Expansion of Mandatory Electronic Promissory Note Issuance... For Corporate Businesses with Total Assets Over 500 Million Won

Ministry of Justice Announces Legislative Notice for Amendment to the Enforcement Decree of the Electronic Promissory Note Act

[Asia Economy Reporter Choi Seok-jin, Legal Affairs Specialist] The mandatory issuance of electronic promissory notes will be expanded from corporate businesses with total assets of 1 billion KRW or more as of the end of the previous fiscal year to corporate businesses with total assets of 500 million KRW or more.

On the 15th, the Ministry of Justice announced the partial amendment of the "Enforcement Decree of the Act on Issuance and Distribution of Electronic Promissory Notes" for public comment, which includes this content.

The amended enforcement decree is expected to take effect three months after its promulgation. The Ministry of Justice anticipates that once the amended decree is enforced, the number of corporate businesses required to issue electronic promissory notes will increase from the current 287,000 to about 400,000, nearly a 1.4-fold increase.

Since first introducing electronic promissory notes in 2005 to minimize the negative effects of promissory note transactions, the Ministry of Justice has gradually expanded the mandatory issuance targets to include publicly audited joint-stock companies (in 2009) and corporations with total assets of 1 billion KRW or more (in 2014).

As a result, the issuance volume of paper promissory notes, which was 41.9 trillion KRW in 2015, sharply decreased to 5.1 trillion KRW in 2018 and 4.2 trillion KRW in 2020. However, since paper promissory notes have no restrictions on the number of endorsements or maturity dates, they still pose risks of intentional default or promissory note fraud, which is why the Ministry of Justice decided to pursue this amendment of the enforcement decree.

A Ministry of Justice official stated, "With the amendment of the enforcement decree, more corporate businesses will use electronic promissory notes, enabling transparent management of transaction information and further enhancing the safety of promissory note transactions."

He added, "Furthermore, as the use of electronic promissory notes, which are strictly limited in terms of endorsement counts and maturity dates under the Electronic Promissory Note Act, increases, it is expected to contribute to improving the liquidity of funds for small and medium-sized enterprises."

This content was produced with the assistance of AI translation services.