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MUTUAL SAVINGS BANKS ACT

Act No. 2333, Aug. 2, 1972

Amended by Act No. 2779, Jul. 25, 1975

Act No. 4867, Jan. 5, 1995

Act No. 5050, Dec. 29, 1995

Act No. 5501, Jan. 13, 1998

Act No. 5507, Jan. 13, 1998

Act No. 5738, Feb. 1, 1999

Act No. 5982, May 24, 1999

Act No. 6203, Jan. 28, 2000

Act No. 6429, Mar. 28, 2001

Act No. 6561, Dec. 31, 2001

Act No. 6992, Dec. 11, 2003

Act No. 7428, Mar. 31, 2005

Act No. 8143, Dec. 30, 2006

Act No. 8522, Jul. 19, 2007

Act No. 8635, Aug. 3, 2007

Act No. 8852, Feb. 29, 2008

Act No. 8863, Feb. 29, 2008

Act No. 10175, Mar. 22, 2010

Act No. 10303, May 17, 2010

Act No. 10682, May 19, 2011

Act No. 10866, Jul. 21, 2011

Act No. 12100, Aug. 13, 2013

Act No. 13447, Jul. 24, 2015

Act No. 13453, Jul. 31, 2015

Act No. 13613, Dec. 22, 2015

Act No. 14125, Mar. 29, 2016

Act No. 14822, Apr. 18, 2017

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Act is to contribute to the growth of the national economy by guiding savings banks for sound operation to assist them in providing citizens and small and medium enterprises with greater convenience in receiving financial services, protecting customers, and maintaining credit system in good order.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 2 (Definitions)
The terms used in this Act shall be defined as follows:
1. The term "small and medium enterprise" means small and medium enterprises as defined in Article 2 (1) of the Framework Act on Small and Medium Enterprises;
2. The term "credit mutual aid deposit service" means a service for receipt and payment of mutual aid deposits provided under an agreement made with mutual aid members on condition that each member deposit mutual aid deposits in installments for a fixed number of units in an account for a fixed term on a regular basis until the amount of savings reaches a specific amount and the service provider shall, in turn, pay the money so deposited to the mutual aid members from each account by drawing lots, making a bid, or any other method;
3. The term "credit installment savings service" means a service of receipt and payment of installment savings provided under an agreement with an installment savings depositor under an agreement that the depositor shall deposit installment savings for a fixed term and the service provider shall pay a certain amount of money to the depositor earlier, than or at the expiration of the term;
4. The term "equity capital" means the aggregate of core capital and supplementary capital according to the standards set by the Bank for International Settlements, which is determined by the Financial Services Commission in accordance with the standards prescribed by Presidential Decree;
5. The term "deposits or similar" means mutual aid deposits, installment savings, deposits, installment deposits, and others prescribed by Presidential Decree;
6. The term "credit extension" means payments, loans, guarantees for payment, purchasing of securities in the nature of financial support, and other direct and indirect transactions of a mutual savings bank that are accompanied by credit risks in financial transactions, as specified further by Presidential Decree. In such cases, any credit extension made on a principal's account shall be deemed to be the credit extension made to the principal, regardless of in whose name it is made;
7. The term "large credit extension" means credit extension made to an individual borrower in excess of 10/100 of the equity capital of a mutual savings bank;
8. The term "illegal or non-performing credit extension" means a case in which the amount of credit extended or the amount provisionally paid falls under any of the following items:
(a) An amount exceeding the limit under Article 12 (1) out of the amount of credit extension made to an individual borrower (hereinafter referred to as "credit extension exceeding the limit for each individual borrower");
(b) An amount exceeding the limit under Article 12 (3) out of the amount of credit extension made to an individual borrower and a person sharing credit risks prescribed by Presidential Decree with the individual borrower (hereinafter referred to as "identical borrower") (hereinafter referred to as "credit extension exceeding the limit for the identical borrower");
(c) An amount exceeding the limit under Article 12 (2) out of the aggregate of a large credit extension (hereinafter referred to as "illegal large credit extension");
(d) Credit extension made and provisional payment made in violation of Article 37 (hereinafter referred to as "credit extension to a large shareholder");
(e) Credit extension and provisional payment that is anticipated as difficult to collect or that is presumed to be a loss in light of the standards set by the Financial Services Commission (hereinafter referred to as "non-performing credit extension");
9. The term "business guidance" means guidance on the following matters relating to business management of mutual savings banks:
(a) Collecting illegal and non-performing credit extensions and securing claims;
(b) Business affairs relating to supply of and demand for funding and lending loans and receiving deposits;
(c) Other matters concerning business management of mutual savings banks, as prescribed by Presidential Decree;
10. The term "business administration" means that an administrator under Article 24-3 (1) (hereinafter referred to as "administrator"), to whom the management of an insolvent mutual savings bank is entrusted for the business stabilization of the mutual savings bank, carries out the business affairs or manages and disposes of its property;
11. The term "large shareholder" means a shareholder falling under any of the following items:
(a) The largest shareholder: A principal who holds the greatest number of the total outstanding voting shares in a mutual savings bank held by the principal and persons in a special relationship, as prescribed by Presidential Decree, with the principal (hereinafter referred to as "specially related persons") on the principal's account, regardless of in whose name the shares are held;
(b) Significant shareholder: A shareholder who holds 10/100 of outstanding voting shares of a mutual savings bank or more on his/her account, no matter in whose name the shares are held, or a shareholder who has de facto control over important matters relating to the management of a mutual savings bank, such as appointment and removal of executives.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 3 (Form of Mutual Savings Banks)
Each mutual savings bank shall be a stock company.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 4 (Business Area of Mutual Savings Banks)
(1) The business area of a mutual savings bank shall be any of the following areas based on the location of its principal business office (hereinafter referred to as "principal office"):
1. Seoul Special Metropolitan City;
2. The area covering Incheon Metropolitan City and Gyeonggi-do;
3. The area covering Busan Metropolitan City, Ulsan Metropolitan City, and Gyeongsangnam-do;
4. The area covering Daegu Metropolitan City, Gyeongsangbuk-do, and Gangwon-do;
5. The area covering Gwangju Metropolitan City, Jeollanam-do, Jeollabuk-do, and Jeju Special Self-Governing Province;
6. The area covering Daejeon Metropolitan City, Chungcheongnam-do, and Chungcheongbuk-do.
(2) Notwithstanding paragraph (1), a mutual savings bank which merges with another mutual savings bank or receives contract transfer may include the business area of the mutual savings bank which ceases to exist due to the merger or which makes the contract transfer in its own business area.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 5 (Capital of Mutual Savings Banks)
(1) The capital of each mutual savings bank shall exceed the amounts classified as follows:
1. Where its principal office is located in the Special Metropolitan City: Twelve billion won;
2. Where its principal office is located in a Metropolitan City: Eight billion won;
3. Where its principal office is located in a Do or Special Self-Governing Province: Four billion won.
(2) A mutual savings bank that intends to relocate its principal office or a branch office or similar under Article 7 (1) from one of the following areas to another within the same business area shall meet the requirements prescribed by Presidential Decree in view of the capital amount which will be applicable in the area whereto it moves and its equity capital, etc.:
1. The Special Metropolitan City;
2. A Metropolitan City;
3. A Do or Special Self-Governing Province.
(3) The capital under paragraphs (1) and (2) means paid-in capital.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 6 (Business License)
(1) Any person who intends to carry out business activities as provided for in Article 11 (1) systematically and continuously for profit shall obtain a license from the Financial Services Commission, except as otherwise provided for in other Acts.
(2) Any person who desires to obtain a license under paragraph (1) (hereinafter referred to as "main license") shall file an application with the Financial Services Commission as prescribed by Presidential Decree.
(3) Any person who desires to obtain a main license under paragraph (2) may file an application for a preliminary license with the Financial Services Commission. In such cases, the Financial Services Commission shall review the application and inform the applicant of whether to grant a preliminary license within two months therefrom: Provided, That the Financial Services Commission may extend such period as prescribed by the Financial Services Commission.
(4) In granting a main license or preliminary license, the Financial Services Commission may attach conditions necessary for the sound management of a mutual savings bank and protection of customers.
(5) The Financial Services Commission shall, when a person who has obtained a preliminary license files an application for a main license, grant him/her the main license after confirming his/her implementation of the conditions set to his/her preliminary license.
(6) Necessary matters concerning further details of the procedures for granting a main license or preliminary license, etc. shall be prescribed by the Financial Services Commission.
(7) Any person who has obtained a main license or preliminary license for a mutual savings bank with conditions attached thereto as provided under paragraph (4) may file an application for the cancellation or change of the conditions under paragraph (4) with the Financial Services Commission, when there are changes in situation or legitimate grounds. In such cases, the Financial Services Commission shall decide on whether to cancel or change the conditions within two months therefrom and notify the applicant of the result in writing without delay.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 6-2 (Requirements for Licensing)
(1) Any person who qualifies for obtaining a license under Article 6 (1) shall meet all of the following requirements:
1. The person shall meet the requirements of Article 5 (1);
2. The person shall have professional human resources and physical facilities, including an electronic computer system, sufficient for protecting customers and carrying out the business in which he/she intends to engage;
3. His/her business plan shall be feasible and appropriate;
4. Large shareholders (including shareholders who are specially related persons of the largest shareholder; and if the largest shareholder is a corporation, including those shareholders who have de facto control over important matters relating to the management of the corporation and are prescribed by Presidential Decree).
(2) Necessary matters concerning further details of the requirements under paragraph (1) shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 6-3 (Public Notice of License, etc.)
The Financial Services Commission shall, whenever it grants a license pursuant to Article 6 (1) or revokes a license pursuant to Article 24 (2), shall issue public notice of the details therewith in the Official Gazette and shall also notify the general public thereof by means of its Internet homepage, etc.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 7 (Restriction on Establishment of Branches, etc.)
(1) A mutual savings bank shall not establish any branch office or liaison office (which includes a branch office or administration office that performs part of its business affairs, or any other similar place; hereinafter referred to as "branch office or similar"), other than its principal office: Provided, That the foregoing shall not apply in cases where a branch office or similar is established by the relevant mutual savings bank within the business area under Article 4 after obtaining a license from the Financial Services Commission as prescribed by Presidential Decree.
(2) Notwithstanding the proviso to paragraph (1), a mutual savings bank prescribed by Presidential Decree may establish a branch office or similar outside the business area under Article 4 when it obtains a license as provided by Presidential Decree.
(3) A mutual savings bank seeking to establish a branch office or similar under the proviso to paragraph (1) or paragraph (2) shall, for each of such branch office or similar, increase the capital by an amount exceeding the amount prescribed by Presidential Decree. In such cases, the capital means paid-in capital.
(4) The Financial Services Commission may attach conditions to a license granted pursuant to the proviso to paragraph (1) and paragraph (2).
[This Article Newly Inserted by Act No. 10175, Mar. 22, 2010]
 Article 8 Deleted. <by Act No. No. 5738, Feb. 1, 1999>
 Article 9 (Use, etc. of Title)
(1) Each mutual savings bank shall include the words "mutual savings bank" or "savings bank" in its name.
(2) No person other than mutual savings banks under this Act may use such a title as "mutual savings bank," "savings bank," "mutual savings company," "mutual loan company," "people's bank," or any other similar title.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 10 (Acts Subject to Authorization)
(1) Each mutual savings bank shall, when it intends to perform any of the following acts, obtain authorization from the Financial Services Commission:
1. Dissolution or a merger;
2. Discontinuance, transfer, or acquisition of a business (or a substantial part of a business);
3. Decrease of capital.
(2) The Financial Services Commission may attach conditions to the authorization granted pursuant to paragraph (1).
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 10-2 (Matters Subject to Mandatory Reporting, etc.)
(1) Each mutual savings bank shall file a report with the Financial Services Commission in advance in any of the following cases: <Amended by Act No. 12100, Aug. 13, 2013>
1. It amends its articles of incorporation (excluding where it amends any insignificant matter prescribed by Presidential Decree);
2. It changes a category or method of its business (excluding where it changes any insignificant matter prescribed by Presidential Decree);
3. It transfers or acquires part of a business;
4. It relocates the principal office, a branch office, etc. within the same business area, and such relocation falls under any of the following:
(a) When the relocation is made from an area under any subparagraph of Article 5 (2) to another area under any subparagraph of the same paragraph;
(b) When the relocation is made from a Metropolitan City to another Metropolitan City;
(c) When the relocation is made from a Special Self-Governing Province to a Do, or from a Do to a Special Self-Governing Province;
(d) When the relocation is made from a Do to another Do;
5. It is necessary, otherwise for protection of customers, as prescribed by Presidential Decree.
(2) The Financial Services Commission may recommend a mutual savings bank to correct or supplement the contents of a report filed by under paragraph (1), if it finds that the contents violate relevant Acts and subordinate statutes or infringe on any right or interest of customers of the mutual savings bank.
(3) A mutual savings bank shall file a report with the Financial Services Commission, as prescribed by the Financial Services Commission, in any of the following circumstances:
1. When any of the shareholders prescribed by Presidential Decree is changed;
2. When its largest shareholder is changed;
3. When shares held by its largest shareholder or persons specially related to him/her are changed by at least one percent of the total outstanding voting shares;
4. When it relocates its principal office or relocates or closes its branch office, etc. (excluding where a report shall be filed in advance in accordance with subparagraph 4 of paragraph (1);
5. When it suspends or resumes the business of its principal office or a branch office, etc.;
6. Deleted; <by Act No. 13453, Jul. 31, 2015>
7. Other cases prescribed by Presidential Decree as they have a significant impact on the management of the mutual savings bank.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Articles 10-3 through 10-5 Deleted. <by Act No. 13453, Jul. 31, 2015>
 Article 10-6 (Examination of Qualifications, etc. of Large Shareholders)
(1) A person who desires to hold more than 30/100 of the total outstanding voting shares in a mutual savings bank by acquiring or taking over voting shares of the mutual savings bank (which means de facto control over the relevant shares: hereafter referred to as "acquisition, etc." in this Article) or to become a large shareholder prescribed by Presidential Decree, shall meet the requirements prescribed by Presidential Decree for the prevention of financial accidents (hereafter referred to as "requirements for the prevention of financial accidents" in this Article), among the qualification requirement for a large shareholder under Article 6-2 (1) 4 and the detailed requirements for obtaining a license under paragraph (2) of the same Article, and shall obtain approval from the Financial Services Commission in advance.
