Suggested citations
AGLC4 | 기업소법 2015 [Enterprises Law of the Democratic People's Republic of Korea (2015)] [tr Daye Gang].
Bluebook | Gieobsobeob 2015 [Enterprises Law of the Democratic People's Republic of Korea (2015)] translated in Law and North Korea by Daye Gang, https://www.lawandnorthkorea.com/.
Adopted on November 11, Juche 99 (2010), as Directive No. 1194 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on November 5, Juche 103 (2014), as Directive No. 228 of the Presidium of the Supreme People’s Assembly
Amended and supplemented on May 21, Juche 104 (2015), as Directive No. 517 of the Presidium of the Supreme People’s Assembly
CHAPTER I. BASICS OF ENTERPRISES LAW
Article 1 (Objective of Enterprises Law)
The Enterprises Law of the Democratic People’s Republic of Korea shall serve to consolidate the socialist enterprise management system and develop the national economy by strictly adopting system and order in the organization and business activities of enterprises.
Article 2 (Definition of enterprises)
An enterprise in this law means an economic unit that directly organises and conducts production or labour activities with constant effort, facilities, resources and funds. Enterprises include things like production, construction, traffic and transportation, and labour units that execute the national economic plan.
Article 3 (Principle of organization of enterprises)
The organization of enterprises is important work to newly build, reduce, combine, divide or change enterprises. The State shall correctly determine the organization standard of wholesale enterprises and shall strictly keep to it.
Article 4 (Principle of business administration of enterprises)
The business administration of enterprises is economic activity to give more benefits to the State by skillfully using economic spaces in conformity with the requirements of objective economic rules. The State shall ensure that enterprises correctly adopt business administration strategy and enterprise strategy and correctly execute the socialist enterprise self-accounting system so that the greatest benefit is produced even while keeping socialist principles in business activities.
Article 5 (Principle of strengthening material and technical foundations of enterprises)
The State shall systematically extend investment for enterprises in conformity with the growing scale of the national economy and the growing closeness in ties between sectors and areas, and shall systematically expand production in enterprises to tirelessly strengthen material and technical foundations.
Article 6 (Principle of Juche-orientation, modernization and scientization of business activities)
The States shall actively accept the results of cutting edge scientific techniques in enterprises to ceaselessly raise the Juche-orientation, modernization and scientization of business activities.
Article 7 (Principle of Kim Jong Il patriotism education)
The State shall strengthen Kim Jong Il patriotism education so that employees have affinity for enterprises so they fully carry out their responsibility and role as owners in production and management.
Article 8 (Principle of guiding enterprise work)
Strengthening guidance over enterprises is a fundamental guarantee to improve and strengthen the work of enterprises. The State shall resolutely guarantee standardized guidance from the State to enterprises in conformity with the principle of socialist economic administration and shall raise and elevate the creative power of enterprises.
Article 9 (Principle of protection of legal rights and benefits of enterprises)
The State shall protect the legal rights and benefits of enterprises.
Article 10 (Excluded subjects from the application of the law)
This law shall not be applied to investment enterprises of foreign countries.
CHAPTER II. ORGANIZATION OF ENTERPRISES
Article 11 (Institution organizing enterprises)
The organization of enterprises shall be done by the relevant enterprises organization institution according to the level and importance of the enterprise. The enterprises organization institutions include the Cabinet, the central labour administration guidance institution, the province (municipality directly under central authority) People’s Committee, the city (district) or county People’s Committee, and the relevant authorities.
Article 12 (Organizational basis of enterprises)
The organization of enterprises shall be done according to the measures of the State. Institutions can be organized according to the requirements of institutions, enterprises and organizations.
Article 13 (Application to organize an enterprise)
Institutions, enterprises and organizations seeking to organize an enterprise must make an application document and submit it to the given enterprise organization institution. The application document shall state the name of the enterprise, the purpose and basis for the organization, the location, level, number of employees, type of business and indicators, and scale.
Article 14 (Deliberation on application document to organize an enterprise and notification of results)
Enterprise organization institutions shall deliberate on application documents to organize and enterprise from within 30 days of the day it was received, and must make a decision to approve or reject it. The results of the deliberation shall be notified in a document to the applying institution, enterprise or organization.
Article 15 (Registration of enterprise)
An enterprise that is being newly organized must receive the enterprise registration application document within 30 days of the day the organization of the enterprise was approved through the relevant people’s safety institution, and submit it to the People’s Committee. In this case, the required documents must be attached, such as the enterprise organization consent document and a building permission for use document.
Article 16 (Issue of enterprise registration certificate)
A People’s Committee that has received an enterprise registration document must deliberate upon it within 30 days and must register the relevant enterprise. In these cases, the registered enterprise shall be issued an enterprise registration certificate. Business activities may not be conducted without an enterprise registration certificate.
