FOREIGN INVESTMENT PROMOTION ACT INTRODUCTION Details of Enactment and Amendment ¡Ü 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. ¡Ü Amendment: This Act has taken its present form after going through fifteen amendment since its enactment. And such amendment to this Act has not included the matters concerning tax benefit subject to the separate stipulation of the Restriction of Special Taxation in connection with the amendment of the Government Organization Act (on May 24, 1999) following the alteration of government organization. Main Contents ¡Ü The investment by foreigners is changed to be made by means of reporting. Accordingly, any foreigner who intends to make an investment in any corporation of the Republic of Korea shall make a report thereon to the Minister of Finance and Economy, who, in turn, shall without delay deliver a certificate of completion of report to the foreigner. ¡Ü The objects which may be invested by a foreigner include cash, capital goods, industrial property rights, immovables, stocks and intellectual property rights, etc. ¡Ü State owned or public properties may be leased or sold to foreign capital invested companies by contract ad libitum, and for a lease of a state owned or public property, the term of the lease can be up to fifty years. ¡Ü 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. ¡Ü Korea Investment Service Center is established at the Korea Trade and Investment Promotion Agency to provide comprehensive supportive services such as investment consultation for foreign investors and foreign capital invested companies and representation in civil petition related affairs. ¡Ü Mayors and 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. Sep. 16, 1998 Act No. 5559 Amended by Jan. 21, 1999 Act No. 5654 Feb. 5, 1999 Act No. 5758 Feb. 8, 1999 Act No. 5827 Feb. 8, 1999 Act No. 5893 Feb. 8, 1999 Act No. 5911 Feb. 8, 1999 Act No. 5914 May 24, 1999 Act No. 5982 Dec. 31, 1999 Act No. 6095 Jan. 21, 2000 Act No. 6193 Dec. 29, 2000 Act No. 6317 Jan. 29, 2001 Act No. 6406 Mar. 28, 2001 Act No. 6452 Apr. 7, 2001 Act No. 6460 Jan. 26, 2002 Act No. 6642 Jan. 26, 2002 Act No. 6643 CHAPTER I GENERAL PROVISIONS ¡á Article 1 (Purpose) The purpose of this Act is to promote foreign investment in this nation by providing incentives and inducements with the ultimate view of contributing to the sound development of this nation's economy. ¡á 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 foreign nationality, a corporation established in accordance with any relevant foreign Act (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 any relevant Act of the Republic of Korea; 4. The term "foreign investment" shall refer to any of the following; (a) Where a foreigner purchases, under the conditions prescribed by the Presidential Decree, stocks or holdings (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 relationship with and participating in the management of said Korean corporation or company; (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 said holding company of the capital investment prescribed by the Presidential Decree; 5. The term "foreign investor" shall refer to a foreigner who is in possession of stocks, under the conditions prescribed by this Act; 6. The term "foreign-capital invested company" shall refer to a company a foreign investor has financed; 7. The term "object of investment" shall refer to that which a foreign investor invests in order to possess stocks pursuant to this Act and which falls under any 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 said foreign means of payment; (b) Capital goods; (c) Proceeds accruing from those stocks which are acquired pursuant to this Act; (d) Industrial property rights, intellectual property rights as prescribed by the Presidential Decree, technologies corresponding thereto, or any other right pertaining to the use of such rights or technologies; (e) Where a foreigner closes his own branch company or office located in the Republic of Korea and converts it into a corporation of the Republic of Korea, or where any other corporation of the Republic of Korea whose stocks are possessed by the foreigner is dissolved, the residual property allotted to said foreigner upon the liquidation of that branch company or office or any other such corporation; (f) Amount of redemption of either loans as prescribed in subparagraph 4 (b) or other loans from foreign countries; (g) Stocks as prescribed by the Presidential Decree; (h) Immovables located in the Republic of Korea; or (i) Other domestic payment means as prescribed by the Presidential Decree; 8. The term "capital goods" shall refer to machinery, facilities, equipment, parts, accessories in the category of industrial facilities (including vessels, motor vehicles, aircraft, etc.), to raw materials for which reserve supply is 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, to livestock, breeds or seeds, trees, fish and shellfish which are necessary for the development of agriculture, forestry, and fisheries, and to fees for transportation and insurance, and acquiring or providing know-how or service; 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 properties 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 residenceship of a foreign country, the provisions of this Act concerning foreigners shall apply in addition to other provisions of this Act. ¡á 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 any relevant Act of the Republic of Korea, foreign investors and foreign-capital invested companies shall be treated the same way as nationals of the Republic of Korea and Korean corporations are treated in business operation. (3) Except as otherwise prescribed by any relevant Act of the Republic of Korea, the provisions concerning the reduction or exemption of taxes contained in other tax-related Acts 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. ¡á Article 4 (Liberalization of Foreign Investment) (1) Except as otherwise prescribed by any relevant Act 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 the investments 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 customs; and 3. Where it violates any relevant Act of the Republic of Korea. (3) The categories of business in which foreign investment is restricted in accordance with one of the subparagraphs of paragraph (2), and the contents of the restriction, shall be prescribed by the Presidential Decree. (4) Where any Act and subordinate statute or public notification other than this Act permits the head of the relevant administrative agency to restrict any foreign investment, including unfavorable treatment for foreigners or foreign-capital invested companies compared with Korean nationals or Korean corporations, or additional liabilities to foreigners or foreign-capital invested companies, the Minister of Commerce, Industry and Energy shall aggregate and publicly announce the contents thereof every year pursuant to the Presidential Decree. If the head of the relevant administrative agency intends to amend or supplement them, he shall, in advance, consult with the Minister of Commerce, Industry and Energy. CHAPTER II FOREIGN INVESTMENT PROCEDURES ¡á 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 corporation of the Republic of Korea (including that in the process of being established) or by a company run by a national of the Republic of Korea, the foreigner shall, in advance, make report to the Minister of Commerce, Industry and Energy in accordance with the Ordinance of the Ministry of Commerce, Industry and Energy. The same shall apply to any modification of matters as prescribed by the Presidential Decree, such as the amount of foreign investment and the ratio thereof (referring to the ratio of the stocks owned by foreign investors against the total stocks of a foreign-capital invested company; hereinafter the same shall apply), among those reported contents. (2) Where a report is made under paragraph (1), the Minister of Commerce, Industry and Energy shall, without delay, issue a certificate of acceptance of said report to the reporter. ¡á Article 6 (Foreign Investment by Means of Purchasing Existing Stocks) (1) Where a foreigner (including any specially related person as prescribed by the Presidential Decree; hereafter the same shall apply in this Article) intends to make an investment by means of purchasing stocks or shares which have already been issued by a company run by a national or corporation of the Republic of Korea (hereinafter referred to as the "existing stocks, etc."), the foreigner shall, in advance, make report to the Minister of Commerce, Industry and Energy in accordance with the Ordinance of the Ministry of Commerce, Industry and Energy. The same shall apply to any modification of matters as prescribed by the Presidential Decree, such as the amount and ratio of foreign investment, among those reported contents. (2) Where a report is made under paragraph (1), the Minister of Commerce, Industry and Energy shall, without delay, issue a certificate of acceptance of said report to the reporter. (3) Where a foreigner intends to make an investment by means of purchasing the existing stocks of any such defense industry company as prescribed by the Presidential Decree, he shall, in advance, obtain the permission of the Minister of Commerce, Industry and Energy in accordance with the Ordinance of the Ministry of Commerce, Industry and Energy notwithstanding the provisions of paragraph (1). The same shall apply to any modification of matters as prescribed by the Presidential Decree, such as the amount and ratio of foreign investment, among those permitted contents. (4) Where an application for permission under paragraph (3) is made, the Minister of Commerce, Industry and Energy shall determine whether or not to give the permission, and notify the applicant within any such period as prescribed by the Presidential Decree. (5) The Minister of Commerce, Industry and Energy shall, in advance, consult with the competent Minister before he determines whether or not to give the permission under paragraph (4). (6) The Minister of Commerce, Industry and Energy may, if deemed necessary, attach conditions to the permission under paragraph (4). (7) A person who acquires existing stocks in violation of the provisions of paragraphs (3) and (6) may not exercise any voting right accompanying them, and the Minister of Commerce, Industry and Energy may order such person to transfer the said existing stocks to a third party as prescribed by the Presidential Decree. (8) Necessary matters concerning the acquisition of existing stocks by a foreigner other than those prescribed in paragraphs (1) through (7) shall be prescribed by the Presidential Decree. ¡á Article 7 (Acquisition of Stocks by Means of Mergers) (1) Where a foreigner makes a foreign investment by means of any of the following, he shall make report to the Minister of Commerce, Industry and Energy: 1. Where a foreign investor has acquired stocks issued upon the capitalization of the provision or reevaluation reserve of the foreign-capital invested company in which he has been involved, or of reserve funds as prescribed in other Acts and subordinate statutes; 2. Where a foreign investor has acquired stocks, of a corporation which continues to exist or is newly established after the merger of a foreign-capital invested company in which he has been involved and another company, based on rights arising from ownership of the stocks of the foreign-capital invested company; 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 stocks which were acquired under the conditions as prescribed by any relevant Act; and 5. Where a foreigner has acquired stocks by the use of convertible bonds, exchangeable bonds, stock depositary receipts, and other similar bonds or deeds which may be converted into, used for the acceptance of, or exchanged for stocks. (2) Where a report is made under paragraph (1), the Minister of Commerce, Industry and Energy shall, without delay, issue a certificate of acceptance of said report to the reporter. ¡á Article 8 (Foreign Investment in Form of Long-Term Loan) (1) Where a foreigner intends to make a foreign investment as prescribed in Article 2 (1) 4 (b), he shall, in advance, make report to the Minister of Commerce, Industry and Energy in accordance with the Ordinance of the Ministry of Commerce, Industry and Energy. The same shall apply to any modification of matters as prescribed by the Presidential Decree, such as the introduction amount and conditions of loans, among those reported contents. (2) Where a report is made under paragraph (1), the Minister of Commerce, Industry and Energy shall, without daly, issue a certificate of acceptance of said report to the reporter. CHAPTER III MEASURES FOR SUPPORTING FOREIGN INVESTMENT ¡á Article 9 (Tax Reduction and Exemption with respect to Foreign Investments) With respect to foreign investments, taxes such as