ENFORCEMENT DECREE OF THE ACT ON STRUCTURAL IMPROVEMENT OF AGRICULTURAL COOPERATIVES

Article 1(Purpose) #

The purpose of this Decree is to prescribe the matters mandated by the Act on Structural Improvement of Agricultural Cooperatives and matters necessary for the enforcement thereof. <Amended on Jan. 31, 2008>

Article 2(Scope of deposits, etc.) #

"Government and other persons prescribed by Presidential Decree" in the proviso, with the exception of the items, of subparagraph 6 of Article 2 of the Act on Structural Improvement of Agricultural Cooperatives (hereinafter referred to as the "Act") means any of the following: <Amended on Feb. 28, 2012; Mar. 11, 2016; Nov. 24, 2020>

1. The Government and local governments;

2. The Bank of Korea under the Bank of Korea Act;

3. The Financial Supervisory Service under Article 24 of the Act on the Establishment of Financial Services Commission (hereinafter referred to as the "Financial Supervisory Service");

4. The Korea Deposit Insurance Corporation established under the Depositor Protection Act;

5. Insured financial companies under the Depositor Protection Act;

6. Cooperatives.

[This Article Wholly Amended on Jan. 31, 2008]

Article 3(Explanation regarding administrative disposition) #

Where the Minister of Agriculture, Food and Rural Affairs intends to provide a cooperative with an opportunity to submit an explanation under the proviso, with the exception of the subparagraphs, of Article 6(2) of the Act, he or she shall send a notice of explanation, stating the details of the disposition, the deadline and method for explanation, the method of handling the relevant case in the absence of any explanation, and other matters necessary for explanation, to the relevant cooperative at least 10 days prior to the date for explanation. <Amended on Mar. 23, 2013>

[This Article Wholly Amended on Sep. 28, 2012]

Article 4(Largest creditor) #

"Largest creditor prescribed by Presidential Decree" in Article 10(1) of the Act means a person who holds the largest number of claims against the relevant cooperative as of any of the following base dates; in such cases, any claims arising from the payment of insurance proceeds, the purchase of claims such as deposits, or financial support, etc. from the Mutual Financial Depositor Protection Fund (hereinafter referred to as the "Fund") established and operated in the NACF under Article 11 of the Act after the base date shall be included: <Amended on Nov. 24, 2020>

1. Where a decision for contract transfer or a disposition of business suspension is made under Article 6(2) of the Act before a liquidator is designated: The date of the decision for contract transfer or the date of business suspension;

2. Where both a decision for contract transfer and a disposition of business suspension are made under Article 6(2) of the Act before a liquidator is designated: The date of the decision for contract transfer;

3. Other cases: The date of a resolution for dissolution or the date of revocation of authorization for establishment.

[This Article Wholly Amended on Sep. 28, 2012]

Article 5(Issuance of Mutual Financial Depositor Protection Fund Bonds) #

`Articles 32, 33(1) and (2) (excluding subparagraphs 8 and 9), and 34 through 44 of the Enforcement Decree of the Agricultural Cooperatives Act shall apply mutatis mutandis to the issuance, offering, etc. of Mutual Finance Depositor Protection Fund Bonds (hereinafter referred to as "Fund Bonds") issued by the management institution at the expense of the Fund under Article 11(6) of the Act. In such cases, "the NACF or the NongHyup Bank" shall be construed as "management institution", "agricultural finance bonds" as "Mutual Finance Depositor Protection Fund Bonds", "bonds" as "Fund Bonds", "the Chairperson of the NACF or the representative of the NongHyup Bank" as "the head of the management institution", and "board of directors" as "fund management committee under Article 15 of the Act".

[This Article Wholly Amended on Sep. 28, 2012]

Article 6(Payment of insurance premiums) #

(1) A cooperative shall pay to the Fund insurance premiums calculated according to the following formula within one month after the end of each quarter under the former part of Article 13(1) of the Act: <Amended on Mar. 23, 2013; Nov. 24, 2020; Nov. 26, 2024>

Insurance premiums = Average balance of deposits, etc. as of the end of each quarter [excluding the average quarterly balance of loans to depositors, etc. secured by their deposits, etc. (the loan ceiling shall not exceed the balance of deposits, etc. provided as collateral)] × 1/4 × Ratio of up to 5/1000 as determined and publicly notified by the Minister of Agriculture, Food and Rural Affairs.

