1. Reason for revision
As “Capital Market and Financial Investment Business Act” (hereinafter referred to as Capital Market Act) was recently revised (Act No. 18128, promulgation on April 20, 2021, enforcement on October 21, 2021) with the contents to strengthen protection of private equity fund investors and to reorganize the system, it is intended to determine the matters to be legally delegated and to improve and supplement some insufficient points found in operation of current system.
2. Main content
A. Matters to be stated in collective investment agreement (Article 7-8.5 of draft)
The fact that collective investment securities of private collective investment scheme belong to complex financial products and, when collective investment property of private collective investment scheme is operated for money loan, the matters on limitation of the share and investors in total assets shall be stated.
B. Condition for setup and establishment of redemption-ban collective investment scheme is added (Article 7-21.2 and Article 7-22.2 of draft).
Collective investment scheme, which belongs to general public-offering collective investment scheme to be invested by public-offering collective investment scheme and general investors, which cannot be evaluated by the method under Article 260.1 of the Enforcement Decree due to excess of 50% of total assets, and which invests in non-marketable assets excluding derivative-linked securities and redemption-ban collective investment securities, shall be set and established as redemption-ban collective investment scheme.
C. Items to be stated in core product manual of general private collective investment scheme are specified (Article 7-41-3.1 through 7-41-3.3 of draft).
As the liability of the company which recommends investment in or sells general private collective investment scheme to issue core product manual (Article 249-4.1 through 249-4.3 of Capital Market Act) is established, the items to be stated in core product manual are specified and minor matters which do not cause the liability for re-issuance to investors although the matters stated in core product manual are changed are specified.
D. Investigation ratio to cause the reason for immediate report by general private collective investment scheme is clarified (Article 7-41-4.2 of draft).
The investment ratio in the affiliated companies of groups with limited mutual investment requiring immediate report of setup or establishment of general private collective investment scheme is clarified as 30%.
E. Regular report items of general private collective investment scheme (Article 7-41-6.5 of draft)
As establishment of an investment in general private collective investment scheme becomes possible, operation situation of investment target company is added in regular report item of general private collective investment scheme.
F. The method of financial institutions, etc. under finance-related acts and subordinate statutes to operate exclusive institutional private collective investment scheme of business executive members is specified (Article 7-41-13.1 through 7-14-13.12 of draft).
Certain financial institutions, etc. among the financial institutions established under finance-related acts and subordinate statutes shall operate collective investment property by the same method with existing management-participation private collective investment scheme.
U. Qualification of professional investment operation personnel to be equipped with by business executive members is specified (Article 7-14-14.1 and Appendix Table 2-3 of draft).
As the condition for professional investment operation personnel is established as the condition for registration of business executive members (Article 249-15.1.3 of Capital Market Act), the condition for qualification of professional investment operation personnel is specified.
V. Delegated matters related with report of business executive members are specified (Article 7-41-14.4 of draft).
As the liability for report of changes in case of changes in registration of business executive members is established (Article 249-15.8 of Capital Market Act), detailed matters are prescribed to exclude minor matters from liability for report of changes.
