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MUTUAL SAVINGS BANKS ACT

Act No. 2333, Aug. 2, 1972

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

Act No. 4867, Jan. 5, 1995

Act No. 5050, Dec. 29, 1995

Act No. 5501, Jan. 13, 1998

Act No. 5507, Jan. 13, 1998

Act No. 5738, Feb. 1, 1999

Act No. 5982, May 24, 1999

Act No. 6203, Jan. 28, 2000

Act No. 6429, Mar. 28, 2001

Act No. 6561, Dec. 31, 2001

Act No. 6992, Dec. 11, 2003

Act No. 7428, Mar. 31, 2005

Act No. 8143, Dec. 30, 2006

Act No. 8522, Jul. 19, 2007

Act No. 8635, Aug. 3, 2007

Act No. 8852, Feb. 29, 2008

Act No. 8863, Feb. 29, 2008

CHAPTER GENERAL PROVISIONS

Article 1 (Purpose)

The purpose of this Act is to contribute to the growth of the national economy by guiding savings banks for healthier operation to assist them in providing private citizens and small and medium enterprises with greater convenience in their financial services, protecting customers, and maintaining credit system in good order. [This Article Wholly Amended by Act No. 6203, Jan. 28, 2000] Article 2 (Definitions)

The terms as used in this Act have the meanings indicated below:

1. The term "small and medium enterprise"means small and medium enterprises as defined in Article 2 (1) of the Framework Act on Small and Medium Enterprises;

2. The term "credit mutual aid deposit service"means a service for receipt and payment of mutual aid deposits provided under an agreement made MUTUAL SAVINGS BANKS ACT

with mutual aid members on condition that each member deposit mutual aid deposits in installments for a fixed number of units in an account for a fixed term on a regular basis until the amount of savings reaches a specific amount and the service provider shall, in turn, pay the money so deposited to the mutual aid members from each account by drawing lots, making a bid, or any other method;

3. The term "credit installment savings service"means a service of receipt and payment of installment savings provided under an agreement with an installment savings depositor under an agreement that the depositor shall deposit installment savings for a fixed term and the service provider shall pay a certain amount of money to the depositor earlier, than or at the expiration of the term;

4. The term "equity capital"means the aggregate of capital, reserves, and other surplus, as further specified by Presidential Decree; 4-2. The term "deposits or similar"means mutual aid deposits, installment savings, deposits, installment deposits, and others specified by Presidential Decree;

4-3. The term "credit extension"means payments, loans, guarantees for payment, purchasing of securities in the nature of financial support, and other direct and indirect transactions of a mutual savings bank that are accompanied by credit risks in financial transactions, as specified further by Presidential Decree. In such cases, any credit extension made on a principal's account shall be deemed to be the credit extension made to the principal, regardless of in whose name it is made; 4-4. The term "large credit extension"means credit extension made to an individual borrower in excess of 10/100 of the equity capital of a mutual savings bank;

5. The term "illegal or non-performing credit extension" means a case in which the amount of credit extended or the amount provisionally paid (hereinafter referred to as "provisional payment made") falls under any of the following items extension:

(a) An amount exceeding the limit under Article 12 (1) and (3) out of the amount of credit extension made to an individual borrower (hereinafter referred to as "credit extension exceeding the limit for each individual borrower");

(b) An amount exceeding the limit under Article 12 (2) out of the aggregate of a large credit extension (hereinafter referred to as "illegal large credit extension");

(c) Credit extension made and provisional payment made in violation of Article 37 (hereinafter referred to as "credit extension to a large shareholder"); and

MUTUAL SAVINGS BANKS ACT

(d) Credit extension and provisional payment that is anticipated as difficult to collect or that is presumed to be a loss in light of the standards prescribed by the Financial Services Commission (hereinafter referred to as "non-performing credit extension");

6. The term "business guidance" means guidance on the following matters relating to business management of mutual savings banks: (a) Collecting illegal and non-performing credit extensions and securing claims;

(b) Business affairs relating to supply of and demand for funding and lending loans and receiving deposits; and

7. The term "business administration" means that an administrator under Article 24-3 (1), to whom the management of an insolvent mutual savings bank is entrusted for the business stabilization of the mutual savings bank, carries out the business affairs or manages and disposes of its property;

8. The term "large shareholder" means a shareholder falling under any of the following items:

(a) The largest shareholder: A principal who holds the greatest number of the total outstanding voting shares in a mutual savings bank held by the principal and persons who have special relationship, as prescribed by Presidential Decree, with the principal (hereinafter referred to as "related persons") on the principal's account, regardless of in whose name the shares are held; and

(b) Significant shareholder: A shareholder who holds 10/100 of outstanding voting shareholders of a mutual savings bank or more on his/her account, no matter in whose name the shares are held, or a shareholder who has de facto control over important matters relating to the management of a mutual savings bank, such as appointment and removal of executives.

[This Article Wholly Amended by Act No. 4867, Jan. 5, 1995] Article 3 (Form of Mutual Savings Banks)

Every mutual savings bank shall be a stock company.

[This Article Wholly Amended by Act No. 4867, Jan. 5, 1995] Article 4 (Restriction on Establishment of Branches) (1) A mutual savings bank may not establish any branch office or liaison office (which includes a branch office or an administration office that performs part of its business affairs, or any other similar place; hereinafter referred to as "branch office or similar"), other than its principal place MUTUAL SAVINGS BANKS ACT

of business: Provided, That the foregoing shall not apply in cases where a branch office or similar meets the requirements under Article 5 (2) and has obtained a license from the Financial Services Commission as prescribed by Presidential Decree. (2) The Financial Services Commission may attach conditions to a license granted pursuant to the proviso to paragraph (1).

Article 5 (Capital of Mutual Savings Banks)

(1) The capital of each mutual savings bank shall not be less than one of the following prescribed amounts, depending upon its business territory as defined in Article 6 (2):

1. In the Special Metropolitan City: Twelve billion won;

2. In a Metropolitan City: Eight billion won; and

3. In a Do; Four billion won. (2) A mutual savings bank that intends to establish a branch office or similar shall increase its capital by the amount specified by Presidential Decree or more for each branch office or similar.

(3) The capital under paragraph (1) means paid-in capital. (4) Deleted.

(5) Deleted.

[This Article Wholly Amended by Act No. 4867, Jan. 5, 1995] Article 6 (Business License)

(1) A person who intends to engage in any of the business activities under Article 11 (1) 1 through 3 shall obtain a license from the Financial Services Commission, except as specifically provided for otherwise, by any other Act: Provided, That the foregoing shall not apply in cases where such business activities are not carried out systematically and continuously for profit.

(2) A person who desires to obtain a license under paragraph (1) shall file an application with the Financial Services Commission as prescribed by Presidential Decree.

(3) The Financial Services Commission may attach conditions to a license MUTUAL SAVINGS BANKS ACT

granted under paragraph (1).

Article 6-2 (Requirements for Licensing)

(1) A person who wishes to be qualified for the license under Article 6 (1) shall meet the following requirements:

1. The person shall satisfy the requirements under Article 5 (1);

2. The person shall have professional human resources and physical facilities, including an electronic computer system, sufficient for protecting customers and carrying out the business in which he/she intends to engage;

3. His/her business plan shall be feasible and appropriate; and

4. Large shareholders (including shareholders related to the largest shareholders, and also including the shareholders specified by Presidential Decree or among the shareholders who have de facto control over important matters relating to the management of a legal entity, if the largest shareholder is a legal entity).

(2) Necessary matters concerning further details of the requirements under paragraph (1) shall be prescribed by Presidential Decree. [This Article Newly Inserted by Act No. 6203, Jan. 28, 2000] Article 6-3 (Public Notice of License)

The Financial Services Commission shall, whenever it grants a license pursuant to Article 6 (1) or revokes a license pursuant to Article 24 (2), shall issue public notice of the details forthwith through the Official Gazette and shall also notify the general public thereof by means of electronic communication or such. [This Article Newly Inserted by Act No. 6203, Jan. 28, 2000] Article 7 Deleted. Article 8 Deleted. Article 9 (Use of Designation)

(1) Every mutual savings bank shall include the words "mutual savings bank" in its name. (2) No person other than mutual savings banks under this Act may use such a designation as "mutual savings bank," "mutual credit fund," "mutual loan company,"and "people's bank," or any other similar designation.

Article 10 (Acts Subject to Approval)

(1) Every mutual savings bank shall, when it intends to perform any of the following acts, obtain approval from the Financial Services Commission: MUTUAL SAVINGS BANKS ACT

1. Dissolution or a merger;

2. Discontinuance, transfer, or acquisition of a business (or a substantial part of a business)

3. Deleted;

4. Deleted;

5. Deleted;

6. Decrease of capital;

7. Deleted; (2) The Financial Services Commission may attach conditions to the authorization granted pursuant to paragraph (1).

[This Article Wholly Amended by Act No. 5982, May 24, 1999] Article 10-2 (Matters Subject to Mandatory Reporting) (1) Every mutual savings bank shall, whenever it falls under any of the following subparagraphs, file a report with the Financial Services Commission in advance:

1. When it amends its articles of incorporation (excluding cases where such a insignificant matter as specified by Presidential Decree is modified);

2. When it changes a category or method of its business (excluding cases where such a insignificant matter as specified by Presidential Decree is modified);

3. When it transfers or acquires part of a business; and

4. When it is necessary, otherwise for protection of customers, as prescribed by Presidential Decree.

(2) The Financial Services Commission may recommend a mutual savings bank to correct or supplement the contents of a report filed by it in accordance with paragraph (1), if it finds that the contents violates any relevant statute or infringe on any right or interest of customers of the mutual savings bank. (3) Deleted.

(4) A person who intends to hold voting shares of a mutual savings bank in excess of 30 percent of the total number of its outstanding voting shares or who intends to become the largest shareholder of a mutual savings bank, as defined by Presidential Decree, by acquiring or purchasing voting MUTUAL SAVINGS BANKS ACT

shares of the mutual savings bank (which means having de facto control over the shares; hereafter referred to as "acquire" in this Article) shall satisfy the requirements applicable to the largest shareholder under Article 6-2 (1) 4 and the requirements prescribed by Presidential Decree for prevention of financial accidents in relation to further details of the requirements for licensing under paragraph (2) of the said Article, and shall obtain approval from the Financial Services Commission in advance. (5) The Financial Services Commission may issue an order to dispose of shares acquired without approval under paragraph (4) within a fixed period of time, which shall not exceed six months.

(6) A person who has acquired shares without approval under paragraph (4) may not exercise his/her voting right in such shares acquired without such approval. (7) A mutual savings bank that falls under any of the following subparagarphs shall file a report with the Financial Services Commission, as prescribed by the Financial Services Commission:

1. When there is a change in any of the shareholders specified by Presidential Decree;

1-2. When there is a change in its largest shareholder;

2. When it relocates its head office or relocates or closes down its branch office or similar;

3. When it suspends or resumes the business of its head office or a branch office or similar;

4. When it appoints or removes an executive; and

5. When there is any other cause or event that has a significant impact on the management of the mutual savings bank, as further specified by Presidential Decree.