(2) In calculating insurance premiums under paragraph (1), deposits, etc. received from persons under Article 2 shall be excluded. <Amended on Nov. 24, 2020>

(3) Notwithstanding paragraph (1), the management institution may reduce insurance premiums for a cooperative that subscribes to liability insurance under Article 23 of the Act, following a resolution by the fund management committee established under Article 15 of the Act (hereinafter referred to as the "fund management committee").

(4) Where a cooperative fails to pay insurance premiums under paragraph (1) by the deadline for payment, it shall pay to the Fund the overdue charges calculated in accordance with the following formula, in addition to the original premiums:

Overdue charges = Unpaid insurance premiums × Number of days, from the date following the deadline for payment of insurance premiums to the date of payment × Interest rate determined by the fund management committee based on the average overdue interest rate for general purpose loans of mutual finance applicable to all cooperatives.

[This Article Wholly Amended on Sep. 28, 2012]

Article 6-2(Reduction of or exemption from insurance premiums) #

(1) Pursuant to Article 13-2(4) of the Act, where the reserves of the Fund as of the end of the immediately preceding fiscal year of the management institution are within the range between the upper and lower limits of the target size (including upper and lower limits; hereafter in this Article referred to as "target size") set or reset under Article 13-2(1) through (3) of the Act, the management institution shall reduce the insurance premiums for the relevant fiscal year following a resolution by the fund management committee.

(2) Pursuant to Article 13-2(4) of the Act, where the reserves of the Fund as of the end of the immediately preceding fiscal year of the management institution exceed the upper limit of the target size, the management institution shall grant an exemption from insurance premiums for the relevant fiscal year following a resolution by the fund management committee.

(3) Matters necessary for the detailed procedures, methods, etc. for setting a target size and granting reduction of or exemption from insurance premiums under paragraphs (1) and (2) shall be determined by the management institution following a resolution by the fund management committee.

(4) The management institution shall publicly announce the matters determined under paragraph (3) on its website.

[This Article Added on Sep. 11, 2014]

Article 7(Operation of fund management committee) #

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

(2) Where the chairperson is unable to perform the duties due to any unavoidable reason, a member designated in advance by the chairperson shall act on his or her behalf.

(3) A meeting of the fund management committee shall be convoked with the attendance of a majority of the incumbent members, and a resolution shall be passed with the concurring vote of a majority of those present.

(4) Where a member of the fund management committee (hereinafter referred to as "member") falls under any of the following cases, he or she shall be excluded from deliberation and resolution by the fund management committee on the relevant agenda item: <Added on Sep. 11, 2014>

1. Where the member or his or her current or former spouse is a party to the relevant agenda item;

2. Where the member is, or was, a relative of a party to the relevant agenda item;

3. Where the member has provided testimony, a statement, research, services, or appraisals or has rendered advice regarding the relevant agenda item;

4. Where the member is currently affiliated with a cooperative, enterprise, organization, etc. relevant to the relevant agenda item or has been affiliated within the last 3 years.

(5) Where there are grounds for the exclusion of a member under any subparagraph of paragraph (4) or where it is impracticable to expect an impartial deliberation and resolution from a member, a party to an agenda item may file with the fund management committee an application for challenge against the member. In such cases, the fund management committee shall determine whether to challenge the member by resolution, and the member shall not participate in the deliberation and resolution thereon. <Added on Sep. 11, 2014>

(6) A member who falls under any of the grounds for exclusion under the subparagraphs of paragraph (4) shall recuse himself or herself from the deliberation and resolution thereon. <Added on Sep. 11, 2014>

