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ACT ON THE STRUCTURAL IMPROVEMENT OF THE FINANCIAL INDUSTRY
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ACT ON THE STRUCTURAL IMPROVEMENT OF THE FINANCIAL INDUSTRY
ACT ON THE STRUCTURAL IMPROVEMENT OF THE FINANCIAL INDUSTRY
INTRODUCTION
Details of Enactment and Amendment
- Enactment: This Act was enacted on March 8, 1991 as Act No. 4341 in order to support a structural improvement, such as a merger,
takeover, etc. of financial institutions, to prevent in advance any insolvency of financial institutions, and then to ensure an efficient
reorganization of insolvent financial institutions.
- Amendment: This act was wholly amended on January, 13 1997 and has arrived at its present form as a result of being amended nine
times since such whole amendment. The latest amendment was on March 31, 2005.
Main Contents
- This Act shall be applicable to such financial institutions as the banks, long-term credit banks, securities companies, trust companies,
insurers, merchant banks, savings banks, etc.
- With respect to the financial institutions subjected to an authorization for a merger or conversion under this Act, the support
for an efficient merger and conversion of business kinds of financial institutions shall be rendered by simplifying the procedures
for merger under the Commercial Act and the Securities and Exchange Act.
- The Government and the Korea Deposit Insurance Corporation may render the fund supports including the investments to the merged
financial institutions, in order to promote the merger of financial institutions.
- In case that any financial institution has been converted into a financial institution of different business kind under this Act,
it may continue to carry on the business prior to such conversion for 6 months.
- The Financial Supervisory Commission may recommend, request or order that a financial institution whose financial status is not
sound merger, transfer of business, transfer of contract, etc. in order to induce a sound management of financial institutions and
to prevent in advance any insolvency of financial institutions.
- The Financial Supervisory Commission may designate a specific financial institution and recommend that it merger with, succeed to
business of, or take over contracts from an insolvent financial institution, and with respect to the financial institution which
mergers with, succeeds to business of an insolvent financial institution, the Korea Deposit Insurance Corporation may render the
support of funds, etc. to it.
- In case that the Financial Supervisory Commission has made a decision on a contract transfer against an insolvent financial institution,
the financial institution receiving a contract transfer at the time of such a decision shall succeed to the rights and duties of
the insolvent financial institution for such a contract.
- In case that a financial institution is dissolved or goes bankrupt, the financial expert recommended by the Financial Supervisory
Commission or an officer or employee of the Korea Deposit Insurance Corporation may, notwithstanding the provisions of the Commercial
Act or the Bankruptcy Act, become the liquidator or trustee in bankruptcy.
ACT ON THE STRUCTURAL IMPROVEMENT OF THE FINANCIAL INDUSTRY
Wholly Amended by Act No. 5257, Jan. 13, 1997
Amended by Act No. 5496, Jan. 8, 1998
Act No. 5549, Sep. 14, 1998
Act No. 5982, May 24, 1999
Act No. 6178, Jan. 21, 2000
Act No. 6274, Oct. 23, 2000
Act No. 6429, Mar. 28, 2001
Act No. 6807, Dec. 26, 2002
Act No. 6891, May 29, 2003
Act No. 7428, Mar. 31, 2005
CHAPTER I GENERAL PROVISIONS
Article 1 (Purpose)
The purpose of this Act is to contribute to the balanced development of the financial industry by supporting the structural improvement
of the financial industry such as the merger, conversion or reorganization of financial institutions, promoting sound competition
between financial institutions and raising the efficiency of financial business.
Article 2 (Definitions)
The definitions of terms as used in this Act shall be as follows: <Amended by Act No. 5496, Jan. 8, 1998; Act No. 5549, Sep. 14,
1998; Act No. 6178, Jan. 21, 2000; Act No. 6274, Oct. 23, 2000; Act No. 6429, Mar. 28, 2001; Act No. 6807, Dec. 26, 2002>
1.The term financial institutions means those falling under any of the following items:
(a) Financial institutions established under the Banking Act;
(b) Long-term Credit Bank under the Long-term Credit Bank Act;
(c) Securities companies and investment advisory companies under the Securities and Exchange Act;
(d) Management companies under the Securities Investment Trust Business Act;
(e) Insurers under the Insurance Business Act;
(f) Mutual savings banks under the Mutual Savings Banks Act;
(g) Trust companies under the Trust Business Act;
(h) Merchant banks under the Merchant Banks Act;
(i) Financial holding companies under the Financial Holding Companies Act; and
(j) Institutions which carry out the financial business under other Acts, as prescribed by the Presidential Decree;
2.Deleted; <by Act No. 5496, Jan. 8, 1998>
3.The term insolvent financial institutions means financial institutions falling under any of the following items:
(a)Financial institutions whose liabilities exceed their assets as the result of an actual survey of conditions of operations or financial
institutions whose management is apparently difficult as their liabilities exceed their assets due to occurrence of any massive financial
scandal or non-performing of claims, which are determined by the Financial Supervisory Commission or the Deposit Insurance Committee
referred to in Article 8 of the Depositor Protection Act. In this case, the valuation and calculation of liabilities and assets shall
be made according to the standards in advance set by the Financial Supervisory Commission;
(b)Financial institutions which are under suspension of payment of claims such as deposits (hereinafter referred to as claims such
as deposits ; hereafter in this Article, the same shall apply) or redemption of money borrowed from other financial institutions
referred to in subparagraph 4 of Article 2 of the Depositor Protection Act; and
(c)Financial institutions which are deemed difficult to pay claims such as deposits or redeem borrowed money without fund support
from outside or separate borrowings (excluding borrowings accruing from ordinary financial transactions) by the Financial Supervisory
Commission or the Deposit Insurance Committee referred to in Article 8 of the Depositor Protection Act;
4.The term take-over means the case where any person who is not deemed in direct charge of managing a financial institution, such
as any person who is not a stockholder or officer of the financial institution or who holds stocks at lower rate than determined
by the Presidential Decree, acquires the stocks of the financial institution and becomes the majority stockholder and in effect controls
the financial institution;
5.Deleted; <by Act No. 5496, Jan. 8, 1998>
6.The term institutions intervening in bankruptcy means those falling under any of the following items:
(a) The Korea Deposit Insurance Corporation established under theDepositor Protection Act (hereinafter referred to as the Korea Deposit
Insurance Corporation ) for financial institutions listed in subparagraph 1 (a), (b) and (e) through (h) and securities companies
listed in item (c) of the same subparagraph; and
(b) The Financial Supervisory Service established under the Act on the Establishment, etc. of Financial Supervisory Organizations
(hereinafter referred to as the Financial Supervisory Service ) for investment advisory companies listed in subparagraph 1 (c) and
financial institutions listed in (d) and (i) of the same subparagraph;
7.The term deposit claim means a claim which the other party to a transaction has relation to money which a financial institution
raises from many and unspecified persons as part of business conducted with authorization or permission, etc. under the Act as referred
to in each item of subparagraph 1;
8.The term depositor means a person who has a deposit claim against a financial institution; and
9.The term officers means directors and auditors of financial institutions (including members of an audit committee if such committee
is established under the Commercial Act or other relevant Acts and subordinate statutes).
CHAPTER II MERGER AND CONVERSION OF FINANCIAL INSTITUTIONS
Article 3 (Merger and Conversion of Financial Institutions)
Any financial institution may become the same or a different kind of financial institution in consequence of the merger with the same
or a different kind of financial institution, and may be converted into a different kind of financial institution independently.