(2) In cases where the acquisition, etc. of shares under paragraph (1) is caused by any ground prescribed by Presidential Decree, such as the death of any incumbent large shareholder, the acquiring person shall file an application for approval with the Financial Services Commission within a period prescribed by Presidential Decree not exceeding three months from the acquisition, etc.
(3) The Financial Services Commission shall examine, at regular intervals prescribed by Presidential Decree, whether large shareholders prescribed by Presidential Decree meet the requirements prescribed by Presidential Decree (hereafter referred to as "requirements for maintaining eligibility for a large shareholder" in this Article), among the qualification requirement for a large shareholder under Article 6-2 (1) 4 and the requirements for the prevention of financial accidents. In such cases, the Financial Services Commission may, if necessary for an examination, require a mutual savings bank or its large shareholders to provide necessary materials or information.
(4) With regard to shares for which approval under paragraph (1) has not been granted or an application for approval under paragraph (2) has not been filed, the Financial Services Commission may issue an order to dispose of them within a prescribed period not exceeding six months.
(5) No person who has made an acquisition, etc. of shares without approval under paragraph (1) shall exercise his/her voting right in respect of the shares so acquired (including shares for which approval has not been granted by a person who made an acquisition, etc. of shares pursuant to paragraph (2)).
(6) With regard to large shareholders acknowledged as not fulfilling the requirements for maintaining eligibility for a large shareholder as a result of the examination conducted under paragraph (3), the Financial Services Commission may issue an order to meet such requirements within a prescribed period not exceeding six months.
(7) No large shareholder who has received an order under paragraph (6) shall exercise his/her voting right in respect of the shares held by him/her in excess of 10/100 of the total outstanding voting shares in the mutual savings bank.
(8) In cases where a large shareholder who has received an order under paragraph (6) fails to comply with such order, the Financial Services Commission may order the large shareholder to dispose of the shares held by him/her in excess of 10/100 of the total outstanding voting shares in the mutual savings bank within a prescribed period not exceeding six months.
(9) Other matters necessary for an approval, application for an approval, request for the provision of materials or information, and order as provided for in paragraphs (1) through (8) shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10175, Mar. 22, 2010]
CHAPTER II BUSINESS
 Article 11 (Business Activities)
(1) A mutual savings bank may engage in the following business activities systematically and continuously for profit: <Amended by Act No. 12100, Aug. 13, 2013>
1. Credit mutual aid deposit service;
2. Credit installment savings service;
3. Receipt of deposits and installment deposits;
4. Extension of loans;
5. Discount of commercial notes;
6. Domestic and foreign exchange of money;
7. Receipt of deposits for safekeeping;
8. Agency service for collection and payment;
9. Intermediary or agency service for corporate mergers and purchases;
10. Agency service for the State, public organizations, and financial institutions;
11. Business affairs conducted on behalf of, or entrusted by, the Korea Federation of Savings Banks under Article 25;
12. Issuance and management of electronic means for debit payment under the Electronic Financial Transactions Act and settlement of payments therefor (In such cases, the scope of business shall be limited to where the business affairs of the Korea Federation of Savings Banks under Article 25-2 (1) 9 are jointly carried out);
13. Issuance, management, and sales of prepaid electronic means payment under the Electronic Financial Transactions Act and settlement of payments therefor (In such cases, the scope of business shall be limited to cases in which the business affairs of the Korea Federation of Savings Banks under Article 25-2 (1) 10 are jointly carried out);
14. Investment brokerage business, investment trade business, and trust business authorized by the Financial Services Commission under the Financial Investment Services and Capital Markets Act;
15. Installment financial business under the Specialized Credit Finance Business Act (only applicable to mutual savings banks that meet requirements prescribed by Presidential Decree, including financial soundness, etc., for the protection of customers, etc.);
16. Business activities incidental to those referred to in subparagraphs 1 through 15 or those required for achieving the purposes under Article 1, which are authorized by the Financial Services Commission.
(2) The minimum maintenance ratio of the aggregate of credit extensions to private individuals and small and medium enterprises within a business area to the amount of total credit, and further details to be observed otherwise by mutual savings banks in carrying out its business activities under paragraph (1) shall be prescribed by Presidential Decree.
(3) Each mutual savings bank shall facilitate convenience in financial services for ordinary citizens and small and medium enterprises in compliance with this Act and orders issued pursuant to this Act in carrying out its business activities under paragraph (1).
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 12 (Limits on Extension of Credit to Individual Borrowers)
(1) A mutual savings bank may not extend credit to any individual borrower in excess of the limits prescribed by Presidential Decree within the extent of 20/100 of its equity capital, and the aggregate of credit extensions to an individual borrower extended by any mutual savings bank which is affiliated with the former and thus subject to the consolidated financial statement (hereinafter referred to as "same affiliated mutual savings bank"), as prescribed by the Financial Services Commission, shall not exceed the limits prescribed by Presidential Decree within the extent of 20/100 of its equity capital under the consolidated financial statement.
(2) The aggregate of large credit extensions to an individual borrower (excluding persons prescribed by Presidential Decree) may not exceed five times the equity capital of a mutual savings bank.
(3) No mutual savings bank may extend credit to any identical borrower in excess of the limits prescribed by Presidential Decree within the extent of 25/100 of its equity capital, and the aggregate of credit extensions to an identical borrower extended by a same affiliated mutual savings bank shall not exceed the limits prescribed by Presidential Decree within the extent of 25/100 of its equity capital under the consolidated financial statement.
(4) Paragraphs (1) through (3) shall not apply to the following cases as prescribed by Presidential Decree:
1. Where it is necessary for improving the national economy or raising the effectiveness in securing claims of a mutual savings bank or a same affiliated mutual savings bank;
2. Where a change in the equity capital of a mutual savings bank or a same affiliated mutual savings bank, a change in the composition of an identical borrower, or any other cause or event has caused the mutual savings bank or the same affiliated mutual savings bank to exceed the limits under paragraphs (1) through (3), although the bank has not extended additional credit;
3. Where a mutual savings bank or a same affiliated mutual savings bank extends the amount of credit which is directly required for the State, local governments, or public agencies prescribed by Presidential Decree in carrying out a local development project prescribed by Presidential Decree.
(5) In cases where a mutual savings bank or a same affiliated mutual savings bank happens to exceed the limits under paragraphs (1) through (3) due to a cause or event under paragraph (4) 2, the bank shall make efforts to comply with the limits within one year from the day on which it exceeds such limits.
(6) If there are unavoidable circumstances due to the maturity and amount, etc. of credit extended, a mutual savings bank or a same affiliated mutual savings bank may extend the period of time, notwithstanding paragraph (5), subject to the approval of the Financial Services Commission.
(7) A mutual savings bank or a same affiliated mutual savings bank that desires to obtain approval under paragraph (6) shall submit a detailed plan of its efforts to comply with the limits under paragraphs (1) through (3), no later than three months before the end of the period under paragraph (5), to the Financial Services Commission, and the Financial Services Commission shall make a decision as to whether to grant approval of the detailed plan within one month from the day on which the plan is submitted and shall notify the bank of its decision.
(8) The limits on credit extension of a same affiliated mutual savings bank shall be managed by a mutual savings bank which shall prepare the consolidated financial statement (hereinafter referred to as "holding mutual savings bank"), and the holding mutual savings bank may require the same affiliated mutual savings banks to submit data concerning the current state of their credit extensions within the scope of management purpose of their credit extension limits.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 12-2 (Prerequisites, etc. for Acquisition of Stocks Issued by Large Shareholders)
(1) A mutual savings bank shall, when it intends to acquire stocks issued by any of its large shareholders (including their specially related persons; the same shall apply hereafter in this Article and Articles 12-3 and 22-4) and with a value equivalent to or more than the amount prescribed by Presidential Decree, refer the case to its board of directors for resolution. In such cases, such resolution shall be adopted by the board of director with an affirmative vote of all incumbent directors.
(2) A mutual savings bank shall, when it acquires stocks issued by any of its large shareholders with a value equivalent to or more than the amount prescribed by Presidential Decree, report the fact to the Financial Services Commission forthwith, and shall disclose it to the public through its Internet homepage or any similar means.
(3) Each mutual savings bank shall submit quarterly reports on matters prescribed by Presidential Decree which are compiled from among the matters subject to mandatory reporting under paragraph (2), and disclose such reports to the public through its Internet homepage or any similar means.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 12-3 (Prohibition on Undue Influence of Large Shareholders)
No large shareholder of a mutual savings bank shall engage in any of the following conduct for his/her own interest in conflict with the interests of the bank: <Amended by Act No. 13453, Jul. 31, 2015>
1. Demanding the bank to furnish him/her with any material or information undisclosed to the public with an intent to exercise undue influence: Provided, That the cases falling under Article 33 (6) of the Act on Corporate Governance of Financial Companies shall be excluded herefrom;
2. Exercising undue influence over personnel or business management of the bank in collusion with other shareholders on condition that they paid back with economic interests or any other consideration;
3. Any other conduct which is similar to an act under subparagraph 1 or 2 and shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 13 (Credit Screening Committees, etc.)
(1) Each mutual savings bank (only applicable to mutual savings banks that meet criteria prescribed by Presidential Decree in consideration of the size of assets, etc.) shall establish and operate a credit screening committee and a department in charge of supervision of credit screening and credit management in order to ensure the soundness of credit, etc.
(2) The composition and method for the operation of the credit screening committee and the supervisory department under paragraph (1) and other necessary matters shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12100, Aug. 13, 2013]
 Article 14 (Obligations to Explain)
(1) Where a mutual savings bank solicits customers to enter into a contract for a bond which ranks after other debts (hereinafter referred to as "subordinated bond"), such as a deposit, and a financial transaction prescribed by Presidential Decree, it shall explain the following to customers for their understanding:
1. Whether the insurance relationship under Article 29 (1) of the Depositor Protection Act is established;
2. The limits of insurance money under Article 32 (2) of the Depositor Protection Act;
3. Other matters prescribed by Presidential Decree for the protection of customers, the maintenance of credit order, etc.
(2) Each mutual savings bank shall receive confirmation that a customer has understood the content it has explained pursuant to paragraph (1) by at least one method among a signature, signature and sealing, recording and other methods prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12100, Aug. 13, 2013]
 Article 15 (Retaining Assets for Reserves)
Each mutual savings bank shall retain assets for reserve in the form of cash, deposits in financial institutions, deposits in the Korea Federation of Savings Banks under Article 25, or securities prescribed by Presidential Decree, as prescribed by the Financial Services Commission, within the limit of 50/100 of total amount of installment savings, deposits, and installment deposits received from customers.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 16 Deleted. <by Act No. 5738, Feb. 1, 1999>
 Article 17 (Restriction on Borrowings)
No mutual savings bank may borrow loans in excess of its equity capital: Provided, That the foregoing shall not apply in cases where it has obtained approval from the Financial Services Commission for such excessive borrowings.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 18 (Management of Surplus Funds)
Each mutual savings bank shall, whenever it has any surplus funds, manage the funds in any of the following methods:
1. By depositing the funds in any financial institutions designated and publicly notified by the Financial Services Commission;
2. By purchasing securities determined by the Financial Services Commission;
3. By depositing the funds in the Korea Federation of Savings Banks under Article 25;
4. By depositing the funds in any of the ways prescribed by the Financial Services Commission.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 18-2 (Prohibited Activities)
(1) No mutual savings bank may engage in any of the following activities: <Amended by Act No. 12100, Aug. 13, 2013>
1. Investing in securities (excluding securities acquired by exercising a security right and securities prescribed by the Financial Services Commission in consideration of the stability of investment, the possibility of securitization within a short term, and the necessity of support for credit recovery or restructuring, etc.) in excess of its equity capital. In such cases, the Financial Services Commission may specially prescribe the limits of investment for each class of securities to ensure the sound management of mutual savings banks in consideration of the size of equity capital, etc.;
2. Owning any real estate other than real estate for business purposes: Provided, That this shall not apply to the acquisition of real estate by exercising its security rights;
3. Providing any guarantee for an obligation or offering any security (excluding provision of guarantee for an obligation or offering any security prescribed by Presidential Decree, as having significantly low credit risks in providing such guarantee or offering the security);
4. Extending credit, in a direct or indirect manner, for making the borrower purchase stocks of the mutual savings bank, or extending credit secured by the securities of the mutual savings bank;
5. Extending credit for speculating on products or securities;
6. Extending credit using another person's name;
7. Providing large shareholders under Article 37 (1) with money, services, or any other monetary gains without justifiable grounds: Provided, That Article 37 shall govern any prohibition of credit extension or provisional payment to large shareholders, etc.;
8. Extending credit, the total of which prescribed by Presidential Decree to a person prescribed by Presidential Decree participating in the same real estate development and supply project, the main financial resources for the repayment of which are earnings generated from the relevant real estate development and supply project, exceeds the limits prescribed by Presidential Decree within 25 percent of its equity capital;
9. Offering or selling subordinated bonds: Provided, That this shall not apply where a mutual savings bank that meets requirements prescribed by Presidential Decree, including financial soundness, offers or sells subordinated bonds by entrusting the offering or sale of subordinated bonds to a financial investment business operator who has obtained approval for conducting an investment intermediary business of debt securities pursuant to Article 12 of the Financial Investment Services and Capital Markets Act;
10. Issuing subordinated bonds by private offering intended for ordinary investors (excluding large shareholders prescribed by Presidential Decree) under Article 9 (6) of the Financial Investment Services and Capital Markets Act;
11. Suspending the whole or part of business due to reasons not corresponding to any of the following:
