Social Enterprise Promotion Act


Published: 2012-02-01

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 Article 1 (Purpose)   print
The purpose of this Act is to contribute to social unity and to enhancing the quality of life of the people by expanding social services that are not sufficiently supplied in our society and by creating new jobs through the support of the establishment and operation of social enterprises and the promotion of social enterprises.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 2 (Definitions)   print
The terms used in this Act shall be defined as follows:
1. The term "social enterprise" means an entity certified as prescribed in Article 7 to be the one that pursues a social objective aimed at enhancing the quality of life of community residents by providing vulnerable social groups with social services or job opportunities or by contributing to the communities while conducting its business activities, such as the manufacture or sale of goods and services;
2. The term "vulnerable social group" means a group of people who suffer hardships in purchasing needed social services at market prices or are confronted with particular difficulties in getting a job under ordinary conditions of the labor market, for whom further detailed criteria shall be prescribed by Presidential Decree;
3. The term "social services" means services in the fields prescribed by Presidential Decree, including educational, health, social welfare, environmental, cultural and other services similar thereto;
4. The term "associated enterprise" means an enterprise that provides various support, such as financial support and managerial consultation, to a specific social enterprise while remaining independent of the social enterprise in respect to personnel, physical, and legal matters;
5. The term "associated local government" means a local government that provides administrative and financial support to a specific social enterprise for the expansion of social services and the creation of jobs for community residents.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 3 (Roles and Responsibilities of Each Operating Entity Involved)   print
(1) In order to expand social services and create job opportunities, the State shall establish policies for supporting social enterprises and shall promote comprehensively any necessary measures.
(2) Each local government shall establish and implement policies for supporting social enterprises, which are tailored to the characteristics of each local government.
(3) Each social enterprise shall endeavor to re-invest the income generated by its business activities into the maintenance and expansion of the social enterprise.
(4) No associated enterprise shall acquire a share of the income generated by a social enterprise.
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 Article 4 Deleted.<by Act 10360, Jun. 8, 2010>   print
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 Article 5 (Establishment of Master Plans for Promotion of Social Enterprises)   print
(1) The Minister of Employment and Labor shall establish a master plan for the promotion of social enterprises (hereinafter referred to as "master plan") every five years, after deliberation by the Employment Policy Deliberative Council established under Article 10 of the Framework Act on Employment Policy (hereinafter referred to as "Policy Deliberative Council"), in order to systematically promote and support social enterprises.
(2) A mater plan shall include the following:
1. Direction-setting for support of social enterprises;
2. Matters concerning the development of conditions for the stimulation of social enterprises;
3. Matters concerning support for the operation of social enterprises;
4. Other matters prescribed by Presidential Decree for the promotion and support of social enterprises.
(3) The Minister of Employment and Labor shall establish and implement an annual implementation plan in conformity with the master plan.
(4) Matters necessary for the establishment and implementation of the master plans and annual implementation plans shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 5-2 (Establishment, etc. of City/Do Plans to Support Social Enterprises)   print
(1) The Seoul Special Metropolitan City Mayor, a Metropolitan City Mayor, a Do Governor and the Governor of a Special Self-Governing Province (hereinafter referred to as "Mayor/Do Governor") shall establish and implement a City/Do Plan to support social enterprises (hereinafter referred to as "support plan"), as prescribed by Presidential Decree, in order to promote and systematically support social enterprises within his/her jurisdiction. In such cases, the support plans shall be prepared in connection with the relevant master plan.
(2) When a Mayor/Do Governor has established the support plan pursuant to paragraph (1), he/she shall submit it to the Minister of Employment and Labor, as prescribed by Presidential Decree.
(3) The Minister of Employment and Labor may give additional support to Cities and Dos that have established excellent support plans.
[This Article Newly Inserted by Act 10360, Jun. 8, 2010]
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 Article 6 (Surveys of Actual State)   print
The Minister of Employment and Labor shall survey the actual state of activities of social enterprises every five years and shall inform the Policy Deliberative Council of the results thereof.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 7 (Certification of Social Enterprises)   print
(1) Any entity that intends to operate a social enterprise shall meet the certification requirements prescribed in Article 8 and obtain certification from the Minister of Employment and Labor.