Article 4 (Authorization)
(1) Where any financial institution intends to merge with another financial institution or to convert itself into other kind of financial
institution under this Act, it shall be subject to authorization from the Financial Supervisory Commission. <Amended by Act No.
5496, Jan. 8, 1998; Act No. 5549, Sep. 14, 1998; Act No. 5982, May 24, 1999>
(2) Deleted. <by Act No. 5496, Jan. 8, 1998>
(3) In granting authorization pursuant to the provisions of paragraph (1), the Financial Supervisory Commission shall examine whether
it conforms to standards falling under each of the following subparagraphs: <Amended by Act No. 5496, Jan. 8, 1998; Act No. 5549,
Sep. 14, 1998; Act No. 5982, May 24, 1999; Act No. 6178, Jan. 21, 2000>
1.The objective of merge or conversion shall be appropriate without causing any fears about any contraction of financial dealings
or disadvantages to established traders or shall not disrupt the efficiency of finance and the sound credit order;
2.The merger or conversion shall not restrict substantially mutual competition between financial institutions;
3.The scope of business intended to do after any merger or conversion shall be appropriate, and organization and manpower shall be
complete with system and capability to conduct such business;
4.There shall be no flaw in executing the process under the Commercial Act, the Securities and Exchange Act and other relevant Acts
and subordinate statutes; and
5.Standards set by the Financial Supervisory Commission, which are corresponding to standards of subparagraphs 1 through 4, shall
be met.
(4) Where the Financial Supervisory Commission desires to grant authorization on the merger between financial institutions, it shall
confer in advance with the Fair Trade Commission whether it restricts substantially mutual competition between financial institutions
as referred to in paragraph (3) 2. <Amended by Act No. 5496, Jan. 8, 1998; Act No. 5549, Sep. 14, 1998; Act No. 5982, May 24,
1999>
(5) Where it is deemed necessary for the sound development of the financial industry in the light of the standards under each subparagraph
of paragraph (3), the Financial Supervisory Commission may set conditions on authorization as referred to in paragraph (1). <Amended
by Act No. 5496, Jan. 8, 1998; Act No. 5549, Sep. 14, 1998; Act No. 5982, May 24, 1999>
Article 5 (Simplification etc. of Procedures of Merger and Conversion)
(1) Where any financial institution obtains authorization on the merger or conversion as referred to in Article 4, it shall be deemed
to have obtained authorization, permission or designation on the business, discontinuance of business or merger of financial institutions
provided for in Acts referred to in each item of subparagraph 1 of Article 2.
(2) Where any financial institution which is a listed company, and any financial institution which is an unlisted company under the
Securities and Exchange Act merge, and the financial institution which is an unlisted company obtains the approval from the general
meeting of stockholders pursuant to Article 522 of the Commercial Act at the expiration of 7 months after the registration pursuant
to Article 3 of the Securities and Exchange Act, the approval shall be effective, notwithstanding the provisions of Article 190 of
the Securities and Exchange Act. <Amended by Act No. 5549, Sep. 14, 1998>
(3) Any financial institution may, notwithstanding the proviso of Article 232 (1) of the Commercial Act, announce to creditors to
file an objection by setting a period of not less than ten days in two or more daily newspapers where a general meeting of stockholders
makes a resolution of merger. In this case, peremptory notices to individual creditors may be omitted. <Amended by Act No. 5549,
Sep. 14, 1998>
(4) Where any financial institution convenes a general meeting of stockholders for a resolution of merger, it may, notwithstanding
the provisions of Article 363 (1) of the Commercial Act, send notices in writing to each stockholder seven days prior to the date
of a general meeting of stockholders. In this case, the financial institution shall announce the purport to the effect that it convenes
a general meeting of stockholders and the target agenda of the meeting in two or more daily newspapers two days prior to the date
of sending written notices. <Newly Inserted by Act No. 5549, Sep. 14, 1998>
(5) Where financial institutions merge, they may, notwithstanding the provisions of Article 522-2 (1) of the Commercial Act, keep
their balance sheets at the main offices seven days prior to the date of a general meeting of stockholders for approval of merger.
<Newly Inserted by Act No. 5549, Sep. 14, 1998>
(6) Where any financial institution closes a stockholders list or sets the basic date pursuant to Article 354 (1) of the Commercial
Act for a resolution of merger, it may, notwithstanding the provisions of Article 354 (4) of the same Act, make public announcement
seven days prior to the closing date or the basic date. In this case, the financial institution shall make public announcement in
two or more daily newspapers. <Newly Inserted by Act No. 5549, Sep. 14, 1998>
(7) The provisions of Article 12 (6) shall apply mutatis mutandis in cases financial institutions consolidate stocks due to a merger.
In this case, individual notices to stockholders may be replaced by public announcement in two or more daily newspapers. <Newly
Inserted by Act No. 5549, Sep. 14, 1998>
(8) The provisions of Article 12 (7) through (9) shall, in case of a merger resolution adopted at a general shareholder meeting of
a financial institution, apply mutatis mutandis to a request for stock purchase: Provided, That in case of a merger made without
financial assistance from the Government and the Korea Deposit Insurance Corporation (hereinafter referred to as the Government,
etc. ), when financial institutions fall under corporations listed under the Securities and Exchange Act, the provisions of Article
191 (3) of the same Act shall apply mutatis mutandis to the decision of purchase prices of stocks. <Newly Inserted by Act No.
5549, Sep. 14, 1998; Act No. 6178, Jan. 21, 2000>
(9) In case of a merger under this Act, acquisition tax in consequence of the acquisition of real estate, etc, registration tax in
consequence of the registration of the corporation or real estate, etc. corporate income tax on liquidation income of the financial
institution which ceases to exist due to the merger, income tax or corporate income tax on the constructive dividend to stockholders
of the financial institution which ceases to exist due to the merger, or other taxes may be reduced or exempted as prescribed by
the Regulation of Tax Reduction and Exemption Act or other Acts or subordinate statutes on tax reduction and exemption.
(10) Where any financial institution makes a resolution of merger at a general meeting of stockholders, the Korea Securities Depository
referred to in Article 173 of the Securities and Exchange Act (hereinafter referred to as the Korea Securities Depository ) may,
notwithstanding the provisions of Article 174-6 (5) 3 of the Securities and Exchange Act, exercise its voting rights: Provided, That
where the Korea Securities Depository exercises its voting rights, it shall exercise its voting rights to ensure that it does not
affect the resolved matters of the number of stocks deducting the number of stocks, which the Korea Securities Depository will exercise,
from the number of stocks present at a general meeting of stockholders. <Newly Inserted by Act No. 5549, Sep. 14, 1998>
(11) The provisions of paragraph (4) shall apply mutatis mutandis to convening a general meeting for reporting a merger or an inaugural
general meeting for a corporation in accordance with the provisions of Articles 526 and 527 of the Commercial Act. <Newly Inserted
by Act No. 5549, Sep. 14, 1998>
Article 5-2 (Simplification of Capital Reduction and Stock Consolidation Procedures)
Where any financial institution makes a resolution to reduce capital by amortizing or consolidating stocks, the provisions of Article
5 (3), (4) and (6) shall apply mutatis mutandis to filing an objection by creditors and convening period and procedures for a general
meeting of stockholders and the provisions of Article 12 (6) shall apply mutatis mutandis to the period and procedures for amortization
and consolidation of stocks. <Amended by Act No. 6178, Jan. 21, 2000>
[This Article Newly Inserted by Act No. 5549, Sep. 14, 1998]
Article 6 (Closing Date of Business Year of Financial Institution Prior to Conversion)
(1)Deleted. <by Act No. 5549, Sep. 14, 1998>
(2)Where any financial institution converts into a different kind of financial institution during its business year, the business
year prior to the conversion shall be deemed to have been terminated on the registration date of amendment to the articles of incorporation
on the alteration of categories of business.