(a) Relocation or closure of the principal office, a branch office, etc.;
(b) Suspension of the whole or part of business under this Act or Acts and subordinate statutes related to finance;
(c) Occurrence of a natural disaster, war, incident or other situation corresponding thereto.
(2) No mutual savings bank in the same affiliation shall engage in any of the following activities: <Newly Inserted by Act No. 12100, Aug. 13, 2013>
1. Investing in securities (excluding securities acquired by exercising a security right and securities prescribed by the Financial Services Commission in consideration of the stability of investment, the possibility of securitization within a short term, and the necessity of support for credit recovery or restructuring, etc.) in excess of its equity capital according to consolidated financial statements. In such cases, the Financial Services Commission may specially prescribe the limits of investment for each class of securities for the sound management of mutual savings banks in consideration of the size of equity capital, etc. according to consolidated financial statements;
2. Extending credit, the total of which prescribed by Presidential Decree to a person prescribed by Presidential Decree participating in the same real estate development and supply project, the main financial resources for the repayment of which are earnings generated from the relevant real estate development and supply project, exceeds the limits prescribed by Presidential Decree within 25 percent of its equity capital according to consolidated financial statements.
(3) Where a mutual savings bank or another mutual savings bank in the same affiliation exceeds the limits under paragraphs (1) and (2) due to reasons prescribed by Presidential Decree, including a change in its equity capital, it shall meet the limits within one year from the date it exceeds the limits: Provided, That it may extend such period upon obtaining approval from the Financial Services Commission under inevitable circumstances in consideration of the size of securities, the period of investment, etc. <Newly Inserted by Act No. 12100, Aug. 13, 2013>
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 18-3 (Amendment, etc. of Terms and Conditions)
(1) Each mutual savings bank shall protect the rights and interests of financial users and, when it enacts or amends any terms and conditions on financial transactions (hereinafter referred to as "terms and conditions"), report such to the Financial Services Commission beforehand: Provided, That in any of the following cases, a mutual savings bank shall make a report to the Financial Services Commission within ten days from the date on which any terms and conditions are newly made or amended:
1. When the bank changes terms and conditions in respect of matters which have no connection with the rights and duties of financial users;
2. When the bank uses the standard terms and conditions under paragraph (3) without any changes thereto;
3. When the contents of the terms and conditions to be enacted or amended are the same as those already reported to the Financial Services Commission by another mutual savings bank;
4. When the bank changes any terms and conditions or the standard terms and conditions in compliance with an order to change issued under paragraph (6).
(2) Each mutual savings bank shall, whenever it enacts or amends its terms and conditions, make them public on its Internet homepage, etc.
(3) In order to establish sound trade rules and prevent unfair terms and conditions from being widely used, the Chairperson of the Korea Federation of Savings Bank (which means the Korea Federation of Savings Bank established under Article 25; the same shall apply hereafter in this Article) may enact or amend standard terms and conditions which might serve as criteria for financial transactions in the mutual savings bank business (hereinafter referred to as the "standard terms and conditions").
(4) The Chairperson of the Korea Federation of Savings Bank shall, whenever he/she enacts or amends the standard terms and conditions, report such to the Financial Services Commission beforehand.
(5) The Financial Services Commission shall notify the Fair Trade Commission of the terms and conditions or the standard terms and conditions reported under paragraph (1) or (4). In such cases, if the Fair Trade Commission acknowledges that the terms and conditions or the standard terms and conditions so reported violate any provision of Articles 6 through 14 of the Act on the Regulation of Terms and Conditions, it may notify the Financial Services Commission thereof and require the Commission to take measures necessary for correcting such violation(s), and the Commission shall comply with the request absent any extraordinary circumstances.
(6) If the Financial Services Commission acknowledges that any terms and conditions or the standard terms and conditions violate this Act or other finance-related Acts and subordinate statutes, or might undermine the interests of financial users otherwise, it may order the relevant mutual savings bank or the Chairperson of the Korea Federation of Savings Bank to amend the terms and conditions or the standard terms and conditions in written form detailing the violation or such. In such cases, the Financial Services Commission shall consult with the Fair Trade Commission before issuing such order for amendment.
[This Article Newly Inserted by Act No. 10175, Mar. 22, 2010]
 Article 18-4 (Criteria, etc. for Management of Collective Investment Assets)
(1) Where a private offering collective investment scheme falls under any of the following when a mutual savings bank manages assets, it shall comply with criteria prescribed by Presidential Decree, such as the method for managing assets necessary for the sound management of assets:
1. Where beneficiaries, shareholders, partners, employees, etc. of a private offering collective investment scheme (hereinafter referred to as "private offering collective investment scheme") as defined in Article 9 (19) of the Financial Investment Services and Capital Markets Act are only comprised of the relevant mutual savings bank and persons specially related to it;
2. Where the percentage of collective investment securities (hereinafter referred to as "percentage of investment") held by the mutual savings bank among collective investment securities (hereinafter referred to as "collective investment securities") as defined in Article 9 (21) of the Financial Investment Services and Capital Markets Act issued by a private offering collective investment scheme is at least 50 percent;
3. Where a private offering collective investment scheme manages assets by a money trust contract, the method of management of which is designated by the mutual savings bank;
4. Other cases prescribed by Presidential Decree, corresponding to those referred to in subparagraphs 1 through 3.
(2) When the following subparagraphs are applied, assets, trusted assets, etc. of a private offering collective investment scheme under each subparagraph of paragraph (1) shall be deemed assets held by a mutual savings bank or another mutual savings bank in the same affiliation to which the mutual saving bank belongs according to the percentage of investment, etc. of the relevant mutual savings bank in assets, trusted assets, etc. of the relevant private equity fund:
1. The limits of credit extension under Article 12 (1) through (3);
2. The limits of investment in securities under Article 18-2 (1) 1 and (2) 1;
3. Other matters prescribed by Presidential Decree, related to the management of assets, the soundness of management, etc. of the mutual savings bank.
(3) Detailed criteria for the scope and size of assets which are deemed held by a mutual savings bank or another mutual savings bank in the same affiliation pursuant to paragraph (2) shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12100, Aug. 13, 2013]
 Article 18-5 (Advertising of Financial Instruments of Mutual Savings Banks)
(1) Where a mutual savings bank advertises financial instruments it deals in, such as deposits, loans and subordinated bonds, (hereinafter referred to as "financial instruments of a mutual savings bank"), it shall include its name, the content of financial instruments of the mutual savings bank, terms of trade, etc. in its advertising.
(2) A mutual savings bank shall specify whether the insurance relationship under Article 29 (1) of the Depositor Protection Act is established, the period for the payment and imposition of interest, etc. in advertising for the reasonable decision-making of customers on financial instruments of the mutual savings bank to prevent customers from misunderstanding the content thereof.
(3) Where any labeling or advertising materials referred to in Article 4 (1) of the Act on Fair Labeling and Advertising are included in an advertisement of financial instruments of a mutual savings bank, said Act shall apply thereto.
(4) The specific content of the terms of trade under paragraphs (1) and (2), and other matters necessary for methods and procedures for advertising shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 12100, Aug. 13, 2013]
 Article 18-6 (Autonomous Deliberation on Advertising)
(1) Where a mutual savings bank intends to advertise the financial instruments it deals in, it shall submit a report on advertising plan and advertising copy to the Korea Federation of Mutual Savings Banks (hereafter in this Article referred to as the "Korea Federation") under Article 25 for deliberation.
(2) Where the Korea Federation finds that the content of an advertisement is different from the fact or that a mutual savings bank intends to advertise its financial instruments in violation of Article 18-5, as a result of deliberation, the Korea Federation may request the relevant mutual savings bank to correct or stop using such advertisement. In such cases, unless there is a justifiable ground, the relevant mutual savings bank shall conscientiously comply with the request of the Korea Federation.
(3) The Korea Federation shall report the result of deliberation on advertisements for each quarter to the Financial Services Commission within one month from the end of the relevant quarter.
[This Article Newly Inserted by Act No. 12100, Aug. 13, 2013]
 Article 18-7 (Duty of Taking Measures to Protect Employees Providing Face-to-Face Customer Service)
(1) A mutual savings bank shall take any of the following measures to protect its employees who provide face-to-face customer service from verbal abuse, sexual harrassment, assault, etc. committed by customers:
1. Separation of an employee from a customer at issue and replacement of him/her with other persons for the service, where the employee requests so;
2. Assistance in medical treatments and counselling for employees;
3. Establishment of a standing body for distress-handling for employees who provide face-to-face customer service: Provided, That the bank shall appoint or commission a distress-handling committee member for employees who provide face-to-face customer service, where a distress-handling committee member is appointed pursuant to Article 26 of the Act on the Promotion of Workers’ Participation and Cooperation;
4. Other measures prescribed by Presidential Decree, such as legal measures necessary for the protection of employees.
(2) An employee may request a mutual savings bank to take measures referred to in the subparagraphs of paragraph (1).
(3) A mutual savings bank shall not impose any disadvantage on an employee for a request that he/she made under paragraph (2).
[This Article Newly Inserted by Act No. 14125, Mar. 29, 2016]
 Article 19 (Disposal of Income)
(1) Each mutual savings bank shall accumulate at least 10/100 of its income earned each year as a reserve until the reserve becomes equivalent to the total amount of its capital.
(2) The reserve under paragraph (1) may not be spent, except for setting off its losses and transferring it to capital.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 20 Deleted. <by Act No. 5738, Feb. 1, 1999>
 Article 21 (Dissolution)
A mutual savings bank shall be dissolved if any of the following events occurs:
1. When the business license under Article 24 (2) is revoked;
2. When a merger under Article 10 (1) 1 occurs or when the business is entirely discontinued or transferred in accordance with subparagraph 2 of the said paragraph;
3. When contracts are entirely transferred in accordance with Article 24-9 (3), 24-11 (1), or 24-15 (2);
4. When contracts are transferred in accordance with Article 14 (2) of the Act on the Structural Improvement of the Financial Industry (applicable only to cases where contracts are entirely transferred) or when the business is entirely transferred in accordance with Article 26 of the said Act.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
CHAPTER III SUPERVISION
 Article 22 (Supervision)
(1) Each mutual savings bank shall be subject to the supervision of the Financial Services Commission.
(2) The Financial Services Commission may, when it acknowledges that customers' rights and interests might be undermined, issue an order to a mutual savings bank as may be necessary for supervision.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 22-2 (Standards for Soundness in Business Management)
(1) The Financial Services Commission may establish the following standards for soundness in business management, as prescribed by Presidential Decree, in order to guide mutual savings banks for healthier management and prevent financial accidents:
1. Standards for financial soundness;
2. Standards for grading of asset soundness;
3. Standards for accounting and settlement of accounts;
4. Standards for risk management;
5. Standards for liquidity.
(2) Each mutual savings bank shall comply with the standards for soundness in business management under paragraph (1) in carrying out business affairs under Article 11.
(3) The Financial Services commission may analyze and evaluate the actual status of management of mutual savings banks for the observance of standards for soundness in business management under paragraph (2) by mutual savings banks and the assurance of soundness in the management of mutual savings banks. <Newly Inserted by Act No. 12100, Aug. 13, 2013>
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 22-3 Deleted. <by Act No. 13453, Jul. 31, 2015>
 Article 22-4 (Requests, etc. to Mutual Savings Banks, etc. for Data)
(1) Where the Financial Services Commission deems that a mutual savings bank or its large shareholder, etc. under Article 37 (1) is suspected of violating Article 12-2, 12-3, or 37, it may request the mutual savings bank or its large shareholder, etc. under Article 37 (1) to submit necessary data. <Amended by Act No. 12100, Aug. 13, 2013>
(2) Where it is anticipated that the bad financial structure of a mutual savings bank, due to liabilities of a large shareholder (only applicable to where the large holder is a company) exceeding its assets, is likely to significantly undermine the soundness in business management of the bank, in cases prescribed by Presidential Decree, the Financial Services Commission take the following measures against the bank:
1. Prohibition on new acquisition of securities issued by large shareholders;
2. Other measures prescribed by Presidential Decree, including restriction on transactions with large shareholders in the nature of financial aid.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 22-5 (Submission of Business Reports, etc.)
(1) Each mutual savings bank shall submit a monthly report stating the business activities conducted for the relevant month to the Governor of the Financial Supervisory Service established under the Act on the Establishment, etc. of Financial Services Commission (hereinafter referred to as “Governor of the Financial Supervisory Service”) by the end of the following month, as prescribed by the Governor of the Financial Supervisory Service. <Amended by Act No. 13453, Jul. 31, 2015>
(2) The report under paragraph (1) shall be signed or affixed with a seal by the representative of a mutual savings bank, or the person in charge or his/her agent.
(3) Each mutual savings bank shall submit data requested by the Financial Services Commission or the Governor of the Financial Supervisory Service in order for it or him/her to exercise supervision or conduct inspections. <Newly Inserted by Act No. 12100, Aug. 13, 2013>
[This Article Newly Inserted by Act No. 10175, Mar. 22, 2010]
 Article 22-6 (Inspection, etc. of Large Shareholders)
(1) Where the Governor of the Financial Supervisory Service deems that a large shareholder of a mutual savings bank is suspected of violating Article 12-3, he/she may require an employee under his/her command to inspect the business and property of the relevant large shareholder to a minimum extent necessary for such purpose.
(2) Where the Governor of the Financial Supervisory Service deems that a person referred to in Article 37 (1) 1 and 2 is suspected of violating paragraphs (1) through (3) of the same Article, he/she may require an employee under his/her command to inspect the business and property of the relevant person to a minimum extent necessary for such purpose.
(3) Article 23 (2) and (3) shall apply mutatis mutandis to inspections under paragraphs (1) and (2).
[This Article Newly Inserted by Act No. 12100, Aug. 13, 2013]
 Article 23 (Inspections)
(1) The Governor of the Financial Supervisory Service may assign his/her employees to conduct an inspection on the business activities and assets of a mutual savings bank.
(2) The Governor of the Financial Supervisory Service may request a mutual savings bank to submit a report on its business activities or assets or submit data, or require a relevant person to appear before him/her to make statements if deemed necessary for the inspection under paragraph (1).