corporate tax, income tax, acquisition tax, registration tax, property tax and aggregate land tax may be reduced or exempted in accordance with the Restriction of Special Taxation Act. ¡á Articles 10 through 12 Deleted. ¡á Article 13 (Rental and Sale of State or Public Property) (1) Notwithstanding the relevant provisions of the State Properties Act and the Local Finance Act, the Minister of Finance and Economy, the Administrative Agency For State Properties, or the head of a local government may allow, by means of a contract ad libitum, a foreign-capital invested company to use, make profits from, rent (hereinafter referred to as "rental"), or buy land or factories owned by the central government or a local government, or other properties belonging to the State or the public (hereinafter referred to as "land"). (2) Where a foreign-capital invested company rents land owned by the central government or a local government 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 a foreign-capital invested company rents land owned by the central government or a local government 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 rented on the 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, with consideration given to 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 which has been rented 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 that wishes to purchase the land in accordance with the provisions of paragraph (1) is acknowledged to have difficulty making a lump-sum payment for the purchase price, the payment may be made in installments, under the conditions prescribed by the Presidential Decree, notwithstanding the provisions of Article 40 (1) of the State Properties Act and of Article 83 (2) of the Local Government Finance Act. (6) Where a foreign-capital invested company operating businesses prescribed by the Presidential Decree rents land owned by the central government that is classified in one of the following subparagraphs, the Minister of Finance and Economy or the Administrative Agency for State Properties may reduce or exempt, through consultation with the Minister of Commerce, Industry and Energy, the rental fee of the land, under the conditions prescribed by the Presidential Decree, notwithstanding the provisions of Article 36 of the Industrial Placement and Factory Construction Act and of Article 38 of the Industrial Sites and Development Act: 1. Land located within a foreign investment zone as prescribed by the provisions of Article 18; 2. Land located within an industrial complex exclusively for foreign companies as prescribed by the provisions of Article 35-3 (1) of the Industrial Placement and Factory Construction Act; and 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"). (7) Where the head of a local government rents land owned by his local government to a foreign-capital invested company, he may reduce or exempt the rental fee of the land under the conditions prescribed by the Presidential Decree, notwithstanding the provisions of Articles 82 (2) and 83 (2) of the Local Finance Act. (8) Where the land that is rented to a foreign-capital invested company with its rental fee reduced or exempted in accordance with the provisions of paragraphs (6) and (7) above 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. (9) The rental period under the provisions of paragraphs (2) and (8) above may be renewed. The renewed rental period in this case may not exceed the period prescribed by the provisions of paragraphs (2) and (8) above each time the renewal is made. ¡á Article 14 (Support Measures for Foreign Investment Activities of Local Governments) (1) Where a local government requests the central government provide the 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 a foreign-capital invested company, for the reduction or exemption of the rental fee of the land or the reduction of lot prices (including where a local government provides support in response to the request of a public agency prescribed by the Presidential Decree that rents land to a foreign-capital invested company with a reduced or exempted rental fee or sells the land in lots for a price lower than the land formation fee, corresponding to the amount of the reduced or exempted rental fee or to the difference between the land formation fee and the price of the land divided into lots), for the payment of various kinds of subsidies such as education and training subsidies, and for foreign-investment inducement projects, the central government shall provide funds to the extent possible. (2) The criteria and procedures followed by the central government when providing funds to a local government in accordance with the provisions of paragraph (1) shall be determined by the foreign investment commission prescribed by the provisions of Article 27 under the conditions prescribed by the Presidential Decree. For the determination of the criteria for the providing of funds in this case, the degree of effort made by a local government to encourage and induce foreign investment and the actual results thereof shall be taken into consideration. (3) Each year the central government shall estimate the amount of the funds to be provided in accordance with the provisions of paragraph (1) and 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 determined by the Presidential Decree under the conditions prescribed by its municipal ordinances. ¡á Article 15 (Establishment of Foreign Investment Support Center, etc.) (1) The 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, either directly or as a proxy, consultations, guidance, advertisements, research, and civil petitions concerning foreign investment, and conduct various 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 services at the Investment Promotion Center: Provided, that where the services of public officials are 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 to 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 promotions, position transfers, 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) Under the Korea Trade and Investment Promotion Agency, there shall be established a grievance settlement organ to deal with difficulties of foreign-capital invested companies. (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. ¡á Article 15-2 (Ombudsman for Foreign Investment) (1) For the purpose of supporting the settlement affairs of difficulties of foreign-capital invested companies, the ombudsmen for foreign investment may be commissioned from among those persons who have much knowledge and experience on the foreign investment business. (2) The ombudsmen for foreign investment under paragraph (1) of this Article shall be commissioned by the President on the recommendation of the Minister of Commerce, Industry and Energy, after the deliberation of the foreign investment commission under Article 27. ¡á Article 16 (Foreign Investment Promotion Officials of Cities and Dos) (1) A foreign investment promotion office may be established at the Special Metropolitan City, Metropolitan City, or Do 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) Relevant 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 Presidential Decree. ¡á 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) Civil petitions related to foreign investors or to the foreign investments of foreign-capital invested companies prescribed by the Presidential Decree (hereinafter referred to as "civil petitions to be directly treated") may be treated directly by a dispatched officer. In this case, the head of the relevant administrative agency to which the dispatched officer belongs shall entrust the dispatched officer with all rights concerning the treatment of the civil petitions. (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 appearing on attached Table 1 (hereinafter referred to as "civil petitions to be treated in bulk") and civil petitions related to foreign investment appearing on attached Table 2 which are to be individually treated (hereinafter referred to as "civil petitions to be individually treated"), transfer them to 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 for disagreeing, 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 appearing 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 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 rejecting the application under the conditions 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) 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 granting of the permission. (7) Where the foreign investor or foreign-capital invested company that was notified of the rejection of his application for 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 any relevant Act and subordinate statute, the head of a civil affairs administrative agency or the dispatched officer shall grant the permission within the period 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 foreign-capital invested company intends to obtain permission relating to civil petitions to be treated in bulk, civil petitions to be individually treated and civil petitions to be directly treated under paragraphs (2) through (8), he or it shall submit application forms 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 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 prescribed by the Presidential Decree, permission on the condition that the requirements which have not been met shall be satisfied. (11) Where any Act and subordinate statute other than this Act contain provisions concerning civil affairs which affect the realization of a goal a foreign-capital invested company is able to pursue only with the permission granted in accordance with other Acts and subordinate statutes from the time the foreign investment was reported to the time of the launching of the business, and which do not fall under one of the following categories, the provisions of other such Acts and subordinate statutes 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 permission as prescribed by the provisions, other than the provisions of subparagraphs 1 through 3 above, of this Act. (12) Where a foreign-capital invested company converts farmlands or forests or alters the form and nature of the forests for the purpose of building a factory, the conversion charges as prescribed in Article 41 of the Framework Act on Agriculture and Rural Community or Article 20-3 of the Forestry Act may be reduced or exempted. In this case, the scope of foreign-capital invested companies subject to such reduction or exemption and the ratio thereof shall be prescribed by the Presidential Decree. (13) Relevant 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 ¡á Article 18 (Designation and Development of Foreign Investment Zone) (1) The Special Metropolitan City Mayor, any other Metropolitan City Mayor and a Do governor (hereinafter referred to as the "Mayor/Do governor") may, if necessary for the inducement of foreign investment which meets such standards as prescribed by the Presidential Decree, designate an area in which a foreign investor desires to make an investment as a foreign investment zone (hereinafter referred to as the "foreign investment zone"), after due deliberation of the foreign investment commission under Article 27. In this case, if the said foreign investment zone is intended to be developed into a local industrial complex (hereinafter referred to as the "local industrial complex") as prescribed in Articles 7 and 7-2 of the Industrial Sites and Development Act, a plan for such development shall be established. (2) Where two or more foreign investors intend to obtain the designation of the foreign investment zone from the Mayor/Do governor pursuant to the former part of paragraph (1), the business classification and zone in which they intend to make an investment shall satisfy the standards as prescribed by the Presidential Decree. (3) Where the Mayor/Do governor designates the foreign investment zone under paragraphs (1) and (2), he shall publicly announce the following matters: 1. Official title, location and area of said foreign investment zone; 2. Methods of development or management; 3. Matters subject to the public announcement under Article 7-3 of the Industrial Sites and Development Act (limited to any case in which the said foreign investment zone is developed into a local industrial complex); and 4. Other matters as prescribed by the Presidential Decree. (4) The foreign investment zone shall be developed and managed by the Mayor/Do governor having jurisdiction over such zone in accordance with the Presidential Decree: Provided, That where the foreign investment zone was designated from part or all of a national industrial complex managed by a certain agency, its management work shall be given to that agency. (5) Where any area which is designated as the foreign investment zone requires the formation of a new site for the establishment of a factory, the said foreign investment zone may be