(2) When the Minister of Employment and Labor intends to grant certification under paragraph (1), he/she shall undergo deliberation thereon by the Policy Deliberative Council.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 8 (Requirements and Procedures for Certification of Social Enterprises)   print
(1) Any entity that intends to obtain certification as a social enterprise shall meet all of the following requirements: <Amended by Act No. 11275, Feb. 1, 2012>
1. That it shall assume the form of an organization prescribed by Presidential Decree, such as a corporation or association as defined in the Civil Act, a company or limited partnership as defined in the Commercial Act, a corporation established under any Special Act, or a non-profit, non-governmental organization;
2. That it shall employ paid workers and conduct business activities, such as production and sale of goods or services;
3. That the primary objective of the organization shall be to realize social objectives, such as enhancing the quality of life of community residents by providing vulnerable social groups with social services or job opportunities, or by contributing to the communities. In such cases, the detailed criteria therefor shall be prescribed by Presidential Decree;
4. That it shall have a decision-making structure in which interested parties, such as the beneficiaries of services and employees, participate;
5. That the revenue generated through its business activities shall meet or exceed the standards prescribed by Presidential Decree;
6. That it shall prepare articles of incorporation, bylaws, or a similar, referred to in Article 9;
7. That it shall use at least 2/3 of profits for social objectives, where it generates distributable profits for each fiscal year (applicable only to companies or limited partnerships as defined in the Commercial Act);
8. That it shall prepare other matters prescribed by Presidential Decree regarding operational guidelines.
(2) Where the Minister of Employment and Labor has certified any entity as a social enterprise, he/she shall publish the details thereof in the Official Gazette.
(3) Matters necessary for the methods and procedures for certifying social enterprises shall be prescribed by Ordinance of the Ministry of Employment and Labor, and standards for examining the certification of social enterprises shall be publicly announced by the Minister of Employment and Labor.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 9 (Articles of Incorporation, etc.)   print
(1) Any entity that intends to obtaincertification as a social enterprise shall prepare articles of incorporation, bylaws, or a similar (hereinafter referred to as "articles of incorporation, etc.") stipulating the following matters: <Amended by Act No. 11275, Feb. 1, 2012>
1. Objectives;
2. Scope of business;
3. Name of business;
4. Principal place of business;
5. The form of organization and governance, method of operation, and method of decision-making on important matters;
6. Matters concerning the distribution and re-investment of profits;
7. Matters concerning contributions to capital and loans;
8. Matters concerning the composition, appointment, and dismissal of employees;
9. Matters concerning dissolution and liquidation (if it is a company or limited partnership as defined in the Commercial Act and has distributable residual property, provisions stipulating that at least 2/3 of such distributable residual property is to be donated to another social enterprise, public fund, etc. shall be included);
10. Other matters prescribed by Presidential Decree.
(2) Where the articles of incorporation, etc. prescribed in paragraph (1) have been amended, the details thereof shall be reported to the Minister of Employment and Labor within 14 days from the date of such amendment.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 10 (Support for Business Management, etc.)   print
(1) The Minister of Employment and Labor may provide various support to a social enterprise, such as professional consultation and supply of information on the fields of business management, technology, taxation, labor relations, and accounting as necessary for the establishment and operation of the social enterprise.
(2) The Minister of Employment and Labor may entrust the support affairs prescribed in paragraph (1) to a government-funded institution or non-governmental organization prescribed by Presidential Decree.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 10-2 (Support, etc. for Education and Training)   print
The Minister of Employment and Labor may provide education and training for nurturing specialized personnel necessary to establish and operate social enterprises and to enhance the abilities of employees of social enterprises.
