ACT ON THE STRUCTURAL IMPROVEMENT OF THE FINANCIAL INDUSTRY

영문법령 불러오는 중…

ACT ON THE STRUCTURAL IMPROVEMENT OF THE FINANCIAL INDUSTRY — 법갈피

Article 4(Authorization) #

(1) Where any financial institution intends to merge with another financial institution or to convert itself into another kind of financial institution under this Act, it shall obtain authorization from the Financial Services Commission in advance. <Amended on Mar. 12, 2010>

(2) Deleted. <Jan. 8, 1998>

(3) In granting authorization pursuant to paragraph (1), the Financial Services Commission shall examine whether it conforms to the following standards: <Amended on Mar. 12, 2010>

1. The objective of the merger or conversion shall aim at rationalizing the financial industry, facilitating the restructuring of the financial industry, and so forth;

2. The merger or conversion shall not shrink financial transactions, disadvantage existing financial traders, nor otherwise impede the efficiency of the financial industry and the maintenance of order in credit;

3. The merger or conversion shall not substantially restrict mutual competition between financial institutions;

4. The scope of the business that is intended to be run after the merger or the conversion of such business shall not violate relevant statutes, etc. and the business plan shall be appropriate;

5. The organization and humans resources, as well as the capability that makes it possible to run the business after the merger or the conversion, shall be maintained;

6. It is required to perfectly implement the procedures without violating the Commercial Act, the Financial Investment Services and Capital Markets Act and relevant statutes;

7. The ratio of the equity capital, debt, etc. shall remain at reasonable levels;

8. Major investors prescribed by Presidential Decree shall have full investment ability and a sound financial position.

(4) Where the Financial Services Commission intends to grant authorization on any merger between financial institutions, it shall consult in advance with the Fair Trade Commission as to whether it substantially restricts mutual competition between financial institutions, as provided for in paragraph (3) 3. <Amended on Mar. 12, 2010>

(5) Where it is deemed necessary for the sound development of the financial industry in the light of the standards under each subparagraph of paragraph (3), the Financial Services Commission may set conditions on authorization under paragraph (1). <Amended on Mar. 12, 2010>

(6) Specific matters necessary for examination standards under each subparagraph of paragraph (3) shall be determined and publicly notified by the Financial Services Commission. <Amended on Mar. 12, 2010>

[Title Amended on Mar. 12, 2010]

Article 5(Simplification of procedures concerning mergers and conversions) #

(1) Where any financial institution obtains authorization for merger or conversion under Article 4, it shall be deemed to have obtained authorization or permission for, or to have been designated for, conducting the business of a financial institution under the Acts referred to in items of subparagraph 1 of Article 2, the discontinuance of the business thereof, or a merger with another financial institution. <Amended on Mar. 12, 2010>

(2) Deleted. <May 27, 2009>

(3) Any financial institution may, where it adopts a resolution of merger with any other financial institution at a general meeting, publish its request to creditors to raise an objection to such merger resolution, setting a period of not less than ten days in at least two daily newspapers (referring to general daily newspapers provided in subparagraph 1 (a) of Article 2 of the Act on the Promotion of Newspapers; hereinafter referred to as "daily newspapers"), notwithstanding Article 527-5 (1) of the Commercial Act. In such cases, peremptory notices to individual creditors may be omitted. <Amended on Mar. 12, 2010>

(4) Where any financial institution convenes a general meeting of stockholders for a resolution of merger, it may, notwithstanding the provisions of Article 363 (1) of the Commercial Act, send a notice in writing to each stockholder seven days prior to the date of such general meeting of stockholders. In such cases, the financial institution shall publish its intention to hold a general meeting of stockholders and the objectives of the meeting in two or more daily newspapers prior to the date of sending a written notice. <Amended on Mar. 12, 2010>

(5) Where any financial institution merges with another financial institution, it may, notwithstanding the provisions of Article 522-2 (1) of the Commercial Act, keep the statement of financial position in its respective main offices 7 days prior to the date of a general meeting of stockholders for approval of such merger. <Amended on Mar. 12, 2010; Apr. 20, 21>

(6) Where any financial institution suspends any entry in the register of stockholders or sets the base date pursuant to Article 354 (1) of the Commercial Act for a resolution of merger, it may, notwithstanding the provisions of Article 354 (4) of the same Act, make public announcement seven days prior to the suspension date or the base date. In such cases, the financial institution shall make public announcement in at least two daily newspapers. <Amended on Mar. 12, 2010>

(7) The provisions of Article 12 (6) shall apply mutatis mutandis where financial institutions consolidate stocks due to a merger. In such cases, individual notices to stockholders may be replaced by public announcement in two or more daily newspapers. <Amended on Mar. 12, 2010>

(8) Where any financial institution adopts a resolution of merger at a general meeting of stockholders, the provisions of Article 12 (7) through (9) shall apply mutatis mutandis to a request for stock purchase; provided, in case of a merger without the support of the Government or the Korea Deposit Insurance Corporation (hereinafter referred to as the "Government, etc."), where the relevant financial institutions are corporations listed under the Financial Investment Services and Capital Markets Act, the provisions of Article 165-5 (3) of the same Act shall apply mutatis mutandis to decisions on the purchase price of a stock. <Amended on Mar. 12, 2010>

(9) In case of a merger under this Act, the following taxes may be reduced or exempted, as provided in the Restrictions of Special Taxation Act or other statutes relating to tax reduction and exemption: <Amended on Mar. 12, 2010>

