'Standards Established for Designation of "Payment Linked Support Headquarters"'

Minister Lee Young, head of the Ministry of SMEs and Startups, is attending the opening ceremony of the 'Delivery Price Linkage System Roadshow' held on the 8th at the KT Umyeon Research Center in Seocho-gu, Seoul, performing with key attendees. Photo by Dongju Yoon doso7@

Standards for designating support centers to facilitate the expansion of the 'Delivery Payment Linkage System,' which will be implemented on October 4 this year, have been established. The linkage system is a mechanism that reflects fluctuations in delivery payments when the prices of major raw materials change beyond a certain level during subcontracting or consignment contracts.

The Ministry of SMEs and Startups announced on the 30th that the Enforcement Decree of the "Act on the Promotion of Mutual Growth between Large and Small-Medium Enterprises" (Mutual Growth Act), which stipulates the designation criteria and procedures for the 'Delivery Payment Linkage Expansion Support Center,' passed the Cabinet meeting. The support centers serve as institutions that assist companies with concluding linkage agreements, provide education on the linkage system, and offer information on raw material prices and key price indices related to the linkage system.

To be designated as a support center, it is mandatory to have a dedicated organization and at least six dedicated personnel. The center must also secure office space of 20㎡ or more, among other criteria. However, if designated for only certain projects, the criteria are relaxed to securing 3 to 5 dedicated personnel and office space between 10㎡ and 20㎡.

Applicants seeking designation as a support center must submit an application form, business plan, and supporting documents to the Ministry of SMEs and Startups. Detailed procedures and application methods will be announced through business notices after July 4, when the linkage system support-related law comes into effect.

If a support center is designated through false or fraudulent means, the designation will be revoked. If the designated business is not carried out for more than one month without justifiable reasons or if the designation criteria are not met, penalties will be imposed according to the number of violations: first warning, second suspension of operations for three months, and third revocation of designation.

The Mutual Growth Act obliges consigning companies to issue agreements detailing the consignment content, delivery payment, inspection methods, and other matters when consigning to subcontractors. Through this revision, the items to be recorded in the agreement include ▲the consignment date of goods, ▲the timing and place of delivery, ▲the inspection timing of delivered goods, ▲if the consigning company provides raw materials necessary for manufacturing goods to the subcontractor, the name, quantity, provision date, price, payment method, and payment date of the raw materials, and ▲the conditions, methods, and procedures for adjusting delivery payments according to Article 22-2, Paragraph 1 of the Act (consultation on delivery payment adjustment).

Lee Young, Minister of SMEs and Startups, stated, "This amendment to the enforcement decree is to designate support centers that assist companies ahead of the full-scale implementation of the linkage system," adding, "We expect these centers to support the establishment of the linkage system closer to the field."

The Ministry of SMEs and Startups has held over 80 roadshows (corporate briefings) to explain the system to companies. Companies voluntarily participating as companion companies in the linkage system are continuously being recruited. Matters related to the obligations of the linkage system, such as criteria for short-term contracts and small-amount contracts that are exceptions to the linkage system, are currently being discussed with the industry, and a draft is planned to be announced for legislative notice in June.

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