Law Viewer

Back Home

SMALL AND MEDIUM ENTERPRISE COOPERATIVES ACT

Wholly Amended by Act No. 8363, Apr. 11, 2007

Amended by Act No. 8486, May 25, 2007

Act No. 8635, Aug. 3, 2007

Act No. 8852, Feb. 29, 2008

Act No. 9120, jun. 13, 2008

Act No. 9893, Dec. 30, 2009

Act No. 10355, jun. 8, 2010

Act No. 10953, Jul. 25, 2011

Act No. 11690, Mar. 23, 2013

Act No. 12311, Jan. 21, 2014

Act No. 13086, Jan. 28, 2015

Act No. 13159, Feb. 3, 2015

Act No. 13869, Jan. 27, 2016

Act No. 14839, Jul. 26, 2017

Act No. 15467, Mar. 13, 2018

Act No. 15521, Mar. 20, 2018

Act No. 15693, jun. 12, 2018

CHAPTER I GENERAL PROVISIONS
 Article 1 (Purpose)
The purpose of this Act is to provide for the matters concerning the establishment, management, and development of cooperative organizations, through which small and medium entrepreneurs consolidate and promote collaborative projects, with aims of providing equal economic opportunities to small and medium entrepreneurs and encouraging their independent economic activities to improve the economic standing of small and medium entrepreneurs and to accomplish the balanced development of the national economy.
 Article 2 (Definitions)
The definitions of terms used in this Act shall be as follows:
1. The term "small and medium entrepreneurs" means:
(a) Persons who run a small or medium business defined in Article 2 (1) of the Framework Act on Small and Medium Enterprises (including a small or medium business under in paragraph (3) of the same Article of the same Act);
(b) Small and medium enterprise cooperatives;
2. The term "organization related to small and medium enterprises" means a non-profit organization, a majority of the constituent members of which are small and medium entrepreneurs, and which is established pursuant to the Civil Act or any other Act.
 Article 3 (Categories, etc.)
(1) Small and medium enterprise cooperatives shall be classified as follows:
1. Cooperatives (hereinafter referred to as "cooperatives");
2. Industrial cooperatives (hereinafter referred to as "industrial cooperatives");
3. Federations of cooperatives (hereinafter referred to as "federations");
4. The Korea Federation of Small and Medium Business (hereinafter referred to as the "Central Federation").
(2) Types of business that allow the establishment of a cooperative, an industrial cooperative, or a federation, shall be classified in accordance with Presidential Decree.
 Article 4 (Legal Personality and Address)
(1) Every cooperative, industrial cooperative, federation, or the Central Federation shall be a legal entity.
(2) The address of a cooperative, an industrial cooperative, or a federation shall be the seat of its principal office, and each of them may have branch offices at such places, at home or abroad, as may be necessary.
(3) The Central Federation shall have its principal office in the Seoul Special Metropolitan City, and may have branches and sub-branches at such places as may be necessary.
 Article 5 (Use of Titles)
A cooperative, an industrial cooperative, a federation, or the Central Federation shall use any of the following expressions in its name: <Amended by Act No. 9120, Jun. 13, 2008; Act No. 10355, Jun. 8, 2010>
1. For each cooperative, "cooperative" with the relevant business type and the name of locality indicated;
2. For each industrial cooperative, "industrial cooperative" with the name of locality and industry or business indicated;
3. For each federation, "cooperative federation" with either the relevant business type or the pertinent administrative district name indicated;
4. For the Central Federation, the "Korea Federation of Small and Medium Business".
 Article 6 (Business Territories)
(1) The business territory of each cooperative (referring to the boundaries of the area in which its member cooperatives or persons qualified as its member have their domiciles; hereinafter the same shall apply) shall be as follows: <Amended by Act No. 10355, Jun. 8, 2010; Act No. 13159, Feb. 3, 2015>
1. For nationwide cooperatives: The whole territory of the Republic of Korea;
2. For regional cooperatives: A Special Metropolitan City, Metropolitan City, Special Self-Governing City, Do, or Special Self-Governing Province (hereinafter referred to as "City/Do"): Provided, That a cooperative may have its business territory covering at least two jurisdictions of Cities/Dos, if it is deemed improper for the cooperative to have its business territory covering only a single City/Do, in light of the characteristics of the specific business type, the distribution of related business entities, and peculiarities in the management of the cooperative, while a cooperative may also have its business territory covering only a certain area within a City/Do, if the related business type is wholesale or retail business, in light of the distribution of the related business entities, etc.
(2) Each industrial cooperative may specify its business territory nationwide, in a City/Do, or in a Si/Gun/Gu: Provided, That the business territory of an industrial cooperative established as falling under the same industry shall be as follows: <Amended by Act No. 10355, Jun. 8, 2010>
1. A single Si/Gun/Gu or the specific area of a Si/Gun/Gu;
2. If it is deemed improper for the cooperative to have its business territory covering only a single Si/Gun/Gu or the specific area of a Si/Gun/Gu in light of the characteristics of the specific business type, the distribution of related business entities, and peculiarities in the management of the cooperative, at least two jurisdictions of Sis/Guns/Gus (including a Si/Gun/Gu in another City/Do) or the specific areas of at least two jurisdictions of Sis/Guns/Gus.
(3) The business territory of each federation shall be as follows:
1. A federation with a specific business type indicated by its name: The whole territory of the Republic of Korea;
2. A federation with a specific administrative district indicated by its name: A specific City/Do: Provided, That a federation may have its business territory covering at least two Cities/Dos, if it is deemed improper for the federation to cover only a single City/Do, in light of the peculiarities in the management of the federation.
(4) The Central Federation shall have its business territory covering the whole territory of the Republic of Korea, and shall be the only federation that has overall control over all business types and industries.
 Article 7 (Nature)
(1) Each cooperative, industrial cooperative, federation, or the Central Federation shall meet the following requirements, except as otherwise expressly provided for in this Act: <Amended by Act No. 9120, Jun. 13, 2008>
1. Its purpose shall be to provide mutual aid for members or member cooperatives, and not to pursue profit;
2. Its members or member cooperatives shall have equal right to vote on resolutions and in elections: Provided, That each member cooperative of a federation with a specific business type indicated by its name shall have the right to vote on resolutions and in elections in proportion to the number of members of the cooperative, as stipulated in the federation’s articles of association.
(2) No cooperative, industrial cooperative, or federation, or the Central Federation shall carry on its business solely for the benefit of specific members or member cooperatives.
 Article 8 (Prohibition of Political Involvement)
(1) A cooperative, industrial cooperative, or federation, or the Central Federation shall be prohibited from getting involved in any political activity.
(2) A cooperative, industrial cooperative, or federation, or the Central Federation shall not engage in any activity that supports a specific political party nor cause any specific candidate to be elected or not to be elected.
(3) No one shall commit any activity under paragraph (2) by making use of any cooperative, industrial cooperative or federation, or the Central Federation.
 Article 9 (Duties of the Government and Local Governments, etc. to Cooperate)
(1) The heads of central administrative agencies and local governments shall provide full cooperation in the business carried out by a cooperative, an industrial cooperative, or a federation, or the Central Federation, and the Government, local governments, and public organizations shall give priority to providing their facilities to them for their convenience, whenever any of them desires to use any of their facilities.
(2) Each local government may lease or provide a parcel of land or a facility, which is public property under control of the local government, to a cooperative, an industrial cooperative, or a federation, or the Central Federation free of charge for their use and benefit, as a part of its support for such projects as installation and operation of facilities that small and medium enterprises can use in common, joint exhibition or sales of the products from small and medium enterprises.
(3) The chairperson of the Central Federation may present his/her opinion to the Government concerning the development of cooperatives, industrial cooperatives, federations, or the Central Federation.
 Article 10 (Prohibition of Concurrent Employment of Public Officials)
No public official shall take office in any cooperative, industrial cooperative, federation, or the Central Federation as an executive officer or employee: Provided, That any public official elected under the Public Official Election Act may become an executive officer or an employee of any cooperative, industrial cooperative, federation, or the Central Federation, except a standing officer or employee of a cooperative, industrial cooperative, or federation, or the chairperson of the Central Federation.
 Article 11 (Application Mutatis Mutandis of Other Acts)
Except as otherwise provided for in this Act, the relevant provisions of the Civil Act or the Commercial Act shall apply mutatis mutandis to cooperatives, industrial cooperatives, federations, and the Central Federation.
 Article 12 (Supervision by Competent Administrative Agencies)
(1) Cooperatives that have a nationwide business territory pursuant to Article 6, industrial cooperatives, federations with a specific business type indicated by their names, and the Central Federation shall be supervised by the Minister of SMEs and Startups. <Amended by Act No. 10355, Jun. 8, 2010; Act No. 14839, Jul. 26, 2017>
(2) Cooperatives not subject to supervision by the Minister of SMEs and Startups under paragraph (1), industrial cooperatives, and federations with a specific administrative district indicated by their names shall be supervised by a Special Metropolitan City Mayor, a Metropolitan City Mayor, the Special Self-Governing City Mayor, a Do Governor, or the Special Self-Governing Province Governor (hereinafter referred to as "Mayor/Do Governor"): Provided, That mutual-aid projects prescribed in Articles 35 (1) 14, 82 (1) 10, and 93 (1) 15 shall be supervised by the Minister of SMEs and Startups. <Newly Inserted by Act No. 10355, Jun. 8, 2010; Act No. 13159, Feb. 3, 2015; Act No. 13869, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017>
(3) Where a cooperative, industrial cooperative, or federation has its business territory covering at least two jurisdictions of Sis/Dos, it shall be supervised by the Mayor/Do Governor having jurisdiction over the seat of its main office. <Amended by Act No. 10355, Jun. 8, 2010; Act No. 13869, Jan. 27, 2016>
(4) For the purpose of the sound development of mutual-aid projects pursuant to Articles 35 (1) 14, 82 (1) 10, 93 (1) 15, and 106 (1) 22 and the protection of contractors thereof, the Minister of SMEs and Startups shall formulate the standards for supervision in consultation with the Chairman of the Financial Services Commission and publicly announce them. <Newly Inserted by Act No. 13869, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017>
 Article 12-2 (Formulation of Policies on Small and Medium Enterprise Cooperatives)
(1) The Minister of SMEs and Startups shall formulate a plan to promote the vitalization of functions of small and medium enterprise cooperatives (hereinafter referred to as "promotion plan") every three years. <Amended by Act No. 14839, Jul. 26, 2017>
(2) Promotion plans shall include: <Amended by Act No. 14839, Jul. 26, 2017>
1. Basic direction-setting for policies to support the vitalization of functions of small and medium enterprise cooperatives;
2. Plans to promote joint business of small and medium enterprise cooperatives;
3. Education of executive officers and employees of small and medium enterprise cooperatives;
4. Plans for cooperation with other cooperatives;
5. Other matters prescribed by the Minister of SMEs and Startups to vitalize the functions of cooperatives.
(3) The Minister of SMEs and Startups may conduct fact-finding surveys to ascertain the actual operating conditions, etc. of small and medium enterprise cooperatives. <Newly Inserted by Act No. 15467, Mar. 13, 2018>
(4) The Minister of SMEs and Startups may request the heads of related central administrative agencies or Mayors/Do Governors to submit data and opinions necessary for formulating promotion plans prescribed in paragraph (1) and for conducting fact-finding surveys prescribed in paragraph (3). In such cases, upon receipt of such request, the heads of related central administrative agencies or Mayors/Do Governors shall cooperate therewith, except in extenuating circumstances. <Amended by Act No. 14839, Jul. 26, 2017; Act No. 15467, Mar. 13, 2018>
[This Article Newly Inserted by Act No. 13159, Feb. 3, 2015]
CHAPTER II COOPERATIVES
SECTION 1 Membership
 Article 13 (Qualification for Membership)
(1) Small or medium entrepreneurs under subparagraph 1 (a) of Article 2 who engage in the same type of business in a certain cooperative’s business territory and industrial cooperatives that engage in the same type of business or related types of business in a certain cooperative’s business territory shall be eligible for membership in such cooperative, as prescribed by articles of association of the relevant cooperative.
(2) A cooperative may, if there is a compelling reason to do so, admit any person other than a small and medium entrepreneur under subparagraph 1 (a) of Article 2 as a member, as stipulated by its articles of association.
(3) A cooperative may admit any small and medium enterpriser under subparagraph 1 (a) of Article 2 who engages in a different type of business as a member, as prescribed by its articles of association: Provided, That the number of such small or medium entrepreneurs shall not exceed 20/100 of the total number of members in the same type of business. <Newly Inserted by Act No. 10355, Jun. 8, 2010>
 Article 14 (Special Members)
A cooperative may admit economic organizations, institutions and organizations related to small and medium enterprises, or the relevant small or medium enterprises domiciled in the cooperative’s business territory as special members, as stipulated by its articles of association.
 Article 15 (Admission Procedures)
(1) Where the articles of association requires that a person who intends to be admitted to the cooperative obtain confirmation of his/her qualification for the membership of the cooperative, pay the amount equivalent to the number of subscribed units of equities as a contribution, and also requires that the cooperative collect the admission fee, the person shall become a member when he/she completes such payment or succeeds to all or some the equities of a member.
(2) A cooperative shall not reject any person qualified for membership in the cooperative and who is willing to join the cooperative, nor require such a person to accept any conditions more disadvantageous than those required at the time current members were admitted, without good cause.
(3) A cooperative may restrict the readmission of a person who has withdrawn from the cooperative at his/her discretion under Article 24 and of a person expelled from the cooperative under Article 25 (1) 3 for a prescribed period not exceeding two years, as prescribed by its articles of association. <Amended by Act No. 13159, Feb. 3, 2015>
 Article 16 (Contribution)
(1) Each member shall have at least one unit of equity in contribution as stipulated by the relevant articles of association.
(2) The value of each unit of equity shall be equal.
(3) The number of units of equity that a member is permitted to hold shall not exceed 20/100 of the total number of units of such equity.
(4) No member may assert against the cooperative by way of offset against his/her contribution.
(5) If a member suspends his/her business, closes down part of his/her business, or any other unavoidable cause exists, the cooperative may reduce the units of equity of such member only at the end of the corresponding business year, as stipulated by its articles of association.
(6) Article 26 shall apply mutatis mutandis to cases under paragraph (5).
(7) The liability of a member shall be limited to the amount of his/her contribution.
 Article 17 (Total Minimum Amount of Contributions to Cooperative)