Article 17 (Amended registration of enterprises)
In cases where an enterprise seeks to change the content of its enterprise registration shall receive approval from the relevant enterprise organization institution within 10 days and then register again by submitting the enterprise amended registration application document to the People’s Committee through the relevant people’s safety institution. The enterprise amended registration application document must state the name, address, and reason for change of the enterprise, and attach the change approval document approved by the relevant enterprise organization institution.
Article 18 (Arrangement of enterprises)
An enterprise organization institution may wind up enterprises that are illogical compared to the requirements of the policies of the State or of reality, or do not have good prospects. The process and method of winding up enterprises shall follow as separately determined.
Article 19 (Return of enterprise registration certificate)
In cases where an enterprise has been combined, divided or has disappeared for another reason, it must submit its enterprise registration certificate within 10 days to the People’s Committee at the corresponding level. In these cases, the relevant people’s safety institutions must be informed.
CHAPTER III. MANAGEMENT SYSTEM OF ENTERPRISES
Article 20 (Supervisors of enterprises)
Enterprises shall have required supervisors according to a designated management system such as a manager, chief engineer, or assistant manager. Supervisors are constituents of the command who have taken responsibility for the work of the enterprise.
Article 21 (Managers)
Managers represent enterprises and shall be responsible for the overall affairs of the enterprise. In cases where there is no manager, the chief engineer or a designated supervisor shall represent the work of the manager.
Article 22 (Chief engineers)
Chief engineers shall be responsible for work of the enterprise such as drafting plans, guiding production, technical management, quality management, and facilities management. The chief engineer must properly report an update of his or her work to the manager.
Article 23 (Assistant managers)
Assistant managers are responsible for work such as supply of resources, product sales, labour administration, transportation, and rear accounting. Assistant managers shall report updates on his or her work to the manager or, in cases where the manager is not present, to the chief engineer.
Article 24 (Management division)
Enterprises must manage divisions so that enterprise management can be done scientifically and rationally and must divide work in detail. Supervisors must responsibly perform their jobs.
Article 25 (Drafting business rules of enterprises)
Enterprises shall draft things such as business rules in conformity with their own reality, according to the standardized enterprise management norms of the State and shall strictly adhere to them. The business rules of enterprises shall be decided at the meeting of the administration cadres or at the general meeting of the employees.
Article 26 (Operation of meetings by enterprises)
Enterprises shall strengthen collective consultation in business activities and shall property operate things like administration cadre meetings, advisory meetings, and employee general meetings to adopt required measures. The meeting procedure shall be determined by the enterprise business rules.
Article 27 (Organization and operation of non-standing committees)
Enterprises shall organize and properly operate non-standing committees required for enterprise management, including a socialist enterprise self-accounting system implementation committee, in conformity with reality.
Article 29 (Changes in equipment of enterprises)
Enterprises may rationally change equipment according to what has been decided.
CHAPTER IV. BUSINESS ADMINISTRATION OF ENTERPRISES
Article 29 (Exercise of business administration rights of enterprises)
Correctly exercising the business administration rights of enterprises is an important requirement to correctly execute the socialist enterprise self-accounting system. Enterprises shall have practical business administration rights founded in socialist ownership, shall smoothly perform their duties by doing business activities in a leading and emergent way, and shall ensure that employees fully carry out their responsibility and role as owners in production and management.
Article 30 (Drafting business administration strategy and enterprise strategy)
Enterprises must correctly adopt a business administration strategy and an enterprise strategy in conformity with the requirements of actual development and conduct business administration activities upon them. A business administration strategy and enterprise strategy shall be adopted by taking into consideration things such as the efforts of the enterprise, the state of technical equipment, updates on the guarantee and use of raw materials and resources, the true state of the business administration of related units, scientific techniques, and economic development trends.
Article 31 (Execution of national economic plan)
Enterprises have planning rights and shall adopt realistic plans in conformity with their reality, shall execute the national economic plan by day, by month, by period and by indicator without fail, and shall increase in a planned way the production of products where demand is high. Enterprise indicators shall be planned and executed by the enterprise itself according to order contracts concluded with consumer institutions, enterprises and organizations. IN these cases, they shall be registered with the relevant area statistical institution.
Article 32 (Organization of production and production process management)
Enterprises shall correctly exercise their production organization rights to rationally do production organization, shall form production process management, and must perform without fail the entrusted order by actively arousing the creativity of employees. In these cases, different forms of production organization may be accepted from the principle of assuring the balance between demand and supply, such as cooperative production organization, specialized production organization, combined production organization, and large-scale production organization. In cases where there is a shortfall to the production plan because production organization was not correctly done, even after being guaranteed the required conditions including raw materials and resources, the enterprise shall be held responsible.