(7) Where a member who falls under any of the grounds for exclusion under the subparagraphs of paragraph (4) fails to recuse himself or herself, a person who has designated or appointed the member pursuant to the subparagraphs of Article 15 (2) of the Act may dismiss or remove the member from office. <Added on Sep. 11, 2014>

Article 8(Payment of insurance money) #

(1) When the management institution pays insurance proceeds under Article 17(1) of the Act, the amount of claims such as deposits, etc. shall be the sum of the deposits, etc. and the amount calculated by multiplying the amount of deposits, etc. by an interest rate determined by the fund management committee in consideration of the average interest rate on the deposits, etc. of all cooperatives, and the limit of insurance proceeds payable to the same depositor, etc. shall be 100 million won. <Amended on Nov. 24, 2020; Jul. 29, 2025>

(2) In the event of an insurance contingency under subparagraph 9a of Article 2 of the Act, the management institution may make advance payment of the amount determined by the fund management committee within the limit of insurance proceeds payable under paragraph (1) (hereinafter referred to as "provisional payment") to depositors, etc.; provided, where a provisional payment exceeds the insurance proceeds, such insurance proceeds shall be the maximum payment limit.

(3) Where a provisional payment has been made to a depositor, etc. under paragraph (2), the insurance proceeds shall be the amount calculated by subtracting the provisional payment under paragraph (2) from the amount under paragraph (1).

[This Article Wholly Amended on Sep. 28, 2012]

Article 9(Withholding payment of insurance money) #

(1) "Amount prescribed by Presidential Decree" in Article 17(3) of the Act means claims such as deposits, etc. provided as collateral by depositors, etc. to the relevant cooperative for other persons and the amount of guarantee obligations owed to the relevant cooperative.

(2) When withholding the payment of insurance proceeds under paragraph (1), the management institution shall issue a document stating the following matters to depositors, etc. who have requested such payment:

1. The amount of insurance proceeds, the payment of which is withheld;

2. Grounds for withholding the payment of insurance money;

3. Period of withholding the payment of insurance money;

4. Procedures and methods to be observed where depositors, etc. request the payment of insurance proceeds withheld, upon the cessation of the grounds for such withholding or the expiration of the withholding period.

[This Article Wholly Amended on Sep. 28, 2012]

Article 10(Public announcement of procedures for payment of insurance proceeds) #

The management institution shall publicly announce the commencement date, period and method of payment of insurance proceeds under Article 17(1) of the Act and provisional payment under Article 8(2), and other necessary matters on its website, and shall also publicly announce them at least once in two or more daily newspapers, including one daily newspaper mainly distributed in the area where the principal office of the relevant cooperative is located, respectively. <Amended on Nov. 24, 2020>

[This Article Wholly Amended on Sep. 28, 2012]

Article 11(Making estimated payments) #

(1) When purchasing claims such as deposits, etc. under Article 19(2) of the Act, the management institution shall make an estimated payment to a depositor, etc., which is an estimated value of claims such as deposits, etc. at the request of the depositor, etc. In such cases, if the amount recovered from the claims such as deposits, etc. that the management institution has purchased (referring to the amount after subtracting expenses incurred in recovery) exceeds the estimated payment, the excess shall be additionally paid to the relevant depositor, etc.

(2) The estimated payment referred to in paragraph (1) shall be an amount calculated by multiplying the value of the claims such as deposits, etc. purchased by the management institution from a depositor, etc. as of the date of public announcement of payment of insurance proceeds (excluding the amount of claims such as deposits, etc. equivalent to the amount of guarantee obligations of a depositor, etc. and the amount of claims such as deposits, etc. which are the subject matter of a security interest) by the estimated payment rate referred to in paragraph (3).

(3) When purchasing claims such as deposits, etc. under Article 19(2) of the Act, the management institution shall determine the estimated payment rate, taking into consideration the amount expected to be recoverable with respect to the claims such as deposits, etc. related to the insolvent cooperative where bankruptcy proceedings are conducted, in light of the financial status of such insolvent cooperative.

(4) In order for the management institution to make an estimated payment under paragraph (1), it shall determine the estimated payment rate under paragraph (3), the period and method of the purchase of claims such as deposits, etc., and other relevant matters, subject to a resolution by the fund management committee.