(8) Necessary matters concerning further detailed requirements for the approval and order under paragraphs (4) and (5) shall be prescribed by Presidential Decree. [This Article Newly Inserted by Act No. 6203, Jan. 28, 2000] Article 10-3 (Appointment of Outside Directors)

(1) Each mutual savings banks (which shall be limited to mutual savings banks that meet the criteria prescribed by Presidential Decree, considering the amount of assets and other factors; the same shall apply hereafter MUTUAL SAVINGS BANKS ACT

in this Article) shall have outside directors (which mean directors not engaged in ordinary business activities of the board of directors and who are not persons falling under any subparagraph of paragraph (4); the same shall apply hereinafter), the minimum number of whom shall be prescribed by Presidential Decree, considering the amount of assets of the mutual savings bank. In such cases, the number of outside directors shall be at least one-half of the total number of directors.

(2) Each mutual savings bank shall have committee under Article 393-2 of the Commercial Act for recommendation of candidates for outside directors (hereinafter referred to as the "committee for recommendation of candidates for outside directors"). In this case, at least one-half of all members of the committee for recommendation of candidates for outside directors shall be outside directors. (3) Outside directors shall be elected by the general assembly of shareholders from among the candidates recommended by the committee for recommendation of candidates for outside directors. (4) No person who falls under any of the following subparagraphs may be qualified as an outside director of a mutual savings bank, and any person who falls under any of the following subparagraphs after he/she is appointed as an outside director shall relinquish of the position:

1. A minor or a person declared incompetent or quasi-incompetent;

2. A person declared bankrupt, but not yet reinstated;

3. A person in whose case two years have not passed since a sentence of imprisonment without prison labor or any heavier punishment upon him/her was completely carried out (or was held as completely carried out) or discharged;

4. A person in whose case two years have not passed since he/she was removed or dismissed pursuant to this Act;

5. The largest shareholder;

6. A person related to the largest shareholder;

7. A significant shareholder or his/her spouse or one of his/her lineal ascendants or descendants;

8. A person who currently works or has worked, during the latest two years, for the mutual savings bank or its affiliate (which means an affiliate as defined in the Monopoly Regulation and Fair Trade Act; the same shall apply hereinafter) as a full-time executive or employee; MUTUAL SAVINGS BANKS ACT

9. The spouse or a lineal ascendant or descendant of a full-time executive of the mutual savings bank;

10. A person who currently works or has worked, during the latest two years, as a full-time executive or employee for a legal entity that has a significant business relationship as prescribed by Presidential Decree with the mutual savings bank or that competes against the mutual savings bank in business or has a cooperative relationship with the mutual savings bank;

11. A full-time executive or employee of a company for which a full-time executive or employee of the mutual savings bank works as a non-standing director;

12. Any other person who has difficulty in performing his/her duty as an outside director or who is anticipated to have influence over the management of the mutual savings bank, as specified by Presidential Decree.

(5) In cases where the composition of the board of directors does not conform to the requirements under paragraph (1) due to resignation or death of an outside director or any other reason, the mutual savings bank shall take measures to compose the board of directors in conformity to the requirements under paragraph (1) at the general meeting of shareholders held first after the day on which such a cause or an event occurs. (6) The provision of the last clause of paragraph (2) shall not apply in cases where a mutual savings banks that shall have outside directors because it falls under the criterion under paragraph (1) for the first time appoints outside directors.

[This Article Newly Inserted by Act No. 6429, Mar. 28, 2001] Article 10-4 (Audit Committee)

(1) Each mutual savings banks (which shall be limited to the mutual savings banks that meet the criteria prescribed by Presidential Decree, considering the amount of assets and other factors; the same shall apply hereafter in this Article) shall have an audit committee (which means the audit committee as defined in Article 415-2 of the Commercial Act; the same shall apply hereafter in this Article). (2) The audit committee shall meet the following requirements:

1. At least two-thirds of incumbent members shall be outside directors; and

2. At least one of the members shall be a specialist in accounting or MUTUAL SAVINGS BANKS ACT

finance as specified by Presidential Decree.

(3) A person who falls under any subparagraph of Article 10-3 (4) 1 through 4 and 7 through 9 may not be qualified as a member of the audit committee as a non-outside-director member, and a person who falls under any of the said subparagraphs after he/she becomes a member of the audit committee as a non-outside-director member shall relinquish such position: Provided, That a person who currently serves as a member but who is a full-time auditor or a non-outside-director member may be qualified as a non-outside-director member of the audit committee, even when he/she falls under Article 10-3 (4) 8. (4) In cases where the composition of the audit committee does not conform to the requirements under paragraph (2) due to resignation or death of a member of the audit committee or any other reason, the mutual savings bank shall take measures to compose the audit committee in conformity with the requirements under paragraph (2) at the general meeting of shareholders held first after the day on which such cause or event occurs. (5) The proviso subparagraphs of Article 415-2 (2) of the Commercial Act shall not apply to the composition of the audit committee under paragraph (1).

(6) Article 409 (2) and (3) of the Commercial Act shall apply mutatis mutandis to the appointment of outside directors who shall serve as members of the audit committee. [This Article Newly Inserted by Act No. 6429, Mar. 28, 2001] Article 10-5 (Exercise of Minority Shareholder's Right) (1) A person who has held at least 5/100,000 of the total number of outstanding shares of a mutual savings bank (which shall be limited to mutual savings banks that meet the criteria prescribed by Presidential Decree, considering the amount of assets and other factors; the same shall apply hereafter in this Article) continuously for six months or longer, as prescribed by Presidential Decree, may exercise the minority shareholder's rights under Article 403 of the Commercial Act (including cases to which the said Article shall apply mutatis mutandis pursuant to Article 324, 415, 424-2, 467-2, or 542 of the Commercial Act).

(2) A person who has held at least 250/1,000,000 of the total number of outstanding shares of a mutual savings bank (or at least 125/1,000,000 if the mutual savings bank involved is one that falls under the criteria prescribed by Presidential Decree) continuously for six months or longer, MUTUAL SAVINGS BANKS ACT

as prescribed by Presidential Decree, may exercise the shareholder's rights under Article 402 of the Commercial Act.

(3) A person who has held at least 50/100,000 of the total number of outstanding shares of a mutual savings bank (or at least 25/100,000 if the mutual savings bank involved is one that falls under the criteria prescribed by Presidential Decree) continuously for six months or longer, as prescribed by Presidential Decree, may exercise the shareholder's rights under Articles 466 of the Commercial Act.

(4) A person who has held at least 250/100,000 of the total number of outstanding shares of a mutual savings bank (or at least 125/100,000 if the mutual savings bank involved is one that falls under the criteria prescribed by Presidential Decree) continuously for six months or longer, as prescribed by Presidential Decree, may exercise the shareholder's rights under Articles 385 (including cases to which the said Article shall apply mutatis mutandis pursuant to Article 415 of the Commercial Act) and 539 of the Commercial Act. (5) A person who has held at least 50/10,000 of the total number of outstanding shares of a mutual savings bank (or at least 25/10,000 if the mutual savings bank involved is one that falls under the criteria prescribed by Presidential Decree) continuously for six months or longer, as prescribed by Presidential Decree, may exercise the shareholder's rights under Article 363-2 of the Commercial Act. In this case, the shareholder's right under 363-2 of the Commercial Act shall be exercises on the basis of voting shares. (6) A person who has held at least 150/10,000 of the total number of outstanding shares of a mutual savings bank (or at least 75/10,000 if the mutual savings bank involved is one that falls under the criteria prescribed by Presidential Decree) continuously for six months or longer, as prescribed by Presidential Decree, may exercise the shareholder's rights under Articles 366 and 467 of the Commercial Act. In such cases, the shareholder's rights under 366 of the Commercial Act shall be exercises on the basis of voting shares. (7) A shareholder under paragraph (1) may, if he/she wins a lawsuit filed by him/her in accordance with Article 403 of the Commercial Act (including cases to which the said Article shall apply mutatis mutandis pursuant to Article 324, 415, 424-2, 467-2, or 542 of the Commercial Act), claim MUTUAL SAVINGS BANKS ACT

the mutual savings bank to pay the litigation costs and all other expenses incurred by him/her in the lawsuit. [This Article Newly Inserted by Act No. 6429, Mar. 28, 2001] CHAPTER BUSINESS

Article 11 (Business Activities)

(1) Any mutual savings bank may engage in the following business activities systematically and continuously for profit: 29. 2008>

1. Credit mutual aid deposit service;

2. Credit installment savings service;

3. Receipt of deposits and installment deposits;

4. Grant loans;

5. Discount commercial notes;

6. Domestic and foreign exchange of money;

7. Receipt of deposits for safekeeping;

8. Agency for the State, public organizations, and financial institutions; 8-2. Business affairs vicariously carried out for or entrusted by the Korea Federation of Savings Banks under Article 25;

8-3. Issuance and management of electronic means for debit payment under the Electronic Banking Act and settlement of payments therefor (In such cases, the scope of business shall be limited to cases in which the business affairs of the Korea Federation of Savings Banks under Article 25-2 (1) 5-5 are jointly carried out);

8-4 Issuance, management, and sales of prepaid electronic means payment under the Electronic Banking Act and settlement of payments therefor (In such cases, the scope of business shall be limited to cases in which the business affairs of the Korea Federation of Savings Banks under Article 25-2 (1) 5-6 are jointly carried out); and

9. Business activities incidental to those under subparagraphs 1 through 8-4 or those required for achieving the purposes under Article 1, subject to the approval of the Financial Services Commission. (2) Necessary matters concerning the business activities under subparagraphs of paragraph (1) shall be further prescribed by Presidential Decree.

MUTUAL SAVINGS BANKS ACT

(3) Deleted.

(4) Every mutual savings bank shall facilitate convenience in financial services for ordinary citizens and small and medium enterprises in compliance with this Act and orders issued pursuant to this Act in carrying out its business activities under paragraph (1).

Article 12 (Limits on Extension of Credit to Individual Borrowers) (1) A mutual savings bank may not extend credit to any individual borrower in excess of the limits prescribed by Presidential Decree within the extent of 20/100 of its equity capital.

(2) The aggregate of large credit extensions to an individual borrower (excluding persons specified by Presidential Decree) may not exceed five times the equity capital of a mutual savings bank.

(3) No mutual savings bank may extend credit to any individual borrower person who shares credit risks with the borrower (hereinafter referred to as "identical borrower"), as specified by Presidential Decree, in excess of the limits prescribed by Presidential Decree within the extent of 25/100 of the equity capital of the mutual savings bank. (4) Paragraphs (1) through (3) shall not apply to cases specified by Presidential Decree among those falling under any of the following subparagraphs:

1. Where it is necessary for improving the national economy or raising the effectiveness in securing claims of a mutual savings bank; and

2. Where a change in the equity capital of a mutual savings bank, a change in the composition of an identical borrower, or any other cause or event has caused the mutual savings bank to exceed the limits under paragraphs (1) through (3), although the bank has not extended additional credit.

(5) In cases where a mutual savings bank happens to exceed the limits under paragraphs (1) through (3) due to a cause or event under paragraph (4) 2, the bank shall make efforts to meet the limits under paragraphs (1) through (3) within one year from the day on which it exceeds such limits. (6) If there are unavoidable circumstances due to the maturity and amount MUTUAL SAVINGS BANKS ACT

of credit extended, a mutual savings bank may extend the period of time, notwithstanding paragraph (5), subject to the approval of the Financial Services Commission.

