ENFORCEMENT DECREE OF THE SMALL AND MEDIUM ENTERPRISE COOPERATIVES ACT

Article 1(Purpose) #

The purpose of this Decree is to prescribe the matters mandated by the Small and Medium Enterprise Cooperatives Act and matters necessary for the enforcement thereof.

Article 2(Principal offices of cooperatives) #

The principal offices of cooperatives prescribed in Article 3 (1) 1 (hereinafter referred to as "cooperative") of the Small and Medium Enterprise Cooperatives Act (hereinafter referred to as the "Act"), business cooperatives prescribed in subparagraph 2 of that paragraph (hereinafter referred to as "business cooperative"), and federations of cooperatives prescribed in subparagraph 3 of that paragraph (hereinafter referred to as "federation") shall be located in the business territories prescribed in Article 6 of the Act.

Article 3(Classification of business types) #

(1) Business types for the cooperatives prescribed in Article 3 (2) of the Act or federations carrying the names of business types (hereinafter referred to as "business type federation") shall be classified according to the minor grouping, sub-grouping and sub-sub grouping of the Korean Standard Industrial Classification prepared and publicly notified by the Commissioner of the Statistics Korea pursuant to Article 22 (1) of the Statistics Act (hereinafter referred to as the "Korean Standard Industrial Classification"); provided, the same shall not apply where deemed particularly necessary by the Minister of SMEs and Startups in consideration of the nature of business types. <Amended on Oct. 23, 2007; Oct. 7, 2009; Jul. 26, 2017>

(2) Notwithstanding the main clause of paragraph (1), wholesale business or retail business may be classified in accordance with minor grouping, sub-grouping and sub-sub grouping without distinguishing wholesale business from retail business in the medium grouping in accordance with the Korean Standard Industrial Classification. <Amended on Oct. 7, 2009>

(3) "Related types of business" in Article 13 (1) of the Act means any of the following business types: <Amended on Jul. 26, 2017>

1. Business types related to production, processing or repair processes;

2. Business types deemed by the Minister of SMEs and Startups to have mutual relations when considering the nature of the business types.

Article 3-2(Exclusion from application of other statutes) #

"Cooperative, a business cooperative, or a federation fulfilling the requirements prescribed by Presidential Decree" in Article 11-2 (1) means a cooperative, a business cooperative, or a federation fulfilling all of the following requirements:

1. The by-laws under Article 30 (1) of the Act (including cases applicable mutatis mutandis in Articles 81 and 92 of the Act) shall include such details as an opportunity to participate in joint projects under Article 35 (1) 1, 82 (1) 1, or 93 (1) 1 of the Act (hereinafter referred as "joint projects"), the period of operating such joint projects, and plans for protecting consumers;

2. Grounds for joint projects shall be specified in the articles of association;

3. It shall not be an inactive cooperative designated under Article 132 (1) of the Act;

4. Where it is subject to the imposition of a penalty surcharge under Article 22 of the Monopoly Regulation and Fair Trade Act or a penalty surcharge under Article 28 of that Act (limited to a violation of Article 26 (1) 1 of that Act), two years shall elapse from the date the payment of the relevant penalty surcharge is notified.

[This Article Added on Feb. 18, 2020]

Article 4(Exception to membership requirements) #

(1) "Any person other than a small and medium entrepreneur" in Article 13 (2) of the Act means a person deemed necessary to smoothly conduct the business of cooperatives among those running enterprises which are not small and medium enterprises.

(2) In cases of accepting persons other than small and medium entrepreneurs as members pursuant to Article 13 (2) of the Act, the number thereof shall not exceed 1/20 of the total number of members of the relevant cooperative.

Article 5(Special members) #

Relevant small and medium enterprises which are eligible to become special members prescribed in Article 14 of the Act shall be small and medium enterprises producing raw and subsidiary materials or facility materials necessary for members to produce products.

Article 6(Investment) #

(1) The value of each unit of investment prescribed in Article 16 of the Act shall be at least 100,000 won.

(2) Investments shall be paid in full as prescribed by the articles of association of cooperatives, business cooperatives or federations.

(3) Where a member or a member cooperative pays an investment, the cooperative, business cooperative and federation shall deliver a certificate of investment as prescribed by the articles of association.

Article 7(Minimum total amount of investment) #

The minimum total amount of investments prescribed in Article 17 of the Act are as follows:

1. National cooperatives prescribed in Article 6 (1) 1 of the Act (hereinafter referred to as "national cooperative"): 80 million won;

2. Regional cooperatives prescribed in Article 6 (1) 2 of the Act (hereinafter referred to as "regional cooperative"): 40 million won.

3. Business cooperatives: 40 million won;

4. Federations: 40 million won.

Article 8(Authorization for establishment) #

(1) A person who intends to obtain authorization for establishing a cooperative, business cooperative or federation shall file a request for authorization for establishment, accompanied by documents necessary for the establishment of the cooperative, with the competent administrative agency prescribed in Article 12 (1) and (2) of the Act (hereinafter referred to as "competent administrative agency") within four weeks from the inaugural general meeting. <Amended on Oct. 7, 2009; Sep. 9, 2010>

(2) Upon receipt of a request pursuant to paragraph (1), the competent administrative agency shall review the details of such request, considering the opinions of the chairperson of the Korea Federation of SMEs (hereinafter referred to as the "KBIZ") and the heads of relevant administrative agencies, and authorize the establishment thereof if the purpose of establishment and business plan are deemed feasible.

