the violation is discovered. In this case, the period of conveyance shall be determined by the Minister of Commerce, Industry and Energy within the maximum scope of six months, but where there exists a compelling reason, the period of conveyance may be extended within the maximum scope of six months.
(6)through (8) Deleted.



Article 8 (Consultation concerning Permission of Acquisition of Existing Stocks)
(1)Where a foreigner has made an application for permission for the acquisition of the existing stocks of a defense industry company in accordance with the provisions of Article 6 (3) of the Act, the Minister of Commerce, Industry and Energy shall, in accordance with the provisions of Article 6 (5) of the Act, request consultation with the Minister of National Defense, and the Minister of National Defense receiving such a request for consultation shall submit his opinion on the matter to the Minister of Commerce, Industry and Energy within ten days from the day on which he received the request.
(2)Where the Minister of National Defense judges that the defense industry products produced by a defense industry company for which permission for the acquisition of existing stocks has been applied are replaceable by the products of another domestic company or that the granting of the permission will not cause any important effect on the security of this nation, he shall agree with the granting of the permission.
(3)In submitting his opinion in accordance with the provisions of paragraph (1), the Minister of National Defense may request the Minister of Commerce, Industry and Energy to grant permission with the following conditions:
1.Necessary conditions for the continuous production of the defense industry products concerned and for the maintenance of the security of this nation; and
2.The condition of dividing and selling to a Korean citizen or a Korean corporation the defense industry facilities concerned.
(4)Where permission had been granted with the conditions as prescribed in paragraph (3) 2, a foreigner who acquired the existing stocks before the sale of the defense industry facilities is completed may not participate in the management of the defense industry company concerned.



CHAPTER III SUPPORTMEASURESFOR FOREIGN INVESTMENT


Articles 9 through 18 Deleted.





























Article 19 (Rental of State or Public Property)
(1)The rental fee for the land, etc. as prescribed in Article 13 (4) of the Act shall be the amount derived from the multiplication of the value of the land, etc. under consideration by the rate of not less than 10/1000: Provided, That the rental fee rates for land, etc. in the area of the Article 18 (1) 1 of the Act designated as foreign investment zone pursuant to the provisions of fore part of the same paragraph shall be as follows:
1.If the land, etc. concerned is state property, the rates determined by the Minister of Commerce, Industry and Energy after consultation with the Minister of Finance and Economy; and
2.If the land, etc. concerned is public property, the rates determined by the Minister of Commerce, Industry and Energy after consultation with the head of a local government that is the owner of the land, etc. in question.
(2)The postponement of the payment period for the purchase price of the land, etc. or the payment in installments as prescribed in Article 13 (5) of the Act shall be done in accordance with the following methods. In this case, the applicable interest rate shall not exceed four percent annually:
1.In case of land, etc. owned by the State: Either the payment period may be extended within the upper limit of one year or the payment in installments within the maximum period of twenty years may be allowed; and
2.In case of land, etc. owned by a local government: Either the payment period may be extended or the payment in installments may be allowed under its Municipal Ordinance.
(3)The term “foreign-capital invested company operating businesses as prescribed by the Presidential Decree” in the main sentence of Article 13 (6) of the Act shall mean any company which installs a new factory facility [referring to a workplace in case of any business other than manufacturing industry on the Korean Standard Industrial Classification (hereinafter referred to as the “Korean Standard Industrial Classification”) prepared and publicly announced by the Commissioner of the Korea National Statistical Office under Article 17 of the Statistics Act; hereinafter the same shall apply] to operate business falling under any of the following subparagraphs:
1.A business which makes a considerable contribution to the economy of this nation such as the acceleration of employment and falls under any of the following items:
(a) A business run by a foreign-capital invested company within a foreign investment zone designated pursuant to the fore part of Article 18 (1) of the Act;
(b) A business which has been subjected to the reduction of or exemption from taxes in accordance with the provisions of Article 121-2 (1) of the Restriction of Special Taxation Act, and in which a foreign investment of not less than one million U. S. dollars has been made; and
(c) A business in which a foreign investment of not less than five million U.S. dollars has been made, and which intends to operate a manufacturing industry (referring to a manufacturing industry according to the Korean Standard Industrial Classification; hereinafter the same shall apply); and
2.A business which makes a considerable contribution to the expansion of infrastructure, the readjustment of industrial structure, or the financial independence of a local government as determined by the Minister of Commerce, Industry and Energy via a deliberation of the Commission.
(4)The rate of the reduction of or exemption from the rental fee of the land owned by the State as prescribed in Article 13 (6) of the Act shall be determined by the management agency of the state property under consideration (including the person who has been delegated or entrusted in accordance with the provisions of Article 21 of the State Properties Act or Article 32 (3) of the same Act; hereinafter the same shall apply) within the scope of the following:
1.For land falling under the provisions of Article 13 (6) 1 of the Act: The rate of the reduction or exemption as prescribed in the following items:
(a) With respect to a business which falls under the provisions of paragraph (3) 1 (a) or (b), 100/100 of the rental fee of the land concerned; and
(b) With respect to a business which falls under the provisions of paragraph (3) 1 (c) or of subparagraph 2 of the said paragraph, 75/100 of the rental fee of the land concerned; and
2.For land falling under the provisions of Article 13 (6) 3 and 4 of the Act: 50/100 of the rental fee of the land concerned.
(5)The rate of reduction of or exemption from the rental fee of the State-owned land under Article 13 (7) of the Act shall be determined by the management agency of the relevant State-owned property within the scope of 100/100.
(6)A foreign-capital invested company or an operator of the facilities to improve foreign investment environment (hereafter in this Article referred to as the “foreign-capital invested company, etc.”) that desires to obtain a benefit of reduction of or exemption from the rental fee of the State-owned land in accordance with the provisions of Article 13 (6) or (7) of the Act shall make an application for reduction or exemption to the management agency of the State-owned property concerned.
(7)A foreign-capital invested company, etc. which desires to obtain a benefit of reduction of or exemption from the rental fee of the land owned by a local government in accordance with the provisions of Article 13 (8) of the Act shall make an application for reduction or exemption to the head of the local government concerned.
(8)Concrete matters such as the types of business to be subjected to a reduction of or exemption from the rental fee of the land owned by a local government and the rate of reduction of or exemption from the rental fee as prescribed in Article 13 (8) of the Act shall be determined by the Municipal Ordinance of the local government concerned taking into account the economic effects which will be brought about by the foreign investment concerned, such as the creation of employment, the transfer of technology, and the effect on the financial independence of the local government concerned.
(9)Except for such cases as provided for in the Act or this Decree, the selling or rental of the land owned by the State or a local government as prescribed in Article 13 of the Act shall be governed by the State Properties Act and the Local Finance Act.