developed into a local industrial complex. (6) Where the foreign investment zone is developed into a local industrial complex under paragraph (5) above, any foreign investment zone which is designated under paragraphs (1) and (2) above shall be deemed to have been designated as the local industrial complex. In this case, a plan for development under the latter part of paragraph (1) above shall be deemed to be that which is prescribed in Articles 7 (2) and 7-2 (3) of the Industrial Sites and Development Act, and the public announcement under paragraph (3) above shall be deemed to be that which is prescribed in Article 7-3 of the said Act. (7) Where there is any such designation or public announcement as prescribed in paragraphs (1) through (3) above in developing the foreign investment zone into a local industrial complex under paragraph (5) above, any "area which is designated and publicly announced as an industrial complex" as referred to in Article 12 (1) of the Industrial Sites and Development Act shall be deemed to be any "area which is designated and publicly announced as the foreign investment zone," and the "time when a national or local industrial complex is designated and publicly announced" as referred to in Article 22 (2) of the said Act shall be deemed to be the "time when the foreign investment zone is designated and publicly announced." (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 methods of the designation of the foreign investment zone shall be prescribed by the Presidential Decree. ¡á Article 18-2 (Cancellation of Designation of Foreign Investment Zone) (1) If a foreign-capital invested company fails to satisfy the standards as prescribed by the Presidential Decree under Article 18 (1) and (2), the Mayor/Do governor shall cancel the designation of the foreign investment zone, after the deliberation of the foreign investment commission under Article 27. (2) Necessary matters concerning the procedures, etc. for the cancellation of the designation of the foreign investment zone under paragraph (1) shall be prescribed by the Presidential Decree. ¡á 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 harbors, roads, water-supply facilities, railways, communication facilities, and electric facilities that 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 the building of 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) Support measures concerning medical, educational, and housing facilities which are to be built in a foreign investment zone shall be determined by the foreign investment committee as prescribed by the provisions of Article 27. ¡á Article 20 (Special Case with respect to Other Acts) (1) Any of the following shall not apply to the partition of land within the foreign investment zone: 1. Article 21-16 of the Act on the Utilization and Management of the National Territory; 2. Article 46 (1) 4 of the Urban Planning Act; 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 which moves into the foreign investment zone, 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 a foreign-capital invested company that moves into a foreign investment zone, the following subparagraphs shall not apply: 1. Articles 4 and 12 (2) and (3) of the Act on the Protection of the Business Sphere of Small and Medium Enterprises and Promotion of Their Cooperation; and 2. Article 31 (2) of the Act on the Honourable Treatment of and Support for Persons of Distinguished Services to the State. CHAPTER V EX POST FACTO MANAGEMENT OF FOREIGN INVESTMENT ¡á Article 21 (Ex Post Facto Management of Foreign Investment) (1) In a case in which a foreign investor falls under any of the following subparagraphs (including a case in which he comes to fall under any of the following subparagraphs due to any capital increase), he shall register a foreign-capital invested company in accordance with the Presidential Decree: 1. Where he has completed the payment of the object of investment; 2. Where he has acquired the existing stocks (referring to having paid for the existing stocks) under Article 6; and 3. Where he has acquired stocks under Article 7 (1) 5. (2) A foreign investor may, even prior to the completion of the payment of the object of investment under paragraph (1) 1 above, register a foreign-capital invested company, if he makes a foreign investment falling under Article 2 (1) 4 (a). (3) Where a foreign investor or foreign-capital invested company falls under any of the following subparagraphs, the Minister of Commerce, Industry and Energy may revoke the permission or cancel the registration: 1. Where a foreign-capital invested company, which is registered under paragraph (1), ceases its business or fails to conduct its business activities for two consecutive years or more; 2. Where a foreign-capital invested company which is registered under paragraph (1) above or a foreign investor who is granted permission under Article 6 (3) fails to comply with a correction order or other necessary measures under Article 28 (4); 3. Where there is any reason for the dissolution of a foreign-capital invested company which is registered under paragraph (1); 4. Where a foreign investor makes an application for the cancellation of registration as prescribed by the Presidential Decree; 5. Where a registration certificate of a foreign-capital invested company is transferred or lent to any other person; and 6. Where the registration of a foreign-capital invested company is effected in disguise of the payment of the object of investment. ¡á Article 22 (Restrictions on Disposal of Capital Goods) (1) A foreign investor or foreign-capital invested company shall, if intending to transfer or lend capital goods which are introduced with their customs duties, etc. exempted under Article 9, or use them for purposes other than those reported, make report to the Minister of Commerce, Industry and Energy in advance, except as prescribed by the Presidential Decree. (2) Where a report is made under paragraph (1), the Minister of Commerce, Industry and Energy shall, without delay, issue a certificate of acceptance of said report to the reporter. (3) Except for cases that meet the criteria prescribed by the Presidential Decree, a foreign-capital invested company that 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 that 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 its investment funds for purposes other than those which the investor has already reported or gotten permission for. ¡á Article 23 (Transfer of Stocks) (1) Where a foreign investor intends to transfer such stocks as acquired under Articles 5 through 7 to any other person, or intends to decrease the number of stocks he owns due to a decrease in his own capital, he shall, in advance, make report to the Minister of Commerce, Industry and Energy in accordance with the Presidential Decree. (2) Where the permission is revoked or the registration is cancelled under any subparagraph of Article 21 (2), a foreign investor shall transfer the stocks owned by him to a national or corporation of the Republic of Korea within six months after being so revoked or cancelled: Provided, That if there exists any unavoidable reason, the transfer period may be extended within six months, with the approval of the Minister of Commerce, Industry and Energy. (3) Where a foreign investor who fails to make such registration as prescribed in Article 21 (1) does not comply with a correction order as prescribed in Article 28 (4), he shall transfer the stocks owned by him to a national or corporation of the Republic of Korea within six months from the day on which the period of execution of that correction order expires: Provided, That if there exists any unavoidable reason, the transfer period may be extended within six months, with the approval of the Minister of Commerce, Industry and Energy. ¡á 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 the Korea Trade and Investment Promotion Agency and a foreign-capital invested company to provide necessary materials and statistics for analyzing the effect of foreign investment on national economy, such as the economic growth, balance of international payments and employment. (2) The Mayors/Do governors, the head of the Korea Trade and Investment Promotion Agency, and foreign-capital invested companies requested to provide materials and statistics as prescribed in paragraph (1) shall comply with such request unless there is a justifiable reason. (3) The public officials who collect and prepare materials and statistics on foreign investment in accordance with paragraphs (1) and (2) shall not reveal business secrets of the companies concerned. CHAPTER VI CONTRACTS FOR INTRODUCTION OF TECHNOLOGY ¡á Article 25 (Report on Contracts for Introduction of Technology) (1) A national or corporation of the Republic of Korea shall, if making a contract for the introduction of technology as prescribed by the Presidential Decree with any foreigner, make report to the Minister of Commerce, Industry and Energy in accordance with the Ordinance of the Ministry of Commerce, Industry and Energy. The same shall also apply to any modification of the contents of such contract for the introduction of technology as so reported. (2) Where a report is made under paragraph (1), the Minister of Commerce, Industry and Energy shall issue a certificate of acceptance of said report to the reporter within any such period as prescribed by the Presidential Decree. (3) A contract for the introduction of technology subject to any such report as prescribed in paragraph (1) shall come into effect within six months after the report is made, and where a contract for the introduction of technology which has already been reported fails to come into effect within that period, the effect of such report shall be deemed void: Provided, That this shall not apply in case any period for which the contract comes into effect is, in advance, approved by the Minister of Commerce, Industry and Energy. (4) If the introduction of technology falls under any of subparagraphs of Article 4 (2), the introduction of technology shall not be conducted. ¡á Article 26 (Tax Reduction and Exemption with respect to Contract for Introduction of Technology) With respect to a contract for the introduction of technology, taxes such as corporate tax or income tax may be reduced or exempted in accordance with the Restriction of Special Taxation Act. CHAPTER VII SUPPLEMENTARY PROVISIONS ¡á Article 27 (Foreign Investment Commission) (1) For the deliberation of the following matters, a foreign investment commission (hereinafter referred to as the "Commission") shall be established under the Ministry of Finance and Economy: 1. Important matters concerning the basic policy and institutions for foreign investment; 2. Integration and adjustment of counterplans by each competent Ministry concerning the improvement of foreign investment environment; 3. Matters concerning criteria for the reduction or exemption of taxes with respect to foreign-capital invested companies; 4. Matters concerning cooperation with and the adjustment of different views 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; and 7. Other important matters concerning the inducement of foreign investment. (2) The Minister of Finance and Economy shall be the chairman of the Commission, and the following persons shall be its members: 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. Relevant Mayors/Do governors; and 3. Heads of relevant administrative agencies as prescribed by the Presidential Decree. (3) For the review and handling of matters deliberated by the Commission and for the treatment of matters entrusted by the Commission, a foreign investment subcommittee (hereinafter referred to as "the Subcommittee") shall be established. (4) The Minister of Commerce, Industry and Energy shall report the current state of promotion of the improvement of foreign investment environment under paragraph (1) 2 to the Commission. (5) Necessary matters concerning the composition and operation of the Commission and the Subcommittee, other than those prescribed in paragraphs (1) through (3), shall be prescribed by the Presidential Decree. ¡á 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, persons who introduce technology, the head of the Korea Trade and Investment Promotion Agency, the heads of the relevant financial institutions, and other interested parties make report on such matters as deemed necessary for foreign investment and technology introduction under this Act. (2) The Minister of Commerce, Industry and Energy may, if deemed necessary for the enforcement of this Act, have public officials under his control or heads of relevant administrative agencies make investigation into the following matters: 1. Matters concerning the introduction, use and disposal of funds (including objects of investment; hereafter the same shall apply in this Article) and capital goods which a foreigner invests; 