1. Acquisition tax following the acquisition of real estate, etc.;

2. Registration tax following the registration of a corporation or real estate, etc.;

3. Corporate tax on liquidation income of the financial institution which ceases to exist due to the merger;

4. Income tax or corporate tax on the constructive dividend to stockholders of the financial institution which ceases to exist due to the merger;

5. Other taxes.

(10) Where any financial institution adopts a resolution of merger at a general meeting of stockholders, the Korea Securities Depository under Article 294 of the Financial Investment Services and Capital Markets Act (hereinafter referred to as the "Securities Depository") may exercise its voting rights; provided, where the Securities Depository exercises its voting rights, it shall exercise the voting rights in such a way as not to affect the contents of a resolution adopted by the number of voting shares represented at the general meeting of stockholders less the number of voting shares owned by the Securities Depository. <Amended on Mar. 12, 2010; May 28, 2013>

(11) The provisions of paragraph (4) shall apply mutatis mutandis where a financial institution convenes a general meeting for reporting on merger or an inaugural general meeting for the newly-merged company in accordance with the provisions of Articles 526 and 527 of the Commercial Act. <Amended on Mar. 12, 2010>

[Title Amended on Mar. 12, 2010]

Article 9(Continuance of business after merger or conversion) #

(1) Where any financial institution newly established by means of merger or conversion, any surviving financial institution or any post-conversion financial institution under this Act succeeds to the rights and business related to the contract which cannot be conducted under statutes applicable to the financial institution, of the financial institution before the merger or conversion, it may continue to carry out the pre-merger or pre-conversion business until six months from the registration date of such merger or amendment to the articles of incorporation concerning the alteration of categories of business; provided, where it succeeds to the rights and business related to the contract which calls for a period exceeding six months for the performance thereof, it may continue to carry out the succeeded business, and the related business deemed inevitable for the performance of the relevant business by the Financial Services Commission until the period of the contract terminates.

(2) Where any financial institution newly established due to a merger or conversion, any surviving financial institution or any post-conversion financial institution becomes a bank under the Banking Act, the same person (meaning the same person referred to in Article 15 (1) of the Banking Act; hereinafter the same shall apply) who holds stocks exceeding the limit referred to in Article 15 (1) of the Banking Act out of the total issued voting stocks at the time of such merger or conversion or virtually controls the financial institution shall ensure that such person complies with the provisions of Article 15 (1) of the Banking Act within three years from the registration date of such merger or the registration date of amendment to the articles of incorporation concerning the alteration of categories of business. In such cases, the scope within which voting rights of relevant stocks may be exercised shall be restricted to the limit referred to in Article 15 (1) of the Banking Act, starting from the registration date of the merger or the registration date of amendment to the articles of incorporation concerning the alteration of categories of business; provided, where the Financial Services Commission considers that the same person complies with the provisions of Article 15 (5) of the Banking Act at the time of merger or conversion, the same person shall be considered to legally hold the stocks of the financial institution or virtually control the financial institution pursuant to paragraphs (2) and (3) of that Article of that Act, or where the same person complies with the provisions of Article 15 (5) of the Banking Act within three years after a financial institution's merger or conversion, such person may legally hold the stocks of the financial institution after submitting a report to or obtaining approval from the Financial Services Commission by applying mutatis mutandis the provisions of paragraphs (2) and (3) of that Article of that Act.

[This Article Wholly Amended on Mar. 12, 2010]

Article 10(Timely corrective measures) #

(1) Where any financial institution’s financial status falls short of the standards referred to in paragraph (2), such as its equity ratio failing to meet the specified standards, or it is deemed evident that a financial institution’s financial status falls short of the standards referred to in paragraph (2) due to the occurrence of any major financial scandal or accrual of non-performing loans, the Financial Services Commission shall recommend, request, or order the financial institution concerned or the executive officers of such financial institution to take the following measures or order it to furnish its implementation plan in order to prevent insolvency, and promote the sound management of such financial institution:

1. Admonition, warning, reprimand, or salary reduction in relation to the financial institution concerned and its executive officers and employees;

2. Capital increase or capital deduction, disposal of property holdings or reduction in stores and downsizing;

3. Ban on acquisition of high-risk assets, such as nonfulfillment of obligations or price fluctuations, or restriction on the receipts at exorbitantly high interest;

4. Suspension of executive officers’ performance of duties or appointment of management supervisors acting for executive officers’ duties;

5. Amortization or consolidation of stocks;

6. Suspension of all or part of business;

7. Merger or third-party takeover of the financial institution concerned;

8. Transfer of business or contracts related to financial transactions, such as deposits or loans (hereinafter referred to as "transfer of contracts");

9. Other measures equivalent to those listed in subparagraphs 1 through 8, which are deemed necessary to improve any financial institution’s financial soundness.

(2) Where the Financial Services Commission intends to take measures pursuant to paragraph (1) (hereinafter referred to as "timely corrective measures"), it shall in advance determine and publicly notify the standards and details thereof.

(3) Where it is found that any financial institution temporarily falling short of the standards referred to in paragraph (2) can meet the standards within a short period or it is deemed that any ground equivalent thereto exists, the Financial Services Commission may delay the timely corrective measures for a specified period.

