Real Estate Investment Company Act

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CHAPTER I GENERAL PROVISIONS

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 Article 1 (Purpose)
 

The purpose of this Act is to contribute to the development of national economy by prescribing the matters concerning the establishment of a real estate investment company, the management methods of assets thereof and the protection of investors therein to provide the citizens with more opportunities to invest in real estate as well as to vitalize the sound investment therein.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 2 (Definitions)
 

The definitions of terms used in this Act shall be as follows:
1.
The term "real estate investment company or real estate investment trust (hereinafter referred to as real estate investment trust)" means any company incorporated pursuant to Articles 3 through 8, 11-2, 26-2 (1), 45 and 49-2 (1), for the main purposes of investing in real estate and managing the invested assets, and which falls under any of the following items:
(a)
Self-managed real estate investment trusts: A company that hires full-time executives and employees, including asset management specialists, on its payroll to invest and operate assets directly;
(b)
Entrusted management real estate investment trusts: A company that entrusts its asset investment and operation to any asset management companies;
(c)
Corporate restructuring real estate investment trusts: A company that invests in the real estate provided for in each item of Article 49-2 (1), and entrusts its asset investment and operation to any asset management companies;
2.
The term "securities" means securities pursuant to Article 4 (1) of the Financial Investment Services and Capital Markets Act, and exchange-traded derivatives pursuant to Article 5 (2) of the same Act;
3.
The term "securities related to real estate" means any of the following items:
(a)
Shares and bonds of real estate investment trusts;
(b)
Collective investment securities related to real estate and prescribed by Presidential Decree among those referred to in Article 9 (21) of the Financial Investment Services and Capital Markets Act;
(c)
Asset-backed securities related to real estate and prescribed by Presidential Decree among those referred to in the Asset-Backed Securitization Act;
(d)
Mortgage-backed bonds and mortgage-backed securities pursuant to the Special Purpose Companies for Mortgage-Backed Bonds Act and the Korea Housing Finance Corporation Act;
(e)
National housing bond pursuant to the Housing Act;
(f)
Urban railroad bond pursuant to the Urban Railroad Act;
(g)
Other securities related to real estate and prescribed by Presidential Decree;
4.
The term "real estate development project" means a project falling under any of the following items:
(a)
A project that develops land into a housing site, factory site, etc.;
(b)
A project that reclaims and creates land from public waters;
(c)
A project that builds or rebuilds a building or other artificial structure; and
(d)
Other projects prescribed by Presidential Decree, which are similar to projects referred to in items (a) through (c).
5.
The term "asset management company" means any company incorporated pursuant to Article 22-3 for the purposes of investing and operating assets on commission of any entrusted management real estate investment trust or any corporate restructuring real estate investment trust.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 3 (Corporate Personality)
 

(1)
Real estate investment trusts shall be established as an incorporated company.
(2)
Real estate investment trusts shall be subject to the application of the Commercial Act, unless otherwise specifically provided for in this Act.
(3)
Real estate investment trusts shall use the name "real estate investment trust" in its trade name.
(4)
No entity, other than real estate investment trusts under this Act, shall use the name "real estate investment trust" or any other name similar thereto.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 4 (Scope of Business Activities)
 

Real estate investment trusts shall not be engaged in any business, other than investing its assets in real estate, etc. by any means falling under any subparagraph of Article 21.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

CHAPTER II INCORPORATION, ORGANIZATION, ETC.

SECTION 1 Incorporation and Authorization for Business

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 Article 5 (Incorporation of Real Estate Investment Trusts)
 

(1)
Real estate investment trusts shall be incorporated by promotion of incorporation.
(2)
Notwithstanding subparagraph 2 of Article 290 of the Commercial Act, real estate investment trusts shall not be incorporated by investment in kind.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 6 (Start-up Capital)
 

(1)
Start-up capital of a self-managed real estate investment trust shall be at least one billion won.
(2)
Start-up capital of an entrusted management real estate investment trust and a corportate restructuring real estate investment trust shall be at least 500 million won.
[This Article Wholly Amended by Act No. 11583, Dec. 18, 2012]

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 Article 7 (Promoters)
 

A person who falls under any of the following subparagraphs shall not be eligible to be a promoter of a real estate investment trust:
1.
A minor, an incompetent person, or a quasi-incompetent person;
2.
A person sentenced to bankruptcy and is not yet reinstated;
3.
A person sentenced to imprisonment without prison labor or heavier punishment or sentenced to a fine or heavier punishment, as declared by a court, under this Act, the Business Affairs of Licensed Real Estate Agents and Report of Real Estate Transactions Act, the Public Notice of Values and Appraisal of Real Estate Act, the Financial Investment Services and Capital Markets Act and other Acts related to finance (hereinafter referred to as "related Acts") prescribed by Presidential Decree and in whose case five years have not passed since such punishment was completely executed (including cases where the execution is deemed to have been completed) or exempted;
4.
A person in the period of a stay of the execution after he/she has been sentenced to a stay of the execution of imprisonment without prison labor or heavier punishment;
5.
A person who was an executive or employee of a corporation, the business license, authorization, registration, etc. of which was cancelled in accordance with this Act or related Acts (limited to a person who was directly or correspondingly responsible for the grounds of cancellation of such business license, authorization, registration, etc. and prescribed by Presidential Decree) and in whose cases five years have not yet elapsed from the date of cancellation of such business license, etc., against such corporation;
6.
A person in whose cases five years have not elapsed since the date of dismissal or removal from his/her office due to a violation of this Act or related Acts.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 8 (Articles of Incorporation)
 

(1)
Promoters of a real estate investment trust shall prepare the articles of incorporation, including the following matters, and affix their names and seals or write their signatures thereon:
1.
Purposes;
2.
Company name;
3.
Total number of stocks to be issued;
4.
Price of a stock;
5.
Total number of stocks to be issued at the time of incorporation;
6.
Matters relating to the investment and management of assets;
7.
Matters relating to the evaluation of assets;
8.
Matters relating to the distribution of profits, etc.;
9.
Location of main office;
10.
Method of public notice;
10-2.
The content of assigning corporate directors and supervisory directors, where a real estate investment trust assigns corporate directors and supervisory directors pursuant to Article 14-3;
11.
Remuneration basis for directors (where a real estate investment trust assigns corporate directors and supervisory directors pursuant to Article 14-3, corporate directors shall be excluded) and auditors;
12.
Outline of an asset custody contract to be concluded with an asset custody organization pursuant to Article 35 (1);
13.
Outline of an entrustment contract where such contract on the investment and management of assets is to be concluded;
14.
Names, resident registration numbers and addresses of promoters;
15.
Other matters prescribed by Presidential Decree.
(2)
A total number of stocks to be issued at the time of incorporation under paragraph (1) 5 may be determined by fixing upper and lower limits.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 8-2 (Report on Incorporation of Self-Managed Real Estate Investment Trust, etc.)
 

(1)
A self-managed real estate investment trust shall prepare a report on its incorporation as prescribed by Presidential Decree and submit it to the Minister of Land, Infrastructure and Transport within ten days from the date of registration of its incorporation.
(2)
After a self-managed real estate investment trust submits a report on its incorporation under paragraph (1), it shall prepare a report on the current status of the company after the incorporation thereof as prescribed by Presidential Decree and submit it to the Minister of Land, Infrastructure and Transport.
(3)
Where the Minister of Land, Infrastructure and Transport deems it necessary for the public interest, as a result of the examination of the details of a report under paragraphs (1) and (2), because the operation, etc. of a self-managed real estate investment trust violates any Acts and subordinate statutes, or is likely to cause difficulty in protecting investors, he/she may order the relevant self-managed real estate investment trust to make corrections or supplements.
(4)
A self-managed real estate investment trust shall file an application for approval under Article 9 (1) with the Minister of Land, Infrastructure and Transport within six months from the date of registration of its incorporation.
[This Article Newly Inserted by Act No. 11583, Dec. 18, 2012]

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 Article 9 (Authorization for Business)
 

(1)
Where a real estate investment trust intends to conduct business referred to in subparagraphs 1 through 4, 6 and 7 of Article 21, it shall obtain authorization from the Minister of Land, Infrastructure and Transport according to the types of real estate investment trusts pursuant to subparagraph 1 of Article 2, as prescribed by Presidential Decree. The same shall also apply to cases where it intends to change any approved matters (this shall not apply to cases where the change of any approved matters has been made due to reasons prescribed by Presidential Decree, such as an auction or public sale).
(2)
The Minister of Land, Infrastructure and Transport shall confirm matters referred to in the following subparagraphs in deciding as to whether to grant authorization for business (hereinafter referred to as "authorization for business") pursuant to paragraph (1):
1.
Whether a real estate investment trust has been incorporated pursuant to Articles 3 through 8, 11-2, 26-2 (1), and 45;
2.
Validity and adequacy of a business plan;
2-2.
Whether an asset portfolio of a corporate restructuring real estate investment trust meets the requirements referred to in Article 49-2 (1);
3.
Adequacy of a plan to issue new stocks: Provided, That it shall be limited to new stocks which are issued within one year and six months from the date of authorization for business;
4.
Other matters prescribed by Presidential Decree.
(3)
Where the Minister of Land, Infrastructure and Transport grants authorization for business, he/she may attach conditions required to ensure integrity of management and protect investors.
(4)
Real estate investment trusts shall not issue new stocks by method of allotment to persons other than shareholders, before obtaining authorization for business.
(5)
Where the Minister of Land, Infrastructure and Transport has granted authorization for business, he/she shall publish the details thereof in the official gazette and on the website, etc.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 10 (Minimum Capital of Real Estate Investment Trust which has Obtained Authorization for Business)
 

The capital of a real estate investment trust, for which six months (hereinafter referred to as "preparation period of the minimum capital") have passed from the date it obtained authorization for business, shall not be less than the following amount:
1.
A self-managed real estate investment trust: 7 billion won;
2.
An entrusted management real estate investment trust and a corporate restructuring real estate investment trust: 5 billion won.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 11 Deleted.
 