2. Circumstances concerning the introduction of technology; and 3. Matters concerning the implementation of such contents as permitted or reported in accordance with this Act. (3) A person who makes investigation under paragraph (2) shall carry an identification verifying his authority and show it to the related persons. (4) In the following cases, the Minister of Commerce, Industry and Energy may issue a correction order to a person who introduces or uses funds or capital goods invested by a foreigner, a person who introduces technology and other interested persons or take other necessary measures: 1. Where such matters as permitted or reported under this Act are not implemented or are illegally or unjustifiably implemented; and 2. Where the fact falling under any subparagraph of Article 4 (2) is detected. (5) Where a person, who introduces funds and capital goods for foreign investment, fails to clear the capital goods through customs or take possession of them within the storage period prescribed by the Customs Duties Act, the superintendent of customs may sell them in accordance with the Presidential Decree. ¡á Article 29 (Examination and Confirmation of Capital Goods Introduced) (1) Where a foreign investor or a foreign-capital invested company has introduced capital goods that meet the criteria prescribed by the Presidential Decree, such as capital goods introduced into this nation under this Act that are subject to a reduction or exemption of taxes, he may have the appropriate minister examine and confirm the capital goods introduced. (2) With respect to capital goods examined and confirmed by the appropriate 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. ¡á Article 30 (Relation with Other Acts and International Treaties) (1) Except as otherwise provided by this Act, matters concerning foreign exchange and foreign trade of this Act 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 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 such capital goods as prescribed in Article 2 (1) 7 (b) of this Act, the written confirmation of the completion of investment in kind in which the Commissioner of the Customs Service confirms the implementation of investment in kind and the type, volume and price of objects thereof shall be deemed to be a written report of investigation of an investigator under 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 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 or corporation of the Republic of Korea that intends to operate a business jointly with a foreign investor who makes report under Article 5 (1) may designate the first day of every month as the reevaluation day and conduct reevaluation, under the Assets Reevaluation Act, 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. ¡á Article 31 (Delegation of Authority) The Minister of Commerce, Industry and Energy or any other competent Minister may, in accordance with the Presidential Decree, delegate or entrust part of his authority as prescribed by this Act to the Commissioner of the National Tax Service, the Commissioner of the Customs Service, the head of the Korea Trade and Investment Promotion Agency and the head of a foreign-investment related agency as prescribed by the Presidential Decree. CHAPTER VIII PENAL PROVISIONS ¡á 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. ¡á 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. ¡á Article 34 (Penal Provisions) A person who has submitted false documents with respect to applying for permission or reporting information prescribed by this Act shall be sentenced to imprisonment for not more than three years or to a fine not exceeding thirty million won. ¡á Article 35 (Penal Provisions) A person who falls under one of the following categories (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. A person who has acquired existing stocks without making the necessary report in violation of the provisions of Article 6 (1); 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. A person who has not complied with, or has refused, interfered with, or avoided an investigation as prescribed by the provisions of Article 28 (2); and 4. A person who has not complied with a correction order as prescribed by the provisions of Article 28 (4). ¡á Article 36 (Joint Penal Provisions) Where the representative of a corporation or an agent, full-time or part-time employee of a corporation or individual person has committed, with respect to business matters of the corporation or individual person, a violation as prescribed by the provisions of Articles 32 through 35, the corporation or individual person shall be sentenced to the fine prescribed by the provisions of the respective Articles, in addition to the punishment of the person who has actually committed the violation. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force at the expiration of two months after its promulgation. ¡á Article 2 (Application Date) The provisions of Article 20 (3) 2 shall apply until Dec. 31, 2003. ¡á Article 3 (Abrogation of Other Laws) The Act on Foreign Investment and Foreign Capital Inducement shall be abrogated. ¡á Article 4 (Application Examples of Provisions concerning the 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. ¡á 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. ¡á 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. ¡á 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. ¡á Article 8 Omitted. ¡á Article 9 (Relation with Other Laws and Regulations) Where other laws or regulations 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 ¡á Article 1 (Enforcement Date) This Act shall enter into force two months after its promulgation. ¡á Articles 2 through 10 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force on January 1, 2000. ¡á Articles 2 through 11 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force six months after its promulgation. ¡á Articles 2 through 8 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force six months after its promulgation. ¡á Articles 2 through 6 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force six months after its promulgation. ¡á Articles 2 through 8 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force six months after its promulgation. ¡á Articles 2 through 5 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force on the date of its promulgation. (Proviso Omitted.) ¡á Articles 2 through 6 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force on January 1, 2001. ¡á Articles 2 through 10 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force on July 1, 2000. ¡á Articles 2 through 7 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force on February 1, 2001. ¡á 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. ¡á 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 ¡á Article 1 (Enforcement Date) This Act shall enter into force on July 1, 2001. ¡á Articles 2 and 3 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force on January 1, 2002. ¡á Articles 2 through 6 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force on July 1, 2001. ¡á Articles 2 through 4 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force six months after its promulgation. ¡á Articles 2 through 8 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force on April 1, 2002. (Proviso Omitted.) ¡á Articles 2 through 17 Omitted. * Attached Table 1 and 2 Omitted. ENFORCEMENT DECREE OF THE FOREIGN INVESTMENT PROMOTION ACT INTRODUCTION Details of Enactment and Amendment ¡Ü 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 with regard to the enforcement thereof. ¡Ü Amendment: This Decree has taken its present form after going through five amendments since its enactment. The latest amendment was on December 30, 2002. Main Contents ¡Ü 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. ¡Ü 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. ¡Ü 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. ¡Ü Conditions of the designation of a foreign investment zone are provided as follows: ¡Û If factory facilities are being newly installed in order to conduct a manufacturing business or industrial support service business, etc. then that the amount of foreign investment is not less than fifty million US Dollars(not less than thirty million US Dollars in the case of an industrial support service business or a business accompanying advanced technologies), that the foreign-capital invested company whose ratio of foreign investment is not less than fifty hundredths provides new regular employment at a scale of not less than one thousand persons, if 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, then that the amount of investment by foreigners is not less than thirty million US Dollars and the scale of new regular employment is not less than three hundred persons; ¡ÛThat the amount of foreign investment is not less than twenty million US Dollars and tourist hotel facilities, combined recreational facilities or international conference facilities are being newly installed; ¡Û That the amount of foreign investment is not less than thirty million US Dollars and the facilities for business for combined cargo terminal, creating and operating a joint collection and delivery complex, operating harbor facilities or physical distribution are being newly installed; or ¡Û That any research facilities are 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 20 persons. ¡Ü 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. Nov. 14, 1998 Presidential Decree No. 15931 Amended by May 24, 1999 Presidential Decree No. 16330 Oct. 27, 1999 Presidential Decree No. 16583 Feb. 23, 2000 Presidential Decree No. 16720 Feb. 24, 2001 Presidential Decree No. 17135 Feb. 24, 2001 Presidential Decree No. 17137 Dec. 31, 2001 Presidential Decree No. 17474 Jul. 27, 2002 Presidential Decree No. 17686 Dec. 30, 2002 Presidential Decree No. 17851 CHAPTER I GENERAL PROVISIONS ¡á Article 1 (Purpose) The purpose of this Decree is to provide for matters delegated by the Foreign Investment Promotion Act and matters necessary for the enforcement thereof. ¡á Article 2 (Definition of Foreign Investment) (1) The term "international economic cooperative organization prescribed by the Presidential Decree" in Article 2 (1) 1 of the Foreign Investment Promotion Act (hereinafter referred to as the "Act") shall mean those falling in the categories described in 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" in Article 2 (1) 4 (a) of the Act shall mean any case falling under any of the following subparagraphs: Provided, That the relevant investment amount (referring to the investment amount per capita, if two foreigners or more make a joint investment) shall be 50 million won or more: 1. A case in which a foreigner owns 10 percent or more of either the total number of voting stocks issued by a corporation of the Republic of Korea (including a corporation in the process of being established; hereinafter the same shall apply) or by a company run by a citizen of the Republic of Korea, or its total equity investment; and 2. A case in which a foreigner owns less than 10 percent of either the total number of voting stocks issued by a corporation of the Republic of Korea or a company run by a citizen of the Republic of Korea, or its total equity investment, and makes a contract falling under any of the following items with that corporation or company: (a) A contract capable of dispatching or electing officers; (b) A contract to deliver or purchase raw materials or products for not less than one year; and (c) A contract for the provision or introduction of technology or the joint research and development. (3) The term "company of the capital investment prescribed by the Presidential Decree" in Article 2 (1) 4 (b) of the Act shall mean a company which falls in any of the following categories: 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, not less than 50 percent of the total number of the stocks or the total equity investment of which is held by its overseas holding company, and which falls in any of the following categories: (a) A company which holds not less than 10 percent of the total number of the stocks issued by, or 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 stocks or not less than 50 percent of the total equity investment is held by its overseas holding company. (4) The term "intellectual property rights as prescribed by the Presidential Decree" in Article 2 (1) 7 (d) of the Act shall mean rights utilized for industrial activities among the copyrights under the Copyright Act and layout-design rights under subparagraph 5 of Article 2 of the Act on the Layout-Designs of Semiconductor Integrated Circuits. (5) The term "stocks as prescribed by the Presidential Decree" in Article 2 (1) 7 (g) of the Act shall mean those stocks which fall under any of the following subparagraphs: 1. Stocks of foreign corporations listed or registered in foreign securities markets; and 2. Stocks owned by foreigners under the Foreign Exchange Transactions Act. (6) The term "other Domestic payment means as prescribed by the Presidential Decree" in Article 2 (1) 7 (g) of the Act shall mean money coming from the sale of stocks or stakes (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. ¡á Article 3 (Definition of Individual Who is a Permanent Resident of Foreign Country) The term "individual who is a permanent resident of a foreign country" in Article 2 (2) of the Act shall mean a person who has acquired permanent residence, or a stay permit which can be substituted for permanent residence, of the country in which he resides. ¡á Article 4 (Remittance of Proceeds to Foreign Countries) (1) When 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. ¡á Article 5 (Categories of Business in Which Foreign Investment is Restricted) (1) The category of business in which foreign investment is restricted under Article 4 (3) of the Act, and the contents of such restriction shall be the following matters, which are publicly announced by the Minister of Commerce, Industry and Energy after consultation with any other competent Minister, in consideration of the scope of reserved contents concerning Domestic direct investment by a non-resident in the field of direct investment of Annex No. 1 (Reservations of the Code of Liberalization of Capital Movement) to the agreed invitation to join the Convention on the Organization for Economic Cooperation and Development for the Republic of Korea and reserved contents provided in the annex to the said Convention concerning bilateral or multilateral investment: 1. 