ENFORCEMENT DECREE OF THE DEBTOR REHABILITATION AND BANKRUPTCY ACT
Presidential Decree No. 19422, Mar. 29, 2006
Amended by Presidential Decree No. 20674, Feb. 29, 2008
Presidential Decree No. 24352, Feb. 14, 2013
Presidential Decree No. 25035, Dec. 30, 2013
Presidential Decree No. 25851, Dec. 16, 2014
Presidential Decree No. 26236, May 12, 2015
Presidential Decree No. 27590, Nov. 22, 2016
Presidential Decree No. 29602, Mar. 5, 2019
| Article 1-2 (Jurisdiction of Courts) |
[This Article Newly Inserted by Presidential Decree No. 27590, Nov. 22, 2016]
| Article 2 (Qualifications for Members of Custodial Committee) |
"Corporation prescribed by Presidential Decree” in Article 16 (3) 2 of the Act means any of the following corporations: <Amended by Presidential Decree No. 24352, Feb. 13, 2013; Presidential Decree No. 27590, Nov. 22, 2016> | 2. | The Korea Asset Management Corporation established under Article 6 of the Act on the Efficient Disposal of Non-Performing Assets, etc of Financial Companies and the Establishment of Korea Asset Management Corporation. |
| Article 3 (Functions of Creditors' Consultative Council) |
| 1. | Presenting opinions when the Custodial Committee examines any rehabilitation proposal or draft repayment plan under Article 17 (1) 3 of the Act; |
| 6. | Presenting opinions on the completion of the rehabilitation procedures under Article 283 of the Act as well as the discontinuation of the rehabilitation procedures prescribed in Articles 285 through 288. |
| Article 4 (Specially Related Persons) |
| 1. | When the principal is a private individual, a person who falls under any of the following: |
| (a) | His/her spouse (including a person in a de facto marital relationship; hereinafter the same shall apply); |
| (b) | A blood relative within the eighth degree of consanguinity or an affinity relative within the fourth degree of relationship; |
| (c) | A person who maintains a livelihood with the principal's money or his/her other property or a person who shares the same livelihood with the principal; |
| (d) | A corporation or organization, and its executive officers, if the investment made in the corporation or organizations by the principal alone or jointly with a person in a relationship falling under any of items (a) through (c) with the principal, is at least 30/100 of its capital, or if the principal exercises de facto influence over important managerial matters of the corporation or organization through appointment and dismissal of executive officers, etc.; |
| (e) | A corporation or organization, and its executive officers, if the investment made in the corporation or organization by the principal, alone or jointly with a person in a relationship falling under any of items (a) through (d) with the principal, is at least 30/100 of its capital, or if the principal exercises de facto influence over important managerial matters of the corporation or organization through appointment and dismissal of executive officers, etc; |
| 2. | If the principal is a corporation or organization, a person who falls under any of the following: |
| (a) | An executive officer; |
| (c) | A private individual and a person in a relationship falling under any item of subparagraph 1 with the individual, a corporation or organization (excluding any of its affiliated companies; hereafter the same shall apply in this subparagraph), and any executive officer of such corporation or organization, if the investment made in the principal by the individual, corporation, or organization alone or jointly with a person in a relationship under any item of subparagraph 1, is at least 30/100 of its capital, or if the individual, corporation, or organization exercises de facto influence over important managerial matters of the principal through the appointment and dismissal of executive officers, etc.; |
| (d) | A corporation or organization, and any executive officer of such corporation or organization, if the investment made in the corporation or organization by the principal alone or jointly with a person in a relationship under any of items (a) through (c) with the principal, is at least 30/100 of its capital, or if the principal exercises de facto control over important managerial matters of the corporation or organization through appointment and dismissal of executive officers, etc. |
| Article 5 (Application for Designation of Designated Payment and Settlement System) |