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 Article 11-2 (Prohibition, etc. against Opening Branch Office of Entrusted Management Real Estate Investment Trusts)
 

Every entrusted management real estate investment trust shall be prohibited from opening any branch office, other than its principal office and from hiring any employee or appointing any full-time executive.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

SECTION 2 Organization

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 Article 12 (Matters Subject to Resolution by General Meeting of Shareholders)
 

(1)
The following matters shall undergo resolution by a general meeting of shareholders: Provided, That Article 434 of the Commercial Act shall apply mutatis mutandis to the resolution on matters referred to in subparagraphs 4 and 5:
1.
Final decision on the business plan of the relevant year;
2.
Plans for borrowing funds and issuing bonds for the relevant year;
3.
Matters relating to the conclusion of important contracts regarding the investment and management of assets or amendments thereto;
4.
Determination of a real estate development project, or matters concerning the change of any important parts prescribed by Presidential Decree, such as the objectives, objects, scope, etc. of the determined real estate development project;
5.
Matters concerning investment in kind in real estate under Article 19;
6.
Matters relating to the conclusion of an asset custody contract with an asset custody organization pursuant to Article 35 (1) or amendments thereto.
(2)
A real estate investment trust may postpone a general meeting of shareholders if the total number of stocks owned by those present are below the majority of the total stocks issued after one hour lapses from the scheduled time of the meeting. In such cases, a real estate investment trust shall convene the general meeting of shareholders postponed (hereafter referred to as "postponed general meeting of shareholders" in this Article) within two weeks from the date.
(3)
If the total number of stocks owned by those present is below the majority of the total stocks issued after one hour lapses from the scheduled opening time of the postponed general meeting of shareholders, the general meeting of shareholders shall be deemed effective by the total number of stocks held by those present. In such cases, the resolution at the postponed general meeting of shareholders shall be passed by the majority of the voting rights of those present: Provided, That the special resolution concerning subparagraphs 4 and 5 of paragraph (1) at the postponed general meeting of shareholders shall be passed by not less than two thirds of the voting rights of those present.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 13 (Matters Subject to Resolution by Board of Directors)
 

(1)
The following matters shall undergo resolution by the board of directors:
1.
Matters relating to the management of real estate, including acquisition or disposal thereof;
2.
Matters relating to the acquisition or disposal of securities with a value exceeding the amount prescribed by Presidential Decree;
3.
Matters concerning borrowings and the issuance of bonds;
4.
Matters concerning the establishment and re-establishment of internal-control standards and the appointment and dismissal of compliance officers pursuant to Article 47.
(2)
Directors shall inform the auditor of the date and time, place, agenda, etc. of a meeting of the board of directors seven days before the meeting commences.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 14 (Qualification, etc. for Directors)
 

(1)
Article 7 shall apply mutatis mutandis to directors of real estate investment trusts.
(2)
A person falling under any of the following subparagraphs is disqualified as a director of any entrusted management real estate investment trust:
1.
A specially-related person (referring to a specially related person provided for in Article 133 (3) of the Financial Investment Services and Capital Markets Act; hereinafter the same shall apply) of any asset management company entrusted with the investment and operation of assets;
2.
A person paid regular remunerations by any asset management company that is entrusted with the investment and operation of assets;
3.
A person prescribed by Presidential Decree as being feared to undermine his/her neutrality as a director.
(3)
When a person selected and appointed as a director of any real estate investment trust falls under paragraph (1) or (2) (limited to a director of any entrusted management real estate investment trust) or it is found that he/she falls under paragraph (1) or (2) at the time he/she is selected and appointed as a director, he/she shall be rightly dismissed.
(4)
Any act in which a director is involved before he/she is dismissed pursuant to paragraph (3) shall not lose its effect.
(5)
Necessary matters concerning the duties of directors shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 14-2 (Qualification, etc. for Auditors)
 

(1)
Each auditor of any real estate investment trust shall be qualified as a certified public accountant provided for in the Certified Public Accountant Act.
(2)
A person falling under any of the following subparagraphs is disqualified as an auditor of any real estate investment trust:
1.
A person who falls under any subparagraph of Article 7;
2.
A person who belongs to any accounting corporation that is in the period of business suspension imposed by the Certified Public Accountant Act;
3.
A person who is in the period of the suspension of the performance of his/her duty imposed by the Certified Public Accountant Act;
4.
A person prescribed by Presidential Decree as being feared to undermine his/her neutrality as an auditor.
(3)
Article 14 (3) through (5) shall apply mutatis mutandis to dismissals and duties of auditors.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 14-3 (Appointment of Corporate Directors and Supervisory Directors)
 

(1)
An entrusted management real estate investment trust may assign a director (hereinafter referred to as "corporate director") who is an asset management company to which it entrusts the investment and operation of its assets pursuant to Article 22-2, and supervisory directors, as prescribed by the articles of incorporation. In such cases, no real estate investment trust that assigns a corporate director and supervisory directors shall assign directors under Article 14 and auditors under Article 14-2.
(2)
Where an entrusted management real estate investment trust assigns corporate directors and supervisory directors pursuant to paragraph (1), it shall appoint at least one corporate director and two supervisory directors.
[This Article Newly Inserted by Act No. 11583, Dec. 18, 2012]

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 Article 14-4 (Qualification for Corporate Directors)
 

Article 14 shall not apply to corporate directors.
[This Article Newly Inserted by Act No. 11583, Dec. 18, 2012]

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 Article 14-5 (Duties of Corporate Directors)
 

(1)
Where an entrusted management real estate investment trust assigns a corporate director pursuant to Article 14-3 (1), the corporate director shall represent the entrusted management real estate investment trust and conduct its business.
(2)
Where a corporate director intends to conduct business falling under any of the following, its conduct of business shall be subject to a resolution of the board of directors. In such cases, Article 13 (1) shall not apply:
1.
The entrustment of business to, or the conclusion of an asset custody contract (including a contract for the change thereof) with, an institution falling under any of the following:
(a)
An asset management company;
(b)
An institution to which general affairs, etc. under Article 22-2 (1) are entrusted;
(c)
An asset custody institution under Article 35 (1).
2.
The payment of remuneration following the investment, management or custody of assets;
3.
Matters concerning the distribution of money and stock dividends;
4.
Other matters prescribed by the articles of incorporation, which are deemed important for the operation of an entrusted management real estate investment trust.
(3)
A corporate director may determine the scope of its duties and appoint a person who is to perform its duties from among executives and employees belonging to the relevant corporate director. In such cases, the corporate director shall notify an entrusted management real estate investment trust of the appointment thereof in writing.
(4)
An act done by a person appointed pursuant to paragraph (3) within the scope of duties of a corporate director shall be deemed an act done by the corporate director.
(5)
A corporate director shall report the progress of business and the details of the asset management at least once every three months to the board of directors.
[This Article Newly Inserted by Act No. 11583, Dec. 18, 2012]

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 Article 14-6 (Qualification for Supervisory Directors)
 

(1)
The provisions of Article 14 (1) through (4) shall apply to supervisory directors.
(2)
A supervisory director shall be a person who does not fall under any of the following:
1.
A promoter of the relevant real estate investment trust;
2.
A person who works full-time at another corporation in a case where he/she is a director of the relevant real estate investment trust and serves as a director of the corporation concerned;
3.
An auditor of the relevant real estate investment trust;
4.
Any other person prescribed by Presidential Decree, who is likely to damage neutrality as supervisory director.
(3)
At least one of supervisory directors shall be a certified public accountant under the Certified Public Accountant Act, who does not fall under any of the subparagraphs of Article 14-2 (2).
[This Article Newly Inserted by Act No. 11583, Dec. 18, 2012]

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 Article 14-7 (Duties of Supervisory Directors)
 

(1)
A supervisory director shall supervise a corporate director's conduct of business.
(2)
Where necessary to understand the business and the status of property of a real estate investment trust, a supervisory director may request a corporate director, asset custody institution, etc. to report the business and the status of property related to the real estate investment trust.
(3)
Where a supervisory director deems it necessary to perform his/her duties, he/she may request an auditor to report an audit.
(4)
A person who receives a request from a supervisory director pursuant to paragraph (2) or (3) shall comply with such request unless there exist extenuating circumstances.
(5)
Articles 409, 410, 412, 412-2, 412-3, 412-5, 413, 413-2 and 414 of the Commercial Act shall apply mutatis mutandis to supervisory directors. In such cases, an "auditor" shall be deemed a "supervisory director".
[This Article Newly Inserted by Act No. 11583, Dec. 18, 2012]

SECTION 3 Issuance of Stock

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 Article 14-8 (Public Offering of Stocks)
 

(1)
No real estate investment trust shall make a public offering of stocks it issues before obtaining approval for business (in the case of a real estate investment trust specialized in development under Article 26-2 (1), before obtaining approval or permission under related Acts and subordinate statutes for a real estate development project in which it invests).
(2)
A real estate investment trust shall make a public offering of at least 30 percent of the total number of stocks issued within one year and six months from the date it obtains approval for business.
(3)
Where a real estate investment trust falls under any of the following, notwithstanding paragraph (2), it may not make a public offering of stocks:
1.
Where the total stocks the National Pension Service incorporated pursuant to Article 24 of the National Pension Act (hereinafter referred to as the "National Pension Service") or other stockholder prescribed by Presidential Decree has acquired or bought severally or jointly within one year and six months from the date the real estate investment trust obtains approval for business is at leat 30 percent of the total stocks issued by the real estate investment trust;
2.
Where the real estate investment trust invests all of its total assets in rental business after the development or purchase of multiple separate housing units (hereinafter referred to as "housing rental business") referred to in subparagraph 2 of Article 2 of the Housing Act.
[This Article Wholly Amended by Act No. 11583, Dec. 18, 2012]

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 Article 15 (Dispersion of Stocks)
 

(1)
One shareholder and a person specially related with such shareholder shall not possess stocks in excess of a fixed percentage by types (hereinafter referred to as "ceiling of ownership of stocks for each person") of a real estate investment trust according to the following classification, after the period for preparation of the minimum capital expires:
1.
Self-managed real estate investment trusts: 30 percent of the total number of stocks issued; and
2.
Consigned-management real estate investment trusts: 40 percent of the total number of stocks issued.
(2)
Where one shareholder and a specially related person (hereinafter referred to as "same person") possess stocks of a real estate investment trust in excess of the per-person shareholding limits in violation of paragraph (1), they shall exercise their voting rights within the shareholding limit per person.
(3)
Where the same person possesses stocks in excess of the per-person shareholding limits, in violation of paragraph (1), the Minister of Land, Infrastructure and Transport may order him/her to dispose of the stocks that are in excess of the per-person shareholding limits by determining within a six month period.
(4)
Where the same person possesses stocks in excess of the per-person shareholding limits through his/her investment in kind, notwithstanding paragraph (3), the Minister of Land, Infrastructure and Transport may order him/her to dispose of his/her stocks that are in excess of the per-person shareholding limits during the period ranging from not less than one year to not more than one year and six months from the date on which the stocks are issued by investment in kind.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 16 (Exceptions to Ceiling of Ownership of Stocks for Each Person)
 

(1)
Article 15 (1) shall not apply to the National Pension Service and other stockholders prescribed by Presidential Decree.
(2)
Where a person owns stocks in excess of the ceiling of ownership of stocks for each person pursuant to paragraph (1), Article 15 (2) shall apply to such cases: Provided, That this shall not apply to cases where the National Pension Service or any other stockholder prescribed by Presidential Decree owns stocks in excess of the ceiling of ownership of stocks for each person.
(3)
Article 15 shall not apply to a real estate investment company that invests all of its total assets in housing rental business.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 17 (Application for Stocks, etc.)
 