(3) Each person who conducts an inspection under paragraph (1) shall carry a certificate indicating his/her authority with him/her and present it to relevant persons.
(4) The Governor of the Financial Supervisory Service may request an external auditor appointed by a mutual savings bank pursuant to the Act on External Audit of Stock Companies to submit information he/she has become aware of in the course of auditing such mutual savings bank or other data related to the soundness of business management in writing to a minimum extent necessary for the purpose of use. <Newly Inserted by Act No. 12100, Aug. 13, 2013>
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 23-2 (Disclosure of Business Management)
Each mutual savings bank shall disclose to the public matters prescribed by Presidential Decree as necessary for protecting customers and maintaining a good credit system, as determined by the Financial Services Commission.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 23-3 (Report of Illegal Acts and Protection of Reporters)
(1) Any person who comes to know any violation of this Act or who is forced or proposed to commit such violation may report or blow the whistle thereon to the Financial Services Commission or the Governor of the Financial Supervisory Service, as prescribed by Presidential Decree.
(2) The Financial Services Commission or the Governor of the Financial Supervisory Service (if the report or whistle-blowing is made by an executive or employee of a mutual savings bank, including such executive or employee) that receives a report or information as prescribed in paragraph (1) shall respect the confidentiality of the identity of such reporter or whistle-blower (hereafter referred to as "reporter, etc." in this Article) or other relevant information.
(3) No agency, organization, or company whereto a reporter, etc. belongs shall treat, in any direct or indirect manner, such reporter, etc. unfavorably because of the report or whistle-blowing.
(4) The Financial Services Commission or the Governor of the Financial Supervisory Service may grant reward money to a reporter, etc. as prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10175, Mar. 22, 2010]
 Articles 23-4 through 23-9 Deleted. <by Act No. 5050, Dec. 29, 1995>
 Article 23-10 Deleted. <by Act No. 5738, Feb. 1, 1999>
 Article 23-11 (Liquidation)
(1) The Financial Services Commission shall, when a mutual savings bank is dissolved due to any of the following reasons, appoint a liquidator for such bank:
1. Approval on the transfer of contracts under Article 24-9 (3), or a decision under Article 24-11 (1) or 24-15 (2);
2. Revocation of the business license under Article 24 (2).
(2) A liquidator shall, immediately upon his/her inauguration, inspect the current status of assets of the mutual savings bank concerned, prepare a list of assets and a balance sheet for approval by a general meeting of its shareholders. The foregoing shall also apply to a report on settlement of accounts at the time the procedures for the liquidation are completed.
(3) In cases under paragraph (2), if the general meeting of shareholders is not duly formed although it has been called two or more times, or a liquidator fails to obtain approval from the general meeting of shareholders, the approval of the Financial Services Commission at the liquidator's request shall be deemed the approval of the general meeting of shareholders.
(4) The Financial Services Commission may, when it appoints a liquidator for a mutual savings bank, require the bank to pay remuneration for the liquidator.
(5) The Financial Services Commission may, in its discretion or at the request of an interested party, dismiss a liquidator, if necessary.
(6) Except as otherwise expressly provided for in this Act, the provisions of the Commercial Act relating to liquidation shall apply mutatis mutandis to the liquidation of a mutual savings bank.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24 (Administrative Dispositions)
(1) If a mutual savings bank or its executives or employees fall under any subparagraph of attached Table 1 or any subparagraph of attached Table of the Act on Corporate Governance of Financial Companies (limited to the measures falling under subparagraph 5), the Financial Services Commission may take any of the following measures: <Amended by Act No. 13453, Jul. 31, 2015; Act No. 14822, Apr. 18, 2017>
1. Issuing a caution or warning to the mutual savings bank or demanding the bank to issue a caution, warning, or reprimand to the executives or employees concerned;
2. Issuing an order to correct such a violation;
3. Recommending the bank to remove the relevant executive (excluding operating officers under subparagraph 5 of Article 2 of the Act on Corporate Governance of Financial companies; hereafter the same applies in Article 35-3) or suspend the performance of his/her duties;
4. Recommending the Federation to dismiss the relevant employee (including an operating officer under subparagraph 5 of Article 2 of the Act on Corporate Governance of Financial Companies; hereinafter the same applies in Article 35-3);
5. Suspending its business partially for a prescribed period of up to six months.
(2) If a mutual savings bank falls under any of the following cases, the Financial Services Commission may issue an order to suspend its business completely for a prescribed period of up to six months or revoke its business license: <Newly Inserted by Act No. 12100, Aug. 13, 2013; Act No. 13453, Jul. 31, 2015>
1. If the bank obtains the business license by fraudulent or other illegal means;
2. If its equity capital has been completely impaired by deficits;
3. If the bank engage in an activity under any subparagraph of Article 10 (1) without approval;
4. If the bank fails to comply with an order issued pursuant to paragraph (1) 2 for corrective measures;
5. If the bank continues its business during the business suspension period;
6. If the bank falls under any of the subparagraph of attached Table of the Act on Corporate Governance of Financial Companies;
7. If the bank engage in an activity falling under Article 18-2 (1) 11;
8. Other cases where the bank violates statutes or articles of incorporation or is likely to harm the public interest significantly due to its poor financial status or business management.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
CHAPTER III-2 NORMALIZATION OF MANAGEMENT OF INSOLVENT MUTUAL SAVINGS BANKS
 Article 24-2 (Business Guidance, etc.)
(1) Where a mutual savings bank falls under any of the following, the Financial Services Commission may provide business guidance for the protection of customers, including depositors, etc., the normalization of management and the preservation of property of the mutual savings bank. In such cases, the Financial Services Commission may require the Governor of the Financial Supervisory Service and the President of Korea Deposit Insurance Corporation established under Article 3 of the Depositor Protection Act (hereinafter referred to as “Korea Deposit Insurance Corporation”) to dispatch its employees to the principal office, a branch office, etc. of the mutual savings bank and require them to reside there and jointly provide business guidance: <Amended by Act No. 12100, Aug. 13, 2013; Act No. 13453, Jul. 31, 2015>
1. If an inspection under Article 23 (1) reveals that the bank has extended credit to an individual borrower in excess of the limit, extended a large amount of credit illegally, or extended credit to a large shareholder, as prescribed by Presidential Decree;
2. If any of its executives becomes subject to a disposition under Article 24 (1) 1 or 3 (which shall be limited only to a disposition prescribed by Presidential Decree);
3. If it is deemed necessary to provide business guidance as a result of the inspection under Article 23 (1);
4. If the mutual savings bank becomes subject to a prompt corrective action pursuant to Article 10 of the Act on the Structural Improvement of the Financial Industry;
5. Other cases prescribed by Presidential Decree, where it is likely to interfere with the rights and interests of customers and credit order, such as the occurrence of bank runs.
(2) Matters necessary in relation to the prerequisites, method, time period, and procedure for the business guidance under paragraph (1) and other matters shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-3 (Business Administration)
(1) If a mutual savings bank falls under any of the following circumstances, the Financial Services Commission may appoint an administrator forthwith to assign him/her to administer the business of the bank:
1. When it is found as a result of the inspection under Article 23 (1) that the illegal or non-performing credit extended by the mutual savings bank is likely to completely impair its capital and it is deemed difficult for the bank to promote business normalization on its own because it is not possible to collect such within a short period of time in an ordinary manner;
2. When there is any ground to revoke its business license under Article 24 (2) and the business administration is necessary for protecting depositors;
3. When it is deemed necessary to correct its business practices through business administration because the bank has been subject to the business guidance for a long time or repeatedly, or an order to take corrective measures against the bank was issued because of its violation of this Act, but the bank has not taken corrective measures within a reasonable period of time;
4. When it is deemed necessary to subject the bank to business administration for protecting depositors because it has repeatedly extended credit or cross-extended credit as defined in Article 37 (1) or (2) to a person falling under any subparagraph of paragraph (1) of the said Article or the amount of credit extended to such person is excessive.
(2) Further specific conditions required for the business administration under paragraph (1) 1, 3, and 4 shall be prescribed by Presidential Decree.
(3) Once the business administration under paragraph (1) commences, the administrator shall inspect the current status of assets (hereinafter referred to as "actual inspection of assets") of the mutual savings bank forthwith.
(4) The term for the business administration shall not exceed six months, but may be extended only once within the limit of six months, if the Financial Services Commission deems it inevitable for promoting business normalization: Provided, That the term for the business administration may be extended until a bankruptcy administrator is appointed in accordance with Article 355 of the Debtor Rehabilitation and Bankruptcy Act, in cases where an application for bankruptcy has been filed in accordance with Article 24-13.
(5) A mutual savings bank that becomes subject to business administration under paragraph (1) shall issue public notice of the substance of the business administration forthwith as prescribed by Presidential Decree.
(6) Articles 14-3 (2) and 14-6 (1) and (2) of the Act on the Structural Improvement of the Financial Industry shall apply mutatis mutandis to the appointment of an administrator under paragraph (1).
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-4 (Suspension of Payments, etc.)
(1) When the business administration under Article 24-3 (5) is publicly notified, payments for all obligations (excluding cases prescribed by Presidential Decree, such as taxes and public dues), executives' execution of duties, and transfer of shares held by shareholders shall be suspended simultaneously.
(2) If it is found, as a result of the actual inspection, that there exists any ground prescribed by Presidential Decree, such as the case where the business of the mutual savings bank concerned can be normalized, the Financial Services Commission may partially or completely lift the suspension under paragraph (1).
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-5 (Authority, etc. of Administrator)
(1) Any person who has an interest in or is specially related to a mutual savings bank may not be appointed as the administrator of such bank.
(2) Each administrator shall have the authority to carry out the business affairs of the mutual savings bank subject to the business administration and manage and dispose of its assets. In this case, the administrator may not assert his/her authority against a third party in performing any legal act such as disposition of assets of the bank, unless and until he/she completes registration under Article 24-6.
(3) Each administrator may, if necessary for securing claims for illegal and non-performing credit extensions, investigate into the assets of a person who is jointly liable for the obligations relating to deposits and similar in accordance with Article 37-3, a person who is liable for damage under Article 399 (1) or 414 (1) of the Commercial Act, or an obligor to take measures as may be necessary, including an application for provisional attachment.
(4) Each administrator may demand an executive or a large shareholder of the mutual savings bank concerned to submit a scheme for business normalization of the bank, including schemes for increasing capital and offering assets as additional security, within a prescribed period of not less than two weeks, but not exceeding one month.
(5) Each administrator shall, whenever he/she performs any act within the extent of his/her authority, indicate that such act is performed for the mutual savings bank subject to the business administration.
(6) An act performed without making the indication under paragraph (5) shall be deemed to be an act done for his/her own interest.
(7) The Financial Services Commission may, if deemed necessary, dismiss an administrator.
(8) Article 35 (1) of the Civil Act, 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 the administrators. In such cases, the term "court" in Articles 30 and 360 through 362 of the Debtor Rehabilitation and Bankruptcy Act shall be construed as the "Financial Services Commission."
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-6 (Notice and Registration of Business Administration)
(1) The Financial Services Commission shall, when it initiates the business administration pursuant to Article 24-3, notify its action forthwith to the district court having jurisdiction over the address of the principal office of the mutual savings bank subject to the business administration, and shall request the registry office having jurisdiction over the addresses of the principal office and branch offices to register the details of its action.
(2) Registry offices shall, upon receiving the request under paragraph (1), register such details forthwith.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-7 (Cessation of Business Administration)
(1) The Financial Services Commission shall, when the business administration is no longer required because the conditions required for the business administration under Article 24-3 have been eliminated and it is deemed possible for the mutual savings bank concerned to promote business normalization of its own accord, shall terminate it immediately.
(2) Article 24-6 shall apply mutatis mutandis to a notification of cessation of business administration and a registration under paragraph (1).
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-8 (Demand for Transfer of Contracts)
(1) The Financial Services Commission shall, when it is found as a result of the actual inspection of assets of a mutual savings bank that it is impossible for the bank to fully perform its obligations with its assets and thus the bank falls under any of the following subparagraphs, designate a person who shall take over contracts (hereinafter referred to as "transfer of contracts") and demand the bank to transfer them to the person:
1. If a mutual savings bank wishes to take over contracts:
2. If it is deemed more desirable to transfer contracts, rather than the bank going bankrupt according to the standards prescribed by Presidential Decree.
(2) A mutual savings bank that wishes to take over contracts of another mutual savings bank in accordance with paragraph (1) shall file an application with the Financial Services Commission for such designation.
(3) The standards and procedure for the designation under paragraph (2) shall be prescribed by Presidential Decree.
(4) Article 24-3 (5) shall apply mutatis mutandis to a public notice of the demand for transfer of contracts under paragraph (1).
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-9 (Agreement and Approval on Transfer of Contracts)
(1) A mutual savings bank shall, when it is demanded to transfer its contracts in accordance with Article 24-8 (1), enter into an agreement with the designated mutual savings bank for the transfer of contracts (hereafter referred to as "agreement").
(2) Both mutual savings banks that intend to enter into the agreement shall pass a resolution under Article 434 of the Commercial Act (or consent of two-thirds of all partners, if either party involved is a limited partnership company).
(3) When the agreement is duly made, both mutual savings banks shall obtain approval on the transfer of contracts from the Financial Services Commission forthwith.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-10 (Requests, etc. for Financial Aid)
(1) The Financial Services Commission may, if deemed necessary to provide financial aid in designating a mutual savings bank to take over contracts in accordance with Article 24-8 (2), request the Korea Deposit Insurance Corporation to determine the substance, terms, and conditions of the financial aid pursuant to Article 38 of the Depositor Protection Act.
(2) The Korea Deposit Insurance Corporation shall, upon receiving request under paragraph (1), determine the substance, terms, and conditions of the financial aid forthwith and notify the Financial Services Commission of its determination.