(3) When authorizing establishment as prescribed in paragraph (2), the competent administrative agency may, if the articles of association of the cooperative, business cooperative or federation are against the statutes or unfair, order to amend the articles of association and if the qualification of an executive officer is deemed unsuitable, order to replace such executive officer and re-elect a new executive officer.

Article 9(Restriction on joint projects) #

(1) Joint projects shall not include the act of infringing on consumers' interests through price-fixing. <Amended on Feb. 18, 2020>

(2) "Businesses prescribed by Presidential Decree" in the proviso to Article 93 (1) of the Act means the business of joint purchase of raw materials and joint sale of products; provided, the business of joint shops directly operated by cooperatives' federations carrying the names of administrative districts (hereinafter referred to as "local federation") among the business of joint sale of products shall be excluded.

Article 9-2(Duty to support negotiation and adjustment of subcontract price) #

(1) The duty to support the negotiation and adjustment of subcontract price prescribed in Articles 35 (1) 13 and 82 (1) 11 of the Act shall respectively include the following: <Amended on Aug. 3, 2015>

1. Public relations on the subcontract price adjustment system prescribed by the Fair Transactions in Subcontracting Act;

2. Guidance on applying for the adjustment of subcontract price prescribed in Article 16-2 (1) of the Fair Transactions in Subcontracting Act, and guidance on filing an application for mediation with the subcontract dispute mediation council prescribed in paragraph (8) of that Article;

3. Negotiation for the adjustment of subcontract price prescribed in Article 16-2 (2) of the Fair Transactions in Subcontracting Act;

4. Investigation and provision of data on applications for the adjustment of subcontract price, etc. filed by subcontractors who are members.

(2) The duty to support the adjustment of subcontract price prescribed in Article 93 (1) 14 of the Act shall include the matters prescribed in paragraph (1) 1, 2 and 4. <Added on Aug. 3, 2015>

[This Article Added on Jan, 28, 2011]

[Title Amended on Aug. 3, 2015]

Article 10(Formulation of business plans) #

(1) In order to formulate business plans, and revenue and expenditure budgets prescribed in Article 36 (including cases where Article 36 applies mutatis mutandis in Articles 83 and 94 of the Act) of the Act, regional cooperatives, business cooperatives, national cooperatives and federations shall follow the guidelines for formulating business plans and revenue and expenditure budgets the chairperson of the KBIZ announces.

(2) The chairperson of the KBIZ shall determine the guidelines for formulating business plans and revenue and expenditure budgets prescribed in paragraph (1) and submit them to the Minister of SMEs and Startups. <Amended on Jul. 26, 2017>

Article 11(Inspection of collective standards) #

A competent administrative agency may have a cooperative inspect whether the products produced by non-members comply with the collective standards prescribed in Article 38 (1) of the Act, pursuant to Article 38 (4) of the Act, in any of the following cases: <Amended on Nov. 20, 2009>

1. Where the quality of products is so inferior that a substantial improvement in quality is strongly required;

2. Where a public institution, such as the Government, prescribed in subparagraph 2 of Article 2 of the Act on Facilitation of Purchase of Small and Medium Enterprise-Manufactured Products and Support for Development of Their Markets, purchases products and the head of such purchasing institution requests that it conduct inspections, deeming that it is necessary to inspect whether such products comply with the collective standards.

Article 12(Request for authorization) #

(1) Where a regional cooperative intends to obtain authorization or approval from the Special Metropolitan City Mayor, Metropolitan City Mayor, Special Self-Governing City Mayor, Do Governor or Governor of the Special Self-Governing Province (hereinafter referred to as "City Mayor/Do Governor") for the following matters, it shall go through the federation or the KBIZ to which the relevant cooperative is affiliated as a member: <Amended on Oct. 7, 2009; Aug. 3, 2015>

1. Matters regarding the amendment of the articles of association prescribed in Article 47 (2) of the Act;

2. Matters regarding the enactment, amendment or repeal of bylaws prescribed in Article 130 (3) of the Act.

(2) Where a business cooperative intends to obtain authorization or approval from the City Mayor/Do Governor for the following matters, it shall go through the cooperative to which the relevant business cooperative is affiliated as a member, or through the federation or the KBIZ to which the relevant business cooperative is affiliated as a member: <Amended on Aug. 3, 2015>

1. Matters regarding the amendment of the articles of association prescribed in Article 47 (2) of the Act which applies mutatis mutandis in Article 85 of the Act;

2. Matters regarding the enactment, amendment or repeal of bylaws prescribed in Article 130 (3) of the Act.

(3) Where a national cooperative or a federation intends to obtain authorization from the Minister of SMEs and Startups for the amendment of the articles of association pursuant to Article 47 (2) of the Act or Article 96 of the Act, it shall go through the KBIZ. <Amended on Jul. 26, 2017>

(4) "Matters prescribed by Presidential Decree" in Article 47 (2) of the Act means the matters in the subparagraphs of Articles 29 (1) (including cases where Article 29 (1) applies mutatis mutandis in Article 81 of the Act), 91 and 104 of the Act.