Article 20 (Criteria for Support to Local Governments)
(1)The criteria for financial support to be given by the State to a local government in accordance with the provisions of Article 14 (1) of the Act shall be determined by the Commission after the comprehensive deliberation of such potential economic effects that will be brought about by the foreign investment concerned, such as the creation of employment and the transfer of technology, and the region to be moved into.
(2)The head of a central administrative agency who has received a request for financial support by a local government shall render the support thus requested in accordance with the criteria for the financial support as determined by the Commission.
(3)The term “public agency as prescribed by the Presidential Decree” in the provisions of Article 14 (1) of the Act shall mean an implementer of an industrial complex development project as prescribed in Article 16 (1) of the Industrial Sites and Development Act.
(4)The term “employment subsidy as prescribed by the Presidential Decree” in the provisions of Article 14 (4) of the Act shall mean the employment subsidy which is paid according to the creation scale of new employment of a foreign-capital invested company.

Article 20-2 (Use, etc. of Cash Grants to Foreign Investment)
(1)The term “use as prescribed by the Presidential Decree” in the part except for the subparagraphs of Article 14-2 (1) of the Act shall mean a use falling under any of the following subparagraphs:
1.Purchase cost or rental fee of the land for establishing a factory facility or research facility;
2.Building cost of a factory facility or research facility;
3.Purchase cost of capital goods, research equipment and materials to be used for the purpose of a project or research at a factory facility or research facility;
4.Installation cost of infrastructure, such as electricity and communications facilities necessary for installing a factory facility or research facility; and
5.Grants for employment or educational training.
(2)The term “parts and materials as prescribed by the Presidential Decree” in Article 14-2 (1) 2 of the Act shall mean the parts and materials (limited to those belonging to the business types under the provisions of Table 4) falling under any of the following subparagraphs, which are determined by the Ordinance of the Ministry of Commerce, Industry and Energy:
1.Those contributing a lot to high value adding to the final products;
2.Those which are parts or materials incidental to ultramodern technology or high core technology having a big effect on technology diffusion or creation of value adding; and
3.Those which become an industrial basis or have a large connective effect among the industries.
[This Article Newly Inserted by Presidential Decree No. 18222, Jan. 13, 2004]

Article 20-3 (Application for and Payment of Cash Grant to Foreign Investment)
(1)A foreigner who intends to receive a cash grant from the State as prescribed in Article 14-2 (1) of the Act shall submit to the Minister of Commerce, Industry and Energy a written application for cash grant with the attachment of a written investment plan comprising the matters of the following subparagraphs:
1.Total investment amount and contents thereof;
2.Size of employment;
3.Effect of technology diffusion;
4.Extent of contribution to the local economy; and
5.Other matters determined by the Minister of Commerce, Industry and Energy.
(2)The Minister of Commerce, Industry and Energy shall, upon the receipt of an application under the provisions of paragraph (1), consult with the Minister of Planning and Budget on whether or not a cash grant is to be awarded, amount to be granted, etc. after negotiating with the foreigner.
(3) The Minister of Commerce, Industry and Energy may pay a cash grant at one time in the year following the year in which the cash grant is decided, or in installments not exceeding ten times within the period of five years from such decision.
(4) In case where the Minister of Commerce, Industry and Energy pays a cash grant in installments under the provisions of paragraph (3), he may adjust the amount and time for grant of the cash grant payed in installments taking into account any change of the investment plan and the actual results of the execution of the cash grant payed in installments.
(5) The matters necessary for cash grant, etc. except for the provisions under paragraphs (1) through (4) shall be determined by the Minister of Commerce, Industry and Energy after undergoing a deliberation by the Commission.
[This Article Newly Inserted by Presidential Decree No. 18222, Jan. 13, 2004]

Article 21 (Operation of Foreign Investment Support Center)
(1)The public officials or the officers or employees of a foreign-investment related agency who have been dispatched (hereinafter referred to as “dispatched officers”) to the Foreign Investment Support Center (hereinafter referred to as the “Investment Support Center”) under Article 15 (1) of the Act shall be directed and supervised by the president of the Korea Trade-Investment Promotion Agency with respect to their service.
(2)The president of the Korea Trade-Investment Promotion Agency shall draw up a written opinion on the performance evaluation of the public officials dispatched in accordance with the provisions of paragraph (1), in accordance with the provisions of Article 37-2 (3) of the Decree on the Appointment of Public Officials or of Article 31-3 (3) of the Decree on the Appointment of Local Public Officials, and send the written opinion to the heads of the relevant administrative agencies from which the public officials concerned were dispatched, and the heads of the relevant administrative agencies who receive these written opinions shall take them into consideration when evaluating the performance of the public officials concerned.
(3)For the purpose of the efficient implementation of the foreign investment support business, the president of the Korea Trade-Investment Promotion Agency may operate a general administrative support center which is mainly composed of the dispatched officers as provided in Article 15 (3) of the Act and teams of exclusive responsibility for foreign investment inducement which are mainly composed of officers and employees of the Korea Trade-Investment Promotion Agency.
(4)The president of the Korea Trade-Investment Promotion Agency shall draw up an annual comprehensive plan for foreign investment inducement for the year and submit it to the Minister of Commerce, Industry and Energy no later than January 31 each year, and shall analyze quarterly foreign investment achievements and report the result of the analysis to the Minister of Commerce, Industry and Energy within one month after the expiration of each quarter.
(5)through (7) Deleted.
(8)Necessary matters other than those prescribed in paragraphs (1) through (4) concerning the organization and operation of the Investment Support Center shall be determined by the president of the Korea Trade-Investment Promotion Agency subject to the deliberation of the Foreign Investment Working Committee (hereinafter referred to as the “Working Committee”) under Article 27 (3) of the Act.



Article 21-2 (Designation and Operation of Project Manager)
(1)The president of the Korea Trade-Investment Promotion Agency may designate a person falling under any of the following subparagraphs as a project manager by foreign investor or foreign-capital invested company in order to efficiently support the investment affairs of a foreign investor or foreign-capital invested company. In this case, the president of the Korea Trade Investment Promotion Agency shall notify the relevant foreign investor and foreign-capital invested company of the designated project manager;
1.Employee of the Korea Trade Investment Promotion Agency;
2.Dispatched officer; or
3.Public official or employee of central administration agency, local government, government-invested institution or public institution pursuant to the Framework Act on the Management of Government-Invested Institutions related to foreign investment. In this case, he shall obtain approval of the head of the concerned agency, government or institution.
(2)The president of the Korea Trade-Investment Promotion Agency may notify the central administrative agency, local governments, government-invested agencies and public agencies in charge of foreign investment-related affairs (hereinafter referred to as the “related administrative agencies, etc.”) of the project manager designated by foreign investor and foreign-capital invested company under the provisions of paragraph (1) (hereinafter referred to as the “project manager”).
(3)The related administrative agencies, etc. who are notified of under the provisions of paragraph (2) shall positively cooperate therewith when the project manager requests cooperation with respect to an offer of materials and a treatment of civil affairs related with foreign investment.
(4) A project manager shall perform the affairs falling under any of the following subparagraphs:
1.Collection, offer of data or information and mediation of interview at the request of a foreign investor or foreign-capital invested company;
2.Presentation of opinion regarding a support related with a foreign investment under the provisions of Articles 9, 13, 14 and 14-2 of the Act;
3.Assist in the affairs and vicarious execution of civil affairs related with a foreign investment under the provisions of Articles 15 and 17 of the Act;
4.Assist in settlement of living of the officers, employees and their families of a foreign investor or foreign-capital invested company, such as house rent and guide to school admission; and
5.Other affairs related with a foreign investment.
(5) The president of the Korea Trade-Investment Promotion Agency shall provide opportunities for education necessary for enhancing the quality and expertise of the project manager.
(6) The president of the Korea Trade-Investment Promotion Agency may treat a project manager preferentially in relation to promotion, transfer and reward.
[This Article Newly Inserted by Presidential Decree No. 18222, Jan. 13, 2004]