(3) The Financial Services Commission may, if deemed necessary for granting approval under Article 24-9 (3) or making a decision under Article 24-11 (1), determine the substance, terms, and conditions of the financial aid within the maximum limit notified by the Korea Deposit Insurance Corporation in accordance with paragraph (2), notwithstanding Article 38 of the Depositor Protection Act.
(4) The Financial Services Commission may, when a financial aid is deemed necessary because there is a run on any mutual savings bank or such run is likely to occur on any mutual savings bank, request the Korea Federation of Savings Banks under Article 25 to provide financial aid to the mutual savings bank.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-11 (Decision on Transfer of Contracts)
(1) The Financial Services Commission may, when a mutual savings bank that has received a demand for the transfer of contracts under Article 24-8 and another mutual savings bank that was designated as a person who shall take over the contracts fail to reach an agreement or did not negotiate for such an agreement, make a decision on the transfer of such contracts.
(2) In making a decision on the transfer of contracts pursuant to paragraph (1), the Financial Services Commission shall, if the substance and the terms and conditions of the financial aid required for the mutual savings bank that shall take over contracts exceeds the maximum limit of the substance, terms, and conditions notified by the Korea Deposit Insurance Corporation in accordance with Article 24-10 (2), consult with the Korea Deposit Insurance Corporation in advance.
(3) The Financial Services Commission shall, when it makes a decision under paragraph (1), notify both mutual savings banks and the Korea Deposit Insurance Corporations of the details of its decision.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-12 (Effectiveness and Public Notice of Transfer of Contract)
(1) The transfer of contracts shall become effective when approval under Article 24-9 (3) is granted or a decision is made under Article 24-11 (1).
(2) A mutual savings bank that has obtained approval or has been notified of a decision in accordance with paragraph (1) shall publicly notify the purposes and abstract of the approval or decision on the transfer of contracts respectively, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-13 (Application for Bankruptcy)
The Financial Services Commission may, when it is discovered as a result of an actual inspection of assets of a mutual savings bank under business administration pursuant to Article 24-3 that the bank is unable to fully perform its obligations with its assets, but does not fall under any subparagraph of Article 24-8 (1) or the bank fails to obtain an approval under Article 24-9 (3) or a decision under Article 24-11 (1), file an application for bankruptcy with the district court having jurisdiction over the address of the principal office of the bank in its own discretion or upon recommendation by the Korea Deposit Insurance Corporation.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-14 (Nomination of Auditor)
If any of the events prescribed in Presidential Decree occurs to a mutual savings bank that shall receive an external audit in accordance with the Act on External Audit of Stock Companies, the Financial Services Commission may request the Securities and Futures Commission under Article 19 of the Act on the Establishment, etc. of Financial Services Commission to nominate an auditor for the bank pursuant to Article 4-3 of the Act on External Audit of Stock Companies. <Amended by Act No. 13453, Jul. 31, 2015>
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 24-15 (Coordination in Promotion of Business Normalization)
(1) The Financial Services Commission may, when it is deemed necessary for protecting depositors and establishing a sound credit system, recommend or arrange the transfer of business or stocks or a merger to the mutual savings bank that is promoting business normalization in accordance with Articles 24-2 through 24-12.
(2) The Financial Services Commission may, if deemed necessary for protecting depositors because the status of the business or assets of a mutual savings bank is significantly unhealthy or any of its executives, employees, or shareholders prescribed by Presidential Decree is likely to conceal its assets, take measures necessary for promoting business normalization, such as making a decision on the transfer of contracts under Article 24-11 (1), filing an application for bankruptcy under Article 24-13, and arranging transfer of business or a merger, without necessarily subjecting the bank to business administration.
(3) Article 24-10 shall apply mutatis mutandis to cases under paragraph (2).
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
CHAPTER IV KOREA FEDERATION OF SAVINGS BANKS
 Article 25 (Establishment)
(1) There shall be established the Korea Federation of Savings Banks (hereinafter referred to as “Federation") for the purposes of promoting the healthier growth of mutual savings banks, encouraging business cooperation between them, establishing a sound credit system, and protecting their customers.
(2) The Federation shall be incorporated as a corporation.
(3) Mutual savings banks shall be eligible for the membership in the Federation.
(4) The Federation shall have the headquarter of business as prescribed by its articles of incorporation and may have branches in any place as required. <Amended by Act No. 13447, Jul. 24, 2015>
(5) The Federation shall be duly formed when it completes registration of incorporation at the location of its principal place of business, as prescribed by Presidential Decree.
(6) The Federation shall have a general meeting and a board of directors, and the management and matters for resolution of the general meeting and the board of directors shall be prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 25-2 (Business)
(1) The Federation shall carry out the following business activities in order to accomplish its purposes as defined in this Act:
1. Conducting research and surveys for the improvement and development of the business of mutual savings banks;
2. Carrying out business activities for encouraging business cooperation between mutual savings banks, establishing a sound credit system, and protecting their customers;
3. Receiving and managing deposits and deposits for reserve from mutual savings banks;
4. Granting loans to mutual savings banks, and purchasing commercial notes possessed or sold by mutual savings banks;
5. Providing mutual savings banks with the guarantee for performance of payment;
6. Providing domestic exchange services and carrying out business affairs commissioned by the State, a public organization, or a financial institution;
7. Offering, underwriting, and selling State bonds and local government bonds under Article 4 (3) of the Financial Investment Services and Capital Markets Act;
8. Establishing and operating subsidiaries for common interests of mutual savings banks or investing in any other corporation;
9. Issuing and managing electronic means for debit payment under the Electronic Financial Transactions Act and carrying out the settlement of payments therefor;
10. Issuing, managing, and selling electronic means for advance payment under the Electronic Financial Transactions Act and carrying out the settlement of payments therefor;
11. Carrying out business affairs entrusted by a national agency, local government, or any other public organization;
12. Carrying out business activities incidental to the business activities under subparagraphs 1 through 11;
13. Carrying out other business activities prescribed by Presidential Decree.
(2) The Federation shall, when it intends to carry out business activities under paragraph (1), prepare an operating manual as prescribed by Presidential Decree and shall obtain approval thereon from the Financial Services Commission. The foregoing shall also apply to any amendment to the manual.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 25-3 (Articles of Incorporation)
(1) The mandatory provisions that shall be included in the articles of incorporation of the Federation shall be prescribed by Presidential Decree.
(2) The Federation shall obtain approval on its articles of incorporation from the Financial Services Commission. The foregoing shall also apply to any amendment to the articles of incorporation.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 25-4 (Executive Officers)
(1) The Federation shall have, as its executives, one Chairperson, one Managing Director, ten or less directors, and one auditor.
(2) The term of each executive of the Federation shall be three years.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 25-5 (Membership Fees)
The Federation may collect membership fees from its members as stipulated by the articles of incorporation.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 25-6 (Accounting Principles)
(1) Accounts of the Federation shall be managed in compliance with the Corporate Accounting Standards.
(2) The Federation shall keep a separate account for receiving and managing the deposits for reserve.
(3) The Financial Services Commission may set specific standards concerning soundness in assets, creation of the reserve for bad debts in connection with the receipt and management of deposits for reserve under paragraph (2).
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Articles 25-7 and 25-8 Deleted. <by Act No. 5738, Feb. 1, 1999>
 Article 25-9 (Borrowings)
The Federation may, whenever necessary for carrying out its business activities, borrow loans subject to the prior approval of the Financial Services Commission, as prescribed by Presidential Decree.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 25-10 (Appointment of Agents)
The Chairperson of the Federation may appoint the Managing Director, a director, or an employee as his/her agent with the delegated power to act on his/her behalf in all affairs relating to the business of the Federation, whether in legal proceedings or otherwise.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 25-11 Deleted. <by Act No. 5738, Feb. 1, 1999>
 Article 26 Deleted. <by Act No. 5507, Jan. 13, 1998>
 Article 27 Deleted. <by Act No. 5738, Feb. 1, 1999>
 Article 28 (Prohibition, etc. on Political Activities)
(1) The Federation may not engage in any act related to politics.
(2) No executives of the Federation may participate in any political party or political organization.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 29 (Administrative Disposition against the Federation and its Officers and Employees)
The Financial Services Commission may, if the Federation or any of its officers and employees falls under any subparagraph of attached Table 2, take any of the following measures: <Amended by Act No. 14822, Apr. 18, 2017>
1. Issuing a caution or warning to the Federation or demanding the Federation to issue a caution, warning, or reprimand to the officer or employee concerned;
2. Issuing an order to correct such a violation;
3. Recommending the Federation to remove the officer concerned or suspending the performance of his/her duties;
4. Recommending the Federation to dismiss the employee concerned;
5. Suspending its business partially for a prescribed period of not more than six months.
[This Article Newly Inserted by Act No. 10175, Mar. 22, 2010]
 Articles 29-2 through 33-2 Deleted. <by Act No. 4867, Jan. 5, 1995>
 Article 34 (Mutatis Mutandis Application)
(1) Except as otherwise expressly provided for otherwise by this Act, the provisions of the Civil Act relevant to incorporated associations shall apply mutatis mutandis to the Federation.
(2) Articles 22 and 23 shall apply mutatis mutandis to the Federation. In such cases, the term "mutual savings bank" shall be construed as the "Federation."
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
CHAPTER V SUPPLEMENTARY PROVISIONS
 Article 34-2 (Vicarious Exercise of Authority)
(1) The authority vested in the Financial Services Commission pursuant to Articles 23-11 (1) and (3) through (5), 24-2 (1), 24-3 (1) and (4), 24-4 (2), 24-5 (7) and (8), 24-6 (1), 24-7, 24-8 (1) and (2), 24-9 (3), 24-10, 24-11, 24-13, 24-14, and 24-15 may be delegated to the Governor of the Financial Supervisory Service, as prescribed by Presidential Decree, if deemed necessary for carrying out business activities efficiently with expertise in promoting business normalization of insolvent mutual savings banks. In such cases, the acts performed vicariously by the Governor of the Financial Supervisory Service shall be deemed to be those performed by the Financial Services Commission.
(2) The Governor of the Financial Supervisory Service shall, whenever he/she exercises any authority delegated pursuant to paragraph (1), indicate that he/she acts on behalf of the Financial Services Commission.
(3) Any act performed without making the indication under paragraph (2) shall be deemed to be an act done for his/her own interest.
(4) The Governor of the Financial Supervisory Service shall, whenever he/she acts on behalf of the Financial Services Commission pursuant to paragraph (1), report important matters to the Financial Services Commission.
(5) The standards and procedures for processing business affairs in connection with the vicarious exercise of the authority of the Financial Services Commission under paragraph (1) and other necessary matters may be prescribed by Presidential Decree.
(6) The Governor of the Financial Supervisory Service may, if necessary for vicariously exercising the authority for the business activities pursuant to paragraph (1), operate a council composed of representatives of the Korea Deposit Insurance Corporation, the Federation, and other related institutions.
(7) The Governor of the Financial Supervisory Service may, when he/she promotes business stabilization of an insolvent mutual savings bank, request the heads of central administrative agencies to furnish him/her with informative materials as may be necessary. In such cases, the heads of central administrative agencies shall, upon receiving such request, comply with the request, absent any extraordinary circumstances.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 35 (Entrustment of Authority)
(1) The Financial Services Commission may entrust the Governor of the Financial Supervisory Service, the Chairperson of the Federation, or the President of the Korea Deposit Insurance Corporation with part of its authority, other than the authority under Article 34-2 (1), as prescribed by Presidential Decree.
(2) Where the Governor of the Financial Supervisory Service has became ware that a mutual savings bank (including its executives and employees) or its large shareholder, etc. under Article 37 (1) falls under any of the following in the course of exercising his/her authority referred to in paragraph (1), he/she shall recommend the Financial Services Commission to take necessary administrative measures: <Amended by Act No. 12100, Aug. 13, 2013; Act No. 14822, Apr. 18, 2017>
1. Where the mutual savings bank or its large shareholder, etc. falls under any of the subparagraphs of Article 24 (2);
2. Where the mutual savings bank or its large shareholder, etc. falls under any of the subparagraphs of Article 38-2;
3. Where the mutual savings bank or its large shareholder, etc. falls under any of the subparagraphs of Article 40 (1), (2), or (4), or paragraph (3) of the same Article;
4. Where the mutual savings bank or its large shareholder, etc. falls under any of the subparagraphs of attached Table 1.
(3) The Governor of the Financial Supervisory Service, the Chairperson of the Federation, or the President of the Korea Deposit Insurance Corporation shall report important matters to the Financial Services Commission when he/she exercises the authority entrusted pursuant to paragraph (1).
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 35-2 Deleted. <by Act No. 13453, Jul. 31, 2015>
 Article 35-3 (Measures Taken on Retired Officers and Employees)
(1) In cases where it is deemed that a retired officer or employee of a mutual savings bank or the Federation would be subject to a measure under Article 24 (1) 1, 3, or 4, or subparagraph 1, 3, or 4 of Article 29 if he/she still worked as an officer or employee, the Financial Services Commission may notify the mutual savings bank or the Federation of the details of such measure. <Amended by Act No. 14822, Apr. 18, 2017>
(2) A mutual savings bank or the Federation which receives the notification under paragraph (1) shall notify the relevant retiring or resigning executive or employee of such fact and keep a record of the details. <Amended by Act No. 14822, Apr. 18, 2017>
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 36 (Relationship with other Acts)
(1) The Bank of Korea Act (excluding Article 80 (1) and (3) thereof) and the Banking Act shall not apply to mutual savings banks.
(2) For purposes of applying Article 45-2 of the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Companies and the Establishment of Korea Asset Management Corporation, a mutual savings bank shall be deemed an institution falling under the same Article. <Amended by Act No. 10682, May 19, 2011>
(3) For purposes of applying Article 2 of the Act on External Audit of Stock Companies, a mutual savings bank shall be deemed a stock company.
(4) The Federation shall be deemed a bank under Article 2 of the Banking Act or financial institution Article 11 of the Bank of Korea Act, when it carries out business activities as provided in Article 25-2 (1) 6 through 11. <Amended by Act No. 10303, May 17, 2010>
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 37 (Prohibition against Extension of Credit, etc. to Large Shareholders, etc.)