[Title Amended on Aug. 3, 2015]

Article 13(Qualification standards for full-time directors) #

"Persons qualified as prescribed by Presidential Decree" in Articles 50 (6) and 95 (3) of the Act means those who have any of the following work experience of five years, among persons having extensive knowledge of and experience in small and medium enterprises; provided, for a person with at least two of the following work experiences, the periods of such work experiences shall be combined:

1. Work experience as a full-time employee for a cooperative, a business cooperative, a federation, or the KBIZ;

2. Work experience as a full-time employee in a job related to small and medium enterprises at a State agency, local government, public institution under the Act on the Management of Public Institutions, or a financial company, etc. under the Act on Real Name Financial Transactions and Confidentiality;

3. Work experience as a licensed attorney-at-law under the Attorney-at-Law Act, a licensed certified public accountant under the Certified Public Accountant Act, a licensed certified tax accountant under the Certified Tax Accountant Act, or a licensed management consultant or technology consultant under Article 8 of the Act on Management Consultants and Technology Consultants in such license-related business;

4. Work experience as a full-time employee in a research or educational institution, corporation, or organization related to the business types of the relevant cooperative, business cooperative, or federation, to which the person is to be appointed.

[This Article Wholly Amended on Mar. 5, 2024]

Article 14 #

Deleted. <Dec. 30, 2016>

Article 15(Division of cooperatives) #

Pursuant to Article 77 (2) of the Act, a cooperative may be divided where it is involved with not less than two business types listed in the sub-sub group in accordance with the Korean Standard Industrial Classification; provided, if particularly necessary in consideration of the unique nature of the type of business conducted by the cooperative, actual status of operation of the cooperative, etc. it shall follow the standards the Minister of SMEs and Startups determines separately. <Amended on Jul. 26, 2017>

Article 16(Registration of agents) #

(1) Where the chairperson appoints an agent pursuant to Article 106 (9) of the Act, the KBIZ shall register the following matters at its location within two weeks from such appointment; the same shall also apply where registered matters are changed: <Amended on Aug. 3, 2015; Jan. 21, 2025>

1. The name and address of an agent;

2. The KBIZ, branch or branch office in which the agent is placed;

3. In the case of limiting the authority of an agent, the details of such limitation.

(2) The chairperson of the KBIZ shall file an application for the registration of an agent prescribed in paragraph (1), and the application shall be accompanied by documents evidencing that the agent is the one prescribed in Article 106 (9) of the Act and, in the case of limiting the authority of the agent, documents evidencing it. <Amended on Aug. 3, 2015>

Article 17(Persons ineligible to subscribe to mutual aid fund for small and medium enterprises) #

"Small and medium entrepreneurs specified by Presidential Decree, including those who fail to achieve the purpose of managing mutual aid fund for small and medium enterprises" in the proviso to Article 109 (2) of the Act means the following persons: <Amended on Sep. 9, 2010>

1. Deleted; <Sep. 9, 2010>

2. A person who has already subscribed to the mutual aid fund for small and medium enterprises;

3. A person who falls under business types and causes prescribed by the Essential Principles of Fund Operation prescribed in Article 30 for the smooth operation of the mutual aid fund for small and medium enterprises (hereinafter referred to as the "Essential Principles of Fund Operation").

Article 18(Subscription to mutual aid fund for small and medium enterprises) #

(1) A person who intends to subscribe to the mutual aid fund for small and medium enterprises shall conclude a contract with the mutual aid fund for small and medium enterprises (hereinafter referred to as "mutual aid contract") on the payment of mutual aid deposits prescribed in Article 109 (1) 1 of the Act (hereinafter referred to as "mutual aid deposit for small and medium enterprises"), loans from mutual aid money prescribed in Article 111 (1) 1 of the Act (hereinafter referred to as "mutual aid money for small and medium enterprises") and enterprising funds for joint purchases and sales prescribed in subparagraph 2 of that paragraph, as prescribed by the Essential Principles of Fund Operation.

(2) In cases of paragraph (1), the date of subscribing to the mutual aid fund for small and medium enterprises shall be the date a small and medium entrepreneur pays the first mutual aid deposit for small and medium enterprises after concluding a mutual aid contract prescribed in paragraph (1).

Article 19(Payment of mutual aid deposits for small and medium enterprises) #

A person who subscribes to the mutual aid fund for small and medium enterprises shall pay mutual aid deposits for small and medium enterprises as stipulated in the mutual aid contract on a monthly or other periodic basis, as prescribed by the Essential Principles of Fund Operation.

Article 20(Separate management of mutual aid fund for small and medium enterprises and fund operation plans) #

(1) When operating and managing the mutual aid fund for small and medium enterprises pursuant to Article 110 of the Act, the KBIZ shall manage the mutual aid fund for small and medium enterprises separately form general accounts.

(2) Draft fund operation plans prescribed in Article 110 (4) of the Act shall include the following matters:

1. Plans for creating the mutual aid fund for small and medium enterprises by financial resource;

2. Plans for using the mutual aid fund for small and medium enterprises;

3. Other matters deemed necessary, as prescribed by the Essential Principles of Fund Operation.

Article 21(Lending mutual aid money for small and medium enterprises) #

(1) Where any of the following events occurs to a subscriber to the mutual aid fund for small and medium enterprises, the mutual aid fund for small and medium enterprises shall provide such subscriber with loans from the mutual aid money for small and medium enterprises:

1. Where a subscriber to the mutual aid fund for small and medium enterprises has difficulty recovering trade receivables, bills receivable, non-trade receivables, etc. (hereinafter referred to as "claims, etc.") due to the bankruptcy of an entrepreneur counterparty;

2. Where a subscriber to the mutual aid fund for small and medium enterprises is likely to go bankrupt due to reasons prescribed in the Essential Principles of Fund Operation, such as delayed recovery of claims, etc., related to business.