Article 7 (Report on Execution of Authorized Matters and Lapse of Authorization)
(1) Where any financial institution merges or is converted as referred to in Article 4, it shall report without delay to the Financial
Supervisory Commission. <Amended by Act No. 5496, Jan. 8, 1998; Act No. 5549, Sep. 14, 1998; Act No. 5982, May 24, 1999>
(2)Where any financial institution fails to effect a registration pursuant to the merger or conversion according to the authorized
contents within 6 months from the date of obtaining authorization as referred to in Article 4, the authorization shall lose its validity:
Provided, That where the Financial Supervisory Commission deems that there exist compelling causes, the period may be extended. <Amended
by Act No. 5496, Jan. 8, 1998; Act No. 5549, Sep. 14, 1998; Act No. 5982, May 24, 1999>
Article 8 (Support on Merger of Financial Institutions)
(1) The Government, etc., where it is deemed necessary to facilitate self-regulatory mergers between financial institutions, may make
investments in or provide financial assistance to financial institutions newly established as a result of mergers or other financial
institutions surviving such mergers under this Act.
(2) Financial institutions newly established as a result of mergers or other financial institutions surviving such mergers under this
Act may continue to conduct their pre-merger businesses prescribed by the Presidential Decree for a period set by the Presidential
Decree from among businesses that cannot be conducted in accordance with Acts and subordinate and statutes applicable to the financial
institutions concerned after obtaining authorization from the Financial Supervisory Commission. In this case, the provisions of Article
9 (1) shall not be applied.
[This Article Wholly Amended by Act No. 6178, Jan. 21, 2000]
Article 9 (Continuance, etc. of Business Pursuant to Merger or Conversion)
(1) Where any financial institution which is newly established, or a financial institution which continues to exist as a consequence
of a merger or conversion under this Act or any financial institution after the conversion succeeds to the rights and business related
to the contract which cannot be concluded under Acts and subordinate statutes applying to the financial institution, of the prior
financial institution before the merger or conversion, it may continue to carry out the business above until 6 months from the registration
date of a merger or amendment to the articles of incorporation on the alteration of categories of business: Provided, That where
it succeeds to the rights and business related to the contract which calls for a period exceeding 6 months for its performance, it
may continue to carry out the succeeded business, and the related business deemed inevitable for the performance of the relevant
business by the Financial Supervisory Commission until the duration of the contract terminates. <Amended by Act No. 5496, Jan.
8, 1998; Act No. 5982, May 24, 1999>
(2) Where any financial institution which is newly established, or a financial institution which continues to exist as a consequence
of a merger or conversion becomes a financial institution under the Banking Act, any same person (meaning the same person referred
to in Article 15 (1) of the Banking Act; hereinafter the same shall apply) who holds stocks exceeding the limit referred to in Article
15 (1) of the Banking Act from among a total number of issued voting stocks at the time of merger or conversion or virtually controls
them shall ensure that he conforms to the provisions of Article 15 (1) of the Banking Act within three years from the registration
date of merger or registration date of amendment to articles of incorporation on the alteration of categories of business. In this
case, the scope of exercising voting rights of relevant stocks shall be restricted to the limit referred to in Article 15 (1) of
the Banking Act, starting from the registration date of merger or registration date of amendment to articles of incorporation on
the alteration of categories of business: Provided, That where the Financial Supervisory Commission deems that the same person meets
the provisions of Article 15 (1) of the Banking Act at the time of merger or conversion, the same person shall be deemed to hold
legally or virtually control the stocks of the financial institution pursuant to paragraphs (2) through (4) of the same Article of
the same Act, and where the same person meets the provisions of Article 15 (6) of the Banking Act within three years after a financial
institution s merger or conversion, he may report to the Financial Supervisory Commission or hold the stocks of the financial institution
on approval by the Financial Supervisory Commission by applying mutatis mutandis the provisions of paragraphs (2) through (4) of
the same Article of the same Act. <Amended by Act No. 5549, Sep. 14, 1998>
CHAPTER III REORGANIZATION OF INSOLVENT FINANCIAL INSTITUTIONS
Article 10 (Timely Corrective Measures)
(1) Where any financial institution s financial status falls short of the standards referred to in paragraph (2) such as its capital
adequacy ratio not meeting the specified standards or it is judged clear that a financial institution s financial status falls short
of standards referred to in paragraph (2) due to occurrence of any massive financial scandal or accrual of nonperforming loans, the
Financial Supervisory Commission may recommend, request or order the financial institution concerned or the officers of such financial
institution or order them to furnish its implementation plan: <Amended by Act No. 6178, Jan. 21, 2000>
1.Bringing attention to, giving warnings to, or reprimanding a financial institution and its officers and employees or cutting pay
of its officers and employees;
2.Capital increase or capital deduction, disposal of property holdings or reduction in stores and downsizing;
3.Ban on acquisition of high-risk assets such as nonfulfillment of obligations or price fluctuations, or restriction on the receipts
at exorbitantly high interest;
4.Suspension of officers duties or appointment of managers acting for officers duties;
5.Amortization or consolidation of stocks;
6.Suspension of all or part of business;
7.Mergers or consolidations or assumption of financial institution concerned by third parties;
8.Business transfers or contract transfers pertaining to financial transactions such as deposits or loans (hereinafter referred to
as contract transfers ); and
9.Other measures equivalent to those listed in subparagraphs 1 through 8, which are deemed necessary to improve any financial institution
s financial soundness.
(2) Where the Financial Supervisory Commission intends to take measures referred to in paragraph (2) (hereinafter referred to as
timely corrective measures ), it shall in advance determine and notify the standards and contents.
(3) Where it is judged that any financial institution temporarily falling short of the standards referred to in paragraph (2) can
meet the standards for a short period of time or it deems that it has any equivalent reason, the Financial Supervisory Commission
may delay timely corrective measures for a specified period.
(4)In determining the standards referred to in paragraph (2), the Financial Supervisory Commission may take measures likely to cause
property damage to any financial institution or its stockholders such as suspension of all business, transfer of all business, transfer
of all contracts or orders on amortization of the total stocks and any equivalent measures only where the financial institution is
an insolvent one, its financial status falls grossly short of the standards referred to in paragraph (2) and it is remarkably deemed
to damage sound credit order or the rights and interests of depositors.
(5) The Financial Supervisory Commission may entrust the powers on timely corrective measures to the Governor of the Financial Supervisory
Service (hereinafter referred to as the Governor of the Financial Supervisory Service ) as prescribed by the Presidential Decree.
[This Article Wholly Amended by Act No. 5549, Sep. 13, 1998]
Article 11 (Assistance in Implementation of Timely Corrective Measures, etc.)
(1) Where the Financial Supervisory Commission orders any financial institution to merge, transfer business or transfer contracts
pursuant to Article 10 (1), it may recommend any other financial institution designated by it to merge with or take over business
from or take over contracts of any other financial institution subject to order.
(2) The Korea Deposit Insurance Corporation may present in advance any financial institution which has been recommended to merge,
take over business or take over contracts pursuant to paragraph (1) with an amount and terms of fund support referred to in subparagraph
6 of Article 2 of the Depositor Protection Act on the condition of its fulfillment.
