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STATE BOND ACT

Wholly Amended by Act No. 4675, Dec. 31, 1993

Amended by Act No. 5454, Dec. 13, 1997

Act No. 5491, Dec. 31, 1997

Act No. 6075, Dec. 31, 1999

Act No. 6836, Dec. 30, 2002

Act No. 7345, Jan. 27, 2005

Act No. 8050, Oct. 4, 2006

Act No. 8852, Feb. 29, 2008

Act No. 10572, Apr. 8, 2011

Act No. 12864, Dec. 30, 2014

 Article 1 (Purpose)
The purpose of this Act is to ensure the stable management of the State bond market and the efficient performance of affairs related to State bonds by providing for basic matters concerning the issuance, registration, redemption, etc. of State bonds.
 Article 2 (Definitions)
The definitions of terms used in this Act shall be as follows:
1. The term “State bond” means a bond issued by the Government to secure funding, etc. for a public purpose under this Act or any other Act;
2. The term “account” means the general account and special account prescribed in Article 4 of the National Finance Act;
3. The term “other fund” means a fund prescribed in Article 5 of the National Finance Act: Provided, That this shall exclude the public capital management fund under Article 2 of the Public Capital Management Fund Act.
 Article 3 (Relationship with Other Acts)
State bonds shall be governed by this Act, except as otherwise expressly provided for in any other Act.
 Article 4 (Types, etc. of State Bonds)
(1) State bonds shall be classified as:
1. State bonds issued at the expense of the public capital management fund under Article 2 of the Public Capital Management Fund Act (hereinafter referred to as “National Treasury bonds”);
2. State bonds issued at the expense of an account, other fund, or special account under any other Act if such other Act expressly provides so.
(2) Each issue of National Treasury bonds shall be determined by the Minister of Strategy and Finance by maturity or type of the National Treasury bonds, taking into consideration financial needs, conditions of the State bond market, and other similar matters.
 Article 5 (Issuance of State Bonds)
(1) State bonds shall be issued by the Minister of Strategy and Finance with approval from the National Assembly.
(2) State bonds shall in principle be issued in the open market.
(3) The Minister of Strategy and Finance may, notwithstanding paragraph (2), require a specific person to purchase a State bond, or issue to a specific person a State bond in lieu of cash payment, pursuant to Article 13 or any other Act. In such cases, the interest rate of the State bond shall be determined at an appropriate level in accordance with the purpose of issuance thereof, giving due consideration to the maturity and market interest rate as at the time it is issued.
(4) The State bonds provided in Article 4 (1) 2 shall be issued by the Minister of Strategy and Finance upon request of the head of the central administrative agency who manages the account, other fund, or special account under any other Act, as prescribed by Presidential Decree.
(5) Necessary matters concerning the method, etc. of issuing State bonds under paragraphs (2) and (3) shall be prescribed by Ordinance of the Ministry of Strategy and Finance.
(6) Necessary matters concerning the detailed terms, scope, etc. of issuing State bonds, other than those provided in paragraphs (1) through (5), shall be determined by the Minister of Strategy and Finance.
 Article 6 (State Bonds Denominated in Foreign Currencies, etc.)
Where State bonds denominated in won or a foreign currency are issued overseas or State bonds denominated in a foreign currency are issued domestically, such shall be separately approved by the National Assembly.
 Article 7 (Issuance of Consolidated National Treasury Bonds)
(1) If necessary to adjust the liquidity of State bonds, the Minister of Strategy and Finance may consolidate and issue National Treasury bonds at the same interest rate, maturity, etc., which may be treated as those of the same issue, for a fixed period not exceeding three years.
(2) If deemed necessary for the stable management, etc. of the State bond market, the Minister of Strategy and Finance may reissue the National Treasury bonds consolidated and issued under paragraph (1) even after the fixed period expires.
(3) Necessary matters concerning the terms, scope, etc. of issuance and reissuance of National Treasury bonds under paragraphs (1) and (2) shall be determined by the Minister of Strategy and Finance.
 Article 8 (Registration, and Cancellation of Registration, of State Bonds)
(1) No State bonds issued under Article 5 shall require issuance of any instruments representing them, and they shall be registered electronically in either inscribed form or bearer form in the register of State bonds by using an electronic data processing system: Provided, That in times of war, incident, or other national emergency equivalent thereto, inscribed instruments or bearer instruments may be issued.
(2) The registration of any State bond under paragraph (1) shall be cancelled if the right to the State bond lapses due to the principal repayment, the purchase and exchange under Article 13, the completion of extinctive prescription, or any other similar reason.
(3) The agency that engages in affairs relating to the registration and cancellation of registration under paragraphs (1) and (2) shall be the Bank of Korea under the Bank of Korea Act (hereinafter referred to as the “Bank of Korea”).
(4) The registration, changes in registration and cancellation of registration of State bonds, the issuance of instruments and other necessary matters thereon under paragraphs (1) and (2) shall be prescribed by Presidential Decree.
 Article 9 (Transfer, etc. of Registered State Bonds)
