Ship Investment Company Act
Chapter 1 Preamble
Article 1 (Purpose)
This act will stipulate the issues on establishment of “Ship Investment Company” and ship operation to provide investors with adequate investment opportunities in ship and to activate investments on vessels in the capital market, thereby establishing the groundwork for the development of the maritime industry and ultimately contributing to the development of the national economy.
Article 2 (Definition of Terms)
The definition of terms used in the Act is in the following.
1. “Ship investment company” refers to the party that is involved in ship investment business with the approval of the Minister of Maritime Affairs and Fisheries under the Act.
2. “Ship investment management company” refers to the party whose main business is to operate and manage the vessel with the commission of the ship investment company, and refers to the party that is registered to the Minister of Maritime Affairs and Fisheries under the provision of Article 38.
3. “ Custody company” refers to the trust company based on Trust Law ( including financial institutions which operates trust business such as bank on the regulation section 28 in the Banking Law) which take commission from ship investment company , custody its assets and operating its business.
4. “Ship operating company” refers to the party who use a vessel of a ship investment company under a chartering contract.
Article 3 (Corporation)
1 Ship investment company shall be a corporation.
2 Ship investment company (including foreign subsidiary under the Paragraph (3)) shall possess only one vessel and shall not substitute it into another vessel during its existence.
3 Ship investment company shall be allowed to establish its foreign subsidiary in case where it is deemed to be necessary to perform the scope of business work under Article 24. In this case, the business work of the foreign subsidiary shall be deemed to be performed by the ship investment company.
4 Ship investment company shall not have branches except for head office, and shall not have employees or full-time staff.
Article 4 (Application of the Commercial Law)
Except for the cases that are stipulated otherwise, ship investment company shall be subject to the Commercial Law.
Article 5 (Restriction on using similar company name)
1 Name of the ship investment company shall include the title of ship investment company.
2 Companies that are not ship investment company under the Act shall not use the title of ship investment company or other similar name.
Chapter 2 Establishment, approval, and issuance of stocks
Section 1 Establishment
Article 6 (Duration)
The duration of ship investment company shall be more than five years from the day that the approval of ship investment business is made under the Article 13.
Article 7 (Promoter)
1 Those who fall under one of the following subparagraphs shall not be qualified for promoter.
1. Person under age, incompetent and semi-incompetent persons;
2. A bankrupt who have not yet been reinstated;
3. Person who has been sentenced to imprisonment and 2 years has not been passed from the day of the completion of the execution (including the cases that the execution is regarded to be completed) or exemption.
4. Person who has been sentenced to imprisonment, or who has been subject to a fine under this Act or under other laws and regulations on maritime affairs and financial issues (This shall include similar law and regulations of foreign countries, and it shall be same in the followings), and 2 years have not yet passed after the completion of the execution (including the cases that the execution is regarded to be completed) or exemption;
5. Person who is granted a stay of execution and is still on probation;
6. Executives or employees of corporation or company that business permission, approval or registration is cancelled under the Act, or under other laws and regulations on maritime affairs and financial issues (Persons who have direct responsibilities or corresponding responsibility for the reasons of cancellation of the approval and others shall be included, and it shall be subject to the Presidential Decree) and five years have not yet passed after cancellation for the corporation or company is made;
7. Persons who is discharged or dismissed from the office for the violation of the Act, or other laws and regulations on maritime affairs and financial issues, and five years have not yet passed since then.
2 Promoter shall acquire the stocks out of total capital amounting to the ratio set by the Presidential Decree within the range of 30/100 of issuing shares
Article 8 (Articles of incorporation)
1 Promoter shall establish articles of incorporation and fill in the following details. All promoters shall sign and seal the document.