(7) A mutual savings bank that desires to obtain approval under paragraph (6) shall submit a detailed plan of its efforts to meet the limits under paragraphs (1) through (3), no later than three months before the end of the period under paragraph (5), to the Financial Services Commission, and the Financial Services Commission shall make a decision as to whether to grant approval of the detailed plan within one month from the day on which the plan is submitted and notify the bank of its decision. [This Article Wholly Amended by Act No. 5501, Jan. 13, 1998] Article 12-2 (Prerequisites for Acquisition of Stocks Issued by Large Shareholders)

(1) A mutual savings bank shall, when it intends to acquire stocks issued by any of its large shareholders (including their related persons; the same shall apply hereafter in this Article and Articles 12-3 and 22-4) and with a value equivalent to or more than the amount prescribed by Presidential Decree, refer the case to its board of directors for resolution. In such cases, such resolution shall be adopted by the board of director with an affirmative vote of all incumbent directors.

(2) A mutual savings bank shall, when it acquires stocks issued by any of its large shareholders with a value equivalent to or more than the amount prescribed by Presidential Decree, report the fact to the Financial Services Commission forthwith, and shall disclose it to the public through its internet homepage or any similar means. (3) Every mutual savings bank shall submit quarterly reports on the matters specified by Presidential Decree among the matters subject to mandatory reporting under paragraph (2), and disclose the reports to the public through its internet homepage or any similar means.

[This Article Newly Inserted by Act No. 8522, Jul. 19, 2007] Article 12-3 (Prohibition on Undue Influence of Large Shareholders) (1) No large shareholder of a mutual savings bank shall engage any of the following acts for his/her own interest in conflict with the interests of the bank:

1. Demanding the bank to furnish him/her with any material or information MUTUAL SAVINGS BANKS ACT

undisclosed to the public with intent to exercise undue influence: Provided, That cases falling under Article 10-5 (3) shall be excluded herefrom;

2. An act of exercising undue influence on personnel or business management of the bank in collusion with other shareholders on condition that they paid back with economic interests or any other consideration; and

3. Any other act similar to an act under subparagraph 1 or 2, as specified by Presidential Decree.

[This Article Newly Inserted by Act No. 8522, Jul. 19, 2007] Article 13 Deleted. Article 14 Deleted. Article 15 (Retention of Assets for Reserves)

Every mutual savings bank shall retain assets for reserve in the form of cash, deposits in financial institutions, deposits in the Korea Federation of Savings Banks under Article 25, or securities specified by Presidential Decree as assets, as prescribed by the Financial Services Commission within the limit of 50/100 of total amount of installment savings, deposits, and installment deposits received from customers. [This Article Wholly Amended by Act No. 4867, Jan. 5, 1995] Article 16 Deleted. Article 17 (Restriction on Borrowings)

(1) No mutual savings bank may borrow loans in excess of its equity capital: Provided, That the foregoing shall not apply in cases where it has obtained approval from the Financial Services Commission for such excessive borrowings. (2) Deleted. (3) Deleted. [This Article Wholly Amended by Act No 2779, Jul. 25, 1975] Article 18 (Management of Surplus Funds)

Every mutual savings bank shall, whenever it has any surplus funds, manage the fund in any of the following manners: 29. 2008>

1. Deposit the funds in any financial institutions designated and publicly MUTUAL SAVINGS BANKS ACT

notified by the Financial Services Commission;

2. Purchase securities specified by the Financial Services Commission;

3. Deposit the funds in the Korea Federation of Savings Banks under Article 25; and

4. Deposit the funds in any of the manners prescribed by the Financial Services Commission.

Article 18-2 (Prohibited Activities)

No mutual savings bank may perform any of the following acts:

1. Invest in securities (excluding those specified by the Financial Services Commission) in excess of its equity capital. In such cases, the Financial Services Commission may set up the limit on investment by classes of securities separately within the extent necessary for healthier management of mutual savings banks;

2. Own any real estate other than real estate for business purposes: Provided, That this sall not apply to acquire by the exercise of its security rights;

3. Deleted;

4. Provide any guarantee for performance of an obligation or offering any asset as security (excluding cases of providing guarantee for performance of an obligation or offering any asset as security, as specified by Presidential Decree, as having significantly low credit risk in providing such guarantee or offering the asset as security);

5. Deleted. [This Article Newly Inserted by Act No. 5501, Jan. 13, 1998] Article 19 (Disposal of Income)

(1) Every mutual savings bank shall accumulate at least 10/100 of its income earned each year as a reserve until the reserve becomes equivalent to the total amount of its capital. (2) The reserve under paragraph (1) may not be spent, except for setting off its losses and transferring it to capital.

Article 20 Deleted. Article 21 (Dissolution)

A mutual savings bank shall be dissolved if any of the following events occurs: MUTUAL SAVINGS BANKS ACT

1. When the business license under Article 24 92) is revoked;

2. When a merger under Article 10 (1) 1 occurs or when the business is entirely discontinued or transferred in accordance with subparagraph 2 of the said paragraph;

3. When contracts are entirely transferred in accordance with Article 24-9 (3), 24-11 (1), or 24-15 (2); and

4. When contracts are transferred in accordance with Article 14 (2) of the Act on the Structural Improvement of the Financial Industry (applicable to cases where contracts are entirely transferred) or when the business is entirely transferred in accordance with Article 26 of the said Act.

[This Article Wholly Amended by Act No 2779, Jul. 25, 1975] CHAPTER SUPERVISION

Article 22 (Supervision)

(1) Every mutual savings bank shall be subject to the supervision of the Financial Services Commission. (2) The Financial Services Commission may, when there is found to be a likelihood that customers' rights and interests will be undermined, issue an order to a mutual savings bank as may be necessary for supervision.

Article 22-2 (Standards for Soundness in Business Management) (1) The Financial Services Commission may establish the following standards for soundness in business management, as prescribed by Presidential Decree, in order to guide mutual savings banks for healthier management and prevent financial accidents:

1. Standards for financial soundness;

2. Standards for grading of financial soundness;

3. Standards for accounting and settlement of accounts; and

4. Standards for risk management. (2) Every mutual savings bank shall comply with the standards for soundness in business management under paragraph (1) in engaging in the business under Article 11. MUTUAL SAVINGS BANKS ACT

[This Article Newly Inserted by Act No. 5738, Feb. 1, 1999] Article 22-3 (Standards for Internal Control)

(1) Every mutual savings bank shall establish basic procedure and standards with which its executives and employees shall comply in performing their duties (hereafter referred to as "internal control standards") to observe relevant statutes, manage its assets in an improved manner, and protect its customers. (2) Every mutual savings bank shall have one or more persons who shall be responsible for monitoring whether the internal control standards are complied with, investigating into violations of the internal control standards, and reporting the results of his/her investigation to the auditor or audit committee (hereinafter referred to as "compliance officers").

(3) A mutual savings bank that intends to appoint or dismiss a compliance officer shall refer the case to its board of directors for resolution.

(4) Every compliance officer shall meet the following requirements.

1. He/she shall have any of the following career experience: (a) A person who has career experience of working for the Bank of Korea or any institution subject to inspections under Article 38 of the Act on the Establishment, etc. of Financial Services Commission (or a foreign financial institution equivalent to such institution) for ten years or longer;

(b) A person who holds a master or higher degree in a finance-related field with career experience of working for a research institute, college, or university as a researcher or a full-time lecturer or with a higher position for five years or longer;

(c) An attorney at law or a certified public accountant with career experience of engaging in a business relating to his/her qualification for five years or longer; and

(d) A person who has career experience of working for the Ministry of Strategy and Finance, the Financial Services Commission, the Securities and Futures Commission, or the Financial Supervisory Service, but in whose case five years have not passed since his retirement or resignation from the agency;

2. He/she shall not fall under any subparagraph of Article 35-2; and MUTUAL SAVINGS BANKS ACT

3. He/she shall not have any record of having been subjected to a disposition of a demand for caution or warning from the Governor of the Financial Supervisory Service due to his/her violation of any finance-related statute during the latest five years.

(5) Necessary matters concerning the internal control standards and compliance officers shall be prescribed by Presidential Decree.

[This Article Newly Inserted by Act No. 6203, Jan. 28, 2000] Article 22-4 (Demand to Mutual Savings Banks for Materials) (1) The Financial Services Commission may, when it suspects that a mutual savings bank or any of its large shareholders has violated Article 12-2, 12-3, or 37, demand the bank or such large shareholders to submit materials as required. (2) The Financial Services Commission may, if it is anticipated that the bad financial structure of a mutual savings bank, due to liabilities of a large shareholder (only in cases where the large holder is a company) exceeding its assets, is likely to significantly undermine the soundness in business management of the bank, as further prescribed by Presidential Decree, take the following measures against the bank:

1. Prohibition on new acquisition of securities issued by large shareholders; and

2. Other measures prescribed by Presidential Decree, including restriction on transactions with large shareholders in the nature of financial aid. [This Article Newly Inserted by Act No. 8522, Jul. 19, 2007] Article 23 (Inspections)

(1) The Governor of the Financial Supervisory Service established pursuant to the Act on the Establishment, etc. of Financial Services Commission (hereinafter referred to as the "Governor of the Financial Supervisory Service") may assign his/her employees to conduct an inspection on the business activities and assets of a mutual savings bank. (2) The Governor of the Financial Supervisory Service may, if deemed necessary for the inspection under paragraph (1), demand a mutual savings bank to submit a report on its business activities or assets or submit data, or have its relevant people appear before him/her to make statements. (3) Every person who conducts an inspection under paragraph (1) shall carry identification indication his/her authority with him/her to present MUTUAL SAVINGS BANKS ACT

it to the people concerned.

[This Article Wholly Amended by Act No. 6203, Jan. 28, 2000] Article 23-2 (Disclosure of Business Management)

Every mutual savings bank shall disclose to the public, as prescribed by the Financial Services Commission, the matters necessary for protecting customers and maintaining good credit system, as specified by Presidential Decree.

[This Article Wholly Amended by Act No. 6203, Jan. 28, 2000] Article 23-3 Deleted. Article 23-4 Deleted. Article 23-5 Deleted. Article 23-6 Deleted. Article 23-7 Deleted. Article 23-8 Deleted. Article 23-9 Deleted. Article 23-10 Deleted. Article 23-11 (Liquidation)

(1) The Financial Services Commission shall, when a mutual savings bank is dissolved due to any of the following reasons, appoint a liquidator for such bank.

1. Approval under Article 24-9 (3), or a decision under Article 24-11 (1) or 24-15 (2); and

2. The revocation of business license under Article 24 (2). (2) A liquidator shall, immediately upon his/her inauguration, inspect the current status of assets of the mutual savings bank concerned, prepare a list of assets and a balance sheet for approval by a general meeting of its shareholders. The foregoing shall also apply to the report on settlement of accounts at the time when the procedures for the liquidation are completed.

(3) In cases where the general meeting of shareholders has not been duly formed although it has been called or a liquidator fails to obtain approval from the general meeting of shareholders in accordance with paragraph (2), approval of the Financial Services Commission at the liquidator's request shall be deemed as the approval of the general meeting of shareholders. (4) The Financial Services Commission may, when it appoints a liquidator for a mutual savings bank, require the bank to pay remuneration for the MUTUAL SAVINGS BANKS ACT

liquidator.

(5) The Financial Services Commission may, in its discretion or at the request of an interested party, dismiss a liquidator, if necessary. (6) Except as specifically provided for otherwise by this Act, the provisions relevant to liquidation in the Commercial Act shall apply mutatis mutandis to the liquidation of mutual savings banks.

