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ACT ON THE FUND FOR REPAYMENT OF PUBLIC FUNDS

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ACT ON THE FUND FOR REPAYMENT OF PUBLIC FUNDS

Act No. 6804, Dec. 26, 2002

Amended by Act No. 8047, Oct. 4, 2006

Act No. 8050, Oct. 4, 2006

Act No. 8135, Dec. 30, 2006

Act No. 8852, Feb. 29, 2008

Act No. 8863, Feb. 29, 2008

Article 1 (Purpose)

The purpose of this Act is to provide for matters necessary for the establishment, administration, management, etc. of the Fund for Repayment of Public Funds to facilitate the redemption of debts which are incurred, in financial restructuring, by the Korea Deposit Insurance Corporation established under the Depositor Protection Act and the Korea Asset Management Corporation established under the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation. Article 2 (Definition)

As used in this Act, the term "debts of the Fund for Redemption of Deposit Insurance Fund Bonds and the Non-performing Loan Resolution Fund" means any of the following:

1. Principal of and interest on bonds provided for by Presidential Decree, which shall be redeemed out of the Fund for Redemption of Deposit Insurance Fund Bonds established under the Depositor Protection Act (hereinafter referred to as the "Fund for Redemption of Deposit Insurance Fund Bonds") and the Non-performing Loan Resolution Fund established under the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Institutions and the Establishment of Korea Asset Management Corporation (hereinafter referred to as the "Non-performing Loan Resolution Fund"); and

ACT ON THE FUND FOR REPAYMENT OF PUBLIC FUNDS

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2. Loans obtained by the Fund for Redemption of Deposit Insurance Fund Bonds and the Non-performing Loan Resolution Fund from the loan account of the Fund for Management of Public Funds established under the Act on the Fund for Management of Public Funds. Article 3 (Establishment of Fund for Repayment of Public Funds) (1) In order to facilitate the redemption of debts of the Fund for Redemption of Deposit Insurance Fund Bonds and the Non-performing Loan Resolution Fund, the Government shall establish the Fund for Repayment of Public Funds (hereinafter referred to as the "Fund") through which any project including a contribution to the Fund for Redemption of Deposit Insurance Fund Bonds and the Non-performing Loan Resolution Fund is carried out. (2) The resources of the Fund shall consist of the following:

1. Deposits received from the Fund for Management of Public Funds established under the Act on the Fund for Management of Public Funds (hereinafter referred to as the "Fund for Management of Public Funds");

2. Annual surplus arising out of the settlement of revenue and expenditure accounts under Article 90 of the State Finance Act;

3. Contributions from the accounts of the Government under Article 6 of this Act;

4. Surplus arising out of the settlement of accounts of the Fund;

5. Contributions from the special accounts for communication business under the Enterprise Budget and Accounts Act;

6. Contributions from the special accounts for postal insurance under the Act on Special Accounts for Postal Insurance;

7. Floating debts under Article 9 of this Act; and

8. Other funds provided for by Presidential Decree. Article 4 (Administration and Management of Fund for Repayment of Public Funds)

(1) The Fund shall be administered or managed by the Financial Services Commission. (2) The Fund shall be used for purposes falling under any of the following subparagraphs:

1. Contribution to the Fund for Redemption of Deposit Insurance Fund Bonds and the Non-performing Loan Resolution Fund;

2. Redemption of debts of the Fund; and ACT ON THE FUND FOR REPAYMENT OF PUBLIC FUNDS

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3. Expenses necessary for the administration and management of the Fund. (3) If a contribution is made under paragraph (2) 1 of this Article, the Financial Services Commission may conclude arrangements which provide for the settlement in case of recalculation, etc. under Article 7.

(4) The accounts of the Fund shall be managed in conformity with the principle under Article 5 of the Enterprise Budget and Accounts Act. (5) The Financial Services Commission may entrust affairs relating to the administration and management of the Fund to the Governor of the Bank of Korea in accordance with Presidential Decree.

(6) If superfluous funds occur in the course of administering the Fund, the Financial Services Commission may utilize them for purposes falling under any of the following subparagraphs within one year:

1. Purchase of securities, such as national bonds, public bonds, etc.;

2. Deposit in or loan to financial institutions; and

3. Other purposes determined by the Financial Services Commission. (7) Other matters necessary for the administration and management of the Fund shall be provided for by Presidential Decree. Article 5 (Contribution to Fund)

(1) Annual surplus arising out of the settlement of revenue and expenditure accounts provided in Article 3 (2) 2 of this Act may be contributed to the Fund with the approval of the President after deliberation of the State Council irrespective of annual expenditure budget of those accounts until the year following that in which there occurs such annual surplus. In this case, such contributions may be used for purposes falling under Article 4 (2) 1 and 2 of this Act, notwithstanding the provisions of Article 70 (2) of the State Finance Act. (2) The Minister of Strategy and Finance shall contribute 30/100 or more of annual surplus arising out of the settlement of revenue and expenditure accounts in the preceding year to the Fund in conformity with the procedures under paragraph (1) of this Article.