(3) Where it is deemed necessary for any financial institution to fulfill timely corrective measures smoothly, the Korea Deposit Insurance
Corporation may offer good offices for mergers or transfers or taking over business between financial institutions or assumptions
by third parties.
(4) Where any financial institution that has taken an order to reduce its capital, amortize wholly or partially stocks, or consolidate
stocks under the provisions of Article 10 (1) or 12 (3) executes such order or any financial institution consolidates stocks for
the increase of its capital pursuant to Article 5 (7) or 5-2, with the result that stocks reduce below the minimum capital stock
as provided for in any Act on establishing the financial institution, the Financial Supervisory Commission may not revoke authorization
or permission on the financial institution for a period not exceeding one year. <Amended by Act No. 5982, May 24, 1999; Act No.
6178, Jan. 21, 2000>
(5) In the event of a conflict with the provisions of Articles 21, 189, 189-4, 191-2 and 200 of the Securities and Exchange Act, Articles
106, 108 and 109 of the Insurance Business Act, Articles 10, 11, 14, 15, 15-3, 17 and 19 of the Merchant Banks Act, Articles 12,
13, 17, 18-2 and 24-2 of the Mutual Savings Banks Act, Article 33 of the Securities Investment Trust Business Act or other related
Acts and subordinate statutes as a result of any merger, assumption, business transfer and taking over business or contract transfer
between financial institutions consequent upon timely corrective measures, the financial institutions concerned shall conform to
the provisions of the related Acts and subordinate statutes within three years pursuant to the procedures determined by the Financial
Supervisory Commission. <Amended by Act No. 6429, Mar 28, 2001; Act No. 6891, May 29, 2003>
(6) The acquisition of stocks or bonds falling under any of the following subparagraphs shall not be deemed the acquisition of stocks
or securities referred to in Article 38 of the Banking Act and Article 17 of the Merchant Banks Act:
1.Stocks which any financial institution listed in subparagraph 1 (a) and (h) of Article 2 comes to possess by converting its existing
loans, etc. into investments as prescribed by the Financial Supervisory Commission; and
2.Bonds which the Government guarantees the payment of the principal and interests.
[This Article Wholly Amended by Act No. 5549, Sep. 13, 1998]
Article 12 (Investments by Government, etc. in Insolvent Financial Institution, etc.)
(1) The Financial Supervisory Commission, when any insolvent financial institution is deemed difficult to continue its business due
to its aggravated financial structure following the continued withdrawal of funds, may ask the Government, etc. to make investments
in such insolvent financial institution or purchase securities prescribed by the Presidential Decree of such insolvent financial
institution. <Amended by Act No. 6178, Jan. 21, 2000>
(2) Where the Government, etc. makes investments in any insolvent financial institution on the request listed in paragraph (1), the
board of directors of the insolvent financial institution may, notwithstanding the provisions of Articles 330, 344 (2), 416 through
418 of the Commercial Act, determine the kinds and contents, quantity, issue par, allotment methods or other procedures of new stocks
to be issued.
(3)The Financial Supervisory Commission may order any insolvent financial institution in which the Government, etc. has made or has
decided to make investments or from which the Government, etc. has purchased or has decided to purchase securities, upon a request
made pur suant to paragraph (1), to invalidate stocks, in whole or in part, without or with compensation, owned by specific stockholders
(meaning stockholders at the time when the Government, etc., upon a request made pursuant to paragraph (1), makes investments or
purchases securities or decides to do so or other stockholders recognized by the Financial Supervisory Commission as responsible
for the insolvency of such financial institution; hereinafter th same shall apply) and to reduce its capital through consolidation
of stocks owned by such specific stockholders at a certain rate. In this case, the Financial Supervisory Commission may order the
insolvent financial institution to invalidate or consolidate stocks owned by the Government, etc. on more favourable terms or methods
than the stocks owned by the specific stockholders out of consideration for investments and the purchase of securities by the Government,
etc. under the provisions of paragraph (1). <Amended by Act No. 6178, Jan. 21, 2000>
(4) Where any insolvent financial institution is ordered to reduce capital pursuant to paragraph (3), the board of directors of the
insolvent financial institution may, notwithstanding the provisions of Articles 438 through 441 of the Commercial Act, resolve to
reduce capital or determine matters on the methods and procedures for capital reduction and procedures for consolidating stocks.
(5) Any insolvent financial institution which intends to reduce capital pursuant to paragraph (4) shall announce to creditors in two
or more daily newspapers that they should file an objection for a specified period of not less than ten days, and if there is any
creditor who has filed an objection, it shall tender performance or provide sufficient security to the creditor or trust a considerable
property to a trust company for this purpose: Provided, That this shall not apply in cases where the actual amount of capital reduction
(meaning the purchase price where self stocks are purchased for value and amortized) falls short of an investments by the Government,
etc. pursuant to paragraph (2). <Amended by Act No. 5549, Sep. 14, 1998>
(6)In consolidating stocks pursuant to paragraphs (3) and (4), the insolvent financial institution shall determine a period of not
less than five days (the last day of the period shall be referred to basic date of stock consolidation ), announce the contents
and the purport to the effect that stock certificates should be presented to the institution during the period, and deliver new stock
certificates within one month from the basic date of stock consolidation: Provided, That where it consolidates stocks of which certificates
trusted to the Korea Securities Depository pursuant to the Securities and Exchange Act, it may be deemed that the presentation of
old stock certificates and delivery of new stock certificates are made by entry in stockholders list at the basic date of stock
consolidation. In this case, the fact shall be announced together at the time of announcement referred to in the main sentence.
(7) Where any insolvent financial institution makes a resolution by the board of directors pursuant to paragraph (2) or (4), it shall
without delay announce the resolved matters and the fact that stockholders who dissent from the resolved matters may request the
institution to purchase stocks owned by themselves by a document stating the kinds and number of stocks within ten days in two or
more daily newspapers.
(8) Where a request referred to in paragraph (7) has been made, any insolvent financial institution shall purchase stocks within two
months from the date of receipt of the request. In this case, purchase prices of stocks shall be determined by agreement between
stockholders and the institution, and where an agreement is not reached, they shall be prices calculated by accounting specialists,
taking into account property value and earning value, etc. of the insolvent financial institution before investments or the purchase
of securities by the Government, etc. are made. <Amended by Act No. 6178, Jan. 21, 2000>
(9) Where any financial institution or the group of stockholders which holds not less than 30/100 of stocks to be requested for the
purchase, objects to the purchase prices determined pursuant to the latter sentence of Article 8, it may request the court to determine
the purchase prices within thirty days from the time of determination.
[This Article Wholly Amended by Act No. 5496, Jan. 8, 1998]
Article 13 (Special Cases for Issue of Nonvoting Stocks)
Where the Government, etc. makes investments in financial institutions falling under any of the following subparagraphs, the financial
institutions may issue nonvoting stocks exceeding the limit referred to in Article 370 (2) of the Commercial Act and Article 191-2
(2) of the Securities and Exchange Act:
1.Insolvent financial institutions;
2.Financial institutions which merge any insolvent financial institutions or take over its business; and
3.Financial institutions which take over contracts pursuant to a decision of contract transfer by the Financial Supervisory Commission
referred to in Article 14 (2).
[This Article Newly Inserted by Act No. 5549, Sep. 14, 1998]
Article 13-2 (Simplification of Process for Capital Reduction including Stock Consolidation)
The provisions of Article 12 (4) through (9) shall apply mutatis mutandis to the case where any financial institution falling under
each of the following subparagraphs intends to consolidate or invalidate stocks for capital increase or decrease: <Amended by
Act No. 6178, Jan. 21, 2000>
1.Financial institutions which are ordered to reduce capital by the Financial Supervisory Commission pursuant to Article 10 (1); and
2.Financial institutions whose market value falls short of face value and which are ordered to increase capital by the Financial Supervisory
Commission pursuant to Article 10 (1).
