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ENFORCEMENT DECREE OF ACT ON LUMP SUM-RAISING SAVINGS OF FARMING AND FISHING HOUSEHOLDS

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ENFORCEMENT DECREE OF ACT ON RAISING LUMP-SUM OF SAVINGS OF FARMING AND FISHING HOUSEHOLDS

Presidential Decree No. 11895, May 13, 1986

Amended by Presidential Decree No. 12712, May 26, 1989 Presidential Decree No. 14438, Dec. 23, 1994

Presidential Decree No. 14668, June 17, 1995

Presidential Decree No. 17052, Dec. 29, 2000

Presidential Decree No. 17824, Dec. 30, 2002

Presidential Decree No. 20653, Feb. 29, 2008

Article 1 (Purpose)

The purpose of this Decree is to provide for the matters necessary for the enforcement of the Act on Raising Lump-Sum Savings of Farming and Fishing Households (hereinafter referred to as the "Act"). Article 2 (Extent, etc. of Farmers and Fishermen) (1) The term "persons as prescribed by Presidential Decree" in the main sentence of Article 2 (2) of the Act means the persons (hereinafter referred to as the "farmers and fishermen") other than persons falling under any of the following subparagraphs out of the farmers, fishermen and stockbreeders of the subparagraphs of the same Article and paragraph:

1. A person who owns farmland exceeding two hectares;

2. A person who owns a fishing boat exceeding 20 tons; and

3. A person who owns livestock exceeding the scale prescribed by annexed Table.

(2) The term "farmers and fishermen in low income brackets" in this Decree means persons other than the persons falling under any of the following subparagraphs out of the farmers and fishermen under the provisions of paragraph (1):

1. A person who owns farmland exceeding one hectare;

2. A person who owns a boat with motorized power; and

3. A person who owns livestock of a scale exceeding 50 percent of the standard under the provisions of annexed Table.

(3) It shall be based on the time when he/she has entered into a contract ENFORCEMENT DECREE OF ACT ON LUMP SUM-RAISING SAVINGS OF FARMING AND FISHING HOUSEHOLDS

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for the raising lump-sum savings under the provisions of Article 7 whether he/she falls under the scope of the farmers and fishermen or the farmers and fishermen in the low income brackets of paragraphs (1) and (2). Article 3 (Classification of Raising Lump-Sum Savings) The raising lump-sum savings of farming and fishing households (hereinafter referred to as the "raising lump-sum savings") shall be classified into the monthly payment of savings (hereinafter referred to as the "monthly paying savings"), the quarterly payment of savings (hereinafter referred to as the "quarterly paying savings") and the semiannual paying savings (hereinafter referred to as the "semiannual savings"). Article 4 (Amount of Raising Lump-Sum Savings)

(1) The maximum of the annual paying amount of the raising lump-sum savings shall be one million and four hundred forty thousand won: Provided, That the maximum annual paying amount of the savings of farmers and fishermen in low income brackets shall be one million and two hundred thousand won. (2) The minimum of each paying amount of savings of the raising lump-sum savings shall be five thousand won for the monthly paying savings, fifteen thousand won for the quarterly paying savings and thirty thousand won for the semiannual paying savings, and the unit of amount shall be one thousand won.

(3) The farmers and fishermen may pay the raising lump-sum savings divided by multiple accounts within the extent of the paying amount of savings of paragraph (1).

(4) The farmers and fishermen may modify a savings contract or terminate a part of the savings to increase or decrease each paying amount of savings after the conclusion of the contract for the lump sum-raising savings. Article 5 (Period of Raising Lump-Sum Savings)

The period of savings of the raising lump-sum savings shall be three years or five years.

Article 6 (Rate of Interest of Raising Lump-Sum Savings) Rate of Interest paid to the amount of the raising lump-sum savings by the savings institutions shall be determined by the Financial Services Commission.

Article 7 (Application for Savings Contract and its Ascertainment) ENFORCEMENT DECREE OF ACT ON LUMP SUM-RAISING SAVINGS OF FARMING AND FISHING HOUSEHOLDS

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(1) A person who intends to make the raising lump-sum savings (hereinafter referred to as an "applicant for savings") shall submit an application for the raising lump-sum savings contract in terms of savings institution to savings institution.

(2) A savings institution which has received an application for the raising lump-sum savings contract of paragraph (1) shall ascertain whether an applicant for the savings falls under the farmers and fishermen or the farmers and fishermen in the low income brackets. (3) The raising lump-sum savings contract shall be deemed to have been materialized on the date when an applicant for the savings has first paid the amount of savings to a savings institution.