(1) No mutual savings bank may extend credit to, make a deposit in, or make a provisional payment to, any of the following persons (hereinafter referred to as "large shareholder, etc."), and no large shareholder, etc. of a mutual savings bank may accept extension of credit, deposit, or a provisional payment from such bank: Provided, That the foregoing shall not apply to deposits prescribed by Presidential Decree that are not intended as funding for large shareholders, etc. or to such extension of credit prescribed by Presidential Decree if there is no risk in collecting claims or if it is for the welfare of employees: <Amended by Act No. 12100, Aug. 13, 2013>
1. Large shareholders (including shareholders prescribed by Presidential Decree);
2. Executives or employees of the mutual savings bank;
3. Relatives or a person in a special relationship prescribed by Presidential Decree with a person falling under subparagraph 1 or 2 or the mutual savings bank;
4. A person who does not fall under any of subparagraphs 1 through 3, who has a special relationship with a large shareholder.
(2) No mutual saving banks shall make an exchange with other mutual savings banks to extend credit to, make a deposit in, or make a provisional payment to, the large shareholders, etc. of such other mutual savings bank in order to circumvent the prohibition against extension of credit, deposits, or provisional payments under paragraph (1).
(3) No large shareholder, etc. of a mutual savings bank shall receive credit extension and a deposit, etc. or provisional payment from another mutual savings bank by forcing the relevant mutual savings bank to violate paragraph (2). <Newly Inserted by Act No. 12100, Aug. 13, 2013>
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 37-2 Deleted. <by Act No. 10175, Mar. 22, 2010>
 Article 37-3 (Joint Liability of Executives, etc.)
(1) An executive of a mutual savings bank who inflicts any damage or loss on the bank or a third party by his/her intentional or negligent conduct in the course of performing his/her duty shall be jointly liable with the bank for the obligations arising in connection with deposits, etc. in the bank.
(2) The oligopolistic shareholder of a mutual savings bank (which means a person constituting an oligopolistic shareholder as defined in Article 39 (2) of the Framework Act on National Taxes) shall, if he/she has caused the insolvency of the bank as a consequence of his/her influence on the business management of the bank, shall be jointly liable with the bank for the obligations arising in connection with deposits, etc. in the bank.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 37-4 Deleted. <by Act No. 13453, Jul. 31, 2015>
 Article 37-5 (Prohibition on Receiving Bribes, etc.)
No officer or employee of a mutual savings bank may, in relation to his/her official duties, engage in embezzlement, breach of trust, or donation, whether direct or indirect, or otherwise demand or receive bribes, or give a promise in relation thereto.
[This Article Newly Inserted by Act No. 10175, Mar. 22, 2010]
 Article 38 (Hearings)
The Financial Services Commission shall hold a hearing whenever it intends to revoke a business license pursuant to Article 24 (2).
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
CHAPTER V-2 SUPPLEMENTARY PROVISIONS
 Article 38-2 (Imposition of Penalty Surcharges)
Where a mutual savings bank, another mutual savings bank in the same affiliation or a large shareholder, etc. falls under any of the following, the Financial Services Commission may impose a penalty surcharge according to the following classification: <Amended by Act No. 14822, Apr. 18, 2017>
1. Mutual savings banks:
(a) Where the mutual savings bank has extended credit in excess of the limits of credit extension under Article 12 (1) through (3) and Article 18-2 (1) 8: Not more than 10 percent of the amount of the excess credit extension;
(b) Where the mutual savings bank owns real estate, in violation of Article 18-2 (1) 2: Not more than 30 percent of the acquisition amount of the real estate owned;
(c) Where the mutual savings bank has extended credit and made a deposit, etc. or made a provisional payment, in violation of Article 37 (1) or (2): Not more than the amount of credit extended, a deposit, etc. or provisional payment made;
2. Where another mutual savings bank in the same affiliation has extended credit in excess of the limits of credit extension under Article 12 (1) or (3): Not more than 30 percent of the amount of the excess credit extension;
3. Where a large shareholder, etc. is granted credit, receives a deposit, etc., or provisional payment, in violation of Article 37 (1) or (3): Not more than the amount of credit granted, a deposit, etc. or provisional payment received.
[This Article Wholly Amended by Act No. 12100, Aug. 13, 2013]
 Article 38-3 (Guidelines for Imposition of Penalty Surcharges)
(1) The guidelines for imposition of a penalty surcharge under Article 38-2 shall be prescribed by Presidential Decree, considering the following factors:
1. Substance and gravity of the violation;
2. Duration and frequency of the violation;
3. Amount of benefit derived from the violation.
(2) Other matters necessary for imposing penalty surcharges shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 8522, Jul. 19, 2007]
 Article 38-4 (Presentation of Statements)
(1) The Financial Services Commission shall, prior to imposing any penalty surcharge, provide the party concerned or an interested party with an opportunity to make a statement. <Amended by Act No. 8863, Feb. 29. 2008>
(2) The party concerned or an interested party may make an appearance in person at a hearing of the Financial Services Commission to make a statement or submit materials as may be necessary. <Amended by Act No. 8863, Feb. 29. 2008>
[This Article Newly Inserted by Act No. 8522, Jul. 19, 2007]
 Article 38-5 (Objections)
(1) Any person who is dissatisfied with a penalty surcharge under Article 38-2 may file an objection with the Financial Services Commission, which shall clearly state the reasons for such objection, within 30 days from the date on which a notice of the disposition is served. <Amended by Act No. 8863, Feb. 29. 2008>
(2) The Financial Services Commission shall make a decision on the objection filed in accordance with paragraph (1) within 30 days from the filing date of the objection: Provided, That the deadline may be extended within the limit of 30 days, if it is impossible to make a decision within the period of time due to an unavoidable cause or event. <Amended by Act No. 8863, Feb. 29. 2008>
[This Article Newly Inserted by Act No. 8522, Jul. 19, 2007]
 Article 38-6 (Extension of Deadline for Payment of Penalty Surcharge and Payment in Installments)
(1) The Financial Services Commission may, if it is deemed difficult for a person to whom the penalty surcharge has been imposed (hereinafter referred to as "penalty surcharge payer") to pay the full amount of the penalty surcharge at a time due to any of the following circumstances, extend the payment deadline or allow him/her to pay it in installments. In such cases, it may require the penalty surcharge payer to offer an asset as security, if deemed necessary: <Amended by Act No. 8863, Feb. 29. 2008>
1. If he/she has sustained severe damage to his/her property by disaster;
2. If his/her business is in a critical crisis due to worsened business conditions;
3. If it is anticipated that he/she is likely to face severe hardship in his/her financial circumstances if the penalty surcharge should be paid in lump sum;
4. If exists any other reason similar to any of those under subparagraphs 1 through 3.
(2) Any penalty surcharge payer who desires to have the payment deadline for the penalty surcharge under paragraph (1) extended or to pay it in installments shall file an application therefor with the Financial Services Commission by no later than ten days before the deadline. <Amended by Act No. 8863, Feb. 29. 2008>
(3) The Financial Services Commission may, if the payment was extended in accordance with paragraph (1) or the payment in installments was allowed, but the penalty surcharge payer falls under any of the following subparagraphs, revoke its decision to extend the deadline or allow the payment in installments and collect the penalty surcharge in a lump sum: <Amended by Act No. 8863, Feb. 29. 2008>
1. If he/she has not paid the penalty surcharge in installments as decided within the time limit;
2. If he/she has not complied with an order issued by the Financial Services Commission as required for preservation of security, such as replacement of security;
3. If it is found impossible to collect the full amount or remainder of the penalty surcharge due to forced execution, commencement of auction, declaration of bankruptcy, dissolution of the legal entity, collection of delinquent national or local taxes, etc.;
4. If there exists any other cause or event prescribed by Presidential Decree similar to those under subparagraphs 1 through 3.
(4) Necessary matters concerning the extension of the clear deadline for penalty surcharge, payment in installments, or security under paragraphs (1) through (3) shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 8522, Jul. 19, 2007]
 Article 38-7 (Collection of Penalty Surcharges and Disposition against Default)
(1) The Financial Services Commission may, if a penalty surcharge payer fails to pay the penalty surcharge within the deadline, collect the additional charge, as prescribed by Presidential Decree, for the period of time from the date immediately following the deadline to the day immediately before the date on which the penalty surcharge is paid. <Amended by Act No. 8863, Feb. 29. 2008>
(2) The Financial Services Commission may, if a penalty surcharge payer fails to pay the penalty surcharge within the deadline, demand him/her to pay it within a fixed period of time and may collect it in the same manner as delinquent national taxes are collected, if the payer fails again to pay the penal surcharge and the additional charge under paragraph (1) within the fixed period of time. <Amended by Act No. 8863, Feb. 29. 2008>
(3) The Financial Services Commission may entrust the Commissioner of the National Tax Service with the collection of penalty surcharges and additional charges or with the collection in the same manner as delinquent national taxes under paragraphs (1) and (2). <Amended by Act No. 8863, Feb. 29. 2008>
(4) Other matters necessary for collecting penalty surcharges shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 8522, Jul. 19, 2007]
 Article 38-8 (Charge for Compelling Compliance)
(1) The Financial Services Commission may, if a person who has been ordered to dispose of shares under Article 10-6 (4) or (8) fails to comply with the order within the prescribed period, impose a charge for compelling the compliance on such person within the limit not exceeding the amount obtained by multiplying the book value of the shares which shall be disposed of by 3/10,000 for each day of default.
(2) The charge for compelling compliance shall be imposed for the period ranging from the day immediately following the final date of the compliance period as set in the order for disposal of stocks to the day the person concerned actually disposes of the stocks (referring to the day of delivering the stock certificates).
(3) In collecting a charge for compelling compliance, the Financial Services Commission may, if the compliance is not made even after 90 days from the final date of the compliance period as set in the order for disposal of stocks, collect the charge for compelling compliance on the basis of each 90th day calculated from such final date.
(4) The provisions of Articles 38-3 through 38-7 shall apply mutatis mutandis to the imposition and collection of a charge for compelling compliance.
[This Article Newly Inserted by Act No. 10175, Mar. 22, 2010]
CHAPTER VI PENALTY PROVISIONS
 Article 39 (Penalty Provisions)
(1) Any of the following persons shall be punished by imprisonment for not more than ten years, or by a fine not exceeding 500 million won:
1. A large shareholder who engages in an activity falling under any of the subparagraphs of Article 12-3, in violation of the same Article, or a person specially related to him/her;
2. A person who suspends the whole or part of his/her business, in violation of Article 18-2 (1) 11;
3. A person who extends credit and makes a deposit, etc. or makes a provisional payment, in violation of Article 37 (1) or (2);
4. A person who is granted credit, receives a deposit, etc. or receives a provisional payment, in violation of Article 37 (1) or (3).
(2) Any of the following persons shall be punished by imprisonment for not less than one year nor more than ten years, or by a fine of at least 10 million won up to 100 million won:
1. A person who makes a feint of paying capital of a mutual savings bank, or who responds to such feint, or arranges such feint;
2. A person who inflicts losses on a mutual saving bank by acquiring gains on property or letting a third party acquire gains on property by an act violating his/her business, who is a promoter, an executive, an administrator, a liquidator, a manager, or an employee to whom a certain type of business or a specific matter of the mutual savings bank has been delegated.
(3) Any person who conducts business without obtaining approval, in violation of Article 6 (1), shall be punished by imprisonment for not more than five years, or by a fine not exceeding 50 million won.
(4) Any of the following persons shall be punished by imprisonment for not more than three years, or by a fine not exceeding 30 million won:
1. A person who makes an advertisement, in violation of Article 18-5 (1) or (2);
2. A person who divulges confidential information about the identity, etc. of a reporter, etc., in violation of Article 23-3 (2).
(5) Any of the following persons shall be punished by imprisonment for not more than one year, or by a fine not exceeding ten million won: <Amended by Act No. 14822, Apr. 18, 2017>
1. A person who establishes a branch office, etc., in violation of Article 7 (1) or (2);
2. Any person who fails to perform his/her duty related to the use, etc. of the name, in violation of Article 9;
3. A person who engage in an activity falling under any of the subparagraphs of Article 10 (1) without obtaining approval, in violation of Article 10;
4. A person who fails to obtain approval or apply for approval, in violation of Article 10-6 (1) or (2);
5. A person who fails to comply with an order to dispose of stocks under Article 10-6 (4) or (8);
6. A person who violates Article 12 (1) through (3) or (5);
7. A person who engages in an activity falling under any of the subparagraphs of Article 18-2 (1) or (2), in violation of the same Article, or violates paragraph (3) of the same Article (excluding a person who violates Article 18-2 (1) 2 or 11);
8. A person who refuses, interferes with, or evades business administration under Article 24-3 (1);
9. A person who refuses, interferes with, or evades the transfer of business affairs to a trustee appointed pursuant to Article 24-3 (1);
10. A person who makes a payment, performs his/her duty, or transfers the name of shareholders, in violation of Article 24-4 (1);
11. A person who fails to comply with a decision on the transfer of a contract under Article 24-11 (1) or 24-15 (2).
(6) Any of the following persons shall be punished by imprisonment for not more than six months, or by a fine not exceeding five million won:
1. Deleted; <by Act No. 14822, Apr. 18, 2017>
2. A person who borrows money, in violation of Article 17;
3. A person who fails to accumulate reserves or uses reserves, in violation of Article 19 (1) or (2).
(7) Imprisonment and fines under paragraphs (1) through (6) may be imposed concurrently.
[This Article Wholly Amended by Act No. 12100, Aug. 13, 2013]
 Article 39-2 (Joint Penalty Provisions)
If a representative of a corporation, or an agent, employee or other servant of the corporation or an individual commits an offense under Article 39 in connection with the business of the corporation or the individual, not only shall such offender be punished accordingly, but the corporation or individual shall also be punished by a fine under the said Article: Provided, That where such corporation or individual has not been negligent in giving due attention and supervision concerning the relevant duties to prevent such violation, this shall not apply.
[This Article Wholly Amended by Act No. 10175, Mar. 22, 2010]
 Article 40 (Administrative Fines)
(1) Any of the following persons shall be punished by a fine not exceeding 50 million won: <Amended by Act No. 14822, Apr. 18, 2017>
1. A person who fails to comply with a request to submit data made by the Financial Services Commission under the latter part of Article 10-6 (3) or Article 22-4 (1), or submits false data;
2. A mutual savings bank that acquires issued stocks of a large shareholder without following a resolution of the board of directors, in violation of Article 12-2 (1);
3. A mutual savings bank that fails to submit a report to the Financial Services Commission or fails to make a public announcement, in violation of Article 12-2 (2) or (3);
4. A mutual savings bank that fails to explain to facilitate customers’ understanding, or to receive confirmation on the content, in violation of Article 14;
5. A person who stipulates or amends terms and conditions or standard terms and conditions without reporting to the Financial Services Commission, in violation of Article 18-3 (1) or (4), and a person who fails to comply with an order to change under paragraph (6) of the said Article;
6. A mutual savings bank that violates methods and procedures for advertising under Article 18-5 (4);
7. A person who violates measures under Article 22-4 (2);
7-2. A person who fails to file a report or materials under Article 22-5 (1) or (3) or who submits false information thereof;