[This Article Newly Inserted by Act No. 5549, Sep. 14, 1998]
Article 14 (Administrative Disposition)
(1) The Financial Supervisory Commission, where any financial institution falls under any of the following subparagraphs, may, on
the recommendation of the Governor of the Financial Supervisory Service, order the officers of the financial institution concerned
to suspend the execution of their business and may appoint managers to conduct the business on behalf of such officers or recommend
the general meeting of stockholders to dismiss such officers: <Amended by Act No. 5496, Jan. 8, 1998; Act No. 5549, Sep. 14, 1998;
Act No. 6178, Jan. 21, 2000>
1.Where the financial institution violates any request or order made or given under the provisions of Article 10 (1) or fails to execute
such request or order; and
2.Where the financial institution fails to execute an order given under the provisions of Article 12 (3).
(2) Where any insolvent financial institution falls under any of the following subparagraphs, the Financial Supervisory Commission
may take necessary measures such as a decision for the transfer of contracts, suspension of business for a certain period of not
less than six months against the insolvent financial institution, and cancellation of the authorization or permission of its business:
Provided, That in case of any insolvent financial institution falling under subparagraph 4, only a disposition may be taken to suspend
its business for a fixed period of 6 months or less and the same shall not apply to any insolvent financial institution not falling
under subparagraphs 1 and 2: <Amended by Act No. 5496, Jan. 8, 1998; Act No. 5549, Sep. 14, 1998; Act No. 5982, May 24, 1999;
Act No. 6178, Jan. 21, 2000>
1.Where an insolvent financial institution fails to execute an order given under Article 10 (1) or 12 (3) or is unable to execute
such order;
2.Where the merger, etc. of insolvent financial institutions fails to be made under an order or arrangement given and made under the
provisions of Articles 10 (1) and 11 (3);
3.Where an insolvent financial institution is judged difficult to execute an order given under the provisions of Article 10 (1) or
to merge with another insolvent financial institution because of its liabilities significantly exceeding its assets; and
4.Where an insolvent financial institution is recognized that it undoubtedly infringes on depositors rights and interests and disrupts
credit order after it has been unable to pay claims including deposits and repay borrowings due to its abruptly aggravated financial
standing.
(3) Deleted. <by Act No. 5982, May 24, 1999>
(4) Where financial institutions have their authorization or permission on business cancelled pursuant to paragraph (2), they shall
be dissolved. <Amended by Act No. 5496, Jan. 8, 1998; Act No. 5982, May 24, 1999>
(5) Where the Financial Supervisory Commission makes a decision for contract transfer pursuant to paragraph (2), it shall determine
the scope of contract to be transferred, terms for contract transfers and financial institutions to take over contracts. In this
case, it shall obtain the consent of the board of directors of any financial institution taking over contracts. <Newly Inserted
by Act No. 5549, Sep. 14, 1998>
(6) Contract transfers according to a decision referred to in paragraph (2) shall not require the resolutions of the board of directors
and a general meeting of stockholders, of any insolvent financial institution to transfer contracts notwithstanding the provisions
of related Acts and articles of incorporation. <Newly Inserted by Act No. 5549, Sep. 14, 1998>
(7) Where the Financial Supervisory Commission makes a decision for contract transfers pursuant to paragraph (2), it shall appoint
a manager of the insolvent financial institution. <Newly Inserted by Act No. 5549, Sep. 14, 1998>
(8) Any insurance company for which the Financial Supervisory Commission has made a decision for contract transfers shall be deemed
to have been granted authorization on the dissolution or consolidation by the Financial Supervisory Commission referred to in Article
139 of the Insurance Business Act. <Newly Inserted by Act No. 5549, Sep. 14, 1998; Act No. 5982, May 24, 1999; Act No. 6891, May
29, 2003>
(9) The provisions of Article 5 shall apply mutatis mutandis in case any financial institution which takes over contracts from the
insolvent financial institution pursuant to paragraph (2) goes through procedures such as a resolution of general meeting of stockholders,
request for stock purchase, and creditor s filing objections in connection with contract transfers. <Newly Inserted by Act No.
5549, Sep. 14, 1998>
Article 14-2 (Effect of Decision for Contract Transfers)
(1) Where any decision for contract transfers referred to in Article 14 (2) has been taken, the rights and duties of any insolvent
financial institution pursuant to a contract which is subject to transfer shall be succeeded to by a financial institution which
takes over contracts (hereafter referred to as undertaking financial institution ) at the time when the decision is taken: Provided,
That where there is a mortgage taking claims as claims secured on contract subject to transfer, the mortgage shall be acquired by
the undertaking financial institution when a notice referred to in paragraph (2) has been given.
(2) Where any decision for contract transfers referred to Article 14 (2) has been taken, the insolvent financial institution and the
undertaking financial institution shall announce jointly without delay the gist of such decision and the fact of contract transfers
in two or more daily newspapers.
(3) Where an announcement referred to in paragraph (2) has been made, the legal relations between creditors, debtors, persons who
pledged their property to secure others obligations or other interested persons (hereafter referred to as interested persons )
and the insolvent financial institution shall be in the same substance succeeded to by the undertaking financial institution: Provided,
That interested persons may set up against the undertaking financial institution for a cause occurred between himself and the insolvent
financial institution prior to an announcement referred to in paragraph (2).
(4) Where an announcement referred to in paragraph (2) has been made, requirements for setting up against for transfer of obligations
with a named obligee shall be deemed to have been met by the announcement: Provided, That interested persons may set up against the
insolvent financial institution for a cause occurred between himself and the insolvent financial institution prior to an announcement
referred to in paragraph (2).
(5) Where any decision for contract transfers referred to in Article 14 (2) has been taken, the Financial Supervisory Commission shall
have the insolvent financial institution and the undertaking financial institution keep and manage data pertaining to contract transfers
and allow interested persons to inspect them. In this case, the standards and procedures necessary for the keeping, management and
inspection shall be determined by the Financial Supervisory Commission.
[This Article Newly Inserted by Act No. 5549, Sep. 14, 1998]
Article 14-3 (Appointment and Duties of Managers)
(1) Managers appointed pursuant to Articles 10 (1) 4, 14 (1) or 14 (7) (hereafter in this Article, referred to as a manager ) shall
have the authority to manage and dispose of assets and liabilities of an insolvent financial institution within the scope of duties
of officer for whom the managers act or business pertaining to a decision for contract transfer, depending on the respective appointment
purposes. <Amended by Act No. 6178, Jan. 21, 2000>
(2) The Financial Supervisory Commission may issue to managers an order necessary for the discharge of their functions.
(3) The Financial Supervisory Commission may dismiss managers as deems necessary.
(4) Where the Financial Supervisory Commission appoints a manager, it shall notify without delay the district court which has jurisdiction
over the seat of the head office or main office of the financial institution, and commission any registry office which has jurisdiction
over the seat of the head office, branch office or each office to have him registered.
(5) The provisions of Article 11 (1) of the Commercial Act and Articles 153 through 156 of the Bankruptcy Act shall apply mutatis
mutandis to managers. In this case, the term court in the Bankruptcy Act shall be deemed to read Financial Supervisory Commission
.