Article 33 (Management system and adjustment of effort)
Enterprises have labour adjustment rights with their management system, shall rationally and effectively use labour resources, shall update technical and economic indicators, and ceaselessly grow labour productivity by raising the technical ability level of employees. In cases where the technical ability grade of employees is assessed, it must be done correctly from standards determined by the State. Enterprises must proactively combine or wind up management divisions in conformity with their own reality based on designated standard management systems and demanufacturing labour placement standards, or shall determine the number of management members, shall clearly determine the functions and limits of responsibility of individual workers, and must increase the relative importance of labour in the production sector. In cases where labour is sent out or received or exchanged between enterprises, they must abide by the designated order of registration.
Article 34 (Product development)
Enterprises have the right to product development and must transition to a technically integrated enterprise and an enterprise where scientific techniques and production have been unified by actively pushing forward new techniques and new product development, in conformity with the requirements of standardization and global modern trends.
Article 35 (Quality Assurance)
Enterprises shall correctly exercise their quality assurance rights to adopt and implement quality improvement strategies in conformity with their own realities, based on research and evaluation about consumer requests about products, scientific and technical development trends, results accomplished in other countries in improving quality of the given product, and technical possibilities of enterprises. Enterprises must plan the work of compulsorily guaranteeing the quality and reliability of products produced and sold over a constant period, and the work of receiving quality certification about individual products and quality control system certification in conformity with the quality certification system. While strictly adhering to State specifications in product production, things such as the detailed form or colour of the product may be instituted and applied on their own.
Article 36 (Management of experts)
Enterprises shall correctly exercise their right to manage experts to send experts with high creative qualities and practical ability to relevant universities including technical universities to cause them to study, and on the other hand shall adopt education systems for learning while working such as factory universities, factory higher technical specialist schools, and distance and night education networks in an orderly manner, and must systematically train useful technical experts, professionals, and technical engineers.
Article 37 (Trade and equity or contractual joint ventures)
Enterprises shall have the right to trade and to equity or contractual joint ventures, and shall proactively open up foreign economic activity within the scope possible, to obtain raw materials, resources and facilities required for production on their own, shall actively realize the modernization of facilities and technical processes of production, shall organize units for export goods production in conformity with reality, and must produce products that have global competitiveness.
Article 38 (Financial management)
Enterprises have the right to financial management, shall lead in arranging and effectively use business administration funds, shall realize reproduction on a large scale, and must smoothly realize business activities. Enterprises must borrow from the bank any deficient business activities funds according to what has been decided, or may mobilize and use residents’ paid leave monetary funds.
Article 39 (Institution of price and sales of produced goods)
Enterprises have the right to institute a price and the right to sell produced goods within a designated scope, and must realize the distribution of produced goods on their own to compensate the costs, and must ceaselessly increase production. Products that an enterprise has produced by an order contract with a consumer, or products they produced by finding an indicator on their own, may be price-determined and sold on their own after taking into consideration the purchaser’s demands and the conditions of the agreement according to the designated principles and methods of price institution, so that the cost of the price of the produced goods can be compensated and production expansion can be realized. Enterprises .. may conclude contracts and directly trade with consumer institutions, enterprises and organizations in goods produced as indicators of enterprises, according to what has been decided, and may directly contract with and sell products such as consumer goods, daily necessities, and small farming implements to wholesale institutions, retail institutions, and direct sales stores. The relevant enterprise shall take responsibility for products that accumulate or are sent back because the quality is low.
Article 40 (Measures to elevate responsibility and creativity of employees)
Enterprises shall actively organize socialist competition in the workplace or labour unit and shall execute a responsibility system in conformity with the reality so that all employees will have the self-awareness that they are the owners, shall actively preserve and manage property of the state including equipment, facilities and buildings, and must raise their rate of usage and productivity.
Article 41 (Development work of scientific techniques)
Enterprises shall realistically and scientifically adopt a plan to develop science and technology based on deep research and evaluation of the scientific and technical development direction and tasks of the State, modern trends in scientific techniques, and the reality and prospects of production development of enterprises, shall strengthen the creative cooperation of technical experts and labourers, shall strongly open up the mass technical innovation movement, and must execute it without fail. Workers and employees who have given benefits to the State through technical innovation including invention and original design shall be given the relevant evaluation.
Article 42 (Technical repair)
Enterprises shall bring closer scientific techniques and production and shall produce purposes, goals and directions for technical repair so that the principle of self-sufficiency founded in modern techniques can be embodied, and must actively push forward technical repair work. Technical repair must correctly decide things such as the stage, subject, difference before and after, and ways, and must ensure that there is economic benefit.
