DEPOSITOR PROTECTION ACT

Transcription

1 DEPOSITOR PROTECTION ACT Act No. 5042, Dec. 29, 1995 Amended by Act No. 5257, Jan. 13, 1997 Act No. 5403, Aug. 30, 1997 Act No. 5421, Dec. 13, 1997 Act No. 5492, Dec. 31, 1997 Act No. 5556, Sep. 16, 1998 Act No. 5702, Jan. 29, 1999 Act No. 6018, Sep. 7, 1999 Act No. 6173, Jan. 21, 2000 Act No. 6274, Oct. 23, 2000 Act No. 6323, Dec. 30, 2000 Act No. 6429, Mar. 28, 2001 Act No. 6626, Jan. 26, 2002 Act No. 6807, Dec. 26, 2002 Act No. 6891, May 29, 2003 Act No. 7027, Dec. 31, 2003 Act No. 7428, Mar. 31, 2005 Act No. 7615, Jul. 29, 2005 Act No. 7885, Mar. 24, 2006 Act No. 8702, Dec. 21, 2007 Act No. 8852, Feb. 29, 2008 Act No. 8863, Feb. 29, 2008 CHAPTER Ⅰ GENERAL PROVISIONS Article 1 (Purpose) The purpose of this Act is to contribute to the protection of depositors and maintenance of the stability of financial system by efficiently operating a deposit insurance system in order to cope with a situation in which a financial institution is unable to pay deposits due to its bankruptcy. <Amended by Act No. 5492, Dec. 31, 1997> Article 2 (Definitions) For the purpose of this Act, definitions of terms used in this Act shall be as follows: <Amended by Act No. 5492, Dec. 31, 1997; Act No. 5556, Sep. 16, 1998; Act No. 6018, Sep. 7, 1999; Act No. 6323, Dec. 30, 2000; Act No. 6429, Mar. 28, 2001; Act No. 6807, Dec. 26, 2002; Act No. 6891, May 29, 2003; Act No. 7615, Jul. 29, 2005; Act No. 1

2 7885, Mar. 24, 2006; Act No. 8702, Dec. 21, 2007; Act No. 8863, Feb. 29, 2008> 1. The term insured financial institutions means financial institutions which are the objects of application of deposit insurance as prescribed in this Act and which fall under any of the following items: (a) Financial institutions authorized under Article 8 (1) of the Banking Act; (b) The Korea Development Bank established under the Korea Development Bank Act; (c) The Industrial Bank of Korea established under the Industrial Bank of Korea Act; (d) Deleted; <by Act No. 5403, Aug. 33, 1997> (e) The National Agricultural Cooperative Federation under the Agricultural Cooperatives Act; (f) The National Federation of Fisheries Cooperatives under the Fisheries Cooperatives Act; (g) Deleted; <by Act No. 6018, Sep. 7, 1999> (h) The Long-Term Credit Bank under the Long-Term Credit Bank Act; (i) Domestic branch offices and agencies of foreign financial institutions authorized under Article 58 (1) of the Banking Act (excluding domestic branch offices and agencies of foreign financial institutions as prescribed by Presidential Decree); (j) Securities companies which obtain permission to conduct the securities business as provided in Article 2 (8) 2 through 4 of the Securities and Exchange Act (excluding the securities companies as prescribed by Presidential Decree among those which exclusively conduct a business of buying and selling or brokerage of securities outside the securities market); (k) Insurance companies that each obtain permission as provided in Article 4 (1) of the Insurance Business Act (excluding insurance companies who mainly conduct re-insurance or guarantee insurance business and who are prescribed by Presidential Decree); (l) Merchant banks as prescribed in the Merchant Banks Act; (m) Mutual savings banks and the Korea Federation of Savings Banks as prescribed in the Mutual Savings Banks Act; or (n) Deleted; <by Act No. 6807, Dec. 26, 2002> 2

3 2. The term deposits means those falling under any of the following items: Provided, That the scope may be restricted by Presidential Decree: (a) Money which insured financial institutions as provided in subparagraph 1 (a) through (i) (hereinafter referred to as banks ) have raised by bearing liabilities from the unspecified persons in the form of deposits, installment deposits, or installments, and money which they have raised through money trusts whose principals are compensated under Article 10 (3) of the Trust Business Act; (b) Money which insured financial institutions as provided in subparagraph 1 (j) (hereinafter referred to as securities companies ) have received as a deposit from the customers in connection with buying and selling securities or with other transactions, and money which they have raised through money trusts whose principals are compensated under Article 10 (3) of the Trust Business Act; (c) Insurance premiums which insured financial institutions as provided in subparagraph 1 (k) (hereinafter referred to as insurance companies ) have received according to the insurance contracts, and money which they have raised through money trusts whose principals are compensated under Article 10 (3) of the Trust Business Act; (d) Money which insured financial institutions as provided in subparagraph 1 (l) (hereinafter referred to as merchant banks ) and the banks and securities companies that merged with a merchant bank, in accordance with the Act on the Structural Improvement of the Financial Industry, have raised pursuant to Article 7 (1) of the Merchant Banks Act by issuing bills and selling financial products to unspecified persons for the purpose of investing the funds in securities, and pay profits therefrom as dividends; (e) Money which insured financial institutions as provided in subparagraph 1 (m) (hereinafter referred to as mutual savings banks ) have raised in the form of fraternity dues, installments, deposits and installment deposits: Provided, That money raised by the Korea Federation of Savings Banks is restricted only to money raised by issuance of cashier s checks; or 3