A minimum amount of contribution a member shall be allowed to pay to a cooperative when the cooperative is established shall be prescribed by Presidential Decree.
 Article 18 (Revolving Contribution)
A cooperative may require its members to re-contribute all or some of the surplus earnings distributed in accordance with its articles of association, in addition to the contribution under Article 16. In this case, Article 16 (4) shall apply mutatis mutandis.
 Article 19 (Right to Vote on Resolutions or in Elections)
(1) Each member shall have one vote per resolution or in each election: Provided, That the right to vote in elections may be exercised only by each person who has been a member of the relevant cooperative from six month prior to the last day of the term of office for executive officers or representatives (or the day on which grounds for holding a by-election are finalized, in cases of a by-election) to the day of voting. <Amended by Act No. 9120, Jun. 13, 2008>
(2) In relation to rights to vote, the proviso to paragraph (1) shall not apply to cooperatives for which six months have not passed from the date on which the registration of establishment is filed. <Newly Inserted by Act No. 15467, Mar. 13, 2018>
(3) Each cooperative may restrict members’ right to vote on resolutions or in elections, as prescribed by its articles of association. <Amended by Act No. 9120, Jun. 13, 2008; Act No. 15467, Mar. 13, 2018>
(4) In order to exercise the right to vote on resolutions or in elections, members shall be present at the meeting: Provided, That they are entitled to exercise their right to vote on resolutions in writing or in electronic form for matters notified in advance, as prescribed by the articles of association. <Newly Inserted by Act No. 9120, Jun. 13, 2008; Act No. 15467, Mar. 13, 2018>
(5) Members are entitled to exercise their right to vote on resolutions or in elections by proxy as qualified under the articles of association. In this case, as prescribed by the articles of association, each proxy shall submit documents or electronic documents attesting his/her right of representation to a cooperative prior to exercising his/her right to vote on resolutions. <Newly Inserted by Act No. 9120, Jun. 13, 2008; Act No. 15467, Mar. 13, 2018>
(6) Persons who exercise their right to vote on resolutions or in elections in accordance with the proviso to paragraph (3) and paragraph (4) shall be deemed present at the meeting. <Amended by Act No. 9120, Jun. 13, 2008; Act No. 15467, Mar. 13, 2018>
(7) The number of members whom a proxy may represent shall be limited to only one person. <Amended by Act No. 15467, Mar. 13, 2018>
 Article 20 (Payment of Expenses)
(1) A cooperative may require its members to pay its expenses in accordance with its articles of association.
(2) Members of a cooperative may assert against the cooperative by way of offset in connection with the payment of expenses under paragraph (1).
 Article 21 (Charges and Fees)
A cooperative is entitled to collect charges and fees in accordance with its articles of association.
 Article 22 (Succession to Membership)
(1) Notwithstanding the provisions of Article 15, a person qualified for membership in a cooperative as the heir of a deceased member of the cooperative shall be deemed to be admitted at the time when the inheritance proceedings commence, if the person files an application for such membership within the time period stipulated by the cooperative’s articles of association. In this case, the heir member shall succeed to the rights and obligations of the deceased member with respect to the equity of the predecessor.
(2) If a deceased person has a number of heirs, paragraph (1) shall apply only to one person chosen by the heirs.
 Article 23 (Transfer of Equities)
(1) Members of a cooperative shall not transfer their equities without the approval of the cooperative.
(2) Any person who is not a member and who intends to acquire equity by transfer shall follow the process for admission to membership.
(3) A transferee of equity shall succeed to the rights and obligations of the transferor.
(4) Members of a cooperative may not hold units of equity in common.
 Article 24 (Discretionary Withdrawal)
Any member of a cooperative may withdraw from the cooperative by providing prior notice of thirty days.
 Article 25 (Statutory Withdrawal)
(1) A member shall be withdrawn from a cooperative on any of the following grounds:
1. Forfeiture of any qualifications for membership;
2. Death or dissolution;
3. Expulsion;
4. Declaration of Bankruptcy.
(2) Expulsion under paragraph (1) 3 shall be executed with regard to any of the following members, subject to the resolution of the general meeting of members:
1. A member who neglects his/her duty to pay any contribution or to bear any expenses, or any other duty that he/she owes to the cooperative;
2. A member who falls under any of the grounds for expulsion as stipulated in the articles of association.
(3) In cases under paragraph (2), the cooperative shall notify the member concerned of the ground for expulsion at least ten days prior to the opening of a general meeting of members to give him/her an opportunity to make a statement at the general meeting.
(4) Any intended expulsion shall not be effective against the supposedly expelled member unless the member is notified of the intended expulsion.
 Article 26 (Refund of Withdrawing Member’s Equity and Suspension of Refund)
(1) A member who withdraws from a cooperative may request the cooperative to refund his/her equity in accordance with the articles of association.
(2) The equities under paragraph (1) shall be determined according to the assets of the cooperative as at the end of the business year immediately preceding the year in which the date of withdrawal falls.
(3) In computing the equities under paragraph (2), the cooperative may, if it is unable to fully perform its obligations with the assets it has on hand, request the withdrawing member to pay the portion of losses he/she shall bear in accordance with the articles of association.
(4) The cooperative may suspend the refund of equity units until the withdrawing member fully performs his/her obligations owed to the cooperative.
(5) The rights to claim under paragraphs (1) and (3) shall extinguished by prescription if they are not exercised within two years after withdrawal.
SECTION 2 Establishment
 Article 27 (Promoters)
(1) In order for a cooperative to be established, any of the following promoters are required who are qualified for membership in the cooperative under Article 13: Provided, That the same shall not apply to special industries recognized as unlikely to meet the standards under the following subparagraphs in light of the number of small and medium entrepreneurs under subparagraph 1(a) of Article 2: <Amended by Act No. 10355, Jun. 8, 2010>
1. Establishment of a cooperative with its business territory covering a single City/Do or a certain area of a single City/Do requires 30 or more promoters: Provided, That the establishment of such cooperative consisting of wholesalers or retailers requires 50 or more promoters;
2. Establishment of a cooperative with its business territory spanning the whole Republic of Korea or two or more Cities/Dos requires 50 or more promoters: Provided, That such cooperative consisting of wholesalers or retailers requires 70 or more promoters.
(2) Each cooperative shall maintain the number of its members equivalent to the number of promoters under each subparagraph of paragraph (1), even after it is duly formed.
(3) The Minister of SMEs and Startups may publicly notify necessary matters, such as the stipulation that several Cities/Dos or Sis/Guns/Gus each shall have the proper minimum number of promoters in order for the promoters under each subparagraph of paragraph (1) to smoothly conduct joint business, etc. in a business territory. <Newly Inserted by Act No. 10355, Jun. 8, 2010; Act No. 14839, Jul. 26, 2017>
 Article 28 (Inaugural General Meeting)
(1) Promoters shall prepare the articles of association and issue a public notice of the articles of association, along with the time and place of the inaugural general meeting to hold such a meeting.
(2) The public notice under paragraph (1) shall be given at least two weeks before the opening date of the inaugural general meeting.
(3) The adoption or amendment of the articles of association prepared by the promoters, the establishment of a business plan, and other decisions on the matters necessary for the establishment of a cooperative shall be made by the resolution adopted at the inaugural general meeting.
(4) The resolution proposed at the inaugural general meeting shall be adopted with the attendance of a majority of the persons who are qualified for membership in the cooperative and consent to the establishment of the cooperative and with the concurring vote of at least two-thirds of those present at the meeting.
 Article 29 (Mandatory Provisions of Articles of Association)
(1) The articles of association of a cooperative shall contain the following matters:
1. Objectives;
2. Name;
3. Business territory;
4. Business;
5. Addresses of places of business;
6. Qualifications for members and proxies;
7. Admission, withdrawal, expulsion of members;
8. Prescribed number and appointment of officers;
9. Value per unit of equity and payment method;
10. Allocation of expenses;
11. Business year;
12. Appropriation of surplus earnings and disposition of deficit;
13. Amount and accumulation method of reserves;
14. Matters concerning the collective standards and inspection of products;
15. Grounds for dissolution;
16. Method of issuing public notices.
(2) In addition to the provisions enumerated in paragraph (1), the articles of association of a cooperative shall, if any person is determined to contribute in kind, provide for the name of such person and the kind, quantity, and value of the assets to be conveyed in contribution, and the number of units of equity given thereto, while the articles of association shall, if there is any asset to be received after the formation of the cooperative, provide for the kind, quantity, and value of such assets and the name of the transferor.
 Article 30 (Mandatory Provisions of By-Laws or Regulations)
(1) The following matters may be prescribed by the by-laws in addition to the provisions of the articles of association:
1. Matters concerning budget and accounts;
2. Matters concerning imposition of admission fees and expenses;
3. Other matters concerning imposition of duties on members.
(2) The following matters may be provided by regulations in addition to the articles of association:
1. Matters concerning the general meeting, the board of directors, and other meetings;
2. Matters concerning execution of business affairs;
3. Matters concerning members;
4. Matters concerning executive officers;
5. Other necessary matters.
 Article 31 (Minutes of Meetings)
(1) Minutes shall be kept of the proceedings of the inaugural general meeting.
(2) The minutes shall record the progress of and resolutions at the meeting, and shall be signed by the chairperson and all promoters.
 Article 32 (Authorization for Establishment)
(1) Promoters shall submit, upon closing the inaugural general meeting, the articles of association, a business plan, and a written statement that describes the names and addresses of executive officers and other necessary matters, without delay, to the competent administrative agency to obtain an authorization for establishment.
(2) If any promoter refuses to sign the minutes under Article 31 (2), a majority of promoters may file an application for authorization for establishment, along with an accompanying statement explaining such situation.
(3) Necessary matters concerning the authorization for establishment under paragraph (1) shall be prescribed by Presidential Decree.
 Article 33 (Transfer of Business to President)
Promoters shall, upon obtaining the authorization under Article 32, transfer the business to the president within two weeks from the date of such authorization.
 Article 34 (Payment of Contributions)
(1) The president shall, upon having the business transferred pursuant to Article 33, require persons who intend to join the cooperative as a member to pay their contributions within three weeks from the date on which the business is transferred.
(2) The payment of contributions under paragraph (1) shall not be made in installments.
(3) Persons who make payments in kind in contribution shall deliver all assets subject to such contribution within the payment period prescribed by paragraph (1).
SECTION 3 Business
 Article 35 (Business Activities)
(1) Every cooperative may conduct all or some of the following business activities in order to achieve the objectives of its establishment: <Amended by Act No. 9893, Dec. 30, 2009; Act No. 10953, Jul. 25, 2011; Act No. 13159, Feb. 3, 2015>
1. Joint business activities that involve production, processing, receipt of orders, sales, purchases, storage, transportation, environmental improvements, trademarks, services, etc., and the development, management, and operation of commercial complexes and common facilities for such activities;
2. Planning business coordination between members and coordination according to the plan, and filing petitions to the competent administrative agency for conciliation where anyone other than small or medium enterprises encroaches on the business field of the relevant cooperative;
3. Intermediation and coordination in consignment transactions between consigning enterprises under the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises and consignee enterprises which are members of the relevant cooperative;
4. Matters concerning the collective standards for products and joint inspection, testing, and research;
5. Granting or intermediation of loans (including discount of notes) to members of the cooperative for business funding, and borrowing of money for funding projects executed by the cooperative itself;
6. Projects related to guidance for business administration, technology and quality control, and also survey, research, education, and provision of information concerning the business affairs of members of the cooperative;
7. Conclusion of collective contracts to promote the economic interests of members;
8. Exportation of products manufactured by members and importation and research on the prices of raw materials and facilities necessary for producing their products;
9. Welfare and fringe benefits for members;
10. Business affairs entrusted by the State, a local government, the Central Federation, or a federation;
11. Establishment and management of overseas facilities for exhibition and sales to facilitate exportation by members;
12. Profit-making business activities necessary for achieving the objectives of its establishment that have obtained approval from the competent administrative agency;
13. Support for negotiations and mediation of subcontract consideration between a prime contractor and a subcontractor who is a member, under the Fair Transactions in Subcontracting Act;
14. Mutual-aid projects (excluding guarantee projects necessary for the performance, etc. of liabilities or obligations of members);
15. Other business activities incidental to those referred to in subparagraphs 1 through 14.
(2) If necessary for pushing ahead with any of the projects referred to in paragraph (1), a cooperative may invest in any other corporation after undergoing a resolution by the board of directors, as determined by articles of association: Provided, That where a cooperative intends to invest the amount surpassing the sum of the contributions and surplus of the cooperative, it shall obtain approval from the competent administrative agency. <Amended by Act No. 13869, Jan. 27, 2016>
(3) Any cooperative may allow any person other than its own members to use its services so long as such use does not cause any inconvenience to its members, as prescribed by the articles of association. <Amended by Act No. 9120, Jun. 13, 2008>
 Article 35-2 (Mutual-Aid Regulations)
(1) Where a cooperative conducts a mutual-aid project referred to in Article 35 (1) 14, it shall prescribe mutual-aid regulations and obtain authorization from the Minister of SMEs and Startups. The same shall apply to amendments to such regulations. <Amended by Act No. 13869, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017>
(2) Mutual-aid regulations referred to in paragraph (1) shall include matters necessary for managing a mutual-aid project, as prescribed by Ordinance of the Ministry of SMEs and Startups, such as the scope of the mutual-aid project, matters concerning the implementation of the mutual-aid project, the mutual-aid fund, agreements and fees for mutual aid, and mutual aid liability reserves. <Amended by Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017>
(3) A cooperative that intends to obtain the authorization referred to in paragraph (1) shall satisfy the following requirements: <Newly Inserted by Act No. 13869, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017>
