1. Reasons for Amendment

Following the amendment to the Real Estate Investment Company Act (promulgated on August 16, 2023 and enforced on February 17, 2024), this amendment aims to revise the administrative rules to reflect the contents of the Act and streamline the REITs supervision system to strengthen investor protection and ease the inspection burden on business entities.

2. Major Provisions

A. Authorization and Registration Guidelines Regarding the Real Estate Investment Company Act (Rules)

 ㅇ Specify the subject of the firewall as the trust business when a business entity concurrently runs an asset management company (Article 20-2 (3))

- According to the statutes, when an asset management company is concurrently operated, the application of the firewall is limited to the trust business, so reflect the provisions of the statutes (Article 21 (2) of the Enforcement Decree of the Real Estate Investment Company Act)

 ㅇ Ease the disqualifications for compliance officers (Article 20 (5))

 - Reflect the amendment to the Enforcement Decree of the Real Estate Investment Company Act (Article 46 (1) 3 of the Amendment to the Enforcement Decree), which eases the disqualifications for compliance officers (at least caution/warning → at least salary reduction)

 ㅇ Remove the provisions on internal control standards for entrusted management real estate investment trusts and corporate restructuring real estate investment trusts (Article 16 (1) 6 and Article 17 (1) 6)

- Since entrusted management real estate investment trusts and corporate restructuring real estate investment trusts are not entities subject to internal control standards (Article 47 (1) of the Real Estate Investment Company Act), remove the relevant provisions

 ㅇ Ease the financial requirements when asset management companies change investors (Attached Table 3)

 - Reduce the level of required equity capital from more than four times the current investment amount to more than two times when there is a change in those who have invested more than 10% of the capital or the largest investor

 ㅇ Clarify the subjects of investment for corporate restructuring real estate investment trusts (Article 17 (3))

- Since the investment real estate requirements for corporate restructuring real estate investment companies are not clear (entering into an agreement with creditors), clearly define them in words (entering into an agreement with creditors pursuant to Article 2 (2) of the Corporate Restructuring Investment Companies Act) which are developed with consideration for the purpose of promoting restructuring

 ㅇ Remove the term “major investor” and specify standards for physical facilities, reflecting the higher-level statutes (Article 20 (2) through (4))

 ㅇ Stipulate the possibility of external agency consultation (Article 21)

 ㅇ Change the abbreviations (Enforcement Decree of the Act, Enforcement Rule of the Act → Enforcement Decree, Enforcement Rule), correct spelling and words (Articles 1, 3, 5, 9, 13, 17-2, Attached Form Nos. 4 and 5)

 ㅇ Update other cited provisions and terms (Articles 15 through 17, 20 and Attached Table 3 revised)

 ㅇ Modify the re-examination deadline (Article 22)

B. Supervisory Regulations on Real Estate Investment Companies (Directive)

 ㅇ Exclude the obligation of entrusted management real estate investment trusts or corporate restructuring real estate investment trusts to keep documents and provide access to them (Article 6 (2))

- Exclude the relevant REITs from the obligation of entrusted management real estate investment trusts (REITs) or corporate restructuring real estate investment trusts (REITs) to keep documents and provide access to them

 ㅇ Provide compliance requirements for real estate investment companies and asset management companies regarding loan investment (Article 8-3)

- Provide specific loan methods and procedures pursuant to the delegation provision in the Enforcement Decree (Article 17-2 (2) 4)

 ㅇ Specify reports on companies excluded from the application of holding company-related provisions (Article 11-2 and Attached Form No. 8)

 ㅇ Correct spelling (Article 1), revise cited provisions (Article 8-2), and change the re-examination deadline (Article 13)

 ㅇ Revise the form by adding items such as basic information about REITs and business overview so that investors may learn more detailed information about the relevant real estate (Attached Form Nos. 5 and 6)

 ㅇ Revise other cited provisions (Article 8-2) and revise/establish forms (Attached Form Nos. 5 and 6 revised, and Attached Form No. 3 newly inserted)

C. Inspection Regulations for Real Estate Investment Companies (Directive)

 ㅇ Specify subjects of corrective orders, etc. (Article 16)

 ㅇ Expand the scope of subjects of warning/caution for real estate investment companies (Article 19 (2) 5 and Attached Table 2)

 - Under the current provisions, the subjects of warning/caution disposition are limited, and sanctions are ineffective, so expand the subjects

 ㅇ Provide criteria for the determination of administrative fines (Article 26-2 and Attached Table 3)

- Provide criteria for the determination of administrative fines (criteria for determining the amount of administrative fines to be imposed on statute violators) with comprehensive consideration for the consequences and motivations for violations

 ㅇ Specify the establishment basis for and role of the real estate investment company (REITs) advisory committee (Articles 27-2 and 27-3 and Attached Form No. 1)

- Formalize the “REIT Disposal Advisory Committee” that is currently being operated voluntarily to objectively determine whether criminal punishment shall be imposed (notification to investigative agencies), expand its role, and specify the basis for the establishment of the committee and other operational details including committee organization and member composition

 ㅇ Correct spelling/words, modify the abbreviations (Article 1, Articl3 10 (1), Article 11 (1) 3, Articles 19, 26 and 27 and Attached Table 1) and cited provisions/terms (Articles 20 through 23 and 25), and change the re-examination deadline (Article 30)

D. Regulations on the Training and Management of Asset Management Specialists (Rules)

 ㅇStipulate matters related to continuing education for asset management specialists (Article 1, Article 3 (2) and Articles 7, 9, 11, 12, 13 and 15)

- To enhance the expertise and sense of ethics of asset management specialists, stipulate that they receive continuing education every three years after completing existing training (preliminary education) (Real Estate Investment Company Act; revised on August 16, 2023 and enforced on February 17, 2024)

- Stipulate details such as training completion qualifications, training hours, training exemption application process, training target notification, and training completion measures, following the amendments to the upper statutes

 ㅇ Stipulate matters related to preliminary education for asset management specialists (Article 9 (1) through (3))

- Add the details of preliminary education

 ㅇ Correct spelling, modify words and abbreviations, change cited provisions (Articles 2 through 6, 10, and 15), and change the re-examination deadline (Article 16)

 ㅇ Revise various forms (Attached Table 1 and Attached Forms 1 through 10 revised/enacted)

 - Revise the documents (Attached Table 1) supporting qualification requirements to reflect the revised Enforcement Decree (Article 18 (2) 3 and 4) stipulating the sum of career requirements for specialists

- Establish forms related to continuing education for asset management specialists (Attached Forms 4 through 7)

- Revise forms related to preliminary education for asset management specialists (Attached Form Nos. 1 through 3 and 8 through 10)