(5) The provisions of Article 11 (1) of the Commercial Act and Articles 30 and 360 through 362 of the Debtor Rehabilitation and Bankruptcy
Act shall apply mutatis mutandis to managers. In this case, the term court in the Debtor Rehabilitation and Bankruptcy Act shall
be deemed to read Financial Supervisory Commission . <Amended by Act No. 7428, Mar. 31, 2005> Enforcement Date: Apr. 1, 2006
[This Article Newly Inserted by Act No. 5549, Sep. 14, 1998]
Article 14-4 (Hearing)
Where the Financial Supervisory Commission intends to cancel the authorization or permission on business for any insolvent financial
institution pursuant to Article 14 (2), it shall hold a hearing. <Amended by Act No. 5549, Sep. 14, 1998; Act No. 5982, May 24,
1999>
[This Article Newly Inserted by Act No. 5496, Jan. 8, 1998]
Article 14-5 (Prior Consultations)
Where the Financial Supervisory Commission desires to issue an order or take measures referred to in Article 10 (4) or make a decision
for contract transfers referred to in Article 14 (2), it shall consult in advance with the Minister of Finance and Economy.
[This Article Newly Inserted by Act No. 5549, Sep. 14, 1998]
Article 14-6 (Special Case for Appointment of Managers)
(1) The Financial Supervisory Commission shall, where it intends to appoint mangers after deciding to suspend the whole business of
any insured financial institution established pursuant to the provisions of subparagraph 1 of Article 2 of the Depositor Protection
Act in accordance with the provisions of Articles 10 (1) 6 and 14 (2) or the transfer of contract (excluding any insured financial
institution that has been given an order to suspend its whole business due to temporal financial strains, but is recognized as certain
to normalize its management), appoint officers or employees of the Korea Deposit Insurance Corporation as managers of such insured
financial institution: Provided, That the Financial Supervisory Commission may, where the payments of claims are nonexistent or are
recognized as nonexistent following the injection of financial assistance from the Government, etc. and deposits made by the Korea
Deposit Insurance Corporation, appoint persons other than such officers or employees of the Korea Deposit Insurance Corporation as
such managers.
(2) In case of the main sentence of paragraph (1), the Financial Supervisory Commission may, where it is deemed necessary to normalize
the management of a financial institution concerned and protect general creditors, appoint persons other than the officers or employees
of the Korea Deposit Insurance Corporation as managers to participate in the management of such financial institution.
(3) The provisions of Article 14-3 (3) shall not apply to officers or employees of the Korea Deposit Insurance Corporation who are
appointed as managers pursuant to the provisions of the main sentence of paragraph (1) and paragraph (2), and the managers appointed
shall hold their office for the period of suspension of business operation or up to the date of completion of business following
the decision of contract transfer: Provided, That when the financial institution concerned is dissolved or goes bankrupt during the
period of suspension of business operation, the managers shall hold their office up to the date of resolution of such dissolution
or the date of sentence of such bankruptcy.
[This Article Newly Inserted by Act No. 6178, Jan. 21, 2000]
Article 14-7 (Request for Data)
(1) The Financial Supervisory Commission, where it is deemed necessary to determine the responsibility for the insolvency of a financial
institution and hold such financial institution accountable, may ask the heads of central administrative agencies concerned, local
governments and other public institutions prescribed by the Presidential Decree (hereafter in this Article referred to as public
institutions ) to supply data or information with respect to assets of persons believed to be responsible for such insolvency.
(2) The heads of public institutions, upon receiving a request referred to in paragraph (1), shall comply with such request unless
special reasons exist for not complying with such request.
[This Article Newly Inserted by Act No. 6178, Jan. 21, 2000]
Article 14-8 (Special Case for Financial Institutions)
Any cleanup financial institution established in accordance with the provisions of Article 36-3 of the Depositor Protection Act (hereinafter
referred to as a cleanup financial institution ) shall, where it receives a transfer contract under the provisions of Article 14
(2), be deemed a financial institution under the provisions of subparagraph 1 of Article 2.
[This Article Newly Inserted by Act No. 6178, Jan. 21, 2000]
CHAPTER IV LIQUIDATION AND BANKRUPTCY OF FINANCIAL INSTITUTIONS
Article 15 (Liquidator or Receiver)
(1) The Financial Supervisory Commission, where any financial institution is dissolved or goes bankrupt, may, notwithstanding the
provisions of Article 531 of the Commercial Act and Article 147 of the Bankruptcy Act, recommend a liquidator or a receiver from
among persons falling under any of the following subparagraphs and the court shall, when a person recommended by the Financial Supervisory
Commission is recognized as having profound banking business knowledge and fit for performing his business as a liquidator or a receiver,
shall appoint him as a liquidator or a receiver. In this case, if the financial institution is an insured financial institution under
subparagraph 1 of Article 2 of the Depositor Protection Act and the Deposit Insurance Corporation or a cleanup financial institution
is the biggest creditor to the financial institution in trouble as prescribed by the Presidential Decree, the Financial Supervisory
Commission shall recommend a person falling under subparagraph 2: <Amended by Act No. 6178, Jan. 21, 2000>
(1) The Financial Supervisory Commission, where any financial institution is dissolved or goes bankrupt, may, notwithstanding the
provisions of Article 531 of the Commercial Act and Article 355 of the Debtor Rehabilitation and Bankruptcy Act, recommend a liquidator
or a receiver from among persons falling under any of the following subparagraphs and the court shall, when a person recommended
by the Financial Supervisory Commission is recognized as having profound banking business knowledge and fit for performing his business
as a liquidator or a receiver, shall appoint him as a liquidator or a receiver. In this case, if the financial institution is an
insured financial institution under subparagraph 1 of Article 2 of the Depositor Protection Act and the Deposit Insurance Corporation
or a cleanup financial institution is the biggest creditor to the financial institution in trouble as prescribed by the Presidential
Decree, the Financial Supervisory Commission shall recommend a person falling under subparagraph 2: <Amended by Act No. 6178,
Jan. 21, 2000; Act No. 7428, Mar. 31, 2005>
1.A financial expert prescribed by the Presidential Decree; and
2.An officer or employee of the Korea Deposit Insurance Corporation.
(2) The Financial Supervisory Commission may entrust recommendations for liquidators or receivers referred to in paragraph (1) to
the Financial Supervisory Service. <Newly Inserted by Act No. 5496, Jan. 8, 1998>
Article 16 (Application for Bankruptcy)
(1) Where the Financial Supervisory Commission becomes acquainted with the fact constituting the causes for bankruptcy as referred
to in Article 117 of the Bankruptcy Act, it may make an application for bankruptcy. <Amended by Act No. 5496, Jan. 8, 1998>
(1) Where the Financial Supervisory Commission becomes acquainted with the fact constituting the causes for bankruptcy as referred
to in Article 306 of the Debtor Rehabilitation and Bankruptcy Act, it may make an application for bankruptcy. <Amended by Act
No. 5496, Jan. 8, 1998; Act No. 7428, Mar. 31, 2005> Enforcement Date: Apr. 1, 2006
(2) The Financial Supervisory Service Governor or any agency intervening in bankruptcy may recommend an application for bankruptcy
of the relevant financial institution to the Financial Supervisory Commission. <Amended by Act No. 5496, Jan. 8, 1998>
Article 17 (Service of Adjudication of Bankruptcy)
Where the court adjudicates any financial institution bankrupt, it shall serve the agency intervening in bankruptcy with a written
instrument specifying the matters as provided for in Article 133 (1) of the Bankruptcy Act.