4 (f) Deleted; <by Act No. 6807, Dec. 26, 2002> 3. The term depositors means those who have claims such as deposits against insured financial institutions; 4. The term claims such as deposits means the capital, principal, interest, profits, insurance money, sundry payments and other agreed pecuniary claims which depositors have against insured financial institutions through financial transactions such as deposit; 5. The term insolvent financial institutions means the following insured financial institutions: (a) Insured financial institutions of which the liabilities exceed their assets as a result of an actual examination of management or insured financial institutions the sound management of which is clearly difficult because their liabilities exceed their assets due to occurrence of large financial losses or non-performing claims, which are determined by the Financial Services Commission or the Deposit Insurance Committee under Article 8; (b) Insured financial institutions which are in suspension of payment for claims such as deposits or of redemption on borrowed money from other financial institutions; and (c) Insured financial institutions for which the Financial Services Commission or the Deposit Insurance Committee under Article 8 deems it difficult to pay for claims such as deposits or to redeem borrowed money without financial assistance or special borrowing (excluding borrowing incurred from ordinary financial transactions) from outside; 5-2. The term insolvency-threatened financial institutions means insured financial institutions which are concluded to have a high possibility of becoming insolvent financial institutions due to their weak financial standing by the Deposit Insurance Committee under Article 8; 6. The term financial assistance means the following items which the Korea Deposit Insurance Corporation established under Article 3 provides to be borne from a deposit insurance fund under Article 24 (1) (hereinafter referred to as the deposit insurance fund ) or a fund for redemption of deposit insurance fund bonds under Article 26-3 (1) (hereinafter referred to as the redemption fund ): 4

5 (a) Loaning or depositing of funds; (b) Purchasing assets; (c) Guaranteeing or accepting obligations; and (d) Equity shares or contributions; and 7. The term insurance contingency means the following items: (a) Insured financial institutions payment suspension of claims such as deposits (hereinafter referred to as the category one insurance contingency ); and (b) Insured financial institutions cancellation of business authorization and permission, decision of dissolution or declaration of bankruptcy (hereinafter referred to as the category two insurance contingency ). CHAPTER Ⅱ KOREA DEPOSIT INSUR- ANCE CORPORATION SECTION 1 Common Provisions Article 3 (Establishment) For the purpose of efficiently operating a deposit insurance system, the Korea Deposit Insurance Corporation shall be established under this Act. Article 4 (Legal Status) (1) The Korea Deposit Insurance Corporation (hereinafter referred to as the Corporation ) shall be a non-capital special corporation. (2) The Corporation shall be operated under this Act, orders issued under this Act, or the articles of incorporation. Article 5 (Registration) (1) The Corporation shall be registered as prescribed by the Presidential Decree. (2) The Corporation shall be formed by registering its incorporation in the location of its main office. (3) For matters which require registration under the provisions of paragraph (1), the Corporation shall not set up against third parties unless those matters happen following the registration. Article 5-2 (Office) (1) The Corporation shall establish its main office in Seoul Special Metropolitan City. 5

6 (2) The Corporation may, if necessary for conduct of its business, have a branch office or a sub-branch under the conditions as prescribed by the articles of incorporation thereof. [This Article Newly Inserted by Act No. 6807, Dec. 26, 2002] Article 6 (Articles of Incorporation) (1) In the articles of incorporation of the Corporation, the following matters shall be entered: <Amended by Act No. 6807, Dec. 26, 2002> 1. Purpose; 2. Denomination; 3. Location of office; 4. Matters relating to the deposit insurance fund and the redemption fund; 5. Matters relating to the Deposit Insurance Committee; 6. Matters relating to the board of directors; 7. Matters relating to the officers and the employees; 8. Matters relating to the business and execution thereof; 9. Matters relating to accounting; 10. Matters relating to changes in the articles of incorporation; and 11. Method of public notification. (2) When the Corporation desires to change its articles of incorporation, it shall obtain the authorization of the Financial Services Commission, after a resolution has been passed by the Deposit Insurance Committee established under the provisions of Article 8. <Amended by Act No. 5556, Sep. 16, 1998; Act No. 6807, Dec. 26, 2002; Act No. 8863, Feb. 29, 2008> Article 7 (Prohibition of Use of Similar Trade Names) A person other than the Corporation shall not use Korea Deposit Insurance Corporation or similar trade names. SECTION 2 Deposit Insurance Committee Article 8 (Deposit Insurance Committee) (1) A Deposit Insurance Committee (hereinafter referred to as the Committee ) shall be established in the Corporation. <Amended by Act No. 6807, Dec. 26, 2002> (2) The Committee shall establish the basic direction relating to the operation of the Corporation, under this Act, orders issued under this Act, or the articles of incorporation, and shall deliberate upon matters such as 6

