Regulators introduce simplified examples for July 2 deadline amid resource constraints
The Financial Supervisory Service (FSS) announced that it jointly held a ‘Duty Structure Diagram Briefing Session’ for small and medium-sized financial investment firms on the 5th with the Korea Financial Investment Association (KOFIA).
This session was prepared to guide financial investment firms, which are subject to submitting duty structure diagrams this year, on their submission obligations and to introduce example duty structure diagrams for small and medium-sized firms prepared by KOFIA. Compliance officers from private equity asset management companies and investment advisory/trust companies, as well as approximately 650 task managers related to duty structure diagrams, attended. Considering the attendance demand, the briefing session was divided into two sessions, morning and afternoon.
Starting this year, approximately 1,007 financial investment firms with assets under 5 trillion Korean won and managed assets under 20 trillion Korean won must submit their duty structure diagrams to the FSS by July 2nd.
The FSS has guided the purpose of the duty structure diagram system and submission obligations through press releases and briefing sessions, but there have been opinions that small and medium-sized financial investment firms with five or fewer executives are facing difficulties in preparing duty structure diagrams due to constraints in human and physical resources.
In response, KOFIA prepared simplified example duty structure diagrams for small and medium-sized financial investment firms to use and distributed them to member companies. The examples include duty description documents, duty system diagrams, and writing guidelines for major positions targeting private equity management companies and investment advisory/trust companies. It was explained that financial investment firms with around five executives can refer to these examples to prepare their duty structure diagrams.
However, it was stated that these examples are merely reference materials to reduce the burden of preparation and are not standard templates uniformly applied to all companies. Each financial investment firm must autonomously supplement and prepare their duty structure diagrams by comprehensively considering their own organizational structure and executive composition based on the examples. It was also added that writing according to the examples does not guarantee approval regarding the appropriateness of the content or the legality of duty allocation.
The FSS explained that if submitted duty structure diagrams do not meet the format, omit important details, or have unclear content, corrections or supplements may be requested.
The FSS and KOFIA plan to continue supporting financial investment firms in establishing and operating duty structure diagrams in line with the system’s purpose. KOFIA has operated a practical training course on preparing duty structure diagrams for private equity management companies four times to strengthen internal control capabilities and plans to open an additional three sessions within the year.