(1)
Where a real estate investment trust intends to issue stocks after obtaining authorization for business, it shall prepare an application for stocks in which the following matters are stated and provide the application to the prospective underwriter of the relevant stocks:
1.
Matters referred to in Article 8 (1) 1 through 10, 10-2, 11 through 13;
2.
When the period for existence or grounds of dissolution are prescribed in the articles of incorporation, the details thereof;
3.
Financial institutions to receive the payment of stock price and the place of payment;
4.
The fact that authorization for business may be cancelled if the capital is less than the minimum capital after the preparation period of the minimum capital expires;
5.
Other matters prescribed by Presidential Decree.
(2)
Where a real estate investment trust solicits an offer to purchase stocks to be issued pursuant to paragraph (1), it shall provide the party concerned with an investor's guide in which the matters prescribed by Presidential Decree, such as the objective of incorporation, an investment plan, etc. are stated.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 18 (Terms of Issuance)
 

(1)
Where a real estate investment trust issues stocks after its incorporation, the issuing price and other terms of issuance for the same kind of stocks issued on the same day shall be uniformly determined.
(2)
In cases of paragraph (1), the issuing price of stocks shall be calculated on the basis of market value, asset value and earnings of the relevant real estate investment trust by means prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 19 (Investment in Kind)
 

(1)
No real estate investment trust shall issue new stocks by method of receiving investment in kind before it provides itself with at least the minimum capital after obtaining approval for business.
(2)
The asset to be invested in kind in a real estate investment trust pursuant to subparagraph 4 of Article 416 of the Commercial Act after obtaining authorization for business of the real estate investment trust shall be any of the following subparagraphs:
1.
Real estate;
2.
Rights related to the use of real estate, such as superficies, right to lease;
3.
Right to benefit of real estate trust, the trust property of which is wholly attributed to the beneficiary at the time the trust expires.
(3)
Deleted.
(4)
The value of real estate which is invested in kind pursuant to paragraph (2) shall be appraised by not less than two property appraisal business operators pursuant to the Public Notice of Values and Appraisal of Real Estate Act. In such cases, a real estate investment trust shall receive a recommendation for appraisal business operator from an institution prescribed by Presidential Decree.
(5)
Matters necessary for the appraisal method of property under paragraph (4) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 20 (Listing, etc. of Stocks)
 

(1)
When a real estate investment trust meets the listing requirements of the listing regulations pursuant to Article 390 (1) of the Financial Investment Services and Capital Markets Act, it shall, without delay, list its stocks on the securities market pursuant to Article 8-2 (4) 1 of the same Act so that its stocks are traded in the securities market.
(2)
Where a real estate investment trust fails to list its stocks on the securities market pursuant to paragraph (1) without justifiable causes, the Minister of Land, Infrastructure and Transport may order it to list its stocks within a fixed period.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 20-2 (Shareholders' Rights to Claim on Purchase of Stocks by Real Estate Investment Trusts)
 

(1)
Where the board of directors of any real estate investment trust passes a resolution on the matters falling under any of the following subparagraphs, any shareholder who opposes to such resolution shall notify in writing the relevant real estate investment trust of his/her intention of opposing the resolution before the general meeting of shareholders, and claim in writing for the purchase of the stocks he/she holds, indicating the kind and number of stocks he/she holds, within 20 days from the date on which the general meeting of shareholders passes a resolution on the relevant matters:
1.
Changes in the articles of incorporation that restrict the number of stocks or extend the period of existence of the company: Provided, That cases will be excluded where it is impossible to sell the assets in possession within the period of existence, and such period is extended once by up to one year;
2.
A merger with other real estate investment trusts;
3.
The issuance of new stocks for the investment in kind pursuant to Article 19.
(2)
Where any shareholder claims on the purchase of his/her stocks under paragraph (1), the relevant real estate investment trust shall purchase such stocks within 20 days from the date on which the period of purchase claim expires. In such cases, necessary matters concerning the purchase price of stocks and methods of making the payment, etc. shall be prescribed by Presidential Decree.
(3)
Notwithstanding paragraph (2), if a real estate investment trust is unable to purchase the stocks due to lack of funds, it may postpone the purchase of stocks by obtaining approval from the Minister of Land, Infrastructure and Transport.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

CHAPTER III BUSINESS OPERATIONS

SECTION 1 Asset Investment and Management

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 Article 21 (Methods of Investment and Management of Assets)
 

Real estate investment trusts shall invest and manage their assets by a method falling under any of the following subparagraphs:
1.
Acquisition, management, amelioration and disposal of real estate;
2.
Real estate development projects;
3.
Lease and rent of real estate;
4.
Sale and purchase of securities;
5.
Deposit in financial institutions;
6.
Acquisition, management and disposal of the rights to the use of real estate, such as superficies, right to lease;
7.
Acquisition, management and disposal of right to benefit of real estate, the trusted property of which is wholly attributed to the beneficiary at the time the trust expires.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 22 (Asset Management Specialists of Self-Managed Real Estate Investment Trusts)
 

(1)
Each self-managed real estate investment trust shall, for the investment and management of its assets, employ regular asset management specialists to enhance its expertise and protect investors pursuant to the following subparagraphs, as prescribed by Presidential Decree:
1.
Certified public appraisers or certified real estate brokers who have worked in the respective fields for not less than five years;
2.
Holders of master's or higher degree in the field of real estate or related field who have worked for not less than three years in the profession related to the investment and management of real estate;
3.
Other persons with work experience equivalent to subparagraph 1 or 2 who are prescribed by Presidential Decree.
(2)
Asset management specialists pursuant to paragraph (1) shall complete an education course on asset management beforehand. In such cases, the necessary matters, such as education institution or education program, shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 22-2 (Business Commissioned, etc. by Entrusted Management Real Estate Investment Trust)
 

(1)
An entrusted management real estate investment trust shall entrust the investment and operation of its assets to an asset management company, and issuance of stocks and general clerical services to an institution that meets the requirements prescribed by Presidential Decree (hereinafter referred to as "institution entrusted with general clerical services, etc.").
(2)
Necessary matters concerning the entrustment of business by an entrusted management real estate investment trust, such as the business scope of an institution entrusted with general clerical services, etc. shall be prescribed by Presidential Decree.
(3)
An entrusted management real estate investment trust, asset management company entrusted with the investment and operation of the assets of the former, and any specially related person therewith are prohibited from trading real estate and securities with each other: Provided, That the same shall not apply to the trade prescribed by Presidential Decree, where there is no risk of undermining the interests of shareholders.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 22-3 (Authorization, etc. for Asset Management Company)
 

(1)
Any person who intends to incorporate an asset management company shall obtain authorization therefor from the Minister of Land, Infrastructure and Transport after meeting the requirements falling under the following subparagraphs. The same shall also apply where he/she intends to change any matters authorized:
1.
The capital shall be not less than seven billion won;
2.
The company shall employ regular asset management specialists under Article 22 not less than the number prescribed by Presidential Decree;
3.
A system shall be established to prevent a conflict of interests between an asset management company and investors, and between a specific investor and other investors.
(2)
The Minister of Land, Infrastructure and Transport shall confirm the matters falling under each of the following subparagraphs when he/she determines whether to grant authorization pursuant to paragraph (1):
1.
Feasibility of a business plan;
2.
Composition of shareholders and the appropriateness of funds used to acquire stocks;
3.
Appropriateness of a divisional management plan between the intrinsic assets of the relevant asset management company and the entrusted assets;
4.
The management's expertise and ability of management.
(3)
An asset management company is prohibited from concurrently running business, other than business commissioned by any entrusted management real estate investment trust and any corporate restructuring real estate investment trust: Provided, That the same shall not apply to cases falling under each of the following subparagraphs:
1.
Where concurrent business is permitted under this Act and other Acts;
2.
Where anyone eligible to be commissioned to run business provided for in each subparagraph of Article 21 in accordance with other Acts obtains authorization pursuant to paragraph (1) after being recognized to be fully able to protect investors;
3.
Where concurrent business is prescribed by Presidential Decree as being not to impede the investment and operation of entrusted assets and the protection of investors.
(4)
A person who intends to obtain authorization for the incorporation pursuant to paragraph (1) shall obtain preliminary authorization from the Minister of Land, Infrastructure and Transport before the acquisition of stocks.
(5)
The Minister of Land, Infrastructure and Transport may attach conditions to secure integrity in management and to protect investors when deciding on whether he/she grants preliminary authorization pursuant to paragraph (4).
(6)
When the Minister of Land, Infrastructure and Transport receives an application for authorization for incorporation pursuant to paragraph (1), he/she shall grant authorization for the incorporation after ascertaining whether the conditions, which were attached when a preliminary authorization was granted pursuant to paragraph (5), have been fulfilled. In such cases, the Minister of Land, Infrastructure and Transport may attach conditions to secure integrity in management and protect investors.
(7)
Where the Minister of Land, Infrastructure and Transport has granted authorization for incorporation pursuant to paragraph (1), he/she shall publicly announce the details thereof on the official gazette and the website, etc.
(8)
Matters necessary for procedures, etc. for preliminary authorization and authorization for the incorporation shall be prescribed by Presidential Decree.
(9)
Article 7 (1) shall apply mutatis mutandis to executives of an asset management company. In such cases, a "real estate investment trust" shall be deemed an "asset management company."
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 23 (Registration of Real Estate Investment Advisory Company)
 

(1)
A person who intends to carry on business of advising, appraising, etc. with regard to the investment and management of assets on the entrustment of a real estate investment trust, shall register with the Minister of Land, Infrastructure and Transport.
(2)
A person who intends to register pursuant to paragraph (1) shall have the qualifications falling under any of the following subparagraphs:
1.
Capital shall be more than the amount prescribed by Presidential Decree, which is at least 500 million won;
2.
He/she shall employ regular asset management specialists under Article 22 not less than the number prescribed by Presidential Decree.
(3)
Where the Minister of Land, Infrastructure and Transport finds that a person who has registered pursuant to paragraph (1) (hereinafter referred to as "real estate investment advisory company") falls under any of the following subparagraphs, he/she may revoke registration thereof: Provided, That where a real estate investment advisory company falls under subparagraph 1 or 2, registration thereof shall be revoked:
1.
If it has been registered by fraudulent or other illegal means;
2.
If it ceases to meet the qualifications referred to in paragraph (2): Provided, That the same shall not apply to cases prescribed by Presidential Decree, such as temporary incompatibility with the requirements for registration;
3.
If it fails to take any measures pursuant to Article 39 (2) without justifiable grounds;
4.
If it is acknowledged unsuitable to carry on business due to violation of this Act, or orders or dispositions under this Act.
(4)
No person who has not registered pursuant to paragraph (1) shall use the title "real estate investment advisory" for its trade name.
(5)
Necessary matters concerning registration procedures, documents to submit, scope of business entrustment, etc. of a real estate investment advisory company shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 24 (Limitations, etc. on Disposal of Real Estate)
 

