[Background]
Following the amendment of the Real Estate Investment Company Act (promulgated on May 27, 2025, and effective on November 28, 2025), a subsequent revision of the enforcement decree is being made. This is part of an effort to advance the Real Estate Investment Trust (REIT) market and increase national income, with key provisions including the introduction of Project REITs and Community Coexistence REITs.
[Main Points]
A. Expanded Scope of Real Estate Development Projects (Amended Article 2, Paragraph 4, Subparagraph 1)
The amendment allows Real Estate Investment Trusts (REITs) to invest in small-scale expansion and renovation projects. This is done by including remodeling in the scope of real estate development projects and abolishing the size limits on expansion and renovation projects.
B. Procedures for Establishing Project REITs (New Article 8-4; Amended Articles 8-4, 18-1, etc.)
The amendment introduces new regulations for the establishment of Project REITs.
1)They must submit an establishment report that includes their name, location, capital, and a list of promoters and executives.
2)They must obtain a business license or registration within 18 months of project completion, with a possible one-time extension of up to six months.
3)They must regularly report project investment details to the Ministry of Land, Infrastructure and Transport and are required to disclose information on matters such as bankruptcy filings.
4)The amendment also includes provisions on exceptions for in-kind contributions before minimum capital is secured and regulations for specialized asset management personnel.
C. Expansion of Shareholders Exempt from Public Offering Requirements (Amended Articles 12-3, Subparagraphs 1 and 31)
To ensure public funds can be smoothly invested in REITs, the amendment adds "the state" to the list of shareholders exempt from public offering requirements. It also includes a comprehensive provision that allows the Minister of Land, Infrastructure and Transport to swiftly designate additional public offering-exempt shareholders when necessary.
D. Provisions for Changes Requiring Approval to Protect Investors (Article 42-2, Paragraph 1)
Any changes to the articles of incorporation that directly affect shareholder interests, such as profit dividends and corporate directors, will now require approval.
E. Restructuring for the Introduction of the REITs Support Center (Amended Article 47-7, Paragraph 1; New Article 2 of Addenda)
The agency responsible for supporting and overseeing REITs has been changed from the Korea Real Estate Board to the new REITs Support Center. The Korea Real Estate Board will continue to handle these duties until the new center is officially designated.
F. Expanded Fine Reduction (Amended Attachment 2)
The scope of fine reductions has been expanded to allow for significant reductions or exemptions in cases of minor mistakes, such as those without intent, gross negligence, or harm to investors.
G. Improved Eligibility Standards for Major Shareholders of Asset Management Companies (Amended Attachment 3)
When the largest shareholder of an asset management company is a holding company or a shell corporation, a thorough eligibility review will be conducted on the actual shareholders.
H. Relaxed Registration Requirements for Real Estate Investment Advisory Companies (Amended Article 24)
The minimum capital required for a Real Estate Investment Advisory Company to register has been lowered to 500 million won.
I. Other Revisions
1)The amendment reflects the deletion of the investment report submission requirement in Article 37, Paragraph 1 of the Act (Article 40).
2)It establishes new standards for submitting investment reports in accordance with the amended law (Article 40-3).