1. It shall have at least 500 million won in capital;
2. Its material facilities including the personnel, computer system, etc. shall meet the standards determined by Ordinance of the Ministry of SMEs and Startups;
3. Its project plan shall meet the standards, such as financial solvency, determined by Ordinance of the Ministry of SMEs and Startups.
[This Article Newly Inserted by Act No. 10953, Jul. 25, 2011]
 Article 35-3 (Extinctive Prescription of Right to Claim Mutual Aids, etc.)
The right to claim mutual aids and the right to claim the return of fees for mutual aids or reserve funds in respect of the mutual-aid projects prescribed in Article 35 (1) 14 shall expire as its extinctive prescription is completed, unless it is exercised within three years for the right to claim mutual aids, and two years for the right to claim the return of fees for mutual aids or reserve funds., respectively.
[This Article Newly Inserted by Act No. 13869, Jan. 27, 2016]
 Article 36 (Business Plan)
(1) Any cooperative shall prepare a business plan and a revenue and expenditure budget within two months after the date of commencement of each business year, as prescribed by Presidential Decree and then go through the resolution of the general meeting. The same shall also apply to any revision thereto.
(2) Ordinary expenses and operating expenses urgently required before the resolution is adopted at a general meeting under paragraph (1) may be disbursed in accordance with the budget for the preceding year.
 Article 37 (Collective Standards and Quality Certification)
(1) Any cooperative may establish the collective standards applicable to products produced or manufactured by its members pursuant to Article 27 (1) of the Industrial Standardization Act. In such cases, the cooperative may establish such standards in conformity with the standards prescribed by other statutes, if such standards exist. <Amended by Act No. 8486, May 25, 2007>
(2) Any cooperative may certify the quality of a product in conformity with the collective standards established under paragraph (1), as prescribed by Ordinance of the Ministry of SMEs and Startups. <Amended by Act No. 8852, Feb. 29, 2008; Act No. 11690, Mar. 23, 2013; Act No. 14839, Jul. 26, 2017>
 Article 38 (Inspection, etc. According to Collective Standards)
(1) Any cooperative may inspect products produced by its members to determine whether they conform to its collective standards, as prescribed by its articles of association.
(2) Every cooperative shall establish inspection regulations to prescribe the matters necessary for its inspections.
(3) The inspection regulations under paragraph (2) may provide for the matters concerning the inspection fee and late payment charge leviable on members.
(4) The provisions of paragraphs (1) through (3) may apply mutatis mutandis to those who are not members, as prescribed by Presidential Decree, if the competent administrative agency deems necessary.
 Article 39 (Quality Certification Marks)
(1) Any member of a cooperative may put a mark on each of his/her products, which has successfully passed an inspection, to indicate that its products conform to the collective standards, as prescribed by inspection regulations.
(2) Paragraph (1) shall also apply mutatis mutandis to those who are not members, in cases where the competent administrative agency takes a measure prescribed in Article 38 (4).
 Article 40 (Collective Contract)
(1) The collective contract under Article 35 (1) 7 shall be made in writing with a clear statement therein that it is a collective contract, subject to a prior resolution of the board of directors: Provided, That if it is deemed urgent as there is insufficient time to convene the board of directors to enter into a collective contract, the president may execute such collective contract and then shall convene the board of directors without delay to obtain ratification thereof, as prescribed by the articles of association.
(2) Each collective contract of a cooperative shall be binding on every member of the cooperative.
(3) No member of a cooperative may sign a contract that contravenes a collective contract of the cooperative.
(4) If any cooperative meets the requirements of inspection under the provisions of Articles 37 through 39, the Government, a public organization, or a government-invested institution shall provide an opportunity to such cooperative preferentially whenever it purchases any goods.
 Article 41 (Fund for Vitalizing Cooperative Functions)
(1) Any cooperative may create and operate a fund for vitalizing the cooperative with aims of vitalizing its functions, and pushing ahead with its business in a sustainable and efficient way.
(2) Matters necessary for the creation, operation, etc. of the fund for vitalizing a cooperative under paragraph (1) shall be prescribed by the articles of association.
 Article 42 (Function Vitalization System)
(1) Every cooperative shall make efforts to establish an operating system under which it can vitalize its own functions and push ahead with its business efficiently (hereinafter referred to as the "function vitalization system").
(2) The Minister of SMEs and Startups or the Mayor/ Do governor may give priority to providing more assistance to cooperatives that have established a function vitalization system than other cooperatives in promoting the measures for supporting small and medium enterprises. <Amended by Act No. 14839, Jul. 26, 2017>
(3) Necessary matters concerning the details of the function vitalization system and the guidelines for assistance therefor may be prescribed and publicly notified by the Minister of SMEs and Startups or may be prescribed by Municipal Rule of the Mayor/ Do governor concerned. <Amended by Act No. 14839, Jul. 26, 2017>
SECTION 4 Organs
 Article 43 (General Meeting)
(1) Each cooperative shall hold general meetings.
(2) A general meeting shall be composed of members of the cooperative.
(3) A regular general meeting shall be held once every business year at the time prescribed by the articles of association.
(4) An extraordinary general meeting may be called when deemed necessary, as prescribed by the articles of association.
 Article 44 (General Meeting of Representatives)
(1) A cooperative may, if the number of its members exceeds 200, hold a general meeting of representatives in lieu of the general meeting of members, as stipulated by its articles of association.
(2) The prescribed number of representatives forming the general meeting of representatives under paragraph (1) shall be at least 1/10 of the total number of members as at the time when the representatives are elected: Provided, That the total number of representatives may be fixed at 100 persons if it exceeds 100 persons.
(3) The provisions governing general meetings of members shall apply mutatis mutandis to general meetings of representatives: Provided, That the general meeting of representatives shall have no power to adopt a resolution concerning any matter under subparagraphs 2 and 3 of Article 49.
(4) The provisions relevant to directors of Articles 50 (2) and (3) and 52 shall apply mutatis mutandis to the method of election and the terms of office for representatives. <Amended by Act No. 15467, Mar. 13, 2018>
 Article 45 (Calling of General Meetings of Members)
(1) The president shall have the power to call general meetings of members.
(2) If a member requests the president to call an extraordinary general meeting in writing with the consent of at least 1/4 of all members, specifying the purposes of and reasons for the meeting, the president shall convene the extraordinary general meeting within two weeks from the day on which such request is made.
(3) If a member has filed a request to call a general meeting under paragraph (2) but no person has the authority to call the general meeting or the president does not call such general meeting within two weeks from the day on which such a request was filed, the auditor shall call the meeting within seven days. In this case, the auditor shall act on behalf of the chairperson.
(4) If the auditor does not or is unable to call a general meeting within the time provided for in paragraph (3), the representative of the members who requested to call the general meeting under paragraph (2) shall call the meeting. In this case, the representative of the members shall act on behalf of and for the chairperson.
(5) If the office of the president is vacant or the president is unable to call a general meeting due to any unavoidable cause, one of directors in the order stipulated by the articles of association shall call the meeting.
 Article 46 (Procedure for Holding Meetings)
A general meeting shall be called at least seven days before the scheduled opening date of the meeting in the manner prescribed by the articles of association with the items on its agenda clearly stated.
 Article 47 (Matters Subject to Resolution at General Meeting)
(1) The following matters shall be subject to the resolution of a general meeting:
1. Amendment to the articles of association;
2. Establishment, amendment, or repeal of by-laws;
3. Establishment of or revision of the revenues and expenditures budgets and the business plan for each business year;
4. Approval on settlement of accounts;
5. Methods of charging and collecting expenses;
6. Expulsion of a member;
7. Dissolution, merger, or split-off of the cooperative;
8. Election and removal of an officer;
9. Appropriation of reserve funds;
10. Acquisition and disposition of real property;
11. Other matters specified by the articles of association.
(2) Any amendment to the provisions specified by Presidential Decree in the articles of association shall be made with prior authorization of the competent administrative agency: Provided, That the same shall not apply to an amendment made in accordance with the articles of association set up by the competent administrative agency.
(3) The power to make an amendment concerning the matters under paragraph (1) 3 and the matters under subparagraphs 5, 10, and 11 of the same paragraph may be delegated to the board of directors, as stipulated by the articles of association.
 Article 48 (Resolution of General Meetings)
(1) General meetings shall adopt resolutions with the attendance of a majority of all members and with the concurring vote of a majority of those present, except as otherwise provided by this Act, the articles of association, or by-laws.
(2) The president shall take the chair of the general meeting: Provided, That a person appointed at the general meeting shall act on behalf of the chairperson if the chairperson is absent from the meeting for any reason.
(3) The general meeting shall have the power to adopt a resolution only concerning the matters notified in advance pursuant to Article 46: Provided, That the same shall not apply if any provision in the articles of association exists to the contrary.
(4) Minutes of meeting shall be prepared to keep records of the proceedings of general meetings and resolutions adopted thereat, and the chairperson and two or more directors designated at the general meeting shall write their signatures and affix their seals thereon.
(5) A member of a cooperative shall not participate in a resolution on any matter, if his/her interests conflict with the cooperative's interests in connection with such matter.
 Article 49 (Extraordinary Resolution)
A resolution concerning any of the following matters shall be adopted with the attendance of a majority of all members and the concurring vote of at least two-thirds of those present at the meeting:
1. Amendment to the articles of association;
2. Expulsion of a member;
3. Dissolution, merger, or split-off of the cooperative.
 Article 50 (Executive Officers)
(1) Every cooperative shall have one president, at least five directors, one standing director, and up to two auditors as its executive officers. In such cases, the title of the standing director may be stipulated by the articles of association.
(2) Executive officers excluding standing directors shall be elected from among the members of the relevant cooperative at a general meeting, as specified by the articles of association. <Amended by Act No. 15467, Mar. 13, 2018>
(3) A member of a cooperative who wishes to be elected president, director, or auditor shall be a member of the relevant cooperative continuously for the period from a date not later than six months before the date on which the term of office for the president, director or auditor he/she intends to be elected terminates (or the date on which grounds for holding a by-election are made final and conclusive, in cases of by-election, etc.) to the date of the election. <Newly Inserted by Act No. 15467, Mar. 13, 2018>
(4) Paragraph (3) shall not apply where a cooperative for which six months have not passed from the date on which the registration of establishment is filed elects the president, directors or auditors. <Newly Inserted by Act No. 15467, Mar. 13, 2018>
(5) Qualifications for candidacy of persons admitted as members of a cooperative under Article 13 (2) or (3) for the president may be restricted, as prescribed by the articles of association. <Newly Inserted by Act No. 13159, Feb. 3, 2015; Act No. 15467, Mar. 13, 2018>
(6) The standing director shall be appointed by the president from among the non-member candidates qualified as prescribed by Presidential Decree and recommended by the board of directors. <Amended by Act No. 13159, Feb. 3, 2015; Act No. 15467, Mar. 13, 2018>
(7) The offices of president, directors, and auditors among executive officers of a cooperative shall be non-standing. <Amended by Act No. 13159, Feb. 3, 2015; Act No. 15467, Mar. 13, 2018>
 Article 51 (Grounds for Disqualification of Executive Officers)
(1) None of the following persons can be an executive officer of a cooperative: <Amended by Act No. 12311, Jan. 21, 2014>
1. An incompetent under the adult guardianship, or a person declared bankrupt and not yet reinstated;
2. A person whose qualification is deprived of or suspended by operation of law or a court ruling;
3. A person in whose case two years have not passed since his/her imprisonment without labor or greater punishment declared by a court was completely executed (including where it shall be deemed completely executed) or exempted;
4. A person who is under suspension of the execution of his/her imprisonment without labor or greater punishment declared by a court;
5. A person in whose case two years have not passed since he/she became subject to a fine of at least one million won under this Act in connection with any business affair of a cooperative;
6. A person who had been elected as an executive officer under this Act but his/her election was held invalid under this Act due to a cause attributable to him/her, and two years have not passed since his/her election was finally held invalid;
7. Deleted. <by Act No. 13869, Jan. 27, 2016>
(2) An executive officer shall be automatically dismissed from his/her office, if he/she falls under any subparagraph of paragraph (1).
(3) Acts in which an executive officer dismissed under paragraph (2) was involved before his/her dismissal shall remain effective.
 Article 52 (Terms of Office for Executive Officers)
(1) The term of office for a non-standing officer shall be four years, while that for a standing officer shall be three years: Provided, That the term of office for each executive officer appointed at the time of the establishment of a cooperative shall be one year.
(2) Every executive officer may re-elected: Provided, That presidents may be re-appointed only twice. <Newly Inserted by Act No. 15467, Mar. 13, 2018>
(3) The term of office for an executive officer who is elected to fill a vacancy shall be the remaining term of office for his/her predecessor, while the term of office for an executive officer who is elected separately during the term of office for other executive officers as a result of an increase in the number of executive officers shall expire at the end of the term of office for other executive officers incumbent as of the time of his/her appointment: Provided, That the term of office for a standing director shall be three years. <Amended by Act No. 15467, Mar. 13, 2018>
(4) If any vacancy exists for an executive officer, a person shall be elected to fill such vacancy within two months from the day on which the event or cause giving rise to such vacancy occurs: Provided, That a vacancy for an executive officer need not be filled if the remaining term of office is less than six months, subject to the resolution of the board of directors. <Amended by Act No. 15467, Mar. 13, 2018>
(5) The term of office for executive officers newly elected subsequently after all executive officers retire from their offices during their term of office shall be the term under the main sentence of paragraph (1): Provided, That the term of office for such executive officers shall expire on the closing date of the annual general meeting held during the year in which the term of office for them expires. <Amended by Act No. 15467, Mar. 13, 2018>