Article 21-3 (Operation, etc. of Grievance Settlement Organ)
(1) Deleted.
(2) The head of the grievance settlement organ under Article 15 (7) of the Act shall be appointed from among foreign investment ombudsmen under Article 15-2 of the Act (hereinafter referred to as the “foreign investment ombudsmen”) or persons who have extensive experience and knowledge in the field of the business matters concerning foreign investment.
(3)The head of the grievance settlement organ may request the relevant administrative agency or the foreign-investment related agency to cooperate for the purpose of solving problems experienced by foreign-capital invested companies and performing duties relating thereto. In this case, the agency thus requested to cooperate shall notify its opinion on the matter under consideration within seven days after the date on which the request has been made.
(4)Deleted.
(5)The head of the grievance settlement organ may, in order to efficiently solve problems experienced by foreign-capital invested companies, designate and manage by region and invested company the staff taking exclusive charge of grievance settlement for whom pay is given on the basis of piece rate system.
(6)The head of the grievance settlement organ shall analyze the results of solving problems experienced by foreign-capital invested companies by quarter and report to the Minister of Commerce, Industry and Energy within one month after each quarter expires.
(7)Necessary matters other than those prescribed in paragraphs (2), (3), (5), and (6) concerning the organization and operation of the grievance settlement organ shall be determined by the head of the Korea Trade-Investment Promotion Agency subject to the deliberation of the Working Committee.
[This Article Newly Inserted by Presidential Decree No. 16583, Oct. 27, 1999]


Article 21-4 (Functions, etc. of Foreign Investment Ombudsmen)
(1) The terms of office of foreign investment ombudsmen under Article 15-2 of the Act shall be three years, but they may be reappointed.
(2) The foreign investment ombudsmen shall perform the following business matters:
1.Collection of information concerning problems experienced by foreign-capital invested companies;
2.Preparation of policy measures for improving foreign investment system and recommendation of the implementation thereof to relevant administrative agencies; and
3.Other necessary matters for assisting foreign-capital invested companies in solving their problems.
[This Article Newly Inserted by Presidential Decree No. 17474, Dec. 31, 2001]


Article 22 (Foreign Investment Promotion Office)
The foreign investment promotion office as prescribed in Article 16 of the Act shall implement tasks which fall under the provisions of the following subparagraphs:
1.The encouragement and verification of the proper treatment of civil petitions transmitted in accordance with the provisions of Article 17 (3) of the Act;
1-2.The vicarious execution of civil petition affairs, such as the preparation and submission of civil petition documents, concerning foreign investment;
2.The inducement of, advertisement on, and support for foreign investment;
3.The receipt, examination, and treatment of difficulties experienced or matters recommended by foreign investors or foreign-capital invested companies;
4.The exchange of information, communication of business matters, and administrative cooperation with the Investment Support Center, the trade centers, branches, offices of the Korea Trade-Investment Promotion Agency, and other agencies related to the inducement of foreign investment;
5.The examination of the legitimacy of reasons for refusal to grant permission as notified in accordance with the provisions of the latter part of Article 17 (5) of the Act;
6.The operation of the Foreign Investment Inducement Council as prescribed in Article 23; and
7.Other kinds of administrative support concerning foreign investment.

Article 23 (Foreign Investment Inducement Council)
(1)In order to deliberate on matters falling under the following subparagraphs, a Foreign Investment Inducement Council (hereinafter referred to as the “Council”) may be established at the Special Metropolitan City, a Metropolitan City, and a Do (hereinafter referred to as the “City/Do”):
1.The inducement plan, advertizement plan, and support plan with respect to foreign investment;
2.The consultation for the solution of difficulties experienced by foreign investors or foreign-capital invested companies;
3.Matters concerning the consultation for the proper treatment of civil petitions as prescribed in Article 17 of the Act; and
4.Other matters deemed necessary by the Special Metropolitan City Mayor, a Metropolitan City Mayor, and a Do governor (hereinafter referred to as the “Mayor/Do governor”), for the inducement of foreign investment.
(2)The chairman of the Council shall be a public official at the level of director or above from among those who belong to the City/Do, and the members of the Council shall be the persons falling under the following subparagraphs:
1.Persons appointed by the Mayor/Do governor from among the public officials under his jurisdiction;
2.From among the public officials or other employees of the competent Si/Gun/Gu (referring to the autonomous Gu; hereinafter the same shall apply) or special local administrative agency or of agencies related to the disposal of civil petitions as prescribed in Tables 1 and 2 of the Act, persons designated by the head of the Si/Gun/Gu, special local administrative agency, or agency concerned upon the request of the Mayor/Do governor;
3.From among the heads of the trade centers, branches, and offices of the Korea Trade-Investment Promotion Agency, the persons designated by the head of the Investment Support Center at the request of the Mayor/Do governor; and
4.Persons commissioned by the Mayor/Do governor from among persons with extensive experience and knowledge in the field of the business matters of foreign investment.
(3)In designating or commissioning members of the Council as prescribed in paragraph (2), the members who can participate in all the meetings of the Council and the members who, according to the decision of the chairman of the Council, can participate in only those meetings at which matters relevant to the members concerned are discussed may be divided in the process of the designation or commission.
(4)The meeting of the Council shall pass a resolution with the attendance of a majority of the members who can participate in the meeting concerned in accordance with the provisions of paragraph (3), and the approval of a majority of the attending members.
(5)Necessary matters concerning the operation of the Council other than those prescribed in paragraphs (1) through (4) shall be determined by the Mayor/Do governor through the resolution of the Council.

