Specialized Credit Financial Business Act of South Korea

by the government of the Republic of Korea

Act No. 5374, Aug. 28, 1997

Amended by Act No. 5505, Jan. 13, 1998

Act No. 5741, Feb. 1, 1999

Act No. 5819, Feb. 8, 1999

Act No. 5982, May 24, 1999

Act No. 6316, Dec. 29, 2000

Act No. 6430, Mar. 28, 2001

Act No. 6681, Mar. 30, 2002

Act No. 6705, Aug. 26, 2002

Act No. 6909, May 29, 2003

Act No. 7065, Jan. 20, 2004

Act No. 7343, Jan. 27, 2005

Act No. 7344, Jan. 27, 2005

Act No. 7428, Mar. 31, 2005

Act No. 7531, May 31, 2005

Act No. 7929, Apr. 28, 2006

Act No. 8265, Jan. 26, 2007

Act No. 8313, Mar. 29, 2007

Act No. 8356, Apr. 11, 2007

Act No. 8525, Jul. 19, 2007

Act No. 8852, Feb. 29, 2008

Act No. 8863, Feb. 29, 2008

CHAPTER Ⅰ GENERAL PROVISIONS

• Article 1 (Objective) The purpose of this Act is to seek financial conveniences for the people and to contribute to the growth of the national economy by supporting sound and initiative development of credit card business, facilities leasing business, installment financing business, and venture capital business.

• Article 2 (Definitions) The definitions of terms used in this Act shall be as follows: <Amended by Act No. 5741, Feb. 1, 1999; Act No. 5982, May 24, 1999; Act No. 6430, Mar. 28, 2001; Act No. 6681, Mar. 30, 2002; Act No. 7065, Jan. 20, 2004; Act No. 8525, Jul. 19, 2007; Act No. 8863, Feb. 29, 2008>

1. “Specialized credit financial business” means credit card business, facilities leasing business, installment financing business, and venture capital business;

2. “Credit card business” means operation as a business of two or more functions from among those falling under any of the following items, including that of item (b):

(a) Issuance and management of credit cards;

(b) Settlement of charges in respect of the use of credit cards; or

(c) Establishment and maintenance of merchant networks of credit cards;

2-2. “Credit card company” means a person who has obtained a license, or made a registration, for credit card business under Article 3 (1): Provided, That where the person falling under Article 3 (3) 1 engages in the business under Article 13 (1) 2 and 3, he shall be deemed as a credit card company insofar as the business is concerned;

3. “Credit card” means a card issued by a credit card company (including

persons who carry on the credit card business in a foreign country), which authorizes the holder to purchase goods or procure services repeatedly by presenting it to a credit card merchant, or to settle the matters as prescribed by Ordinance of the Prime Minister;

4. “Credit card holder” means an individual who is issued a credit card through a contract with the credit card company;

5. “Credit card merchant” means a person falling under any of the following items:

(a) A person who sells goods or provides services, etc. to credit card holders, debit card holders, or pre-paid card holders (hereinafter referred to as the “credit card holders, etc.”) through the transactions by means of a credit card, debit card, or pre-paid card (hereinafter referred to as the “credit card, etc.”) in compliance with the contract with the credit card company; and

(b) A person acting for the transactions by means of a credit card, etc. (hereinafter referred to as the “agency for settlements”) for the persons who sell goods or provide services, etc. to credit card holders, etc. in compliance with the contract with the credit card company;

6. “Debit card” means a card issued by the credit card company (excluding the card which enables to obtain a loan of fund) whereby the provision of goods and services and payment therefor can be done simultaneously by means of an electronic or magnetic fund transfer between the bank accounts of the debit card holders and the credit card merchants;

7. “Debit card holder” means a person who is issued a debit card under a contract with the credit card company;

8. “Pre-paid card” means a card which is issued by the credit card company upon receipt of a set amount beforehand and on which the set amount is recorded (through electronic or magnetic means) and against the presentation of which by a debit card holder the credit card merchant provides goods and services within the set amount;

9. “Facilities leasing business” means to carry on facilities leasing as a business;

10. “Facilities leasing” means a financing method whereby goods specified by Presidential Decree (hereinafter referred to as “specified goods”) newly purchased or leased are leased to others for use for a certain period against payment therefor receivable periodically in installments. The disposal of the goods at the end of that period shall be decided by an agreement between the parties concerned;

11. “Deferred payment sale” means a financing method whereby newly acquired specified goods are delivered to the other party for use, against payment of the price plus interest, etc., by periodic installments for a period equal to or more than the period prescribed by Presidential Decree. The time of ownership transfer and other conditions shall be decided by an agreement between the parties concerned;