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. Total ratio of investment permissible to foreigners (hereinafter referred to as the "ratio of investment permissible to foreigners") according to the category of business in which foreign investment is only partially permitted under subparagraph 1; 3. Qualification 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, without any such restriction as prescribed in paragraph (1). (3) Where the ratio of the turnover of a restricted category of business of a company falling under paragraph (2) exceeds 1/100 of the total turnover of that company after a foreigner acquires its stocks, such stocks as acquired in excess of the ratio of investment permissible to foreigners shall be transferred to a citizen or corporation of the Republic of Korea within 6 months from the date fixed for the settlement of accounts of the business year when said ratio is exceeded: Provided, That if there exists any inevitable reason, the period of such transfer may be extended within 6 months with approval of the Minister of Commerce, Industry and Energy. (4) A foreigner shall not make an investment in any company conducting concurrently both a category of business in which foreign investment is not permitted and that in which foreign investment is only partially permitted under paragraph (1) 1, and he shall, if intending to make an investment in any company conducting not less than two categories of business in which foreign investment is only partially permitted under paragraph (1) 1, be prohibited from making an investment 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 a relevant administrative agency shall, if there exist any modification or supplement of contents concerning the restriction on foreign investment which are publicly announced 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 the Minister of Commerce, Industry and Energy by January 31, and the Minister of Commerce, Industry and Energy shall integrate them and give notice by the last day of February each year. CHAPTER II PROCEDURES FOR FOREIGN INVESTMENT ¡á Article 6 (Matters to be Reported concerning Alterations in Contents of Foreign Investment) The term "matters prescribed by the Presidential Decree" in the latter part of Articles 5 (1), 6 (1) and (3) and 8 (1) of the Act shall mean the following matters: 1. The business name or personal name and nationality of the foreign investor concerned; 2. The amount of investment by foreigners, the ratio of investment by foreigners (the ratio of the stocks held by foreign investors to the total stocks of the foreign-capital invested company; hereinafter the same shall apply), and the method of investment; 3. The type of business desired to be operated; and 3-2. The transferor of stocks; 3-3. The offerer, amount and conditions of loans; and 4. Other important matters concerning the contents of the report and permission as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy. ¡á Article 7 (Procedures for Foreign Acquisition of Existing Stocks) (1) The term "persons of special relationship prescribed by the Presidential Decree" in the former part of Article 6 (1) of the Act shall mean persons falling in any of the categories described in 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 in which not less than fifty percent of the total number of the stocks issued by it or not less than fifty percent of the total equity investment of it, 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 actually 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 persons through an employment contract, in case of an individual person, or to persons who maintain their livelihood by means of the money or property of the said individual person); and 4. A foreign corporation in which not less than fifty percent of the total number of the stocks issued by it, or not less than fifty percentage of the total equity investment of it, 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 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 once for a maximum of fifteen days. (4) Where a 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 supply the supplement or correction within the designated period. In this case, the period required for the supplement or correction shall not be included in the period of decision on and issuance of the permission as prescribed in paragraph (3) above. (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: Provided, That where there exists a compelling reason, the period of conveyance may be extended, but by no more than six months. (6) through (8) Deleted. ¡á Article 8 (Consultation concerning Permission for Acquisition of Existing Stocks) (1) Where a foreigner has made an application for permission for the acquisition of 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 receives the request. (2) Where the Minister of National Defense judges that 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 adversely affect the security of the nation, he shall approve the granting of permission. (3) In submitting his opinion in accordance with the provisions of paragraph (1) above, the Minister of National Defense may request the Minister of Commerce, Industry and Energy to grant permission with the following conditions: 1. Necessary conditions be maintained for the continuous production of the defense industry products concerned and for the maintenance of the security of this nation; and 2. The defense industry facilities concerned be divided and sold to a Korean citizen or a Korean corporation. (4) Where permission had been granted with the conditions as prescribed in paragraph (3) 2 above, a foreigner who acquires the existing stocks before the sale of the defense industry facilities has been completed may not participate in the management of the defense industry company concerned. CHAPTER III SUPPORT MEASURES FOR FOREIGN INVESTMENT ¡á Articles 9 through 18 Deleted. ¡á Article 19 (Rental of State or Public Property) (1) The rental fee for the land as prescribed in Article 13 (4) of the Act shall be the amount derived from the multiplication of the value of the land under consideration by a ratio of not less than 1/100: Provided, That the rental fee rates for land, etc. in industrial complexes for the exclusive use of foreign investment enterprises designated under Article 35-3 of the Industrial Placement and Factory Construction Act shall be as follows: 1. If the land, etc. concerned is state property, the rates shall be 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 shall be 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 date of the purchase price of land, etc. or payment in installments under Article 13 (5) of the Act shall be conformed to the following methods. In this case, the applicable interest rate shall not exceed four percent annually: 1. In case of land owned by the State: either the payment period may be extended within the upper limit of one year or payment in installments within the maximum period of twenty years may be allowed; and 2. In case of land owned by a local government: either the payment period shall be extended or payment in installments allowed under its Municipal Ordinances. (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 each of following subparagraphs: 1. A business which makes a considerable contribution to the economy of this nation and falls in any of the following categories: (a) A business run by a foreign-capital invested company within a foreign investment zone as prescribed in Article 18 of the Act; (b) A business which has been subject to 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 manufacturing industry (referring to a manufacturing industry according to the Classification of Korean Standard Industries; hereinafter the same shall apply) in whose case foreign investment is not less than five million U. S. Dollars; and 2. A business which makes a considerable contribution to the securing of social overhead capital, the readjustment of the industrial structure, or the financial independence of the local government as determined by the Minister of Commerce, Industry and Energy via the deliberation of the Foreign Investment Commission under Article 27 of the Act (hereinafter referred to as the "Commission"). (4) The ratio 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 said Act; hereinafter the same shall apply) by the following guidelines: 1. For land falling under the provisions of Article 13 (6) 1 and 2 of the Act; the ratio of the reduction or exemption shall be as prescribed in the following items: (a) With respect to a business which falls under the provisions of paragraph (3) 1 (a) and (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) and 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 of the Act: 50/100 of the rental fee of the land concerned. (5) The foreign-capital invested company which desires to obtain the benefits of reduction of or exemption from the rental fee of state owned land in accordance with the provisions of Article 13 (6) of the Act shall make an application for the reduction or exemption to the management agency of the state owned property concerned. (6) The foreign-capital invested company which desires to obtain the benefits of reduction of or exemption from the rental fee of land owned by a local government in accordance with the provisions of Article 13 (7) of the Act shall make an application for the reduction or exemption to the head of the local government concerned. (7) Matters such as the types of business to be eligible for the reduction of or exemption from the rental fee of the land owned by a local government and the ratio of the reduction of or exemption from the rental fee as prescribed in Article 13 (7) of the Act shall be determined by the Municipal Ordinances of the local government concerned after due deliberation on the possible economic effects of the foreign investment concerned, such as the creation of employment, the transfer of technology, and the influence on the financial independence of the local government concerned. (8) Except for such cases as provided for in the Act and this Decree, the selling or rental of land owned by the State or local government as prescribed in Article 13 of the Act shall be governed by the State Properties Act and the Local Finance Act. ¡á Article 20 (Criteria for Support for 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 comprehensive deliberation on the possible economic effects of the foreign investment concerned, such as the creation of employment, the transfer of technology and the specific influence 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 prescribed by the Presidential Decree" in the provisions of Article 14 (1) of the Act shall mean the agency which conducts the development business of the industrial complex as prescribed in Article 16 (1) 1 and 2 of the Industrial Sites and Development Act. (4) The term "employment subsidy determined prescribed by the Presidential Decree" in the provisions of Article 14 (4) of the Act shall mean the employment subsidy which is to be paid according to the number of new jobs created by a foreign-capital invested company. ¡á 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") in accordance with the provisions of Article 15 (1) of the Act shall be directed and