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ISSUANCE AND DISTRIBUTION OF ELECTRONIC BILLS ACT

Act No. 7197, Mar. 22, 2004

Amended by Act No. 8443, May 17, 2007

Act No. 8863, Feb. 29, 2008

Act No. 9364, Jan. 30, 2009

Act No. 9651, May 8, 2009

Act No. 10303, May 17, 2010

Act No. 11461, jun. 1, 2012

Act No. 11730, Apr. 5, 2013

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Act is to contribute to the enhancement of the national economy by enabling the issuance and distribution of promissory notes in electronic form and the exercise of rights thereto.
 Article 2 (Definitions)
The terms used in this Act shall be defined as follows: <Amended by Act No. 10303, May 17, 2010; Act No. 11461, Jun. 1, 2012 >
1. The term "electronic document" means the information prepared, transmitted, received, or stored in electronic form by an information processing system in accordance with subparagraph 1 of Article 2 of the Act on Electronic Documents and Transactions; <Amended by Act No. 11461, Jun. 1, 2012>
2. The term "electronic bill" means a promissory note prepared in electronic document, which is registered with an electronic bill management agency in accordance with Article 5 (1);
3. The term "officially certified digital signature" means information defined in subparagraph 3 of Article 2 of the Digital Signature Act;
4. The term "electronic bill management agency" means institutions designated by the Minister of Justice pursuant to Article 3 (1);
5. The term "business identification information" means the information with which a business operator is identifiable, such as the trade name, business registration number, membership number, corporate registration number, and resident registration number of a person related to an electronic bill;
6. The term "financial institution" means any institution specified by Presidential Decree among banks under the Banking Act or financial institutions engaging in any business similar thereto;
7. The term "user" means a person registered with an electronic bill management agency, who conducts transactions of electronic bills through the system of the electronic bill management agency.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 3 (Electronic Bill Management Agency)
(1) The electronic bill management agency shall be designated by the Minister of Justice.
(2) Any person who desires to be designated as an electronic bill management agency shall meet the following requirements:
1. The person shall be a corporation incorporated pursuant to Article 32 of the Civil Act or a stock company incorporated pursuant to the Commercial Act;
2. The person shall have technical capability, financial capability, facilities, equipment, and other things as specified by Presidential Decree.
(3) The procedure for the designation of an electronic bill management agency and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 4 (Scope of Application)
Except as otherwise provided for by this Act, electronic bills shall be governed by the provisions of Bills of Exchange and Promissory Notes Act.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
CHAPTER II REGISTRATION OF ELECTRONIC BILLS AND ACTIONS ON BILL
 Article 5 (Registration of Electronic Bills)
(1) Any person who desires to issue an electronic bill shall register the electronic bill with an electronic bill management agency.
(2) The electronic bill management agency may refuse to register an electronic bill or place limitations on annual total amount of issuance and other conditions of electronic bills, referring to the opinion of the financial institution to whom the payment of such electronic bill is claimable or opinions of credit reporting agencies.
(3) The procedure for, and the method of, the registration of electronic bills with the electronic bill management agency and other necessary matters shall be prescribed by Presidential Decree.
(4) Endorsement or guarantee of an electronic bill or the exercise of a right to an electronic bill shall be done only using an electronic document defined by this Act.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 6 (Issuance of Electronic Bills)
(1) Each electronic bill shall contain the following matters:
1. Matters specified in subparagraphs 1, 2, 3, 5, and 6 of Article 75 of the Bills of Exchange and Promissory Notes Act;
2. The financial institution to which the payment of the electronic bill is claimable;
3. Information representing the identity of the electronic bill;
4. Business identification information.
(2) The area in which the financial institution under paragraph (1) 2 is situated is deemed the place of payment under subparagraph 4 of Article 75 of the Bills of Exchange and Promissory Notes Act.
(3) The officially certified digital signature placed by an issuer on an electronic bill under paragraph (1) is deemed as the name printed and the seal affixed, or the signature affixed, in accordance with subparagraph 7 of Article 75 of the Bills of Exchange and Promissory Notes Act.
(4) An electronic bill is deemed issued at the time when the issuer transmits the electronic bill to another person in accordance with Article 6 (1) of the Act on Electronic Documents and Transactions and the other person receives it in accordance with paragraph (2) of the aforesaid Article. <Amended by Act No. 11461, Jun. 1, 2012>