[This Article Newly Inserted by Act No. 4867, Jan. 5, 1995] Article 24 (Administrative Dispositions)

(1) The Financial Services Commission may, if it is anticipated that the sound management of a mutual savings bank is likely to be undermined because the bank violates this Act or an order issued pursuant to this Act, take any of the following measures:

1. Issue a caution or warning to the mutual savings bank or demand the bank to issue a caution, warning, or reprimand to the executives or employees concerned;

2. Issue an order to correct such a violation;

3. Recommend the bank to remove the executive concerned or suspend the performance of his/her duties; and

4. Suspend its business partially for a fixed period of time not exceeding six months.

(2) The Financial Services Commission may, when a mutual savings bank falls under any of the following subparagraphs, issue an order to suspend its business completely for a fixed period of time not exceeding six months or revoke its business license:

1. If it is discovered that the bank has obtained the business license by false or in fraudulent means;

2. If its equity capital has been completely impaired by deficits;

3. If the bank does an act under any subparagraph of Article 10 (1) without approval;

4. If the bank does not comply with an order issued pursuant to paragraph (1) 2 for corrective measures;

5. If the bank continues its business during the business suspension period; and

MUTUAL SAVINGS BANKS ACT

6. If the bank is likely to severely undermine public interest because it violates any other statute or its articles of incorporation, or the status of its business management is inadequate.

[This Article Wholly Amended by Act No. 6203, Jan. 28, 2000] CHAPTER -2 BUSINESS NORMALIZATION

OF INSOLVENT MUTUAL

SAVINGS BANKS

Article 24-2 (Business Guidance)

(1) The Financial Services Commission may, if a mutual savings bank falls under any of the following subparagraphs, provide business guidance to such a bank:

1. If it is discovered as a result of the inspection under Article 23 (1) that the bank has extended credit to an individual borrower in excess of the limit, extended a large amount of credit illegally, or extended credit to a large shareholder, as prescribed by Presidential Decree;

2. If any of its executives becomes subject to a disposition under Article 24 (1) 1 or 3 (which shall be limited only to the disposition specified by Presidential Decree);

3. If it is deemed necessary to provide business guidance as a result of the analysis and evaluation under Article 23 (2); and

4. If the mutual savings bank becomes subject to the corrective measures on time pursuant to Article 10 of the Act on the Structural Improvement of the Financial Industry.

(2) Necessary matters concerning the prerequisites, method, time period, and procedure for the business guidance under paragraph (1) shall be prescribed by Presidential Decree. [This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-3 (Business Administration)

(1) The Financial Services Commission may, if a mutual savings bank falls under any of the following subparagraphs, appoint an administrator forthwith to assign him/her to administer the business of the bank.

MUTUAL SAVINGS BANKS ACT

1. When it is found as a result of the inspection under Article 23 (1) that the illegal or non-performing credit extended by the mutual savings bank is likely to completely impair its capital and it is anticipated difficult for the bank to promote business normalization on its own because it is not possible to collect claims within a short period of time in an ordinary manner;

2. When there any ground exists to revoke its business license under Article 24 (2) and the business administration is necessary for protecting depositors;

3. When it is deemed necessary to correct its business practices through business administration because the bank has been subject to the business guidance for a long time or repeatedly, or an order to take corrective measures against the bank was issued because of its violation of this Act, but the bank has not take corrective measures within a reasonable period of time; and

4. When it is deemed necessary to subject the bank to business administration for protecting depositors because it has repeatedly extended credit or cross extended credit as defined in Article 37 (1) or (2) to a person falling under any subparagraph of paragraph (1) of the said Article or the amount of credit extended to such person is excessive.

(2) Further specific conditions required for the business administration under paragraph (1) 1, 3, and (4) shall be prescribed by Presidential Decree. (3) Once the business administration under paragraph (1) commences, the administrator shall inspect the current status of assets (hereinafter referred to as "actual inspection of assets") of the mutual savings bank forthwith.

(4) The term for the business administration shall not exceed six months, but may be extended only once within the limit of six months, if the Financial Services Commission deems it inevitable for promoting business normalization: Provided, That the term for the business administration may be extended until a bankruptcy administrator is appointed in accordance with Article 355 of the Debtor Rehabilitation and Bankruptcy Act, in cases where an application for bankruptcy has been filed in accordance with Article 24-13.

(5) A mutual savings bank that becomes subject to business administration MUTUAL SAVINGS BANKS ACT

under paragraph (1) shall issue public notice of the substance of the business administration forthwith as prescribed by Presidential Decree.

(6) Articles 14-3 (2) and 14-6 (1) and (2) of the Act on the Structural Improvement of the Financial Industry shall apply mutatis mutandis to the appointment of an administrator under paragraph (1). [This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-4 (Suspension of Payments)

(1) When the business administration under Article 24-3 (5) is publicly notified, payments for all obligations, performance of executives, and transfer of shares held by shareholders shall be suspended simultaneously. (2) The Financial Services Commission may, if it is found as a result of the actual inspection that it is possible to normalize the business of the mutual savings bank concerned or if such reason exists specified by Presidential Decree, partially or completely lift the suspension under paragraph 1. [This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-5 (Authority of Administrator)

(1) A person who has an interest in or is related to the mutual savings bank concerned may not be appointed as the administrator thereof.

(2) Every administrator shall have the authority to carry out the business affairs of the mutual savings bank subject to the business administration and manage and dispose of its assets. In this case, the administrator may not assert his/her authority against a third party in performing any legal act such as disposition of assets of the bank, unless and until he/she completes registration under Article 24-6.

(3) Every administrator may, if necessary for securing claims for illegal and non-performing credit extensions, investigate into the assets of a person who is jointly liable for the obligations relating to deposits and similar in accordance with Article 37-3, a person who is liable for damage under Article 399 (1) or 414 (1) of the Commercial Act, or an obligor to take measures as may be necessary, including an application for provisional attachment. (4) Every administrator may demand an executive or a large shareholder of the mutual savings bank concerned to submit a scheme for business normalization of the bank, including schemes for increasing capital and MUTUAL SAVINGS BANKS ACT

offering assets as additional security, within a fixed period of time of not less than two weeks, but not exceeding one month.

(5) Every administrator shall, whenever he/she performs any act within the extent of his/her authority, indicate that such act is performed for the mutual savings bank subject to the business administration.

(6) An act performed without making the indication under paragraph (5) shall be deemed to be an act done for his/her own interest. (7) The Financial Services Commission may, if deemed necessary, dismiss an administrator. (8) Article 35 (1) of the Civil Act, Article 11 (1) of the Commercial Act, and Articles 30 and 360 through 362 of the Debtor Rehabilitation and Bankruptcy Act shall apply mutatis mutandis to the administrators. In such cases, the term "court" in Articles 30 and 360 through 362 of the Debtor Rehabilitation and Bankruptcy Act shall be construed as the "Financial Services Commission." [This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-6 (Notices and Registration of Business Administration) (1) The Financial Services Commission shall, when it initiates the business administration pursuant to Article 24-3, notify its action forthwith to the district court having jurisdiction over the address of the head office of the mutual savings bank subject to the business administration, and shall request the registry office having jurisdiction over the addresses of the head office and branch offices to register the details of its action. (2) Registry offices shall, upon receiving the request under paragraph (1), register such details forthwith.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-7 (Cessation of Business Administration) (1) The Financial Services Commission shall, when the business administration is no longer required because the conditions required for the business administration under Article 24-3 have been eliminated and it is deemed possible for the mutual savings bank concerned to promote business normalization of its own accord, shall terminate it immediately.

(2) Article 24 (6) shall apply mutatis mutandis to cases under paragraph MUTUAL SAVINGS BANKS ACT

(1).

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-8 (Demand for Transfer of Contracts)

(1) The Financial Services Commission shall, when it is found as a result of the actual inspection of assets of a mutual savings bank that it is impossible for the bank to fully perform its obligations with its assets and thus the bank falls under any of the following subparagraphs, designate a person who shall take over contracts (hereinafter referred to as "transfer of contracts") and demand the bank to transfer them to the person.

1. If a mutual savings bank wishes to take over contracts: and

2. If it is deemed more desirable to transfer contracts, rather than the bank going bankrupt according to the standards prescribed by Presidential Decree.

(2) The mutual savings bank that wishes to take over contracts of another mutual savings bank in accordance with paragraph (1) shall file an application with the Financial Services Commission for such designation. (3) The standards and procedure for the designation under paragraph (2) shall be prescribed by Presidential Decree. (4) Article 24-3 (5) shall apply mutatis mutandis to the cases under paragraph (1).

(5) Deleted.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-9 (Agreement and Approval on Transfer of Contracts) (1) A mutual savings bank shall, when it is demanded to transfer its contracts in accordance with Article 24-8 (1), enter into an agreement with the designated mutual savings bank for the transfer of contracts (hereafter referred to as an "agreement"). (2) Both mutual savings banks that intend to enter into the agreement shall pass a resolution under Article 434 of the Commercial Act (or consent of two-thirds of all partners, if either party involved is a limited partnership company). (3) When the agreement is duly made, both mutual savings banks shall obtain approval on the transfer of contracts from the Financial Services Commission forthwith.

MUTUAL SAVINGS BANKS ACT

(4) Deleted.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-10 (Requests for Financial Aid)

(1) The Financial Services Commission may, if deemed necessary to provide financial aid in designating a mutual savings bank who shall take over contracts in accordance with Article 24-8 (2), request the Korea Deposit Insurance Corporation established pursuant to the Depositor Protection Act (hereinafter referred to as the "Korea Deposit Insurance Corporation") to determine the substance, terms, and conditions of the financial aid pursuant to Article 38 of the said Act. (2) The Korea Deposit Insurance Corporation shall, upon receiving request under paragraph (1), determine the substance, terms, and conditions of the financial aid forthwith and notify the Financial Services Commission of its determination. (3) The Financial Services Commission may, if deemed necessary for granting approval under Article 24-9 (3) or making the decision under Article 24-11 (1), determine the substance, terms, and conditions of the financial aid within the maximum limit notified by the Korea Deposit Insurance Corporation in accordance with paragraph (2), notwithstanding Article 38 of the Depositor Protection Act.

(4) The Financial Services Commission may, when a financial aid is deemed necessary because a bank run by a large number of customers withdrawing their deposits has occurred or is likely to occur to a mutual savings bank, request the Korea Federation of Savings Banks under Article 25 to provide financial aid to the mutual savings bank.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-11 (Decisions on Transfer of Contracts) (1) The Financial Services Commission may, when a mutual savings bank that has received a demand for the transfer of contracts under Article 24-8 and another mutual savings bank that was designated as a person who shall take over the contracts fail to reach an agreement or did not negotiate for such an agreement, make a decision on the transfer of such contracts. (2) In making a decision on the transfer of contracts pursuant to paragraph (1), the Financial Services Commission shall, if the substance, terms, MUTUAL SAVINGS BANKS ACT

and conditions of the financial aid required for the mutual savings bank who shall take over contracts exceeds the maximum limit of the substance, terms, and conditions notified by the Korea Deposit Insurance Corporation in accordance with Article 24-10 (2), consult with the Korea Deposit Insurance Corporation in advance.