(4) In determining the standards referred to in paragraph (2), the Financial Services Commission may take the following measures likely to cause serious property damage to a financial institution or its stockholders, only where the financial institution is insolvent, its financial status falls grossly short of the standards referred to in paragraph (2), and it is deemed evident that good order in credit or the rights and interests of depositors are likely to be impeded:

1. Suspension of all business;

2. Transfer of all business;

3. Transfer of all contracts;

4. Order to amortize the total stocks;

5. Other measures equivalent to those under subparagraphs 1 through 4.

(5) The Financial Services Commission may entrust its authority regarding timely corrective measures to the Governor of the Financial Supervisory Service, as prescribed by Presidential Decree. <Amended on Dec. 29, 2020>

[This Article Wholly Amended on Mar. 12, 2010]

Article 11(Assistance in implementation of timely corrective measures) #

(1) Where the Financial Services Commission orders one financial institution to merge, or transfer its business or contracts pursuant to Article 10 (1), it may designate another financial institution and recommend merger with the financial institution subject to such order or to acquire the business or contracts thereof by transfer.

(2) The Korea Deposit Insurance Corporation may suggest in advance the amount, terms, etc., of financial assistance under subparagraph 7 of Article 2 of the Depositor Protection Act to the financial institution that is recommended to undertake a merger, acquisition of another business by transfer, or transfer of contracts pursuant to paragraph (1) on the premise that such financial institution complies with the recommendation from the Financial Services Commission. <Amended on Dec. 22, 2015>

(3) The Korea Deposit Insurance Corporation may, where deemed necessary for smooth implementation of timely corrective measures by a financial institution, arrange a merger, transfer of business between financial institutions, or third-party takeover.

(4) The Financial Services Commission may choose not to revoke authorization or permission granted to a financial institution for a period of up to one year in any of the following cases:

1. Where a financial institution ordered to reduce its capital under Article 10 (1), amortize all or some of its stocks, or consolidate its stocks under Article 12 (3) complies with the order;

2. Where a financial institution consolidates its stocks under Article 5 (7) or 5-2 for its capital increase and as a result, its capital has been reduced below the minimum capital required by any Act concerning the establishment of financial institutions.

(5) Where a financial institution violates the following statutes due to any merger, takeover, or transfer of business or contracts conducted between financial institutions according to timely corrective measures, the financial institution shall make itself conform to the relevant statutes within three years, according to the procedures determined by the Financial Services Commission: <Amended on Apr. 5, 2013>

1. Articles 81, 133, 165-15, 167, 340, 342, 344, and 347 of the Financial Investment Services and Capital Markets Act;

2. Articles 106, 108, and 109 of the Insurance Business Act;

3. Articles 12, 17, 18-2, and 24-2 of the Mutual Savings Banks Act;

4. Other provisions of the relevant statutes.

(6) The acquisition of stocks or bonds falling under any of the following subparagraphs shall not be deemed the acquisition of stocks or securities under Article 38 of the Banking Act and Article 344 of the Financial Investment Services and Capital Markets Act:

1. Stocks which any financial institution listed in subparagraph 1 (a) and (h) of Article 2 comes to possess by converting its existing loans, etc. into investments, as prescribed by the Financial Services Commission;

2. Bonds of which the Government guarantees the payment of principal and interest.

[This Article Wholly Amended on Mar. 12, 2010]

Article 12(Investments by Government in insolvent financial institutions) #

(1) The Financial Services Commission may, when any insolvent financial institution is deemed unable to continue its business due to its destabilized financial structure following the continued withdrawal of funds, request the Government, etc. to make investments in such insolvent financial institution or purchase securities prescribed by Presidential Decree of such insolvent financial institution.

(2) Where the Government, etc. makes investments in any insolvent financial institution upon a request under paragraph (1), the board of directors of the insolvent financial institution may determine the kinds, contents, quantity, issue price, allotment methods of new stocks to be issued and other matters concerning procedures, notwithstanding the provisions of Articles 330, 344 (2), 416 through 418 of the Commercial Act.

(3) The Financial Services Commission may order any insolvent financial institution in which the Government, etc. has made or has decided to make investments or from which the Government, etc. has purchased or has decided to purchase securities, upon a request made pursuant to paragraph (1), to invalidate stocks, in whole or in part, with or without compensation, owned by specific stockholders (referring to stockholders at the time the Government, etc., upon a request made pursuant to paragraph (1), makes investments or purchases securities or decides to do so or other stockholders recognized by the Financial Services Commission as responsible for the insolvency of such financial institution; hereinafter the same shall apply) and to reduce its capital through consolidation of stocks owned by such specific stockholders at a certain rate. In such cases, the Financial Services Commission may order the insolvent financial institution to invalidate or consolidate stocks owned by the Government, etc. on more favorable terms or methods than the stocks owned by the specific stockholders out of consideration for investments and the purchase of securities by the Government, etc. under the provisions of paragraph (1).

(4) Where any insolvent financial institution is ordered to reduce capital pursuant to paragraph (3), the board of directors of the insolvent financial institution may resolve to reduce capital or determine matters on the methods and procedures for capital reduction, procedures for consolidating stocks and any other relevant matters, notwithstanding the provisions of Articles 438 through 441 of the Commercial Act.