Article 24 (Treatment of Civil Petitions by Foreign Investors)
(1)The scope of the civil petitions to be directly treated, and the treatment period, as prescribed in Article 17 (2) and (5) of the Act shall be as shown in Table 1 of this Decree.
(2)The treatment period for the civil petitions to be treated in bulk and the civil petitions to be individually treated as prescribed in Article 17 (5) of the Act shall be as follows:
1.For the civil petitions to be treated in bulk: The period shown in Table 2 of this Decree: Provided, That where civil petitions which concern the permission on the right column of Table 1 of the Act are individually received, the treatment period as prescribed by the relevant Acts and subordinate statutes; and
2.For the civil petitions to be individually treated: The treatment period as prescribed by the relevant Acts and subordinate statutes.
(3)Where the head of a civil petitions treatment agency, having received civil petitions to be treated in bulk, has requested consultation with the head of the relevant agency in accordance with the provisions of Article 17 (4) of the Act, the head of the relevant agency shall submit his opinions to the head of the civil petitions treatment agency by one day before the last day of the treatment period as shown in Table 2 of this Decree (where the treatment period as shown in Table 2 exceeds seven days, by two days before the last day of the treatment period).
(4)The starting day of reckoning the treatment period as prescribed in paragraphs (1) and (2) shall be the day of the receipt of the civil petition concerned by the head of the civil petitions treatment agency or the dispatched officer concerned.
(5)The term “other permission as prescribed by the Presidential Decree” in Table 2 of the Act shall mean the business matters of civil petitions as shown in Table 3 of this Decree.
(6)Where the head of a civil petitions treatment agency or a dispatched officer makes notification of his refusal to grant permission in accordance with the latter part of Article 17 (5) of the Act, he shall explicitly indicate the reasons and the legal foundations for the refusal.
(7)The term “period as prescribed by the Presidential Decree” in the former part of Article 17 (7) of the Act shall mean three days.
(8)Where the head of a civil petitions treatment agency grants permission with conditions attached in accordance with the provisions of Article 17 (10) of the Act, he shall attach the condition that insufficient points be supplemented no later than the time as prescribed by one of the following subparagraphs:
1.For permission as prescribed in subparagraph 1 or 2 of Table 1 of the Act: The time of the application for the construction permission (where construction permission is considered to be granted, the time of the report on the starting of the construction);
2.For permission as prescribed in subparagraph 3 of Table 1 of the Act: The time of the report on the starting of the construction;
3.For permission as prescribed in subparagraph 4 of Table 1 of the Act: The time of the report on the starting of the operation; and
4.For permission as prescribed in subparagraph 5 of Table 1 of the Act: The time of the registration into the constructions ledger.
(9)Where the person who receives permission with conditions attached in accordance with the provisions of Article 17 (10) of the Act makes an application for permission as prescribed by one of subparagraphs of paragraph (8), he shall submit to the head of the civil petitions treatment agency a written confirmation that he has completed the implementation of the conditions mentioned above.
(10)Deleted.
(11)Where a reasonable and objective ground has been deemed to exist for not being able to properly treat civil petitions within the treatment period as prescribed in paragraph (1) or (2), the head of the civil petitions treatment agency concerned may extend the treatment period only once. In this case, the head of the civil petitions treatment agency shall determine the extended treatment period anticipated to be necessary for proper treatment, and notify the applicant for the permission concerned (where the application for permission has been vicariously done by the Investment Support Center, the head of the Investment Support Center) of the extended treatment period and the reasons for the extension of the treatment period, and where the head of the Investment Support Center has received the notification, he shall, without delay, notify the original applicant for the permission concerned of the contents of the said notification.
(12)Where supplement or correction has been deemed necessary with respect to the contents of the application for the treatment of civil petitions to be treated in bulk, civil petitions to be individually treated, or civil petitions to be directly treated as prescribed in Article 17 of the Act, the head of the civil petitions treatment agency concerned or the dispatched officer concerned may determine the period for the supplement or correction and request the person concerned to supplement or correct within the said period. In this case, the period consumed for the supplement or correction shall not be included in the treatment period as prescribed in paragraphs (1) and (2).
(13)Except where otherwise provided in the Act or this Decree, the treatment of civil petitions which concern foreign investment shall be governed by the Civil Petitions Treatment Act.