7 operation plans of the funds. Article 9 (Composition of Committee) (1) The Committee shall consist of 7 members as follows: <Amended by Act No. 5492, Dec. 31, 1997; Act No. 5556, Sep. 16, 1998; Act No. 6173, Jan. 21, 2000; Act No. 6323, Dec. 30, 2000; Act Nos & 8863, Feb. 29, 2008> 1. The president of the Corporation; 2. The Vice Chairman of the Financial Services Commission; 3. The Vice Minister of Strategy and Finance; 4. Deleted; <by Act No. 8863, Feb. 29, 2008> 5. The Vice Governor of the Bank of Korea; 6. through 12. Deleted; and <by Act No. 6323, Dec. 30, 2000> 13. One member commissioned by the Financial Services Commission, and 2 members commissioned by the Financial Services Commission on the recommendation of the Minister of Strategy and Finance and the Governor of the Bank of Korea. (2) Qualifications for members referred to in paragraph (1) 13 shall be prescribed by the Presidential Decree. <Amended by Act No. 5492, Dec. 31, 1997; Act No. 6173, Jan. 21, 2000> (3) The term of office of the members referred to in paragraph (1) 13 shall be three years, and they may be re-appointed. <Amended by Act No. 5492, Dec. 31, 1997; Act No. 6173, Jan. 21, 2000> Article 9-2 (Prohibition of Political Activities) Notwithstanding the provisions of Article 6 of the Political Parties Act, a member provided in Article 9 (1) 13 may not join any political party nor participate in any political campaign. [This Article Newly Inserted by Act No. 6807, Dec. 26, 2002] Article 9-3 (Guarantee of Member Status) (1) A member provided in Article 9 (1) 13 shall not be decommissioned against his will during his term of office unless he falls under any of the following subparagraphs: 1. When he falls under any subparagraph of Article 16; 2. When he has great difficulty in performing his duties due to any mental or physical disability; and 3. When he becomes unfit for the discharge of his duties as a member for a violation of any duty under this Act. (2) Where a member provided in Article 9 (1) 13 is decommissioned due to any such cause as referred to in paragraph (1), no act performed by him as a member before he is decommissioned shall lose its effect. 7

8 [This Article Newly Inserted by Act No. 6807, Dec. 26, 2002] Article 10 (Operation) (1) The chairman of the Committee shall be the president of the Corporation. (2) The chairman shall represent the Committee and exercise general control over the business of the Committee. (3) When the chairman is unable to perform his duties for compelling reasons, the members under Article 9 (1) 2 through 5 in accordance with the order prescribed thereby shall act for the chairman. <Amended by Act No. 5492, Dec, 31, 1997; Act No. 6173, Jan. 21, 2000> (4) The Committee shall make resolutions with the attendance of a majority of all the members and with the affirmative vote of a majority of the members present: Provided, That the financial assistance under Article 38-4 (3) shall be decided upon by the affirmative vote of two-thirds or more of all the members. <Amended by Act No. 6807, Dec. 26, 2002> (5) through (9) Deleted. <by Act No. 6323, Dec. 30, 2000> (10) The Committee shall prepare the minutes of the Committee, and make them public as determined by the Committee. <Newly Inserted by Act No. 6323, Dec. 30, 2000> (11) The Committee may, if necessary, have those who are deemed to represent the insured financial institutions or the related specialists, etc. attend the Committee, and hear their opinions. <Newly Inserted by Act No. 6323, Dec. 30, 2000> (12) Matters necessary for the operation of the Committee shall be prescribed by the Presidential Decree. <Amended by Act No. 5492, Dec, 31, 1997; Act No. 6323, Dec. 30, 2000> SECTION 3 Officers and Employees Article 11 (Officers) (1) The Corporation shall have one president, one vice president, not more than four directors, and one auditor. <Amended by Act No. 5492, Dec, 31, 1997; Act No. 6807, Dec. 26, 2002> (2) The president shall be appointed and dismissed by the President of the Republic of Korea upon the recommendation of the Chairman of the Financial Services Commission. <Amended by Act No. 5556, Sep. 16, 1998; Act No. 8863, Feb. 29, 2008> 8

9 (3) The vice president and directors shall be appointed and dismissed by the Financial Services Commission upon the recommendation of the president of the Corporation. <Amended by Act No. 5556, Sep. 16, 1998; Act No. 6807, Dec. 26, 2002; Act No. 8863, Feb. 29, 2008> (4) An auditor shall be appointed and dismissed by the Financial Services Commission. <Amended by Act No. 5556, Sep. 16, 1998; Act No. 8863, Feb. 29, 2008> (5) The terms of office of the president, the vice president, the directors and the auditor (hereinafter referred to as officers ) shall be three years, and they may be re-appointed. <Amended by Act No. 6807, Dec. 26, 2002> (6) When there is a vacancy among the officers, it shall be filled by a new appointment, and the term of office of the new appointee shall be reckoned from the date on which he was appointed. Article 12 (Duties of Officers) (1) The president shall represent the Corporation, and exercise general control over the business of the Corporation. (2) The vice president shall assist the president, and the directors, the president and the vice president; and each of them shall take partial charge of the business of the Corporation under the articles of incorporation. <Amended by Act No. 6807, Dec. 26, 2002> (3) When the president is unable to perform his duties, an officer shall act for the president, in the order as provided for in the articles of incorporation. (4) The auditor shall inspect and audit the business and the accounting of the Corporation. Article 13 (Status Guarantee of Officers) No officer shall be removed against his will before the end of his term of office unless any of the following cases occurs: 1. When he falls under any of subparagraphs of Article 16; 2. When he violates this Act, an order under this Act or the articles of incorporation; and 3. When he is extremely difficult to perform duties due to his mental or physical disability. Article 14 (Board of Directors) (1) The board of directors shall be established in the Corporation. (2) The board of directors shall be composed of the president, vice president, and directors. <Amended by Act No. 6807, Dec. 26, 2002> (3) The board of directors shall resolve principal matters relating to the 9