(3) The prepared budget may be revised with financial resources of the amount of money exceeding 70/100 of annual surplus arising out of the ACT ON THE FUND FOR REPAYMENT OF PUBLIC FUNDS

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settlement of revenue and expenditure accounts if it is unavoidable to do so either due to any natural disaster or in the administration of national economy. In this case, the Minister of Strategy and Finance shall contribute the remainder of such annual surplus to the Fund, notwithstanding the provisions of paragraph (2). (4) The amount of money (one hundred thousand won, in case that such amount is less than one hundred thousand won) obtained by multiplying the average balance in the preceding year of postal savings under the Postal Savings and Insurance Act by the ratio provided for by Presidential Decree to the extent not exceeding 3/1000 shall be contributed to the Fund from the special accounts for postal insurance every year.

(5) The amount of money (one hundred thousand won, in case that such amount is less than one hundred thousand won) obtained by multiplying any other amount of money provided for by Presidential Decree in consideration of reserves for liability, etc. accumulated in the preceding year by the ratio provided for by Presidential Decree to the extent not exceeding 3/1000 shall be contributed to the Fund from the special accounts for postal insurance every year.

(6) Matters necessary for the method, time, etc. of contribution under paragraphs (4) and (5) shall be provided for by Presidential Decree. Article 6 (Inclusion in Budget, etc.)

(1) The Government shall include the following expenses and financial resources in the budget every fiscal year:

1. Expenses provided in Article 4 (2) 3; and

2. Financial resources necessary to redeem debts of the Fund in full until the year 2027.

(2) The Financial Services Commission shall require the Minister of Strategy and Finance to include funds to be provided from national finance in annual expenditure budget every year, taking into account administrative conditions of the Fund in the following year.

(3) The Minister of Strategy and Finance shall endeavor to comply with the requirement under paragraph (2) and shall, if it is difficult to include such funds in annual expenditure budget due to financial circumstances, etc., appropriate deposits received from the Fund for Management of Public ACT ON THE FUND FOR REPAYMENT OF PUBLIC FUNDS

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Funds for insufficient financial resources including the funds.

Article 7 (Recalculation System)

(1) The Financial Services Commission shall de facto investigate assets and debts of the Fund for Redemption of Deposit Insurance Fund Bonds and the Non-performing Loan Resolution Fund in the year to which the date when every five years have elapsed since the establishment of the Fund belongs: Provided, That the Financial Services Commission may, if deemed necessary, do so at any time. (2) The Financial Services Commission shall, if deemed necessary as a result of de facto investigation under paragraph (1), take measures such as alterations to debts of the Fund for Redemption of Deposit Insurance Fund Bonds and the Non-performing Loan Resolution Fund after consulting with the Minister of Strategy and Finance.

(3) If the Financial Services Commission take measures under paragraph (2) of this Article, he/she shall endeavor to take into account the ratio of contributions from the Fund under Article 4 (2) 1 of this Act to funds raised out of special contributions for redemption of deposit insurance fund bonds under Article 30-3 of the Depositor Protection Act.

(4) The Financial Services Commission shall report results of de facto investigation of assets and debts of the Fund for Redemption of Deposit Insurance Fund Bonds and the Non-performing Loan Resolution Fund as well as matters concerning prearranged measures under paragraphs (1) and (2) to the National Assembly. Article 8 (Submission of Plan for Redemption of Principal of and Interest on Public Funds to National Assembly)

The Financial Services Commission shall prepare specifications of and plans for the redemption of public funds provided in subparagraph 1 of Article 2 of the Public Fund Oversight Special Act in accordance with Presidential Decree and submit them to the National Assembly not later than 31st December of each year. Article 9 (Temporary Borrowing of Funds)

If funds are temporarily deficient in the course of administering the Fund, the Financial Services Commission may temporarily borrow necessary funds ACT ON THE FUND FOR REPAYMENT OF PUBLIC FUNDS

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for such administration (the period of such borrowing shall be limited to one year or less) from the Government, the Bank of Korea or other institutions provided for by Presidential Decree on condition that such borrowed funds should be redeemed out of the Fund. Article 10 (Fund Administration Council)

(1) There shall be established the Fund Administration Council (hereinafter referred to as the "Council") to deliberate on major matters concerning the administration and management of the Fund.

(2) The Council shall deliberate on the following matters concerning the administration and management of the Fund:

1. Major policies concerning the administration and management of the Fund;

2. Preparation of a draft plan for the administration of the Fund under Article 66 (2) of the State Finance Act;

3. Alteration to disbursements according to major items under Article 70 (2) of the State Finance Act;

4. Preparation of a report on final accounts of the Fund under Article 73 of the State Finance Act;

5. Major matters concerning the administration and management of the Fund provided for by Presidential Decree; and

6. Other matters which the Chairperson of the Council refers to the Council for deliberation if deemed necessary.

(3) Matters necessary for the organization and operation of the Council shall be provided for by Presidential Decree.