(1)
No real estate investment trust shall dispose of acquired real estate during a period fixed by Presidential Decree within five years: Provided, That this shall not apply to any of the following cases:
1.
Where land or buildings, etc. created or built in accordance with a real estate development project are sold in lots;
2.
Where any ground prescribed by Presidential Decree exists for the protection of investors.
(2)
Unless a real estate development project is undertaken on land in which there is no building or other structure (excluding land developed pursuant to subparagraph 4 (b) of Article 2; hereinafter the same shall apply in this paragraph), a real estate investment trust shall not dispose of the land: Provided, That this shall not apply to cases prescribed by Presidential Decree to protect investors, including a merger, dissolution of a real estate investment trust.
(3)
When a real estate investment trust acquires or disposes of real estate, it shall prepare an actual inspection report including the current status, transaction price, etc. of the relevant real estate and submit such report in advance to the Minister of Land, Infrastructure and Transport, and keep the report in its head office, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 25 (Asset Portfolio)
 

(1)
A real estate investment trust shall, after the preparation period of the minimum capital expires, ensure that not less than 80/100 of the value of its total assets is represented by real estate, securities related to real estate, and cash, as of the end of each quarter. In such cases, not less than 70/100 of its total assets shall be real estate (including buildings under construction).
(2)
In calculating the component ratio of assets pursuant to paragraph (1), assets falling under any of the following subparagraphs shall be deemed real estate within two years from the expiry date of the preparation period of the minimum capital, the date of issuance of new stocks or the date of sale of real estate:
1.
Subscription money paid at the time of the incorporation;
2.
Funds raised by issuance of new stocks;
3.
Proceeds from sale of real estate owned by a real estate investment trust.
(3)
The details of assets and the standards for calculation pursuant to paragraph (1) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 25-2 (Accounting)
 

(1)
Each real estate investment trust shall perform the accounting of the operation of assets, including real estate, etc., according to the accounting standards set by the Financial Services Commission.
(2)
The Financial Services Commission may entrust any nongovernmental institution specializing in formulating the accounting standards with the formulation of accounting standards referred to in paragraph (1), as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 26 (Investment in Real Estate Development Project)
 

(1)
A real estate investment trust may invest in a real estate development project only after its stocks are listed on the securities market pursuant to Article 8-2 (4) 1 of the Financial Investment Services and Capital Markets Act.
(2)
No real estate investment trust shall invest in a real estate development project in excess of 30/100 of its total assets.
(3)
Where a real estate investment trust intends to invest in a real estate development project, it shall prepare a business plan, which includes land subject to the development, development methods and other matters prescribed by Presidential Decree, and go through the appraisal of the plan by a real estate investment advisory company, and submit the appraisal report prepared by the real estate investment advisory company to the Minister of Land, Infrastructure and Transport, one month before it invests in the real estate development project.
(4)
The total assets referred to in paragraph (2) mean the total assets entered on the balance sheet as of the end of the immediately preceding quarter, on the day preceding the general meeting of shareholders in which a resolution is passed on investment in any real estate development project.
(5)
In the calculation of the ratio of a real estate development project, for the new construction or reconstruction of any building pursuant to paragraph (2), the value of land owned by the relevant real estate investment trust shall be included in the total assets, but excluded from the invested amount of such real estate development project.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 26-2 (Special Cases on Investment in Real Estate Development Project)
 

(1)
Notwithstanding Article 26 (2), a real estate investment trust which is incorporated for the purpose of investment in and operation of a real estate development project referred to in subparagraph 2 of Article 21 (hereinafter referred to as "real estate investment trust specialized in development"), may invest at least 70 percent of its total assets in a real estate development project (including a rental business of land, buildings, etc. created or built by a real estate development project; hereinafter the same shall apply in this Article).
(2)
A real estate investment trust specialized in development may invest its assets by methods falling under subparagraphs 1, 3, 6 and 7 of Article 21, within the limits of less than 30 percent of its total assets.
(3)
Notwithstanding Article 3 (3), a real estate investment trust specialized in development shall use the name of "real estate investment trust specialized in development" in its trade name.
(4)
Notwithstanding Article 21, a real estate investment trust specialized in development shall invest and operate surplus funds, which are not invested or operated pursuant to paragraphs (1) and (2), by method falling under any of the following subparagraphs:
1.
Deposit in financial institutions;
2.
Trading of national bonds and public bonds.
3.
Trading of bonds issued by financial institutions prescribed by the Act on the Management of Public Institutions;
4.
Trading of bonds issued or guaranteed by banks established by the Banking Act.
(5)
Articles 26 (1) and 39-2 shall not apply to real estate investment trusts specialized in development.
(6)
Notwithstanding Article 14-8 (1), real estate investment trusts specialized in development (excluding a real estate investment trust that invests all of its total assets in housing rental business) shall make a public offering of at least 30 percent of the total number of stocks issued by the date, on which one year and six months have passed after obtaining authorization and/or permission, etc. for implementation, under relevant Acts and subordinate statutes, of the real estate investment project in which it invests.
(7)
Notwithstanding Article 15 (1), the same person shall not possess stocks of a real estate investment trust specialized in development (excluding a real estate investment trust that invests all of its total assets in housing rental business) in excess of the upper limits of shareholding for each person provided for in the main sentence of the same paragraph or the proviso thereto, six months after obtaining authorization and/or permission, etc. for implementation under relevant Acts and subordinate statutes of the real estate investment project in which the real estate investment trust specialized in development invests.
(8)
Notwithstanding Article 19 (2), the right to claim for registration of real estate ownership transfer may be invested in kind in a real estate investment trust specialized in development.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 26-3 (Special Cases concerning Investment in Development Project of Land Provided for Compensation)
 

(1)
Notwithstanding Article 19 (2), where compensation is made with land for public works implemented pursuant to the proviso to Article 63 (1) of the Act on Acquisition of and Compensation for Land, etc. for Public Works, with regard to a real estate investment trust specialized in development which is established to make investments in a development project of land granted as part of compensation, the right to receive land as compensation (hereinafter referred to as "the land provision compensation right") may be invested in kind therein.
(2)
Notwithstanding Article 19 (4), the value of the land provision compensation right which is to be invested in kind pursuant to paragraph (1) shall be the amount for which the land owner agrees to receive with land from the project operator, based on the calculation in accordance with Article 68 of the Act on the Acquisition and Compensation of Land, etc. for Public Works.
(3)
Articles 14-8, 15, 19 (1), 20, and 41 (1) 1 of this Act, Article 422 of the Commercial Act, and Article 2 of the Act on Special Measures for the Registration of Real Estate shall not apply to real estate investment trusts specialized in development under paragraph (1).
[This Article Newly Inserted by Act No. 10269, Apr. 15, 2010]

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 Article 27 (Investment in Securities)
 

(1)
No real estate investment trust shall acquire in excess of 10/100 of the stocks of other company issued with voting right: Provided, That this shall not apply to a case falling under any of the following subparagraphs:
1.
Where it acquires stocks of a company which has been established with a fixed period of existence to develop specific real estate;
2.
Where it merges with other company;
3.
Where it takes over the whole business of other company;
4.
Where it is necessary to achieve the objective in exercising the rights of a real estate investment trust;
5.
Where there is no risk of undermining the protection of investors and the stable operation of assets, as prescribed by Presidential Decree.
(2)
Where a real estate investment trust acquires in excess of 10/100 of the stocks of other company issued with voting right pursuant to paragraph (1) 2 through 4, it shall, within six months from the date it possesses in excess, make itself fit for the investment limit pursuant to paragraph (1).
(3)
No real estate investment trust shall acquire securities issued by the same person in excess of 5/100 of its total assets: Provided, That this shall not apply to state bonds, local government bonds or other securities prescribed by Presidential Decree.
(4)
Where a real estate investment trust holds securities in excess of the investment limit pursuant to paragraph (3), it shall, within six months from the date it possesses in excess, make itself fit for the investment limit pursuant to paragraph (3).
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 28 (Dividends)
 

(1)
Real estate investment trusts shall distribute not less than 90/100 of their dividend limit of the relevant year to their shareholders pursuant to Article 462 (1) of the Commercial Act. In such cases, the reserved profit pursuant to Article 458 of the same Act shall not be accumulated.
(2)
The dividends of real estate investment trusts shall be cash dividends.
(3)
When any entrusted management real estate investment trust pays its dividends in accordance with paragraph (1), it may pay such dividends in excess of its profits, notwithstanding Article 462 of the Commercial Act. In such cases, the standards for paying dividends in excess of profits shall be set by Presidential Decree within the scope of the depreciation cost of the relevant year.
(4)
When a real estate investment trust listed on the stock exchange pursuant to Article 20 distributes its profit out of selling real estate accounting for more than a percentage prescribed by Presidential Decree in its total assets, it shall hold a meeting of the board of directors at least ten days before the end of the relevant business year to determine whether to distribute the profit, and an estimated amount for the distribution thereof by a resolution of the board of directors.
(5)
The distribution of profits determined pursuant to paragraph (4) shall be made following a resolution of a general meeting of stockholders: Provided, That where it is prescribed by the articles of incorporation that the distribution of profits may be made by a resolution of the board of directors, the profits may be distributed by a resolution of the board of directors.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 29 (Borrowing of Funds and Issuance of Bonds)
 

(1)
Each Real estate investment trust, after obtaining authorization for business, may borrow funds or issue bonds in order to operate and invest assets, or redeem borrowings and issued bonds, as prescribed by Presidential Decree.
(2)
The borrowing of funds and the issuance of bonds pursuant to paragraph (1) shall not exceed the amount twice the equity capital: Provided, That where a real estate investment trust has passed an extraordinary resolution at a general meeting of shareholders by a resolution method referred to in Article 434 of the Commercial Act, it may borrow funds and issue bonds within the limits that the total thereof does not exceed ten times its equity capital.
(3)
The equity capital referred to in paragraph (2) means the amount obtained by subtracting the total amount of debts from the total amount of assets that are entered in the balance sheet as of the end of the immediately preceding quarter, on the date preceding the date on which the board of directors passes a resolution on the borrowing of funds or issuance of bonds.
(4)
Where it is impossible to calculate equity capital pursuant to paragraph (3) and there is a reason prescribed by Presidential Decree, the amount obtained by subtracting the total amount of debts from the total amount of assets on the balance sheet as of the date before the date of holding a meeting of the board of directors shall be calculated as equity capital.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

SECTION 2 Prohibited Activities, etc.

