The amendment to the Real Estate Investment Company Act (the “Amendment”) has been promulgated to (i) introduce a new regime on project real estate investment companies (“Project REITs”), and (ii) relax regulations applicable to real estate investment companies (“REITs”). The Amendment is scheduled to take effect on November 28, 2025.

Previously, there were restrictions on REITs’ direct participation in development projects from the early stages due to various applicable regulations. With the enactment of the Amendment, it is expected that the number of development projects using the REITs will increase.
 

• Unlike ordinary REITs that must secure business authorization or registration, Project REITs are permitted to (i) engage in real estate development projects by filing a report of their incorporation within six months from the date of incorporation, and later to (ii) secure a business authorization during the operation phase following the completion of the development project. However, business authorization will be subject to the following requirements: (i) the qualifications of the promoters and the contents of the articles of incorporation must be in compliance with the Real Estate Investment Company Act, (ii) the amount of assets must be no less than KRW 5 billion, (iii) entrustment agreements with an asset management company, an administration agent and a custodian must be executed, and (iv) other requirements as prescribed by the Enforcement Decree of the Real Estate Investment Company Act must be satisfied.
   

• In addition, Project REITs will (i) be permitted to issue and allot new shares to third parties that are currently not shareholders in accordance with methods and limits set forth in the Enforcement Decree of the Real Estate Investment Company Act after the filing of the incorporation report, and (ii) upon the filing of the incorporation report, be deemed to have obtained a business authorization in respect of in-kind contributions, delegation of asset management business, restrictions on acquisition of shares by the asset management company, borrowing and issuance of bonds, and delegation of asset custody.
   

• Moreover, existing ordinary REITs may be converted to Project REITs by fulfilling the relevant requirements and filing for registration within six months from the effective date of the Amendment.
   

In summary, under the Project REIT regime, investors will be able to directly participate in real estate development projects in a more prompt and efficient manner by filing a simple incorporation report. In particular, compared to ordinary REITs, Project REITs will be subject to further relaxed requirements on public offering, allowing for additional flexibility in shareholder composition and business operation.
 

• The Amendment has extended the deadline for public offering from “within two years from the date of business authorization” to within three years from the date of business authorization for ordinary REITs and within five years from the date of business authorization for Project REITs.
   

• In addition, the application of the per-shareholder ownership limit has been extended from six months after the date of business authorization to upon completion of the public offering.
   

The Amendment will take effect on November 28, 2025. The details of the Enforcement Decree of the Real Estate Investment Company Act will specify the detailed procedures for the Project REIT regime, as well as the developments regarding the activation of Project REITs pursuant to the Amendment.

[Korean Version]