(5) The maturity of each electronic bill shall not exceed one year from the date of issuance.
(6) No electronic bill shall be issued in the form of a blank bill under Article 10 of the Bills of Exchange and Promissory Notes Act (referring to the relevant provisions, in cases where the aforesaid Article is cited in Article 77 of the aforesaid Act).
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 6-2 (Use of Electronic Bills)
Every stock company subject to the external audit under Article 2 of the Act on External Audit of Stock Companies or every corporate business entity whose total amount of assets, etc. as at the end of the immediately previous business year meets the standards prescribed by Presidential Decree shall, whenever it issues a promissory note, issue it in the form of an electronic bill. <Amended by Act No. 11730, Apr. 5, 2013>
[This Article Newly Inserted by Act No. 9651, May 8, 2009]
 Article 7 (Endorsement of Electronic Bills)
(1) Whenever an electronic bill is endorsed, an electronic document stating the intent of endorsement (hereinafter referred to as "electronic document of endorsement") shall be attached to the electronic bill.
(2) Each electronic document of endorsement shall describe the information representing the identity of the relevant electronic bill.
(3) The endorsement and the delivery thereof under Article 13 (1) of the Bills of Exchange and Promissory Notes Act are deemed to be completed at the time an endorser transmits an electronic bill and an electronic document of endorsement to another person in accordance with Article 6 (1) of the Act on Electronic Documents and Transactions and the other person receives it in accordance with paragraph (2) of the aforesaid Article. <Amended by Act No. 11461, Jun. 1, 2012>
(4) An endorsee who makes further endorsement shall attach all electronic documents of endorsement previously made to the electronic bill and shall make the endorsement in accordance with paragraph (1).
(5) The total number of endorsements of an electronic bill shall not exceed 20.
(6) Article 6 (3) shall apply mutatis mutandis to endorsement of electronic bills. In such cases, the term "issuer" shall be construed as "endorser.“
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 7-2 (Partial Endorsement of Electronic Bills)
(1) Notwithstanding Article 12 (2) of the Bills of Exchange and Promissory Notes Act, only a person who makes the first endorsement of an electronic bill issued may split the total amount payable into not more than five parts and endorse for each part. In such cases, each electronic bill to be partially paid shall be endorsed in the manner as provided for in Article 7.
(2) A person who endorses an electronic bill pursuant to paragraph (1) shall indicate that the amount of the electronic bill for which he/she endorses is a part of the amount payable of an electronic bill before the split.
(3) An electronic bill after split shall be regarded as the same with an electronic bill before split to the extent of the amount indicated on the spilt one.
(4) Effects of legal acts regarding an spilt electronic bill shall not influence on the legal relations of the other spilt electronic bills, and the endorser of those spilt electronic bills shall assign a different number on each electronic bill, so that they are distinguishable. The detailed method for assigning a number on such electronic bills shall be prescribed by Presidential Decree.
(5) When the rights to an electronic bill after split are extinguished, the rights to the electronic bill before split shall be deemed to exist to the extent of the remaining value.
(6) Paragraph (1) shall not apply where an endorser of an electronic bill indicates that prohibition of partial endorsement or the same intent on the electronic bill.
[This Article Newly Inserted by Act No. 11730, Apr. 5, 2013]
 Article 8 (Guarantee of Electronic Bills)
(1) Any person who guarantees an electronic bill shall attach an electronic document to the electronic bill stating his/her intent of guarantee.
(2) Article 6 (3) and (4) and 7 (2) shall apply mutatis mutandis to guarantee of electronic bills. In such cases, the term "issuer" shall be construed as "guarantor," and the term "issuance" as "guarantee."
(3) Partial payments of an electronic bill may not be secured by means of guarantee. <Newly Inserted by Act No. 11730, Apr. 5, 2013>
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 9 (Presentment for Payment)
(1) An electronic bill is deemed presented for payment as provided for in Article 38 (1) of the Bills of Exchange and Promissory Notes Act at the time when the holder of the electronic bill transmits an electronic document stating his/her intent to demand the payment to the financial institution to which the payment is claimable pursuant to Article 6 (1) 2, along with the electronic bill and the electronic documents of endorsement attached to the electronic bill, and the financial institution receives the electronic bill and the accompanying electronic documents: Provided, That the presentment of an electronic bill to the electronic bill management agency has the same effect as the presentment for payment, and automatic presentment for payment before the maturity of each electronic bill may be made possible by an information processing system operated by the electronic bill management agency.