(5) Any insolvent financial institution which intends to reduce capital pursuant to paragraph (4) shall publicly announce to the creditors in two or more daily newspapers that they may file an objection within a specified period of not less than 10 days, and if there is any creditor who has filed an objection, it shall tender performance or provide sufficient security to the creditor or trust a considerable property to a trust business entity provided for in the Financial Investment Services and Capital Markets Act for this purpose; provided, this shall not apply where the amount of actually reduced capital (referring to the purchase price where treasury stocks are purchased with consideration for retirement) falls short of the amount of investment by the Government, etc. pursuant to paragraph (2).

(6) In consolidating stocks pursuant to paragraphs (3) and (4), the insolvent financial institution shall determine a period of not less than five days (the last day of the period shall be referred to "base date of stock consolidation": hereinafter the same shall apply), announce the contents and the purport to the effect that stock certificates should be submitted to the institution during the period, and deliver new stock certificates within one month from the base date of stock consolidation; provided, where it consolidates stocks of which certificates trusted to the Depository pursuant to the Financial Investment Services and Capital Markets Act, it may be deemed that the submission of old stock certificates and delivery of new stock certificates are made by entry in stockholders' list at the base date of stock consolidation. In such cases, the fact shall be announced together at the time of announcement referred to in the main clause.

(7) Where any insolvent financial institution makes a resolution by the board of directors pursuant to paragraph (2) or (4), it shall, without delay, publicly announce the following matters in two or more daily newspapers:

1. The resolution by the board of directors;

2. The fact that stockholders who have any objection to the resolution may request the institution to purchase stocks owned by themselves by a document stating the kinds and number of stocks within 10 days.

(8) Where any insolvent financial institution receives a request under paragraph (7), it shall purchase stocks within two months from the date of receipt of such request. In such cases, the purchase price of stocks shall be determined through consultations between stockholders and the institution, and where agreement is not reached, the purchase price of stocks shall be that calculated by accounting specialists, taking into account the property value and the earning value, etc. of the insolvent financial institution before investments or the purchase of securities by the Government, etc. are made.

(9) Where any financial institution or a group of stockholders who holds not less than 30/100 of stocks having requested the purchase of stocks objects to the purchase price determined pursuant to the latter sentence of paragraph (8), it may request the court to decide the purchase price within 30 days from the date on which such purchase price is determined.

[This Article Wholly Amended on Mar. 12, 2010]

Article 14(Administrative disposition) #

(1) Where a financial institution falls under any of the following subparagraphs, the Financial Services Commission shall, on the recommendation of the Governor of the Financial Supervisory Service, order executive officers of the relevant financial institution to suspend the execution of their business and may appoint management supervisors to conduct the business on behalf of such executive officers or recommend a general meeting of stockholders to dismiss such executive officers: <Amended on Mar. 12, 2010>

1. Where the financial institution fails to comply with any request or order made or issued under Article 10 (1);

2. Where the financial institution fails to perform as order under Article 12 (3).

(2) Where an insolvent financial institution falls under any of the following subparagraphs, the Financial Services Commission may make administrative dispositions, such as a decision on the transfer of contracts, suspension of business for a period of not more than six months against the insolvent financial institution, and revocation of authorization, permission, etc. for its business; provided, in cases of any insolvent financial institution falling under subparagraph 4, it may make an administrative disposition only to suspend its business for up to six months, and in cases of any insolvent financial institution not falling under subparagraph 1 or 2, the same shall not apply: <Amended on Mar. 12, 2010>

1. Where the insolvent financial institution fails to or is unable to perform as ordered under Article 10 (1) or 12 (3);

2. Where the insolvent financial institution fails to merge under an order or arrangement issued or made under Articles 10 (1) and 11 (3);

3. Where the insolvent financial institution is deemed unable to perform any order issued or to merge with another financial institution as ordered under Article 10 (1) because its liabilities significantly exceed its assets;

4. Where the insolvent financial institution is recognized as undoubtedly infringing on depositors’ rights and interests and disrupts order in credit after it has been unable to pay claims, such as deposits, and repay borrowings due to its abruptly destabilized financial standing.

(3) Deleted. <May 24, 1999>

(4) A financial institution shall be dissolved if authorization, permission, etc. for its business is revoked under paragraph (2). <Amended on Mar. 12, 2010>

(5) Where the Financial Services Commission decides to transfer contracts pursuant to paragraph (2), it shall determine the scope of contracts to be transferred, terms for the transfer of contracts, and the financial institution to which contracts are transferred. In such cases, it shall in advance obtain the consent of the board of directors of the financial institution to which the contracts are to be transferred. <Amended on Mar. 12, 2010>

(6) The transfer of contracts according to a decision under paragraph (2) shall not require resolution by the board of directors, and a general meeting of stockholders, of an insolvent financial institution to transfer contracts, notwithstanding the provisions of related Acts and the articles of incorporation. <Amended on Mar. 12, 2010>

(7) Where the Financial Services Commission decides the transfer of contracts pursuant to paragraph (2), it shall appoint a management supervisor for the insolvent financial institution. <Amended on Mar. 12, 2010>

(8) An insurance company for which the Financial Services Commission has decided the transfer of contracts shall be deemed to have been granted authorization on dissolution, consolidation, etc. by the Financial Services Commission pursuant to Article 139 of the Insurance Business Act. <Amended on Mar. 12, 2010>

(9) The provisions of Article 5 shall apply mutatis mutandis where the financial institution to which contracts are transferred from an insolvent financial institution pursuant to paragraph (2) performs procedures, such as resolution of a general meeting of stockholders, request for stock purchase, and creditor’s filing of objections in connection with the transfer of contracts. <Amended on Mar. 12, 2010>

[Title Amended on Mar. 12, 2010]

Article 14-2(Effect of decision on transfer of contracts) #

(1) Where a decision on the transfer of contracts has been made pursuant to Article 14 (2), the rights and duties of the insolvent financial institution under contracts included in the decision shall be succeeded to the financial institution to which such contracts are transferred (hereinafter referred to as "underwriting financial institution") at the time the decision is made; provided, where a mortgage backed by secured claims under a contract subject to transfer exists, the mortgage shall be acquired by the underwriting financial institution when the public announcement referred to in paragraph (2) is made.