[This Article Newly Inserted by Act 10360, Jun. 8, 2010]
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 Article 11 (Subsidization of Facility Costs, etc.)   print
The State and a local government may subsidize or finance land purchasing costs, facility costs, etc. as necessary for the establishment or operation of a social enterprise, or lend or permit the use ofState or public property or articles. <Amended by Act No. 11275, Feb. 1, 2012>
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 Article 12 (Preferential Purchases by Public Institutions)   print
(1) The head of each public institution as defined in subparagraph 2 of Article 2 of the Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of their Markets (hereinafter referred to as "head of each public institution") shall encourage preferential purchases of goods or services produced or provided by social enterprises (hereinafter referred to as "social enterprise-produced products"). <Amended by Act No. 11275, Feb. 1, 2012>
(2) The head of each public institution shall notify the Minister of Employment and Labor of a purchase plan to increase purchases of social enterprise-produced products and a record of purchases in the preceding year. <Amended by Act No. 11275, Feb. 1, 2012>
(3) The Minister of Employment and Labor shall compile and publicly announce the purchase plans and the record of purchases notified under paragraph (2). <Newly Inserted by Act No. 11275, Feb. 1, 2012>
(4) Matters necessary to notify and publicly announce the purchase plans and the record of purchases referred to in paragraphs(2) and (3) shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 11275, Feb. 1, 2012>
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 13 (Tax Reduction or Exemption and Subsidization of Social Insurance Premiums)   print
(1) The State and local governments may grant reduction of or exemption from national or local taxes to social enterprises, as provided in the Corporate Tax Act, the Restriction of Special Taxation Act, and the Restriction of Special Local Taxation Act. <Amended by Act No. 10220, Mar. 31, 2010>
(2) The State may subsidize part of the premiums for employment insurance and industrial accident compensation insurance under the Act on the Collection of Insurance Premiums, etc. for Employment Insurance and Industrial Accident Compensation Insurance, the insurance premiums under the National Health Insurance Act, and the pension premiums under the National Pension Act with respect to social enterprises.
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 Article 14 (Financial Support to Social Enterprises Providing Social Services)   print
(1) The Minister of Employment and Labor may provide financial support to social enterprises providing social services within budgetary limits, for personnel expenses, operating expenses, advisory fees, and other expenses incurred in operating such social enterprises by means of an open invitation and screening.
(2) When the Minister of Employment and Labor provides support under paragraph (1) to a social enterprise supported by an associated enterprise or associated local government, he/she may provide additional support in the working expenses, considering the state of financial support provided by the associated enterprise or associated local government.
(3) Matters necessary for requirements for the selection of enterprises eligible for financial support, screening procedures and other relevant matters shall be prescribed by Ordinance of the Ministry of Employment and Labor.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 15 (Limitations on Liability of Associated Enterprises)   print
No associated enterprise shall be liable for the employment of workers of any relevant social enterprise.
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 Article 16 (Tax Reduction or Exemption for Associated Enterprises, etc.)   print
The State and local governments may grant reduction of or exemption from national taxes or local taxes to associated enterprises, corporations or individuals that make donations to social enterprises, as prescribed by the Corporate Tax Act, the Income Tax Act, the Restriction of Special Taxation Act, and the Local Tax Act.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 16-2 (Social Enterprise Day)   print
(1) To raise understanding of social enterprises and encourage their activities, the State shall designate July 1 of each year as the Social Enterprise Day, and also designate one week from the Social Enterprise Day onward as the Social Enterprise Week.
(2) The State and local governments shall endeavor to implement projects, such as events in line with the purport of the Social Enterprise Day.
[This Article Newly Inserted by Act 10360, Jun. 8, 2010]
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 Article 17 (Reporting, etc.)   print
(1) Each social enterprise shall prepare a business report stating matters specified by Ordinance of the Ministry of Employment and Labor, such as the results of business performance and the details of participation in decision-making by interested parties, and submit it to the Minister of Employment and Labor by the end of April and October of each fiscal year. <Amended by Act No. 11275, Feb. 1, 2012>
(2) The Minister of Employment and Labor shall guide and supervise social enterprises and, if deemed necessary, may require any social enterprise or its members to file a necessary report or submit relevant documents.
(3) The Minister of Employment and Labor may evaluate the operation of social enterprises based on the business reports submitted under paragraph (1).