supervised by the head of the Korea Trade and Investment Promotion Agency. (2) The head of the Korea Trade and 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 conduct of foreign investment support business, the head of the Korea Trade and Investment Promotion Agency may operate a general administrative support center which is composed mainly of dispatched officers as provided in Article 15 (3) of the Act and a team of exclusive responsibility for foreign investment inducement which is composed mainly of officers and employees of the Korea Trade and Investment Promotion Agency. (4) The head of the Korea Trade and Investment Promotion Agency shall prepare an annual comprehensive plan for foreign investment inducement and report it to the Minister of Commerce, Industry and Energy by January 31 each year, and shall analyze quarterly foreign investment achievements and make report to the Minister of Commerce, Industry and Energy within one month after each quarter expires. (5) through (7) Deleted. (8) Necessary matters concerning the organization and operation of the Investment Support Center, other than those as prescribed in paragraphs (1) through (4) shall be determined by the head of the Korea Trade and Investment Promotion Agency after the deliberation of the Foreign Investment Working Committee (hereinafter referred to as the "Working Committee") under Article 27 (3) of the Act. ¡á Article 21-2 (Operation, etc. of the 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 other persons who have full experience and knowledge on affairs relating to 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 settling difficulties of 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 settle difficulties of foreign-capital invested companies, designate and manage by region and invested company the staff taking exclusive charge of grievance settlements, 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 settling difficulties by quarter and make report to the Minister of Commerce, Industry and Energy within one month after each quarter expires. (7) Necessary matters concerning the organization and operation of the grievance settlement organ, other than those as prescribed in paragraphs (2), (3), (5), and (6), shall be determined by the head of the Korea Trade and Investment Promotion Agency after the deliberation of the Working Committee. ¡á Article 21-3 (Functions, etc. of Foreign Investment Ombudsmen) (1) The term of office of the foreign investment ombudsmen under Article 15-2 of the Act shall be three years, but the consecutive appointment may be permitted. (2) The foreign investment ombudsmen shall perform the following duties: 1. Collection of information concerning difficulties of foreign-capital invested companies; 2. Preparation of measures to improve the 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 settling their difficulties. ¡á Article 22 (Foreign Investment Promotion Office) The foreign investment promotion office as prescribed in Article 16 of the Act shall perform tasks as prescribed by the provisions of the following subparagraphs: 1. The encouragement and verification of 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 for, 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 and 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 committee as prescribed in Article 23; and 7. Other kinds of administrative support concerning foreign investment. ¡á Article 23 (Foreign Investment Inducement Committee) (1) A foreign investment inducement committee (hereinafter referred to as the "Committee") may be established at the Special Metropolitan City, a Metropolitan City, and a Do(hereinafter referred to as the "City/Do") in order to deliberate on matters described in the following subparagraphs: 1. The inducement plan, advertizement plan, and support plan with respect to foreign investment; 2. The Consultation for the solution of problems 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 Committee shall be a public official at the level of director or above from those who belong to the City/Do, and the members of the Committee shall be persons falling in the categories described in the following subparagraphs: 1. Persons appointed by the Mayor/Do governor from among the public officials under his jurisdiction; 2. Persons designated by the head of the Si/Gun/Gu (referring to the head of the autonomous Gu; hereinafter the same shall apply), the special local administrative agency or agency concerned upon the request of the Mayor/Do governor, from the public officials or other employees of the Si, Gun, and Gu (referring to autonomous Gu) or a special local administrative agency with jurisdiction over the Committee or of agencies related to the disposal of civil petitions as prescribed on Table 1 and Table 2 of the Act; 3. Persons designated by the head of the Foreign Investment Support Center upon the request of the Mayor/Do governor from the heads of the trade centers, branches, and offices of the Korea Trade and Investment Promotion Agency; and 4. Persons requested by the Mayor/Do governor from persons with extensive experience and knowledge on the matter of foreign investment. (3) In designating or requesting members of the Committee as prescribed in paragraph (2) above, the members who can participate in all the meetings of the Committee and the members who can participate in only those meetings at which matters relevant to the members concerned are discussed may be designated according to the decision of the chairman of the Committee. (4) The meeting of the Committee 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) above, and the approval of a majority of the attending members. (5) Necessary matters concerning the operation of the Committee other than those prescribed in paragraphs (1) through (4) shall be determined by the Mayor/Do governor through the resolution of the Committee. ¡á 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 shown on Table 1 of this Decree. (2) The treatment period for civil petitions to be treated in bulk and the civil petitions to be treated individually as prescribed in Article 17 (5) of the Act shall be as follows: 1. For civil petitions to be treated in bulk: the period shown on 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 shall be as prescribed by the relevant Acts and subordinate statutes; and 2. For the civil petitions to be treated individually : 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 on Table 2 of this Decree (where the treatment period as shown on Table 2 exceeds seven days, by two days before the last day of the treatment period). (4) The start of the treatment period as prescribed in paragraph (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 permissions prescribed by the Presidential Decree" on Table 2 of the Act shall mean the business matters of civil petitions as shown on Table 3 of this Decree. (6) Where the head of a civil petitions treatment agency or a dispatched officer gives 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 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 date as prescribed by one of the following subparagraphs: 1. For permission as prescribed in subparagraph 1 or 2 of Table 1 of this Act: the date of the application for the construction permission (where construction permission was deemed to have been granted, the date of the report on the start of construction); 2. For permission as prescribed in subparagraph 3 of Table 1 of the Act: the date of the report on the start of construction; 3. For permission as prescribed in subparagraph 4 of Table 1 of the Act: the date of the report on the start of operation; and 4. For permission as prescribed in subparagraph 5 of Table 1 of the Act: the date of the registration into the construction 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 the 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) The scope of the foreign-capital invested companies to be eligible for the reduction or exemption of the conversion charge in accordance with the provisions of Article 17(12) of the Act shall be limited to foreign-capital invested companies of the manufacturing industry, and the ratio of the reduction or exemption shall be the same as the ratio of foreign investment of the company concerned. (11) Where reasonable and objective grounds have been deemed to exist for the inability to treat properly 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 Done vicariously 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 treated individually, or civil petitions to be treated directly as prescribed in Article 17 of the Act, the head of a civil petitions treatment agency or a dispatched officer 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 required 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 for 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 ZONES ¡á Article 25 (Designation of Foreign Investment Zones) (1) The term "foreign investment which meets such standards as prescribed by the Presidential Decree" in Article 18 (1) of the Act shall mean that foreign investment which falls under any of the following subparagraphs. In this case, in calculating the foreign investment amount, the portion corresponding to the owning rate as computed by the calculation methods under Article 116-2 (7) and (8) of the Enforcement Decree of the Restriction of Special Taxation Act shall not be counted in the foreign investment amount, in case of a foreign corporation whose stocks or equity shares are directly or indirectly owned by Korean citizens (excluding persons falling under Article 3 of this Decree) or Korean corporations: 1. Where any plant established to conduct manufacture or business as prescribed in Article 116-2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act falls under any of the following categories: (a) When the amount of foreign investment is not less than fifty million U. S. Dollars (thirty million U. S. dollars in case of a business under Article 116-2 (1) of the Enforcement Decree of the Restriction of Special Taxation Act); (b) A foreign-capital invested company whose ratio of foreign investment is not less than 50/100 and whose scale of new regular employment is not less than one thousand persons; (c) Deleted; (d) When 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, a foreign-capital invested company whose amount of foreign investment is not less than thirty million U. S. Dollars and whose scale of new regular employment is not less than three hundred persons; and 2. Where the amount of foreign investment is not less than twenty million U. S. Dollars (not less than thirty million U. S. Dollars, in case of item (b) below) and facilities for the conduct of a business falling under any of the following items are newly established: (a) A tourist hotel keeping business and a floating tourist hotel keeping business as prescribed in subparagraph 2 (a) and (b) of Article 2 of the Enforcement Decree of the Tourism Promotion Act; (b) A combined recreation business as prescribed in subparagraph 3 (b) of Article 2 of the Enforcement Decree of the Tourism Promotion Act, and a combined 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 thirty million U. S. Dollars and facilities for the conduct of a business falling under any of the following items are newly established: (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 13 of Article 2 of the Distribution Industry Development Act; and (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 conducted in harbor background complexes as provided in subparagraph 7 of Article 2 of the Harbor Act. 