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 Article 30 (Limitations on Transactions)
 

No real estate investment trust shall enter into transactions falling under any subparagraph of Article 21 with any of the following persons: Provided, That where the business is chosen by means of public sale, competitive bidding, etc., with no risk of undermining the shareholders' interest, which is prescribed by Presidential Decree, this shall not apply:
1.
Executives, employees and specially related persons of the relevant real estate investment trust;
2.
Holders of not less than 10/100 of stocks of the relevant real estate investment trust (hereinafter referred to as "major shareholders") and its specially related persons.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 31 (Limitations, etc. on Concurrent Engagement)
 

(1)
No real estate investment trust shall be concurrently engaged in other business activities except where it is allowed under this Act or other Acts and subordinate statutes.
(2)
No full-time executive of a real estate investment trust shall become a full-time executive or an employee of other company, or run other business.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 32 (Prohibition on Use of Undisclosed Asset Management Information)
 

No person who falls under any of the following subparagraphs (including a person in whose cases one year has not elapsed since he/she ceases to fall under any of the following subparagraphs) shall buy and sell real estate or securities by utilizing undisclosed information (information having substantial influence on the investment decision, which is not disclosed by the investor's guide under Article 17 (2) and the investment report under Article 37, which pertain to plans of a real estate investment trust to buy or sell specific real estate or securities with the assets; hereinafter the same shall apply) on the asset management of a real estate investment trust, or allow a third party to make use of such information:
1.
Executives, employees or agents of the relevant real estate investment trust;
2.
Major shareholders;
3.
A person who has signed an entrustment contract on the investment and management business with the relevant real estate investment trust;
4.
Agents, employees or other workers of a person who falls under subparagraph 2 or 3 (referring to executives, employees or agents of a legal person, in cases where a person who falls under subparagraph 2 or 3 is a legal person).
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 33 (Code of Conduct for Executives and Employees)
 

No executives or employees of a real estate investment trust shall, concerning investment and management business of assets, conduct an act falling under any of the following subparagraphs:
1.
Guaranteeing or promising a certain portion of profit for those who intend to make an investment;
2.
Contriving to gain profits for himself/herself or a third party concerning the investment and management of assets;
3.
Any acts feared to be detrimental to the practices of real estate transactions or shareholders' interest, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 34 (Responsibility of Executives, Employees, etc. to Indemnification for Damage)
 

(1)
If an executive or employee of a real estate investment trust causes damage to the real estate investment trust by performing any act, in violation of Acts and subordinate statutes or the articles of incorporation, or by negligence of his/her duty, he/she shall be responsible to pay for such damage.
(2)
Where an executive or employee of a real estate investment trust assumes responsibility for damage to the real estate investment trust, and if there is a cause attributable to the involved directors, auditor, those entrusted with the investment and management of assets or the asset custody organization pursuant to Article 35 (1), they shall be jointly and severally liable to pay for such damage.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

SECTION 3 Entrustment of Asset Custody

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 Article 35 (Entrustment, etc. of Asset Custody)
 

(1)
Real estate investment trusts shall, as prescribed by Presidential Decree, entrust the custody of asset such as real estate, securities, cash and related business thereof to the following institutions (hereinafter referred to as "asset custody organization"):
1.
Trust business operators under the Financial Investment Services and Capital Markets Act;
2.
Korea Land and Housing Corporation under the Korea Land and Housing Corporation Act (hereinafter referred to as the "Korea Land and Housing Corporation");
3.
Korea Asset Management Corporation under the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Companies and the Establishment of Korea Asset Management Corporation;
4.
Korea Housing Guarantee Co., Ltd under the Housing Act;
5.
Other institutions prescribed by Presidential Decree, which are corresponding to subparagraphs 1 through 4.
(2)
The Korea Land and Housing Corporation and the Korea Asset Management Corporation shall, in carrying out custody business of real estate pursuant to paragraph (1), obtain authorization for trust business in accordance with the Financial Investment Services and Capital Markets Act. In such cases, Article 24 of the Financial Investment Services and Capital Markets Act shall not apply.
(3)
An asset custody organization entrusted with the custody of securities pursuant to paragraph (1) shall, as prescribed by Presidential Decree, deposit them with the Korea Securities Depository pursuant to Article 294 of the Financial Investment Services and Capital Markets Act.
(4)
Necessary matters concerning the method of concluding a contract on the entrustment of asset custody business, etc. pursuant to paragraph (1) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 36 (Responsibility, etc. of Asset Custody Organization)
 

(1)
An asset custody organization shall, in accordance with Acts and subordinate statutes and asset custody contracts, carry out its business faithfully as a bona fide caretaker for the sake of a real estate investment trust.
(2)
An asset custody organization shall, in order to abide by Acts and subordinate statutes and manage assets in a sound manner, provide its executives and employees with the basic procedures and standards for performance of duties thereof as prescribed by Presidential Decree.
(3)
An asset custody organization shall manage the entrusted asset of a real estate investment trust separately from its own asset or other assets entrusted for custody by a third party.
(4)
When an asset custody organization commits an act in violation of Acts and subordinate statutes or an asset custody contract, or causes damage to a real estate investment trust due to negligence of duties, it shall assume the responsibility of indemnification.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

SECTION 4 Public Notice of Information

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 Article 37 (Investment Report)
 

(1)
Each real estate investment trust which has obtained authorization for business shall, as prescribed by Presidential Decree, prepare an investment report for every quarter and annual settlement, and submit such investment report to the Minister of Land, Infrastructure and Transport and the Financial Services Commission within the time limit prescribed by Presidential Decree: Provided, That a real estate investment trust specialized in development shall submit an investment report to the Minister of Land, Infrastructure and Transport.
(2)
An investment report pursuant to paragraph (1) shall include important matters concerning asset management.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 38 (Keeping and Notifying Investment Related Documents)
 

A real estate investment trust which has obtained authorization for business shall, as prescribed by Presidential Decree, keep and publicly announce quarterly or annual financial statements and investment reports, and provide them for shareholders' and creditors' perusal.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

CHAPTER IV SUPERVISION

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 Article 39 (Supervision and Inspection, etc.)
 

(1)
The Minister of Land, Infrastructure and Transport may, if it is deemed necessary to protect public interests or shareholders of a real estate investment trust, order a real estate investment trust, asset management company, real estate investment trust advisory company, asset custody organization and institution commissioned to perform general clerical services (hereinafter referred to as "real estate investment trust, etc.") to submit or report materials pertaining to business, property, etc. provided for in this Act, and have public officials under his/her control to inspect such business, property, etc.
(2)
Where a real estate investment trust, etc. violates this Act, or orders or dispositions under this Act, or a real estate investment trust offering its stocks to the public pursuant to Article 49-3 (1) or an asset management company (excluding an asset management company entrusted with investment and management of assets exclusively by a real estate investment trust which is not a real estate investment trust offering its stocks to the public) violates the Financial Investment Services and Capital Markets Act, or orders or dispositions under the same Act, the Minister of Land, Infrastructure and Transport may take measures falling under any of the following subparagraphs:
1.
Suspension of all or part of business;
2.
Request for taking measures to dismiss or discipline executives and employees;
3.
Other measures necessary for the correction of violated matters as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 39-2 (Supervision of Financial Services Commission)
 

(1)
The Financial Services Commission may, if it is deemed necessary to protect public interests or shareholders of a real estate investment trust, etc. order the real estate investment trust, etc. to submit or report materials pertaining to supervision over financial affairs, or have the Governor of the Financial Supervisory Service to inspect such affairs.
(2)
Where a real estate investment trust, etc. violates this Act, or orders or dispositions under this Act, or a real estate investment trust offering its stocks to the public pursuant to Article 49-3 (1) or an asset management company (excluding an asset management company entrusted with investment and management of assets exclusively by a real estate investment trust which is not a real estate investment trust offering its stocks to the public) violates the Financial Investment Services and Capital Markets Act, or orders or dispositions under the same Act, the Financial Services Commission may request the Minister of Land, Infrastructure and Transport to take measures falling under any subparagraph of Article 39 (2), and the Minister of Land, Transport and Maritime Affairs shall comply with such request if there is no extenuating circumstance. In such cases, the Minister of Land, Infrastructure and Transport shall notify the Financial Services Commission of the details of such measures taken.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 40 (Matters for Authorization)
 

(1)
Where a real estate investment trust intends to perform any act falling under any of the following subparagraphs after having obtained authorization for business, it shall obtain authorization from the Minister of Land, Infrastructure and Transport, as prescribed by Presidential Decree: Provided, That where it changes a minor matter prescribed by Presidential Decree among cases falling under subparagraph 1, this shall not apply:
1.
Amendments to the articles of incorporation;
2.
Deleted;
3.
Acquisition by take-over or transfer of all business;
4.
Merger of real estate investment trusts.
(2)
Article 9 (5) shall apply mutatis mutandis to authorization pursuant to paragraph (1).
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 41 (Matters to be Reported)
 

(1)
A real estate investment trust shall, within ten days from the date of occurrence of causes falling under any of the following subparagraphs, report to the Minister of Land, Infrastructure and Transport, as prescribed by Presidential Decree:
1.
Investment in kind pursuant to Article 19 (2);
2.
Change of executives;
3.
Conclusion of a contract falling under the proviso to Article 30;
3-2.
Dissolution of a real estate investment trust;
4.
Other important matters on the management of a real estate investment trust prescribed by Presidential Decree.
(2)
The Minister of Land, Infrastructure and Transport may, where it is acknowledged that the matters reported under paragraph (1) are in violation of the relevant Acts and subordinate statutes or detrimental to the shareholders' rights and interests, order the relevant real estate investment trust to correct or supplement them.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 42 (Revocation of Authorization for Business, etc.)
 