(1) If any State bond registered under Article 8 (hereinafter referred to as “registered State bond”) is transferred or pledged, it may not be enforceable against the Government or any third party unless the fact of the transfer or pledge is registered.
(2) If any registered State bond is deposited or bailed as security under Acts and subordinate statutes, the fact of the deposit or bailment may be registered in lieu of offering the registered State bond as security.
(3) Necessary matters concerning the transfer, pledge, procedure for offering as security, and cancellation of registration of registered State bonds under paragraphs (1) and (2) shall be prescribed by Presidential Decree.
 Article 10 (Suspension of State Bond Registration)
(1) The Minister of Strategy and Finance may suspend the registration of a State bond under Article 9 required as a result of transferring any right thereto, as prescribed by Presidential Decree, for a period of not more than one month before the maturity date of the State bond or the date of interest payment thereon: Provided, That this shall not apply in the case of inheritance, legacy, or compulsory execution.
(2) Paragraph (1) shall apply mutatis mutandis to the suspension of cancellation of registration under Article 9 (3).
 Article 11 (Repayment of Principal and Payment of Interest on State Bonds)
(1) The repayment of principal and the payment of interest on any State bond shall be made according to the terms stipulated at the time the State bond is issued. In such cases, the repayment date of principal on the State bond shall be as stipulated at the time the State bond is issued.
(2) Necessary matters concerning the detailed method, etc. for repaying principal and for paying interest on State bonds under paragraph (1) shall be prescribed by Presidential Decree.
 Article 12 (Deduction due to Defect in Interest Coupons)
(1) In cases of any defect in an interest coupon of a State bond issued in the form of a bearer instrument with the interest coupon attached, the amount corresponding to the portion of the defect shall be deducted from the amount of redemption when the State bond is redeemed.
(2) The bearer of the defective interest coupon under paragraph (1) may claim payment of the amount deducted at any time through redemption of the interest coupon.
 Article 13 (Purchase and Exchange of State Bonds before Maturity)
(1) Where deemed necessary for maturity diversification, liquidity adjustment, etc. of State bonds, the Minister of Strategy and Finance may purchase State bonds prior to maturity.
(2) Simultaneously with the purchase of State bonds under paragraph (1), the Minister of Strategy and Finance may issue new State bonds and offer them in exchange for the purchased bonds after adjusting the prices.
(3) The following matters concerning the purchase and exchange of State bonds before maturity under paragraphs (1) and (2) shall be determined and published by the Minister of Strategy and Finance:
1. The method of purchasing State bonds prior to maturity under paragraph (1);
2. The amount of redemption of the State bonds purchased or issued in exchange under paragraph (1) or (2);
3. The issue of the State bonds to be exchanged under paragraph (2);
4. The estimated issue price of State bonds required for exchange under paragraph (2);
5. The maturity date of the State bonds issued in exchange under paragraph (2);
6. Any other matter necessary for the purchase and exchange of State bonds before maturity.
 Article 14 (Extinctive Prescription of State Bonds)
The right to receive payments of principal and interest on State bonds shall be extinguished by completion of prescription unless it is exercised for five years: Provided, That the right to receive interest payments being paid periodically within one year shall be extinguished by completion of prescription unless it is exercised for three years.
 Article 15 (Management of Affairs concerning State Bonds)
(1) The issuance of National Treasury bonds, the repayment of the principal amount of State bonds, and other affairs concerning State bonds shall be managed by the Bank of Korea as prescribed by Ordinance of the Ministry of Strategy and Finance.
(2) Article 36 (4) and (5) of the Management of the National Funds Act shall apply mutatis mutandis to the receipt, disbursement, and custody of the funds raised by issuing State bonds, the funds needed to pay the principal and interest payments of State bonds, and any other similar funds, among the affairs concerning State bonds managed by the Bank of Korea under paragraph (1).
 Article 16 (Reporting on Management of Affairs concerning State Bonds)
The Governor of the Bank of Korea shall file a report on the management of affairs concerning State bonds under Article 15 with the Minister of Strategy and Finance, as prescribed by Ordinance of the Ministry of Strategy and Finance.
 Article 17 (Request for Provision of Materials and Consultation)
(1) Where necessary to properly issue and manage State bonds, the Minister of Strategy and Finance may request the head of a relevant central administrative agency, or the Bank of Korea, the Korea Exchange under Article 8-2 (2) of the Financial Investment Services and Capital Markets Act, or any other agency related to the management of affairs concerning State bonds and determined by Presidential Decree (hereinafter referred to as “agency for management of State bond affairs”), to provide materials related to State bonds.
(2) Any person requested to provide materials related to State bonds under paragraph (1) shall comply with such request except in special circumstances.
(3) Where necessary to formulate and carry out policies regarding the State bond market, the Minister of Strategy and Finance may consult in advance with the head of a relevant central administrative agency or with an agency for management of State bond affairs.
ADDENDUM
This Act shall enter into force six months after the date of its promulgation.