8. A person who refuses, interferes with or evades an inspection under Article 22-6 (1) or (2);
9. A person who refuses, interferes with or evades an inspection under Article 23 (1);
10. A person who fails to file a report or submit data or make an appearance or statement (hereafter in this subparagraph referred to as "report, etc.") under Article 23 (2) (including where this applies mutatis mutandis in Article 22-6 (3)) or files a false report, etc.;
11. A person who fails to make a public announcement or makes a false public announcement, in violation of Article 23-2;
12. A person who fails to comply with a request or order under Article 24 (1) 1 through 4;
13. A person who fails to comply with business guidance under Article 24-2 (1);
14. A person who has not been granted for approval of the Financial Services Commission, in violation of Article 25-2 (2).
(2) Any of the following persons shall be punished by a fine not exceeding 30 million won:
1. through 3. Deleted; <by Act No. 13453, Jul. 31, 2015>
4. A person who violates an order under Article 22 (2) (including where this applies mutatis mutandis in Article 34 (2));
5. Deleted; <by Act No. 14822, Apr. 18, 2017>
6. A person who fails to file a report or submit data or make an appearance or statement (hereafter in this subparagraph referred to as "report, etc.") under Article 23 (2) (including cases where this applies mutatis mutandis in Article 34 (2)) or files a false report, etc.;
7. A person who gives unfavorable treatment to a reporter, etc., in violation of Article 23-3 (3).
(3) Any person who fails to retain assets for reserve, in violation of Article 15, shall be punished by a fine not exceeding twenty million won. <Newly inserted by Act No. 14822, Apr. 18, 2017>
(4) Any of the following persons shall be punished by a fine not exceeding ten million won: <Amended by Act No. 14125, Mar. 29, 2016; Act No. 14822, Apr. 18, 2017>
1. A person who fails to give notice or file a report, in violation of Article 10-2 (1) or (3);
1-2. A person who fails to take a measure to protect employees or gives disadvantages to employees, in violation of Article 18-7;
2. A person who fails to make a public announcement under Article 24-3 (5) (including where this applies mutatis mutandis in Article 24-8 (4)) or 24-12 (2), or makes a false public announcement;
3. A person who violates Article 25-3 (2);
4. A person who fails to implement a request under subparagraph 1 of Article 29;
5. A person who fails to file a report under Article 34-2 (4) or 35 (3), or makes a false report.
(5) Administrative fines under paragraphs (1) through (4) shall be imposed and collected by the Financial Services Commission, as prescribed by presidential Decree. <Amended by Act No. 14822, Apr. 18, 2017>
[This Article Wholly Amended by Act No. 12100, Aug. 13, 2013]
 Article 41 Deleted. <by Act No. 5501, Jan. 13, 1998>
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That Article 32 (2) shall enter into force on the day set separately by Presidential Decree.
Article 2 (Transitional Measures)
(1) Any person who engages in the business under Article 11 or any similar business as of the enforcement date of this Act shall file a report with the Minister of Finance within 30 days from the date this Act enters into force, as prescribed by Presidential Decree.
(2) Any person who has filed a report in accordance with the foregoing paragraph and who intends to continue the business shall file an application for the license under Article 6 within 90 days from the date this Act enters into force. In such cases, the capital shall be the amount prescribed by Presidential Decree, notwithstanding Article 5, but shall be increased to the amount equivalent to or more than that under Article 5 within one year from the end of the time period for such application.
(3) Any person who has filed the report under paragraph (1) may continue his/her existing business until the end of the time period for the application under the foregoing paragraph: Provided, That if the term of any contract already made exceeds the end of the time period for the application, he/she may continue his/her business until the expiration of the contract term only for the settlement of the contract, notwithstanding Article 6.
(4) The Minister of Finance may, if necessary, order a person who engages in a business in accordance with the foregoing paragraph to submit a report on the current status of his/her business and assets in accordance with Article 23, assign a public official under his/her control to conduct an inspection thereon, or issue an order as may be necessary for supervision over the business.
(5) Any person who has a branch office as of the date this Act enters into force shall be eligible for the license under paragraph (2), notwithstanding Article 4. In such cases, the person who has obtained such a license may continue operation of the branch office only for two years from the end of the time period for the application under the said paragraph.
ADDENDA <Act No. 2779, Jul. 25, 1975>
(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation: Provided, That Article 32 (4) 1 shall enter into force on the day set separately by Presidential Decree.
(2) (Transitional Measures) A mutual credit union that has received mutual aid deposits and installment savings in excess of the limit under Article 13 as of the enforcement date of this Act shall take measures necessary to adjust the level of such deposits and savings to the limit by no later than December 31, 1976.
(3) (Idem) The funds raised as of the date this Act enters into force shall be deemed to be funds under the provisions of this Act.
(4) (Idem) A mutual credit union that has any executive disqualified under Article 35-2 as of the date this Act enters into force shall replace such a person with a person qualified under the said Article no later than December 31, 1976.
ADDENDA <Act No. 4867, Jan. 5, 1995>
Article 1 (Enforcement Date)
This Act shall enter into force three months after the date of its promulgation.
Article 2 (Special Cases concerning Previous Mutual Credit Unions Incorporated as under General Partnership)
Mutual credit unions incorporated as a general partnership or limited partnership as of the date this Act shall be governed by the former provisions for purposes of applying Article 3, 5 (3), 20 (2), or 37-3 (3) to them, and the terms "stocks" and "stockholders" shall be construed as "investment certificates" and "partners"respectively for purposes of applying Article 10-2 (3) or (4) 1, 24-4 (1), or 24-15 (1), subparagraph 8 of Article 35-2, subparagraph 1 of Article 37, Article 37-3 (1) or (3), or Article 39 (3) 10, while the term "general meeting of stockholders" shall be construed as "general meeting of partners"for purposes of applying Article 23-11 (2) or (3). <Amended by Act No. 6429, Mar. 28, 2001>
Article 3 (Transitional Measures concerning Capital)
(1) A mutual credit union that fails to meet the standards for capital under the amended provision of Article 5 (1) as of the enforcement date of this Act shall make endeavor to meet the standards under the amended provisions of the said paragraph of the said Article within seven years from the date this Act enters into force (or within the period of time set in a plan for increasing the capital, in cases where it fails to increase the capital within seven years, but obtains approval of the Financial Supervisory Commission on the plan). <Amended by Act No. 5501, Jan. 13, 1998; Act No. 6203, Jan. 28, 2000>
(2) The increase of the capital of a branch office established as of the date this Act enters into force shall be governed by the former provisions.
Article 4 (Transitional Measures concerning Transformation into Stock Company)
In cases where a mutual credit union is established in order to transform a mutual credit union incorporated as a general partnership or a limited partnership as of the date this Act enters into force establishes into a stock company, such a mutual credit union shall be governed by the former provisions in applying Article 5 (1), but shall, upon the completion of the transformation, make efforts to meet the requirements under the amended provisions of Article 5 (1) within the period of time set in Article 3 of Addenda, while the provisions relevant to the contribution relating to the business license under Article 5 (2) of the Credit Management Fund Act shall not be applicable.
Article 5 (Transitional Measures concerning Liquidation)
A mutual credit union under the liquidation proceedings as of the date this Act enters into force shall be deemed to be under the liquidation proceedings under this Act.
Article 6 (Transitional Measures concerning Penalty Provisions)
An act committed before the date this Act enters into force shall be governed by previous relevant provisions in applying penalty provisions.
Article 7 Omitted.
ADDENDA <Act No. 5050, Dec. 29, 1995>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. <Proviso Omitted.>
Article 2 (Transitional Measures concerning Dispositions)
An order to transfer contracts, a decision, or a disposition, including appointment of an administrator, issued or made by the Minister of Finance and Economy pursuant to any provision of Articles 23-2 through 23-9 of the Mutual Savings Banks Act as of the date this Act enters into force shall be deemed to be an act done by the President with the authority delegated by the Minister of Finance and Economy pursuant to this Act, if a corresponding provision exists in this Act.
Articles 3 and 4 Omitted.
ADDENDA <Act No. 5501, Jan. 13, 1998>
Article 1 (Enforcement Date)
This Act shall enter into force on April 1, 1998: Provided, That the amended provisions of Article 5 of Addenda shall enter into force on the date of its promulgation; the amended provisions of Articles 25 through 25-6 and 25-8 through 34 on the day on which the Federation is formed; the amended provisions of Article 38 on January 1, 1998; and the amended provisions of Article 25-7 on July 1, 1998.
Article 2 (Repeal of Credit Management Fund Act)
The Credit Management Fund Act is hereby repealed.
Article 3 (General Transitional Measures)
(1) A license, permission, approval, registration, disposition, or any other act by the Minister of Finance and Economy, the Director of the Financial Supervisory Service of the Bank of Korea, the President of the Credit Management Fund, the Federation Chairperson, an administrator, or a liquidator or with the power delegated by the Minister of Finance and Economy or vicariously on behalf of the Minister pursuant to a former provision of this Act or a provision of the Credit Management Fund Act as of the date this Act enters into force shall be deemed to be an act by the Minister of Finance and Economy, the Financial Supervisory Commission of the Governor of the Financial Supervisory Service, the President of the Korea Deposit Insurance Corporation, the Federation Chairperson, an administrator, or a liquidator pursuant to this Act, if a relevant provision exists in this Act.
(2) A report or an application filed, or any other act done with or done against the Minister of Finance and Economy, the Director of the Financial Supervisory Service of the Bank of Korea, the President of the Credit Management Fund, the Federation Chairperson, an administrator, or a liquidator pursuant to a former provision of this Act or a provision of the Credit Management Fund Act as of the date this Act enters into force shall be deemed to be an act done to or against the Minister of Finance and Economy, the Financial Supervisory Commission of the Governor of the Financial Supervisory Service, the President of the Korea Deposit Insurance Corporation, the Federation Chairperson, an administrator, or a liquidator pursuant to this Act.
Article 4 (Transitional Measures concerning Penalty Provisions)
In imposing a punishment, applying a penalty provision, or imposing an administrative fine on or to a person who has violated former provisions of this Act or a provision of the Credit Management Fund Act before the enforcement date of this Act, such violation shall be governed by the former provisions or the relevant provision of the Credit Management Fund Act.
Article 5 (Transitional Measures concerning Federation)
(1) The federation formed pursuant to the previous provision of Article 25 at the time when the Federation is formed shall be deemed to be the Federation under this Act.
(2) The Federation Chairperson shall prepare a draft operating manual and an amendment to the articles of incorporation of the Federation for the approval of the Minister of Finance and Economy by no later than the date this Act enters into force, and shall carry out the works necessary for the registration of the amendment.
(3) The approval under paragraph (2) shall be deemed as an approval or authorization of the Financial Supervisory Commission, notwithstanding the amended provisions of Articles 25-2 (2) and 25-3 (2).
(4) Incumbent executives of the Federation at the time when the Federation is formed shall be deemed to be executives of the Federation under this Act, and their terms of office shall begin on the day on which they were appointed as executives of the Federation.
Article 6 (Special Cases concerning Continuance and Dissolution of Credit Management Fund)
(1) The Credit Management Fund shall exist continuously until the Financial Supervisory Service is established, notwithstanding Article 2 of Addenda.
(2) The Credit Management Fund shall be dissolved on the day on which the Financial Supervisory Service is established, without necessarily going through the procedures for dissolution and liquidation.
Article 7 (Transfer of Assets, Rights, and Obligations)
(1) All assets, rights, and obligations of the Credit Management Fund as of the date this Act enters into force shall be comprehensively transferred to each of the following persons on the date this Act enters into force according to the categories as classified below:
1. Those that belong to the business account for management of contributions shall be transferred to The Korea Deposit Insurance Corporation: Provided, That those that belong to the fund management account shall be comprehensively transferred to the Financial Supervisory Service on the day on which the Financial Supervisory Service is formed;
2. Those that belong to the business account for management of deposits shall be transferred to the Federation.
(2) The name of the Credit Management Fund recorded in the registers and other public records of an asset, a right, or an obligation transferred pursuant to paragraph (1) shall be deemed to be the name of the Financial Supervisory Service, the Korea Deposit Insurance Corporation, or the Federation to whom it is transferred.
(3) The value of an asset transferred pursuant to paragraph (2) shall be the book value as of the transfer.
Article 8 Omitted.
Article 9 (Relationship with other Statutes)
A citation of the former Credit Management Fund Act or any provision thereof by any other statute enforceable at the time when this Act enters into force shall be deemed to be a citation of this Act or a corresponding provision hereof in lieu of the former provision, if a corresponding provision exists herein.
ADDENDA <Act No. 5507, Jan. 13, 1998>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 Omitted.
ADDENDA <Act No. 5738, Feb. 1, 1999>
(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.
(2) (Applicability to Executives of Federation) The amended provisions of Article 25-4 shall apply to the executives of the Federation elected after the date this Act enters into force.
(3) (Transitional Measure concerning Penalty Provisions) In applying penalty provisions to or imposing administrative fines for acts committed before the date this Act enters into force, former provisions shall apply to such acts.
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.
ADDENDA <Act No. 6203, Jan. 28, 2000>
(1) (Enforcement Date) This Act shall enter into force three months after the date of its promulgation: Provided, That Articles 25-10 and 36 (2) hereof and the amended provision of Article 3 (1) of Addenda of the Amendment (Act No. 4867) to the Mutual Savings Banks Act.
(2) (Transitional Measures concerning Preparation of Internal Control Standards) Each mutual credit union shall establish the internal control standards under the amended provisions of Article 22-3 within six months after the date this Act enters into force.
(3) (Transitional Measures concerning Changes in Restriction on Qualification for Executives) If cases where a person who serves a mutual credit union as an executive as of the date this Act enters into force falls under any of the grounds for disqualification under the amended provisions of Article 35-2 due to a cause or an event that arose before the date this Act enters into force, previous relevant provisions shall apply to such person, notwithstanding the amended provisions.
(4) (Transitional Measures concerning Penalty Provisions and Administrative Fines) In applying penalty provisions to or imposing administrative fines for acts committed before the date this Act enters into force, a relevant previous provision shall apply to such a case.
ADDENDA <Act No. 6429, Mar. 28, 2001>
Article 1 (Enforcement Date)
This Act shall enter into force on the date prescribed by Presidential Decree, which shall not be later than two years from the date of its promulgation: Provided, That the amended provisions of Articles 10-2, 24-3, 37, and 39 (2) and (4) 6 shall enter into force on the date of its promulgation, and the amended provisions of Articles 10-3 through 10-5, subparagraph 1 of Article 18, and Article 22-3 (2) through (5) shall enter into force three months after the date of its promulgation. In this case, the term "mutual savings bank"shall be construed as "mutual credit union."
Article 2 (Transitional Measures concerning Change of Name of Mutual Credit Union)