10 business of the Corporation. (4) The president shall convene the board of directors, and shall be the chairman. (5) The board of directors shall make resolutions with the attendance of a majority of all the members and with the affirmative vote of a majority of the members present. (6) The auditor may state his views by attending the meetings of the board of directors. Article 15 (Appointment and Dismissal of Employees) The president shall appoint and dismiss the employees of the Corporation. Article 15-2 (Appointment of Agents) (1) The president may appoint agents from among the vice president, directors, and employees of the Corporation, who have the authority to act on judicial or extrajudicial matters with respect to the business of the Corporation. <Amended by Act No. 6807, Dec. 26, 2002> (2) The scope of employees who can be appointed as agents to act on trial under the provisions of paragraph (1) shall be prescribed by the Presidential Decree. [This Article Newly Inserted by Act No. 6173, Jan. 21, 2000] Article 15-3 (Request for Dispatch of Public Officials, etc.) (1) The president may, where deemed necessary for the conduct of business, request the administrative agency, corporation, or organization concerned to dispatch a public official, officer, or employee under its control (hereafter in this Article referred to as the dispatched employee ). In this case, he shall do so after prior consultation with the Chairman of the Financial Services Commission. <Amended by Act No. 8863, Feb. 29, 2008> (2) In seeking consultation under the latter part of paragraph (1), the president shall submit to the Chairman of the Financial Services Commission a document stating the number of dispatched employees, the period of dispatch, the reasons for a request for dispatch, and the qualifications for dispatched employees. <Amended by Act No. 8863, Feb. 29, 2008> (3) The dispatched employees under paragraph (1) shall be regarded as the employees of the Corporation in connection with the conduct of business under Article 18. [This Article Newly Inserted by Act No. 6807, Dec. 26, 2002] Article 16 (Disqualification for Appointment to Office) A person who falls under any of the following subparagraphs shall not be an officer of the Corporation, and a person who falls under subparagraph 10

11 2 shall not be an employee of the Corporation: <Amended by Act No. 6323, Dec. 30, 2000> 1. A person who is not a national of the Republic of Korea; and 2. A person falling under any of subparagraphs of Article 33 of the State Public Officials Act. Article 17 (Duty of Prohibition of Concurrent Holding of Offices) (1) An officer and an employee shall not engage in a profit-making business except for their duties nor hold other offices concurrently without obtaining approval from the person who has the appointive powers. <Amended by Act No. 6807, Dec. 26, 2002> (2) Deleted. <by Act No. 6807, Dec. 26, 2002> (3) An officer or an employee of the Corporation, or a person who held such positions in the Corporation, shall not divulge trade secrets learned from his duties. SECTION 4 Duties Article 18 (Scope of Duties) (1) For the purpose of attaining the objectives of this Act, the Corporation shall carry out duties listed in the following subparagraphs: <Amended by Act No. 5492, Dec, 31, 1997; Act No. 6323, Dec. 30, 2000; Act No. 6807, Dec. 26, 2002> 1. Management and operation of the deposit insurance fund; 1-2. Management and operation of the redemption fund; 1-3. Vicarious exercise of right to claim compensation for damages under Article 21-2; 2. Receipt of insurance premiums under the provisions of Article 30 and special contributions for redemption of deposit insurance fund bonds under the provisions of Article 30-3 (hereinafter referred to as the special contributions ); 3. Payment of insurance money under the provisions of Articles 31 and 32; 4. Resolution of insolvent financial institutions under the provisions of Articles 35-2 through 38; 5. Duties incidental to the duties of subparagraphs 1 through 4; 6. Duties commissioned or designated by the Government for the protection of depositors; and 11

12 7. Other business as determined by other Acts and subordinate statutes. (2) The Corporation may, after deliberation by the Committee, enact provisions necessary for the execution of its duties. Article 19 Deleted. <by Act No. 5492, Dec, 31, 1997> Article 20 (Business Agency) (1) The Corporation may, if necessary, mandate part of its duties to other agencies (hereinafter referred to as agencies ). <Amended by Act No. 5556, Sep. 16, 1998; Act No. 5702, Jan. 29, 1999> (2) The scope of the agencies shall be prescribed by the Presidential Decree. Article 21 (Request to Insured Financial Institutions for Submission of Data) (1) The Corporation may request an insured financial institution and the financial holding company which has such insured financial institution as its subsidiary, etc. under the Financial Holding Companies Act to submit the data related to the business and financial status of such insured financial institution and financial holding company to the extent necessary for carrying out its duties such as the determination of the insured financial as an insolvent financial institution under subparagraph 5 of Article 2 or as a failing or insolvency-threatened financial institution under subparagraph 5-2 of Article 2, the establishment and receipt of insurance premiums and special contributions under Articles 30 and 30-3, the calculation and payment of insurance money under Articles 31 and 32, and the resolution of insolvent financial institutions under Articles 35-2 through 38. <Amended by Act No. 5492, Dec. 31, 1997; Act No. 6274, Oct. 23, 2000; Act No. 6323, Dec. 30, 2000; Act No. 6807, Dec. 26, 2002> (2) Where an insured financial institution is deemed to be threatened with insolvency on the basis of the data, etc. submitted under paragraph (1) in the light of the standards as set by the Presidential Decree or its insured risk is not confirmed under paragraph (5), the Corporation may investigate the business and the financial status of the insured financial institution and the financial holding company which has such insured financial institution as its subsidiary, etc. under the Financial Holding Companies Act. <Amended by Act No. 5492, Dec. 31, 1997; Act No. 6274, Oct. 23, 2000; Act No. 6323, Dec. 30, 2000; Act No. 6807, Dec. 26, 2002> 12