Where a person who operates a payment and settlement system (hereinafter referred to as "operation institution") intends to have the payment and settlement system he/she operates designated under Article 120 (1) of the Act (hereinafter referred to as "designated payment and settlement system"), he/she shall file an application with the Governor of the Bank of Korea, along with any of the following documents: | 1. | Documents evidencing the grounds for the establishment of the operation institution; |
| 2. | Rules that the operation institution has established to conduct payment and settlement affairs (hereinafter referred to as "operating rules"); |
| 3. | A copy of such agreement, etc., where a separate agreement exists providing for measures to address a failure by a participant in the payment and settlement system to fulfill his/her settlement obligation by a transfer instruction (including fund transfer and securities transfer; hereinafter the same shall apply); |
| 4. | Qualification requirements for the participation in the payment and settlement system and a list of the participants in the payment and settlement system as of the date of the designation application. |
| Article 6 (Designation of Designated Payment and Settlement System) |
Where a payment and settlement system for which the application is filed for designation under Article 5 meets all of the following requirements, the Governor of the Bank of Korea may designate it as a designated payment and settlement system in consultation with the Chairperson of the Financial Services Commission: <Amended by Presidential Decree No. 20674, Feb. 29, 2008> | 1. | A payment and settlement system shall have an inherent systematic risk that the default by some participants could result in other participants defaulting (hereinafter referred to as "settlement risk"), and could pose severe obstacles to the normal operation of the financial market if settlement is not complete, in consideration of a settlement size, methods for handling transfer instructions, etc.; |
| 2. | The operating rules of an operation institution shall include each of the following: |
| (a) | The point of time when a transfer instruction becomes final and irrevocable; |
| (b) | When a participant in a payment and settlement system has filed for the rehabilitation procedures or bankruptcy procedures or when he/she is aware of the fact that the rehabilitation procedures or bankruptcy procedures have been filed for him/her or he/she has been declared bankrupt, the procedures for notifying such fact to the Governor of the Bank of Korea through an operation institution without delay; |
| (c) | Matters related to sanctions, such as the suspension of the use of a payment and settlement system that an operation institution which is aware of the fact stated in item (b) takes against the relevant participant; |
| (d) | Matters related to the procedures for processing transfer instructions or payment, execution thereof, adjustment, deduction, the furnishing, disposal, or appropriation of security, such as deposit funds, and other forms of settlement which are conducted between participants (hereinafter referred to as "transfer instruction, etc."); |
| (e) | Matters related to the measures to be taken when a participant fails to meet his/her settlement obligation with regard to transfer instructions, etc. |
| 3. | The transfer of domestic currency funds between participants shall be conducted using domestic currency current accounts of the Bank of Korea or other settlement assets without any credit or liquidity risk; |
| 4. | It shall meet the criteria recognized as necessary and determined by the Governor of the Bank of Korea for the stability of payment and settlement systems, including measures for preventing settlement risks, etc. |
| Article 7 (Ex Officio Designation of Designated Payment and Settlement Systems) |
| (1) | Notwithstanding Article 5, where it is deemed necessary for the stability of payment and settlement systems, the Governor of the Bank of Korea may designate a designated payment and settlement system ex officio in consultation with the Chairperson of the Financial Services Commission. <Amended by Presidential Decree No. 20674, Feb. 29, 2008> |
| (2) | For the designation referred to in paragraph (1), the Governor of the Bank of Korea may require an operation institution of the relevant payment and settlement system, to submit documents specified in the subparagraphs of Article 5. In such cases, the operation institution in receipt of such request shall comply therewith, unless there is a compelling reason not to do so. |