(5) When a resolution is passed under paragraph (4), the management institution shall make a public announcement thereof, applying Article 10 mutatis mutandis.

[This Article Wholly Amended on Sep. 28, 2012]

Article 12(Examination methods and procedures) #

(1) Where necessary for an examination under Article 21(7) of the Act (hereafter referred to as "examination" in this Article), the management institution may require that its employees examine books, documents, and other data regarding the business affairs and financial status of the liquidation corporation or bankruptcy estate of an insolvent cooperative or a prospective insolvent cooperative.

(2) When conducting an examination, the management institution shall notify the person subject to such examination of the grounds for and scope of the examination and other necessary matters in advance; provided, this shall not apply where it is deemed that the purpose of the examination cannot be achieved due to the destruction of evidence, etc. if such prior notice is given.

(3) Where conducting an examination, the management institution shall provide a person subject to such examination with an opportunity to fully state his or her opinions.

(4) Once an examination is complete, the management institution shall notify the parties concerned of the results thereof in writing.

[This Article Wholly Amended on Sep. 28, 2012]

Article 13(Types of public institutions) #

"Other public institutions prescribed by Presidential Decree" in Article 22 of the Act means the following:

1. Public institutions under the Act on the Management of Public Institutions;

2. Corporations incorporated under special statutes;

3. Clearing houses designated under the Bills of Exchange and Promissory Notes Act or the Check Act.

[This Article Wholly Amended on Sep. 28, 2012]

Article 14(Subscription to liability insurance) #

(1) "A cooperative that meets the standards prescribed by Presidential Decree" in Article 23(1) of the Act means a cooperative that fails to meet the standards determined by the fund management committee upon the evaluation of the management status of the cooperative conducted by the Chairperson of the NACF under Article 142(2) of the Agricultural Cooperatives Act.

(2) Where the management institution requests that a cooperative subscribe to liability insurance under Article 23(1) of the Act, it shall do so in writing specifying matters prescribed by the Minister of Agriculture, Food and Rural Affairs, such as the limit of insurance proceeds payable, etc. <Amended on Mar. 23, 2013>

(3) A cooperative required to subscribe to liability insurance by the management institution under Article 23(1) of the Act shall subscribe to such liability insurance within 6 months from the date of receipt of such request; provided, in cases of unavoidable circumstances recognized by the fund management committee, such as where its normal business management is expected to be significantly impaired by the subscription to liability insurance, it shall subscribe to the insurance within the period determined by the management institution, which shall not exceed 2 years.

[This Article Wholly Amended on Sep. 28, 2012]

Article 15(Exception to support in installments) #

"Cases prescribed by Presidential Decree" in the proviso of Article 27(2) of the Act means any of the following:

1. Payment of insurance proceeds under Article 17(1);

2. Purchase of claims such as deposits, etc. under Article 19(2);

3. Provision of financial support under Article 25 of the Act; provided, this shall not apply where the recipient of such financial support is an insolvent cooperative or a prospective insolvent cooperative;

4. Making a provisional payment under Article 8(2);

5. Where it is deemed inevitable for the structural improvement of the cooperative and where financial support is given upon a resolution of the fund management committee; provided, this shall not apply where the recipient thereof is an insolvent cooperative or a prospective insolvent cooperative.

[This Article Wholly Amended on Sep. 28, 2012]

Article 16(Conclusion of agreement on implementation of management normalization) #

(1) "Cooperative prescribed by Presidential Decree" in the proviso of Article 28(1) of the Act means a cooperative other than insolvent cooperatives or prospective insolvent cooperatives.

(2) "Financial soundness standards prescribed by Presidential Decree" in Article 28(2)1 of the Act means the ratio of net capital to the total assets determined by the Financial Services Commission for the cooperative under Article 83-3(1)1 of the Credit Unions Act. In such cases, assets, liabilities, and allowances for bad debts related to the calculation of the ratio of net capital to the total assets shall include those accruing from businesses other than the credit business.