(2) The timing for the transmission and reception for presentment for payment shall be governed by Article 6 (1) and (2) of the Act on Electronic Documents and Transactions. <Amended by Act No. 11461, Jun. 1, 2012>
(3) Any holder who makes presentment for payment shall state his/her account in a financial institution through which he/she desires to receive the payment for the bill in the electronic document stating his/her intent to demand the payment under paragraph (1).
(4) A financial institution to which presentment for payment is made in accordance with paragraph (1) shall, when it pays the amount of the electronic bill, notify the electronic bill management agency of the payment: Provided, That the foregoing sentence shall not apply to cases where the payment is completed by the information processing system operated by the electronic bill management agency.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 10 (Termination of Bills)
The obligor under a bill is deemed to redeem the bill at the time when notice is given in accordance with Article 9 (4) or when the payment is completed by the information processing system operated by the electronic bill management agency.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 11 (Exclusion of Bills from Application of Nature of Mandatorily Redeemable Instrument and Partial Payment)
 Article 12 (Refusal of Payment)
(1) Any financial institution that refuses to make a payment upon presentment for payment under Article 9 (1) shall make such refusal by an electronic document (hereinafter referred to as "electronic document of payment refusal").
(2) An electronic document of payment refusal is deemed as a notarized certificate under Article 44 (1) of the Bills of Exchange and Promissory Notes Act, if the electronic document is delivered to, and is confirmed by, the electronic bill management agency.
(3) The date on which the holder of an electronic bill receives the electronic document under paragraph (1) is deemed the preparation date of the notarized certificate.
(4) The method of, and the procedure for, the confirmation of an electronic document of payment refusal under paragraph (2) and other necessary matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 13 (Call for Redemption)
(1) The holder of an electronic bill shall, when he/she calls for the redemption of the bill, transmit an electronic document stating his/her intent to call for the obligor to redeem it, along with the following documents attached thereto:
1. Electronic bills;
2. Electronic documents of endorsement;
3. Electronic documents of payment refusal.
(2) An obligor to redeem an electronic bill shall, when he/she pays the amount of the bill, notify the electronic bill management agency of the payment.
(3) An obligor to redeem an electronic bill is deemed to recover the electronic bill at the time when notice is given in accordance with paragraph (2).
(4) Article 9 (3) shall apply mutatis mutandis to the call for redemption of an electronic bill. In such cases, the term "call for payment" shall be construed as "call for redemption."
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 14 (Return of Bills and Refusal to Accept)
(1) Any person who has issued or endorsed an electronic bill shall, if he/she desires to have the electronic bill returned on the ground of a mistake or otherwise, demand the holder of the bill to notify the electronic bill management agency of his/her intent to return it.
(2) An electronic bill is deemed to have never been issued or endorsed if a notice is given in accordance with paragraph (1), and the electronic bill management agency shall delete the record of the issuance or endorsement of the electronic bill.
(3) The recipient of an electronic bill shall, if he/she intends to refuse to accept an electronic bill, notify the electronic bill management agency of his/her intent to refuse to accept it. An electronic bill is deemed to have never been accepted by a recipient, if the notice of the recipient's intent to refuse to accept it is given, and the electronic bill management agency shall issue a document certifying the fact that the recipient has refused to accept the electronic bill if the recipient demands such document.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
CHAPTER III ENSURING OF SAFETY IN TRANSACTIONS OF ELECTRONIC BILLS AND PROTECTION OF USERS
 Article 15 (Duty to Ensure Safety)
The electronic bill management agency shall comply with the standards prescribed by Presidential Decree with regard to human resources, facilities, and electronic devices for electronic transmission and processing of transactions of electronic bills so as to ensure the safety in transactions of electronic bills and ensure the certainty of payment.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 16 (Creation and Preservation of Records of Transactions of Electronic Bills)
(1) The electronic bill management agency shall undertake the following business activities:
1. Measures to enable the issuance, endorsement, and guarantee of electronic bills and the exercise of rights thereto through the agency's electronic information processing system;
2. Preservation of records of the issuer and endorsers of each electronic bill, changes in holders of electronic bills, and the exercise of rights to such electronic bills;
3. Creation and preservation of records of tracing and searching transactions of electronic bills, with which errors discovered in the course of such tracing and searching can be verified and corrected.
(2) The kinds, method, and preservation period of records that the electronic bill management agency is obligated to preserve in accordance with paragraph (1) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 17 (Provision of Information about Transactions of Electronic Bills)
(1) The electronic bill management agency shall, upon receiving a request from a user, provide the user with information about settlement of payment, such as the current status of issuance and balance of the relevant electronic bill, as prescribed by Presidential Decree.
(2) No person who has acquired information about any of the following facts in the course of business in connection with transactions of electronic bills shall provide or divulge such information to any other person without consent of the relevant user: Provided, That the same shall not apply to any case under the proviso to Article 4 (1) of the Act on Real Name Financial Transactions and Confidentiality nor to any case specified by any other Act:
1. Facts concerning the personal situation of the user;
2. Information or data concerning the details and performance of the user's trading accounts and transactions of electronic bills.
(3) The electronic bill management agency may disclose to the public the facts specified in paragraphs (1) and (2), subject to prior approval of the Minister of Justice, in cases specified by Presidential for soundness in the issuance and distribution of electronic bills and the protection of bona fide traders.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 18 (Elucidation and Notification of Terms and Conditions)
(1) The electronic bill management agency shall, when it accepts the registration of an electronic bill, stipulate terms and conditions on transactions of electronic bills to the user at the request of the user and shall issue the terms and conditions to the user and explain the contents of the terms and conditions, as prescribed by Presidential Decree.
(2) The electronic bill management agency shall, when it intends to establish or amend the standard agreement form for transactions of electronic bills, obtain approval of the Minister of Justice therefor: Provided, That in cases where the Minister of Justice concludes that an amendment of the terms and conditions is not likely to adversely affect any right, interest, or obligation of users, such amendment shall be notified to the Minister of Justice within ten days after the amendment.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 19 (Objections and Settlement of Disputes)
(1) The electronic bill management agency shall reflect reasonable opinions and complaints presented or raised by users in connection with transactions of electronic bills in its operations and shall prepare the procedure for compensating users for losses arising from their transactions of electronic bills, as prescribed by Presidential Decree.
(2) The electronic bill management agency shall, whenever it accepts the registration of an electronic bill, stipulate the procedure under paragraph (1) in detail.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
CHAPTER IV SUPERVISION OF MANAGEMENT OF ELECTRONIC BILLS
 Article 20 (Supervision and Inspection of Electronic Bill Management Agency)
(1) The Minister of Justice shall supervise an electronic bill management agency to ensure that the agency abides by this Act or any order thereunder.
(2) The Minister of Justice may, if necessary for the supervision under paragraph (1), require the electronic bill management agency to submit a report on its business or may inspect the electronic bill management agency's facilities, equipment, documents, and others related to the management of electronic bills, as prescribed by Presidential Decree.
(3) The Minister of Justice may, if necessary for the smoother operation of the electronic bill system and the protection of users, order the electronic bill management agency to submit necessary data, such as information about users' transactions of electronic bills.
(4) If the Minister of Justice finds that an electronic bill management agency violates the Act or orders thereunder and is likely to undermine the sound operation of the electronic bill system or to infringe on the rights and interests of a user, the Minister of Justice may take any of the following measures:
1. An order to correct the violation;
2. A caution or warning to the electronic bill management agency or a demand to issue a caution, warning, or reprimand to its executives and employees;
3. A recommendation to remove an executive of the electronic bill management agency or a demand to suspend an executive's performance of duties.