 Article 53 (Restrictions on Election Campaign)
(1) No person shall engage in election campaigning when it is not the period of election campaign starting from the date following the deadline for candidate registration to the date preceding the election day. <Newly Inserted by Act No. 15467, Mar. 13, 2018>
(2) No person shall engage in any of the following conduct with intent to cause him/herself or any specific person to be successfully elected to an office or cause any specific person to be defeated in an election: <Amended by Act No. 15467, Mar. 13, 2018>
1. Providing, offering to provide, or promising to provide money, goods, entertainment, or any interest in property, or a public or private job, to any voter;
2. Engaging in any conduct provided for in subparagraph 1 with regard to any person who intends to become or has become a candidate, with intent to cause the person not to become a candidate or withdraw his/her candidacy.
(3) No person shall receive any benefit or public or private job, specified in paragraph (2) 1 or 2 or accept any offer to provide such benefit or job. <Amended by Act No. 15467, Mar. 13, 2018>
(4) Notwithstanding paragraph (1), no person who intends to become an executive officer shall canvass members of the cooperative door to door, or gather them in a specific place for his/her election campaign regardless of the period prescribed in the same paragraph. <Amended by Act No. 15467, Mar. 13, 2018>
(5) No person shall publish any false information verbally or in the form of poster, or in any other way in connection with the election of an executive officer or defame any candidate by disclosing false information to the public. <Amended by Act No. 15467, Mar. 13, 2018>
(6) No person shall engage in election campaigning by any means other than the following: <Amended by Act No. 13159, Feb. 3, 2015; Act No. 15467, Mar. 13, 2018>
1. Posting campaign posters;
2. Distributing official electoral information and printed materials;
3. Holding joint speeches and public forums;
4. Using telephones (including text messages) and computer communications (including electronic mails).
(7) Detailed matters concerning the methods of election campaigns under paragraph (6) shall be prescribed by Ordinance of the Ministry of SMEs and Startups. <Newly Inserted by Act No. 13159, Feb. 3, 2015; Act No. 14839, Jul. 26, 2017; Act No. 15467, Mar. 13, 2018>
 Article 54 (Organization and Operation of Electoral Management Committee)
(1) Each cooperative may organize and operate an electoral management committee to manage its elections of executive officers in a fair manner.
(2) Matters necessary for the functions, composition, operation, etc. of the electoral management committee shall be prescribed by the articles of association.
 Article 55 (Board of Directors)
(1) The board of directors shall have the power to make decisions on the execution of business affairs of the cooperative.
(2) The board of directors shall be composed of the president, directors, and the standing director.
(3) The president shall have the power to call the board of directors and shall take the chair of the meeting.
(4) The board of directors shall adopt a resolution with the attendance of a majority of its constituent members and the concurring vote of a majority of those present at the meeting.
(5) No member of the board of directors who has a special interest in matters related to his/her status or in which his/her interest conflicts with the interest of the cooperative shall participate in making resolutions on such matters. In such cases, presidents, directors and standing directors who are unable to participate in making resolutions shall not be included in the number of members of the board of directors prescribed in paragraph (4). <Newly Inserted by Act No. 15467, Mar. 13, 2018>
(6) Directors may participate in voting by means of a written statement or an electronic document, or by proxy, as prescribed by the articles of association. <Amended by Act No. 15467, Mar. 13, 2018>
(7) Minutes of meetings shall be prepared to keep records of the proceedings of the board of directors, and the chairperson and two or more directors designated by the board of directors shall write their signatures. <Amended by Act No. 15467, Mar. 13, 2018>
 Article 56 (Matters Subject to Resolution of Board of Directors)
The board of directors shall have the power to adopt resolutions on the following matters: <Amended by Act No. 13869, Jan. 27, 2016>
1. Matters concerning the standard qualifications for membership;
2. Matters concerning borrowing and repayment of loans;
3. Matters to be included in the agenda of general meetings for resolutions;
4. Matters delegated by general meetings and matters concerning execution of business affairs of the cooperative;
5. Deleted. <by Act No. 15467, Mar. 13, 2018>
6. Establishment, amendment, or repeal of regulations;
7. Investment in another corporation;
8. Other matters prescribed by the articles of association.
 Article 57 (President’s Duties)
The president shall represent a cooperative and exercise general supervision over its affairs.
 Article 58 (Duties of Standing Director)
The standing director of a cooperative shall assist the president in executing the business affairs of the cooperative and shall vicariously perform the duties of the president (excluding the president’s duties to call general meetings and preside over general meetings as the chairperson; hereinafter the same shall apply), if the office of president is vacant or the president is unable to perform his/her duties due to any unavoidable cause.
 Article 59 (Vacancy for Standing Director)
If the office of standing director is vacant or if the standing director is unable to perform his/her duties due to any unavoidable cause, a person appointed by the president as stipulated by the articles of association among non-members shall act on behalf of the director.
 Article 60 (Auditors’ Duties)
(1) Auditors shall audit the status of property and of execution of business affairs of the cooperative and report the results thereof to the general meeting.
(2) Auditors shall, whenever they discover any wrongdoing in the status of property or execution of business affairs of the cooperative, report it to the general meeting, the competent administrative agency, the federation, or the Central Federation.
(3) An auditor shall represent the cooperative where the cooperative enters into a contract with the president or a director. The same shall also apply to lawsuits between the cooperative and the president or a director.
 Article 61 (Auditors' Liability)
Article 65 of the Civil Act shall apply mutatis mutandis where the auditor neglects his/her duties.
 Article 62 (Prohibiting Executive Officers from Concurrently Holding Two Offices)
(1) No executive officer of a cooperative shall concurrently hold another office of the cooperative: Provided, That the same shall not apply if permission therefor has been obtained from the competent administrative agency.
(2) No president shall concurrently hold the office of president of another cooperative.
(3) No standing director of a cooperative shall hold another full-time job in any place other than the cooperative: Provided, That he/she may concurrently work as an executive officer of a cooperation in which the cooperative holds at least 50/100 of the total number of exercisable voting stocks, if approved by the board of director. <Amended by Act No. 13159, Feb. 3, 2015>
 Article 63 (Keeping Articles of Association and Other Documents)
(1) The president shall keep the articles of association, by-laws, minutes of general meetings and the board of directors, and the list of members at the principal place of business.
(2) The list of members shall contain the following descriptions concerning each member:
1. Name or title and address;
2. Date of Admission;
3. Number of units of contribution, amount of contribution paid, and date of payment;
4. Number of employees, total amount of assets, facilities, capacity, and performance of production, and other necessary matters.
(3) Any member or creditor of a cooperative may request the president to allow him/her to inspect the documents under paragraph (1) or make copies thereof at any time.
(4) The president shall not reject any request under paragraph (3) without good cause.
 Article 64 (Keeping Documents Relating to Settlement of Accounts)
(1) The president shall prepare a business report, a balance sheet, an income statement, and a proposed plan for appropriation of surplus funds or disposition of any deficit, and submit them to the auditors by no later than seven days prior to the opening date of the annual general meeting, and retain them at the principal place of business.
(2) The president shall submit the documents under paragraph (1), along with the auditors’ written opinion attached thereto to the annual general meeting for approval.
(3) Any creditor of a cooperative may request the president to allow him/ her to inspect the documents under paragraph (1) or make copies thereof at any time.
(4) The president shall not reject any request under paragraph (3) without good cause.
 Article 65 (Inspection of Accounting Books, etc.)
(1) Members of a cooperative may request the president, with consent of at least one-fifth of all members, to allow them to inspect accounting books and documents or make copies thereof at any time.
(2) The president shall not reject any request under paragraph (1) without good cause.
 Article 66 (Request for Re-election of Officers)
(1) Members of a cooperative may request the cooperative, with the joint signature of at least one-fourth of all members, to hold a re-election for all or some of its executive officers, as stipulated by the articles of association.
(2) If the general meeting adopts a resolution approving the request under paragraph (1) by the attendance of a majority of all members and the concurring vote of at least two-thirds of members present at the meeting, the executive officers concerned shall be automatically dismissed from office.
(3) The president shall, upon receiving a request under paragraph (1), notify the executive officers concerned of the reason for re-election at least seven days before the scheduled date of the general meeting and provide them with an opportunity to make statements on their cases at the general meeting.
SECTION 5 Accounting
 Article 67 (Business Year)
(1) The business year of a cooperative shall correspond to the fiscal year of the Government.
(2) Necessary matters concerning accounting in addition to the provisions of this Act shall be stipulated by by-laws in compliance with the accounting principles established by the chairperson of the Central Federation.
 Article 68 (Devaluation of Unit of Contribution)
(1) Once a cooperative resolves to devalue the unit of contribution, it shall prepare a balance sheet within two weeks from the date of such resolution.
(2) The cooperative shall issue a public notice to inform creditors that any one who has an objection shall file an application within the time period under paragraph (1) and shall also issue a peremptory notice to each informed creditor individually.
(3) The time period to file an objection under paragraph (2) shall be at least thirty days.
 Article 69 (Filing Objections)
(1) It shall be deemed that creditors who have not filed an objection during the time period under Article 68 (2) have approved the devaluation of the unit of contribution.
(2) The cooperative shall, upon receiving such objection from a creditor, fully perform its obligations or tender any adequate asset as security to the creditor.
 Article 70 (Reserve Funds and Funds Carried-Over)
(1) Each cooperative shall accumulate at least 1/10 of its surplus earnings in its reserve funds until such reserve funds reach the amount stipulated by the articles of association.
(2) The reserve funds under paragraph (1) shall be accumulated until they reach at least 1/2 of the total amount of contributions.
(3) The reserve funds under paragraph (1) shall not be used for any purpose other than appropriation to cover deficits.
(4) Each cooperative shall carry over at least 1/10 of surplus earnings for each business year to the following business year for appropriation to operating expenses.
 Article 71 (Appropriation of Surplus Earnings)
(1) No cooperative shall distribute surplus earnings unless there are any earnings remaining after appropriating them to cover deficit and deducting the reserve funds and funds carried-over under Article 70.
(2) The dividends of surplus earnings shall be distributed to each member in proportion to the amount of their contribution and patronage of the cooperative business as stipulated by the articles of association.
 Article 72 (Prohibition on Acquisition of Equities)
No cooperative shall acquire equities from its members or receive equities as the subject matter of any pledge.
SECTION 6 Dissolution and Liquidation
 Article 73 (Dissolution)
(1) A cooperative shall be dissolved on any of the following grounds:
1. Resolution at a general meeting;
2. Merger or split-off of the cooperative (excluding a split-off under Article 77 (2));
3. Bankruptcy of the cooperative;
4. Occurrence of a cause of dissolution stipulated by the articles of association;
5. Order of dissolution issued by the competent administrative agency.
(2) A cooperative shall report its dissolution to the competent administrative agency within two weeks from the date of dissolution, if it is dissolved on a ground set forth in paragraph (1) 1, 4, or 5.
(3) The competent administrative agency may, when it has issued an order of dissolution under paragraph (1) 5, commission registration of dissolution. <Newly Inserted by Act No. 9120, Jun. 13, 2008>
 Article 74 (Procedure for Merger)
(1) A merger of cooperatives shall be subject to the prior resolution at a general meeting.
(2) Articles 68 and 69 shall apply mutatis mutandis to a merger of cooperatives.
(3) A cooperative that intends to merge with another cooperative shall submit a statement on the reasons for the merger, and a business plan and the articles of association for the surviving cooperative or newly established cooperative, to the competent administrative agency for consultation.
 Article 75 (Promoters of Merger)
(1) In cases where a cooperative is established as a result of a merger, promoters appointed from among the members of the merged cooperatives at the general meeting of each cooperative shall jointly prepare the articles of association, appoint executive officers, and follow other procedures necessary for establishment.
(2) The term of office for the executive officers under paragraph (1) shall expire on the opening date of the next annual general meeting.
(3) Article 49 shall apply mutatis mutandis to the method of appointment of the promoters under paragraph (1).
 Article 76 (Timing and Effects of Merger)
(1) A merger of cooperatives shall become effective when the cooperative surviving the merger or the cooperative formed as a result of the merger completes the registration of merger at the registry office at the location of its principal office.
(2) The cooperative surviving a merger or the cooperative formed as a result of a merger shall succeed to the rights and obligations of the cooperative dissolving upon such merger.
 Article 77 (Split-off)
(1) A cooperative that intends to split off one of its segments shall determine, by resolution at its general meeting, the extent of the rights and obligations to which the cooperative to be established after the split-off shall succeed.
(2) If a cooperative engages in two or more different types of business as specified in the guidelines prescribed by Presidential Decree, it can be split off with the concurring vote of a majority of the members in some types of business, notwithstanding Articles 47 (1) and 49.
(3) Articles 68 and 69 shall apply mutatis mutandis to the split-off of a cooperative.
CHAPTER III INDUSTRIAL COOPERATIVES
SECTION 1 Membership
 Article 78 (Qualification for Membership)
Small and medium entrepreneurs defined in subparagraph 1 (a) of Article 2 and specified by the articles of association of an industrial cooperative shall be qualified for membership in the industrial cooperative: Provided, That Article 13 (1) and (3) shall apply mutatis mutandis to members of an industrial cooperative engaged in an identical type of business. <Amended by Act No. 10355, Jun. 8, 2010>
 Article 79 (Provisions Applicable Mutatis Mutandis)
Articles 15 through 26 shall apply mutatis mutandis to the members of each industrial cooperative. In such cases, "cooperative" shall be construed as "industrial cooperative" and "20/100" in Article 16 (3) as "30/100," respectively.
SECTION 2 Establishment
 Article 80 (Promoters)