1. Purpose
2. Name of the company
3. Total number of shares to be issued
4. Per-share price
5. Total number of shares issued at the time of establishment
6. Duration period
7. Limits of borrowings and bond issuance
8. Guidelines of asset management
9. Details on profit allocation, and changes (increase or decrease) of capital
10. Location of company
11. Notification method
12. Standards of remuneration for directors and auditors
13. Overview of asset management trust agreement to be signed with ship investment management company (including the standards of remuneration to be paid to ship investment management company)
14. Overview of asset custody agreement to be signed with asset custody company
15. Outlines of the agreement on shipbuilding, sales and chartering
16. Title or name of promoter, corporation registration number or resident identification number and address
17. Other issues set under the Presidential Decree
2 The total number of shares stipulated in subparagraph 5 of Paragraph (1) can be set under maximum or minimum limits.
Article 9 (Subscription for stock acquisition)
1 Promoter shall provide the prospectus that explains the purpose of establishment, chartering plan, and facts set by the presidential decree to the potential investors when they propose the subscription of issuing stocks at the time of establishment of ship investment company.
2 Promoter shall write stock subscription form that includes each of the following details and shall provide it to the parties that apply for stock subscription of the company at the time of establishment.
1. Details stipulated in the Article 8
2. Reasons for dissolution when it is stipulated in the Articles of Incorporation
3. The kind and number of shares to be acquired by the promoters.
4. Method of stock allocation and payment date for the shares issued at establishment
5. Financial institutions and payment place for stock payment
6. Name and address of candidates of directors and auditors
7. Issues on fund provision
8. Name and address of ship investment management company for business custody
9. Name and address of the company that will sign an agreement on shipbuilding, sales and chartering
10. In case that the number of shares that subscription is made is less than that of shares issued at the time of establishment, ship investment company can cancel the establishment of the company
11. In case ship investment company is not established until a specified deadline or if the Minister of Maritime Affairs and Fisheries does not grant approval under the provisions of the Act, the person who made the subscription for the shares can cancel the subscription
12. In other case involved shareholder’s interest set by the presidential decree
Article 10 (Limit of incomplete establishment)
The ship investment company cannot be established by investment in kind in spite of Paragraph 2 of Article 290 in Commercial Law.
Article 11 (Candidates for directors and auditors)
1 The candidates for director and auditors written in subscription form shall be regarded to be appointed for the job at the time of closing the share allocation.
2 The directors and auditors shall acquire the approval from the inaugural meeting.
Article 12 (Organizing registration)
1 The issues subject to organizing registration are in the followings.
1. Issues that are stipulated in Subparagraphs 1~3, 5, 6, 10, and 11 of Paragraph 1, Article 8;
2. Details when the reasons for dissolution of ship investment company are stipulated in the articles of incorporation;
3. Name and address of agent for title transfer;
4. Name and resident identification number of director;
5. Name, resident identification number, address of the director that represents the ship investment company; and
6. The background behind the case when several directors jointly represent the ship investment company as stipulated in the articles of incorporation
2 In case organizing registration is made documents as specified in the Presidential Decree shall be attached.
Section 2 Approval
Article 13 (Approval of ship investment business)
1 Ship investment company that desires to be involved in ship investment business under Paragraph 2 of Article 24 shall acquire the approval of the Minister of Maritime Affairs and Fisheries. The approval of the Minister shall be also required in case that the approved issues need change.
2 The Minister of Maritime Affairs and Fisheries shall review each of the following details for the approval as stated in Paragraph (1).
1. Ship investment company is established lawfully under the Act;
2. Business plan shall be concrete, reasonable and sound;
3. The agreement signed with ship investment management company and assets custody company by ship investment company shall be reasonable;
4. The agreement on chartering signed between ship operating company and ship investment company shall be appropriate; and
5. Other issues set under the Presidential Decree
3 In case the Minister of Maritime Affairs and Fisheries grants the approval under Paragraph (1), the Minister can attach conditions to guarantee sound business management and for the protection of investors, and can limit the business scope.
4 In case the Minister of Maritime Affairs and Fisheries grants the approval under Paragraph (1), the Minister can inform the details of the approval and notify it by the daily government newspaper and internet according to the ministry of maritime affairs and fisheries law.