Article 17 (Service of Adjudication of Bankruptcy)
Where the court adjudicates any financial institution bankrupt, it shall serve the agency intervening in bankruptcy with a written
instrument specifying the matters as provided for in Article 313 (1) of the Debtor Rehabilitation and Bankruptcy Act. <Amended
by Act No. 7428, Mar. 31, 2005> Enforcement Date: Apr. 1, 2006
Article 18 (Consultation about Period for Reporting Obligations)
The court shall, in determining the period for reporting claims and the fixed date of examining claims pursuant to Article 132 of
the Bankruptcy Act, hear the opinion of the agency intervening in bankruptcy in advance.
Article 18 (Consultation about Period for Reporting Obligations)
The court shall, in determining the period for reporting claims and the fixed date of examining claims pursuant to Article 312 of
the Debtor Rehabilitation and Bankruptcy Act, hear the opinion of the agency intervening in bankruptcy in advance. <Amended by
Act No. 7428, Mar. 31, 2005> Enforcement Date: Apr. 1, 2006
Article 19 (Opinion Statement)
The agency intervening in bankruptcy may present or state its opinion to the court in the course of bankruptcy proceedings for any
financial institution.
Article 20 (Drawing up and Inspection of List of Depositors)
(1) Where the agency intervening in bankruptcy is served with the instrument as referred to in Article 17, it shall without delay
draw up a list of depositors specifying the matters provided for in Article 202 (1) of the Bankruptcy Act for the deposit claims
with which it is acquainted. <Amended by Act No. 5496, Jan. 8, 1998>
(1) Where the agency intervening in bankruptcy is served with the instrument as referred to in Article 17, it shall without delay
draw up a list of depositors specifying the matters provided for in Article 448 of the Debtor Rehabilitation and Bankruptcy Act for
the deposit claims with which it is acquainted. <Amended by Act No. 5496, Jan. 8, 1998; Act No. 7428, Mar. 31, 2005> Enforcement
Date: Apr. 1, 2006
(2) Where the agency intervening in bankruptcy draws up a list of depositors as referred to in paragraph (1), it shall without delay
make a public notice of the purport and place of inspection, and ensure that the depositors will inspect it until the last day of
the period for reporting claims as determined by the court (hereinafter referred to as the period of reporting claims ). In this
case, the period of not less than 2 weeks shall be granted between the starting date of inspection and the last date of the period
for reporting claims.
(3) Where the agency intervening in bankruptcy knows that there are deposit claims not entered in the relevant list of depositors
or there are facts benefiting the depositors after the commencement of inspection of the list of depositors, it shall enter them
without delay in the list of depositors.
Article 21 (Presentation of List of Depositors)
(1) The agency intervening in bankruptcy shall present the list of depositors to the court without delay after the expiration of the
period for reporting claims.
(2) The deposit claims entered in the list of depositors presented to the court pursuant to paragraph (1) shall be deemed to have
been reported within the period of reporting claims.
(3) Where the agency intervening in bankruptcy knows that there are deposit claims not entered in the list of depositors after it
presentation of the list of depositors to the court, it shall report such fact to the court without delay. In this case, the deposit
claims notified to the court shall be deemed to have been reported after the expiration of the period for reporting claims.
Article 22 (Intervention by Depositors)
Where the depositors of deposit claims deemed to have been reported pursuant to Article 21 (2) and (3) desire to intervene directly
in bankruptcy proceedings, they shall report their intention to the court. In this case, the court shall notify the fact to the agency
intervening in bankruptcy.
Article 23 (Powers of Agency Intervening in Bankruptcy)
The agency intervening in bankruptcy may perform all acts on bankruptcy proceedings for the depositors of deposit claims deemed to
have been reported pursuant to Article 21 (2) and (3): Provided, That this shall not apply in cases where the relevant depositors
intervene directly in bankruptcy proceedings pursuant to Article 22, and the authorization by the depositors is required in cases
where the agency intervening in bankruptcy takes legal proceedings on the confirmation of deposit claims.
CHAPTER V RESTRICTION ON COMBINATION OF ENTERPRISES THROUGH FINANCIAL INSTITUTION
Article 24 (Stockholding Limit on Other Companies)
(1) Where any financial institution and financial institutions belonging to the conglomerate to which the former financial institution
belongs (hereinafter referred to as the same affiliated financial institutions ) desire to perform the acts under any of the following
subparagraphs, they shall be subject in advance, to the approval from the Financial Supervisory Commission according to the standards
as determined by the Presidential Decree: Provided, That this shall not apply in case they obtain authorizations and approval etc.
under the Acts forming the basis of the establishment of the relevant financial institutions: <Amended by Act No. 5496, Jan. 8,
1998>
1.Where they own not less than 20/100 of the total number of issued voting stocks of other companies; or
2.Where they own not less than 5/100 of the total number of issued voting stocks of other companies, and any same affiliated financial
institution or conglomerate to which the same affiliated financial institutions belong is deemed as controlling the relevant company
and where determined by the Presidential Decree.
(2) The term conglomerate means conglomerate as referred to in subparagraph 2 of Article 2 of the Monopoly Regulation and Fair Trade
Act.
(3) In granting approval as referred to in paragraph (1), the Financial Supervisory Commission shall consult in advance with the Fair
Trade Commission whether the relevant stockholdings restrict competition in the related market. This shall also apply in case where
it grants authorization and approval, etc. pursuant to the proviso of paragraph (1). <Amended by Act No. 5496, Jan. 8, 1998>
CHAPTER VI SUPPLEMENTARY PROVISIONS
Article 24-2 (Relations with Other Acts)
Except as otherwise provided in this Act, with respect to a merger and conversion of financial institutions, measures against insolvent
financial institutions and the liquidation and bankruptcy of financial institutions, they shall be governed by the provisions of
Acts which form the basis for authorization or permission on a financial institution, the Commercial Act, the Non-Contentious Case
Litigation Procedure Act or other related Acts and subordinate statutes.
[This Article Newly Inserted by Act No. 5549, Sep. 14, 1998]
Article 25 (Delegation of Powers)
(1) The Minister of Finance and Economy may delegate part of the powers under this Act to the Financial Supervisory Commission, the
Financial Supervisory Service Governor or the Korea Deposit Insurance Corporation as prescribed by the Presidential Decree. <Amended
by Act No. 5496, Jan. 8, 1998; Act No. 5549, Sep. 14, 1998>
(2) The Financial Supervisory Commission may entrust part of the powers under this Act to the Financial Supervisory Service Governor
or the Korea Deposit Insurance Corporation as prescribed by the Presidential Decree. <Newly Inserted by Act No. 5496, Jan. 8,
1998>
Article 26 (Application Mutatis Mutandis of Provisions on Merger)
The provisions on the merger from among Articles 3 through 8 and 9 (1) shall apply mutatis mutandis in case any financial institution
transfers all of its business to other financial institutions and ceases to exist and takes over all business from other financial
institutions. <Amended by Act No. 5549, Sep. 14, 1998>
CHAPTER VII PENAL PROVISIONS
Article 27 (Penal Provisions)
Officers, managers or liquidators of financial institutions (hereinafter referred to as officers, etc. of financial institutions
) shall, when they perform the act falling under any of the following subparagraphs, be punished by imprisonment with prison labor
for a period not exceeding one year or by a fine not exceeding 10 million won:
1.When they fail to take procedures and measures for executing an order given under the provisions of Article 10 (1);
2.When they violate an order given under the provisions of Article 12 (3);
3.When they fail to execute necessary procedures for dissolution in contravention of the provisions of Article 14 (4); and
4.When they violate the provisions of Article 24 (1).