The establishment of an industrial cooperative shall be initiated by five or more promoters who are qualified for membership therein: Provided, That Article 27 (1) 1 and 2 shall apply mutatis mutandis to a promoter who intends to establish an industrial cooperative in a City/Do or nationwide. <Amended by Act No. 10355, Jun. 8, 2010>
 Article 81 (Provisions Applicable Mutatis Mutandis)
Articles 27 (2) and 28 through 34 shall apply mutatis mutandis to the establishment of industrial cooperatives. In such cases, "cooperative" shall be construed as "industrial cooperative," and "attendance of a majority and at least two-thirds of those present" in Article 28 (4) as "at least two-thirds," respectively, and Article 29 (1) 14 shall not apply mutatis mutandis thereto.
SECTION 3 Business
 Article 82 (Business Activities)
(1) Any industrial cooperative may engage in all or some of the following business activities: <Amended by Act No. 9120, Jun. 13, 2008; Act No. 10953, Jul. 25, 2011; Act No. 13159, Feb. 3, 2015>
1. Executing collaborative projects for production, processing, contracting, selling, purchasing, storage, transportation, and other services and the development, management, and operation of industrial complexes and common facilities;
2. Granting or recommending loans to members for business funding (including discount of notes) or borrowing loans for funding businesses executed by the industrial cooperative itself;
3. Providing members with guidance, training programs, and information for management, technology, and quality control in their business and conducting research projects;
4. Executing collective contracts for pursuing the economic interests of members;
5. Exportation of products produced by members and importation of raw materials necessary for production of such products;
6. Activities for the welfare and well-being of members;
7. Joint research projects for development of technology, new products, management skills, etc.;
8. Business affairs entrusted by the State, a local government, the Central Federation, a federation, or a cooperative;
9. Profit-making projects approved by the competent administrative agency as necessary for achieving the objectives of its establishment;
10. Mutual aid projects (excluding guarantee projects necessary for the performance, etc. of liabilities or obligations of members);
11. Support for negotiations and mediation of subcontract consideration between a prime contractor and a subcontractor who is a member, under the Fair Transactions in Subcontracting Act;
12. Any business activities incidental to those referred to in subparagraphs 1 through 11.
(2) An industrial cooperative referred to in Article 12 (2) 2 (b) of the Distribution Industry Development Act and a shopping district promotion cooperative referred to in Article 18 of the same Act may engage in the following business activities in addition to the business activities under paragraph (1):
1. Business activities for establishing the order for sound commercial transactions in a large store or shopping district;
2. Installation, operation and management of facilities for the protection and convenience of consumers and members;
3. Other business activities incidental to those referred to in subparagraphs 1 and 2.
(3) The Minister of SMEs and Startups may coordinate some of the business activities of a specific industrial cooperative if a dispute has arisen or is likely to arise between a national cooperative and an industrial cooperative in connection with the business activities referred to in paragraph (1), while the Mayor/ Do Governor may do so if a dispute has arisen or is likely to arise between any cooperative other than a national cooperative and an industrial cooperative in connection with the business activities referred to in paragraph (1), considering the peculiarities of the locality, business sector, and the business purposes of the industrial cooperative involved. <Amended by Act No. 14839, Jul. 26, 2017>
 Article 83 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 35 (2) and (3), 35-2, 35-3, 36 and 40 through 42 shall apply mutatis mutandis to the business activities of industrial cooperatives. In this case, "cooperative" shall be construed as "industrial cooperative". <Amended by Act No. 10953, Jul. 25, 2011; Act No. 13869, Jan. 27, 2016>
SECTION 4 Organs
 Article 84 (Executive Officers)
(1) Each industrial cooperative shall have one president, two or more directors, and two or less auditors as its executive officers: Provided, That it may have one standing director as stipulated by the articles of association, if necessary.
(2) The standing director shall be appointed by the president from among non-members recommended by the board of directors.
 Article 85 (Provisions Applicable Mutatis Mutandis)
Articles 43 through 49, 50 (2) through (5) and (7), and 51 through 66 shall apply mutatis mutandis to industrial cooperatives. In such cases, "cooperative" shall be construed as "industrial cooperative." <Amended by Act No. 13159, Feb. 3, 2015, Act No. 15467, Mar. 13, 2018>
SECTION 5 Accounting
 Article 86 (Accounting)
The provisions of Articles 67 through 72 shall apply mutatis mutandis to the accounting of industrial cooperatives. In this case, "cooperative" shall be construed as "industrial cooperative".
SECTION 6 Dissolution and Liquidation
 Article 87 (Dissolution and Liquidation)
The provisions of Articles 73 through 77 shall apply mutatis mutandis to the dissolution and liquidation of industrial cooperatives. In this case, "cooperative" shall be construed as "industrial cooperative".
CHAPTER IV FEDERATION OF COOPERATIVES
SECTION 1 Member Cooperatives
 Article 88 (Qualification for Membership)
(1) Where a federation bears the title of a specific type of business, the cooperatives engaged in the same type of business and the industrial cooperatives shall be qualified for membership in such federation, as stipulated by the articles of association of the federation. <Amended by Act No. 9120, Jun. 13, 2008>
(2) Where a federation bears the name of a specific administrative district, the cooperatives and industrial cooperatives whose business territory covers the whole or part of the business territory of the federation shall be qualified for membership in such federation.
 Article 89 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 14 through 18, the proviso to Article 19 (1), Article 19 (2) through (7), Articles 20, 21, and 23 through 26 shall apply mutatis mutandis to the membership of a federation. In this case, "cooperative" shall be construed as "federation;" "members" as "members or representatives;" "special members" as "special member cooperatives;" and "20/100" in Article 16 (3) as "two-fifths," respectively. <Amended by Act No. 9120, Jun. 13, 2008; Act No. 15467, Mar. 13, 2018>
SECTION 2 Establishment
 Article 90 (Promoters)
The establishment of a federation shall be initiated by the promoters qualified for membership under Article 88 and specified in the following subparagraphs:
1. Three or more cooperatives as promoters for a federation with the title of a specific business sector in its name: Provided, That a federation engaged in a wholesale or retail business shall have ten or more promoter-cooperatives;
2. Five or more cooperatives as promoters for a federation with a specific administrative district in its name.
 Article 91 (Mandatory Provisions of Articles of Association)
The articles of association of each federation shall contain the following provisions:
1. Purpose;
2. Name;
3. Business territory;
4. Business;
5. Seat of office;
6. Qualifications for members cooperatives and agents;
7. Admission to and withdrawal and expulsion from, membership;
8. Prescribed number and appointment of executive officers;
9. Value of one unit of contribution and payment method therefor;
10. Allocation of expenses;
11. Business year;
12. Appropriation of surplus earnings and disposition of deficit;
13. Amount of reserve fund and accumulation method thereof;
14. Matters concerning collective standards of products and inspection thereof;
15. Grounds for dissolution;
16. Method of public notice.
 Article 92 (Provisions Applicable Mutatis Mutandis)
Articles 27 (2), 28, and 30 through 34 shall apply mutatis mutandis to the establishment of a federation. In such cases, "cooperative" shall be construed as "federation;" "members" as "members or representatives;" and "president" as "chairperson," respectively.
SECTION 3 Business
 Article 93 (Business Activities)
(1) A federation may engage in all or some of the following business activities: Provided, That any federation whose name bears the name of a certain administrative district shall not engage in the business activities prescribed in subparagraphs 4, 5, 9, 10, and 14 and other business activities specified by Presidential Decree: <Amended by Act No. 9893, Dec. 30, 2009; Act No. 10953, Jul. 25, 2011>
1. Executing collaborative projects for manufacturing, processing, selling, purchasing, storage, transportation, environmental improvement, trademarks, services, etc. and development, management, and operation of industrial complexes and common facilities for such purposes;
2. Filing applications for conciliation with the competent administrative agency where conciliation between member cooperatives is required in connection with their business or any person, other than small and medium entrepreneurs encroaches on the business area of its member cooperatives;
3. Intermediating and coordinating consignment transactions between a consigning enterprise and a consigned enterprise, a member of a member cooperative, under the Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises;
4. Recommending loans to member cooperatives for an enterprising fund and borrowing loans for the federation’s business;
5. Matters concerning collective standards for products and inspection thereof;
6. Offering guidance for organization, business activities, development of new technology, and quality control in its member cooperatives;
7. Furnishing member cooperatives with training programs and information and implementing projects for promotion of informatization;
8. Conducting surveys and research on cooperatives;
9. Concluding collective contracts for pursuing the economic interests of member cooperatives;
10. Exporting products manufactured by members of its member cooperatives and importing and researching prices of raw materials and building materials required by members of its member cooperatives for manufacturing their products;
11. Executing business affairs entrusted by the State, a local government, or the Central Federation;
12. Installing and managing exhibitions and fairs, at home and abroad, for member cooperatives;
13. Engaging in profit-making business activities approved by the competent administrative agency as necessary for achieving the objectives of its establishment;
14. Supporting mediation of subcontract consideration between a prime contractor and a subcontractor who is a member, under the Fair Transactions in Subcontracting Act;
15. Mutual aid projects (excluding guarantee projects necessary for the performance, etc. of liabilities or obligations of members);
16. Other business activities incidental to those under subparagraphs 1 through 15.
(2) Any federation may, if necessary for promoting any business activity under paragraph (1), request any of its member cooperatives to submit a report or issue an order as required, as prescribed by its articles of association or by-laws.
(3) Any federation may audit matters relating to the business activities and accounting of its member cooperatives as prescribed by its articles of association and may also receive cooperation from the Central Federation to conduct such audit jointly with the Central Federation, if necessary.
(4) Every federation shall order a member cooperative to take corrective measures, if it finds, as a result of an audit under paragraph (3), that any matter needs to be corrected, and shall report the results of such audit to the competent administrative agency through the Central Federation.
 Article 94 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 35 (2) and (3), 35-2, 35-3, and 36 through 42 shall apply mutatis mutandis to the business activities of each federation. In this case, “Article 35 (1) 7" in Article 40 (1) shall be construed as " Article 93 (1) 9;" "cooperative" as "federation;" and "members" as "member cooperatives or members of a member cooperative" respectively. <Amended by Act No. 9120, Jun. 13, 2008; Act No. 10953, Jul. 25, 2011; Act No. 13869, Jan. 27, 2016>
SECTION 4 Organs
 Article 95 (Executive Officers)
(1) Each federation shall have one chairperson, five or more directors, one standing director and up to two auditors as its executive officers.
(2) General meetings shall be composed of representatives as prescribed by the articles of association, and the chairperson, directors and auditors shall be elected from among the representatives, as prescribed by the articles of association, but the chairperson may not concurrently hold the office of president of a cooperative.
(3) The standing director shall be appointed by the chairperson from among non-member cooperatives or non-members of a member cooperative, qualified as prescribed by Presidential Decree and recommended by the board of directors.
(4) Representatives shall be elected from among members of member cooperatives as prescribed by the articles of association. In this case, the chairperson shall not lose his/her status as a representative during his/her term of office, except where he/she falls under Article 24 and any subparagraph of Article 25 (1).
 Article 96 (Provisions Applicable Mutatis Mutandis)
The provisions governing the general meeting, board of directors and executive officers of a cooperative shall apply mutatis mutandis to the general meeting, board of directors and executive officers of a federation. In this case, "one-fourth" in Article 45 (2) shall be construed as "one-third;" "one-fifth" in Article 65 as "one-third;" "one-fourth" in Article 66 (1) as "one-third;" "cooperative" as "federation;" "members" as "member cooperatives or representatives ("members" in Article 43 (2) shall be construed as "representatives");" "president" as "chairperson;" and "federation or the Central Federation" in Article 60 (2) as "Central Federation", respectively.
SECTION 5 Accounting
 Article 97 (Accounting)
The provisions governing the accounting of each cooperative shall apply mutatis mutandis to the accounting of each federation. In this case, "cooperative" shall be construed as "federation" and "members" as "member cooperatives," respectively.
SECTION 6 Dissolution and Liquidation
 Article 98 (Dissolution and Liquidation)
The provisions governing the dissolution and liquidation of a cooperative shall apply mutatis mutandis to the dissolution and liquidation of a federation.
CHAPTER V KOREA FEDERATION OF SMALL AND MEDIUM BUSINESS
SECTION 1 Membership
 Article 99 (Membership)
(1) The members of the Central Federation shall consist of regular members and special members.
(2) The following entities shall be qualified for regular membership of the Central Federation: <Amended by Act No. 13159, Feb. 3, 2015>
1. Federations;
2. National cooperatives;
3. Regional cooperatives;
4. Industrial cooperatives;
5. Organizations relating to small and medium enterprises;
6. Federations of cooperatives established under Article 71 (1) of the Framework Act on Cooperatives.
(3) Economic organizations, and organizations and institutions relating to small and medium enterprises may be admitted to the Central Federation as special members, as prescribed by the articles of association.
 Article 99-2 (Associate Members)
(1) The Central Federation may have small and medium entrepreneurs who intend to participate in the business performed, or use facilities operated, by the Central Federation as associate members, as prescribed by its articles of association.
(2) The Central Federation may require its associate members to pay admission fees and bear expenses, as prescribed by its articles of association.
(3) Associate members may participate in the business performed, or use facilities operated, by the Central Federation as associate members, as prescribed by the articles of association.
[This Article Newly Inserted by Act No. 13159, Feb. 3, 2015]
 Article 100 (Right to Vote on Resolutions and in Elections)
(1) Every regular member shall have one vote per resolution and in each election.
(2) If a person qualified as a member of any federation under Article 88 has memberships of at least three federations that have the right to vote on resolutions or in elections in the Central Federation, its right to vote on resolutions or in elections may be restricted by the articles of association of the Central Federation.
(3) The right to vote on resolutions or in elections held by all organizations relating to small and medium enterprises as regular members shall not exceed 20/100 of the total number of votes on resolutions or in elections in the Central Federation as a whole.