13 (3) The Corporation may ask the Governor of the Financial Supervisory Service (hereinafter referred to as the Financial Supervisory Service Governor ) established under the Act on the Establishment, etc. of Financial Services Commission to conduct an examination of an insured financial institution and the financial holding company which has such insured financial institution as its subsidiary, etc. under the Financial Holding Companies Act and deliver the results of the examination, or to allow a member of the Corporation to participate jointly in the examination of such insured financial institution and financial holding company under the Financial Holding Companies Act, subject to a resolution of the Committee thereon, by setting the specific scope as deemed necessary to protect depositors and maintain the stability of the financial system. In this case, the Financial Supervisory Service Governor shall comply with such request, regardless of the provisions of Article 66 (3) of the Act on the Establishment, etc. of Financial Services Commission. <Amended by Act No. 5492, Dec. 31, 1997; Act No. 6274, Oct. 23, 2000; Act No. 6807, Dec. 26, 2002; Act No. 8863, Feb. 29, 2008> (4) Where it is deemed necessary for the protection of depositors, the Corporation may ask the Financial Supervisory Service Governor to present data relating to an insured financial institution and the financial holding company which has such insured financial institution as its subsidiary, etc. under the Financial Holding Companies Act by setting the specific scope. In this case, the Financial Supervisory Service Governor shall comply with such request. <Newly Inserted by Act No. 5556, Sep. 16, 1998; Act No. 6274, Oct. 23, 2000; Act No. 6807, Dec. 26, 2002> (5) Where it is deemed necessary to judge the risks of insurance contingency by an insured financial institution, the Corporation may ask the Financial Supervisory Service Governor to ascertain within one month whether or not the data submitted under paragraph (4) are true through the examination, etc. of the insured financial institution and the financial holding company which has such insured financial institution as its subsidiary, etc. under the Financial Holding Companies Act. <Newly Inserted by Act No. 6807, Dec. 26, 2002> (6) The Corporation may, in case where deemed that there exist the risks of insurance contingency as a result of investigations under para- 13

14 graph (2), notify the Financial Services Commission thereof and request it to take adequate measures. In this case, the Financial Services Commission in receipt of such a request shall comply with such request unless there exist any special reasons. <Newly Inserted by Act No. 6323, Dec. 30, 2000; Act No. 8863, Feb. 29, 2008> Article 21-2 (Vicarious Exercise of Right to Claim Compensation for Damages, etc.) (1) The Corporation may, when it falls under any of the following subparagraphs, request any insolvent financial institution or any insolvencythreatened financial institution (hereinafter referred to as an insolvent financial institution, etc., and including only in this Article the liquidated corporation or the bankrupt foundation) to seek compensation for damages from persons involved in the insolvency who are deemed responsible for the insolvency or the anticipated insolvency (referring to former and incumbent officers and employees of the insolvent financial institution, etc., persons provided for in each subparagraph of Article (1) of the Commercial Act, the debtor who has failed to meet his obligations to the insolvent financial institution (in cases where the debtor is a corporation, the former and incumbent officers and employees of the relevant corporation, persons who are prescribed in the provisions of each subparagraph of Article (1) of the Commercial Act and major shareholders who are prescribed by the Presidential Decree shall be included) and third parties; hereafter the same shall apply): <Amended by Act No. 6323, Dec. 30, 2000; Act No. 7885, Mar. 24, 2006> 1. Where payment of any insurance money is decided or such insurance money is paid under the provisions of Articles 31 and 34 (1); 2. Where any financial institution for resolution established pursuant to Article 36-3 (1) decides on takeover of business or contract, or payment of claims such as deposits or takes over business or contract, or pays claims such as deposits; 3. Where financial assistance is decided or financial assistance is provided under the provisions of Article 38; and 4. Deleted. <by Act No. 6323, Dec. 30, 2000> (2) The request made by the Corporation under the provisions of paragraph (1) shall be in writing that specifies the reasons thereof, method 14

15 of claim, and claim period. (3) The Corporation may, if any insolvent financial institution, etc. does not comply with the request made under the provisions of paragraph (1), promptly claim compensation for damages on behalf of such insolvent financial institution, etc. (4) The Corporation may, if any insolvent financial institution, etc. files a lawsuit to claim compensation for damages referred to in paragraph (1), participate in such suit to assist such insolvent financial institution, etc. during a period for which such suit is pending. In this case, the provisions of Articles 71 through 77 of the Civil Procedure Act shall be applied mutatis mutandis. <Amended by Act No. 6626, Jan. 26, 2002> (5) Where the Corporation wins a lawsuit by exercising vicariously the right to claim compensation for damages under the provisions of paragraph (3) or participates in a lawsuit under paragraph (4) upon the request of an insolvent financial institution, etc., any expenses accruing therefrom shall be borne by such insolvent financial institution, etc. (6) Where an insolvent financial institution, etc. goes bankrupt, any claim for expenses referred to in paragraph (5) which are not borne by such insolvent financial institution, etc. shall be deemed a foundation claim. (7) The Corporation may, when it is deemed necessary to claim the compensation for damage, to vicariously exercise the right to claim the compensation for damage or to participate in lawsuit pursuant to the provisions of paragraphs (1) through (4), may ask the relevant insolvent financial institution, etc., persons involved in the insolvency or the interested persons falling under any of the following subparagraphs (hereinafter referred to as the interested persons ) to submit materials concerning their business operations and their current properties, to be present (excluding the request for the presence of the interested persons) and inspect them: Provided, That the scope of the third parties among the persons involved in the insolvency shall be limited to accounting corporations and certified public accountants: <Amended by Act No. 7885, Mar. 24, 2006> 1. A spouse of a person involved in the insolvency, a person involved in the insolvency and a lineal ascendant and a descendant of the 15