(3) The Financial Services Commission shall, when it makes the decision under paragraph (1), notify both mutual savings banks and the Korea Deposit Insurance Corporations of the details of its decision. (4) Deleted.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-12 (Effectiveness and Public Notices of Transfer of Contracts) (1) The transfer of contracts shall become effective when approval under Article 24-9 (3) is granted or a decision is made under Article 24-11 (1). (2) A mutual savings bank that has obtained approval or has been notified of a decision in accordance with paragraph (1) shall publicly notify the purposes and abstract of the approval or decision on the transfer of contracts respectively, as prescribed by Presidential Decree.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-13 (Application for Bankruptcy)

(1) The Financial Services Commission may, when it is discovered as a result of an actual inspection of assets of a mutual savings bank under the business administration pursuant to Article 24-3 that the bank is unable to fully perform its obligations with its assets, but does not fall under any subparagraph of Article 24-8 (1) or the bank fails to obtain approval under Article 24-9 (3) or the decision under Article 24-11 (1), file an application for bankruptcy with the district court having jurisdiction over the address of the head office of the bank in its own discretion or upon the recommendation by the Korea Deposit Insurance Corporation. (2) Deleted.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-14 (Nomination of Auditors)

If a mutual savings bank that shall receive an external audit in accordance with the Act on External Audit of Stock Companies fall under such ground as prescribed by Presidential Decree, the Financial Services Commission MUTUAL SAVINGS BANKS ACT

may request the Securities and Futures Commission under the Act on the Establishment, etc. of Financial Services Commission to nominate an auditor for the bank pursuant to Article 4-3 of the Act on External Audit of Stock Companies.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 24-15 (Coordination in Promotion of Business Normalization) (1) The Financial Services Commission may, when it is deemed necessary for protecting depositors and establishing a sound credit system, recommend or arrange the transfer of business or stocks or a merger to the mutual savings bank that is promoting business normalization in accordance with Articles 24-2 through 24-12.

(2) The Financial Services Commission may, if deemed necessary for protecting depositors because the status of the business or assets of a mutual savings bank is significantly unhealthy or executives, employees, or such shareholders as specified by Presidential Decree are likely to conceal its assets, take measures necessary for promoting business normalization, such as making a decision on the transfer of contracts under Article 24-11 (1), filing an application for bankruptcy under Article 24-13 (1), and arrangement of transfer of business or a merger, without necessarily subjecting the bank to business administration. (3) Article 24-10 shall apply mutatis mutandis to cases under paragraph (2).

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] CHAPTER KOREA FEDERATION OF

SAVINGS BANKS

Article 25 (Establishment)

(1) The Korea Federation of Savings Banks (hereinafter referred to as the "Federation") shall be established for the purposes of promoting the healthier growth of mutual savings banks, encouraging business cooperation between them, establishing a sound credit system, and protecting their customers. (2) The Federation shall be a legal entity.

MUTUAL SAVINGS BANKS ACT

(3) Mutual savings banks shall be eligible for the membership in the Federation. (4) The Federation shall have its principal place of business in Seoul Special Metropolitan City and may have branches in any place as required.

(5) The Federation shall be duly formed when it completes registration of incorporation at the registry office having jurisdiction over the address of its principal place of business, as prescribed by Presidential Decree.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 25-2 (Business)

(1) The Federation shall carry out the following business activities in order to accomplish its purposes under this Act:

1. Conducting research and surveys for the improvement and development of the business of mutual savings banks;

2. Carrying out business activities for encouraging business cooperation between mutual savings banks, establishing a sound credit system, and protecting their customers;

3. Receiving and managing deposits and the deposit for reserve from mutual savings banks;

4. Granting loans to mutual savings banks, and purchasing commercial notes possessed or sold by mutual savings banks;

5. Providing mutual savings banks with the guarantee for performance of payment;

5-2. Providing domestic and foreign exchange services and carrying out business affairs entrusted by the State, a public organization, or a financial institution, vicariously;

5-3. Offering, underwriting, and selling securities in accordance with Article 2 (1) 1 and 2 of the Securities and Exchange Act; 5-4. Establishing and operating affiliates for common interests of mutual savings banks or investing in any other legal entity; 5-5. Issuing and managing electronic means for debit payment under the Electronic Banking Act and carrying out the settlement of payments therefor;

6. Carrying out business affairs entrusted by a national agency, local government, or any other public organization, vicariously; MUTUAL SAVINGS BANKS ACT

7. Carrying out business activities incidental to the business activities under subparagraphs 1 through 6; and

8. Carrying out other business activities specified by Presidential Decree. (2) The Federation shall, when it intends to carry out business activities under paragraph (1), prepare an operating manual as prescribed by Presidential Decree and shall obtain approval thereon from the Financial Supervisory Commission. The foregoing shall also apply in cases where it intends to amend the manual. [This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 25-2 (Business)

(1) The Federation shall carry out the following business activities in order to accomplish its purposes under this Act:

1. Conducting research and surveys for the improvement and development of the business of mutual savings banks;

2. Carrying out business activities for encouraging business cooperation between mutual savings banks, establishing a sound credit system, and protecting their customers;

3. Receiving and managing deposits and the deposit for reserve from mutual savings banks;

4. Granting loans to mutual savings banks, and purchasing commercial notes possessed or sold by mutual savings banks;

5. Providing mutual savings banks with guarantee for performance of payment;

5-2. Providing domestic and foreign exchange services and carrying out business affairs entrusted by the State, a public organization, or a financial institution vicariously;

5-3. Offering, underwriting, and selling securities in accordance with Article 2 (1) 1 and 2 of the Capital Market and Financial Investment Business Act;

5-4. Establishing and operating affiliates for common interests of mutual savings banks or investing in any other legal entity; 5-5. Issuing and managing electronic means for debit payment under the Electronic Banking Act and carrying out the settlement of payments therefor;

6. Carrying out business affairs entrusted by a national agency, local government, or any other public organization, vicariously; MUTUAL SAVINGS BANKS ACT

7. Carrying out the business activities incidental to business activities under subparagraphs 1 through 6; and

Article 25-3 (Articles of Incorporation)

(1) The mandatory provisions that shall be included in the articles of incorporation of the Federation shall be prescribed by Presidential Decree.

(2) The Federation shall obtain approval on its articles of incorporation from the Financial Services Commission. The foregoing shall also apply to any amendment to the articles of incorporation.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 25-4 (Executive Officers)

(1) The Federation shall have, as executives, one Chairperson, one Managing Director, no more than five directors, and one auditor.

(2) Deleted.

(3) Deleted.

(4) The term of each executive of the Federation shall be three years. [This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 25-5 (Membership Fees)

The Federation may collect membership fees from its members as stipulated by the articles of incorporation. [This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 25-6 (Principles in Accounting)

(1) Accounts of the Federation shall be managed in compliance with the standards for corporate accounting. (2) The Federation shall have a separate account for receiving and managing the deposits for reserve for separate accounting.

(3) The Financial Services Commission may prescribe specific standards concerning soundness in assets, creation of the reserve for bad debts in connection with the receipt and management of deposits for reserve under MUTUAL SAVINGS BANKS ACT

paragraph (2). 29. 2008> [This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article25-7 Deleted. Article25-8 Deleted. Article 25-9 (Borrowings)

(1) The Federation may, whenever necessary for carrying out its business activities, borrow loans subject to the prior approval of the Financial Services Commission, as prescribed by Presidential Decree.

(2) Deleted.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 25-10 (Appointment of Agents)

The Federation Chairperson may appoint the Managing Director, a director, or an employee as his/her agent with the delegated power to act on his/her behalf in all affairs relating to the business of the Federation, whether in legal proceedings or otherwise.

[This Article Newly Inserted by Act No. 6203, Jan. 28, 2000] Article 25-11 Deleted. Article 26 Deleted. Article 27 Deleted. Article 28 (Prohibition on Political Activities)

(1) The Federation may not engage any act to be involved in politics.

(2) Executives of the Federation may participate in any political party or political organization. Article 29 Deleted. Article 29-2 Deleted. Article 30 Deleted. Article 31 Deleted. Article 32 Deleted. Article 32-2 Deleted. Article 32-3 Deleted. Article 32-4 Deleted. Article 33 Deleted. Article 33-2 Deleted. Article 34 (Mutatis Mutandis Application)

(1) Except as provided for otherwise by this Act, the provisions relevant to incorporated associations in the Civil Act shall apply mutatis mutandis MUTUAL SAVINGS BANKS ACT

to the Federation.

(2) Articles 22, 23, and 24 (1) shall apply mutatis mutandis to the Federation. In such cases, the term "mutual savings bank"shall be construed as the "Federation." CHAPTER SUPPLEMENTARY

PROVISIONS

Article 34-2 (Vicarious Exercise of Authority)

(1) The authority vested in the Financial Services Commission pursuant to Articles 23-11 (1) and (3) through (5), 24-2 (1), 24-3 (1) and (4), 24-4 (2), 24-5 (7) and (8), 24-6 (1), 24-7, 24-8 (1) and (2), 24-9 (3), 24-10, 24-11, 24-13, 24-14, and 24-15 may be delegated to the Governor of the Financial Supervisory Service, as prescribed by Presidential Decree for vicarious exercise of the authority, if deemed necessary for carrying out business activities efficiently with expertise in promoting business normalization of insolvent mutual savings banks. In cases, the acts performed vicariously by the Governor of the Financial Supervisory Service shall be deemed to be those performed by the Financial Services Commission.

(2) The Governor of the Financial Supervisory Service shall, whenever he/she exercises any authority delegated pursuant to paragraph (1), indicate that he/she acts on behalf of the Financial Services Commission.

(3) Any act performed without making the indication under paragraph (2) shall be deemed to be an act done for his/her own interest. (4) The Governor of the Financial Supervisory Service shall, whenever he/she acts on behalf of the Financial Services Commission, report important matters to the Financial Services Commission. 29. 2008> (5) Necessary matters concerning the standards and procedures for processing business affairs in connection with the vicarious exercise of the authority of the Financial Services Commission under paragraph (1) may be prescribed by Presidential Decree.

MUTUAL SAVINGS BANKS ACT

(6) The Governor of the Financial Supervisory Service may, if necessary for vicariously exercising the authority for the business activities pursuant to paragraph (1), operate a council composed of representatives of the Korea Deposit Insurance Corporation, the Federation, and other related institutions. (7) The Governor of the Financial Supervisory Service may, when he/she promotes business stabilization of an insolvent mutual savings bank, request the heads of central administrative agencies to furnish him/her with informative materials as may be necessary. In case, the heads of central administrative agencies shall, upon receiving such request, comply with the request, unless there are extraordinary circumstances otherwise.