Article 11 (Opening of Account of Fund)

In order to clarify revenues and expenditures of the Fund, the Financial Services Commission shall open its account of the Fund with the Bank of Korea. Article 12 (Accounting Authorities of Fund)

(1) The Financial Services Commission shall, from among public officials under his/her control, appoint a Fund revenue collector, a Fund financier, a Fund expenditure officer and a Fund accounting official to perform affairs relating to revenues and expenditures of the Fund.

(2) If affairs relating to the administration and management of the Fund ACT ON THE FUND FOR REPAYMENT OF PUBLIC FUNDS

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are entrusted to the Governor of the Bank of Korea under Article 4 (5), the Financial Services Commission may appoint an Assistant Governor in charge of revenues of the Fund and an Assistant Governor in charge of acts of causing expenditures of the Fund from among Assistant Governors of the Bank of Korea, and a Fund expenditure clerk and a Fund accounting clerk from among the staff of the Bank of Korea, respectively. In this case, the Assistant Governor in charge of revenues of the Fund, the Assistant Governor in charge of acts of causing expenditures of the Fund, the Fund expenditure clerk, and the Fund accounting clerk shall perform duties of the Fund revenue collector, the Fund financier, the Fund expenditure officer, and the Fund accounting official, respectively.

Article 13 (Disposal of Profits from Fund and Deficits Therein) (1) If there is a surplus arising out of the settlement of accounts of the Fund, that surplus shall be reserved.

(2) If there is a loss after the settlement of accounts of the Fund, that loss shall be made up for by a reserve under paragraph (1), and if the reserve is insufficient, the Government may make up for the said loss from the general account.

Article 14 (Supervision and Order)

If affairs relating to the administration and management of the Fund are entrusted under Article 4 (5), the Financial Services Commission shall supervise such affairs and may give orders necessary therefor.

Article 15 (Liquidation of Fund)

If the Fund is liquidated, the remainder of the property shall devolve on the National Treasury.

Article 16 (Application of Act to Administration of Fund) Except as provided in this Act, the State Finance Act shall apply to the administration and management of the Fund.

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on January 1, 2003: Provided, That the provisions of Article 5 (4) and (5) shall do so on January 1, 2004. ACT ON THE FUND FOR REPAYMENT OF PUBLIC FUNDS

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Article 2 (Effective Period)

This Act shall remain effective until December 31, 2027. Article 3 (Plan for Administration of Fund in 2003 in Certain Cases) (1) Notwithstanding the provisions of Article 10 (1) of the Act on the Fund for Management of Public Funds, Article 8 of the Framework Act on Fund Management and Article 84-2 of the National Assembly Act, national bonds may be issued from the Fund for Management of Public Funds to such an extent as financial resources of the Fund included in the budget in the year 2003 permits and may be deposited with the Fund, and deposits received from the Fund for Management of Public Funds and contributions from the general account may be used for purposes falling under Article 4 (2) of this Act, notwithstanding the provisions of Article 10 (2) of this Act, Article 7 of the Framework Act on Fund Management and Article 84-2 of the National Assembly Act.

(2) If the Fund is established, the Minister of Finance and Economy shall, without delay, submit a plan for the administration of the Fund in the year 2003 and a revised plan for the administration of the Fund for Management of Public Funds in the year 2003 (hereinafter referred to as the "plan for the administration of the fund, etc.") to the Minister of Planning and Budget after deliberation and resolution of the corresponding Fund Administration Council (meaning the Fund Administration Committee, in case of the Fund for Management of Public Funds), and the Minister of Planning and Budget shall submit those plans to the National Assembly with the approval of the President after deliberation of the State Council. In this case, the plan for the administration of the fund, etc. shall be deemed to have been deliberated on and established. (3) The plan for the administration of the fund, etc. provided in paragraph (2) shall be prepared in conformity with the budget in the year 2003 which the National Assembly deliberates and resolves on. Article 4 (Exemption from Debts)

The exemption from any obligation to redeem loans provided in subparagraph 2 of Article 2 (limited to the remainder of the loans as of December 31, 2002) shall be allowed.

Article 5 Omitted.

ADDENDA

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Article 1 (Enforcement Date)

This Act shall enter into force on January 1, 2007. Article 2 Omitted.

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on January 1, 2007. (Proviso Omitted) Articles 2 through 12 Omitted.

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on January 1, 2007. Articles 2 through 9 Omitted.

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)

Articles 2 through 7 Omitted.

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on the date of its promulgation. Articles 2 through 5 Omitted.