CHAPTER IV FOREIGN INVESTMENT ZONE


Article 25 (Designation of Foreign Investment Zone)
(1)In case where the Mayor/Do governor intends to designate a zone of Article 18 (1) 1 of the Act pursuant to the fore part of the same paragraph as foreign investment zone, he shall set up a designation plan including the matters of following subparagraphs and submit it to the Minister of Commerce, Industry and Energy:
1.Location and extent of foreign investment zone;
2.Name and purpose of designation of foreign investment zone;
3.Period and method of development of foreign investment zone;
4.Qualification for occupant enterprise and principal category of business to attract;
5.Business operator and administration agency;
6.Method of business operation; and
7.Land utilization plan and principal infrastructure installation plan.
(2) The Mayor/Do governor shall announce the matters of the following subparagraphs when he has designated the zone of Article 18 (1) 1 of the Act as foreign investment zone pursuant to the fore part of paragraph (1) of the same Article:
1.Name and purpose of designation of foreign investment zone;
2.Period and method of development of foreign investment zone;
3.Qualification for occupant enterprise and principal category of business to attract; and
4.Method of public reading of the relevant drawing and document.
(3)The term “foreign investment which meets the criteria as prescribed by the Presidential Decree” in Article 18 (1) 2 of the Act shall mean a foreign investment which falls under any of the following subparagraphs. In this case, in computing the foreign investment amount, the portion corresponding to the owning rate as computed by the calculation methods
under Article 116-2 (11) and (12) of the Enforcement Decree of the Restriction of Special Taxation Act, shall not be counted in the foreign investment amount in the case of the foreign corporation whose stocks or equity shares are directly or indirectly owned by Korean citizens (excluding the persons falling under the provisions of Article 3) or Korean corporations:
1.Where the amount of foreign investment is not less than thirty million U.S. dollars and the plant facilities needed for running a manufacturing business or a business under the provisions of Article 116-2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act are newly installed;
2.Deleted;
2-2.Where the amount of foreign investment is not less than twenty million U.S. dollars and the facilities needed for running a business falling under any of the following items are newly installed;
(a)A tourist hotelkeeping business and a floating tourist hotelkeeping business as prescribed in Article 2 (1) 2 (a) and (b) of the Enforcement Decree of the Tourism Promotion Act;
(b)A universal recreation business as prescribed in Article 2 (1) 3 (b) of the Enforcement Decree of the Tourism Promotion Act, and a universal amusement facility business as prescribed in subparagraph 5 (a) of the same Article; and
(c)International conference facilities as prescribed in subparagraph 3 of Article 2 of the International Conference Industry Promotion Act;
3.Where the amount of foreign investment is not less than ten million U.S. dollars and the facilities needed for the running of a business falling under any of the following items are newly installed:
(a) A combined cargo terminal business as provided in subparagraph 8-2 of Article 2 of the Goods Distribution Promotion Act;
(b) A business of creating and operating a joint collection and delivery complex as provided in subparagraph 15 of Article 2 of the Distribution Industry Development Act;
(c) A business of operating harbor facilities as provided in subparagraph 6 of Article 2 of the Harbor Act. and a physical distribution business as provided in Article 5 (8) of the Enforcement Decree of the Restriction of Special Taxation Act which is run within harbor background complexes as provided in subparagraph 7 of the same Article;
(d) A business of operating airport facilities as provided in subparagraph 6 of Article 2 of the Aviation Act, and a physical distribution industry as provided in Article 5 (8) of the Enforcement Decree of the Restriction of Special Taxation Act which is operated within the airport zone as provided in subparagraph 7 of Article 2 of the same Act; and
(e) A business of creating infrastructure facilities (limited to revertible facilities as provided in subparagraph 3 of Article 2 of the Act on Private Participation in Infrastructure) by implementing a private investment project as provided in subparagraph 5 of Article 2 of the same Act; and
4.Where a research facility is newly installed or added in order to perform research and development activities for a business under Article 116-2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act (hereafter in this subparagraph referred to as the “business”), which satisfies the requisites falling under each of the following items:
(a) The amount of foreign investment shall be not less than 5 million U.S. dollars; and
(b) The scale of the regular employment of the manpower exclusively charged with research having a degree of master or higher related with the business and a three-year or more research career shall be not less than ten persons.
(4)“The standards as prescribed by the Presidential Decree” as referred to in Article 18 (2) of the Act shall mean all the matters of the following subparagraphs:
1.The total sum of the amount invested by 2 or more foreign investors shall be US$30,000,000 or more;
2.The category of business or business being operated shall fall under the category of business or business pursuant to the provisions of subparagraphs of (3); and
3.The facility pursuant to the provisions of subparagraphs of paragraph (3) shall be installed within the same national or local industrial complex, or adjacent thereto.
(5)Where the Mayor/Do governor intends to designate a zone of Article 18 (1) 2 of the Act as foreign investment zone in accordance with the provisions of fore part of paragraph (1) of the same Article, he shall draw up a designation plan (refers to the development plan pursuant to the hind part of Article 18 (1) of the Act, where the foreign investment zone concerned is developed into a local industrial complex. The same shall apply hereinafter) which includes matters falling under the following subparagraphs, and submit it to the Minister of Commerce, Industry and Energy: Provided, That where all or part of a national industrial complex or local industrial complex whose development is already completed, is to be designated as a foreign investment zone, matters prescribed in subparagraphs 8 through 12 may be omitted:
1.Title, location, and area of the foreign investment zone;
2.Method of development or management of the foreign investment zone;
3.Content of investment, scale of employment, and content of business of the foreign-capital invested company to move into the foreign investment zone;
4.Possibility of fulfillment of foreign investment liable for inducement activity;
5.Cost and expected effect of designation of foreign investment zone;
6.Fund-raising plan;
7.Support plan for principal facilities to the foreign investment zone;
8.Operator of development project;
9.Method and period of execution of the development project;
10.Land utilization plan and principal infrastructure installation plan;
11.Where there exists land, buildings, other objects or rights which are to be expropriated or used, the itemized contents thereof;
12.Materials for examination of environmental effect as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy; and
13.Such other matters as determined by the Commission.
(6)Where the Mayor/Do governor intends to draw up the designation plan as prescribed in paragraph (3), he shall hear the opinions of the relevant head of Si/Gun/Gu, residents, and experts.
(7)The Commission shall deliberate, on the basis of the designation plan, on the desirability of the designation, comprehensively considering effects on the national economy such as the feasibility of the foreign investment subjected to the on-going inducement activity, balanced regional development, the efficient utilization of the national territory, and the increase of employment.
(8)Where the designation has not been deemed necessary as a result of the deliberation under paragraph (5), the Mayor/Do governor shall not designate the region concerned as a foreign investment zone.
(9) Foreign-capital invested companies shall, in accordance with the designation plan under the provisions of paragraph (5), satisfy the criteria under paragraphs (3) and (4) within 5 years from the date of public notice under Article 18 (3) of the Act.
(10)The Mayor/Do governor shall develop the foreign investment zone concerned in accordance with the designation plan having been deliberated by the Commission, and where the Mayor/Do governor intends to alter the matters as determined by the Ordinance of the Ministry of Commerce, Industry and Energy in the designation plan, he shall go through the prior deliberation of the Commission.
(11)Necessary matters concerning the designation and development of a foreign investment zone other than those as prescribed in paragraphs (1) through (10) shall be determined by the Commission.

Article 26 (Management of Foreign Investment Zones)
(1)The agency in charge of the management of foreign investment zone (hereafter in this Article, referred to as “management agency”) pursuant to the provisions of Article 18 (4) of the Act shall manage the foreign investment zone in accordance with the designation plan prescribed by Article 25 (1) and (5).
(2)The management agency, which manages foreign investment zone in accordance with the provisions of paragraph (1), shall take into account preferentially the convenience of the foreign investors or foreign-capital invested companies and shall positively endeavor to render support for securing various infrastructures needed for supporting the business of the foreign-capital invested companies in the zone, such as financial institutions, information and communication facilities, and goods distribution facilities, as well as support for securing medical facilities, educational facilities, and housing.
(3)Matters necessary for the management of a foreign investment zone other than those provided in paragraphs (1) and (2) shall be determined by the Commission.

Article 26-2 (Cancellation of Designation of Foreign Investment Zone)
(1) The Mayor/Do governor shall, in case where a zone of Article 18 (1) 2 of the Act designated as foreign investment zone pursuant to the fore part of paragraph (1) of the same Article comes not to satisfy the designation criteria under the provisions of Article 25, order the foreign-capital invested company to equip itself with the criteria with fixing a specified period within the scope of 6 months (hereinafter referred to as the “implementation period”) pursuant to the provisions of Article 18-2 of the Act: Provided, That the Mayor/Do governor may, in case where deemed that the foreign-capital invested company has an inevitable ground, extend the relevant period only once within the scope not exceeding the initial implementation period.
(2) The Mayor/Do governor shall, in case where the foreign-capital invested company has failed to satisfy the designation criteria within the implementation period, request the Commission within 30 days to deliberate on the cancellation of the designation.
(3) Matters necessary for the cancellation of designation of a foreign investment zone other than those provided in paragraphs (1) and (2) shall be determined by the Commission.
[This Article Newly Inserted by Presidential Decree No. 17135, Feb. 24, 2001]



CHAPTER V FOLLOW-UPMANAGEMENT OF FOREIGN INVESTMENT


Article 27 (Procedures for Registration of Foreign-Capital Invested Company)
(1)In accordance with the provisions of Article 21 of the Act, a foreign investor or a foreign-capital invested company shall file the registration of the foreign-capital invested company with the Minister of Commerce, Industry and Energy within thirty days from the day on which the relevant cause for registration occurs.
(2)Where a foreign-capital invested company registered in accordance with the provisions of paragraph (1) falls under any of the following subparagraphs, it shall finish the alteration registration of the foreign-capital invested company within thirty days from the day on which a cause for the alteration registration has occurred:
1.Where it has done the report on the acquisition of stocks occasioned by a merger in accordance with the provisions of Article 7 of the Act;
2.Where it has done the report in accordance with the provisions of Article 23 (1) of the Act, and has completed the conveyance or decrease of the stocks;
3.Where the trade name or title of the foreign-capital invested company has been changed; and
4.Where an alteration has been made with respect to the subject matter as prescribed in any subparagraph of Article 6.