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 (hereinafter in this subparagraph referred to as the "business"), which satisfies the requisites falling under each of the following subparagraphs; (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 having a degree of master or higher degree and a three-year or more research career, exclusively charged for research shall be not less than 20 persons. (2) Where any area in which two or more foreign investors make an investment may be designated as the foreign investment zone under Article 18 (2) of the Act, the business category and area in which they do so shall satisfy the requisites falling under any of the following subparagraphs: 1. Where the category of business operated by them belongs to the industrial group of the same interrelationship from among the medium classification of the Korean Standard Industrial Classification, or is in cooperative relations of mutual specialization in the production of parts or products; and 2. Where any area in which plant facilities are established is in the same national or local industrial complex or is adjacent thereto. (3) Where the Mayor/Do governor intends to designate a foreign investment zone under Article 18 (1) and (2) of the Act, he shall establish a designation plan (meaning a development plan as prescribed in the latter part of Article 18 (1) of the Act, if a foreign investment zone is developed into a local industrial complex; hereinafter the same shall apply) which includes the matters falling under following subparagraph, and submit that designation plan to the Minister of Commerce, Industry and Energy: Provided, That where all or part of a national or local industrial complex whose development has already been completed is to be designated as a foreign investment zone, such matters as prescribed in subparagraphs 8 through 12 may be omitted: 1. The title, location and area of the foreign investment concerned; 2. The method of development or management; 3. The contents of investment, the scale of employment, and the contents of business with respect to foreign-capital invested companies which will move into the foreign investment zone concerned; 4. The feasibility of foreign investment subject to inducement activity; 5. The costs for and the expected effects from the designation of the foreign investment zone concerned; 6. The financing plan for the necessary funds; 7. The support plan for important facilities which are to belong in the foreign investment zone concerned; 8. The executor of the development business; 9. The method and period of execution of the development business; 10. The land utilization plan and the important infra-structure facilities installation plan; 11. Where there exists land, buildings, other objects or rights which are to be expropriated or used, the itemized contents of the land under consideration; 12. Materials for the examination of environmental effects, as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy; and 13. Other matters as determined by the Commission. (4) Where the Mayor/Do governor intends to establish a designation plan under paragraph (3), he shall hear opinions of the relevant head of Si/Gun/Gu, residents and experts. (5) The Commission shall, on the basis of a designation plan, deliberate on whether or not to designate, comprehensively considering effects on the national economy such as the feasibility of the foreign investment subject to the inducement, balanced regional development, the efficient utilization of national land, and the increase of employment. (6) Where the designation is not deemed necessary as a result of the deliberation under paragraph (5), the Mayor/Do governor shall not designate the area concerned as a foreign investment zone. (7) Foreign-capital invested companies shall, in accordance with a designation plan under paragraph (3) above, satisfy the criteria as prescribed in paragraphs (1) and (2) above within 5 years from the date of public announcement under Article 18 (3) of the Act. (8) The Mayor/Do governor shall develop a foreign investment zone concerned in accordance with a designation plan as deliberated by the Commission, and where he intends to modify the matters as prescribed by the Ordinance of the Ministry of Commerce, Industry and Energy in the designation plan, he shall, in advance, refer it to the Commission for deliberation. (9) Necessary matters concerning the designation and development of a foreign investment zone other than those as prescribed in paragraphs (1) through (8) shall be determined by the Commission. ¡á Article 26 (Management of Foreign Investment Zones) (1) The Mayor/Do governor or the agency in charge of management work shall manage a foreign investment zone according to a designation plan as prescribed in Article 25 (2) of this Decree in accordance with Article 18 (4) of the Act. (2) The Mayor/Do governor or the agency in charge of management work, where he or it manages the foreign investment zone in accordance with the provisions of paragraph (1) above, shall take into account the convenience of the foreign investor or the foreign-capital invested company and positively endeavor to render support for securing various infra-structure facilities needed for facilitation of the business of the foreign-capital invested company, such as financial institutions, information and communication facilities, and goods distribution facilities as well as support for securing medical facilities, educational facilities, and housing facilities. (3) Necessary matters for the management of a foreign investment zone other than those as prescribed in paragraphs (1) and (2) shall be determined by the Commission. ¡á Article 26-2 (Cancellation of Designation of Foreign Investment Zone) (1) In case a foreign investment zone fails to satisfy such designation criteria as prescribed in Article 25 of this Decree, the Mayor/Do governor shall order a foreign-capital invested company to satisfy those criteria within any certain period not exceeding 6 months as fixed by him (hereinafter referred to as the "implementation period") pursuant to Article 18-2 of the Act: Provided, That the Mayor/Do governor may, if deemed that the foreign-capital invested company has any inevitable ground, extend such period only once within the scope not exceeding the initial implementation period. (2) In case a foreign-capital invested company fails to satisfy the designation criteria within the implementation period, the Mayor/Do governor shall request the Commission to deliberate on the cancellation of the designation within 30 days. (3) Necessary matters for the cancellation of designation of a foreign investment zone other than those as prescribed in paragraphs (1) and (2) shall be determined by the Commission. CHAPTER V EX POST FACTO MANAGEMENT OF FOREIGN INVESTMENT ¡á Article 27 (Procedures for Registration of Foreign-Capital Invested Companies) (1) In accordance with the provisions of Article 21 of the Act, the foreign investor shall finish the registration of the foreign-capital invested company with the Minister of Commerce, Industry and Energy within thirty days from the day on which a cause for the registration has occurred. (2) A foreign-capital invested company registered in accordance with the provisions of paragraph (1) above 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 when any of the following events have occurred: 1. The company has completed the report on the acquisition of stocks occasioned by a merger in accordance with the provisions of Article 7 of the Act; 2. The company has completed the report in accordance with the provisions of Article 23 (1) of the Act, and has completed the conveyance or the decrease of stocks; 3. The business title or name of the foreign-capital invested company has been changed; and 4. An alteration has been made with respect to the subject matter as prescribed in any of the subparagraphs of Article 6. ¡á Article 28 (Application for Registration Cancellation) (1) Where a foreign investor comes to fall under Article 21 (3) 1 through 3 of the Act or Article 30 (2) of this Decree, he may make an application for the registration cancellation to the Minister of Commerce, Industry and Energy in accordance with Article 21 (2) 4 of the Act. (2) The date of cessation of the business of the foreign-capital invested company under Article 21 (2) 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. ¡á Article 29 (Restrictions on Disposal of Capital Goods) (1) The term "cases 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 Duties Act. (2) The term "cases that meet the criteria prescribed by the Presidential Decree" in the provisions of Article 22 (3) of the Act shall mean cases identified in 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 categories: (a) Where a company whose ratio of foreign investment is under 50/100 and whose largest shareholder is not a foreign investor (including cases where persons of special relationship as prescribed in Article 7 (1)) acquire 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 Administrator 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. ¡á Article 30 (Conveyance of Stocks) (1) A foreign investor who intends to make a 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 identified in 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 Administrator of the Korea Customs Service, or the head of the local government concerned of the contents of the report. CHAPTER VI CONTRACTS FOR INTRODUCTION OF TECHNOLOGY ¡á 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 the payment period with respect to the compensation for the introduction of the technology concerned is no less than one year, and which fall in any of the categories described in 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 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 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 the 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. ¡á Article 32 (Procedures for Reports on Contracts for Introduction of Technology) The term "period 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. ¡á Article 33 Deleted. CHAPTER VII SUPPLEMENTARY PROVISIONS ¡á 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 head of the Korea Trade and Investment Promotion Agency, the head of the grievance settlement organ, and a foreign investment ombudsman may attend at meetings of the Commission and state their opinions. (4) A meeting of the Commission shall be held with the attendance of a majority of the members who can participate in the meeting concerned, and it shall pass resolutions with the approval of a majority of the members attending. (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, 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. ¡á Article 35 (Composition and Operation of the Foreign Investment Working Committee) (1) The Vice-Minister of Commerce, Industry and Energy shall be the Chairman of the Foreign Investment Working Committee (hereinafter referred to as the "Working Committee") as prescribed in Article 27 (3) of the Act, and the following persons shall be its members: 1. A person designated, upon the request of the Minister of Commerce, Industry and Energy, by the head of the Ministry or agency concerned from among the public officials of Grade I of 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 requested by the Chairperson from persons with extensive experience and knowledge in 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 Chairperson of the Working Committee from 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, the Foreign Investment Inducement Subcommittee with a member of a working committee of the Ministry of Commerce, Industry and Energy as its Chairperson, 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 related to foreign investment inducement activities of the Working Committee. (5) Relevant 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. ¡á Article 36 (Report on Materials concerning the Present Situation of Foreign Investment) (1) The Governor of the Bank of Korea shall integrate the current situation of the outflow and inflow of foreign investment funds and the current situation of payment of prices for technology introduction according to a contract for the introduction of technology under Article 25 of the Act every month, and make report 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. ¡á Article 37 (Disposal of Capital Goods) (1) Where the head 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 head of a customs house to postpone the disposal as prescribed in paragraph (1) above. In this case, the request to the head 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 head of the customs house concerned shall dispose of the capital goods concerned and report to the Minister of Commerce, Industry and Energy. ¡á Article 38 (Examination and Confirmation of Capital Goods Introduced) (1) The term "capital goods that meet the criteria prescribed by the Presidential Decree" in the provisions of Article 29 (1) of the Act shall mean those identified in any of the following subparagraphs: 1. Capital goods which must be subject to 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. ¡á Article 39 (Confirmation of Completion of Investment in Kind) (1) Where the Administrator 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 (1) of the Enforcement Decree of the Act on Special Measures for Promotion of Venture Businesses. ¡á 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 distinctions: 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 Administrator 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 identified in any of the following subparagraphs to the head of the Korea Trade and Investment Promotion Agency (including the heads of the trade centers, branches and offices designated by the head of the Korea Trade and 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 (2) 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 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 and Investment Promotion Agency. (4) The persons to whom the delegation or entrustment was made in accordance with the provisions of paragraphs (1) and (2) shall make notification of, or report on, the contents of their treatment of the matters delegated or entrusted to the Minister of Commerce, Industry and Energy or the competent Minister. (5) 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. ADDENDA ¡á Article 1 (Enforcement Date) This Decree shall enter into force on November 17, 1998. ¡á Article 2 (Repeal of Other Acts and Subordinate Statutes) The Enforcement Decree of the Foreign Investment and Foreign Capital Inducement Act is hereby repealed. ¡á 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. ¡á 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. ¡á 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 ¡á Article 1 (Enforcement Date) This Decree shall enter into force on the date of its promulgation. ¡á Articles 2 through 5 Omitted. 