Regulation on Return, etc. of Short-Swing Profit

Transcription

1 Regulation on Return, etc. of Short-Swing Profit Article 1 (Purpose) Enacted by the FSC Public Notification on Feb. 4, 2009 Amended by the FSC Public Notification on Aug. 26, 2009 The purpose of this Regulation is to prescribe necessary matters related to the method of calculating short-swing profits, the recognition of exceptions to return of short-swing profits, etc. pursuant to Article 172 of the Financial Investment Services and Capital Markets Act (hereinafter referred to as the "Act") and Articles 194 through 199 of the Enforcement Decree of the Act (hereinafter referred to as the "Decree"). Article 2 (Employees Obligated to Return Short-Swing Profit) "A person deemed by the Securities and Futures Commission as one who has knowledge of material, nonpublic information" in the body, above subparagraphs, of Article 194 of the Decree refers to any of the following persons: 1. An employee who works in a department for finance, accounting, planning, research and development, or public disclosure of the corporation; 2. An employee against whom a notice is given to or a criminal complaint is filed with an investigative authority as one suspected to have used nonpublic information under Article 174 (1) of the Act. Article 3 (Method of Calculating Price and Volume of Specific Securities, etc. of Different Classes) (1) The "price calculated by converting into equity securities using the formula prescribed and publicly notified by the Securities and Futures Commission" in Article 195 (2) 2 of the Decree means the closing price of equity securities subject to the exercise of a right in specific securities or such on the trading day of the specific securities. (2) The "volume calculated by the formula prescribed and publicly notified by the Securities and Futures Commission" in Article 195 (3) of the Decree means the volume of equity securities that can be converted as those acquirable if a right in specific securities or such, is exercised on the trading day. In such cases, the volume of less than one share out of the volume of equity securities shall be cut off. Article 4 (Grounds, etc. Taken into Account in Calculating Price and Volume) (1) The "ground specified and publicly notified by the Securities and Futures

2 Commission" in Article 195 (4) of the Decree means any of the following events: 1. An increase or a decrease in capital; 2. A merger; 3. Distribution of dividends; 4. Stock split; 5. Stock consolidation. (2) If stocks go ex-right or ex-dividend after purchase or sale of such stocks, short-swing profits shall be calculated on the basis of the trading unit price and volume converted by the formula set forth in the Appendix hereto. (3) If one and the same person has made a transaction on his/her own account, using multiple accounts, all accounts shall be regarded as one account. (4) Taxes for capital increase without consideration or distribution of dividends, accrued past due interest related to other transactions, interest for unsecured loans, or such shall not be taken into account in calculating short-swing profits. Article 5 (Exceptions to Return of Short-Swing Profit) "Where the Securities and Futures Commission deems that there is no likelihood that any material, nonpublic information will be used" in subparagraph 13 of Article 198 of the Decree refers to any of the following cases: 1. Acquisition of forfeited stocks or fractional stocks arising from issuing new stocks for consideration; 2. Trading by a collective investment business entity under a collective investment agreement; 3. Acquisition of stocks as payment of a reward, an incentive, or retirement or severance benefits; 4. Acquisition of stocks by exercising a right in specific securities or such, already owned; 5. Trading securities of less than the minimum trading unit permitted in the securities market. Article 6 (Attachments, etc. to Reports) A report on the current status of holdings of specific securities or such under Article 173 of the Act shall be accompanied by a trading report or any other

3 materials evidencing acquisition or disposal. Article 7 (Entrustment of Authority) The Governor of the Financial Supervisory Service may determine forms, detailed standards and methods for calculation, and other matters necessary for execution of affairs in connection with the enforcement of this Regulation. Article 8 (Deadline for Reexamination) Pursuant to the Regulations Concerning the Issuance and Management of Directives and Established Rules (Presidential Directive No. 248), a measure such as continuation, repeal, or amendment of this Regulation after an examination of changes in Acts or subordinate statutes, or in current conditions, occurring after the issuance of this Regulation shall be taken by June 30, <Newly Inserted on August 26, 2009> Article 1 (Enforcement Date) ADDENDA This Regulation shall enter into force on February 4, Article 2 (Repeal of Former Regulation) The former "Regulation on Reporting on Current Status of Stocks Owned by Executives and Significant Stockholders and Return of Short-Swing Profits) is hereby repealed on the date this Regulation enters into force. ADDENDUM (August 26, 2009) This Regulation shall enter into force on the date of its promulgation.

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