16 spouse; 2. A person and a subsequent purchaser who have profited directly from legal acts that have been performed for the purpose of the person involved in the insolvency and the property right; and 3. A person who has been involved in concealing the property of the person involved in the insolvency. (8) The provisions of paragraphs (1) through (6) shall apply mutatis mutandis to any insured financial institution that survives after the takeover of any insolvent financial institution, etc. by a third person or a merger with insolvent financial institution, etc. In this case, the Corporation may ask such insured financial institution to furnish data necessary to claim compensation for damages from persons responsible for such insolvency or participate in any lawsuit, and such insured financial institution shall comply with such request from the Corporation unless special reasons exist for not complying with such request. (9) The persons conducting the investigation under paragraph (7) shall carry the identification indicating their authority, and show it to the parties concerned. <Newly Inserted by Act No. 6323, Dec. 30, 2000> (10) Matters necessary for the method and procedure, etc. for the investigation under paragraph (7) shall be prescribed by the Presidential Decree. <Newly Inserted by Act No. 6323, Dec. 30, 2000> [This Article Newly Inserted by Act No. 6173, Jan. 21, 2000] Article 21-3 (Request for Provision of Data) (1) The Corporation may, when it is deemed necessary for the request for the claim of compensation for damages, the vicarious exercise of the right to claim compensation for damages or participation in a lawsuit under Article 21-2 (1) through (4), ask the heads of central administrative agencies concerned, local governments, public institutions and financial institutions that are prescribed by the Presidential Decree (hereafter referred to as pubic institutions, etc in this Article) to furnish data or information pertaining to the properties and businesses of the persons involved in such insolvency and interested persons: Provided, That In cases where the Corporation asks the heads of financial institutions to furnish information or data pertaining to the financial transactions of the persons involved in insolvency and interested persons, the 16

17 provisions of Article 21-4 shall apply thereto. <Amended by Act No. 7885, Mar. 24, 2006> (2) The heads of public institutions shall, upon receiving the request referred to in the provision of the main sentence of paragraph (1), comply with such request unless there exist any special reasons. <Amended by Act No. 7885, Mar. 24, 2006> [This Article Newly Inserted by Act No. 6173, Jan. 21, 2000] Article 21-4 (Request for Furnishing Information, etc. Pertaining to Financial Transactions) (1) In case where it is deemed impossible to confirm the liability for the compensation for damage of persons involved in insolvency and whether the persons involved in insolvency or interested persons conceal their properties without resorting to the information or data pertaining to the contents of the financial transactions in connection with the claim the compensation for damage, the vicariously exercise of the right to claim the compensation for damage or the participation in lawsuit provided for in the provisions of Article 21-2 (1) through (4) and the inspection provided for in the provisions of Article 21-2 (7) (hereinafter referred to as the information pertaining to financial transactions ), the President may ask the heads of financial institutions to furnish information pertaining to the financial transactions, etc. pursuant to the provisions of subparagraph 1 of Article 2 of the Act on Real Name Financial Transactions and Guarantee of Secrecy, notwithstanding the provisions of Article 4 (2) of the same Act. In this case, the heads of the relevant financial institutions shall comply with the request. (2) The request for furnishing information pertaining to the financial transactions, etc. referred to in the provisions of paragraph (1) shall be limited to the necessary minimum. (3) In case where the President ask the heads of financial institutions to furnish the information pertaining to financial transactions pursuant to the provisions of paragraph (1), the provisions of Articles 4 (6), 4-2 (5) and 4-3 (3) of the Act on Real Name Financial Transactions and Guarantee of Secrecy shall mutatis mutandis apply thereto. [This Article Newly Inserted by Act No. 7885, Mar. 24, 2006] <This amended Article will be valid until March 24, 2009 according to 17

18 Article 2 (1) of the Addenda (Act No. 7885, Mar. 24, 2006)> SECTION 5 Treasury and Accounting Article 22 (Accounting) The fiscal year of the Corporation shall be in accordance with the fiscal year of the Government. Article 23 (Budget and Settlement of Accounts) The budget and settlement of accounts of the Corporation shall be approved by the Financial Services Commission through a resolution of the Committee. <Amended by Act No. 5556, Sep. 16, 1998; Act No. 8863, Feb. 29, 2008> Article 24 (Setting up of Deposit Insurance Fund) (1) A deposit insurance fund shall be established in the Corporation for the receipt of insurance premiums under Article 30, the payment of insurance money under Articles 31 and 32, the purchase of claims such as deposits under Article 35-2, investments under Article 36-3 (4), and the support of funds under Articles 36-5 (3) and 38. <Amended by Act No. 5492, Dec. 31, 1997; Act No. 5556, Sep. 16, 1998; Act No. 6323, Dec. 30, 2000; Act No. 6807, Dec. 26, 2002> (2) The following subparagraphs shall be the sources of revenue for the deposit insurance fund: <Amended by Act No. 5492, Dec. 31, 1997; Act No. 5556, Sep. 16, 1998; Act No. 6323, Dec. 30, 2000; Act No. 6807, Dec. 26, 2002> 1. Contributions from insured financial institutions; 2. Contributions from the Government; 2-2. Funds created from the issuance of deposit insurance fund bonds; 2-3. State property granted by the Government to the Corporation under Article 24-2; 3. Borrowings under the provisions of Article 26; 4. Insurance premiums received under the provisions of Article 30 (1); 4-2. Funds collected from claims acquired under Article 35; 4-3. Funds collected from claims such as deposits purchased under Article 35-2; 5. Funds recovered from those funds provided for the resolution of insolvent financial institutions under the provisions of Article 36-5 (3), or 38; and 18