(4) The Minister of Employment and Labor may issue a corrective order, where necessary as a result of his/her review of the details of a report, guidance, supervision and evaluation under paragraphs (1) through (3).
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 18 (Revocation of Certification)   print
(1) Where a social enterprise falls under any of the following subparagraphs, the Minister of Employment and Labor may revoke the certification of the social enterprise: Provided, That the certification shall be revoked in cases falling under subparagraph 1: <Amended by Act No. 11275, Feb. 1, 2012>
1. Where it obtains certification by deceit or other fraudulent means;
2. Where it no longer meets the certification requirements prescribed in Article 8;
3. Where it obtains or tries to obtain financial support provided under this Act or other Acts by deceit or other fraudulent means;
4. Where it returns the certification without any specific ground that makes it difficult to maintain the social enterprise, such as deterioration of business;
(2) Unless three years have passed from the date of the revocation of certification, the Minister of Employment and Labor shall not grant certification to an enterprise, the certification of which has been revoked under paragraph (1) or an enterprise deemed practically identical to such enterprise. In such cases, criteria for practical identicalness shall be prescribed by Presidential Decree. <Newly Inserted by Act No. 11275, Feb. 1, 2012>
(3) The Minister of Employment and Labor shall hold a hearing when he/she intends to revoke certification pursuant to paragraph (1). <Amended by Act No. 11275, Feb. 1, 2012>
(4) Further detailed guidelines and procedures for the revocation of certification shall be prescribed by Ordinance of the Ministry of Employment and Labor. <Amended by Act No. 11275, Feb. 1, 2012>
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 19 (Prohibition against Use of Similar Names)   print
No person other than a social enterprise shall use the name of "social enterprise" or any other similar name.
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 Article 20 (Establishment, etc. of the Korea Social Enterprise Promotion Agency)   print
(1) The Minister of Employment and Labor shall establish a Korea Social Enterprise Promotion Agency (hereinafter referred to as "Promotion Agency") to efficiently perform duties to foster and promote social enterprises.
(2) The Promotion Agency shall be a corporation.
(3) The Promotion Agency shall be duly formed upon completing the registration for its establishment at the registry office having jurisdiction over its principal place of business.
(4) The Promotion Agency shall conduct the following projects: <Amended by Act No. 11275, Feb. 1, 2012>
1. Training social enterprisers, scouting for a model of social enterprise, and supporting commercialization;
2. Monitoring and evaluating social enterprises;
3. Establishing social enterprise networks by business type, area and whole country, and supporting the operation thereof;
4. Constructing and operating websites of social enterprises and an integrated information system;
5. Providing consultancy to improve business administration, technology, taxation, labor, or accounting;
6. Cooperating in international exchange related to social enterprises;
7. Other businesses relating to social enterprises, which have been entrusted as prescribed by this Act or other Acts and subordinate statutes;
8. Projects incidental to those referred to in subparagraph 1 through 7.
(5) The Government may make contributions to the Promotion Agency to cover expenses incurred in the establishment and operation, within budgetary limits.
(6) Except as otherwise specifically provided in this Act, the provisions concerning an incorporated foundation of the Civil Act shall apply mutatis mutandis to the Promotion Agency.
(7) The Promotion Agency may request the State, local governments, public institutions, such as educational institutions and research institutions, to provide data necessary for the performance of duties.
(8) The executives and employees of the Promotion Agency shall be deemed public officials for the purposes of penal provisions in Articles 129 through 132 of the Criminal Act.
(9) No current or former executive and employee of the Promotion Agency shall reveal confidential information or use it for other purposes, which he/she has learned in the course of performing his/her duties.
(10) The Minister of Employment and Labor shall direct and supervise the Promotion Agency, have the Promotion Agency file a necessary report concerning duties, accounting and property, or have affiliated public officials access the Promotion Agency and inspect books, documents and other articles.
(11) The articles of incorporation, board of directors, executives and accounting of the Promotion Agency, cooperation with relevant institutions, and other matters necessary for the establishment, operation, etc. of the Promotion Agency shall be prescribed by Presidential Decree.
(12) No entity other than the Promotion Agency shall use the title "Korea Social Enterprise Promotion Agency" or a similar.