(2) Where any decision on the transfer of contracts under Article 14 (2) has been made, the insolvent financial institution and the underwriting financial institution shall, without delay, jointly announce the gist of such decision and the fact that the contracts were transferred in two or more daily newspapers.

(3) Where a public announcement has been made pursuant to paragraph (2), the legal relations between the creditors, debtors, persons pledging property to secure another’s obligation or other interested persons (hereafter referred to as "interested persons") and the insolvent financial institution shall be in the same substance succeeded to by the underwriting financial institution; provided, interested persons may set up against the underwriting financial institution on grounds that have arisen between themselves and the insolvent financial institution prior to the public announcement referred to in paragraph (2).

(4) Where a public announcement under paragraph (2) has been made, requirements for setting up against for the assignment of nominative claim referred to in Article 450 of the Civil Act shall be deemed to have been met by the public announcement; provided, interested persons may set up against the underwriting financial institution on grounds that have arisen between themselves and the insolvent financial institution prior to the public announcement.

(5) Where any decision for contract transfer referred to in Article 14 (2) has been made, the Financial Services Commission shall have the insolvent financial institution and the underwriting financial institution keep and manage materials pertaining to the transfer of contracts and allow interested persons to inspect them. In such cases, the standards and procedures necessary for retention, management and inspection shall be determined by the Financial Services Commission.

[This Article Wholly Amended on Mar. 12, 2010]

Article 14-6(Special cases concerning appointment of management supervisors) #

(1) With regard to an insured financial institution under subparagraph 1 of Article 2 of the Depositor Protection Act, the Financial Services Commission shall, where it intends to appoint a management supervisor after ordering the suspension of all of its business under Article 10 (1) 6 or deciding to transfer contracts under Article 14 (2) (excluding an insured financial institution that has been issued an order to suspend all of its business due to temporal financial strains, but is recognized as certain to normalize its management), appoint an executive officer or employee of the Korea Deposit Insurance Corporation as a management supervisor of such insured financial company; provided, the Financial Services Commission may appoint a person other than an executive officer or employee of the Korea Deposit Insurance Corporation as a management supervisor where it finds or deems that the Government, etc. does not provide support or the Korea Deposit Insurance Corporation does not pay claims, such as deposits. <Amended on Dec. 22, 2015>

(2) In the case of the main clause of paragraph (1), the Financial Services Commission may, where it is deemed necessary to normalize the management of the financial institution concerned and protect general creditors, appoint persons other than executive officers or employees of the Korea Deposit Insurance Corporation as management supervisors to participate in the management of such financial institution.

(3) The provisions of Article 14-3 (3) shall not apply to the executive officers or employees of the Korea Deposit Insurance Corporation who are appointed as management supervisors pursuant to the main clause of paragraph (1) and paragraph (2), and the management supervisors so appointed shall hold their office for the period of business suspension or up to the date of completion of business following the decision of contract transfer; provided, when the financial institution concerned is dissolved or goes bankrupt during the period of business suspension, the management supervisors shall hold their office up to the date of resolution of such dissolution or the date of declaration of such bankruptcy.

[This Article Wholly Amended on Mar. 12, 2010]

Article 23-6(Requirements and procedures for financial assistance) #

(1) Where a financial institution intends to receive financial assistance, it shall file an application with the Korea Development Bank by December 31, 2014, as determined and publicly notified by the Financial Services Commission. <Amended on May 21, 2014>

(2) If the Korea Development Bank receives an application pursuant to paragraph (1), it shall determine as to whether to render financial assistance to the financial institution through an examination pursuant to paragraph (3) in accordance with a resolution of the Deliberative Committee on Fund Management pursuant to Article 29 of the Korea Development Bank Act at the expense of the Fund. <Amended on May 21, 2014>

(3) Where the Korea Development Bank intends to provide financial assistance to a financial institution which has filed an application for financial assistance (hereafter referred to in this Article and Article 23-7 as "applicant institution"), it shall examine whether the applicant institution satisfies the requirements of the following subparagraphs. In such cases, if necessary for the examination, it may request the applicant institution to submit data: <Amended on May 21, 2014>

1. The applicant institution shall not receive support from the Government or Korea Deposit Insurance Corporation pursuant to Article 12 of this Act or Article 38 of the Depositor Protection Act;

2. The improvement of the financial structure or the expansion of capital of the applicant institution shall be recognized as necessary because the financial intermediary functions do not work properly for such reason as liquidity strain on the applicant institution, resulted from sudden changes in the financial market;

3. The details of a plan for improvement of the financial functions pursuant to Article 23-7 shall be appropriate for improvement of the managerial soundness and financial intermediary function of the applicant institution.