(1)
The Minister of Land, Infrastructure and Transport may, where a real estate investment trust or an asset management company falls under any of the following subparagraphs, revoke authorization for business pursuant to Article 9 or authorization for incorporation pursuant to Article 22-3: Provided, That if it falls under subparagraph 1 or 4, he/she shall revoke an authorization for business or authorization for incorporation:
1.
Where it obtains authorization for business pursuant to Article 9 or authorization for incorporation pursuant to Article 22-3 by fraudulent or other unlawful means;
2.
Where it is short of the minimum capital, in violation of Article 10;
3.
Where it does not comply with the component ratio of assets, in violation of Article 25;
4.
Where it is found to be incompatible with the requirements for authorization for business or authorization for incorporation, or violates the terms of authorization for business or authorization for incorporation: Provided, That the same shall not apply to cases prescribed by Presidential Decree, such as temporary incompatibility with the requirements for authorization for business or authorization for the incorporation;
5.
Where it fails to take the measures pursuant to Article 39 (2) without justifiable causes;
(2)
Article 9 (5) shall apply mutatis mutandis to the revocation of authorization for business and authorization for incorporation pursuant to paragraph (1).
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

CHAPTER V MERGER AND DISSOLUTION

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 Article 43 (Merger)
 

(1)
No real estate investment trust shall merge with another company unless it meets all the following requirements:
1.
A real estate investment trust shall merge other real estate investment trusts by method of merger;
2.
A real estate investment trust that exists by merger and a real estate investment trust that ceases to exist by merger shall be the real estate investment trust of the same kind provided in the items of subparagraph 1 of Article 2;
3.
Where either of a real estate investment trust that exists by merger and a real estate investment trust that ceases to exist by merger is the real estate investment trust that has completed a public offering of stocks pursuant to Article 14-8, the other real estate investment trust shall have completed a public offering of stocks pursuant to Article 14-8.
(2)
In addition to matters provided in paragraph (1), matters necessary for merger of real estate investment trusts shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 11583, Dec. 18, 2012]

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 Article 44 (Dissolution)
 

A real estate investment trust shall be dissolved if any of the following reasons exists:
1.
Expiration of the period of existence stipulated in the articles of incorporation or occurrence of other causes of dissolution;
2.
A resolution for dissolution by a general meeting of shareholders;
3.
Merger;
4.
Bankruptcy;
5.
Dissolution order or dissolution ruling by a court;
6.
Revocation of authorization for business pursuant to Article 42;
7.
Where a self-managed real estate investment trust fails to apply for authorization for business within the period provided in Article 8-2 (4).
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 44-2 (Peremptory Notice to Creditors at Time of Liquidation)
 

A liquidator shall, within one month from the date he/she takes office, give a peremptory notice to creditors of a real estate investment trust by publicly announcing not less than twice that the creditors should report their credit within a given period and that the creditors who fail to report within a given period will be excluded from the liquidation. In such cases, the period for reporting shall not be less than one month.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 44-3 (Special Cases on Dissolution of Entrusted Management Real Estate Investment Trust)
 

(1)
Where an entrusted management real estate investment trust that has corporate directors and supervisory directors is dissolved (excluding dissolution under subparagraph 3 or 4 of Article 44), a meeting of liquidators composed of liquidators and liquidation supervisors shall be established.
(2)
A liquidator and liquidation supervisor shall be appointed as prescribed by the articles of incorporation. However, where the appointment of them is not prescribed by the articles of incorporation, they shall be appointed by a resolution at a general meeting of stockholders: Provided, That where an entrusted management real estate investment trust has been dissolved due to a reason referred to in subparagraph 1 or 2 of Article 44, unless the dissolution is provided otherwise in the articles of incorporation or at a general meeting of stockholders, a corporate director and supervisory director shall be a liquidator and liquidation supervisor, respectively.
(3)
A liquidator shall conduct business concerning liquidation, and a liquidation supervisor shall supervise the liquidator's conduct of business.
[This Article Newly Inserted by Act No. 11583, Dec. 18, 2012]

CHAPTER VI REGISTRATION

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 Article 45 (Registration of Incorporation)
 

(1)
The registration of incorporation of a real estate investment trust shall be filed within two weeks from the date of the completion of procedures pursuant to Articles 298 and 300 of the Commercial Act.
(2)
Matters to be registered for establishment pursuant to paragraph (1) shall be as follows: Provided, That in cases referred to in subparagraphs 3 and 4, where an entrusted management real estate investment trust assigns a corporate director and supervisory director, such corporate director and supervisory director shall be excluded:
1.
Matters regarding Article 8 (1) 1 through 5, 9 and 10;
2.
If a period of existence or causes of dissolution of a real estate investment trust are provided for in the articles of incorporation, the period and causes;
3.
Names and resident registration numbers of the directors and auditor;
4.
Name, resident registration number and address of the representative director;
4-2.
Where an entrusted management real estate investment trust assigns a corporate director and supervisory director, the corporate name, corporate registration number and address of the head office of the corporate director, and the name and resident registration number of the supervisory director; and
5.
Where it is decided that two or more directors are to represent a real estate investment trust, such purport thereof.
(3)
Where the registration of establishment is filed pursuant to paragraph (1), documents prescribed by Presidential Decree, such as the articles of incorporation, shall be attached thereto.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 46 (Commissioning Registration of Dissolution)
 

(1)
Where a real estate investment trust has been dissolved due to the revocation of authorization for business pursuant to Article 42, the Minister of Land, Infrastructure and Transport shall commission the registry having jurisdiction over the seat of the real estate investment trust to register dissolution thereof.
(2)
Where the Minister of Land, Infrastructure and Transport commissions the registration pursuant to paragraph (1), he/she shall attach documents evidencing the grounds of registration.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

CHAPTER VII SUPPLEMENTARY PROVISIONS

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 Article 47 (Formulation, etc. of Internal Control Standards)
 

(1)
Each real estate investment trust and asset management company shall lay down and implement basic procedures and standards (hereinafter referred to as "internal control standards") with which executives and employees are required to comply in order to abide by Acts and subordinate statutes, manage assets in a sound manner and protect shareholders.
(2)
Each self-managed real estate investment trust and asset management company shall examine as to whether the internal control standards are observed, and in cases of violation thereof, they shall employ a regular compliance officer to investigate the violation of the internal control standards and to report the results thereof to the auditor.
(3)
Details of the internal control standards, requirements and duties of a compliance officer and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 48 (Hearings)
 

The Minister of Land, Infrastructure and Transport shall, where he/she intends to take a disposition falling under any of the following subparagraphs, hold a hearing pursuant to the Administrative Procedures Act:
1.
Revocation of registration pursuant to Article 23 (3);
2.
Revocation of authorization for business and authorization for incorporation pursuant to Article 42 (1).
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 49 (Relationship with Other Acts and Subordinate Statutes)
 

(1)
Articles 415-2, and 542-8 through 542-12 of the Commercial Act shall not apply to real estate investment trusts.
(2)
Articles 418 through 420, and 420-2 through 420-4 of the Commercial Act shall not apply to a real estate investment trust, the preparation period of the minimum capital of which has not elapsed.
(3)
Notwithstanding Article 290 of the Commercial Act, an agreement pursuant to subparagraph 3 of the same Article shall has no effect on real estate investment trusts.
(4)
Where an entrusted management real estate investment trust assigns a corporate director and supervisory director, Article 393 of the Commercial Act shall not apply to the entrusted management real estate investment trust.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 49-2 (Special Cases of Corporate Restructuring Real Estate Investment Trusts)
 

(1)
Each corporate restructuring real estate investment trust shall meet the requirements stipulated by this Act and not less than 70/100 of its total assets shall be represented by the following real estate:
1.
Real estate that any enterprise sells to redeem its debts and liabilities it owes to any creditor financial institution;
2.
Real estate sold to implement an agreement that is concluded with a creditor financial institution for the purpose of improving the financial structure;
3.
Real estate sold according to the procedures for rehabilitation provided for in the Debtor Rehabilitation and Bankruptcy Act;
4.
Real estate that is recognized by the Financial Services Commission as being necessary to back up the corporate restructuring of any enterprise;
(2)
The Minister of Land, Infrastructure and Transport shall, if he/she intends to grant authorization for business to any corporate restructuring real estate investment trust (excluding a corporate restructuring real estate investment trust that is a real estate investment trust offering its stocks to the public pursuant to Article 49-3 (1)) in accordance with Article 9, in advance listen to opinions of the Financial Services Commission with regard thereto.
(3)
Articles 14-8, 24 (1) and (2), and 25 (1) shall not apply to corporate restructuring real estate investment trusts.
(4)
Articles 11-2, 14 (2), 14-3 through 14-7, 22-2, 28 (3), 44-3 and 49 (4) shall apply mutatis mutandis to corporate restructuring real estate investment trusts. In such cases, a "entrusted management real estate investment trust" shall be deemed a "corporate restructuring real estate investment trust."
(5)
In cases of making an investment in a corporate restructuring real estate investment trust, the relevant investment shall not be governed by the restriction on the limit of investment, restriction on management of assets and restriction on investment pursuant to Acts falling under any of the following subparagraphs:
1.
Article 37 (1) and (2) of the Banking Act;
2.
Articles 106, 108 and 109 of the Insurance Business Act;
3.
Article 344 of the Financial Investment Services and Capital Markets Act;
4.
Other Acts prescribed by Presidential Decree.
(6)
Where a corporate restructuring real estate investment trust falls under a subsidiary company of a bank (hereinafter referred to as "bank" in this paragraph) pursuant to Article 2 (1) 2 of the Banking Act, the relevant corporate restructuring real estate investment trust shall not be deemed a subsidiary company of a financial institution in calculating the ceiling of credit offering to a subsidiary company pursuant to Article 37 (3) of the Banking Act.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 49-3 (Special Cases concerning Real Estate Investment Trust Offering Its Stocks to Public)
 

(1)
Articles 11 through 16, 22 through 28, 28-2, 29 through 43, 48, 50 through 53, 56, 58, 60 through 65, 80 through 84, subparagraphs 2, 3 and 6 through 8 of Article 85, Articles 86 through 95, 181 through 187 (excluding Article 184 (4)), 194 through 206, 229 through 234, 234-2, 235 through 249, 249-2, 250 through 253, and 415 through 425 of the Financial Investment Services and Capital Markets Act shall not apply to a real estate investment trust offering its stocks to the public (referring to a real estate investment trust that is not a privately placed fund referred to in Article 9 (19) of the Financial Investment Services and Capital Markets Act; hereinafter the same shall apply) and asset management companies (excluding an asset management company entrusted with investment and management of assets exclusively by real estate investment trusts which are not real estate investment trusts offering their stocks to the public).
(2)
Where the Minister of Land, Infrastructure and Transport grants authorization for business to a real estate investment trust offering its stocks, or to an asset management company pursuant to Article 22-3 (excluding an asset management company entrusted with investment and management of assets exclusively by a real estate investment trust which is not a real estate investment trust offering its stocks to the public), he/she shall consult with the Financial Services Commission in advance.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 49-4 (Establishment, etc. of Association)
 

(1)
A self-managed real estate investment trust, asset management company or real estate investment advisory company may establish the association (hereinafter referred to as the "association") of a self-managed real estate investment trust, asset management company or real estate investment advisory company in order to promote specialization in work related to real estate investment trusts and sound development thereof.
(2)
The association shall be a juristic person.
(3)
The association shall be established by effecting the registration of association in the place in which its main office is located.
(4)
To establish the association, three or more persons from a self-managed real estate investment trust, asset management company or real estate investment advisory company shall become the promoters to draw up the articles of association, and obtain authorization for establishment from the Minister of Land, Infrastructure and Transport after a resolution of the inaugural general meeting.
(5)
Where any of the following occurs, the Minister of Land, Infrastructure and Transport may revoke the authorization for establishment of the association:
1.
Where an authorization for establishment is obtained by false or other illegal means;
2.
Where any condition governing the grant of authorization for establishment is violated;
3.
Where the purpose of the association cannot be achieved;
4.
Where any project unsuitable for the establishment purpose, is conducted;
5.
Where the association fails to comply with orders to report, submit documents, etc., rejects, interferes with or refrains itself from examination and inspection, makes false reports or submits false documents, in violation of Article 49-5.
(6)
Matters to be stated in the article of association and other necessary matters shall be prescribed by Presidential Decree.
(7)
Unless provided for by this Act concerning the association, the provisions concerning an incorporated association specified by the Civil Act shall apply mutatis mutandis.
[This Article Newly Inserted by Act No. 10269, Apr. 15, 2010]

