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ACT ON THE PREPARATION AND DEVELOPMENT OF FINANCIAL CENTER

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ACT ON THE PREPARATION AND DEVELOPMENT OF FINANCIAL CENTER

Act No. 8699, Dec. 21, 2007

Amended by Act No. 8863, Feb. 29, 2008

Article 1 (Purpose)

The purpose of this Act is to contribute to the development of the national economy by providing for matters relating to the preparation and development of a financial center to strengthen the competitiveness of the financial industry as well as to ensure the advanced financial market. Article 2 (Definitions)

As used in this Act:

1. The term "financial center" means any center of domestic and international financial transactions in which many financial institutions are capable of raising, transacting and managing funds and of carrying on other financial transactions;

2. The term "Korean financial institution" means any entity falling within any of the following subparagraphs:

(a) A institution referred to in any of subparagraphs 1 through 14 of Article 38 of the Act on the Establishment, etc. of Financial Services Commission; and

(b) An entity engaged in the financial business or finance-related affairs in the Republic of Korea and provided for by Presidential Decree; and

3. The term "foreign financial institution" means any entity established under Acts and subordinate statutes of a foreign country and engaged in the financial business therein.

Article 3 (Basic Responsibilities of State)

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(1) The State shall establish and implement various policies for the preparation and development of a financial center. (2) The Government shall, every year, submit to the National Assembly a report on policies and trends with respect to the preparation and development of a financial center prior to the commencement of an ordinary session of the National Assembly.

Article 4 (Relationship to Other Acts)

Except as otherwise provided in other Acts, the preparation and development of a financial center shall be governed by this Act. Article 5 (Formulation, etc. of Basic Plan)

(1) In order to promote the preparation and development of a financial center, the Financial Services Commission shall formulate and implement a basic plan for such preparation and development (hereinafter referred to as the "basic plan") every three years.

(2) The basic plan shall include the following matters:

1. Fundamental directions and objectives of policies on the preparation and development of a financial center;

2. Improvement of systems, Acts and subordinate statutes related to foreign exchange and any other finance;

3. Support for and promotion of the financial market for the preparation and development of a financial center;

4. Improvement of finance-related control and financial supervision systems for the preparation and development of a financial center;

5. International cooperation for the preparation and development of a financial center;

6. Improvement of management and life environment for the preparation and development of a financial center;

7. Development of and support for the specialized finance carrying on financial business in the specific field by using the characteristic and condition of foreign financial market;

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8. Development of and support for information and communication systems related to the financial business;

9. Training of experts in finance;

10. Integration of financial institutions and vitalization of the financial business;

11. Improvement of tax systems related to finance; and

12. Other matters necessary for the preparation and development of a financial center.

(3) The Financial Services Commission shall confirm the basic plan after deliberation by the Financial Center Promotion Committee established under Article 6. (4) The Financial Services Commission may, if necessary for the formulation of the basic plan, request the administrative agencies concerned, education or research institutions related to finance or other corporations or organizations to submit necessary materials.

(5) The Financial Services Commission may, if deemed necessary for the integration of financial institutions and vitalization of the financial business, designate many areas as financial center.

(6) Other matters necessary for the formulation and implementation of the basic plan shall be provided for by Presidential Decree Article 6 (Financial Center Promotion Committee)

(1) Under the Financial Services Commission, there shall be established a Financial Center Promotion Committee (hereinafter referred to as the "Committee") to deliberate on the following matters:

1. Formulation and modification of the basic plan;

2. Establishment of major policies on the preparation and development of a financial center;

3. Coordination of opinions of the administrative agencies concerned ACT ON THE PREPARATION AND DEVELOPMENT OF FINANCIAL CENTER 4

concerning the preparation and development of a financial center;

4. Examination of implementation situation of policies related to the preparation and development of a financial center;

5. Review of status of treatment of matters relating to the improvement of management environment reported under Article 13 (3), and examination of performance and improvements of Acts and subordinate statutes and systems; and

6. Other matters necessary for the preparation and development of a financial center which are provided for by Presidential Decree. (2) The Committee shall be composed of not more than thirty members including one Chairperson.

(3) The Chairperson of the Committee shall be the chairperson of the Financial Services Commission, and the members shall be the following persons:

1. Persons who have much knowledge and experience on finance and who are commissioned by the Financial Services Commission (hereinafter referred to as the "commissioned members");

2. Vice ministers of the administrative agencies concerned provided for by Presidential Decree or other officials equivalent thereto; and

3. Heads of finance-related institutions provided for by Presidential Decree. (4) The members referred to in any subparagraph of paragraph (3) shall be not more than ten persons respectively.