[This Article Newly Inserted by Act 10360, Jun. 8, 2010]
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 Article 21 (Delegation and Entrustment of Authority)   print
(1) The Minister of Employment and Labor may partially delegate his/her authority under this Act to the heads of local governments or the heads of local labor and employment offices, as prescribed by Presidential Decree. <Amended by Act No. 11275, Feb. 1, 2012>
(2) The Minister of Employment and Labor may entrust the following duties to the Promotion Agency:
1. Surveys of the actual state of activities of social enterprises pursuant to Article 6;
2. Duties concerning certification of social enterprises pursuant to Article 7 (1);
3. Receipt of reports on the amendment to articles of incorporation, etc. pursuant to Article 9 (2);
4. Provision of education and training pursuant to Article 10-2.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
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 Article 22 (Penal Provisions)   print
Any person who reveals confidential information that he/she has learned in the course of performing his/her duties or uses it for other purposes in violation of Article 20 (9) shall be punished by imprisonment for not more than three years or by a fine not exceeding ten million won.
[This Article Newly Inserted by Act 10360, Jun. 8, 2010]
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 Article 23 (Fines for Negligence)   print
(1) Any person falling under any of the following subparagraphs shall be punished by a fine for negligence not exceeding ten million won:
1. A person who fails to comply with a corrective order issued pursuant to Article 17 (4);
2. A person who uses the title of social enterprise or any other similar name, in violation of Article 19.
(2) Any person falling 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 perform the duty to report on the amendment to articles of incorporation pursuant to Article 9 (2);
2. A person who neglects the duty to prepare and submit a business report under Article 17 (1), or prepares a false or fraudulent report;
3. A person who fails to file a report under Article 17 (2), submits a false report, fails to submit documents, or submits false documents;
4. An entity who uses the title "Korea Social Enterprise Promotion Agency" or a similar, in violation of Article 20 (12).
(3) Fines for negligence under paragraphs (1) and (2) shall be imposed and collected by the Minister of Employment and Labor, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act 10360, Jun. 8, 2010]
ADDENDUM
This Act shall enter into force on July 1, 2007.
ADDENDA<Act No. 8361, Apr. 11, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 10 Omitted.
ADDENDA<Act No. 9685, May 21, 2009>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Articles 2 through 8 Omitted.
ADDENDA<Act No. 10220, Mar. 31, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2011.
Articles 2 through 5 Omitted.
ADDENDA<Act No. 10339, Jun. 4, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force one month after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 5 Omitted.
ADDENDA<Act No. 10360, Jun. 8, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Preparation for Establishment of the Korea Social Enterprise Promotion Agency)
(1) The Minister of Employment and Labor may appoint no more than five promoters to handle business affairs concerning the establishment of the Promotion Agency.
(2) The promoters shall prepare the articles of incorporation of the Promotion Agency and complete registration for the incorporation of the Promotion Agency after obtaining authorization from the Minister of Employment and Labor.
(3) The promoters shall transfer the business affairs of the Promotion Agency to the Director of the Promotion Agency without delay after completing the registration for incorporation of the Promotion Agency, and be deemed dismissed when the transfer of business affairs is completed.
ADDENDA<Act No. 11275, Feb. 1, 2012>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That the amended provisions concerning limited partnerships inArticles 8 (1) and 9 (1) shall enter into force on April 15, 2012, and amended provisions of Articles 12 and 18 shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Revocation of Certification)
(1) The amended provisions of Article 18 (1) 3 shall apply to the cases of obtaining or trying to obtain financial support under this Act, or other Acts or subordinate statutes by deceit or other fraudulent means on or after the date the aforesaid amended provisions enter into force.
(2) The amended provisions of Article 18 (1) 4 shall apply to the return of certification without any specific ground that makes it difficult to maintain a social enterprise on or after the date the aforesaid amended provisions enter into force.
(3) The amended provisions of Article 18 (2) shall apply to the enterprises, the certification of which has been revoked or the enterprises deemed practically identical to such enterprises on or after the date the aforesaid amended provisions enter into force.