(2) Notwithstanding paragraph (1), where a subscriber to the mutual aid fund for small and medium enterprises falls under any of the following cases, the whole or part of mutual aid money for small and medium enterprises shall not be provided as loans, as prescribed by the Essential Principles of Fund Operation: <Amended on Feb. 13, 2013; Mar. 5, 2024>

1. Where the period of paying mutual aid deposits for small and medium enterprises is less than one month;

2. Where the subscriber has a history of delinquent repayment of the mutual aid money for small and medium enterprises already borrowed;

3. Where the subscriber has a history of neglecting to recover claims, etc.

Article 22(Limits for loans from small and medium enterprise mutual aid money) #

(1) Mutual aid money for small and medium enterprises shall be provided as a loan within the extent of the amount equivalent to 30 times the total amount of mutual aid deposits imposed on small and medium enterprises made by subscribers to the mutual aid fund for small and medium enterprises, as prescribed by the Essential Principles of Fund Operation.

(2) Matters necessary for the interest rates, periods of repayment, overdue interests, etc. of mutual aid money for small and medium enterprises shall be prescribed by the Essential Principles of Fund Operation.

Article 23(Provision of enterprising funds for joint purchases and sales) #

(1) The mutual aid fund for small and medium enterprises shall provide enterprising funds for joint purchases and sales prescribed in Article 111 (1) 2 of the Act (hereinafter referred to as "enterprising fund') to the subscribers to the mutual aid fund for small and medium enterprises through the cooperatives, business cooperatives or business type federations thereof.

(2) Matters necessary for conditions of providing the enterprising funds prescribed in paragraph (1) shall be prescribed by the Essential Principles of Fund Operation.

Article 24(Use of mutual aid fund for small and medium enterprises) #

(1) "Businesses specified by Presidential Decree" in Article 111 (1) 3 of the Act means businesses for which support is provided in accordance with the emergency aid plans for business stabilization prescribed in Article 61 of the Small and Medium Enterprises Promotion Act. <Amended on Nov. 20, 2009>

(2) Matters necessary for the detailed methods, procedures, etc. of operating the surplus fund of the mutual aid fund for small and medium enterprises prescribed in Article 111 (3) of the Act shall be prescribed by the Essential Principles of Fund Operation, within the extent not impairing the stability and profitability of the mutual aid fund for small and medium enterprises.

Article 25(Accumulation and operation of reserves for bad debts of mutual aid money) #

(1) The amount of reserves for bad debts of mutual aid money received from small and medium entrepreneurs, who has taken out a loan from mutual aid money for small and medium enterprises pursuant to Article 112 of the Act, shall be determined by the Essential Principles of Fund Operation, within the extent of 1/10 of the amount of loans from mutual aid money for small and medium enterprises.

(2) Reserves for bad debts of mutual aid money shall not be used for purposes other than the purpose of appropriation for costs necessary to compensate for bad debts incurred from loans from mutual aid money for small and medium enterprises and to recover such loans.

(3) Other matters necessary for accumulating and operating reserves for bad debts of mutual aid money shall be prescribed by the Essential Principles of Fund Operation.

Article 26(Head of mutual aid team) #

(1) The small and medium business mutual aid team prescribed in Article 113 (1) of the Act shall have a leader (hereinafter referred to as the "head of the mutual aid team").

(2) The chairperson of the KBIZ shall appoint and dismiss the head of the mutual aid team by obtaining approval from the Minister of SMEs and Startups. <Amended on Jul. 26, 2017>

(3) The head of the mutual aid team shall represent the mutual aid team and exercise general supervision over its business affairs.

(4) The head of the mutual aid team shall serve for three years, and may be reappointed.

Article 27(Organization of fund management committee) #

(1) The chairperson of the KBIZ shall chair the fund management committee prescribed in Article 113 (2) of the Act (hereinafter referred to as the "management committee"), and the following persons shall become the members thereof: <Amended on Feb. 29, 2008; Nov. 20, 2009; Jul. 26, 2017; Apr. 2, 2019>

1. A person designated by the Minister of Economy and Finance and by the Minister of SMEs and Startups from among public officials of grade III or members in general service of the Senior Executive Service of the Ministry of Economy and Finance and the Ministry of SMEs and Startups who are in charge of budget related to the mutual aid fund for small and medium enterprises;

2. The head of the mutual aid team;

3. Directors in charge of affairs related to the business of the mutual aid fund for small and medium enterprises among the executive officers of the Korea SMEs and Startups Agency prescribed in Article 72 of the Small and Medium Enterprises Promotion Act;

4. Managing directors of the Industrial Bank of Korea prescribed in the Industrial Bank of Korea Act;

5. Managing directors of the Credit Guarantee Fund prescribed in the Credit Guarantee Fund Act;

6. Up to four persons commissioned by the Minister of SMEs and Startups upon recommendation by the chairperson of the KBIZ among persons with extensive knowledge of and experience in small and medium enterprises.