(5) Commissioned members shall hold office for a term of two years and may be commissioned consecutively for further terms. (6) Other matters necessary for the composition and operation of the Committee shall be provided for by Presidential Decree. Article 7 (Enhancement of Transparency in Financial Market) The Government shall repeal unnecessary regulations related to finance and restrain the establishment of inefficient regulations related to finance in order to vitalize the financial market.

Article 8 (Promotion of Competition)

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The Government shall endeavor to establish efficient competitive systems of the financial market as well as to create the fair competitive environment. Article 9 (Promotion of Financial Reform)

The Government shall endeavor to promote the financial reform to enhance the productivity of financial institutions through the management improvement such as the development and sales vitalization of financial services based on originality.

Article 10 (Training of Experts in Finance)

(1) The Government shall formulate and implement policies for the training of experts in finance in order to develop human resources necessary for the preparation and development of a financial center. (2) The Financial Services Commission shall prepare and publish a report on the status and prospect of supply and demand of experts in finance every year: Provided, That he/she may entrust such preparation and publication to relevant specialized institutions or organizations in accordance with Presidential Decree. (3) In order to train experts in finance, the Financial Services Commission may designate universities, research institutes or other finance-related institutions or organizations as institution training experts in finance and have them conduct education and training.

(4) The Financial Services Commission may provide the expenses necessary for education and training under paragraph (3), to such an extent as the relevant budget permits. Article 11 (Support for International Exchange and Cooperation) (1) In order to prepare and develop a financial center, the Government shall formulate the following international exchange and cooperation promotion methods:

1. Survey of international trends related to the preparation and development of a financial center;

2. Cooperation with international organizations related to finance and ACT ON THE PREPARATION AND DEVELOPMENT OF FINANCIAL CENTER 6

foreign governments in finance-related affairs;

3. Exchange of financial personnel between a domestic enterprise, university, research institute, institution or organization (hereinafter referred to as the "enterprise") and a foreign enterprise;

4. Establishment of international cooperation systems to promote the export of technology and equipment related to payment and settlement affairs, securities deposit and storage affairs or other financial affairs; and

5. Other projects necessary for the promotion of international exchange and cooperation.

(2) If the domestic enterprise implements projects falling within paragraph (1) 1 and 3 through 5, the Government may provide support necessary therefor.

Article 12 (Support for Mutual Relocation of Domestic and Foreign Financial Institutions)

The Government shall establish and implement policies on the following matters for the preparation and development of a financial center:

1. Improvement of situation for the relocation of domestic financial institutions into foreign countries;

2. Improvement of situation for the relocation of foreign financial institutions into the Republic of Korea;

3. Expansion of financial transactions between domestic and foreign financial institutions; and

4. Improvement of situation necessary for the internationalization of the financial industry.

Article 13 (Financial Center Support Office)

(1) Any institution or organization provided for by Presidential Decree, taking into account the specialization, etc. of finance-related affairs, shall have a financial center support office to perform the following duties comprehensively:

1. Support for the relocation of domestic financial institutions into foreign ACT ON THE PREPARATION AND DEVELOPMENT OF FINANCIAL CENTER 7

countries;

2. Support for the relocation of foreign financial institutions into the Republic of Korea; and

3. Treatment of matters concerning the improvement of management environment related to the conduct of the financial business in the Republic of Korea by domestic and foreign financial institutions. (2) The head of a financial center support office may, if necessary to perform duties referred to in paragraph (1) 3, request the administrative agencies concerned or relevant corporations or organizations to provide necessary assistance. If the administrative agencies concerned or relevant corporations or organizations fail to comply with such request, they shall communicate the reasons therefor.

(3) The head of a financial center support office shall report the status of treatment of matters relating to the improvement of management environment under paragraph (1) 3 and performance to the Committee. In such case, he/she may, if it is necessary to improve Acts and subordinate statutes and systems in connection with such treatment, include the methods for improvement in such report.

(4) The Financial Services Commission may provide the expenses necessary for the establishment and operation of a financial center support office, to such an extent as the relevant budget permits.

ADDENDUM

This Act shall enter into force three months after the date of its promulgation. ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on the date of its promulgation. Articles 2 through 5 Omitted.