(5) The Minister of Justice may, if necessary for the operation of the electronic bill system or the supervision or inspection of the electronic bill management agency, request the Financial Services Commission to consult or to delegate or entrust part of his/her authority, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 21 (Cancellation of Designation)
(1) The Minister of Justice may cancel the designation under Article 3, if the electronic bill management agency falls under any of the following subparagraphs:
1. If it is designated as the electronic bill management agency under Article 3 by deceit or in any other fraudulent way;
2. If it fails to continue its business for one year or longer without any justifiable reason;
3. If its business ends in fact by a merger, bankruptcy, or permanent closedown of the corporation.
(2) The electronic bill management agency may, even if its designation is cancelled, continue its business operation for the payment for transactions of electronic bills conducted before the disposition of cancellation is made.
(3) The Minister of Justice shall hold a hearing, when he/she intends to cancel designation pursuant to paragraph (1), and shall, when he/she cancels designation, publicly notify the details thereof through the Official Gazette and inform the general public of the details through computer communications networks or similar means.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
CHAPTER V PENALTY PROVISIONS
 Article 22 (Penalty Provisions)
(1) Any person who engages in a business for the management of electronic bills without being designated as an electronic bill management agency shall be punished by imprisonment with labor for not more than five years or by a fine not exceeding 100 million won.
(2) Any of the following persons shall be punished by imprisonment with labor for not more than three years or by a fine not exceeding 50 million won:
1. Any person who issues an electronic bill without registration with the electronic bill management agency, in violation of Article 5 (1);
2. Any person who provides information about transactions of electronic bills, in violation of Article 17 (2).
(3) Any person who evades, or interferes with, the inspection under Article 20 (2) shall be punished by imprisonment with labor for not more than one year or by a fine not exceeding 30 million won.
(4) Electronic bill are treated as securities for the purpose of the punishment of the offenses specified in Articles 214 through 217 of the Criminal Act and any offense committed in connection with an electronic bill shall be punished in accordance with the provisions applicable to the corresponding offense committed in connection with such securities.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 23 (Administrative Fines)
(1) Any of the following persons shall be punished by an administrative fine not exceeding ten million won:
1. Any person who violates the standards of safety under Article 15;
2. Any person who fails to submit data without any justifiable reason upon receiving an order to submit data under Article 20 (3) or who submits false data.
(2) Any of the following persons shall be punished by an administrative fine not exceeding five million won: <Amended by Act No. May 8, 2009>
1. Any person who breaches the duty to use electronic bills under Article 6-2;
2. Any person who breaches the duty to preserve records of transactions of electronic bills under Article 16 (1) 2 or 3;
3. Any person who fails to provide information about settlement of payments without any justifiable reason upon receiving a request under Article 17 (1);
4. Any person who breaches the duty to explain the terms and conditions under Article 18 (1);
5. Any person who fails to obtain approval, or who fails to give a notice, in accordance with Article 18 (2).
(3) Administrative fines provided for in paragraphs (1) and (2) shall be imposed and collected by the Minister of Justice.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
 Article 24 (Treatment of Electronic Bill Management Agency as Financial Institution)
The electronic bill management agency is deemed a financial institution under Article 2 of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes.
[This Article Wholly Amended by Act No. 9364, Jan. 30, 2009]
ADDENDUM
This Act shall enter into force on January 1, 2005.
ADDENDUM <Act No. 8443, May 17, 2007>
This Act shall enter into force three months after the date of its promulgation.
ADDENDA <Act No. 8863, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDUM <Act No. 9364, Jan. 30, 2009>
This Act shall enter into force on the date of its promulgation.
ADDENDUM <Act No. 9651, May 8, 2009>
This Act shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 10303, May 17, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 10 Omitted.
ADDENDA <Act No. 11461, Jun. 1, 2012>
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Articles 2 through 10 Omitted.
ADDENDA <Act No. 11730, Apr. 5, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Article 2 (Applicability)
This amended provisions of Article 7-2 shall begin to applying from the first electronic bill issued after this Act enters into force.