(2) The members commissioned pursuant to paragraph (1) 6 shall serve for two years, and may be reappointed.

Article 28(Functions of management committee) #

The management committee shall deliberate and make resolutions on the following matters regarding the operation and management of the mutual aid fund for small and medium enterprises:

1. Matters regarding the enactment and amendment of regulations for managing the mutual aid fund for small and medium enterprises, such as the Essential Principles of Fund Operation;

2. Matters regarding the formulation and revision of draft fund management plans and settlement of accounts;

3. Other matters regarding the operation and management of the mutual aid fund for small and medium enterprises, which the chairperson refers to meetings.

Article 29(Operation of management committee) #

(1) The chairperson of the management committee shall convene and preside over meetings of the management committee.

(2) Where the chairperson of the management committee is unable to conduct his or her duties due to unavoidable causes, the head of the mutual aid team shall act for him or her.

(3) A majority of the members of the management committee shall constitute a quorum and any decision thereof shall require a concurring vote of at least a majority of those present.

(4) The chairperson of the management committee shall determine matters necessary for the operation of the committee other than the matters provided in paragraphs (1) through (3) by undergoing resolutions by the committee.

Article 30(Essential Principles of Fund Operation) #

(1) The chairperson of the KBIZ shall ensure that detailed matters necessary for operating and managing the mutual aid fund for small and medium enterprises included in the Essential Principles of Fund Operation.

(2) Where the chairperson of the KBIZ intends to establish or amend the Essential Principles of Fund Operation, he or she shall obtain an approval from the Minister of SMEs and Startups therefor. <Amended on Jul. 26, 2017>

(3) In order to approve the Essential Principles of Fund Operation pursuant to paragraph (2), the Minister of SMEs and Startups shall pre-consult with the Minister of Economy and Finance. <Amended on Feb. 29, 2008; Jul. 26, 2017>

Article 31(Organization of Administrative Committee of Mutual Aid Fund for Small and Micro Enterprises) #

(1) The chairperson of the KBIZ shall chair the Administrative Committee of Mutual Aid Fund for Small and Micro Enterprises prescribed in Article 118-2 (1) of the Act (hereinafter referred to as "Administrative Committee of Mutual Aid Fund") and the following persons shall become the members thereof: <Amended on Jul. 26, 2017>

1. One person nominated by the Minister of SMEs and Startups among public officials of grade III or members in general service of the Senior Executive Service of the Ministry of SMEs and Startups who are in charge of affairs related to small and micro enterprises;

2. The head of the mutual aid team;

3. Managing directors of the Industrial Bank of Korea under the Industrial Bank of Korea Act;

4. Up to seven persons commissioned by the Minister of SMEs and Startups upon recommendation by the chairperson of the KBIZ among those who have engaged in the areas of small and medium enterprises, mutual aid, insurance, finance and law and have extensive knowledge of and experience in small and medium enterprises.

(2) The members commissioned pursuant to paragraph (1) 4 shall service for two years, and may be reappointed for two consecutive terms only.

[This Article Wholly Amended on Sep. 10, 2008]

Article 32(Functions of Administrative Committee of Mutual Aid Fund) #

The Administrative Committee of Mutual Aid Fund shall deliberate and make resolutions on the following matters regarding the operation and management of the mutual aid for small and micro enterprises: <Amended on Sep. 10, 2008; Jun. 27, 2023>

1. Matters regarding the formulation and modification of a business plan (hereinafter referred to as "profit-making business plan") for a profit-making business under Article 118 (2) of the Act (hereinafter referred to as "profit-making business");

2. Matters regarding the formulation and revision of mutual aid management plans for small and micro enterprises and settlement of revenues and expenditures prescribed in Article 36 (2);

3. Matters regarding the enactment and amendment of regulations on operating and managing the mutual aid for small and micro enterprises, such as the Essential Principles of Mutual Aid Operation under Article 41 (hereinafter referred to as the "Essential Principles of Mutual Aid Operation");

4. Other matters regarding the operation and management of the mutual aid for small and micro enterprises, which the chairperson refers to meetings.

Article 33(Operation of Administrative Committee of Mutual Aid Fund) #

(1) The chairperson of the Administrative Committee of Mutual Aid Fund shall convene and preside over meetings of the Administrative Committee of Mutual Aid Fund. <Amended on Sep. 10, 2008>

(2) Where the chairperson of the Administrative Committee of Mutual Aid Fund is unable to conduct his or her duties due to unavoidable causes, the head of the mutual aid team shall act on his or her behalf. <Amended on Sep. 10, 2008>

(3) A majority of the members of the Administrative Committee of Mutual Aid Fund shall constitute a quorum and any decision thereof shall require a concurring vote of at least a majority of those present. <Amended on Sep. 10, 2008>

(4) The chairperson of the Administrative Committee of Mutual Aid Fund shall prepare and keep minutes of meetings. <Amended on Sep. 10, 2008>

(5) The chairperson of the Administrative Committee of Mutual Aid Fund shall determine matters necessary for the operation of the Mutual Aid Management Committee other than those provided in paragraphs (1) through (4) following deliberations and resolutions by the Mutual Aid Management Committee. <Amended on Sep. 10, 2008>