(4) No inactive cooperatives published in the Official Gazette pursuant to Article 132 (1) shall exercise their right to vote on resolutions or in elections in the Central Federation until they are recognized as resuming their participation in activities under paragraph (2) of the said Article. <Amended by Act No. 13159, Feb. 3, 2015>
 Article 101 (Admission and Withdrawal)
(1) Those specified in Article 99 shall be admitted to membership in the Central Federation as prescribed by the articles of association of the Central Federation.
(2) A member shall withdraw from the Central Federation if the Central Federation is dissolved, it forfeits its qualification, or an event or cause specified in the articles of association occurs.
 Article 102 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 19 through 21 shall apply mutatis mutandis to the membership of the Central Federation. In this case, "cooperative" shall be construed as "Central Federation" and "members" as "regular members," respectively.
SECTION 2 Establishment
 Article 103 (Promoters)
The establishment of the Central Federation shall be initiated by three or more federations or cooperatives specified in Article 99 as promoters.
 Article 104 (Mandatory Provisions of Articles of Association)
The articles of association of the Central Federation shall contain the following provisions:
1. Purpose;
2. Name;
3. Business;
4. Address of place of business;
5. Qualifications for members and their proxies;
6. Admission to and withdrawal and expulsion from membership;
7. Prescribed number and appointment of officers;
8. Allocation of expenses;
9. Appropriation of surplus earnings and disposition of deficits;
10. Business year;
11. Grounds for dissolution;
12. Method of public notice.
 Article 105 (Provisions Applicable Mutatis Mutandis)
The provisions of Articles 28 and 30 through 33 shall apply mutatis mutandis to the establishment of the Central Federation. In this case, "cooperative" shall be construed as "Central Federation;" "members" as "regular members;" and "president" as "chairperson", respectively.
SECTION 3 Business
 Article 106 (Business Activities)
(1) The Central Federation may engage in the following business activities: <Amended by Act No. 10953, Jul. 25, 2011; Act No. 13086, Jan. 28, 2015; Act No. 15467, Mar. 13, 2018>
1. Providing guidance for organization and business activities of cooperatives, industrial cooperatives, and federations;
2. Executing projects for protecting the interests of regular members and their sound growth, and making proposals to the Government;
3. Providing regular members with guidance and training programs for business management, technology, and quality control;
4. Furnishing regular members and small and medium entrepreneurs with information and executing projects for promoting informatization;
5. Conducting surveys, research and education on small and medium enterprises;
6. Granting subsidies to regular members or intermediating grants of subsidies;
7. Borrowing money for the business of the Central Federation;
8. Operating and managing the mutual aid fund for small and medium enterprises;
9. Executing mutual aid projects for stabilizing the livelihood of small enterprises and small entrepreneurs (referring to small enterprises defined in Article 2 (2) of the Framework Act on Small and Medium Enterprises and small and micro entrepreneurs defined in Article 2 of the Act on the Protection of and Support for Micro Enterprises; hereinafter the same shall apply);
10. Executing collaborative projects for regular members;
11. Carrying out the business affairs relating to exportation and importation for small and medium enterprises, and installing, operating, and managing exhibitions and fairs, locally and abroad, for products manufactured by small and medium enterprises;
12. Installing and managing industrial complexes and common facilities for small and medium enterprises;
13. Executing business affairs entrusted by the State or a local government;
14. Raising and managing financial resources for supporting regular member’s business activities;
15. Establishing and operating research institutes and training institutes for small and medium enterprises;
16. Installing and operating common logistics facilities including warehouses for small and medium enterprises;
17. Facilitating electronic commerce of products manufactured by small and medium enterprises;
18. Publishing a newspaper relating to small and medium enterprises;
19. Raising professional human resources necessary for operating small and medium enterprise cooperatives;
20. Conducting business activities for executing contracts on product liability insurance or such for the products manufactured by small and medium entrepreneurs for them under Article 639 of the Commercial Act;
21. Engaging in profit-making business activities approved by the competent administrative agency as necessary for achieving the objectives of its establishment;
22. Mutual aid projects (guarantee projects necessary for the performance, etc. of liabilities or obligations of members, etc. shall be conducted only for procurement contracts concluded with public agencies);
23. Projects to improve public awareness referred to in subparagraph 4 of Article 2 of the Special Act on Support for Human Resources of Small and Medium Enterprises;
24. Other business activities incidental to those referred to in subparagraphs 1 through 23.
(2) If necessary for promoting any business activity under paragraph (1), the Central Federation may invest in any other corporation with prior approval from the competent administrative agency.
(3) If necessary for promoting any business activity under paragraph (1), the Central Federation may demand any of its regular members to submit a report on its business affairs and accounting, and issue a necessary order, as prescribed by the articles of association or bylaws.
(4) The Central Federation may audit the matters relating to the business affairs and accounting of regular members, as prescribed by the articles of association, and when any regular member refuses, interferes with, or evades an audit of the Central Federation, the Central Federation may request the competent administrative agency to take necessary measures. <Amended by Act No. 13159, Feb. 3, 2015>
(5) Whenever it is found that a corrective measure or any other action is required as a result of an audit under paragraph (4), the Central Federation shall order the relevant regular member to take such a corrective measure or other necessary action, and report the results of the audit to the competent administrative agency immediately.
(6) Upon receipt of a request to take a measure under paragraph (5), a regular member shall take a necessary measure within two months and report the results thereof to the Central Federation. <Newly Inserted by Act No. 13159, Feb. 3, 2015>
(7) If a regular member fails to take a necessary measure within the prescribed period, the Central Federation shall re-request him/her to take the measure under paragraph (5) within one month, and if he/she fails to comply with such request even during the said period, it may request the competent administrative agency to take necessary measures. <Newly Inserted by Act No. 13159, Feb. 3, 2015>
(8) The Central Federation may establish a supportive fund for collaborative projects to support collaborative projects promoted by its members:
1. The supportive fund for collaborative projects shall be raised with the following resources:
(a) Investments and contributions from members;
(b) Contributions from enterprises;
(c) Contributions or loans from financial institutions;
(d) Other incomes specified by the articles of association;
2. The supportive fund for collaborative projects under subparagraph 1 shall be spent for the following projects:
(a) Projects for developing technology and trademarks jointly;
(b) Projects for joint testing and researching;
(c) Projects for purchasing and selling goods, and developing markets domestically and abroad jointly;
(d) Projects for acquiring certifications on standards domestically and abroad, and entering into international procurement markets;
(e) Projects for informatization;
(f) Other projects specified by the articles of association.
(9) The chairperson of the Central Federation may appoint an employee as his/her agent to perform in all judicial or extrajudicial affairs, as prescribed by the articles of association.
 Article 106-2 (Provisions Applicable Mutatis Mutandis)
Articles 35 (3), 35-2 (excluding paragraph (3) 1), and 35-3 shall apply mutatis mutandis to the business affairs of the Central Federation. In such cases, “cooperative” shall be construed as “Central Federation” and “member of a cooperative” as “member of the Central Federation,” respectively. <Amended by Act No. 13869, Jan. 27, 2016>
[This Article Wholly Amended by Act No. 10953, Jul. 25, 2011]
 Article 107 (Approval of Business Plan)
(1) The Central Federation shall prepare a business plan and a revenue and expenditure budget within two months from the commencement date of the business year for approval of its general meeting, and shall file an application for approval thereof with the competent administrative agency within two weeks from the closing date of the general meeting. The same shall also apply to any revisions thereto.
(2) Ordinary expenses and operating expenses urgently required before the approval under paragraph (1) may be disbursed in accordance with the budget for the preceeding year.
SECTION 4 Mutual Aid Fund for Small and Medium Enterprises
 Article 108 (Establishment of Mutual Aid Fund for Small and Medium Enterprises)
The mutual aid fund for small and medium enterprises shall be established for the purpose of preventing small and medium entrepreneurs from going bankrupt and laying the groundwork for the projects for collaborative sales and purchases.
 Article 109 (Raising Mutual Aid Fund for Small and Medium Enterprises)
(1) The mutual aid fund for small and medium enterprises fund shall be raised with the following financial resources:
1. Mutual aid deposits made by small and medium entrepreneurs as members of the mutual aid fund for small and medium enterprises;
2. Contributions from the Government, cooperatives, industrial cooperatives, federations and other persons;
3. Loans borrowed for mutual aid operations;
4. Earnings from the management of the mutual aid fund for small and medium enterprises.
(2) Any small or medium enterpriser may join the mutual aid fund for small and medium enterprises: Provided, That the Central Federation and the small and medium entrepreneurs specified by Presidential Decree including those who fails to achieve the purpose of managing mutual aid fund for small and medium entrepreneurs shall not join the mutual aid fund for small and medium enterprises. <Amended by Act No. 10355, Jun. 8, 2010>
(3) The Government may provide such aid as may be necessary to the small and medium entrepreneurs joining the mutual aid fund for small and medium enterprises in order to facilitate their joining the fund.
(4) The Government shall appropriate contributions for its expenditure budget, within budgetary limits, for each fiscal year.
 Article 110 (Operation and Management of Mutual Aid Fund for Small and Medium Enterprises)
(1) The Central Federation shall be responsible for the operation and management of the mutual aid fund for small and medium enterprises.
(2) The Central Federation may, if deemed necessary for the operation and management of the mutual aid fund for small and medium enterprises, delegate part of its authority to the head of a financial institution, after obtaining approval from the Minister of SMEs and Startups. <Amended by Act No. 14839, Jul. 26, 2017>
(3) The chairperson of the Central Federation and the person who executes the administrative affairs of the mutual aid fund for small and medium enterprises or the person to whom the authority to operate and manage the fund has been delegated shall be liable for damage caused by intention or gross negligence committed in the course of operation and management of the fund. In such cases, such liability may be mitigated, except where such damage is caused by intention.
(4) The Central Federation shall draw up a draft fund management plan for each fiscal year, as prescribed by Presidential Decree, and report such plan to the Minister of SMEs and Startups by no later than 20 days before the commencement of the pertinent fiscal year, after it is adopted by a resolution of the fund management committee under Article 113 (2). The same shall also apply to any revision thereto. <Amended by Act No. 14839, Jul. 26, 2017>
 Article 111 (Use, etc. of Mutual Aid Fund for Small and Medium Enterprises)
(1) The mutual aid fund for small and medium enterprises shall be spent for the following business activities:
1. Granting mutual aid loans to small or medium entrepreneurs who have joined the fund to prevent them from going bankrupt;
2. Granting aid to an enterprising fund for collaborative purchases and sales of small and medium entrepreneurs who have joined the mutual aid fund for small and medium enterprises;
3. Other business activities specified by Presidential Decree as necessary for assisting small and medium entrepreneurs who have joined the mutual aid fund for small and medium enterprises;
4. Business activities incidental to those under subparagraphs 1 through 3;
5. Operation and management of the mutual aid fund for small and medium enterprises under Article 110.
(2) The surplus of the mutual aid fund for small and medium enterprises may be operated in the following manners: <Amended by Act No. 8635, Aug. 3, 2007; Act No. 14839, Jul. 26, 2017>
1. Purchase of securities under Article 4 of the Financial Investment Services and Capital Markets Act. In such cases, stocks or any similar or related securities or instruments shall be limited to those reflected in the fund management plan;
2. Deposits in financial institutions;
3. Transactions of exchange-traded derivatives under Article 5 (2) of the Financial Investment Services and Capital Markets Act. In such cases, the latter part of subparagraph 1 shall apply mutatis mutandis;
4. Payment guarantee to financial institutions on the account of the mutual aid fund for small and medium enterprises, after obtaining approval from the Minister of SMEs and Startups.
(3) Matters necessary for the detailed method, procedures, etc. for the management of the surplus of the mutual aid fund for small and medium enterprises under paragraph (2) shall be prescribed by Presidential Decree.
 Article 112 (Accumulation of Reserve for Bad Debt of Mutual Aid)
(1) The Central Federation shall collect the reserve for bad debt of mutual aids from the small and medium entrepreneurs to whom a mutual aid loan is granted for accumulation and management in order to compensate for losses that may be incurred in lending such mutual aid loans.
(2) The methods, procedures, and other necessary matters concerning accumulation and management of the reserve for bad debt of mutual aid under paragraph (1) shall be prescribed by Presidential Decree.
 Article 113 (Organization Responsible for Management of Mutual Aid Fund for Small and Medium Enterprises)
(1) The small and medium business mutual aid team shall be organized under the Central Federation in order to manage the mutual aid fund for small and medium enterprises efficiently.
(2) There shall be established in the small and medium business mutual aid team a fund management committee to deliberate and decide on matters relating to the management of the mutual aid fund for small and medium enterprises on behalf of the board of directors of the Central Federation.
(3) The fund management committee shall consist of up to 11 committee members, including one committee chairperson.
(4) Matters necessary for the organization and operation of the small and medium business mutual aid team and the fund management committee shall be prescribed by Presidential Decree.
 Article 114 (Detailed Provisions Governing Mutual Aid Fund for Small and Medium Enterprises)
Matters necessary for the operation, management, etc. of the mutual aid fund for small and medium enterprises shall be prescribed by Presidential Decree.
SECTION 5 Mutual Aid Fund for Small Enterprises and Small Entrepreneurs
 Article 115 (Management and Operation of Mutual Aid Funds for Small Enterprises and Small Entrepreneurs)
(1) The Central Federation shall be responsible for the management and operation of mutual aid funds for small enterprises and small entrepreneurs (hereinafter referred to as "mutual aid fund for small enterprises and small entrepreneurs") so that small enterprises and small entrepreneurs can ensure a stable livelihood against threats to their survival from closure of business, aging, etc. and have an opportunity to restore their business.
(2) Matters necessary for the methods, procedures, etc. for the management of mutual aid fund for small enterprises and small entrepreneurs shall be prescribed by Presidential Decree.
 Article 116 (Admission to the Membership of Mutual Aid Fund for Small Enterprises and Small Entrepreneurs)
