Regulations Governing Securities Firms Article 14

A securities firm, unless concurrently operated by a financial institution and subject to other relevant laws or regulations, shall, if it has already issued securities pursuant to the Act, set aside a 20 percent special reserve from the annual after-tax earnings pursuant to Article 41 of the Act. However, if the accumulated amount reaches the paid-in capital amount, no further amount needs to be set aside.If it has not issued securities pursuant to the Act, it shall set aside a 20 percent special reserve from the annual after-tax earnings. However, if the accumulated amount reaches the paid-in capital amount, no further amount needs to be set aside.The FSC may increase or decrease the percentages under the preceding two paragraphs based on business needs.The special reserve referred to in the preceding three paragraphs shall not be used except to cover losses of the company or, when the accumulated special reserve reaches 25 percent of the amount of paid-in capital, the portion in excess of 25 percent of paid-in capital may be used for capitalization. However, this restriction shall not apply if the FSC has provided otherwise.