Article 34(Subscription to mutual aid for small and micro enterprises) #

(1) A person who intends to subscribe to the mutual aid for small and micro enterprises pursuant to Article 116 of the Act shall conclude a contract with the KBIZ (hereinafter referred to as "mutual aid contract for small and micro enterprises") on the payment of mutual aid deposits prescribed in Article 117 (1) 1 of the Act (hereinafter referred to as "mutual aid deposit imposed on small and micro enterprises") and receipt of mutual aid money prescribed in Article 118 (1) 1 of the Act (hereinafter referred to as "mutual aid money for small and micro enterprises"), as prescribed by the Essential Principles of Mutual Aid Operation. <Amended on Sep. 10, 2008; Jun. 27, 2023>

(2) In cases of paragraph (1), the date of subscribing to the mutual aid for small and micro enterprises shall be the date the representatives of small and micro enterprises pay the first mutual aid deposit imposed on small and micro enterprises after concluding a mutual aid contract for small and micro enterprises.

(3) A subscriber to the mutual aid for small and micro enterprises prescribed in paragraph (1) shall pay mutual aid deposits imposed on small and micro enterprises to the KBIZ on a monthly or other periodic basis, as prescribed by the Essential Principles of Mutual Aid Operation. <Amended on Sep. 10, 2008>

Article 35(Persons ineligible to subscribe to mutual aid for small and micro enterprises) #

"Persons specified by Presidential Decree, including those who have already joined the mutual aid fund" in the proviso to Article 116 (1) of the Act means any of the following persons: <Amended on Sep. 10, 2008; May 4, 2010>

1. Deleted; <May 4, 2010>

2. A person who is already a member of the mutual aid for small and micro enterprises as of the date of subscription thereto;

3. A person for whom one year has not passed since the KBIZ terminated his or her mutual aid contract for small and micro enterprises due to any of the following causes:

(a) Where a subscriber to the mutual aid for small and micro enterprises fails to pay mutual aid deposits imposed on small and micro enterprises for 12 months;

(b) Where a subscriber to the mutual aid for small and micro enterprises is paid or intends to be paid mutual aid money for small and micro enterprises by false or other improper means;

4. Other persons who fall under any of the grounds prescribed by the Essential Principles of Mutual Aid Operation for the smooth management and operation of the mutual aid for small and micro enterprises.

Article 36(Separate management of mutual aid for small and micro enterprises and mutual aid operation plans) #

(1) Deleted. <Jun. 27, 2023>

(2) The KBIZ shall formulate a mutual aid operation plan for small and micro enterprises (hereinafter referred to as "mutual aid operation plan") by undergoing deliberations and resolutions by the Administrative Committee of Mutual Aid Fund each fiscal year and report such plan to the Minister of SMEs and Startups 20 days before the commencement of the relevant fiscal year. The same shall apply to any revision thereof. <Amended on Sep. 10, 2008; Jul. 26, 2017>

(3) Mutual aid operation plans shall include the following matters: <Amended on Jun. 27, 2023>

1. Revenue plans for funds for operating the mutual aid for small and micro enterprises under Article 117 (1) of the Act (hereafter in this Article referred to as "mutual aid fund for small and micro enterprises");

2. Plans for the use of the mutual aid fund for small and micro enterprises;

3. Other matters deemed necessary by the Essential Principles of Mutual Aid Operation.

Article 37(Grounds for mutual aid and payment of mutual aid money) #

(1) "Where an event or cause to grant mutual aid as specified by Presidential Decree occurs ... such as business closure" in Article 118 (1) 1 of the Act means any of the following cases: <Amended on Jun. 27, 2023; Mar. 5, 2024>

1. Where a small or micro enterprise closes down business (including cases where a person who has subscribed to the mutual aid for small and micro enterprises in the status of individual business transfers the entire business to a person or persons other than his or her spouse or children, on condition that cases where a person who has subscribed to the mutual aid for small and micro enterprises in the status of individual business closes down business to make an in-kind investment to establish a corporation shall be excluded) or dissolves (limited to corporations);

2. Where a subscriber to the mutual aid for small and micro enterprises dies;

3. Where a person who has subscribed to the mutual aid for small and micro enterprises in the status of the representative of a corporation resigns from the status of representative due to a disease or an injury;

4. Where a subscriber to the mutual aid for small and micro enterprises who is at least full 60 years old and has paid mutual aid deposits imposed on small and micro enterprises for at least 120 months requests that the mutual aid money for small and micro enterprises be paid;

5. Where a subscriber to the mutual aid for small and micro enterprises who has suffered any of the following damage at a place of business due to a natural disaster defined in subparagraph 1 (a) of Article 3 of the Framework Act on the Management of Disasters and Safety or a social accident defined in subparagraph 1 (b) of that Article (limited to social accidents occurring in an area declared as a special disaster area pursuant to Article 60 of that Act) claims the payment of mutual aid money for small and micro enterprises:

(a) Where the main place of business is damaged or lost, making business operations at the relevant place of business impossible;

(b) Where it is impossible to operate business unless major facilities, materials, etc. which sustained damage are repaired or replaced;

(c) Where an area adjacent to the place of business is designated as a danger zone under Article 41 (1) of the Framework Act on the Management of Disasters and Safety and the measures specified in the subparagraphs of that paragraph are taken accordingly, making business operations impossible;

Article 38(Provision of loans to subscribers to mutual aid for small and micro enterprises) #

(1) A loan prescribed in Article 118 (1) 2 of the Act shall not exceed the total amount of mutual aid deposits imposed on small and micro enterprises that the relevant subscriber to the mutual aid for small and micro enterprises has paid. <Amended on Jun. 27, 2023>

(2) Matters necessary for conditions of loans, such as interest rates, repayment period, overdue interests, etc. for loans under paragraph (1) shall be prescribed by the Essential Principles of Mutual Aid Operation.