Article 8 (Raising Lump-Sum Savings Contract)

(1) The raising lump-sum savings contract shall be entered into by and between the farmers and fishermen and the savings institutions. (2) Matters of the following subparagraphs shall be shown in the lump sum-raising savings contract:

1. Address and name of the relevant person of the savings contract;

2. Classification of savings, each paying amount of savings, period of savings and paying time of the amount of savings;

3. Matters concerning the termination of the savings contract;

4. Matters concerning the payment of the principal of savings and the profit; and

5. Matters concerning the payment of savings bounties. Article 9 (Method of Raising Lump-Sum Savings )

The lump sum-raising savings shall be by means of payment of each paying amount of savings to a savings institution by the farmer or the fisherman himself/herself or his/her agent in accordance with the savings contract in an accumulative manner.

Article 10 (Deemed Termination of Savings Contract) (1) When a person who has entered into a contract for the monthly paying savings has not paid the amount of savings more than six consecutive months, the savings contract concerned shall be deemed to have been terminated on the date when the six months have elapsed. (2) When a person who entered into the contract for the quarterly paying savings or the semiannual paying savings has not paid the amount of savings more than one and half years from the date of the last payment, the savings ENFORCEMENT DECREE OF ACT ON LUMP SUM-RAISING SAVINGS OF FARMING AND FISHING HOUSEHOLDS

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contract concerned shall be deemed to have been terminated on the date when a year has elapsed from the date of the last payment Article 11 (Payment of Savings Bounties)

The amount, as prescribed by the following subparagraphs, of the savings bounty under the provisions of Article 6 of the Act, shall be paid through the savings institution concerned from the encouragement fund (hereinafter referred to as the "Fund") for the raising lump-sum savings of farming and fishing households:

1. In cases where the farmers and fishermen save up until the expiration of the contract period of the raising lump-sum savings, an amount of money equivalent 4.5/100 of the average balance (hereinafter referred to as the "average balance of the paid principal") of the paid principal of the savings during the period of savings when its contract period is three years, and an amount of money equivalent 12.5/100 of the average balance of the paid principal when its contract period is five years;

2. In cases where the farmers and fishermen in the low income brackets save up until the expiration of the contract period of the raising lump-sum savings, an amount of money equivalent 13.5/100 of the average balance of the paid principal when its contract period is three years, and amount of money adding the savings bounty of paragraph (1) to the amount of money equivalent to 35.5/100 of the average balance of the paid principal when its contract period is five years;

3. In cases where the raising lump-sum savings contract is terminated partway, an amount of money equivalent to 0.9/100 of the average balance of the paid principal when the savings has been paid longer than three years, and amount of money equivalent to 5.6/100 of the average balance of the paid principal when the savings has been paid longer than four years; and

4. In cases where the raising lump-sum savings contract is terminated partway due to reasons prescribed by Article 16 (2) of the Act, the savings bounty to be paid shall be as set out in the following subparagraphs:

(a) Amount of money equivalent to 0.8/100 of the average balance of the paid principal when the savings has been paid longer than one year;

ENFORCEMENT DECREE OF ACT ON LUMP SUM-RAISING SAVINGS OF FARMING AND FISHING HOUSEHOLDS

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(b) Amount of money equivalent to 3.6/100 of the average balance of the paid principal when the savings has been paid longer than two years;

(c) Amount of money equivalent to 7.5/100 of the average balance of the paid principal when the savings has been paid longer than three years; and

(d) Amount of money equivalent to 13.6/100 of the average balance of the paid principal when the savings has been paid longer than four years.

Article 12 (Computation of Savings Bounty and Interest according to Increase of each Paying Amount of Savings)

In cases where the farmers and fishermen who have save up by increasing each paying amount of savings under the provisions of Article 4 (4), save up until the expiration of the savings contract period, or terminate the savings contract partway, the savings bounty and interest for the increased amount of the paying amount of the savings shall be computed by applying the payment rate and interest rate of the partway termination, respectively to the savings period computed from the date of increasing the paying amount of savings: Provided, That the savings bounty to be paid in cases where the savings is paid until the expiration of the savings contract period, shall be paid in accordance with the provisions of the items of subparagraph 4 of Article 11.

Article 13 (Establishment of Account for Savings Encouragement Fund) The Financial Services Commission shall establish an account for the encouragement Fund of the raising lump-sum savings at the Bank of Korea to keep the revenue and expenditure of the fund clear. Article 14 (Operation and Management of Fund)

The matters necessary for the operation and management of the fund and the payment of the savings bounty shall be prescribed by the Governor of the Bank of Korea with the approval of the Financial Services Commission.