Any person who holds a license granted for a mutual credit union pursuant to former provisions as of the date this Act enters into force shall be deemed to hold a license for a mutual savings bank under the amended provisions of Article 6 (1).
Article 3 (Transitional Measures concerning Change of Name of Federation of Mutual Credit Unions)
(1) The Federation of Mutual Credit Unions existing as of the date this Act enters into force shall be deemed the Korea Federation of Savings Banks under this Act.
(2) The name of the Federation of Mutual Credit Unions indicated in the registers and other public records in relation to the property of the Federation of Mutual Credit Unions existing as at the date this Act enters into force shall be deemed the name of the Korea Federation of Savings Banks under this Act.
Article 4 (Transitional Measures concerning Capital)
The mutual savings banks that fail to meet the standards for capital under the amended provisions of Article 5 (1) as of the date this Act enters into force shall make efforts to meet the standards under the amended provisions within five years from the date this Act enters into force.
Article 5 (Transitional Measures concerning Change of Time Limit for Reporting Acquisition of Stocks)
As to the time limit for reporting the acquisition of stocks, relevant former provisions shall be applicable until ten days after the date the amended provisions of Article 10-2 enter into force, notwithstanding the amended provisions of the said Article.
Article 6 (Transitional Measures concerning Appointment of Outside Directors)
A mutual savings bank that shall appoint outside directors in accordance with the amended provisions of Article 10-3 shall appoint such outside directors at the annual general meeting of shareholders convened first after the date this Act enters into force in accordance with the said amended provisions. In this case, a person appointed as an outside director at the annual general meeting of shareholders shall be deemed to have been recommended by the committee for recommendation of candidates for outside directors in accordance with the amended provisions of Article 10-3 (3).
Article 7 (Transitional Measures concerning Establishment of Audit Committee)
A mutual savings bank who shall have an audit committee in accordance with the amended provisions of Article 10-4 shall take measures to have the audit committee under the amended provisions organized at the annual general meeting of shareholders convened first after the date this Act enters into force.
Article 8 (Transitional Measures concerning Standing Auditor Following Establishment of Audit Committee)
If a person who currently serves a mutual savings bank, which shall have an audit committee in accordance with the amended provisions of Article 10-4, as a standing auditor (or the standing auditor nominated in advance by the board of directors of the bank, if there are two or more standing auditors) as of the date this Act enters into force, and whose term of office has not expired as of the date of opening the annual general meeting of shareholders at which the audit committee shall be organized in accordance with Article 5 of Addenda, is not dismissed at the annual general meeting of shareholders, such person shall be deemed as a non-outside-director member of the audit committee of the bank until his/her term of office expires. In such cases, the standing auditor shall be deemed as a director appointed at the general meeting of shareholders in accordance with Article 382 (1) of the Commercial Act until the expiration of his/her term of office.
Article 9 (Transitional Measures concerning Appointment of Compliance Officers)
Each mutual savings bank that shall appoint a compliance officer in accordance with the amended provision of Article 22-3 (2) shall appoint such a compliance officer within three months after the date this Act enters into force.
Article 10 Omitted.
Article 11 (Relationship with other Statutes)
A citation of the former Mutual Credit Unions Act, a mutual credit union, or the Federation of Mutual Credit Unions by any other statute enforceable at the time when this Act enters into force shall be deemed to be a citation of the Mutual Savings Banks Act, a mutual savings bank, or the Korea Federation of Savings Banks in lieu of the Act, the union, or the federation.
ADDENDA <Act No. 6561, Dec. 31, 2001>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 Omitted.
ADDENDA <Act No. 6992, Dec. 11, 2003>
(1) (Enforcement Date) This Act shall enter into force three months after the date of its promulgation.
(2) (Transitional Measures concerning Matters subject to Approval) A case reported in accordance with the former provisions of Article 10-2 (3) 1 as of the date this Act enters into force shall be deemed to have been approved pursuant to this Act.
(3) (Transitional Measures Cconcerning Limit on Loans Lent to Identical Borrowers) A mutual savings bank that has extended credit in excess of the limit under the amended provision of Article 12 (2) as of the date this Act enters into force shall make efforts to meet the limit under the amended provisions within one year from the date this Act enters into force.
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.
ADDENDUM <Act No. 8143, Dec. 30, 2006>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 8522, Jul. 19, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Imposition of Penalty Surcharge)
The amended provisions of Article 38-2 shall apply to mutual savings banks that extend credit in violation of Article 12 or 37 on or after the enforcement date of this Act.
Article 3 (Transitional Measures concerning Restriction on Transactions with Large Shareholders)
(1) A mutual savings bank that has extended credit, which falls under the amended provisions of subparagraph 4-3 of Article 2, to an investor (including his/her relatives and specially related persons under Article 37 (1) 3) or a person who falls within the category of large shareholder pursuant to the amended provisions of subparagraph 8 of Article 2 (including his/her specially related persons) shall endeavor to meet the requirements under the amended provisions of Article 37 within one year from the date this Act enters into force.
(2) If there are unavoidable circumstances due to the amount of credit extended, a mutual savings bank may, notwithstanding paragraph (1), extend the term of such credit, subject to prior approval of the Financial Services Commission. <Amended by Act No. 8863, Feb. 29. 2008>
(3) A mutual savings bank that desires to obtain the approval under paragraph (2) shall submit to the Financial Services Commission a detailed plan for compliance with the amended provisions of Article 37 no later than three months before the expiration of the term under paragraph (1), and the Financial Services Commission shall, in turn, make a decision as whether to approve the plan and notify the bank of its decision within one month from the day on which the plan is submitted. <Amended by Act No. 8863, Feb. 29. 2008>
Article 4 (Transitional Measures concerning Members of Audit Committee)
A mutual savings bank that shall appoint members of the audit committee in accordance with the amended provisions of Article 10-4 shall appoint such members of the audit committee in compliance with the amended provisions at an annual general meeting of shareholders convened first after the date this Act enters into force.
ADDENDA <Act No. 8635, Aug. 3, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force one year and six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 44 Omitted.
ADDENDA <Act No. 8852, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force one year and six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.
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.
ADDENDA <Act No. 10175, Mar. 22, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation: Provided, That the amended provisions of Article 22-2 (1) 5 shall enter into force on July 1, 2010.
Article 2 (Applicability for Persons who Become Large Shareholders Due to Inheritance, etc. Following Death of Incumbent Shareholders)
The amended provisions of Article 10-6 (2) shall apply to shareholders who make acquisition, etc. of stocks due to inheritance, etc. following the death of any incumbent shareholder on or after the enforcement date of this Act.
Article 3 (Applicability to Examination of Qualifications of Large Shareholders)
The amended provisions of Article 10-6 (3) shall apply to shareholders of a mutual savings bank who obtain approval on or after the enforcement date of this Act and incumbent shareholders who fail to meet the requirements for maintaining eligibility for a large shareholder on or after the enforcement date of this Act.
Article 4 (Applicability to Restrictions on Full-Time Officers' Holding Concurrent Offices)
The amended provisions of Article 37-4 shall apply to full-time officers appointed on or after the enforcement date of this Act.
Article 5 (Transitional Measures concerning Prohibited Activities for Mutual Savings Banks)
(1) Any mutual savings bank which conducts an act falling under any of the amended provisions of subparagraphs 4 through 6 of Article 18-2 and Article 37 at the time this Act enters into force shall take measures to conform to such amended provisions within one year from the enforcement date of this Act.
(2) Notwithstanding paragraph (1), any mutual savings bank may extend the period of time subject to the approval of the Financial Services Commission, if there are unavoidable circumstances due to the amount of credit extended, etc.
(3) Any mutual savings bank seeking to obtain an approval under paragraph (2) shall submit a detailed plan for conforming to the amended provisions of subparagraphs 4 through 6 of Article 18-2 and Article 37 to the Financial Services Commission by not later than three months before the expiration of the period of time under paragraph (1), and the Financial Services Commission shall decide whether to approve such detailed plan and notify the result within one month from the day of receipt of such detailed plan.
Article 6 (Transitional Measures concerning Terms and Conditions)
Terms and conditions and the standard terms and conditions of a mutual savings bank which are being used at the time this Act enters into force shall be deemed to have been reported to the Financial Services Commission in accordance with the amended provisions of Article 18-3.
Article 7 (Transitional Measures concerning General Meeting, etc. of the Korea Federation of Savings Banks)
The Korea Federation of Savings Banks shall take measures to conform to the amended provisions of Articles 25 (6) and 25-4 (1) by the date of the first general meeting held after this Act enters into force.
Article 8 (Transitional Measures concerning Disqualification, etc.)
(1) Where an executive or a compliance officer of any mutual savings bank falls under the amended provisions of any subparagraph of Article 35-2 (1) or fails to meet the requirements of Article 22-3 (4) 2 at the time this Act enters into force due to any ground which arose prior to the enforcement of this Act, the previous provisions shall apply while he/she is in active service, notwithstanding the amended provisions of Article 35-2.
(2) In applying the amended provision of the proviso to Article 35-2 (2), two years shall be applicable if the service period is not less than two years or not set.
Article 9 (Transitional Measures concerning Penalty Provisions and Administrative Fines)
The previous provisions shall apply when penalty provisions and administrative fines are applied with regard to acts done before this Act enters into force.
Article 10 Omitted.
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. 10682, May 19, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Act No. 10866, Jul. 21, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 4 Omitted.
ADDENDA <Act No. 12100, Aug. 13, 2013>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation: Provided, That the amended provisions of Article 18-4 (2) and (3) shall enter into force two years after the date of their promulgation.
Article 2 (Applicability to Prohibited Activities of Mutual Savings Banks)
(1) The amended provision of Article 18-2 (1) 9 shall apply beginning with cases where the board of directors passes a resolution in order to offer or sell subordinated bonds after this Act enters into force.
(2) The amended provision of Article 18-2 (1) 10 shall apply beginning with cases where the board of directors passes a resolution in order to issue subordinated bonds by means of private offering after this Act enters into force.
Article 3 (Applicability to Disqualification of Executives)
(1) The amended provisions of Article 35-2 (1) shall apply beginning with a person who receives a request for suspension from office or on whom measures corresponding to suspension of the performance of his/her duty and suspension from office are imposed due to a reason which occurs after this Act enters into force.
(2) A person who becomes disqualified under the amended provisions of Article 35-2 (1) due to a reason which occurs before this Act enters into force shall be governed by the former provisions, notwithstanding such amended provisions.
Article 4 (Transitional Measures concerning Prohibited Activities of Mutual Savings Banks)
(1) A mutual savings bank or another mutual savings bank in the same affiliation which exceeds the limits under the amended provision of 18-2 (1) 8 or (2) 2 as at the time this Act enters into force, notwithstanding the amended provision of paragraph (3) of the same Article, shall meet such limits within two years after this Act enters into force.
(2) A mutual savings bank in the same affiliation which exceeds the limits under the amended provision of 18-2 (2) 1 as at the time this Act enters into force, notwithstanding the amended provision of paragraph (3) of the said Article, shall meet such limits within five years after this Act enters into force.
(3) Notwithstanding paragraphs (1) and (2), where the Financial Services Commission deems that unavoidable circumstances exist in consideration of the size of credit extension and the content of a contract for investment in securities, such period may be extended by up to one year upon obtaining approval from the Financial Services Commission.
(4) A mutual savings bank and another mutual savings bank in the same affiliation that intend to obtain approval under paragraph (3) shall submit a detailed plan to satisfy the amended provisions of Article 18-2 (1) 8 and (2) 1 and 2 to the Financial Services Commission, respectively, not later than three months before the period under paragraphs (1) and (2) expires, and the Financial Services Commission shall decide whether to approve such detailed plan and notify them of its decision within one month from the date it receives the detailed plan.
Article 5 (Transitional Measures concerning Prohibition against Credit Extension, etc. to Large Shareholders, etc.)
A mutual savings bank which has violated Article 37 (1) through (3) by extending credit, making a deposit, etc. or making a provisional payment to a person who is deemed a large shareholder, etc. in accordance with the amended provision of Article 37 (1) 4 as at the time this Act enters into force and the large shareholder, etc. shall satisfy the said amended provision within three years after this Act enters into force.
Article 6 (Transitional Measures concerning Penalty Surcharges)
When a penalty surcharge is imposed against an act done before this Act enters into force, the former provisions on penalty surcharges shall apply to such act.
Article 7 (Transitional Measures concerning Penalty Provisions and Administrative Fines)
When penalty provisions and administrative fines are applied to an act done before this Act enters into force, the former provisions shall apply to such act.
ADDENDUM <Act No. 13447, Jul. 24, 2015>
This Act shall enter into force on the date of its promulgation.
ADDENDA <Act No. 13453, Jul. 31, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force a year after the date of its promulgation.
Articles 2 through 18 Omitted.
ADDENDA <Act No. 13613, Dec. 22, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force a year after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 4 Omitted.
ADDENDUM <Act No. 14125, Mar. 29, 2016>
This Act shall enter into force three months after the date of its promulgation.
ADDENDA <Act No. 14822, Apr. 18, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Notification of Measures Taken on Retired Employees)
The amended provisions of Article 35-3 (1) and (2) shall also apply to an employee who retires after this Act enters into force, having committed an offense before this Act enters into force.
Article 3 (Applicability to Penalty Surcharges)
The amended provisions of subparagraph 1 (b) of Article 38-2 shall apply to violations after this Act enters into force.
Article 4 (Transitional Measures concerning Recommending Banks to Suspend Performance of Officers’ Duties)
For a violation before this Act enters into force, notwithstanding Article 24 (1) 3 (limited to suspending performance of an officer’s duties) and subparagraph 3 of Article 29, the former provisions shall apply to such violation.
Article 5 (Transitional Measures concerning Penalty Surcharges)
Where a penalty surcharge is imposed on a violation before this Act enters into force, notwithstanding the amended provisions of subparagraph 1 (a) or (c) of Article 38-2, or subparagraphs 2 and 3 of the same Article, the former provisions shall apply to such violation.
Article 6 (Transitional Measures concerning Penalty Provisions)
Where a penalty provision is applied to a violation before this Act enters into force, notwithstanding the amended provisions of Article 39 (5) 7 and (6) 1, the former provisions shall apply to such violation.