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 Article 49-5 (Duties and Monitoring of Association)
 

(1)
The association shall perform the following duties:
1.
Investigation and research for the sound development of work related to real estate investment trusts;
2.
Affairs to promote cooperation among members of the association;
3.
Education and training for asset management specialists in real estate investment trusts and persons serving in the field of real estate investment trusts so as to improve their job skills;
3-2.
Self-imposed control for the maintenance of healthy business order among the members of the association and for the protection of investors;
3-3.
Affairs entrusted by the Minister of Land, Infrastructure and Transport;
4.
Affairs incidental to subparagraphs 1 through 3, 3-2 and 3-3;
5.
Other affairs prescribed by Presidential Decree.
(2)
The Minister of Land, Infrastructure and Transport may, if necessary for monitoring purposes, have the association to make reports on the affairs, order the association to submit documents or issue other necessary orders; and other matters necessary to investigate and inspect affairs of the association, or to monitor the association shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10269, Apr. 15, 2010]

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 Articles 49-6 (Entrustment of Affairs)
 

(1)
The Minister of Land, Infrastructure and Transport may entrust the following affairs to the association or an institution prescribed by Presidential Decree, as prescribed by Presidential Decree:
1.
The confirmation of facts necessary for authorization for business under Article 9 (2);
2.
The confirmation of facts necessary for the inspection of affairs or property of a real estate investment trust, etc. under Article 39 (1);
3.
Other affairs prescribed by Presidential Decree.
(2)
The Minister of Land, Infrastructure and Transport may support some of expenses incurred in conducting entrusted affairs to the association or an institution to which he/she has entrusted affairs pursuant to paragraph (1).
[This Article Newly Inserted by Act No. 11583, Dec. 18, 2012]

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 Article 49-7 Deleted.
 

CHAPTER VIII PENAL PROVISIONS

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 Article 50 (Penal Provisions)
 

A person who falls under any of the following subparagraphs shall be punished by imprisonment for not more than five years or by a fine not exceeding one hundred million won:
1.
A person who conducts business referred to in subparagraphs 1 through 4, 6 and 7 of Article 21, or makes a public offering or public sale (referring to a public offering, public sale, or offering securities for sale pursuant to Article 9 (7) and (9) of the Financial Investment Services and Capital Markets Act) by making use of the name "real estate investment trust", without obtaining approval for business (excluding approval for change) pursuant to Article 9;
2.
A person who obtains authorization for business or authorization for alteration pursuant to Article 9 by fraudulent or other illegal means;
3.
A person who issues new stocks by receiving investment in kind before it provides itself with at least the minimum capital under Article 10 after obtaining approval for business, in violation of Article 19 (1);
4.
A person who invests in and manages assets, in violation of Article 21;
5.
A person who is engaged in trading real estate or securities by making use of undisclosed information regarding the asset management of a real estate investment trust or who allows a third party to use such information, in violation of Article 32;
6.
A person who obtains preliminary authorization, authorization for incorporation, or authorization for alteration of business of an asset management company provided for in Article 22-3 by fraudulent or other illegal means;
7.
A person who borrows funds or issues bonds by making use of the name "real estate investment trust" without obtaining authorization for business pursuant to Article 9, in violation of Article 29 (1).
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 51 (Penal Provisions)
 

A person who falls under any of the following subparagraphs shall be punished by imprisonment for not more than three years or by a fine not exceeding 50 million won:
1.
A person who fails to submit a report on incorporation under Article 8-2 (1) or a report on the current status of the company after the incorporation thereof under paragraph (2) of the said Article, or submits such report by deception or other unlawful means;
2.
A person who issues new stocks by allotment to persons, other than shareholders, prior to authorization for business, in violation of Article 9 (4): Provided, That where he/she offers stocks to the public pursuant to Article 9 (7) of the Financial Investment Services and Capital Markets Act, subparagraph 1 of Article 50 shall apply;
3.
A person who makes a public offering of stocks issued by a real estate investment trust before it obtains approval for business, or approval or permission for a real estate development project, in violation of Article 14-8 (1);
4.
A person who makes investments in kind and receives any investment in kind without having the value of real estate appraised pursuant to Article 19 (4);
5.
A person who registers a real estate investment advisory company pursuant to Article 23 (1) by fraudulent or other illegal means;
6.
A person who manages assets, in violation of Article 25 (1);
7.
A person who invests in a real estate development project, in violation of Article 26 (1) or (2): Provided, That this shall not apply to cases where a real estate investment trust specialized in development makes an investment in a real estate development project pursuant to Article 26-2;
8.
A person who performs transactions, in violation of Article 22-2 (3) (including cases where the provisions are applied mutatis mutandis under Article 49-2 (4));
9.
A person who manages assets, in violation of Article 27 (1) or (3);
10.
A person who borrows funds or issues bonds, in violation of Article 29;
11.
A person who enters into transactions with a person falling under any subparagraph of Article 30, in violation of the same Article;
12.
A person who manages assets, in violation of Article 49-2 (1).
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 52 (Penal Provisions)
 

A person who falls under any of the following subparagraphs shall be punished by imprisonment for not more than one year or by a fine not exceeding 10 million won:
1.
A person who fails to offer stock subscription forms or an investor's guide or offers false stock subscription forms or false investor's guide, in violation of Article 17;
2.
A person who violates the disposal order pursuant to Article 15 (3) or (4);
3.
A person who disposes of real estate, in violation of Article 24 (1) or (2);
4.
A person who fails to prepare a first-hand report pursuant to Article 24 (3) or prepares a false first-hand report;
4-2.
A person who has not distributed at least 90 percent of the distribution limit of the profit of the relevant business year of a real estate investment trust to stockholders, in violation of Article 28 (1), or a person who has made a resolution for the distribution of the profit, in violation of paragraph (4) of the said Article;
5.
A person who violates the code of conduct pursuant to Article 33;
6.
A person who fails to deposit securities with the Korea Securities Depository, in violation of Article 35 (3);
7.
A person who fails to separately manage assets, in violation of Article 36 (3);
8.
A person who fails to prepare an investment report or prepares a false investment report, in violation of Article 37 (1);
9.
A person who performs any act falling under any subparagraph of Article 40 (1) without obtaining authorization in accordance with the same paragraph of the same Article;
10.
A person who fails to comply with the corrective order or supplement order pursuant to Article 41 (2).
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 53 (Joint Penal Provisions)
 

Where a representative of a juristic person, or an agent, employee or other servant of a juristic person or an individual commits an offense under any of Articles 50 through 52 with regard to business of such juristic person or individual, not only shall such offender be punished, but also such juristic person or individual shall be punished by a fine referred to in the relevant provisions: Provided, That this shall not apply where the juristic person or individual has not been negligent in giving due attention to and supervision concerning the relevant business in order to prevent such offense.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

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 Article 54 (Fines for Negligence)
 

(1)
A person who falls under any of the following subparagraphs shall be punished by a fine for negligence not exceeding 10 million won:
1.
A person who uses the name of a real estate investment trust or any name similar thereto, in violation of Article 3 (4);
2.
A person who fails to obtain approval for change under Article 9 (1);
3.
A person who fails to make a public offering of at least 30 percent of the total number of stocks issued within one year and six months from the date he/she obtains approval for business, in violation of Article 14-8 (2);
4.
A person who fails to list stocks on the stock exchange, in violation of Article 20 (1);
5.
A person who fails to employ regular asset management specialists, in violation of Article 22 (1);
6.
A person who concurrently conducts other business, in violation of Article 22-3 (3);
7.
A person who uses the name of a real estate investment trust advisory company, in violation of Article 23 (4);
8.
A person who violates accounting standards under Article 25-2 (1);
9.
A person who fails to make a public offering of at least 30 percent of the total number of stocks issued by the date one year and six months have passed from the date approval or permission was granted for the execution under related Acts and subordinate statutes regarding a real estate development project in which he/she invests, in violation of Article 26-2 (6);
10.
A person who fails to entrust the custody of assets and affairs related thereto, in violation of Article 35 (1);
11.
A person who refuses, interferes with or evades the submission of data, a report or inspection thereof under Article 39 (1) or Article 39-2 (1), or submits false data or makes a false report;
12.
A person who fails to establish internal control standards, in violation of Article 47 (1); and
13.
A person who fails to employ a regular compliance officer, in violation of Article 47 (2).
(2)
A person who falls under any of the following subparagraphs shall be punished by a fine for negligence not exceeding five million won:
1.
A person who fails to implement measures under Article 8-2 (3);
2.
A person who establishes a branch office, employs an employee or regular executive, in violation of Article 11-2;
3.
A person who fails to inform an entrusted management real estate investment trust in writing of a person who is to perform duties of a corporate director, in violation of the latter part of Article 14-5 (3);
4.
A person who fails to set conditions equally for the issuance of stocks, in violation of Article 18;
5.
A person who invests in a real estate development project without going through the appraisal of a real estate investment trust advisory company, or a person who fails to submit an appraisal report prepared by a real estate investment trust advisory company to the Minister of Land, Infrastructure and Transport until one month before he/she invests in a real estate development project, in violation of Article 26 (3);
6.
A person who has two jobs at the same time or holds concurrent posts, in violation of Article 31 (2);
7.
A person who fails to submit an investment report within a fixed period, in violation of Article 37 (1);
8.
A person who fails to keep or publicly announce financial statements and an investment report for each quarter and settlement term, or to provide them for perusal, in violation of Article 38;
9.
A person who fails to implement measures under Article 39 (2);
10.
A person who fails to perform his/her duty to report under Article 41 (1).
(3)
Fines for negligence pursuant to paragraphs (1) and (2) shall be imposed and collected by the Minister of Land, Infrastructure and Transport, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10269, Apr. 15, 2010]

ADDENDA

(1)
(Enforcement Date) This Act shall enter into force on July 1, 2001.
(2)
(Special Case of Fictitious Authorization for Korean National Housing Corporation, Korea Land Corporation and Korea Asset Management Corporation under the Trust Business Act) In conducting any such custody business of real estate as entrusted under Article 35 (1) of this Act, the Korean National Housing Corporation, the Korea Land Corporation and the Korea Asset Management Corporation shall be deemed to have been authorized under the Trust Business Act for one year after this Act enters into force notwithstanding the provisions of paragraph (2) of the same Article and the Trust Business Act.
(3)
(Transitional Measures concerning Subparagraph 1 (b) and (c) (ⅲ) of Article 3 of the Futures Trading Act) "Subparagraph 1 (b) and (c) (ⅲ) of Article 3 of the Futures Trading Act" as referred to in subparagraph 2 of Article 2 of this Act shall be deemed to be "Article 2-2 (1) of the Securities and Exchange Act" until the day before the enforcement date of Article 6 of Addenda of the Futures Trading Act (Act No. 5041) under the proviso of Article 1 of the said Addenda.