[This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 35 (Entrustment of Authority)

(1) The Financial Services Commission may entrust the Governor of the Financial Supervisory Service, the Federation Chairperson, or the President of the Korea Deposit Insurance Corporation with part of its authority, other than the authority under Article 34-2 (1), as prescribed by Presidential Decree. (2) The Governor of the Financial Supervisory Service shall, when he/she has discovered that a mutual savings bank has fallen under any subparagraph of Article 24 (1) or (2) or Article 40 (1) while exercising the authority entrusted pursuant to paragraph (1), recommend the Financial Services Commission to take necessary administrative measures. (3) The Governor of the Financial Supervisory Service, the Federation Chairperson, or the President of the Korea Deposit Insurance Corporation shall, when he/she exercises the authority entrusted pursuant to paragraph (1), report important matters to the Financial Services Commission. [This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 35-2 (Disqualification of Executives)

(1) No person who falls under any of the following subparagraphs shall be qualified as an executive of a mutual savings bank, and shall be deprived of his/her position if he/she falls under any of the subparagraphs after he/she is appointed as an executive: Provided, That subparagraph 8 shall be applicable only to the auditor:

1. A minor or a person declared incompetent or quasi-incompetent; MUTUAL SAVINGS BANKS ACT

2. A person declared bankrupt, but not yet reinstated;

3. A person in whose case five years have not passed since a sentence of imprisonment without prison labor or any heavier punishment upon him/her was completely carried out (or was held as completely carried out) or discharged;

4. A person in whose case five years have not passed since a sentence of fine or any heavier punishment upon him/her on account of a violation of this Act or finance-related statute specified by Presidential Decree (hereafter referred to as "finance-related statute" in this Article) was completely carried out (or was held as completely carried out) or discharged;

5. A person in whose case the execution of a sentence of imprisonment without prison labor or any heavier punishment was suspended but who is still subject suspended sentence;

6. A person in whose case five years have not passed since he/she was punished by disciplinary removal or dismissal pursuant to this Act or a relevant finance-related statute;

7. A person who once worked, as an executive or employee, for a legal entity or a company whose permission, license, or registration for business was revoked pursuant to this Act or a relevant finance-related statute (who is liable, directly or reasonably, for the cause of such revocation, as further specified by Presidential Decree) and in whose case five years have not passed since the day on which such revocation was enforced against the legal entity or the company; and

8. The majority shareholder of the mutual savings bank as defined in Article 37-3 (2) and the spouse or lineal ascendant or descendant or a sibling of the majority shareholder or the representative director. [This Article Wholly Amended by Act No. 6203, Jan. 28, 2000] Article 35-3 (Allotted Contributions)

(1) Mutual savings banks and the Federation, all of whom shall be subject to inspection by the Financial Supervisory Service, shall pay the Financial Supervisory Service their apportioned contributions required for the expenses for such inspection. (2) Necessary matters concerning the rate and limit of the apportioned contribution under paragraph (1) and other matters concerning the payment of apportioned contribution shall be prescribed by Presidential Decree. [This Article Newly Inserted by Act No. 5507, Jan. 13, 1998] Article 36 (Relations to other Acts)

MUTUAL SAVINGS BANKS ACT

(1) The Bank of Korea Act (excluding Article 80 (1) and (3) thereof) and the Banking Act shall not apply to mutual savings banks. (2) Deleted.

(3) For purposes of apply Article 2 of the Act on External Audit of Stock Companies, a mutual savings bank shall be deemed financial institution under Article 2 of the Banking Act or Article 11 of the Bank of Korea Act.

[This Article Wholly Amended by Act No. 4867, Jan. 5, 1995] Article 37 (Prohibition on Extension of Credit to Large Shareholders)

(1) No mutual savings bank shall extend credit or make a provisional payment to a person falling under any of the following subparagraphs (hereinafter referred to as "a large shareholder"), and no large shareholders of a mutual savings bank shall accept extension of credit or a provisional payment offered by such bank: Provided, That the foregoing shall not apply to such extension of credit as specified by Presidential Decree, if there is no risk in collecting claims or if it is for the welfare of employees:

1. A large shareholder (including such shareholders as specified by Presidential Decree);

2. An executive or employee of the mutual savings bank; and

3. Such relatives or related person as specified by Presidential Decree with a person falling under subparagraph 1 or 2 or the mutual savings bank.

(2) Mutual savings banks may not make an exchange with each other to extend credit or make a provisional payment to their large shareholders in order to circumvent the prohibition on extension of credit or provisional payments under paragraph (1).

[This Article Wholly Amended by Act No. 5507, Jan. 13, 1998] Article 37-2 (Depositors' Right to Preferential Payment) A person who has a deposit in a mutual savings bank shall have the right to repayment of such deposit prior to other creditors, from all assets of the bank within the limit of the amount of his/her deposit, except as specifically provided for otherwise by other Acts. MUTUAL SAVINGS BANKS ACT

[This Article Newly Inserted by Act No. 2779, Jul. 25, 1975] Article 37-3 (Joint Liability of Executives)

(1) An executive of a mutual savings bank who inflicts any damage or loss on the bank or a third party by his/her intentional or negligent conduct in the course of performing his/her duty shall be jointly liable with the bank for the obligations arising in connection with deposits in the bank.

(2) The majority shareholder of a mutual savings bank (which means a person constituting a majority shareholder as defined in Article 39 (2) of the Framework Act on National Taxes) shall, if he/she has caused the insolvency of the bank as a consequence of his/her influence on the business management of the bank, shall be jointly liable for the obligations arising in connection with deposits in the bank.

(3) Deleted.

(4) Deleted.

[This Article Newly Inserted by Act No. 2779, Jul. 25, 1975] Article 38 (Hearings)

The Financial Services Commission shall hold a hearing whenever it intends to revoke a business license pursuant to Article 24 (2). [This Article Wholly Amended by Act No. 5507, Jan. 13, 1998] CHAPTER -2 IMPOSITION AND

COLLECTION OF PENALTY

SURCHARGES

Article 38-2 (Imposition of Penalty Surcharge)

The Financial Services Commission may impose penalty surcharge upon a mutual savings bank that falls under any of the following subparagraphs:

1. In cases where the bank has extended credit in excess of the limit on credit extension under Article 12: Not more than 10/100 of the amount of the excess credit extension; and

2. In cases where the bank has extended credit or made a provisional payment in violation of Article 37: Not more than 20/100 of the amount of the credit extended or provisional payment.

[This Article Newly Inserted by Act No. 8522, Jul. 19, 2007] MUTUAL SAVINGS BANKS ACT

Article 38-3 (Guidelines for Imposition of Penalty Surcharges) The guidelines for imposition of penalty surcharges under Article 38-2 shall be prescribed by Presidential Decree, considering the following factors:

1. Substance and degree of violation;

2. Duration and frequency of violations; and

3. Amount of benefit derived from such violation. (2) Necessary matters concerning the imposition of penalty surcharges shall be prescribed additionally by Presidential Decree. [This Article Newly Inserted by Act No. 8522, Jul. 19, 2007] Article 38-4 (Presentation of Statements)

(1) The Financial Services Commission shall, prior to imposing any penalty surcharge, provide the party concerned or an interested party an opportunity to make a statement in his/her side favor. 29. 2008> (2) The party concerned or an interested party may make an appearance in person at a hearing of the Financial Services Commission to make a statement on his/her side or submit materials as may be necessary.

[This Article Newly Inserted by Act No. 8522, Jul. 19, 2007] Article 38-5 (Objections)

(1) Any person who is dissatisfied with the disposition of a penalty surcharge under Article 38-2 may file an objection with the Financial Services Commission, which shall cleary state the reasons for such objection, within 30 days from the date on which a notice of the disposition is served.

(2) The Financial Services Commission shall make a decision on the objection filed in accordance with paragraph (1) within 30 days from the filing date of the objection: Provided, That the deadline may be extended within the limit of 30 days, if it is impossible to make a decision within the period of time due to an unavoidable cause or event. 29. 2008> [This Article Newly Inserted by Act No. 8522, Jul. 19, 2007] Article 38-6 (Extension of Deadline for Payment of Penalty Surcharge and Payment in Installments)

(1) The Financial Services Commission may, if it deems difficult for a person to whom the penalty surcharge has been imposed (hereinafter referred to as "penalty surcharge payer") to pay the full amount of the penalty surcharge at a time due to any of the following circumstances, MUTUAL SAVINGS BANKS ACT

extend the payment deadline or allow him/her to pay it in installments. In such cases, it may require the penalty surcharge payer to offer an asset as security, if deemed necessary:

1. If he/she has sustained severe damage to his/her property by disaster;

2. If his/her business is in a critical crisis due to worsened business conditions;

3. If it is anticipated that he/she is likely to face severe hardship in his/her financial circumstances if the penalty surcharge should be paid in lump sum; and

4. If exists any other reason similar to any of those under subparagraphs 1 through 3.

(2) Any penalty surcharge payer who desires to have the payment deadline for the penalty surcharge under paragraph (1) extended or to pay it in installments shall file an application therefor with the Financial Services Commission by no later than ten days before the deadline.

(3) The Financial Services Commission may, if the payment was extended in accordance with paragraph (1) or the payment in installments was allowed, but the penalty surcharge payer falls under any of the following subparagraphs, revoke its decision to extend the deadline or allow the payment in installments and collect the penalty surcharge in lump sum:

1. If he/she has not paid the penalty surcharge in installments as decided within the time limit:

2. if he/she has not complied with an order issued by the Financial Services Commission as required for preservation of security, such as replacement of security;

3. If it is found impossible to collect the full amount or remainder of the penalty surcharge due to forced execution, commencement of auction, declaration of bankruptcy, dissolution of the legal entity, disposition against default on national local taxes; and

4. If any other cause or event similar to those under subparagraphs 1 through 3 exist, as specified further by Presidential Decree. (4) Necessary matters concerning the extension of the clear deadline for penalty surcharge, payment in installments, or security under paragraphs (1) through (3) shall be prescribed by Presidential Decree. [This Article Newly Inserted by Act No. 8522, Jul. 19, 2007] MUTUAL SAVINGS BANKS ACT

Article 38-7 (Collection of Penalty Surcharges and Dispositions against Default)

(1) The Financial Services Commission may, if a penalty surcharge payer fails to pay the penalty surcharge within the deadline, may collect the additional charge, as prescribed by Presidential Decree, for the period of time from the date immediately following the deadline until the day immediately before the date on which the penalty surcharge is paid.

(2) The Financial Services Commission may, if a penalty surcharge payer fails to pay the penalty surcharge within the deadline, may demand him/her to pay it within a fixed period of time, and may collect it in accordance with the practices for the disposition against default on national taxes, if the payer fails again to pay the penal surcharge and the additional charge under paragraph (1) within the fixed period of time.

(3) The Financial Services Commission may entrust the Commissioner of the National Tax Service with the collection of penalty surcharges and additional charge under paragraph (1) and (2) or the disposition against default on such payment. (4) Other necessary matters concerning the collection of penalty surcharges shall be prescribed by Presidential Decree.

[This Article Newly Inserted by Act No. 8522, Jul. 19, 2007] CHAPTER PENAL PROVISIONS

Article 39 (Penal Provisions)

(1) Any person who falls under any of the following subparagraphs shall be punishable by imprisonment for not less than one year, but not more than ten years or by fine of not less than ten million won, but not more than 100 million won:

1. A person who makes a feigned payment of capital of a mutual savings bank, who aids and abets someone else to do such a feigned payment, or who arranges such a feigned payment;

2. A promoter, an executive, a liquidator, a manager, or an employee to whom a certain type of business or a specific business affair of a mutual savings bank has been delegated, but who has acquired an interest in an asset or aided and abetted a third party to acquire an MUTUAL SAVINGS BANKS ACT

interest by an act committed in breach of his duty, thereby inflicting damage or loss on the bank.