| (3) | When the Governor of the Bank of Korea intends to designate a designated payment and settlement system ex officio under paragraph (1), he/she shall give prior written notification to the operation institution of the relevant payment and settlement system by clearly stating any of the following matters, and shall provide an opportunity to submit its opinions thereon within a fixed period: |
| 1. | Grounds for the designation to be made, and details of and legal grounds for such designation; |
| 2. | An intention that the operation institution can submit its opinions with respect to subparagraph 1, and the processing method to be applied where failing to submit its opinions. |
| Article 8 (Notification, etc. of Designation) |
| (1) | Where the Governor of the Bank of Korea decides to make designation under Articles 6 and 7, he/she shall notify the relevant operation institution of details of the designation in writing and post it in the official gazette. In such cases, the designation details shall include the payment and settlement system to be designated, the operation institution of the payment and settlement system, the effective date of the designation, and operating rules. |
| (2) | Where the Governor of the Bank of Korea determines against designation after receipt of an application for designation pursuant to Article 5, he/she shall notify the relevant operation institution of the grounds for rejection. |
| Article 9 (Demand, etc. for Submission of Materials) |
| (1) | Where it is necessary to conduct the duties of designation prescribed in this Decree, the Governor of the Bank of Korea may require the submission of materials from the operation institution of a designated payment and settlement system. |
| (2) | The operation institution of a designated payment and settlement system shall consult with the Governor of the Bank of Korea in advance, when it is recognized that any amendment to its operating rules related to the designated payment and settlement system may affect whether it remains compliant with the designation requirements prescribed in Article 6. |
| (3) | Where the operation institution of a designated payment and settlement system amends its operating rules, it shall make submission to the Governor of the Bank of Korea within seven business days from the date of amendment. |
| (4) | Where it is deemed that the amendment to the operating rules would fail to satisfy the designation requirements prescribed in Article 6, the Governor of the Bank of Korea may request the relevant operation institution to take necessary actions, such as amending the operating rules. |
| Article 10 (Revocation of Designation of Designated Payment and Settlement System) |
| (1) | Where a designated payment and settlement system does not meet the designation requirements prescribed in Article 6 any more, the Governor of the Bank of Korea may revoke the designation of the relevant designated payment and settlement system in consultation with the Chairperson of the Financial Services Commission. <Amended by Presidential Decree No. 20674, Feb. 29, 2008> |
| (2) | Article 7 (3) shall apply mutatis mutandis in cases falling under paragraph (1). |
| (3) | Where the Governor of the Bank of Korea revokes designation under paragraph (1), he/she shall give written notice to the relevant operation institution regarding the facts which have caused such revocation, and the details, effective date, and legal grounds for the revocation, and post the same in the official gazette. |
| (4) | The revocation of designation under paragraph (1) shall not affect transfer instructions, etc. which were made prior to the revocation. |
| Article 11 (Advisory Committee) |
| (1) | The Governor of the Bank of Korea shall establish an advisory committee for advices concerning the designation of a designated payment and settlement system and the revocation of its designation. |
| (2) | Matters necessary for the composition, operation, etc. of the advisory committee shall be determined by the Governor of the Bank of Korea. |
| Article 12 (Special Cases concerning on CLS System) |
With regard to the Continuous Linked Settlement System operated by the Continuous Linked Settlement Bank International (CLS Bank International), when it is deemed necessary in consideration of its unique characteristics as an international payment and settlement system, subparagraph 2 (b) and (c) of Article 6 and Article 9 (2) through (4) need not apply.
Except as provided in Articles 5 through 12, detailed matters necessary for the designation of a payment and settlement system shall be determined and publicly notified by the Governor of the Bank of Korea.