Article 28 (Application for Registration Cancellation)
(1) Where a foreign investor comes to fall under the provisions of Article 21 (3) 1 through 3 of the Act or the provisions of Article 30 (2) of this Decree, he may make an application for registration cancellation to the Minister of Commerce, Industry and Energy in accordance with the provisions of Article 21 (3) 4 of the Act.
(2) The date of cessation of the business of the foreign-capital invested company under Article 21 (3) 1 of the Act shall be the date of cessation of business which is reported under Article 5 (4) of the Value-Added Tax Act.

Article 29 (Restrictions on Disposal of Capital Goods)
(1)The term “cases as prescribed by the Presidential Decree” in the provisions of Article 22 (1) of the Act shall mean where the capital goods which had been introduced into this nation with their customs duties exempted in accordance with the provisions of Article 121-3 (1) of the Restriction of Special Taxation Act were disposed of or used after the expiration of five years from the day of the receipt of the importation report as prescribed by the Customs Act.
(2)The term “cases which meet the criteria prescribed by the Presidential Decree” in the provisions of Article 22 (3) of the Act shall mean cases which fall under any of the following subparagraphs:
1.In a case which falls under the provisions of Article 22 (3) 1 of the Act, where the ratio of foreign investment is under 10/100; and
2.In a case which falls under the provisions of Article 22 (3) 2 of the Act, where it falls under one of the following items:
(a)Where a company whose ratio of foreign investment is under 50/100 and whose largest stockholder is not a foreign investor (including persons of special relationship as prescribed in Article 7 (1)) acquires the stocks of a domestic company;
(b)Where a foreign-capital invested company of financial business or insurance business, all or part of whose business activities consist of the acquisition of the stocks of other companies, acquires the stocks of other companies in accordance with the provisions of other Acts and subordinate statutes; and
(c)Where not more than 10/100 of the total number of the stocks issued by, or the total equity investment of a domestic company is acquired.
(3)The Commissioner of the National Tax Administration and the Commissioner of the Korea Customs Service shall examine whether a foreign-capital invested company has violated the provisions of Article 22 (1), (3) or (4) of the Act with respect to business matters which fall under their jurisdiction, and make a report on the result of the examination to the Minister of Commerce, Industry and Energy.

Article 30 (Conveyance of Stocks)
(1)A foreign investor who intends to make the report on the conveyance of stocks in accordance with the provisions of Article 23 (1) of the Act shall make the report to the Minister of Commerce, Industry and Energy within thirty days from the day falling under any of the following subparagraphs:
1.Where the stocks are to be conveyed, the day on which the conveyance contract is concluded; and
2.Where the capital is to be decreased, the day on which the period of peremptory notice to the creditor expires as prescribed in Article 439 of the Commercial Act.
(2)Where a foreign investor has come not to hold any of the stocks he previously held because he has conveyed all of the stocks held by himself to a Korean citizen or corporation or because the foreign-capital invested company concerned has decreased its capital, the Minister of Commerce, Industry and Energy shall cancel the registration of the foreign-capital invested company concerned as prescribed in Article 21 (1) of the Act.
(3)Where a foreigner takes over from a foreign investor the stocks of a foreign-capital invested company, and where the foreign investor concerned has made the report as prescribed in paragraph (1) above, the report as prescribed in Article 7 (1) 3 of the Act shall be regarded as having been made.
(4)Where the Minister of Commerce, Industry and Energy has received the report on the conveyance or the decrease of the stocks from a foreign investor in accordance with the provisions of paragraph (1) above, he shall, without delay, notify the Commissioner of the National Tax Administration, the Commissioner of the Korea Customs Service, or the head of the local government concerned of the contents of the report.



CHAPTER VI CONTRACTSFORINTRODUCTIONOF TECHNOLOGY


Article 31 (Scope of Technology Introduction Contracts Required to be Reported)
(1)The scope of technology introduction contracts required to be reported in accordance with the provisions of Article 25 (1) of the Act shall be limited to contracts, whose contract period or payment period with respect to the compensation for the introduction of the technology concerned is not less than one year, and which fall under any of the following subparagraphs:
1.A contract needed for the introduction into this nation of the kind of high technology which is absolutely necessary for the strengthening of international competitiveness of domestic industries under Article 121-6 (1) of the Restriction of Special Taxation Act, and which is eligible for making the application for the exemption from taxes to the Minister of Finance and Economy;
2.A contract needed for the introduction of technology which concerns aircraft, spacecraft (including the ground support facilities), and their parts, as prescribed in subparagraphs 2 and 3 of Article 2 of the Aerospace Industry Development Promotion Act; and
3.A contract needed for the introduction of technology which concerns defense products as prescribed in Article 4 (2) 1, 2, 4, 6, 7 and 10 of the Act on Special Measures for Defense Industry.
(2)Where the period of a contract which has already entered into force, is to be extended, the calculation of the period in the main sentence of paragraph (1) above shall be made by adding the period of the original contract and the period of the extended contract.

Article 32 (Procedures for Report on Contract for Introduction of Technology)
The term “period as prescribed by the Presidential Decree” in the provisions of Article 25 (2) of the Act shall mean “immediately”: Provided, That where the application for the exemption from taxes is made under Article 121-6 of the Restriction of Special Taxation Act at the time of reporting on the contract for the introduction of technology, it shall mean seven days.

Article 33 Deleted.




CHAPTER VII SUPPLEMENTARY PROVISIONS


Article 34 (Operation of Foreign Investment Commission)
(1)Deleted.
(2)The chairman of the Commission (hereinafter referred to as the “Chairman”) shall exercise general control over the business affairs of the Commission, represent the Commission, and convene and preside over the meeting of the Commission. Where the Chairman is unable to discharge his duties for an unavoidable reason, a member of the Commission as designated by the Chairman shall perform such duties on behalf of the Chairman.
(3)The president of the Korea Trade-Investment Promotion Agency, the head of the grievance settlement organ, the foreign investment ombudsmen and the project managers may attend the meetings of the Commission and state their opinions.
(4)The meeting of the Commission shall be held with the attendance of a majority of the members who are entitled to participate in the meeting concerned, and it shall pass resolutions with the approval of a majority of the members present.
(5)The Commission may, if deemed necessary, have the person concerned state his opinions.
(6)Where the Chairman convenes a meeting of the Commission, he shall notify each member of the Commission of the date and time, place, and purpose of the meeting no later than three days before the beginning of the meeting: Provided, That this shall not apply in an emergency.
(7)The Commission shall have a secretary for the treatment of its administrative affairs, and the secretary shall be appointed by the Chairman of the Commission from among the public officials of the Ministry of Finance and Economy.