(2) A person who falls under any of the following subparagraphs shall be punishable by imprisonment for not more than five years or by fine not exceeding 50 million won:

1. A person who violates Article 6 (1); 1-2. A large shareholder or a person related to the large shareholder who commits an act under any subparagraph of Article 12-3 in violation of the said Article;

2. A person who violates Article 37 (1) or (2) and the large shareholder who receives credit extension or a provisional payment from such person; (3) A person who falls under any of the following subparagraphs shall be punishable by imprisonment for not more than one year or by fine not exceeding ten million won:

1. A person who violates Article 4 (1);

2. Deleted;

3. A person who violates Article 9;

4. A person who violates Article 10; 4-2. A mutual savings bank that violates any provision of Article 12 (1) through (3) and (5);

5. Deleted;

6. Deleted;

7. Deleted; 7-2. A person who violates Article 10-2 (4);

7-3. A person who violates an order issued pursuant to Article 10-2 (5);

8. A person who rejects, interferes with, or evades the business administration under Article 24-3 (1);

9. A person who rejects, interferes with, or evades the transfer of business affairs to the administrator appointed pursuant to Article 24-3 (1);

10. A person who makes a payment, performs his/her duty, or transfers shares in violation of Article 24-4 (1); and

11. A person who fails to follow a decision on the transfer of contracts under Article 24-11 (1) or 24-15 (2).

(4) A person who falls under any of the following subparagraphs shall be punishable by imprisonment for not more than six months or by fine MUTUAL SAVINGS BANKS ACT

not exceeding five million won:

1. Deleted;

2. A person who violates Article 15, 17, or 19;

3. Deleted;

4. Deleted;

5. Deleted;

6. Deleted. (5) The punishments by imprisonment and fines under paragraphs (1) through (4) may be imposed concurrently.

[This Article Wholly Amended by Act No. 2779, Jul. 25, 1975] Article 39-2 (Joint Penal Provisions)

If a representative, an agent, an employee, or any other servant of a legal entity or an individual commits an offense under Article 39 in connection with the business of the legal entity or the individual, not only shall such offender be punished accordingly, but the legal entity or the individual shall also be punished by fine under the said Article. [This Article Newly Inserted by Act No. 5501, Jan. 13, 1998] Article 40 (Fines for Negligence)

(1) A person who falls under any of the following subparagraphs shall be punishable by fine for negligence not exceeding five million won:

1. A person who violates Article 10-2 (1) or (7);

2. A mutual savings bank that has not referred a case to its board of directors for resolution in violation of Article 12-2 (1);

3. A mutual savings bank that has not submitted a report to the Financial Services Commission or has not made a disclosure to the public in violation of Article 12-2 (2) or (3);

4. A person who violates an order issued pursuant to Article 22 (2) (including cases to which the said provisions shall apply mutatis mutandis pursuant to Article 34 (2));

5. A person who fails to comply with a demand of the Financial Services Commission to submit data in accordance with Article 22-4 (1) or who submits a false data;

6. A person who violates a measure made pursuant to Article 22-4 (2);

7. A person who rejects, interferes with, or evades an inspection under Article 23 (1);

MUTUAL SAVINGS BANKS ACT

8. A person who fails to submit data or make an appearance to make a statement in accordance with Article 23 (2) (including cases to which the said provisions shall apply mutatis mutandis pursuant to Article 34 (2)) or who submits false data or makes a false statement;

9. A person who fails to make a disclosure or notice to the public in accordance with Article 23-2, 24-3 (5) (including cases to which the said provisions shall apply mutatis mutandis pursuant to Article 24-8 (4)), or 24-12 (2) or who makes a false disclosure or notice;

10. A person who fails to comply with the demand under Article 24 (1) 1 (including cases to which the said provisions shall apply mutatis mutandis pursuant to Article 34 (2));

11. A person who fails to follow the business guidance under Article 24-2 (1);

12. A person who violates Article 25-2 (2) or 25-3 (2); and

13. A person who fails to submit a report in accordance with Article 34-2 (4) or 35 (3) or who submits a false report.

(2) Fines for negligence under paragraph (1) shall be imposed and collected by the Financial Services Commission, as prescribed by Presidential Decree.

(3) A person who is dissatisfied with a disposition of fine for negligence under paragraph (2) may file an objection with the imposing authority within 30 days from the day on which the notice of such a disposition is served. (4) If the person against whom a disposition of fine for negligence is made pursuant to paragraph (2) files an objection under paragraph (3), the imposing authority shall notify the competent court of the objection forthwith, and the court shall, in turn, place the case on trial pursuant to the Non-Contentious Case Litigation Procedure Act. (5) If neither an objection is filed nor fine for negligence paid within the period under paragraph (3), such fine for negligence shall be collected in accordance with the practices against default on national taxes. [This Article Wholly Amended by Act No. 4867, Jan. 5, 1995] Article 41 Deleted. ADDENDA

MUTUAL SAVINGS BANKS ACT

Article 1 (Enforcement Date)

This Act shall enter into force on the date of its promulgation: Provided, That Article 32 (2) shall enter into force on the day set separately by Presidential Decree.

Article 2 (Transitional Measures)

(1) A person who engages in the business under Article 11 or any similar business as of the enforcement date of this Act shall file a report with the Minister of Finance within 30 days from the date this Act enters into force, as prescribed by Presidential Decree.

(2) A person who has filed a report in accordance with the foregoing paragraph and who intends to continue the business shall file an application for the license under Article 6 within 90 days from the date this Act enters into force. In such cases, the capital shall be the amount specified by Presidential Decree, notwithstanding Article 5, but shall be increased to the amount equivalent to or more than that under Article 5 within one year from the end of the time period for such application.

(3) A person who has filed the report under paragraph (1) may continue his/her existing business as until the end of the time period for the application under the foregoing paragraph: Provided, That if the term of any contract already made exceeds the end of the time period for the application, he/she may continue his/her business until the expiration of the contract term only for the settlement of the contract, notwithstanding Article 6. (4) The Minister of Finance may, if necessary, order a person who engages in a business in accordance with the foregoing paragraph to submit a report on the current status of his/her business and assets in accordance with Article 23, assign a public official under his/her control to conduct an inspection thereon, or issue an order as may be necessary for supervision over the business.

(5) A person who has a branch office as of the date this Act enters into force shall be eligible for the license under paragraph (2), notwithstanding Article 4. In such cases, the person who has obtained such a license may continue operation of the branch office only for two years from the end of the time period for the application under the said paragraph. ADDENDA

(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation: Provided, That Article 32 (4) 1 shall enter into force on the day set separately by Presidential Decree.

(2) (Transitional Measure) A mutual credit union that has received mutual aid deposits and installment savings in excess of the limit under Article 13 as of the enforcement date of this Act shall take measures necessary MUTUAL SAVINGS BANKS ACT

for adjust the level such deposit and savings to the limit by no later than December 31, 1976.

(3) (Idem) The funds raised as of the date this Act enters into force shall be deemed to be funds under the provisions of this Act. (4) (Idem) A mutual credit union that has any executive disqualified under Article 35-2 as of the date this Act enters into force shall replace such a person with a person qualified under the said Article no later than December 31, 1976.

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force three months after the date of its promulgation. Article 2 (Special Exception to Previous Mutual Credit Unions Incorporated as under General Partnership)

Mutual credit unions incorporated as a general partnership or limited partnership as of the date this Act shall be governed by the former provisions for purposes of applying Article 3, 5 (3), 20 (2), or 37-3 (3) to them, and the terms "stocks" and "stockholders" shall be construed as "investment certificates" and "partners"respectively for purposes of applying Article 10-2 (3) or (4) 1, 24-4 (1), or 24-15 (1), subparagraph 8 of Article 35-2, subparagraph 1 of Article 37, Article 37-3 (1) or (3), or Article 39 (3) 10, while the term "general meeting of stockholders" shall be construed as "general meeting of partners"for purposes of applying Article 23-11 (2) or (3).

Article 3 (Transitional Measures concerning Capital) (1) A mutual credit union that fails to meet the standards for capital under the amended provision of Article 5 (1) as of the enforcement date of this Act shall

make endeavor to meet the standards under the amended provisions of the said paragraph of the said Article within seven years from the date this Act enters into force (or within the period of time set in a plan for increasing the capital, in cases where it fails to increase the capital within seven years, but obtains approval of the Financial Supervisory Commission on the plan). [Effective on Jan. 28, 2000]

(2) The increase of the capital of a branch office established as of the date this Act enters into force shall be governed by the former provisions. Article 4 (Transitional Measures concerning Transformation into Stock Company)

In cases where a mutual credit union is established in order to transform a mutual credit union incorporated as a general partnership or a limited MUTUAL SAVINGS BANKS ACT

partnership as of the date this Act enters into force establishes into a stock company, such a mutual credit union shall be governed by the former provisions in applying Article 5 (1), but shall, upon the completion of the transformation, make efforts to meet the requirements under the amended provisions of Article 5 (1) within the period of time set in Article 3 of Addenda, while the provisions relevant to the contribution relating to the business license under Article 5 (2) of the Credit Management Fund Act shall not be applicable.

Article 5 (Transitional Measures concerning Liquidation) A mutual credit union under the liquidation proceedings as of the date this Act enters into force shall be deemed to be under the liquidation proceedings under this Act.

Article 6 (Transitional Measures concerning Penal Provisions) An act committed before the date this Act enters into force shall be governed by previous relevant provisions in applying penal provisions. Article 7 Omitted.

ADDENDA (Credit Management Fund Act) Article 1 (Enforcement Date)

This Act shall enter into force six months after the date of its promulgation.

Article 2 (Transitional Measures concerning Dispositions) An order to transfer contracts, a decision, or a disposition, including appointment of an administrator, issued or made by the Minister of Finance and Economy pursuant to any provision of Articles 23-2 through 23-9 of the Mutual Credit Union Act as of the date this Act enters into force shall be deemed to be an act done by the President with the authority delegated by the Minister of Finance and Economy pursuant to this Act, if a corresponding provision exists in this Act.

Articles 3 and 4 Omitted.

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on April 1, 1998: Provided, That the amended provisions of Article 5 of Addenda shall enter into force on the date of its promulgation; the amended provisions of Articles 25 through 25-6 and 25-8 through 34 on the day on which the Federation is formed; the amended provisions of Article 38 on January 1, 1998; and the amended provisions of Article 25-7 on July 1, 1998.

Article 2 (Repeal of Credit Management Fund Act)

MUTUAL SAVINGS BANKS ACT

The Credit Management Fund Act is hereby repealed. Article 3 (General Transitional Measures)

(1) A license, permission, approval, registration, disposition, or any other act by the Minister of Finance and Economy, the Director of the Financial Supervisory Service of the Bank of Korea, the President of the Credit Management Fund, the Federation Chairperson, a manager, or a liquidator or with the power delegated by the Minister of Finance and Economy or vicariously on behalf of the Minister pursuant to a former provision of this Act or a provision of the Credit Management Fund Act as of the date this Act enters into force shall be deemed to be an act by the Minister of Finance and Economy, the Financial Supervisory Commission of the Governor of the Financial Supervisory Service, the President of the Korea Deposit Insurance Corporation, the Federation Chairperson, a manager, or a liquidator pursuant to this Act, if a relevant provision exists in this Act.

(2) A report or an application filed, or any other act done with or done against the Minister of Finance and Economy, the Director of the Financial Supervisory Service of the Bank of Korea, the President of the Credit Management Fund, the Federation Chairperson, a manager, or a liquidator pursuant to a former provision of this Act or a provision of the Credit Management Fund Act as of the date this Act enters into force shall be deemed to be an act done to or against the Minister of Finance and Economy, the Financial Supervisory Commission of the Governor of the Financial Supervisory Service, the President of the Korea Deposit Insurance Corporation, the Federation Chairperson, a manager, or a liquidator pursuant to this Act.