(4) Where the Korea Development Bank does not provide financial assistance to an applicant institution, it shall give notice to the applicant institution with the grounds specified therein within the period determined and publicly notified by the Financial Services Commission. <Amended on May 21, 2014>

(5) Where the Korea Development Bank provides financial assistance to an applicant institution, it shall report the details of financial assistance, the results of examination or such to the Financial Services Commission within the period determined and publicly notified by the Financial Services Commission. <Amended on May 21, 2014>

(6) Necessary matters concerning the standards, methods, and conditions for an examination under paragraph (3) shall be determined and publicly notified by the Financial Services Commission, taking overall consideration of the following factors:

1. Types of business of the applicant institution;

2. The present financial conditions of the applicant institution;

3. Whether there are dominant stockholders who can participate in increasing its capital or such in the applicant institution;

4. Track record of previous support, such as provision of credit by the applicant institution to small and medium enterprises;

5. The applicant institution’s potential to contribute to the stabilization of the financial market and improvement of intermediary functions.

[This Article Wholly Amended on Mar. 12, 2010]

Article 23-7(Plans for improvement of financial functions) #

(1) An applicant institution shall present a plan including the following matters (hereinafter referred to as "plan for improvement of financial functions") to the Korea Development Bank for the purpose of improving the managerial soundness and financial intermediary function of the relevant applicant institution as determined and publicly notified by the Financial Services Commission: <Amended on May 21, 2014>

1. The amount of financial assistance applied for and its purpose;

2. A plan for contributing to the stabilization of national economy according to the nature by the relevant applicant institution, which includes the following matters:

(a) A plan for support, including provision of credit to small and medium enterprises;

(b) A plan for enterprise restructuring as a creditor financial institution;

(c) A plan for raising foreign currency to secure foreign currency liquidity in cases of a financial institution referred to in subparagraph 1 (a) of Article 2;

3. The period to implement a plan for improvement of financial functions;

4. Other matters prescribed by Presidential Decree for the improvement of the managerial soundness and financial intermediary function of the relevant applicant institution.

(2) When the Korea Development Bank examines the appropriateness of a plan for improvement of financial functions pursuant to Article 23-6 (3) 3, it may evaluate the degree of appropriateness differently by applicant institutions in consideration of the applicant institutions’ track record of improvement of financial functions in the past, and their responsibility for decrease of the soundness of management, etc. <Amended on May 21, 2014>

(3) The detailed standards for preparation of a plan for improvement of financial functions shall be determined and publicly notified by the Financial Services Commission in consideration of types of financial assistance, types of business of the applicant institution, and so forth.

[This Article Wholly Amended on Mar. 12, 2010]

Article 23-9(Checkup of implementation of plans for improvement of financial functions and supervisory measures) #

(1) A financial institution which has received financial assistance (hereafter referred to as "recipient institution" in this Article) shall notify the Korea Development Bank and the Financial Services Commission of the implementation status of a plan for the improvement of financial functions on a quarterly basis, as prescribed by Presidential Decree. <Amended on May 21, 2014>

(2) The Financial Services Commission may, if deemed necessary for the stabilization of financial markets and improvement of financial functions or if it has received a request from the Korea Development Bank, check the implementation status of a plan for improvement of financial functions of the recipient institution. <Amended on May 21, 2014>

(3) The Financial Services Commission may, for checkup pursuant to paragraph (2), inspect affairs or the financial status of the recipient institution, or request submission of data, attendance, statement, etc. of the person concerned. In such cases, the relevant recipient institution shall comply with such request in the absence of any special reasons to the contrary.

(4) The Financial Services Commission may take measures necessary for the supervision of any of the following recipient institutions:

1. Where it fails to implement a plan for improvement of financial functions;

2. Where it fails to report the implementation status of a plan for improvement of financial functions pursuant to paragraph (1) or makes a false report;

3. Where it refuses, hinders or evades the performance of affairs of the Financial Services Commission provided for in paragraph (2) or (3);

4. Where it fails to comply with a request of the Financial Services Commission provided for in paragraph (3) or neglects the performance thereof.

(5) "Measures necessary for the supervision" in paragraph (4) means the following measures:

1. A corrective order for the relevant offense;

2. A request for admonition or warning to an executive officer of the recipient institution;

3. A request for censure against an employee of the recipient institution;

4. Suspension of performance of duties of an executive officer of the recipient institution or designation of a management supervisor performing duties for the executive officer;

5. Other measures deemed necessary for supervision of the recipient institution and those equivalent to subparagraphs 1 through 4.

(6) Where the Financial Services Commission has made a check pursuant to paragraph (2) or taken measures pursuant to paragraph (5), it shall report the results thereof to the Korea Development Bank. <Amended on May 21, 2014>

[This Article Wholly Amended on Mar. 12, 2010]

Article 24(Stockholding limit by other companies) #

(1) Where a financial institution (excluding the Industrial Bank of Korea referred to in subparagraph 1 (b) of Article 2; hereafter the same shall apply in this Chapter) or another financial institution belonging to the enterprise group to which the former financial institution belongs (hereinafter referred to as "same affiliated financial institution") intends to perform any of the following acts, it shall obtain prior approval from the Financial Services Commission according to the standards determined by Presidential Decree; provided, this shall not apply where it obtains authorization, approval etc. under the Acts forming the basis for the establishment of the relevant financial institution: <Amended on Mar. 29, 2016>

1. Holding not less than 20/100 of the total number of issued voting stocks of another company;

2. Holding not less than 5/100 of the total number of issued voting stocks of another company controlled in effect by any same affiliated financial institution or enterprise group to which the same affiliated financial institution belongs, as determined by Presidential Decree;

3. Holding not less than 10/100 of the total number of issued voting stocks of another company controlled in effect by any same affiliated financial institution or enterprise group to which the same affiliated financial institution belongs, as determined by Presidential Decree;

4. Holding not less than 15/100 of the total number of issued voting stocks of another company controlled in effect by any same affiliated financial institution or enterprise group to which the same affiliated financial institution belongs, as determined by Presidential Decree.