Article 35 (Composition, and Operation of Foreign Investment Working Committee)
(1)The Vice-Minister of Commerce, Industry and Energy shall be the Chairman of the Working Committee, and the persons of the following subparagraphs shall be the members thereof:
1.A person designated, upon the request of the Minister of Commerce, Industry and Energy, by the head of the concerned Ministry or agency from among the public officials of Grade Ⅰin the Ministry of Commerce, Industry and Energy and other relevant Ministries or agencies;
2.A Vice-Mayor or vice-governor of the relevant City/Do and a person commissioned by the Chairman from among persons with extensive experience and knowledge in the field of the business matters of foreign investment; and
3.The head of the Investment Support Center, the head of the grievance settlement organ and the foreign investment ombudsmen.
(2)Deleted.
(3)The Working Committee shall have a secretary for the treatment of its administrative affairs, and the secretary shall be appointed by the Chairman of the Working Committee from among the public officials under the jurisdiction of the Ministry of Commerce, Industry and Energy.
(4)The Commission shall install, under the jurisdiction of the Working Committee, a Foreign Investment Inducement Subcommittee with a member of the Working Committee of the Ministry of Commerce, Industry and Energy as its Chairman, for the integration and management of foreign investment inducement situations, the encouragement and verification of the treatment of civil petitions concerning foreign investment, and the examination of the agenda of the Working Committee concerning foreign investment inducement activities.
(5)Necessary matters concerning the operation of the Commission, the Working Committee, and the Subcommittee other than those as prescribed in this Decree shall be determined by the Chairman of the Commission through the resolution of the Commission.

Article 36 (Report on Materials concerning Present Situation of Foreign Investment)
(1)The President of the Bank of Korea shall integrate the current situation of the outflow and inflow of foreign investment funds and the current payment status of prices for technology introduction according to the contract for the introduction of technology under Article 25 of the Act each month, and shall report on the result of the integration to the Minister of Commerce, Industry and Energy no later than the 10th of the following month.
(2)The Minister of Commerce, Industry and Energy shall periodically gather the materials concerning the current situation of foreign investment and foreign-capital invested companies and send the materials to agencies related to foreign investment inducement.

Article 37 (Disposal of Capital Goods)
(1)Where the collector of a customs house intends to dispose of capital goods in accordance with the provisions of Article 28 (5) of the Act, he shall submit the list of the capital goods to be disposed of to the Minister of Commerce, Industry and Energy via the Administrator of the Korea Customs Service.
(2)The Minister of Commerce, Industry and Energy may, after consulting with the head of the relevant agency, request the collector of a customs house to postpone the disposal as prescribed in paragraph (1) above. In this case, the request to the collector of a customs house shall be made within twenty days from the day on which the list of the capital goods concerned is submitted.
(3)Where no request for the postponement has been made within the period as prescribed in the latter part of paragraph (2) above, the collector of the customs house concerned shall dispose of the capital goods concerned and report to the Minister of Commerce, Industry and Energy.

Article 38 (Examination and Confirmation of Capital Goods Introduced)
(1)The term “capital goods which meet the criteria as prescribed by the Presidential Decree” in the provisions of Article 29 (1) of the Act shall mean those falling under any of the following subparagraphs:
1.Capital goods which must be subjected to the exemption from the customs duties, special consumption tax, and value-added tax in accordance with the provisions of Article 121-3 (1) of the Restriction of Special Taxation Act;
2.Capital goods introduced into this nation by a foreign investor as the object of his investment; and
3.Capital goods introduced into this nation by investment of foreign payment instruments in a foreign-capital invested company by a foreign investor or investment of the domestic payment instruments into which the foreign payment instruments have been exchanged, and which fall under any of the following items:
(a)Used capital goods; and
(b)Capital goods which belong to the objects designated and publicly announced by the Minister of Commerce, Industry and Energy in accordance with the provisions of Article 25 of the Enforcement Decree of the Foreign Trade Act.
(2)A person who intends to introduce into this nation capital goods as prescribed in any of the subparagraphs of paragraph (1) above shall draw up a written specification of the objects to be introduced, which includes such information as the quantities, standard sizes, and prices, and manufacturers of the capital goods to be introduced, and apply for their examination and confirmation by the competent Minister before their shipment.

Article 39 (Confirmation of Completion of Investment in Kind)
(1)Where the Commissioner of the Korea Customs Service has confirmed the completion of the investment in kind in accordance with the provisions of Article 30 (3) of the Act, he shall, without delay, notify the President of the Bank of Korea.
(2)The term “technology evaluation agency as prescribed by the Presidential Decree” in the provisions of Article 30 (4) of the Act shall mean evaluation agencies as prescribed in Article 4 (4) of the Enforcement Decree of the Act on Special Measures for Promotion of Venture Businesses.

Article 40 (Delegation or Entrustment of Authority)
(1)In accordance with the provisions of Article 31 of the Act, the Minister of Commerce, Industry and Energy shall delegate or entrust his authority according to the following differentiations:
1.Authority concerning the report on the contract for the introduction of technology as prescribed in Article 25 (1) through (3) of the Act shall be entrusted to the competent Minister;
2.Authority as prescribed in Article 28 (2) of the Act concerning the examination of whether the provisions of Article 22 (1) of the Act have been violated shall be delegated to the Administrator of the Korea Customs Service;
3.Authority as prescribed in Article 28 (2) of the Act concerning the examination of whether the provisions of Article 22 (3) and (4) of the Act have been violated shall be delegated to the Commissioner of the National Tax Administration; and
4.Authority as prescribed in Article 28 of the Act other than those as prescribed in subparagraphs 2 and 3 above concerning the examination of the implementation situation of the contents of the permission for or report by foreigners, foreign investors, foreign-capital invested companies and introducers of technology, and concerning the correction order shall be delegated or entrusted to the competent Minister, the Commissioner of the National Tax Administration or the Commissioner of the Korea Customs Service, in view of the nature of their duties and the matter under consideration.
(2)In accordance with the provisions of Article 31 of the Act, the Minister of Commerce, Industry and Energy may entrust his authority falling under any of the following subparagraphs to the president of the Korea Trade-Investment Promotion Agency (including the heads of the trade-centers, branches and offices designated by the president of the Korea Trade-Investment Promotion Agency; hereinafter the same shall apply) and the head of the foreign exchange bank (including the heads of such branches of the foreign exchange bank as designated by the head of the foreign exchange bank; hereinafter the same shall apply):
1.The receipt of the report and the alteration report on foreign investment and the issuance of the certificate of completed report as prescribed in Articles 5 through 8 of the Act;
2.The registration and cancellation of the registration of foreign-capital invested companies as prescribed in Article 21 of the Act (excluding any case prescribed in Article 21 (3) 2 of the Act);
3.The receipt of the report on the conveyance of capital goods as prescribed in Article 22 (1) of the Act; and
4.The receipt of the report on the conveyance of the stocks and the cancellation of the registration as prescribed in Article 30.
(3)The competent Minister shall entrust the business matters concerning the examination and confirmation as prescribed in Article 38 (2) to the head of the foreign exchange bank and the head of the Korea Trade-Investment Promotion Agency.
(4)The Mayor/Do governor may, pursuant to the provisions of Article 31 of the Act, delegate the management business pursuant to the provisions of Article 18 (4) of the Act to the Korea Industrial Complex Corporation pursuant to the provisions of Article 45-3 of the Industrial Cluster Development and Factory Establishment Act. In this case, the Mayor/Do governor may set up the detailed matters necessary for the handling of entrusted matters.
(5)Those who have been delegated or entrusted in accordance with the provisions of paragraphs (1) and (2) shall inform or report how they have handled the delegated or entrusted matters to the Minister of Commerce, Industry and, Energy, those who have been entrusted pursuant to the provisions of paragraph (3) to the concerned Minister, and those who have been entrusted pursuant to the provisions of paragraph (4) to the Mayor/Do governor.
(6)The Minister of Commerce, Industry and Energy may determine such detailed matters as needed with respect to the treatment of the matters delegated or entrusted in accordance with the provisions of paragraphs (1) through (3) above.