Article 13-2 (Approval of ship investment company for government-owned vessel)
1 The Minister of Maritime Affairs and Fisheries may approve the establishment of the ship investment company solely for the government-owned vessel (government-owned vessel shall mean the vessel owned by the government through the ‘sale by deferred payment’ or operated by the government under the Paragraph (1) of the Article 2.
2 In relation to the ship investment company under the Paragraph (1), the Minister of Maritime Affairs and Fisheries shall have pre-discussion about the below with the Minister of Planning and Budget.
1. Subject vessel
2. Shipbuilding and operation plan of the vessel
3. Matters of the vessel’s ownership transfer through the ‘sale by deferred payment’
4. Contents, method, procedure and conditions of the shipbuilding and etc. under the agreement between the government and ship investment company
5. Dividend rate and guarantee to the shareholders of ship investment company
3 In relation to the ship investment company under the Paragraph (1), the ownership transfer of the government-owned vessel through the ‘sale by deferred payment’ shall be included in the scope of business work under the Paragraph (1) of the Article 24. In this case, the period of ‘sale by deferred payment’ shall be deemed to be the chartering period under the Paragraph (1) of the Article 1.
4 Government-owned vessel shall be subject to the Subparagraph 4 of the Paragraph 2 of the Article 13. In this case, ship operating company shall be the government.
5 Ship investment company under the Paragraph (1) shall be not subject to the Paragraph (2) of the Article 3, the Paragraph (1) of the Article 27 and the Article 28.
Article 14 (Validity of the approval)
1 In case the ship investment company that acquires business approval under Paragraph (1) of Article 13 fails to commence its ship investment business within six-month period from the day of approval, the approval shall lose its validity.
2 If there is a justifiable reason that is recognized by the Minister of Maritime Affairs and Fisheries, the period that is mentioned in the Paragraph (1) may be extended within six month period in accordance with the application of the ship investment company that acquired business approval under the Article 13.
14-2 (Investment Consultation Committee)
1 The Minister of the Maritime Affairs and the Fisheries may have the investment consultation committee in order to hear the effects of shipping and financing industries and etc. in reviewing the approval of ship investment company.
2 Necessary matters including composition, function and operation of the investment consultation committee shall be stipulated in the Presidential Decree.
Section 3 Issuance of stocks
Article 15 (Public offering of stocks)
1 In case ship investment company issues stocks after the establishment, stock subscription form shall be filled in as specified in the Presidential Decree and it shall be provided to the parties that wish to acquire the stocks.
2 Ship investment company shall not issue stocks after shipbuilding is finished or purchasing of vessel is completed.
3 Stockholders of ship investment company shall not have the rights to demand redemption of stocks during the duration period of ship investment company.
Article 16 (Conditions on stock issuance)
1 If ship investment company issues stocks after the establishment, issue price and other issuance conditions shall be equally specified for the same kind of stocks to be issued on the same day.
2 Regarding the case of Paragraph (1), the stock issue price shall be calculated under the methods set by the Presidential Decree based upon the market value, asset value, and profit value of the ship investment company.
Article 17 (Listing of shares)
1 The ship investment company shall list its stocks on KSE or KOSDAQ to exchange shares when it meets the listing standard for KSE according to section 71 of Securities Exchange Act or registration condition for KOSDAQ under section 162 of the above act without any delay.
2 The Minister of Maritime Affairs and Fisheries can order its execution for the listing when the ship investment company doesn’t try to list its stocks on KSE or KOSDAQ under provision 1 without any reason.
Article 18 (Restrictions on stock ownership)
1 Aggregate amount of stocks of ship investment company owned by Ship investment management company, asset custody company, ship operating company, the parties under the agreement on shipbuilding, sales, and chartering, and the parties with special interests of the above mentioned parties (“Ship Investment Management Company and Related Parties) shall not exceed 25/100 of total stocks.