(2) "Enterprise group" in paragraph (1) means an enterprise group as defined in subparagraph 11 of Article 2 of the Monopoly Regulation and Fair Trade Act. <Amended on Dec. 29, 2020>

(3) In granting an approval under paragraph (1), the Financial Services Commission shall consult in advance with the Fair Trade Commission whether the relevant stockholdings restrict competition in the related market. This shall also apply where it grants authorization, approval, etc. pursuant to the proviso to paragraph (1).

(4) Notwithstanding paragraph (1), where any same affiliated financial institution falls under any subparagraph of paragraph (1) on inevitable grounds prescribed by Presidential Decree, including the capital reduction of other shareholders, the relevant financial institution shall file an application for approval therefor with the Financial Services Commission within the period set by Presidential Decree from the date on which such inevitable grounds occur. In such cases, the Financial Services Commission shall determine whether to grant an approval according the standards of paragraph (6).

(5) Where any same affiliated financial institution intends to acquire shares of any other company in excess of the limit provided for in the following subparagraphs, it shall obtain approval therefor from the Financial Services Commission again, notwithstanding paragraphs (1) and (4):

1. 25/100 of the total number of the issued voting shares;

2. 33/100 of the total number of the issued voting shares.

(6) In granting an approval to any same affiliated financial institution pursuant to paragraphs (1), (4), and (5), the Financial Services Commission shall examine each of the following requirements (hereinafter referred to as "excess ownership requirements"). In such cases, if it is deemed necessary to examine the requirements, the Financial Services Commission may request the relevant financial institution to submit data: <Amended on Oct. 31, 2017; Feb. 4, 2020; Dec. 29, 2020; Oct. 1, 2025>

1. The holding of the relevant shares shall not aim at de facto controlling another company that does not fall under any of the following items:

a. A company that runs a financial business (referring to any of the financial and insurance businesses provided for in the Korean Standard Industrial Classification, which is prepared and publicly notified by the Minister of Data and Statistics pursuant to Article 22 (1) of the Statistics Act); provided, general holding companies provided for in Article 18 (2) 5 of the Monopoly Regulation and Fair Trade Act shall not be deemed the ones which engage in banking operations;

b. A company (limited to a company that falls under Article 51-2 (1) 6 of the Corporate Tax Act) that runs private investment projects designated by the competent administrative agency pursuant to Article 8-2 of the Act on Private Participation in Infrastructure;

c. A company that runs business either directly related to the business operations of the financial institutions, including the credit information business and the claims collection services under the Credit Information Use and Protection Act or necessary for the efficient performance of the business operations of the financial institutions;

2. The holding of the relevant shares shall not actually restrict competition in the relevant market.

(7) The Financial Services Commission shall, where it decides not to grant an approval under paragraphs (1), (4) and (5), notify the applicant of the grounds therefor within the period determined by Presidential Decree.

(8) The Financial Services Commission shall, after any same affiliated financial institution is granted approval pursuant to paragraphs (1), (4) and (5), examine whether it meets the excess ownership requirements, as prescribed by Presidential Decree.

(9) The scope of the issued shares and methods of calculating the stockholding ratio referred to in each subparagraph of paragraphs (1) and (5) shall be determined and publicly notified by the Financial Services Commission.

[This Article Wholly Amended on Mar. 12, 2010]

Article 28(Administrative fines) #

(1) Any financial institution shall, when it performs any of the following acts, be subject to an administrative fine not exceeding 20 million won: <Amended on Dec. 29, 2020>

1. When it fails to submit a report provided for in Article 7 (1) or submits a false report;

2. Where it continues to run the business which is prohibited from being run pursuant to statutes, without authorization therefor from the Financial Services Commission in violation of Article 8 (2);

3. Where it continues to run the business which is prohibited from being run pursuant to statutes, in violation of Article 9 (1);

4. Where it fails to conform to Article 15 (1) of the Banking Act within three years as required under the main clause of Article 9 (2) or exercises its voting right in excess of the scope of its voting right;

5. Where it fails to submit a report to the Financial Services Commission or fails to obtain approval from the Financial Services Commission, which is required pursuant to the proviso to Article 9 (2);

6. Where it fails to submit a self-normalization plan, in violation of Article 9-3 (2) or (3);

7. Where it fails to comply with the request of the Governor of the Financial Supervisory Service to submit materials without good cause, in violation of Article 9-4 (3);

8. Where it fails to comply with the request of the Governor of the Financial Supervisory Service to submit materials without good cause, in violation of Article 9-5 (3);

9. Where it fails to comply with the Financial Services Commission’s request to submit a self-normalization plan without good cause, in violation of Article 9-7 (2);

10. Where it fails to comply with the Financial Services Commission's request, in violation of Article 9-8 (1);

11. Where it fails to comply with the Financial Services Commission's request without good cause, in violation of Article 9-9 (2);