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 ¡á Article 1 (Enforcement Date) This Decree shall enter into force on the date of its promulgation. ¡á 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) (Application Examples to Designation of Foreign Investment Zone) The amended provisions of subparagraphs 1 (a) and 4 of Article 25 (1) shall start to apply to the foreign investment reported for the first time after the enforcement of this Decree. * Attached Table 1 through 3 Omitted. FOREIGNER'S LAND ACQUISITION ACT INTRODUCTION Details of Enactment and Amendment ¡Ü Enactment: This Act was enacted on January 7, 1994 as the Act on the Acquisition of Lands by Foreigners and their Management, in order to generally improve and supplement the previous system of land acquisition by foreigners, for example, by allowing foreigners and foreign enterprises easier acquisition of land needed for their business affairs. With the enactment of this Act, the Foreigner's Land Acquisition Act previously in enforcement (September 18, 1961, Act No. 718) was repealed. ¡Ü Amendment: This Act has arrived at its present form as result of being wholly amended on May 25, 1998 and amended in part on January 21, 1999. Consequently, the title of the Act has been changed to the Foreigner's Land Acquisition Act, and activation of investment by foreigners is aimed for by overall abolishment of restrictions related with land acquisition and management by foreigners, for example, by changing the permission-based system of land acquisition to the reporting-based system. Main Contents ¡Ü When a foreigner, a foreign government, or an international organization concludes a contract for land acquisition within the territory of the Republic of Korea, it shall be reported to the head of Shi/Kun/Ku within sixty days after the date on which the contract is concluded, but permission shall be obtained prior to the contract for land acquisition for certain areas only, such as military installation protection areas, cultural property protection areas, and ecosystem conservation areas. ¡Ü When a foreigner, a foreign government, or an international organization acquires land within the territory of the Republic of Korea due to a cause other than a contract (inheritance, auction, etc.), it shall be reported to the head of Shi/Kun/Ku within six months after the date on which the land is acquired. ¡Ü When a national of the Republic of Korea, or a corporation or an organization established in accordance with the Acts and subordinate statutes of the Republic of Korea who/ that has land within the territory of the Republic of Korea changes his/ its nationality and then desires to continue to own the land, he/ it shall report it to the head of Shi/Kun/Ku within six months after the date of change of the nationality. ¡Ü A foreigner who enters into a contract to acquire land that is subject to the requirement of obtaining permission for acquisition without obtaining the permission or after obtaining the permission by unjust means shall be criminally punished (by imprisonment for not more than two years or a fine not exceeding twenty million won), and a fine for negligence not exceeding three million won shall be assessed against a person who fails to report land acquisition or makes a false report after acquiring land that is subject to the requirement of being reported after acquisition. Wholly Amended by May 25, 1998 Act No. 5544 Amended by Jan. 21, 1999 Act No. 5656 ¡á Article 1 (Purpose) The purpose of this Act is to prescribe matters necessary for foreigner's land acquisition within the territory of the Republic of Korea. ¡á Article 2 (Definition) For the purpose of this Act, the term "foreigner" means an individual, juristic person, or organization falling under any of the following subparagraphs: 1. An individual who does not have the nationality of the Republic of Korea; and 2. A juristic person or organization which falls under any of the following items: (a) A juristic person or organization which is established in accordance with foreign Acts and subordinate statutes; (b) A juristic person or organization where not less than half of its employees or members fall under subparagraph 1; (c) A juristic person or organization where not less than half of the officers such as employees executing its affairs or directors fall under subparagraph 1; and (d) A juristic person or organization where individuals falling under subparagraph 1 or juristic persons or organizations falling under item (a) have not less than half of its capital or voting rights. In this case, when calculating the capital or the number of voting rights, the bearer-type shares of a stock company shall be considered to belong to an individual falling under subparagraph 1 or a juristic person or organization falling under item (a). ¡á Article 3 (Principle of Reciprocity) An individual, juristic person, organization, or government of a foreign country which prohibits or limits a national of the Republic of Korea, a juristic person or organization established in accordance with the Acts and subordinate statutes of the Republic of Korea, or the Government of the Republic of Korea, from acquiring or transferring land within its own territory, may be prohibited or limited from acquiring or transferring land within the territory of the Republic of Korea by the Minister of Construction and Transportation in accordance with the relevant provision of the Presidential Decree. ¡á Article 4 (Report on Land Acquisition by Contract) (1) Where a foreigner, a foreign government, or an international organization prescribed by the Presidential Decree (hereinafter referred to as a "foreigner") concludes a contract for land acquisition within the territory of the Republic of Korea (hereinafter referred to as a "land acquisition contract"), it shall report the conclusion of the contract to the head of Shi/Kun/Ku (referring to an autonomous Ku; hereinafter the same shall apply) within the following 60 days in accordance with the relevant provision of the Presidential Decree. (2) Notwithstanding the provisions of paragraph (1), in case of acquiring the land located in a district or area falling under any of the following subparagraphs, the foreigner shall obtain permission from the head of Shi/Kun/Ku before the conclusion of the contract in accordance with the relevant provision of the Presidential Decree: 1. Military installation protection areas under subparagraph 2 of Article 2 of the Protection of Military Installations Act, naval bases under Article 3 of the Naval Bases Act, base protection areas under subparagraph 9 of Article 2 of the Military Air Bases Act, or such other areas as may be especially necessary to limit foreigner's land acquisition for the purpose of national defense as prescribed by the Presidential Decree. 2. Designated cultural properties, and protectors or reservations for them under Article 2 (2) of the Protection of Cultural Properties Act; and 3. Deleted; 4. Ecosystem conservation areas under subparagraph 12 of Article 2 of the Natural Environment Conservation Act. (3) As long as a foreigner's land acquisition in a district and area falling under any subparagraph of paragraph (2) does not cause any inconveniences in the related district and area, the head of Shi/Kun/Ku shall permit the foreigner's land acquisition in accordance with paragraph (2). (4) No land acquisition contract concluded in violation of paragraph (2) shall have any effect. ¡á Article 5 (Report on Land Acquisition Caused by Reasons other than Contract) Where a foreigner acquires land within the territory of the Republic of Korea by means of inheritance, auction, or any cause other than contracts prescribed by the Presidential Decree, he/she shall report it to the head of Shi/Kun/Ku within 6 months after his/her land acquisition in accordance with the relevant provision of the Presidential Decree. ¡á Article 6 (Report on Continuous Holding of Land) Where a national of the Republic of Korea, or a juristic person or organization established in accordance with the Acts and subordinate statutes of the Republic of Korea, which has land within the territory of the Republic of Korea, changes its nationality and then desires to keep the land, it shall report to the head of Shi/Kun/Ku within 6 months after the change of the nationality in accordance with the relevant provision of the Presidential Decree. ¡á Article 7 (Penal Provisions) Where a foreigner concludes a land acquisition contract without obtaining permission under Article 4 (2) or with obtaining permission by any unjust means, he/she shall be sentenced to imprisonment for not more than two years or to a fine not exceeding twenty million won. ¡á Article 8 (Joint Penal Provisions) Where a representative of a juristic person, or an agent, employee, or other personnels of a juristic person or individual commits an offense provided for in Article 7 in connection with affairs of the juristic person or individual, not only shall such an actor be sentenced accordingly, but its juristic person or individual shall be sentenced to the fine provided for in the same Article. ¡á Article 9 (Fine for Negligence) (1) A person who fails to report land acquisition under Article 4 (1) or makes a false report, shall be sentenced to a fine for negligence not exceeding three million won. (2) A person who falls under any of the following subparagraphs shall be sentenced to a fine for negligence not exceeding one million won. 1. A person who fails to report land acquisition under Article 5 or makes a false report; or 2. A person who fails to report the continuous holding of land under Article 6 or makes a false report. (3) A fine for negligence provided for in paragraphs (1) and (2) shall be imposed and collected by the head of Shi/Kun/Ku in accordance with the relevant provision of the Presidential Decree. (4) A person who is dissatisfied with the disposition of a fine for negligence under paragraph (3) may raise an objection against it to the head of Shi/Kun/Ku within thirty days after receiving its notification. (5) Where a person who is subject to the disposition of a fine for negligence under paragraph (3) raises an objection against it under paragraph (4), the head of Shi/Kun/Ku shall forthwith notify the competent court, and the court shall, upon the receipt of such notification, bring the case to a trial for negligence under the Non-Contentious Case Litigation Procedure Act. (6) Where no objection is raised and no fine for negligence is paid within a definite period under paragraph (4), the fine for negligence shall be collected according to the rules of dispositions on delinquency of local tax. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force one month after the date of its promulgation. ¡á Article 2 (Transitional Measures concerning Previous Permission and Report) (1) Where any permission or report on the acquisition or continuous holding of land was granted or made under the previous provisions at the time this Act enters into force, it shall be considered to have been granted or made in accordance with the amended provisions of Article 4 (1) and (2), 5, or 6. (2) Where a foreigner who failed to obtain permission or make a report on the acquisition or continuous holding of land under the previous provisions at the time this Act enters into force, obtains permission or makes a report in accordance with the amended provisions of Article 4 (1) and (2), 5, or 6 within one year after the date of its enforcement, he shall be considered to have obtained permission or made a report in accordance with the previous provisions. ¡á Article 3 (Transitional Measures concerning Penal Provisions) The application of penal provisions against an illegal act before the enforcement of this Act shall be made in accordance with the previous provisions: Provided, That the same shall not apply to the permission obtained or report made in accordance with the amended provisions of Article 2 (2) of the Addenda within one year after this Act enters into force. ¡á Articles 4 Omitted. ADDENDA ¡á Article 1 (Enforcement Date) This Act shall enter into force on July 1, 1999. ¡á Articles 2 and 3 Omitted.