CHAPTER VIII FINE FOR NEGLIGENCE


Article 41 (Procedure of Imposition and Collection of Fine for Negligence)
(1)When a fine for negligence is imposed pursuant to the provisions of Article 37 (2) of the Act, the relevant violation shall be inspected and confirmed, and then the person liable for the disposition of fine for negligence shall be informed to pay with the detail of violation and amount of fine for negligence, etc. described clearly in writing.
(2)When the Minister of Commerce, Industry and Energy intends to impose a fine for negligence pursuant to the provisions of paragraph (1), he shall fix a period of 10 days or longer and give the person liable for the disposition of fine for negligence an opportunity to express his opinion orally or in writing (including an electronic document). In this case, if no opinion is heard within the period, it is deemed that there is no opinion at all.
(3)In deciding the amount of fine for negligence, the Minister of Commerce, Industry and Energy shall consider the motive, result, etc. of the violation concerned.
(4) The procedure of collection of fine for negligence shall be prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy.
[This Article Newly Inserted by Presidential Decree No. 18662, Dec. 31, 2004]



ADDENDA


Article 1 (Enforcement Date)
This Decree shall enter into force on November 17, 1998.

Article 2 (Repeal of Other Acts and Subordinate Statutes)
The Enforcement Decree of the Foreign Investment and Foreign Capital Inducement Act is hereby repealed.

Article 3 (Applicable Cases for Designation of Foreign Investment Zone)
(1)The provisions of Article 25 (1) 1 (d) and 2 shall apply to foreign investments reported on or after the date this Decree enters into force.
(2)The application of the provisions of Article 25 (1) 2 shall be limited to foreign investments which will have been reported by December 31, 2003, and which will have completed the payment of the objects of the investments by December 31, 2005.

Article 4 (Transitional Measures concerning Public Notice of Provisions concerning Restrictions on Foreign Investment)
Notwithstanding the provisions of Article 5 (2), the head of the relevant administrative agency shall notify the Minister of Finance and Economy of the contents of the provisions restricting foreign investment within one month after this Decree enters into force, and the Minister of Finance and Economy shall integrate the notified contents and make public notice of the integrated contents within two months after this Decree enters into force.

Article 5 (Relationship with Other Acts and Subordinate Statutes)
Where other Acts and subordinate statutes contain, at the time when this Decree enters into force, a quotation of such provisions as related to foreign investment from among the Enforcement Decree of the Foreign Investment and Foreign Capital Inducement Act and the Enforcement Decree of the Foreign Capital Inducement Act, and where there are provisions corresponding to the quoted ones in this Decree, those Acts and subordinate statutes shall be regarded as having quoted the corresponding provisions of this Decree.



ADDENDA


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

Articles 2 through 5 Omitted.

_____
SeanHayes@ipglegal.com























ADDENDUM


This Decree shall enter into force on the date of its promulgation.



ADDENDA


(1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.
(2) (Applicable Cases for Designation of Foreign Investment Zone)The amendments to Article 25 (1) 2 shall apply to foreign investments with respect to which the designation plan is submitted in accordance with Article 25 (2) on or after the date this Decree enters into force.



ADDENDUM


This Decree shall enter into force on the date of its promulgation: Provided, That the amendments to the proviso of Article 2 (2) shall enter into force three months after the date of its promulgation.



ADDENDA


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

Articles 2 through 7 Omitted.




















ADDENDA


(1) (Enforcement Date) This Decree shall enter into force on January 1, 2002.
(2) (Applicable Cases for Rental Fee of State or Public Property) The amendments to Article 19 (3) shall apply to foreign investments reported on or after the date this Decree enters into force.
(3) (Applicable Cases for Requirements for Designation of Foreign Investment Zone) The amendments to Article 25 (1) 1 through 3 shall apply to foreign investments reported on or after the date this Decree enters into force.



ADDENDA


(1) (Enforcement Date) This Decree shall enter into force on July 27, 2002.
(2) and (3) Omitted.





ADDENDA


(1) (Enforcement Date) This Decree shall enter into force on January 1, 2003.
(2) (Applicable Examples to Designation of Foreign Investment Zone) The amended provisions of Article 25 (1) 1 (a) and 4 shall start to apply to the foreign investment reported on and after the date when this Decree enters into force.



ADDENDA


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

Articles 2 through 6 Omitted.











ADDENDA


(1)(Enforcement Date) This Decree shall enter into force on the date of its promulgation: Provided, That the amended provisions of Article 25 (1) 3 (b) shall enter into force on February 1, 2004.
(2)(Applicable Examples of Reduction of or Exemption from Rent Fee for Foreign-Capital Invested Company) The amended provisions of Article 19 (4) 2 shall start to apply to the application for reduction of or exemption from the rental fee filed for the first time after the enforcement of this Decree.
(3)(Applicable Examples of Foreign Investment Zone) The amended provisions of Article 25 shall start to apply to the foreign investment reported for the first time after the enforcement of this Decree.



ADDENDA


Article 1 (Enforcement Date)
This Decree shall enter into force on March 30, 2004.

Articles 2 through 4 Omitted.











ADDENDUM


This Decree shall enter into force on Jan. 1, 2005.



ADDENDA


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

Articles 2 through 5 Omitted.


_____
SeanHayes@ipglegal.com