Article 38-2(Formulation and reporting of profit-making business plans) #

(1) Where the KBIZ intends to engage in profit-making business under Article 118 (3) of the Act, it shall formulate a profit-making business plan following deliberation and resolution of the Administrative Committee of Mutual Aid Fund and shall report such plan to the Minister of SMEs and Startups no later than 20 days before the plan is implemented. The same shall also apply to any modification of the profit-making business plan formulated and reported.

(2) A profit-making business plan shall include the following matters:

1. The purposes and details of the profit-making business;

2. Budget and timeline for the profit-making business;

3. Plans to generate profits and to use such profits.

[This Article Added on Jun. 27, 2023]

[Previous Article 38-2 moved to Article 38-3 <Jun. 27, 2023>]

Article 38-3(Methods and procedures for application for accounts for receiving mutual aid money) #

(1) Where a recipient of mutual aid for small and micro enterprises intends to have the mutual aid money for small and micro enterprises deposited into a designated account in his or her name under Article 118-3 (1) of the Act (hereinafter referred to as "account for receiving the mutual aid money"), he or she shall submit to the KBIZ an application for the payment of the mutual aid money for small and micro enterprises, stating the relevant account number therein. The same shall also apply where he or she intends to change the account for receiving the mutual aid money.

(2) Where it is impracticable for the KBIZ to transfer the mutual aid money for small and micro enterprises to a recipient's account for receiving the mutual aid money because the financial institution at which he or she opens such account is unable to normally conduct its business due to business closure, business suspension, any issue related to information and communications, etc., or due to any unavoidable reason corresponding thereto, the KBIZ may transfer the money to an account in his or her name opened at a different bank or may make a direct cash payment if the recipient desires so.

[This Article Added on Sep. 11, 2018]

[Moved from Article 38-2; previous Article 38-3 moved to Article 38-4 <Jun. 27, 2023>]

Article 38-4(Data requested to be provided) #

"Data prescribed by Presidential Decree" in Article 118-4 (1) 1 of the Act means the following under the Corporate Tax Act, the Value-Added Tax Act, or the Income Tax Act: <Amended on Jun. 27, 2023>

1. A certificate of business registration;

2. A certificate of business closure;

3. A certificate of value-added tax base;

4. A certificate of the amount of revenues of a business entity exempted from value-added tax;

5. A certificate of standard financial statements;

6. A written confirmation of incomes and tax credits, such as pension premiums.

[This Article Added on Aug. 11, 2020]

[Title Amended on Jun. 27, 2023]

[Moved from Article 38-3 <Jun. 27, 2023>]

Article 39(Accumulation of reserves) #

In order to appropriate funds for the mutual aid for small and micro enterprises money, the KBIZ shall accumulate reserves prescribed in Article 120 of the Act each period of settlement of accounts in the following order:

1. Reserves to be appropriated for the payment of mutual aid money for small and micro enterprises where grounds for mutual aid in the subparagraphs of Article 37 (1) arise;

2. Reserves to be appropriated for the payment of mutual aid money for small and micro enterprises in the event of a change in risk rates due to dramatic economic fluctuations, etc.

Article 40(Operation of reserves) #

When operating reserves accumulated pursuant to Article 39, the KBIZ shall endeavor to ensure stability, liquidity and profitability.

Article 41(Essential Principles of Mutual Aid Operation) #

(1) The KBIZ shall ensure that details necessary for methods and procedures of operation, and mutual aid contracts of the mutual aid for small and micro enterprises are included in the Essential Principles of Mutual Aid Operation, following deliberations and resolutions by the Mutual Aid Management Committee. <Amended on Sep. 10, 2008>

(2) When determining or amending the Essential Principles of Mutual Aid Operation, the KBIZ shall report to the Minister of SMEs and Startups in advance. <Amended on Jul. 26, 2017>

Article 41-2(Requirements for designating inactive cooperatives) #

(1) "Requirements prescribed by Presidential Decree" in Article 132 (1) of the Act means any of the following cases: <Amended on Mar. 5, 2024>

1. In the case of a failure to conduct the proper purpose business prescribed in Article 35, 82, 93 or 106 of the Act for at least one year;

2. In the case of a failure to hold a general meeting prescribed in Article 43 (including cases where Article 43 applies mutatis mutandis in Article 85, 96 or 125 of the Act) of the Act for at least two consecutive years;

3. Where the number of members or the number of members remains falling short of a majority of minimum number of promoters at the time of establishment for at least one year;

4. Where the position of the president (referring to the chairperson in the case of a federation or the KBIZ) remains vacant for at least one year;

5. Where one year has elapsed since the equity capital was completely eroded (applicable only to cooperatives, business cooperatives, and federations for which three years have elapsed from the date of authorization for establishment).