19 6. Operating profits of the deposit insurance fund and other revenues. (3) The expenditure of the deposit insurance fund shall consist of insurance money, redemption of the principal and interest of deposit insurance fund bonds, payments to depositors under Article 35-2, investments under Article 36-3 (4), funds and related incidental expenses for supporting the resolution, etc. of insolvent financial institutions under Article 36-5 (3) or 38, redemption of borrowed money and its interest, and transfer, etc. to accounts managing funds necessary for the operation of the Corporation under Article 24-3 (1). <Amended by Act No. 5492, Dec. 31, 1997; Act No. 5556, Sep. 16, 1998; Act No. 6323, Dec. 30, 2000; Act No. 6807, Dec. 26, 2002> (4) The contributions under the provisions of paragraph (2) 1 shall be determined separately for each insured financial institution by taking into account the balance of deposits of each insured financial institution, within the scope of not exceeding one percent (ten percent for merchant banks and mutual savings banks) of its paid-in capital or capital contribution. The amount, time and method of payment shall be prescribed by the Presidential Decree. <Amended by Act No. 5492, Dec. 31, 1997; Act No. 6429, Mar. 28, 2001> Article 24-2 (Gratuitous Transfer of State Property) (1) If the Government deems it necessary to protect depositors and assure the stability of the credit order, it may transfer the miscellaneous property under Article 4 (4) of the State Properties Act to the Corporation gratuitously, notwithstanding the provisions of Article 44 of the same Act. (2) The transfer under paragraph (1) shall be subject to the prior consent of the National Assembly after the deliberation of the State Council and the approval of the President of the Republic of Korea: Provided, That if it is deemed particularly necessary to protect depositors and assure the stability of the credit order, such transfer shall only be subject to an ex post facto approval of the National Assembly. [This Article Newly Inserted by Act No. 5421, Dec. 13, 1997] Article 24-3 (Separate Audit of Accounts) (1) The deposit insurance fund and the redemption fund shall keep their accounting separate from that of each other and the funds necessary for 19

20 the operation of the Corporation. <Newly Inserted by Act No. 5556, Sep. 16, 1998; Act No. 6807, Dec. 26, 2002> (2) The deposit insurance fund and the redemption fund shall establish separate accounts for banks, securities companies, insurance companies, merchant banks, mutual savings banks, and credit unions, and keep their accounting separate from each other, but for the insurance companies, they shall be further separately audited as life insurance and non-life insurance. <Amended by Act No. 6429, Mar. 28, 2001; Act No. 6807, Dec. 26, 2002; Act No. 7885, Mar. 24, 2006> (3) The Committee shall determine an overall transfer of assets and liabilities between accounts under paragraph (2), transactions such as loans, etc. (including the lending limit), transactions between accounts under paragraph (2) and the Corporation, and the methods, etc. of distributing expenses for the operation of the Corporation. <Amended by Act No. 5556, Sep. 16, 1998; Act No. 7885, Mar. 24, 2006> (4) The deposit insurance fund and the redemption fund may not have transaction relations with each other. <Newly Inserted by Act No. 6807, Dec. 26, 2002> [This Article Newly Inserted by Act No. 5492, Dec. 31, 1997] Article 25 (Operation of Surplus Cash) When there is a cash surplus in the deposit insurance fund and the redemption fund, the Corporation may use such surplus in accordance with the methods falling under the following subparagraphs: <Amended by Act No. 5492, Dec. 31, 1997; Act No. 5556, Sep. 16, 1998; Act No. 6807, Dec. 26, 2002; Act No. 8863, Feb. 29, 2008> 1. Purchase of government bonds and public bonds, or other securities designated by the Committee; 2. Deposit in insured financial institutions designated by the Committee; and 3. Other methods prescribed by the Financial Services Commission. Article 26 (Loan) (1) When necessary for the matters as provided in the following subparagraphs, the Corporation may, notwithstanding the provisions of Article 79 of the Bank of Korea Act, borrow funds at the account of the deposit insurance fund or the redemption fund from the Government, the 20

21 Bank of Korea, insured financial institutions or other institutions as determined by the Presidential Decree, subject to prior approval of the Financial Services Commission, as prescribed by the Presidential Decree: Provided, That in the case of subparagraph 3, borrowing from the Bank of Korea shall be temporary (the period thereof shall not be longer than one year): <Amended by Act No. 6807, Dec. 26, 2002; Act No. 8863, Feb. 29, 2008> 1. Execution of duties under Article 18 (1) 3 and 4; 2. Redemption of the principal of and the interest on, deposit insurance fund bonds, or borrowings borne by the deposit insurance fund; and 3. Expenditure under Article 26-3 (3) 1 through 3. (2) The Government may guarantee the redemption of the principal of and the interest on borrowings from the Bank of Korea under paragraph (1). <Newly Inserted by Act No. 5492, Dec. 31, 1997> Article 26-2 (Issue of Deposit Insurance Fund Bonds) (1) The Corporation may issue deposit insurance fund bonds at the account of the deposit insurance fund through a decision by the Committee to raise funds necessary for the protection of depositors and the stability of the credit order. <Amended by Act No. 6807, Dec. 26, 2002> (2) Where the Corporation intends to issue deposit insurance fund bonds, it shall determine the amount, terms, and the methods of issuance and redemption at every issuance and report them to the Financial Services Commission. <Amended by Act No. 5556, Sep. 16, 1998; Act No. 6807, Dec. 26, 2002; Act No. 8863, Feb. 29, 2008> (3) The necessary matters for the issuance of deposit insurance fund bonds shall be determined by the Committee. <Amended by Act No. 6807, Dec. 26, 2002> (4) The extinctive prescription of deposit insurance fund bonds shall terminate at the lapse of five years for principal and two years for interest. <Amended by Act No. 6807, Dec. 26, 2002> (5) The Government may guarantee the redemption of the principal of and interest on deposit insurance fund bonds. <Amended by Act No. 6807, Dec. 26, 2002> (6) Deposit insurance fund bonds shall be deemed deposit insurance 21