Article 4 (Transitional Measures concerning Penal Provisions) In imposing a punishment, applying a penal provision, or imposing a fine for negligence on or to a person who has violated former provisions of this Act or a provision of the Credit Management Fund Act before the enforcement date of this Act, such violation shall be governed by the former provisions or the relevant provision of the Credit Management Fund Act. Article 5 (Transitional Measures concerning Federation) (1) The federation formed pursuant to the previous provision of Article 25 at the time when the Federation is formed shall be deemed to be the Federation under this Act.

(2) The Federation Chairperson shall prepare a draft operating manual and an amendment to the articles of incorporation of the Federation for the approval of the Minister of Finance and Economy by no later than the date this Act enters into force, and shall carry out the works necessary for the registration of the amendment.

MUTUAL SAVINGS BANKS ACT

(3) The approval under paragraph (2) shall be deemed as an approval or authorization of the Financial Supervisory Commission, notwithstanding the amended provisions of Articles 25-2 (2) and 25-3 (2). (4) Incumbent executives of the Federation at the time when the Federation is formed shall be deemed to be executives of the Federation under this Act, and their terms of office shall begin on the day on which they were appointed as executives of the Federation.

Article 6 (Special Exception to Continuance and Dissolution of Credit Management Fund)

(1) The Credit Management Fund shall exist continuously until the Financial Supervisory Service is established, notwithstanding Article 2 of Addenda.

(2) The Credit Management Fund shall be dissolved on the day on which the Financial Supervisory Service is established, without necessarily going through the procedures for dissolution and liquidation. Article 7 (Transfer of Assets, Rights and Obligations) (1) All assets, rights, and obligations of the Credit Management Fund as of the date this Act enters into force shall be comprehensively transferred to each of the following persons on the date this Act enters into force according to the categories as classified below:

1. Those that belong to the business account for management of contributions shall be transferred to The Korea Deposit Insurance Corporation: Provided, That those that belong to the fund management account shall be comprehensively transferred to the Financial Supervisory Service on the day on which the Financial Supervisory Service is formed; and

2. Those that belong to the business account for management of deposits shall be transferred to the Federation.

(2) The name of the Credit Management Fund recorded in the registers and other public records of an asset, a right, or an obligation transferred pursuant to paragraph (1) shall be deemed to be the name of the Financial Supervisory Service, the Korea Deposit Insurance Corporation, or the Federation to whom it is transferred.

(3) The value of an asset transferred pursuant to paragraph (2) shall be the book value as of the transfer.

Article 8 (Amendment to Framework Act on Fund Management) The Framework Act on Fund Management is hereby amended as follows: annexed Table 47 annexed is revoked.

Article 9 (Relations to other Statutes)

A citation of the former Credit Management Fund Act or any provision thereof by any other statute enforceable at the time when this Act enters into force shall be deemed to be a citation of this Act or a corresponding provision hereof in lieu of the former provision, if a corresponding provision MUTUAL SAVINGS BANKS ACT

exists herein.

ADDENDA (Interest Limitation Act) Article 1 (Enforcement Date)

This Act shall enter into force on the date of its promulgation. Article 2 Omitted.

ADDENDA

(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.

(2) (Applicability to Executives of Federation) The amended provisions of Article 25-4 shall apply to the executives of the Federation elected after the date this Act enters into force.

(3) (Transitional Measure concerning Penal Provisions) In applying penal provisions to or imposing fines for negligence for acts committed before the date this Act enters into force, former provisions shall apply to such acts. ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on the date of its promulgation.

Articles 2 through 6 Omitted.

ADDENDA

(1) (Enforcement Date) This Act shall enter into force three months after the date of its promulgation: Provided, That Articles 25-10 and 36 (2) hereof and the amended provision of Article 3 (1) of Addenda of the Amendment (Act No. 4867) to the Mutual Credit Union Act.

(2) (Transitional Measure concerning Preparation of Internal Control Standards) Every mutual credit union shall establish the internal control standards under the amended provisions of Article 22-3 within six months after the date this Act enters into force.

(3) (Transitional Measure concerning Changes in Restriction on Qualification for Executives) If cases where a person who serves a mutual credit union as an executive as of the date this Act enters into force falls under any of the grounds for disqualification under the amended provisions of Article 35-2 due to a cause or an event that arose before the date this Act enters into force, previous relevant provisions shall apply to such person, notwithstanding the amended provisions.

(4) (Transitional Measure concerning Penal Provisions and Fine for MUTUAL SAVINGS BANKS ACT

Negligence) In applying penal provisions to or imposing fines for negligence for acts committed before the date this Act enters into force, a relevant previous provision shall apply to such a case.

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on the date set by Presidential Decree, which shall not be later than two years from the date of its promulgation: Provided, That the amended provisions of Articles 10-2, 24-3, 37, and 39 (2) and (4) 6 shall enter into force on the date of its promulgation, and the amended provisions of Articles 10-3 through 10-5, subparagraph 1 of Article 18, and Article 22-3 (2) through (5) shall enter into force three months after the date of its promulgation. In this case, the term "mutual savings bank"shall be construed as "mutual credit union." Article 2 (Transitional Measures concerning Change of Name of Mutual Credit Union)

A person who holds a license granted for a mutual credit union pursuant to former provisions as of the date this Act enters into force shall be deemed to hold a license for a mutual savings bank under the amended provisions of Article 6 (1).

Article 3 (Transitional Measures concerning Change of Name of Federation of Mutual Credit Unions)

(1) The Federation of Mutual Credit Unions existing as of the date this Act enters into force shall be deemed the Korea Federation of Savings Banks under this Act.

(2) The name of the Federation of Mutual Credit Unions indicated in the registers and other public records in relation to the property of the Federation of Mutual Credit Unions existing as at the date this Act enters into force shall be deemed the name of the Korea Federation of Savings Banks under this Act.

Article 4 (Transitional Measure concerning Capital) The mutual savings banks that fail to meet the standards for capital under the amended provisions of Article 5 (1) as of the date this Act enters into force shall make efforts to meet the standards under the amended provisions within five years from the date this Act enters into force. Article 5 (Transitional Measures concerning Change of Time Limit for Reporting Acquisition of Stocks)

As to the time limit for reporting the acquisition of stocks, relevant former provisions shall be applicable until ten days after the date the amended provisions of Article 10-2 enter into force, notwithstanding the amended provisions of the said Article.

MUTUAL SAVINGS BANKS ACT

Article 6 (Transitional Measures concerning Appointment of Outside Directors)

A mutual savings bank that shall appoint outside directors in accordance with the amended provisions of Article 10-3 shall appoint such outside directors at the annual general meeting of shareholders convened first after the date this Act enters into force in accordance with the said amended provisions. In this case, a person appointed as an outside director at the annual general meeting of shareholders shall be deemed to have been recommended by the committee for recommendation of candidates outside directors in accordance with the amended provisions of Article 10-3 (3). Article 7 (Transitional Measures concerning Establishment of Audit Committee)

A mutual savings bank who shall have an audit committee in accordance with the amended provisions of Article 10-4 shall take measures to have the audit committee under the amended provisions organized at the annual general meeting of shareholders convened first after the date this Act enters into force.

Article 8 (Transitional Measures concerning Standing Auditor Following Establishment of Audit Committee)

If the term of a person who currently serves a mutual savings bank, which shall have an audit committee in accordance with the amended provisions of Article 10-4, as the standing auditor (or the standing auditor nominated in advance by the board of directors of the bank, if there are two or more standing auditors) as of the date this Act enters into force, and whose term of office does not expire until the date of opening the annual general meeting of shareholders, at which the audit committee shall be organized in accordance with Article 5 of Addenda, is not dismissed at the annual general meeting of shareholders, shall be deemed as a non-outside-director member of the audit committee of the bank until his/her term of office expires. In such cases, the standing auditor shall be deemed as a director appointed at the general meeting of shareholders in accordance with Article 382 (1) of the Commercial Act until the expiration of his/her term of office. Article 9 (Transitional Measures concerning Appointment of Compliance Officers)

Every mutual savings bank that shall appoint a compliance officer in accordance with the amended provision of Article 22-3 (2) shall appoint such a compliance officer within three months after the date this Act enters into force.

Article 10 Omitted.

Article 11 (Relations to other Statutes)

A citation of the former Mutual Credit Unions Act, a mutual credit union, or the Federation of Mutual Credit Unions by any other statute enforceable MUTUAL SAVINGS BANKS ACT

at the time when this Act enters into force shall be deemed to be a citation of the Mutual Savings Banks Act, a mutual savings bank, or the Korea Federation of Savings Banks in lieu of the Act, the union, or the federation. ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on the date of its promulgation. Article 2 Omitted.

ADDENDA

(1) (Enforcement Date) This Act shall enter into force three months after the date of its promulgation.

(2) (Transitional Measures concerning Matters subject to Approval) A case reported in accordance with the former provisions of Article 10-2 (3) 1 as of the date this Act enters into force shall be deemed to have been approved pursuant to this Act.

(3) (Transitional Measures concerning Limit on Loans Lent to Identical Borrowers) A mutual savings bank that has extended credit in excess of the limit under the amended provision of Article 12 (2) as of the date this Act enters into force shall make efforts to meet the limit under the amended provisions within one year from the date this Act enters into force. ADDENDA (Debtor Rehabilitation and Bankruptcy Act) Article 1 (Enforcement Date)

This Act shall enter into force one year after the date of its promulgation. Articles 2 through 6 Omitted.

ADDENDUM

This Act shall enter into force on the date of its promulgation. ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force six months after the date of its promulgation. Article 2 (Applicability to Imposition of Penalty Surcharge) The amended provisions of Article 38-2 shall apply to mutual savings banks that extend credit in violation of Article 12 or 37 on or after the enforcement date of this Act.

Article 3 (Transitional Measures concerning Restriction on Transactions with Large Shareholders)

(1) A mutual savings bank that has extended credit, which falls under MUTUAL SAVINGS BANKS ACT

the amended provisions of subparagraph 4-3 of Article 2, to an investor (including his/her relatives and related persons under Article 37 (1) 3) or a person who falls within the category of large shareholder pursuant to the amended provisions of subparagraph 8 of Article 2 (including his/her related persons) shall endeavor to meet the requirements under the amended provisions of Article 37 within one year from the date this Act enters into force.

(2) If there are unavoidable circumstances due to the amount of credit extended, a mutual savings bank may, notwithstanding paragraph (1), extend the term of such credit, subject to prior approval of the Financial Services Commission. (3) A mutual savings bank that desires to obtain the approval under paragraph (2) shall submit to the Financial Services Commission a detailed plan for compliance with the amended provisions of Article 37 no later than three months before the expiration of the term under paragraph (1), and the Financial Services Commission shall, in turn, make a decision as whether to approve the plan and notify the bank of its decision within one month from the day on which the plan is submitted.

Article 4 (Transitional Measures concerning Members of Audit Committee) A mutual savings bank that shall appoint members of the audit committee in accordance with the amended provisions of Article 10-4 shall appoint such members of the audit committee in compliance with the amended provisions at an annual general meeting of shareholders convened first after the date this Act enters into force.

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force one year and six months after the date of its promulgation.

Articles 2 through 44 Omitted.

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force one year and six months after the date of its promulgation: Provided, That ... ... the amended part of an Act, which was promulgated before the date this Act enters into force, but is hereby amended before the date such Act enters into force has not yet arrived, shall enter into force on the date such Act enters into force.

MUTUAL SAVINGS BANKS ACT

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.

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