(2) If necessary to verify whether or not the KBIZ, federations, cooperatives or business cooperatives satisfy the requirements prescribed in the subparagraphs of paragraph (1), the competent administrative agency may conduct fact-finding surveys in accordance with the standards prescribed by the Minister of SMEs and Startups. <Amended on Jul. 26, 2017>

[This Article Added on Aug. 3, 2015]

Article 42(Entrustment of authority) #

(1) The Minister of SMEs and Startups shall entrust the following authority over the national cooperatives and business type federations in Appendix 1 to the competent ministers administering such business types pursuant to Article 136 of the Act: <Amended on Oct. 7, 2009; Sep. 9, 2010; Feb. 13, 2013; Jul. 26, 2017>

1. Supervision prescribed in Article 12 (1) of the Act

2. Deleted; <Oct. 7, 2009>

3. Approval for profit-making business prescribed in Articles 35 (1) 12 and 93 (1) 13 of the Act;

4. Approval for making investments in other corporations prescribed in Article 35 (2) of the Act (including cases where Article 35 (2) applies mutatis mutandis in Article 94 of the Act);

5. Authorization for the amendment of the articles of association prescribed in Article 47 (2) of the Act (including cases where Article 47 (2) applies mutatis mutandis in Article 96 of the Act);

5-2. Investigation, notification, publication in the Official Gazette, and orders for dissolution of inactive cooperatives prescribed in Article 132 of the Act;

6. Matters regarding orders for correction and for taking other necessary measures prescribed in Article 133 of the Act.

(2) Competent administrative agencies shall entrust the following authority over regional cooperatives, business cooperatives, national cooperatives and federations to the chairperson of the KBIZ pursuant to Article 136 of the Act:

1. Acceptance of documents related to the settlement of accounts prescribed in Article 129 of the Act;

2. Acceptance of reports prescribed in Article 130 (1) and (2) of the Act;

3. Approval for the enactment, amendment and repeal of bylaws prescribed in Article 130 (3) of the Act;

4. Inspection of duties and accounting prescribed in Article 131 of the Act.

(3) When granting authorization for the establishment of, cancelling authorization for the establishment of or issuing orders for the dissolution of cooperatives, business cooperatives and federations, the City Mayor/Do Governor or the competent minister for the relevant business type shall notify the Minister of SMEs and Startups of such fact within two weeks after the granting. <Amended on Jul. 26, 2017>

Article 42-2(Processing of personally identifiable information) #

(1) If unavoidable to handle the administrative affairs regarding supervision prescribed in Article 12 (1) of the Act, the head of the competent administrative agency (including those to whom the authority in the following categories are delegated or entrusted) may process data including resident registration numbers and alien registration numbers prescribed in subparagraph 1 or 4 of Article 19 of the Enforcement Decree of the Personal Information Protection Act: <Amended on Jul. 26, 2017>

1. Where the head of a competent administrative agency is the Minister of SMEs and Startups: Persons entrusted with the authority of the Minister of SMEs and Startups pursuant to Article 42;

2. Where the head of a competent administrative agency is a City Mayor/Do Governor: Persons to whom the authority of the City Mayor/Do Governor is delegated or entrusted.

(2) If unavoidable to handle the following administrative affairs, the chairperson of the KBIZ may process data including resident registration numbers and alien registration numbers prescribed in subparagraph 1 or 4 of Article 19 of the Enforcement Decree of the Personal Information Protection Act: <Amended on Jun. 27, 2023>

1. Administrative affairs regarding mutual aid business prescribed in Article 106 (1) 22 of the Act;

2. Administrative affairs regarding the provision of loans, etc. from the mutual aid money prescribed in Article 111 (1) 1 and 2 of the Act;

3. Administrative affairs regarding the management and operation of mutual aid business for small and micro enterprises prescribed in Article 115 of the Act;

4. Administrative affairs regarding a request for provision of data under the subparagraphs of Article 118-4 (1) of the Act.

(3) If unavoidable to handle the following administrative affairs, the executive directors of cooperatives, executive directors of business cooperatives or chairpersons of federations may process data including resident registration numbers and alien registration numbers prescribed in subparagraph 1 or 4 of Article 19 of the Enforcement Decree of the Personal Information Protection Act: <Amended on Mar. 5, 2024>

1. Administrative affairs regarding lending or arranging the lending of enterprising funds prescribed in Article 35 (1) 5, 82 (1) 2 or 93 (1) 4 of the Act;

2. Administrative affairs regarding mutual aid business prescribed in Article 35 (1) 15, 82 (1) 10 or 93 (1) 15 of the Act.

Article 42-3(Re-examination of regulations) #

The Minister of SMEs and Startups shall examine the appropriateness of the following matters every three years, counting from each base date specified in the following (referring to the period that ends on the day before the base date of every third year) and shall take measures, such as making improvements: <Amended on Jul. 26, 2017>

1. The scope of the number of persons other than small and medium entrepreneurs eligible to become members and the ratio of such persons to the total number of members of the relevant cooperative, which are prescribed in Article 4 of the Act: January 1, 2017;

2. Persons ineligible to subscribe to the mutual aid for small and micro enterprises prescribed in Article 35: January 1, 2017.

[This Article Wholly Amended on Dec. 30, 2016]

Article 43(Criteria for imposing administrative fines) #

The criteria for imposing administrative fines prescribed in Article 141 (1) and (2) of the Act shall be as specified in Appendix 2.

[This Article Added on Dec. 9, 2010]