(1) Persons who may join the mutual aid fund for small enterprises and small entrepreneurs shall be limited to the representatives of small enterprises and small entrepreneurs: Provided, That persons specified by Presidential Decree including those who have already joined the mutual aid fund shall not be admitted to the mutual aid fund for small enterprises and small entrepreneurs. <Amended by Act No. 9893, Dec. 30. 2009>
(2) A person who wishes to join as a member of the mutual aid fund for small enterprises and small entrepreneurs shall enter into a mutual aid agreement with the Korea Federation of Small and Medium Business. <Amended by Act No. 9120, Jun. 13, 2008>
 Article 117 (Fundraising)
The funds for the management of the mutual aid fund for small enterprises and small entrepreneurs shall be raised with the following resources:
1. Mutual aid deposits made by the members of the mutual aid fund for small enterprises and small entrepreneurs;
2. Contributions from cooperatives, industrial cooperatives, federations, and other persons;
3. Loans borrowed for the mutual aid fund for small enterprises and small entrepreneurs;
4. Earnings accrued from operation of the mutual aid fund for small enterprises and small entrepreneurs.
 Article 118 (Business Activities of Mutual Aid Fund for Small Enterprises and Small Entrepreneurs)
The mutual aid fund for small enterprises and small entrepreneurs shall engage in the following business activities:
1. Granting mutual aid when an event or cause to grant mutual aid as specified by Presidential Decree occurs, such as closedown of a small enterprise or a small enterpriser who has joined the mutual aid fund for small enterprises and small entrepreneurs;
2. Granting loans to members of the mutual aid fund for small enterprises and small entrepreneurs;
3. Business activities incidental to those under subparagraphs 1 and 2.
 Article 118-2 (Administrative Committee of Mutual Aid Fund for Small Enterprises and Small Entrepreneurs)
(1) In lieu of the board of directors of the Central Federation, the Administrative Committee of Mutual Aid Fund for Small Enterprises and Small Entrepreneurs (hereafter referred to as the "Administrative Committee of Mutual Aid Fund") shall be established in the small and medium business mutual aid team to deliberate and decide on matters concerning the administration and management of mutual aid fund for small enterprises and small entrepreneurs.
(2) The Administrative Committee of Mutual Aid Fund shall be comprised of not more than 11 members, including one chairperson.
(3) Matters necessary for the organization and operation of the Administrative Committee of Mutual Aid Fund shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 9120, Jun. 13, 2008]
 Article 118-3 (Accounts for Receiving Mutual Aid Fund)
(1) A person who receives the mutual aid fund for small enterprises and small entrepreneurs may request the Central Federation to deposit the mutual aid fund into a designated account in his/her name (hereinafter referred to as "account for receiving the mutual aid fund"), and in such cases, the Central Federation shall deposit the mutual aid fund into the account for receiving the mutual aid fund.
(2) Notwithstanding paragraph (1), where it is impracticable to transfer the mutual aid fund to the account for receiving the mutual aid fund due to information and communication disorder or other unavoidable causes prescribed by Presidential Decree, the Central Federation may pay the mutual aid fund as prescribed by Presidential Decree, such as payment in cash.
(3) A financial institution with which an account for receiving the mutual aid fund is established shall make the account for receiving the mutual aid fund deposit only the mutual aid fund and manage it.
(4) Matters necessary for the methods and procedures of making requests prescribed in paragraph (1) and for managing accounts for receiving the mutual aid fund prescribed in paragraph (3) shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 15693, Jun. 12, 2018]
 Article 119 (Protection of Entitlements)
(1) No entitlement to mutual aid money may be transferred or seized, or may be offered as security: Provided, That if any ground for paying mutual aid money occurs to a person who has been granted a loan under subparagraph 2 of Article 118 before repaying the loan and interest, the Central Federation may deduct the loan and interest from the mutual aid money. <Amended by Act No. 13159, Feb. 3, 2015; Act No. 5693, Jun. 12, 2018>
(2) No claim for the money deposited in accounts for receiving the mutual aid fund prescribed in Article 118-3 (1) shall be seized. <Newly Inserted by Act No. 15693, Jun. 12, 2018>
 Article 120 (Accumulation of Reserves)
(1) The Central Federation shall reflect the reserves as the provision for each type of mutual aid for small enterprises and small entrepreneurs in preparation for future payments in its settlement of accounts for each fiscal term and shall accumulate and manage them separately.
(2) Matters necessary for the accumulation and management of the reserves under paragraph (1) shall be prescribed by Presidential Decree.
 Article 121 (Exclusion from Application of Insurance Business Act)
The Insurance Business Act shall not apply to the mutual aid for small enterprises and small entrepreneurs.
SECTION 6 Organs
 Article 122 (Executive Officers)
The Central Federation shall have the following executive officers:
1. One chairperson;
2. Five or more vice-chairpersons;
3. One standing vice-chairperson;
4. Ten or more directors;
5. Up to five standing directors;
6. One auditor.
 Article 123 (Appointment of Executive Officers)
(1) The chairperson shall be elected by vote, as prescribed by the articles of association at the general meeting from among the representatives of regular members: Provided, That the chairperson shall not concurrently hold the office of the chairperson of a cooperative or industrial cooperative or the chairperson of a federation and the representative director of a corporation invested pursuant to Article 106 (2). <Amended by Act No. 10355, Jun. 8, 2010; Act No. 15467, Mar. 13, 2018>
(2) The term of the chairperson shall be four years, which may be renewed consecutively only once. In such cases, the chairperson shall be deemed to have qualifications for the representative of regular members under the main sentence of paragraph (1). <Newly Inserted by Act No. 10355, Jun. 8, 2010>
(3) Vice-chairpersons and directors shall be elected from among the representatives of regular members at a general meeting, as prescribed by the articles of association. <Amended by Act No. 10355, Jun. 8, 2010>
(4) The standing vice-chairperson shall be appointed by the chairperson from among the persons recommended by the board of directors and approved by the Minister of SMEs and Startups as having abundant knowledge and experience in small and medium enterprises. In such cases, he/she shall be appointed from among those who are not members of a cooperative or an industrial cooperative. <Amended by Act No. 10355, Jun. 8, 2010; Act No. 14839, Jul. 26, 2017>
(5) Standing directors shall be appointed by the chairperson, as prescribed by the articles of association, and the auditor shall be appointed by the chairperson on the recommendation of the board of directors, after obtaining approval from the Minister of SMEs and Startups, and shall serve as full-time officers. In such cases, standing directors and the auditor shall be appointed from among those who are not members of a cooperative or an industrial cooperative, nor members of any organization relating to small and medium enterprises. <Amended by Act No. 10355, Jun. 8, 2010; Act No. 14839, Jul. 26, 2017>
(6) The Central Federation may commission the National Election Commission under the Election Commission Act to manage the elections for the chairperson under paragraph (1), as prescribed by the articles of association. <Amended by Act No. 10355, Jun. 8, 2010>
(7) Where the National Election Commission is entrusted with the management of elections for the chairperson of the Central Federation under paragraph (6), Article 272-2 of the Public Official Election Act and Article 14-2 of the Election Commission Act shall apply mutatis mutandis to the crackdown and investigation of violations of this Act. <Newly Inserted by Act No. 13159, Feb. 3, 2015>
 Article 124 (Executive Officers’ Duties)
(1) The chairperson shall represent the Central Federation and exercise general supervision over its business affairs, and shall take the chair of general meetings and of the board of directors.
(2) If the chairperson is absent from a general meeting for any reason, one of the vice-chairpersons, in the order prescribed in the articles of association, shall act on his/her behalf, while if the chairperson and all vice-chairpersons are simultaneously absent from a general meeting or the board of directors for any reason, the acting chairperson shall be elected at the general meeting to preside over the meeting, and the standing vice-chairperson shall act on behalf of the chairperson at the board of directors.
(3) Vice-chairpersons and the standing vice-chairperson shall assist the chairperson, while the standing vice-chairperson shall execute and handle administrative affairs of the Central Federation in compliance with the orders from the chairperson. If the office of the chairperson becomes vacant, one of vice-chairpersons, in the order prescribed by the articles of association, shall act on behalf of the chairperson, while if the offices of chairperson and all vice-chairpersons become vacant, the standing vice-chairperson shall act on behalf of the chairperson.
(4) Standing directors shall assist the chairperson, vice-chairpersons and the standing vice-chairperson, take the responsibility for the business affairs of the Central Federation as allocated by the chairperson, and shall act on behalf of the chairperson as prescribed by the articles of association, if the chairperson, vice-chairpersons, and the standing chairperson are simultaneously absent from office for any reason or their offices become vacant simultaneously.
(5) The auditor shall audit the status of property and executed business affairs of the Central Federation, report it to the general meeting, and carry out the business affairs under Article 106 (4).
 Article 125 (Provisions Applicable Mutatis Mutandis)
Unless otherwise expressly provided for in this Chapter, the provisions governing the general meeting, board of directors, and executive officers of a cooperative shall apply mutatis mutandis to the general meeting, board of directors, and executive officers of the Central Federation. In such cases, "cooperative" shall be construed as "Central Federation;" "members" as "regular members;" "president" in Articles 45 (1) through (3), 48 (2), 55 (3), 57, 64 (1) and (2), and 66 (3) as "chairperson;" "president, directors, and auditors" in Article 50 (7) as "chairperson, vice-chairpersons, and the auditor;" "standing director" in Article 52 (3) as "standing vice-chairperson, standing directors and the auditor;" "chairperson, directors, and the standing director" in Article 55 (2) and (5) as "chairperson, vice-chairpersons, the standing chairperson, directors, and standing directors." <Amended by Act No. 13159, Feb. 3, 2015; Act No. 15467, Mar. 13, 2018>
SECTION 7 Accounting
 Article 126 (Accounting)
Article 67 shall apply mutatis mutandis to the accounting of the Central Federation.
SECTION 8 Dissolution and Liquidation
 Article 127 (Dissolution and Liquidation)
The provisions governing the dissolution and liquidation of a cooperative shall apply mutatis mutandis to the dissolution and liquidation of the Central Federation.
CHAPTER VI REGISTRATION
 Article 128 (Register)
Each registry shall keep the registers of small and medium enterprise cooperatives, small and medium enterprise industrial cooperatives, federations of small and medium enterprise cooperatives, and the Korea Federation of Small and Medium Business.
CHAPTER VII SUPERVISION
 Article 129 (Submission of Documents concerning Settlement of Accounts)
Each cooperative, industrial cooperative, or federation, or the Central Federation shall submit a business report, a balance sheet, an income statement, and documents stating the appropriation of surplus earnings and disposition of deficit for each business year to the competent administrative agency within two weeks of the end of the annual general meeting.
 Article 130 (Duty to Report)
(1) Every cooperative, industrial cooperative, or federation, or the Central Federation shall, whenever any of the following events occurs, report it to the competent administrative agency within two weeks from the date on which such event occurs:
1. Holding a general meeting and the result thereof;
2. Change of its address;
3. Appointment of an executive officer;
4. Establishment, amendment, or repeal of by-laws or regulations;
5. Deleted; <by Act No. 13869, Jan. 27, 2016>
6. Changes in members or member cooperatives.
(2) The competent administrative agency may require a cooperative, industrial cooperative, or federation or the Central Federation to submit such report as may be deemed necessary particularly for making sure that it handles its business affairs in an appropriate manner.
(3) The establishment, amendment, or repeal of bylaws under paragraph (1) 4 governing the matters specified in subparagraphs of Article 30 (1) shall be subject to the approval of the competent administrative agency.
(4) Where a cooperative, industrial cooperative or federation submits documents concerning the settlement of accounts pursuant to Article 129 or files a report pursuant to Article 130 (1), it may use the data processing device designated by the Minister of SMEs and Startups. <Newly Inserted by Act No. 15467, Mar. 13, 2018>
 Article 131 (Inspection)
(1) The competent administrative agency may, if there exist reasonable grounds to believe that the operations or accounts of a cooperative, an industrial cooperative, a federation, or the Central Federation are in violation of this Act or the relevant articles of association, require the cooperative, the industrial cooperative, the federation, or the Central Federation to submit such report as may be necessary in connection with its operations or accounts or may conduct an inspection of the status of its operations or accounts.
(2) A member of a cooperative, or a member cooperative or a representative of a federation may, if it is believed that the operations or accounts of the cooperative, industrial cooperative, or federation concerned or the Central Federation are in violation of the articles of association or bylaws, request the competent administrative agency in writing, with consent of at least one-third of all members, representatives, or member cooperatives, to conduct an inspection.
(3) The competent administrative agency shall, upon receiving a request under paragraph (2), inspect the status of operations or accounts of the cooperative, industrial cooperative or federation concerned, or the Central Federation.
 Article 132 (Inactive Cooperatives)
(1) If the competent administrative agency finds, as a result of the investigation conducted at its discretion or upon a report, into the status of activities of the Central Federation, a federation, a cooperative, or an industrial cooperative, that it is actually not operating upon meeting the requirements prescribed by Presidential Decree, shall designate it as an inactive cooperative and inform its chairperson or president that it is an inactive cooperative, and shall publish its finding in the Official Gazette. <Amended by Act No. 13159, Feb. 3, 2015>
(2) If the Central Federation, a federation, a cooperative, or an industrial cooperative has not filed an application for resuming its activities within one year after it is published as an inactive cooperative or organization in the Official Gazette under paragraph (1) or if it is found that it has not resumed its activities even one year after it files an application for resuming its activities, the competent administration agency shall order it to be dissolved pursuant to Article 133 (2). In such cases, Article 133 (3) shall not apply.
 Article 133 (Administrative Orders)
(1) The competent administrative agency may, if it finds that a cooperative, an industrial cooperative, a federation, or the Central Federation falls under any of the following subparagraphs, order it to take corrective measures or any other necessary actions within a given time period:
1. If its operations or accounts are in violation of any statute, the articles of association, or by-laws;
2. If if fails to commence its business without justifiable grounds within one year from the date on which its establishment is authorized, or if it has suspended its business for one year or longer;
3. If it fails to complete the registration of its establishment within ninety days after the date on which its establishment is authorized;