22 fund bonds under Article 2 (1) 3 of the Securities and Exchange Act. <Amended by Act No. 6807, Dec. 26, 2002> [This Article Newly Inserted by Act No. 5492, Dec. 31, 1997] Article 26-3 (Establishment, etc. of Fund for Redemption of Deposit Insurance Fund Bonds) (1) A fund for redemption of deposit insurance fund bonds shall be established at the Corporation to adjust the debts incurred by the deposit insurance fund (limited to those incurred by December 31, 2002) in the course of backing the restructuring of insured financial institutions. (2) The following subparagraphs shall be the sources of revenue for the redemption fund: <Amended by Act No. 7885, Mar. 24, 2006> 1. Contributions from the fund for redemption of public funds under Article 4 of the Public Capital Redemption Fund Act; 2. Funds raised by the issuance of fund bonds for redemption of deposit insurance fund bonds under paragraph (4) (hereinafter referred to as redemption fund bonds ); 3. Borrowings under Article 26 (1); 4. Special contributions paid under Article 30-3; 5. Funds collected from claims acquired under Article 35; 6. Funds collected from claims such as deposits purchased under Article 35-2; 7. Funds recovered from those funds provided for the resolution, etc. of insolvent financial institutions under Article 36-5 (3) or 38; and 8. Operating profits of the redemption fund and other revenues. (3) The redemption fund shall be used for the following: 1. Redemption of the principal of and the interest on deposit insurance fund bonds (limited to those issued by December 31, 2002) and redemption fund bonds; 2. Insurance money, payments to depositors under Article 35-2, and support money and incidental expenses for the resolution, etc. of insolvent financial institutions under Article 36-5 (3) or 38; 3. Redemption of borrowings and interest thereon; and 4. Transfer to the management account of funds necessary for the operation of the Corporation under Article 24-3 (1). (4) The Corporation may, where necessary for redemption of the prin- 22

23 cipal and interest of deposit insurance fund bonds and redemption fund bonds, issue redemption fund bonds at the redemption fund account subject to a resolution by the Committee thereon. In this case, the provisions of Article 26-2 (2) through (6) shall apply mutatis mutandis. [This Article Newly Inserted by Act No. 6807, Dec. 26, 2002] SECTION 6 Supervision Article 27 (Supervision) (1) The Financial Services Commission shall guide and supervise the duties of the Corporation, and may give necessary orders. <Amended by Act No. 5556, Sep. 16, 1998; Act No. 8863, Feb. 29, 2008> (2) When a disposition of the Corporation under this Act is unlawful, or when deemed necessary for the protection of depositors, the Financial Services Commission may cancel all or part of such disposition, or suspend the execution of such disposition. <Amended by Act No. 5556, Sep. 16, 1998; Act No. 8863, Feb. 29, 2008> Article 28 (Report and Inspection) (1) When deemed necessary, the Financial Services Commission may have the Corporation report matters pertaining to its duties, accounting, and properties, or have public officials who belong to the Financial Services Commission examine the state of the Corporation s business, books and records, documents, facilities, or other matters. <Amended by Act No. 5556, Sep. 16, 1998; Act No. 8863, Feb. 29, 2008> (2) Where the public officials who belong to the Financial Services Commission conduct an examination under the provisions of paragraph (1), such officials shall carry certificates indicating their authority and show the certificates to the relevant person. CHAPTER Ⅲ DEPOSIT INSURANCE Article 29 (Insurance Relations) (1) Insurance relations among the Corporation, an insured financial institution, and depositors shall be formed and effected when a depositor holds claims such as deposits against an insured financial institution. <Amended by Act No. 5492, Dec. 31, 1997> (2) Any insured financial institution shall indicate whether insurance 23

24 relations have been created and their contents under paragraph (1) on such terms and conditions as the Corporation may determine. <Newly Inserted by Act No. 5492, Dec. 31, 1997; Act No. 5556, Sep. 16, 1998> (3) The Corporation may investigate whether any insured financial institution has indicated whether insurance relations have been built and their contents under the provisions of paragraph (2). <Newly Inserted by Act No. 6173, Jan. 21, 2000> Article 30 (Payment of Premiums) (1) Each insured financial institution shall pay to the Corporation as insurance premiums the amount (one hundred thousand won where the amount is less than one hundred thousand won) calculated by multiplying a balance of deposits (an amount as determined by the Presidential Decree in consideration of liability reserves under Article 120 of the Insurance Business Act for insurance companies) by the rate as determined by the Presidential Decree not exceeding 5/1,000. In this case, the rate may be set differently taking into account the management and financial status by insured financial institution and accumulated amounts of accounts under Article 24-3 (2). <Amended by Act No. 5556, Sep. 16, 1998; Act No. 6891, May 29, 2003; Act No. 7885, Mar. 24, 2006> (2) Notwithstanding the provisions of paragraph (1), with regard to an insured financial institution falling under any of the following subparagraphs, the Corporation may, through a resolution of the Committee, reduce all or part of the contributions under Article 24 (2) 1 and of the insurance premiums and arrears under paragraphs (1) and (3), or defer their payment by fixing a specified period: <Amended by Act No. 5492, Dec. 31, 1997; Act No. 6807, Dec. 26, 2002> 1. An insured financial institution which is related to an insurance contingency when such insurance contingency occurs; and 2. An insured financial institution about which, in view of its financial status, there is concern over the possibility of a suspension of payment of deposits or whose sound business is extremely difficult. (3) Where an insured financial institution does not pay the insurance premiums referred to in paragraph (1), by the specified time, such insured financial institution shall pay to the Corporation arrears in addition to the insurance premiums as prescribed by the Presidential Decree. <Amended by Act No. 5492, Dec. 31, 1997> 24