Article 43 (Technical management)
Enterprises shall form technical management to improve technical and economic indicators, and must do technical process management according to the requirements of technical regulations and standard operation manuals. Old technical regulations and standard operation manuals must be updated at the right time.
Article 44 (Power management)
Enterprises shall store well and effectively use fuel including coal, and must form technical management over heating facilities to eliminate accidents, raise thermal efficiency, and must not waste heat. Enterprises must tirelessly lower fuel consumption levels and must strictly implement a system that recovers and uses wasted heat.
Article 45 (Use of electricity)
Enterprises shall keep electricity use limits and must only use supplied electricity on designated subjects. Enterprises shall systematically lower electricity consumption levels and must abide strictly by the order of electricity use following shift production.
Article 46 (Resources management)
Enterprises must correctly calculate the volume of resources required, adopt a plan for the supply of resources, and assure the required resources at the right time according to the plan to normalize production. Enterprises shall adopt a resources management system in an orderly manner, correctly keep resources consumption levels, and must economize on resources to the utmost.
Article 47 (Property inspection)
Enterprises must conduct inspections of enterprise property according to what is designated. Updates on property inspections must be reported to higher level institutions and relevant authorities at the right time.
Article 48 (Institution and application of labour quotas, labour remuneration)
Enterprises shall scientifically institute, apply and update labour quotas based on standard labour quotas, and must correctly execute a socialist labour remuneration system in conformity with the requirements of the Socialist Law of Distribution. Enterprises shall have as the foundation the distribution of labour remuneration funds from income, and shall ceaselessly increase business administration income and other income to increase the scale of distribution of labour remuneration funds to a level where the standard of life of employees can be smoothly guaranteed.
Article 49 (Labour protection, social insurance and social security)
Enterprises shall take responsibility for and guarantee the working conditions of employees, shall hold sufficient labour protection facilities, and must resolutely prioritize production in labour protection work. Enterprises shall correctly execute State social insurance and social security systems, and shall ensure that the people-oriented measures of the State are evenly allocated.
Article 50 (Management of fixed assets)
Enterprises shall register without exception fixed assets including real estate and facilities and must responsibly do its management. Enterprises shall take into consideration the nature and year of use of fixed assets, must determine an update cycle on their own, and shall apply different depreciation methods to arrange required funds for repair modernization. Fixed assets including real estate or facilities that are left over or hoarded shall adopt a funds guarantee for the agreed price, shall transfer control or lease to different enterprises under the conditions of registration by the relevant authorities, and funds realized in this process may be used in business activities.
Article 51 (Guarantee of living conditions of employees)
Enterprises must responsibly resolve standard of life issues of employees such as the housing issues, subsidiary food supply issues, and fuel issues. Enterprises must manage things such as creches, kindergartens, paediatric wards, rest spots and sanatoria well, and must properly administer and operate them.
Article 52 (Review meetings for business administration)
Enterprises must properly make business administration review meetings by order, by month, by period, by half-year and by year. Business administration review meetings must find the results, defects, experiences and lessons that have appeared in the business activities of the enterprise, shall fairly evaluate the activities of the workplace, of labour units and of the workers, shall improve enterprise management, and shall adopt measures to perform the national economic plan without fail. Business activity results shall be published to employees.
CHAPTER V. GUIDANCE AND CONTROL OVER ENTERPRISES’ WORK
Article 53 (Guidance for enterprises’ work)
Guidance for the work of enterprises shall be done by the relevant central institution or the province (or municipality directly under central authority), city (or district), or the county People’s Committee under the standardized guidance of Cabinet. Cabinet and the relevant authorities shall resolutely adhere to socialist principles and shall strictly command and guide enterprises’ work in conformity with the requirements of our way of economic administration methods.
Article 54 (Guarantee of business activity conditions for enterprises)
Cabinet and relevant authorities shall correctly exercise the business administration rights that enterprises have been charged with by the State, shall draft and direct regulations that embody our way of economic administration methods at the right time, and shall sufficiently guarantee the required conditions so that one’s responsibility and role can be fully performed.
Article 55 (Report on business activities)
Enterprises must regularly report on their business activities to relevant higher level institutions. Higher level institutions must analyse the business activities of enterprises and must resolve issues raised at the right time.
Article 56 (Supervision and control over enterprises’ work)
Supervision and control for enterprise work shall be done by the relevant supervision and control institution. The relevant supervision and control institution must strengthen supervision and control work so that business activities of enterprises are conducted in conformity with the requirements of socialist economic administration principles.
Article 57 (Administrative or criminal liability)
Responsible workers of institutions, enterprises and organizations that cause grave consequences by violating this law shall have administrative or criminal liability imposed depending on the gravity.
Last updated 10 August 2020