[This Article Newly Inserted by Act No. 6178, Jan. 21, 2000]
Article 28 (Fine for Negligence)
(1) Any financial institution, when it violates this Act or an order given by this Act, shall be punished by a fine for negligence
not exceeding 20 million won.
(2) The officers, etc. of financial institutions shall, when they perform the act falling under any of the following subparagraphs,
be punished by a fine for negligence not exceeding 10 million won:
1.When they fail to make a report under the provisions of Article 7 (1) or make a false report;
2.When they violate the provisions of Article 12 (5) through (8); and
3.When they violate the provisions of Article 14-2 (2) or (5).
(3) The fine for negligence under the provisions of paragraphs (1) and (2) shall be imposed and collected by the Financial Supervisory
Commission as prescribed by the Presidential Decree.
(4) Any person who is dissatisfied with a disposition taken to impose a fine for negligence under the provisions of paragraph (3)
may raise an objection to the Financial Supervisory Commission within 30 days from the date on which he is notified of such disposition.
(5) The Financial Supervisory Commission shall, when a person subjected to a disposition taken to impose a fine for negligence under
the provisions of paragraph (3) raises an objection pursuant to the provisions of paragraph (4), promptly notify the competent court
of the fact, and the competent court, upon receiving such notice, shall bring the case to the trial of a fine for negligence in accordance
with the Non-Contentious Case Litigation Procedure Act.
(6) When a person fails to raise an objection within a prescribed period under the provisions of paragraph (4) and to pay a fine for
negligence, the Financial Supervisory Commission shall collect such fine for negligence according to the example of a disposition
taken to collect national taxes in arrears.
[This Article Newly Inserted by Act No. 6178, Jan. 21, 2000]
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on March 1, 1997.
Article 2 (Examples of Application on Bankruptcy of Financial Institutions)
The provisions of Articles 17 through 23 shall not apply to the financial institutions under bankruptcy preceding at the time when
this Act enters into force.
Article 3 (Transitional Measures on Stockholdings Limit on Other Enterprises)
Where any financial institution acquires and owns the stocks of other companies with authorization and approval, etc. under the Acts
forming the basis of its establishment at the time when this Act enters into force, they shall be deemed to have obtained approval
pursuant to Article 24 (1).
Article 4 Omitted.
Article 5 (Relationship with Other Acts and Subordinate Statutes)
Where other Acts and subordinate statutes cite the provisions of the previous Act on Merger and Business Conversion of Financial Institutions,
if this Act includes the provisions corresponding to them, this Act or the corresponding provisions of this Act shall be deemed to
have been cited in lieu of the previous provisions.
ADDENDA <Act No. 5496, Jan. 8, 1998>
Article 1 (Enforcement Date)
This Act shall enter into force on April 1, 1998: Provided, That the amendment to Article 14-2 shall enter into force on January 1,
1998 and the amendments to subparagraph 3 of Article 2, Articles 10 through 12 shall enter into force on the date of its promulgation.
Article 2 (Transitional Measures on Supervisors until Date of Entry into Force of Act)
Until March 31, 1998, in the enforcement of the provisions enumerated in the proviso of Article 1 of the Addenda, for the powers of
the Financial Supervisory Commission, the Monetary Board under the Bank of Korea Act shall exercise them over financial institutions
referred to in subparagraph 1 (a) of Article 2, the Minister of Finance and Economy over financial institutions referred to in items
(b) and (d) through (i) of the same subparagraph, and the Securities and Exchange Commission under the Securities and Exchange Act
over financial institutions referred to in item (c) of the same subparagraph, respectively; for the powers of the Financial Supervisory
Service Governor, the Director of the Banking Supervisory Authority under the Bank of Korea Act shall exercise them over financial
institutions referred to in subparagraph 1 (a) of Article 2, the Minister of Finance and Economy over financial institutions referred
to in items (b), (d) and (i) of the same subparagraph, the Director of the Securities Supervisory Board under the Securities and
Exchange Act over financial institutions referred to in (c) of the same subparagraph, the Director of the Insurance Supervisory Board
under the Insurance Business Act over financial institutions referred to in item (e) of the same subparagraph and the Chairman of
the Credit Management Fund under the Credit Management Fund Act over financial institutions referred to in items (f) through (h)
of the same subparagraph, respectively; for the powers of the Operating Committee and the Korea Deposit Insurance Corporation referred
to in Article 8 of the Depositor Protection Act, the Korea Deposit Insurance Corporation under the Depositor Protection Act shall
exercise them over financial institutions referred to in subparagraph 1 (a) and (b) of Article 2, the Securities and Exchange Commission
under the Securities and Exchange Act over financial institutions referred to in item (c) of the same subparagraph, the Insurance
Supervisory Board under the Insurance Business Act over financial institutions referred to in item (e) of the same subparagraph and
the Credit Management Fund under the Credit Management Fund Act over financial institutions referred to in items (f) through (h),
respectively.
Article 3 (General Transitional Measures)
(1) Any decision, authorization, measures, order, recommendation, good offices, recognition or other acts done by the Minister of
Finance and Economy, the Monetary Board, the Securities and Exchange Commission, the Operating Committee under the Depositor Protection
Act, the Insurance Guarantee Fund Management Committee under the Insurance Business Act, the Operating Committee under the Credit
Management Fund Act, the Korea Deposit Insurance Corporation, the Credit Management Fund, the Office of Banking Supervision at the
Bank of Korea, the Securities Supervisory Board or the Insurance Supervisory Board under the previous provisions at the time of the
entry into force of this Act shall be deemed acts done by the Minister of Finance and Economy, the Financial Supervisory Commission,
the Operating Committee under the Depositor Protection Act, the Korea Deposit Insurance Corporation, the Financial Supervisory Service
Governor or the Financial Supervisory Service under this Act.
(2) Any application, report or other acts done to the Minister of Finance and Economy or the Monetary Board under the previous provisions
at the time of the entry into force of this Act shall be deemed acts done to the Minister of Finance and Economy under this Act.
ADDENDA <Act No. 5549, Sep. 14, 1998>
(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.
(2) (Transitional Measures on Time for Notice for Convocation of General Meeting of Stockholders) Where the time for notice for convocation
of general meetings of stockholders and closing date or basic date for stockholders list are provided for in the articles of incorporation
of a financial institution differently from amendments to Article 5 (4) and (6) at the time of the entry into force of this Act,
they shall be governed by the amendments to Article 5 (4) and (6).
ADDENDA <Act No. 5982, May 24, 1999>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 6 Omitted.
ADDENDUM <Act No. 6178, Jan. 21, 2000>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 6274, Oct. 23, 2000>
Article 1 (Enforcement Date)
This Act shall enter into force one month after the date of its promulgation.
Articles 2 through 6 Omitted.
ADDENDA<Act No. 6429, Mar. 28, 2001>
Article 1 (Enforcement Date)
This Act shall enter into force on the date as prescribed by the Presidential Decree within the limit not exceeding 2 years from the
promulgation date of this Act. (Proviso Omitted.) Enforcement date of this Act shall be Mar. 1, 2002 pursuant to the Presidential
Decree No. 17519, Feb. 25, 2002
Articles 2 through 11 Omitted.
ADDENDA<Act No. 6807, Dec. 26, 2002>
Article 1 (Enforcement Date)
(1) This Act shall enter into force on January 1, 2003. (Proviso Omitted.)
(2) Omitted.
Articles 2 through 11 Omitted.
ADDENDA<Act No. 6891, May 29, 2003>
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 34 Omitted.
ADDENDA<Act No. 7428, Mar. 31, 2005>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 6 Omitted.
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