| Article 14 (Derivative Financial Transactions) |
| (1) | "Derivative financial transactions that are prescribed by Presidential Decree" in Article 120 (3) 1 of the Act means transactions in forward deliveries, options, and swaps performed on the following underlying assets or the prices, interest rates, indicators, or units of the underlying assets, or the indexes based thereon: |
| 1. | Financial investment instruments (referring to securities and instruments based on derivative financial transactions); |
| 2. | Currency (including any foreign currency); |
| 3. | Ordinary commodities (referring to agricultural products, livestock products, fisheries products, forestry products, mining products, energies, the goods manufactured or processed with such products as raw materials, and other similar goods); |
| 4. | Credit risk (referring to a change in credit owing to a change in credit rating, bankruptcy, debt readjustment, etc. of a party or a third party); |
| 5. | Other risks due to natural, environmental, or economic phenomena, which are computable or assessable based on price, interest rate, indicator, or unit in a reasonable and appropriate way. |
| Article 15 (Shareholders with Special Relationships) |
"Other shareholders with a special relationship, the scope of which is prescribed by Presidential Decree" in Article 205 (4) of the Act means shareholders of the stock company, who fall under any of the subparagraphs of Article 4.
| Article 15-2 (Scope of Specially-Related Persons Exempt from Draft Rehabilitation Plan or Disapproval of Rehabilitation Plan) |
| 1. | Any of the following persons, when the principal is a private individual: |
| (b) | Lineal ascendant or descendant of the principal or his/her spouse; |
| (d) | A person who maintains a livelihood with the principal's money or his/her other property or a person who shares the same livelihood with the principal. |
| 2. | Any of the following persons, if the principal is a corporation or an organization: |
| (a) | An executive officer and a person in a relationship referred to in any item of subparagraph 1 with him/her; |
| (c) | A private individual and a person in a relationship referred to in any item of subparagraph 1 with the individual, if the investment made in the principal by the individual alone or jointly with a person in a relationship under any item of subparagraph 1, is at least 30/100 of its capital, or if the individual exercises de facto influence over important managerial matters of the principal through the appointment and dismissal of executive officers, etc. |
[This Article Newly Inserted by Presidential Decree No. 25851, Dec. 16, 2014]
| Article 15-3 (Scope of Small Business Income Earners) |
[This Article Newly Inserted by Presidential Decree No. 26236, May 12, 2015]
| Article 16 (Exempted Assets) |
| (2) | "The amount prescribed by Presidential Decree" in Article 383 (2) 2 of the Act means 11 million and 100 thousand won. <Amended by Presidential Decree No. 29602, Mar. 5, 2019> |
[This Article Wholly Amended by Presidential Decree No. 24352, Feb. 13, 2013]
| Article 17 (Disposable Income) |
"The amount prescribed by Presidential Decree" in subparagraph 4 (b) of Article 579 of the Act means a national pension premium, employment insurance premium, and industrial accident compensation insurance premium.
ADDENDA
Article 1 (Enforcement Date）
This Decree shall enter into force on April 1, 2006.
Article 2 Omitted.
ADDENDA <Presidential Decree No. 20674, Feb. 29, 2008>
Article 1 (Enforcement Decree)
This Decree shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA <Presidential Decree No. 24352, Feb. 13, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicable Examples concerning Exempted Assets)
The amended provisions of Article 16 shall apply starting with a case where an individual debtor applies for exemption under Article 383 (2) of the Act after this Decree enters into force.
ADDENDA <Presidential Decree No. 25035, Dec. 30, 2013>
Article 1 (Enforcement Date)
This Decree shall enter into force on January 1, 2014.
Articles 2 through 5 Omitted.
ADDENDUM <Presidential Decree No. 25851, Dec. 16, 2014>
This Decree shall enter into force on January 16, 2015.
ADDENDUM <Presidential Decree No. 26236, May 12, 2015>
This Decree shall enter into force on July 1, 2015.
ADDENDUM <Presidential Decree No. 27590, Nov. 22, 2016>
This Decree shall enter into fore on November 30, 2016.
ADDENDA <Presidential Decree No. 29602, Mar. 5, 2019>
Article 1 (Enforcement Date)
This Decree shall enter into force on the date of its promulgation.
Article 2 (Applicability to Exempted Assets)
The amended provisions of Article 16 (2) shall begin to apply where an individual debtor applies for exemption under Article 383 (2) of the Act after this Decree enters into force.