12. Where it fails to comply with or violates a request or an order under Article 10 (1);

13. Where it is not in compliance with relevant statutes or regulations within three years in accordance with the procedures set by the Financial Services Commission, in violation of Article 11 (5);

14. Where it fails to make a public announcement or to tender performance or provide sufficient security to any creditor who has filed an objection, or to trust a considerable property to a trust business entity under the Financial Investment Services and Capital Markets Act, which are prescribed in Article 12 (5);

15. Where it consolidates stocks, in violation of Article 12 (6);

16. Where it fails to makes a public announcement under Article 12 (7);

17. Where it fails to purchase stocks under Article 12 (8);

18. Where it violates or fails to comply with any order issued or any disposition imposed by the Financial Services Commission under Article 14 (1) or (2);

19. Where it fails to make a public announcement under Article 14-2 (2);

20. Where it fails to keep and manage materials pertaining to the transfer of contracts or refuses to allow interested persons to inspect such materials, in violation of Article 14-2 (5);

21. Where it acquires shares of another company without obtaining approval therefor from the Financial Services Commission, in violation of Article 24 (1) or (5);

22. Where it fails to file an application for approval within a fixed period, in violation of Article 24 (4);

23. Where it exercises its voting rights on the shares of other company in excess of the stockholding limit without obtaining approval, in violation of Article 24-2 (2).

(2) An executive officer, etc. of a financial institution shall, when he or she performs any of the following acts, be subject to an administrative fine not exceeding 10 million won:

1. When it fails to submit a report provided for in Article 7 (1) or submits a false report;

2. When he or she violates Article 12 (5) through (8);

3. When he or she violates Article 14-2 (2) or (5).

(3) Administrative fines pursuant to paragraphs (1) and (2) shall be imposed and collected by the Financial Services Commission.

[This Article Wholly Amended on Mar. 12, 2010]

ACT ON THE STRUCTURAL IMPROVEMENT OF THE FINANCIAL INDUSTRY

Article 1(Purpose) #

Article 2(Definitions) #

Article 3(Merger and conversion of financial institutions) #

Article 4(Authorization) #

Article 5(Simplification of procedures concerning mergers and conversions) #

Article 5-2(Simplification of capital reduction and stock consolidation procedures) #

Article 6(Closing date of business year of financial institution prior to conversion) #

Article 7(Report on execution of authorized matters and lapse of authorization) #

Article 8(Support for mergers and conversions of financial institutions) #

Article 9(Continuance of business after merger or conversion) #

Article 9-2(Selection of systemically important financial institutions) #

Article 9-3(Formulation and submission of self-normalization plans of systemically important financial institutions) #

Article 9-4(Evaluation of self-normalization plans) #

Article 9-5(Formulation of resolution plans) #

Article 9-6(Establishment of Deliberation Committee on self-normalization plans and resolution plans) #

Article 9-7(Deliberation by Deliberation Committee and approval of the Financial Services Commission) #

Article 9-8(Requests for addressing expected challenges) #

Article 9-9(Implementation of measures by systemically important financial institutions) #

Article 9-10(Duty of cooperation of systemically important financial institutions) #

Article 10(Timely corrective measures) #

Article 11(Assistance in implementation of timely corrective measures) #

Article 11-2(Confidentiality obligations of executive officers and employees of financial institutions) #

Article 12(Investments by Government in insolvent financial institutions) #

Article 13(Special cases for issuance of non-voting stocks) #

Article 13-2(Simplification of capital-reducing process including stock consolidation) #

Article 14(Administrative disposition) #

Article 14-2(Effect of decision on transfer of contracts) #

Article 14-3(Appointment of management supervisors and their duties) #

Article 14-4(Hearings) #

Article 14-5 #

Article 14-6(Special cases concerning appointment of management supervisors) #

Article 14-7(Request for provision of data) #

Article 14-8(Special cases concerning financial institutions) #

Article 14-9(Measures of temporary suspension of qualified financial transactions by systemically important financial institutions) #

Article 15(Liquidators or trustees in bankruptcy) #

Article 16(Petitions for bankruptcy) #

Article 17(Service of adjudication of bankruptcy) #

Article 18(Consultation about period for reporting claims) #

Article 19(Statement of opinions) #

Article 20(Preparation and inspection of deposit sheets) #

Article 21(Presentation of deposit sheets) #

Article 22(Intervention by depositors) #

Article 23(Powers of agencies intervening in bankruptcy) #

Article 23-2(Establishment of financial stabilization fund) #

Article 23-3(Operation, management, and accounting of fund) #

Article 23-4(Borrowing) #

Article 23-5(Issuance of bonds for financial stabilization fund) #

Article 23-6(Requirements and procedures for financial assistance) #

Article 23-7(Plans for improvement of financial functions) #

Article 23-8(Special cases concerning financial assistance) #

Article 23-9(Checkup of implementation of plans for improvement of financial functions and supervisory measures) #

Article 24(Stockholding limit by other companies) #

Article 24-2(Corrective measures) #

Article 24-3(Compulsory performance charges) #

Article 24-4(Relationship with other Acts) #

Article 25(Delegation of authority) #

Article 26(Application mutatis mutandis of provisions on mergers) #

Article 26-2(Penalty provisions) #

Article 27(Penalty provisions) #

Article 28(Administrative fines) #