ADDENDUM

This Act shall enter into force on July 1, 2001: Provided, That the amended provisions of Article 22 (2) shall enter into force on July 1, 2002.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 13 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on March 1, 2004. (Proviso Omitted.)
Articles 2 through 12 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Transitional Measures concerning Corportate Restructuring Real Estate Investment Trust and Asset Management Company)
Any corporate restructuring real estate investment trust and any asset management company that are granted an authorization for their incorporations, respectively, pursuant to the previous provisions at the time this Act enters into force shall be deemed the corporate restructuring real estate investment trust and the asset management company that are incorporated, respectively, pursuant to this Act.
Article 3 (Transitional Measures concerning Internal Control Standards)
Any asset management company that obtains an authorization for its incorporation pursuant to the previous provisions at the time this Act enters into force shall lay down its internal control standards provided for in the amended provisions of Article 47 (1) within three months after the enforcement of this Act.
Article 4 (Transitional Measure concerning Penal Provisions and Fine for Negligence)
The application of the penal provisions and a fine for negligence with regard to the act performed prior to the enforcement of this Act shall be governed by the previous provisions.
Article 5 (Special Cases concerning Conversion of Corporate Restructuring Real Estate Investment Trust into Entrusted Management Real Estate Investment Trust)
Any corporate restructuring real estate investment trust that is incorporated pursuant to the previous provisions at the time this Act enters into force may convert into an entrusted management real estate investment trust provided for in this Act after undergoing a resolution of the general meeting of shareholders provided for in the provisions of Article 434 of the Commercial Act and obtaining an authorization for its incorporation from the Minister of Construction and Transportation pursuant to the amended provisions of Article 5.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 12 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 6 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Article 2 (Transitional Measures concerning Name of Real Estate Investment Trust)
As a real estate investment trust which has obtained authorization for incorporation before this Act enters into force, a real estate investment trust which does not use the name of "real estate investment trust" or "real estate investment trust specialized in development" in its trade name shall change such trade name suitable to the amended provisions of Articles 3 (3) and 26-2 (2) within one year after this Act enters into force.
Article 3 (Transitional Measures concerning Incorporation of Real Estate Investment Trust)
Any person who has obtained preliminary authorization pursuant to the previous provisions of Article 5 before this Act enters into force may incorporate a real estate investment trust pursuant to the previous provisions.
Article 4 (Transitional Measures concerning Authorization for Business of Real Estate Investment Trust)
A real estate investment trust (including a real estate investment trust incorporated pursuant to Article 3 of Addenda) incorporated pursuant to the previous provisions before this Act enters into force shall be deemed to have obtained authorization for business pursuant to the amended provisions of Article 9, and the preparation period of the minimum capital of such real estate investment trust pursuant to the amended provisions of Article 10 shall be deemed to have elapsed.
Article 5 (Transitional Measures concerning Restrictions on Exercise of Voting Right)
Notwithstanding the amended provisions of Article 16 (2), the previous provisions shall apply to a real estate investment trust (including a real estate investment trust incorporated pursuant to Article 3 of Addenda) incorporated pursuant to the previous provisions before this Act enters into force.
Article 6 (Transitional Measures concerning Investment in Real Estate Development Project)
Notwithstanding the amended provisions of Article 26 (2), the previous provisions shall apply to a real estate investment trust (including a real estate investment trust incorporated pursuant to Article 3 of Addenda) incorporated pursuant to the previous provisions before this Act enters into force.
Article 7 (Transitional Measures concerning Penal Provisions)
In the application of the penal provisions to any acts committed before this Act enters into force, the previous provisions shall apply.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force one year and six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 44 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.

ADDENDA

(1)
(Enforcement Date) This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 52 and 54 shall enter into force six months after the date of its promulgation.
(2)
(Transitional Measures) When applying the penal provisions to any acts committed before this Act enters into force, the previous provisions shall apply.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions of Articles 23 (3), 42 (1), 47 (2), 49-4, and 49-5 shall enter into force three months after the date of its enforcement.
Article 2 (Applicability concerning General Meetings of Shareholders)
The amended provision of Article 12 (2) shall enter into force beginning from the first general meeting of shareholders convened after this Act enters into force.
Article 3 (Applicability concerning Rights to Claim on Purchase of Stocks)
The amended provision of Article 20-2 shall enter into force beginning from the first claim on purchase of stocks concerning the resolution of the board of directors after this Act enters into force.
Article 4 (Transitional Measures concerning Rights of Redemption)
Notwithstanding the amended provisions of Article 49-2 (3), the real estate investment trust established pursuant to the previous provisions prior to this Act enters into force shall be governed by the previous provisions.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 10 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Start-up Capital of Self-Managed Real Estate Investment Trust)
The amended provision of Article 6 (1) shall apply from a self-managed real estate investment trust that applies for registration of incorporation after this Act enters into force.
Article 3 (Applicability to Report on Incorporation, etc. of Self-Managed Real Estate Investment Trust, etc. )
(1)
The amended provision of Article 8 (2) shall apply from a self-managed real estate investment trust that applies for registration of incorporation after this Act enters into force.
(2)
A self-managed real estate investment trust which was incorporated in accordance with the former provisions before this Act enters into force but has failed to apply for approval for business by the enforcement date of this Act shall submit a report on incorporation within one month from the enforcement date of this Act in accordance with the amended provision of Article 8-2 (1).
(3)
A self-managed real estate investment trust that has submitted a report on incorporation pursuant to paragraph (2) shall prepare and submit a report on the current status of the company to the Minister of Land, Transport and Maritime Affairs after three months from the date it has submitted a report on incorporation in accordance with the amended provision of Article 8-2 (2).
(4)
A self-managed real estate investment trust that has submitted a report on the current status of the company pursuant to paragraph (3) shall apply for approval for business within six months from the enforcement date of this Act in accordance with the amended provision of Article 8-2 (4).
Article 4 (Applicability to Approval for Business)
The amended provision of Article 9 (2) shall apply from cases where a real estate investment trust applies for approval for business (including approval for change) after this Act enters into force.
Article 5 (Applicability to Public Offering of Stocks)
The amended provisions of Article 14-8 shall apply from a real estate investment trust that applies for registration of incorporation after this Act enters into force.
Article 6 (Applicability to Investment in Kind)
The amended provisions of Article 19 (1) and (4) shall apply from cases where a real estate investment trust applies for approval for business after this Act enters into force.
Article 7 (Applicability to Approval of Asset Management Company, etc.)
The amended provisions of Article 22-3 (1) 2 and 3 shall apply from cases where a person who intends to incorporate an asset management company applies for approval of the company after this Act enters into force.
Article 8 (Applicability to Submission or Keeping of Actual Inspection Report)
The amended provision of Article 24 (3) shall apply from cases where a real estate investment trust acquires or disposes of real estate after this Act enters into force.
Article 9 (Applicability to Submission of Appraisal Report)
The amended provision of Article 26 (3) shall apply from cases where a real estate investment trust invests in a real estate development project after this Act enters into force.
Article 10 (Applicability to Dividends)
The amended provisions of Article 28 (4) and (5) shall apply from cases where a real estate investment trust pays dividends after this Act enters into force.
Article 11 (Applicability to Merger of Real Estate Investment Trust)
The amended provisions of Articles 40 (1) 4 and 43 shall apply from cases where a real estate investment trust passes a resolution for merger at a general meeting of stockholders after this Act enters into force.
Article 12 (Applicability to Dissolution)
The amended provision of subparagraph 7 of Article 44 shall apply from a self-managed real estate investment trust that applies for registration of incorporation after this Act enters into force.
Article 13 (Applicability to Registration of Incorporation)
(1)
The amended provision of Article 45 (2) shall apply from cases where a person applies for registration of incorporation of a real estate investment trust after this Act enters into force.
(2)
Where a real estate investment trust incorporated at the time this Act enters into force intends to assign corporate directors and supervisory directors in accordance with the amended provision of Article 14-3 (1), it shall change the articles of incorporation and register the corporate directors and supervisory directors following the appointment thereof. In such cases, the amended provision of Article 45 (2) 4-2 shall apply to matters required to be registered.
Article 14 (Transitional Measures concerning Securing of Asset Management Specialists of Self-Managed Real Estate Investment Trust)
A self-managed real estate investment trust incorporated at the time this Act enters into force shall employ regular asset management specialists within six months from the enforcement date of this Act in accordance with the amended provision of Article 22 (1).
Article 15 (Transitional Measures concerning Securing of Asset Management Specialists of Asset Management Companies)
An asset management company approved by the Minister of Land, Transport and Maritime Affairs at the time this Act enters into force shall employ regular asset management specialists within six months from the enforcement date of this Act in accordance with the amended provision of Article 22-3 (1) 2.
Article 16 (Transitional Measures concerning Securing of Asset Management Specialists of Real Estate Investment Trust Advisory Companies)
A real estate investment trust advisory company registered with the Minister of Land, Transport and Maritime Affairs at the time this Act enters into force shall employ regular asset management specialists within six months from the enforcement date of this Act in accordance with the amended provision of Article 23 (2) 2.
Article 17 (Transitional Measures concerning Securing of Compliance Officers)
A self-managed real estate investment trust and an asset management company incorporated at the time this Act enters into force shall employ a regular compliance officer within six months from the enforcement date of this Act in accordance with the amended provision of Article 47 (2).
Article 18 (Transitional Measures concerning Penal Provisions and Fines for Negligence)
When penal provisions or provisions on fines for negligence apply to acts done before this Act enters into force, the former provisions shall apply to such acts.

ADDENDA
Article 1 (Enforcement Date)
(1)
This Act shall enter into force on the date of its promulgation.
(2)
Omitted.
Articles 2 through 7 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation. (Proviso Omitted.)
Articles 16 and 17 Omitted.

ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on June 19, 2013.
Article 2 (Applicability to Public Offering of Stocks of Real Estate Investment Trust that Invests All of Its Total Assets in Housing Rental Business and Upper Limits of Shareholding for Each Person)
The amended provisions of Articles 14-8 (3), 16 (3) and 26-2 (6) and (7) shall apply from the first real estate investment trust company incorporated after this Act enters into force.

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