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Article 18
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(Approval for Operation)
Approval from the Competent Authority is required for the operation of any securities finance enterprise, securities central depository enterprise, or any other securities-related service enterprise.
Regulations governing the conditions for establishment, application and approval procedures, finances, operations, management, and other matters for compliance with respect to the securities enterprises referred to in the preceding paragraph shall be prescribed by the Competent Authority.
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Article 38
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(Protective Measures for Issues)
In order to protect public interests and the interests of investors, the Competent Authority may, prior to the approval of a public offer or issuance, either require the issuer, securities underwriters, or other related parties to submit reference materials or reports, or make a direct examination of relevant documents and accounts.
The Competent Authority may, at any time after the issuance of securities, order the issuer to submit financial and business reports or makes a direct examination of the financial and business conditions of the issuer.
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Article 39
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(Penalties for Issuer Non-Compliance With Laws or Regulations)
During its examination of the disclosed financial reports and other reference materials or reports of the issuer, or by its direct investigation of the financial and business conditions of the issuer, the Competent Authority may, if it finds that the issuer has failed to comply with an act or regulation, issue a corrective order prescribing a period in which to correct the non-compliance, or it may additionally impose penalties pursuant to this Act.
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Article 53
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(Disqualifications and Discharge of Directors, Supervisors, or Managerial Officers)
No person who falls within any of the following categories shall serve as the director, supervisor, or managerial officer of a securities firm; those appointed and currently serving in any of these capacities shall be discharged; the Competent Authority shall also make written request to the Ministry of Economic Affairs to void the registration of such person as a director, supervisor, or managerial officer:
- Any person specified in any subparagraph of Article 30 of the Company Act.
- Any person who served as the director, supervisor, managerial officer or other equivalent position in a juristic person at the time when it was adjudged bankrupt, and that three years have not elapsed since the finalization of the bankruptcy, or that the reconciliation has not yet been fulfilled.
- Any person with whom in the last three years a financial institution has refused to transact, or who has a bad credit record.
- Any person who has been sentenced under this Act to a criminal penalty of severity equal to or greater than the imposition of a criminal fine, and three years have not elapsed since the completion of sentence execution, the expiration of suspension of sentence, or the pardon of such punishment.
- Any person who has violated the provision of Article 51 hereof.
- Any person who was discharged from his position under Article 56 or subparagraph 2 of Article 66 hereof within the last three years.
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Article 54
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(Disqualifications of Associated Persons)
Associated persons employed by securities firms whose duties relate to the securities business shall have reached the age of majority and possess the qualifications required by relevant acts and regulations, and shall not fall within one of the following categories:
- Having been adjudged bankrupt and not reinstated, or having been declared by a court to be under guardianship or assistance and that declaration has not been voided.
- Concurrently holding a position with another securities firm, provided that this restriction shall not apply when there is an investment relationship and the Competent Authority has granted approval allowing concurrent holding of the position of director or supervisor at the invested securities firm.
- Having been sentenced to a criminal penalty of severity equal to or greater than a term of imprisonment for fraud, breach of trust, or violation of laws governing business and industry, and three years have not elapsed since the date of completion of the sentence execution, the expiration of suspension of sentence, or the pardon of such punishment.
- Falling under any of the situations specified in either subparagraphs 2 through 4 or subparagraph 6 of the preceding Article.
- Having violated orders issued by the competent Authority in accordance with this Act.
The job title of the associated persons referred to in the preceding paragraph shall be prescribed by the Competent Authority.
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Article 56
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(Sanctions for Legal Violations of Securities Firms)
If any director, supervisor, or employee of a securities firm is found to have committed any act which violates this Act or another related act or regulation, and if such violation may affect the normal operation of the said securities firm, the Competent Authority, in addition to ordering the said securities firm to suspend business operation of such person for not more than one year or discharge such person at any time, may also impose sanctions in accordance with Article 66 depending on the severity of the violation.
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Article 66
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(Sanctions for Legal Violations by Securities Firms)
Where a securities firm has violated this Act or any order issued hereunder, in addition to being subject to the punishment provided under this Act, the Competent Authority may, depending on the severity of the offense, impose any of the following sanctions, and furthermore may order the securities firm to correct the violation within a prescribed period:
- warning.
- ordering the securities firm to remove its directors, supervisors, or managerial officers from their office.
- suspending the business, in whole or in part, of the company or its branch for a period of not more than six months.
- voiding or revoking the business license of the company or its branch.
- other necessary measures.
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