12. “Installment financing business” means operation as a business of installment financing;

13. “Installment financing” means a method of financing whereby a sum of money lent to a buyer for purchase of goods or services is paid to the seller, and the principal and interest thereon are collected from the buyer in installments, by means of an agreement with the buyer and the seller;

14. “Venture capital business” means operation as a business of various services referred to in each of subparagraphs of Article 41 (1);

15. “Specialized credit financial business companies” means persons exclusively carrying on services referred to in subparagraphs of Article 46 (1), who are licensed by the Financial Services Commission or registered with the Financial Services Commission in accordance with the provisions of Article 3 (1) or (2) for a specialized credit financial business;

16. “Concurrent loan service providers” means those other than specialized credit financial business companies, who are licensed by the Financial Services Commission or registered with the Financial Services Commission in accordance with the proviso of Article 3 (3) for a specialized credit financial business;

17. “Major shareholder” means a shareholder who falls under any of the following subparagraphs:

(a) The largest shareholder: A person who holds the greatest number of outstanding voting stocks of a specialized credit financial business company when the number of stocks held by himself as a principal and the number of stocks held by any person specially related with the principal as further prescribed by Presidential Decree (hereinafter referred to as a “specially related person”) on the principal’s account are summed up, no matter whose name the account stands in: or

(b) Principal shareholder: A person who holds 10/100 or more of total number of outstanding voting stocks of a specialized credit financial business company on his account, no matter whose name the account stands in, or a shareholder who exercises de facto influence over important matters concerning management of the specialized credit financial business company through appointment and dismissal of officers, etc., as further specified by Presidential Decree;

18. “Credit extension” means grant of loans, guarantee of payment, purchase of securities to supply funds, or other direct or indirect transactions of a specialized credit financial business company which involve a certain amount of financial risk and which are prescribed by Presidential Decree: and

19. “Equity capital” means the total amount of paid-in capitals, capital surplus and surplus earnings, as prescribed by Presidential Decree.

CHAPTER Ⅱ LICENSE OR REGISTRATION

• Article 3 (License or Registration of Business) (1) A person who wishes to perform a credit card business shall obtain a license from the Financial Services Commission: Provided, That persons falling under paragraph (3) 2 may carry on a credit card business by registering with the Financial Services Commission. <Amended by Act No. 6681, Mar. 30, 2002; Act No. 8863, Feb. 29, 2008>

(2) A person who is carrying out or wishes to carry out a facilities leasing business, installment financing business or venture capital business, and wishes to avail himself of the provisions of this Act, shall register with the Financial Services Commission according to each category of business. <Newly Inserted by Act No. 6681, Mar. 30, 2002; Act No. 8863, Feb. 29, 2008>

(3) A person who is eligible to obtain license or make registration under paragraph (1) or (2) shall be restricted to one who is or wishes to be a specialized credit financial business company: Provided, That this shall not apply to those who falls under any of the following subparagraphs: <Amended by Act No. 5505, Jan. 13, 1998; Act No. 5741, Feb. 1, 1999; Act No. 5982, May 24, 1999; Act No. 6681, Mar. 30, 2002; Act No. 8863, Feb. 29, 2008>

1. A financial institution established by the provisions of other Acts or one designated by Presidential Decree from among financial institutions with authorization or license from the Financial Services Commission; or

2. Persons designated by Presidential Decree as appropriate to combine a credit card business with others in terms of the nature of business performed by them.

(4) The Financial Services Commission may attach the conditions to the license under paragraph (1). <Newly Inserted by Act No. 6430, Mar. 28, 2001; Act No. 8863, Feb. 29, 2008>

• Article 4 (Application for License or Registration) A person who wishes to obtain license or make registration according to the provisions of Article 3 (1) or (2) shall submit to the Financial Services Commission an application for license or registration indicating the following, accompanied by documents prescribed by Presidential Decree: <Amended by Act No. 5741, Feb. 1, 1999; Act No. 5982, May 24, 1999; Act No. 6430, Mar. 28, 2001; Act No. 6681, Mar. 30, 2002; Act No. 8863, Feb. 29, 2008>

1. Trade name and the location of main office;

2. Capital stock, and the names or titles of contributors and their respective shares (excluding minority contributors prescribed by Ordinance of the Prime Minister);

3. Names of directors or officers;

4. Category of specialized credit financial business to be performed;

5. Purposes for which the person wishes to be a specialized credit financial business company; and

6. Contents of business being carried out by the person who wishes to be a concurrent loan service provider.