4. If the number of its members or member cooperatives has decreased and fails to reach the number required under Article 27 (2) (including cases applied mutatis mutandis pursuant to Article 81 or 92).
(2) The competent administrative agency may order a cooperative, an industrial cooperative, a federation, or the Central Federation to dismiss its officers or to be dissolved if it violates an order issued under paragraph (1): Provided, That if it violates an order issued pursuant to paragraph (1) 3, the authorization for its establishment may be revoked.
(3) The competent administrative agency shall, whenever it intends to issue an order of dissolution pursuant to paragraph (2), hold a hearing.
(4) Where a cooperative, industrial cooperative, federation, or the Central Federation violates the details or conditions of the authorization prescribed in Article 35-2 (including the cases applied mutatis mutandis in Articles 83, 94, and 106-2), the Minister of SMEs and Startups may order to correct the violated matters and other necessary measures by fixing a certain period. <Newly Inserted by Act No. 13869, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017>
(5) The Minister of SMEs and Startups may order a suspension of the operation of a mutual-aid project pursuant to Articles 35 (1) 14, 82 (1) 10, 93 (1) 15, and 106 (1) 22, or revoke its authorization in any of the following cases by undergoing a hearing: <Newly Inserted by Act No. 13869, Jan. 27, 2016; Act No. 14839, Jul. 26, 2017>
1. Where a project has been authorized under Article 35-2 (including the cases applied mutatis mutandis in Articles 83, 94, and 106-2) by fraud or other improper means;
2. Where a project has violated an order prescribed in paragraph (4).
 Article 134 (Assistance in Business)
The Government shall, whenever it implements a policy for assisting small and medium enterprises with their business, do so through the Central Federation. However, it may implement it through a federation, a cooperative, or an industrial cooperative, if deemed necessary to do so.
 Article 135 (Subsidies)
(1) The competent administrative agency shall subsidize all or part of the expenses required for the management of the Central Federation to foster small and medium enterprises.
(2) The Mayor/ Do governor may subsidize part of the expenses required for the management of branches of the Central Federation within his/her jurisdiction through the Central Federation to foster small and medium enterprises and develop local communities.
(3) The competent administrative agency may subsidize all or part of the expenses required for the establishment of quality standards, inspections, improvements of distribution structure, and other matters relating to the management of a cooperative, an industrial cooperative, or a federation within the budget to foster small and medium enterprises.
 Article 136 (Entrustment of Authority)
(1) The Minister of SMEs and Startups may entrust part of his/her authority granted under this Act to the head of any other central administrative agency (excluding the Mayor/ Do governor; hereinafter the same shall apply), the chairperson of the Central Federation, or the president of a federation, as prescribed by Presidential Decree. <Amended by Act No. 14839, Jul. 26, 2017>
(2) The Mayor/ Do governor may entrust part of his/her authority granted under this Act to the chairperson of the Central Federation or the president of a federation, as prescribed by Presidential Decree.
 Article 136-2 (Re-Examination of Regulation)
The Minister of SMEs and Startups shall examine the appropriateness of the following matters every three years, counting from the base date of January 1, 2016 (referring to the period that ends on the day before the base date of every third year) and shall take measures, including making improvements: <Amended by Act No. 14839, Jul. 26, 2017>
1. Standard for promoters of a cooperative prescribed in Article 27;
2. Reserve funds and funds carried-over prescribed in Article 70;
3. Standard for promoters of a federation prescribed in Article 90.
[This Article Newly Inserted by Act No. 13869, Jan. 27, 2016]
CHAPTER VIII PENALTY PROVISIONS
 Article 137 (Penalty Provisions)
(1) Any of the following persons shall be punished by imprisonment with labor for not more than two years or by a fine not exceeding twenty million won: <Amended by Act No. 9120, Jun. 13, 2008; Act No. 15467, Mar. 13, 2018>
1. A person who violated Article 8 (3);
2. A person who violated Article 53 (2) or (3) (including cases applied mutatis mutandis pursuant to Article 85, 96, or 125).
(2) A person who violated any provision of Article 53 (1) or (4) through (6) (including cases applied mutatis mutandis pursuant to Article 85, 96, or 125) shall be punished by imprisonment with labor for not more than one year or by a fine not exceeding ten million won. <Amended by Act No. 9120, Jun. 13, 2008; Act No. 15467, Mar. 13, 2018>
(3) The prescription period for public prosecution of crimes under paragraphs (1) and (2) shall expire six months after the relevant election day (or six months after the day on which a relevant act was committed in cases where such crime was committed after the election day): Provided, That the period shall be three years in cases where the offender has absconded or has concealed his/her accomplices or witnesses who are needed for proving the crime.
 Article 138 (Penalty Provision)
An executive officer of a cooperative, an industrial cooperative, a federation, or the Central Federation shall be punished by imprisonment with labor for not more than three years or a fine not exceeding twenty million won, or both, if he/she provides a loan to someone or disposes of its property for any speculative transaction outside the scope of business of the cooperative, the industrial cooperative, the federation, or the Central Federation. <Amended by Act No. 9120, Jun. 13, 2008>
 Article 139 (Voidance of Election Due to Election Crime Committed by Elected)
If a person selected by an election for an executive officer of a cooperative, an industrial cooperative, a federation, or the Central Federation is sentenced to imprisonment with labor or a fine of not less than one million won on account of committing a crime under Article 137 (1) 2 or (2), his/her election shall be held void.
 Article 140 (Penalty Provision)
If a cooperative, an industrial cooperative, a federation, or the Central Federation violates an order issued pursuant to Article 133 (1) 1 or 2, its officers shall be punished by a fine not exceeding ten million won. <Amended by Act No. 9120, Jun. 13, 2008>
 Article 141 (Administrative Fine)
(1) A person shall be subject to an administrative fine not exceeding 500,000 won, if he/she rejects, interferes with, or evades an inspection under Article 131.
(2) A promoter, an officer or a liquidator of a cooperative, an industrial cooperative, a federation, or the Central Federation shall be punished by an administrative fine not exceeding 300,000 won, if he/she falls under any of the following subparagraphs:
1. If the cooperative, industrial cooperative, federation, or Central Federation engages in any business other than those allowed under this Act;
2. If he/she violates Article 15 (2) or 25 (3) (including cases applied mutatis mutandis pursuant to Article 79 or 89);
3. If he/she violates Article 43 (3) (including cases applied mutatis mutandis pursuant to Article 85, 96, or 125);
4. If he/she violates Article 62 or 66 (3) (including cases applied mutatis mutandis pursuant to Article 85 or 96);
5. If he/she fails to retain documents or omits to make an entry of any mandatory description in a certain document, makes a false entry of such description, or rejects a request for allowing others to inspect or copy such documents without good cause in violation of Article 63 or 64 (including cases applied mutatis mutandis pursuant to Article 85, 96, or 125);
6. If he/she rejects a request for allowing others to inspect or copy account books or documents without good cause in violation of Article 65 (2) (including cases applied mutatis mutandis pursuant to Article 85, 96, or 125);
7. If he/she neglects his/her duty to issue a public notice or provides a false public notice in violation of Article 68 (2) (including cases applied mutatis mutandis pursuant to Article 86 or 97);
8. If he/she violates Article 70 or 71 (including cases applied mutatis mutandis pursuant to Article 86 or 97);
9. If he/she acquires any equity or receives such equity as the subject matter of a pledge in violation of Article 72 (including cases applied mutatis mutandis pursuant to Article 86 or 97);
10. If he/she violates Article 73 (2) (including cases applied mutatis mutandis pursuant to Article 87, 98, or 127);
11. If he/she violates any provision of Article 93 (2) through (4) or 106 (3) through (5);
12. If he/she fails to submit a document or submits a false document in violation of Article 129;
13. If he/she fails to submit a report under Article 130 or submits a false report.
(3) The Minister of SMEs and Startups (referring to the head of an entrusted central administrative agency, if his/her authority has been entrusted to the head of the central administrative agency pursuant to Article 136; hereafter the same shall apply in this Article) or the Mayor/ Do governor shall impose and collect administrative fines under paragraphs (1) and (2) as prescribed by Presidential Decree. <Amended by Act No. 14839, Jul. 26, 2017>
(4) through (6) Deleted. <by Act No. 15521, Mar. 20, 2018>
 Article 142 (Protection of Reporters, etc. of Election Crimes)
Article 262-2 of the Public Official Election Act shall apply mutatis mutandis to the protection of reporters, etc. of crimes prescribed in 137 (1) 2 and (2) in connection with the election of the chairperson of the Central Federation.
[This Article Newly Inserted by Act No. 13159, Feb. 3, 2015]
 Article 143 (Payment of Monetary Rewards to Reporters on Election Crimes)
(1) The Central Federation may pay a monetary reward to a person who has reported a crime prescribed in Article 137 (1) 2 or (2) in connection with the election of the chairperson of the Central Federation before the election commission of the Central Federation (including the National Election Commission, where the management of election is entrusted to the National Election Commission) becomes aware of it.
(2) The upper limits for monetary rewards, standards for, and methods of payment of the monetary rewards under paragraph (1) shall be prescribed by the articles of association.
[This Article Newly Inserted by Act No. 13159, Feb. 3, 2015]
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicable Examples to Term of Office for Executive Officers)
The provisions of Article 52 (including cases applied mutatis mutandis pursuant to Article 85, 96, or 125) shall apply to executive officers elected on or after July 29, 2006, which corresponds to the date on which the Partial Amendment (Act No. 7944) to the Small and Medium Enterprise Cooperatives Act enters into force.
Article 3 (Transitional Measures concerning Dissolution of Cooperatives, Industrial Cooperatives, and Federations)
A cooperative, an industrial cooperative, or a federation established before July 1, 2002, which corresponds to the date on which the Amendment (Act No. 6684) to the Small and Medium Enterprise Cooperatives Act enters into force shall be dissolved when six months have passed since the minimum number of its members decreased to less than a majority as stated in the previous provisions of Article 63 (1) 6 (including cases applied mutatis mutandis pursuant to Articles 67-10 and 79) before the date on which the said Amendment enters into force. In this case, Articles 23 (2), 67-3, and 70 (2) cited in the previous provisions of Articles 63 (1) 6, 67-10, and 79 refer to the previous provisions thereof.
Article 4 Deleted. <by Act No. 13869, Jan. 27, 2016>
Article 5 (Transitional Measures concerning Penalty Provisions or Administrative Fines)
In applying penalty provisions and provisons concerning administrative fines, acts committed before the date on which this Act enters into force shall be governed by the previous provisions.
Article 6 Omitted.
Article 7 (Relations with Other Statutes)
A citation of the previous Small and Medium Enterprise Cooperatives Act or any provision thereof by any other statute at the time when this Act enters into force shall be deemed to be a citation of this Act or a corresponding provision hereof, if any, in lieu of the previous provision.
ADDENDA <Act No. 8486, May 25, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force one year after the date of its promulgation.
Articles 2 through 10 Omitted.
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 on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.
ADDENDA <Act No. 9120, Jun. 13, 2008>
(1) (Enforcement Date) This Act shall enter into force three months after the date of its promulgation.
(2) (Transitional Measures concerning Membership of Mutual Aid Fund for Small Enterprises and Small Entrepreneurs) Mutual aid agreements for small enterprises and small entrepreneurs made with the small and medium enterprises mutual aid team under the previous provisions at the time when this Act enters into force shall be deemed mutual aid agreements made with the Korea Federation of Small and Medium Business under the amended provisions of Article 116 (2).
ADDENDUM <Act No. 9893, Dec. 30, 2009>
This Act shall enter into force three months after the date of its promulgation.
ADDENDA <Act No. 10355, Jun. 8, 2010>
(1) (Enforcement Date) This Act shall enter into force three months after the date of its promulgation.
(2) (Transitional Measures concerning Business Territory of Industrial Cooperatives in Identical Type of Business) In applying business territory of an industrial cooperative engaged in an identical type of business, which was established before this Act enters into force, the former provisions shall apply, notwithstanding the amended provisions of the proviso to Article 6 (2).
(3) (Transitional Measures concerning Maintenance of Number of Members equivalent to Number of Promoters) The former provisions shall, notwithstanding the amended provisions of Article 27 (2), apply to the maintenance of the number of members equivalent to the number of promoters of a cooperative or industrial cooperative established before this Act enters into force.
ADDENDUM <Act No. 10953, Jul. 25, 2011>
This Act shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 11690, Mar. 23, 2013>
Article 1 (Enforcement Date)
(1) This Act shall enter into force on the date of its promulgation.
(2) Omitted.
Articles 2 through 7 Omitted.
ADDENDA <Act No. 12311, Jan. 21, 2014>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 (Transitional Measures concerning Incompetent Persons, etc.)
An incompetent under adult guardianship referred to in the amended provisions of Article 51 (1) 1 shall be deemed to include a person in whose case the declaration of incompetency or quasi-incompetency remains effective under Article 2 of the Addenda to the partially amended Civil Act (Act No. 10429).
ADDENDA <Act No. 13086, Jan. 28, 2015>
Article 1 (Enforcement Date)
This Act shall enter into force on May 28, 2015. (Proviso Omitted.)
Articles 2 through 8 Omitted.
ADDENDA <Act No. 13159, Feb. 3, 2015>
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 106 shall enter into force three months after the date of its promulgation and the amended provisions of Articles 6 (1) 2 and 12 (2) on the date of their promulgation.
Articles 2 (Applicability to Restriction on Qualifications for Candidacy of President)
The amended provisions of Article 50 (3) shall apply beginning with the first election of the president held after this Act enters into force.
ADDENDUM <Act No. 13869, Jan. 27, 2016>
This Act shall enter into force six months after the date of its promulgation.
ADDENDA <Act No. 14839, Jul. 26, 2017>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation: Provided, That among the Acts amended in accordance with Article 5 of these Addenda, amendments to Acts, which were promulgated before this Act enters into force, but the dates on which they are to enter into force have yet to arrive, shall enter into force on the enforcement dates of the respective Acts.
Articles 2 through 6 Omitted.
ADDENDA <Act No. 15467, Mar. 13, 2018>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Restriction on Re-Appointment of Presidents)
The amended provisions of Article 52 (2) shall begin to apply from the first president elected after this Act enters into force. In such cases, the term of office that commences by the election that takes place after this Act enters into force shall be considered the first term of office thereof.
ADDENDUM <Act No. 15521, Mar. 20, 2018>
This Act shall enter into force on the date of its promulgation.
ADDENDUM <Act No. 15693, Jun. 12, 2018>
This Act shall enter into force three months after the date of its promulgation.