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Introduction to SMEs Legal System in Republic of Korea

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Introduction to SMEs Legal System in Republic of Korea06



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Title Introduction to SMEs Legal System in Republic of Korea
Similar Titles
Material Type Report
Date 2015
Language Korean
File Type Theme
Subject Industry and Technology < Entrepreneurship
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Abstract

Sub-Theme 1 | Introduction to SMEs Legal System in Republic of Korea​





1. Change of Social and Economic Environment in the 1960s



During the 1960s,##MORE_LAYER_BOX##There was a government’s move for the SMEs but it was temporary tool to facilitate supply of basic goods and services after the Korean War rather than a comprehensive policy for the SMEs. ##MORE_LAYER_BOX_END## there was substantial change in social, political and economic environment.

The government during the 1960s laid the groundwork for the comprehensive policy for SMEs.

The policy for the SMEs was not well framed and effectively operated until the enactment of ‘The Basic Law of the SMEs. In this vein, the enactment of the ‘Basic Act for the SMEs’ in 1966 was a good start for paving the way for legislative development for the SMEs.

In a nutshell, the SMEs policies during the 1960s were driven into two directions: First, to lay the groundwork for the national economic development, the government which industrial sector should be given priority and established sponsorship plan to boost exporting industries.  Second, the government constructed in local provinces industrial complexes, which concentrated on predetermined industry sector – textile, chemicals, mechanic engineering and so forth. Finally, the SMEs laws may appropriately support policies for business activities of the SMEs.





2. Issues of Single Unifying Legislation(Ups and Downs for Single Unifying Act)



Drafting a single unifying law for the SMEs simply refers to consolidate all the related laws for the SMEs. The most important merit of consolidation is to maintain consistency when it comes to setting up and executing the related policies. ##MORE_LAYER_BOX## Specifically, first, legal consistency can be achieved in term of interpretation. Even a seemingly new problem can be fixed up without taking into a new legislation. Second, the relative simplicity of statutory framework may encourage the laypeople into complying with the law effectively.##MORE_LAYER_BOX_END##

A single unifying law may not be able to effectively respond to rapidly changing environments such as new industry, new social norms, etc. ##MORE_LAYER_BOX##Specifically, first, because a single unifying law has limitation in itemizing, it is not easy to entail all the small detailed problems. Second, because a single unifying law may increase the need of related regulations, it may cause constitutionality issue of those related regulations. Third, the government division for the SMEs does not seem to have sufficient capacity to set up all the related regulations and deal with all the related problems.##MORE_LAYER_BOX_END##

It is advised that the current LSN-based system is more appropriate than a single unifying law for considering legislative history and related industrial development. ##MORE_LAYER_BOX## The Basic Act for the SMEs depicts (1) Scope of the SMEs (2) Responsibilities and Obligations of national government and municipal governments (3) Responsibilities and Obligations of the SMEs (4) Modernization of Management and Improving Technologies (5) Securing Distribution Channels (6) Establishment of Fair System (7) Legal and Financial Support (8) Financing and Taxation (9) Promoting Globalization.  IN addition, other statutes for the SMEs are handling relatively more detailed subjects.  In order to fix the above-mentioned problems of the current legislations for the SMEs – overuse of LSN and overlapping of contents – it would be appropriate to classify the current laws in the following ways: (1) General Provisions including definition (2) Financing for the SMEs (3) Securing Distribution Channels (4) Support for the SMEs including restructuring and management innovation (5) Governing Relationship between Large and Small Businesses including affiliation, subcontracts and distribution channels (6) Support for Entrepreneurship (7) Support for the Particular Industry for the SMEs.  This six group categorization is expected to contribute to simplify complex structure of the statutes for the SMEs and provide law keepers with convenience 



 
[Functional Approach of SME-related Acts]

 



































































  General Financing Distribution Restructuring/ Management Innovation Affiliation/ Subcontracts Entrepreneurship Balanced Development
 1960 Framework Act on Small and Medium Enterprises (1966) Industrial  Bank  of Korea(1961)/ SMEs Credit Guarantee Act(1967) Small and Medium Enterprises Cooperative Act(1961) Adjustment of Projects for Small and Medium Enterprises Act(1961)      
 1970 Small and Medium Enterprises Promotion  Act(1978) Credit Guarantee Fund Act

 (1974)
    Promotion of Alliance between Small and Medium Enterprises Act(1975)    
 1980     Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products Act(1981) Act on Special Measure for the Promotion of Managerial Stability and Structural Adjustment for Small and Medium Enterprises(1989) Fair Transactions in Subcontracting Act(1984) Support for Small and Medium Enterprise Establishment Act(1986)  
 1990     Promotion of Small and Medium Enterprises and Encouragement of Purchase of Their Products Act(1994)(current ‘Small and Medium Enterprises Promotion Act’) Act on Special Measures for Supporting the Structural Improvement and Managerial Stabilization of Small and Medium Enterprises(1995)   Act on Special Measures for Support to Small Enterprises and Small Commercial and Industrial Businessmen (1997)/Act on Special Measures for the Promotion of Venture Business(1997)/Act on Support for Female-Owned Business(1999) Balanced Regional Development and Support for Local Small and Medium Enterprises Act(1994)
 2000       Special Act on Support for Human resources of Small and Medium Enterprises(2003)/Act on the Promotion of Technology Innovation of Small and Medium Enterprises(2001)/Special Act on the Promotion of Business Conversion in Small and Medium Enterprises(2006) Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises(2006) Promotion of Disabled Persons’ Enterprise Activities Act(2005) Act on Special Measures for the Structural Improvement of Small and Medium Enterprises and Vitalization of Customary Markets(2002)/Special Act on Fostering Traditional Markets and Shopping Centers (2004)


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