Article 15 (Fiscal Year of Fund)

The fiscal year of the Fund shall be from January 1 to December 31 of each year.

Article 16 (Affairs of Accounting Institution of Fund) ENFORCEMENT DECREE OF ACT ON LUMP SUM-RAISING SAVINGS OF FARMING AND FISHING HOUSEHOLDS

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The Fund revenue collecting officer shall perform the affairs concerning the revenue collection of the Fund, the Fund financial officer shall perform the affairs concerning the act of grounds for expenditure and the property management of the Fund, the Fund expenditure officer shall perform the affairs concerning the expenditure of the Fund, and the Fund accounting public official shall perform the affairs concerning the custody and accounting of the national funds, custody funds and securities respectively. [This Article Wholly Amended by Presidential Decree No. 17824, Dec. 30, 2002] Article 17 (Compensation for Losses)

In cases where the Fund compensates the savings institutions for losses incurred under the provisions of Article 13 of the Act, the matters necessary these far shall be as separately prescribed by the Financial Services Commission.

Article 18 (Grounds for Non-Taxation for Interest Income, etc.) The term "reasons as prescribed by Presidential Decree" in Article 16 (2) 3 of the Act means the occasions falling under any of the following subparagraphs:

1. When the amount of savings has not been paid more than six months consecutively for the monthly paying savings, and more than a year consecutively for the quarterly paying savings and the semiannual paying savings because a farmer or a fisherman lost work due to the injury and incurable disease, etc.;

2. When a farmer or a fisherman who has entered into the contract for the raising lump-sum savings the period of expiration of which is five years and has paid the amount of savings longer than three years, terminates the contract; and

3. When a person who has been designated as a person subject to reduction or exemption from agricultural income tax or income tax, or as a person subject to payment of the government subsidy because of the reduction of the income due to damage by blight and noxious insects, by snow, by storm, by flood or by fall in price, etc., terminates the contract. Article 19 (Presentation of Voucher)

A person who makes the inspection under the provisions of Article 17 (2) and (3) of the Act shall present the voucher showing such authority to the related person.

ENFORCEMENT DECREE OF ACT ON LUMP SUM-RAISING SAVINGS OF FARMING AND FISHING HOUSEHOLDS

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ADDENDA (1) (Enforcement Date) This Decree shall enter into force on the date of its promulgation.

(2) (Transitional Measure concerning Payment of Savings Bounty) The savings bounty for the raising lump-sum savings for which the farmers and fishermen, etc. entered into a contract with local agricultural cooperatives, fisheries cooperative by region and by business types or corporate fishing village fraternities prior to this Decree entering into force, shall be paid according to the payment rate at the time of contract.

ADDENDA (1) (Enforcement Date) This Decree shall enter into force on June 1, 1989. (2) (Transitional Measure concerning Payment of Savings Bounty) The payment rate of the savings bounty to be paid for the raising lump-sum savings entered into contract prior to this Decree entering into force shall be in accordance with the payment rate at the time of contract. ADDENDUM This Decree shall enter into force on the date of its promulgation. ADDENDUM This Decree shall enter into force on the date of its promulgation. ADDENDA Article 1 (Enforcement Date)

This Decree shall enter into force on January 1, 2001. Articles 2 through 6 Omitted.

ADDENDA Article 1 (Enforcement Date)

This Decree shall enter into force on January 1, 2003. Articles 2 through 6 Omitted.

ENFORCEMENT DECREE OF ACT ON LUMP SUM-RAISING SAVINGS OF FARMING AND FISHING HOUSEHOLDS

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ADDENDA Article 1 (Enforcement Date)

This Decree shall enter into force on the date of its promulgation: Provided, That

of Presidential Decree to be amended under Article 2 of Addenda, the amended part of Presidential Decree which was promulgated prior to this Decree entering into force but enforcement date of which has not arrived, shall enter into force on the date the relevant Presidential Decree enters into force respectively.

Articles 2 Omitted.

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[Attached Table]

Standard of Scale of the Livestock belonging to the Stockbreeder subject to Lump Sum-Raising Savings (related to Article 2 (2) 3) Species of Livestock Scale

Dairy cattle, Deer

Cattle, Horse

Pig, Goat, Sheep, Dog

Rabbit, Chinchilla, Mink

Poultry

Honeybee

20 head

30 head

150 head

5,000 head

10,000 head

150 groups

Remarks

1. It shall be based on the mother livestock, two heads of young livestock (referred to the livestock with no record of delivery or egg-laying) shall be deemed one head.

2. Livestock not shown in the above annexed Table shall be based on the scale of the livestock of similar species.