(3) "Profitability standards prescribed by Presidential Decree" in Article 28(2)2 of the Act means the following:

1. The ratio of profits to assets or capital;

2. The ratio of expenses to profits;

3. Productivity per executive officer or employee.

(4) "Asset soundness prescribed by Presidential Decree" in Article 28(2)4 of the Act means the following:

1. The ratio of overdue loans to loans;

2. The ratio of non-performing loans to loans.

(5) Detailed standards for the ratio of net capital to total assets and other matters prescribed in paragraphs (2) through (4) shall be determined by the fund management committee.

[This Article Wholly Amended on Sep. 28, 2012]

Article 17(Non-disclosure of agreement) #

"Matters prescribed by Presidential Decree" in the proviso of Article 28(3) of the Act means any of the following:

1. Matters regarding the sale of assets held, such as real estate and bonds;

2. Matters regarding methods for implementing management normalization plans.

[This Article Wholly Amended on Sep. 28, 2012]

Article 18(Non-business assets) #

"Non-business assets prescribed by Presidential Decree" in Article 29(1), with the exception of its subparagraphs, of the Act means any of the following:

1. Assets acquired by a person falling under any subparagraph of Article 29(1) of the Act to receive payment for non-performing loans;

2. Fixed assets (including lease deposits; hereafter the same shall apply in this Article) to be disposed of by the cooperative in accordance with timely corrective measures under Article 4 of the Act;

3. Fixed assets that are no longer used for business by the cooperative due to merger, business transfer, contract transfer, etc.;

4. Fixed assets that are no longer used for business due to managerial improvement, etc. by a person falling under any subparagraph of Article 29(1) of the Act.

[This Article Wholly Amended on Jan. 31, 2008]

Article 19(Calculation of acquisition price of non-performing assets) #

(1) Where an asset management company for agricultural cooperatives under Article 29(1) of the Act (hereinafter referred to as "management company") acquires non-performing assets under Article 30 of the Act, the acquisition price shall be based on objective prices, such as that calculated by an appraisal corporation, etc. defined in subparagraph 4 of Article 2 of the Act on Appraisal and Certified Appraisers for collaterals provided for non-performing loans or non-business assets subject to acquisition, and shall be determined in consideration of senior debts, real rights, leaseholds, etc. <Amended on Sep. 11, 2014; Aug. 31, 2016; Nov. 24, 2020>

(2) Where it is impracticable to determine the price of non-performing assets in advance under paragraph (1), a condition may be attached to the acquisition contract to the effect that the difference between the acquisition price and the disposal price of such assets shall be settled ex post facto.

[This Article Wholly Amended on Sep. 28, 2012]

Article 20(Entrustment of authority) #

The Minister of Agriculture, Food and Rural Affairs shall entrust the following authority to the head of the management institution under Article 34 of the Act: <Amended on Mar. 23, 2013>

1. Determination on a prospective insolvent cooperative under subparagraph 4 of Article 2 of the Act;

2. Timely corrective measures against prospective insolvent cooperatives and their executive officers under Article 4 of the Act.

[This Article Wholly Amended on Sep. 28, 2012]

Article 20-2(Processing of personally identifiable information) #

(1) The Minister of Agriculture, Food and Rural Affairs may process data containing resident registration numbers, passport numbers, drivers' license numbers or alien registration numbers under Article 19 of the Enforcement Decree of the Personal Information Protection Act, if it is unavoidable to perform administrative affairs regarding the following: <Amended on Nov. 24, 2020>

1. Determination on insolvent cooperatives and prospective insolvent cooperatives under subparagraphs 3 and 4 of Article 2 of the Act;

2. Making a request for submission of data, conducting a fact-finding survey on management status, and making a request for correction under Article 3(3) of the Act;

3. Appointment of an administrator and entrustment of registration under Article 4(1)4, the former part of Article 6(1), Article 6(5), and Article 8(2) and (5) of the Act;

4. Mergers, business transfer, and contract transfer under Articles 4(1)6 and 7 and 6(2) of the Act;

5. Making a request for provision of data or information under Article 22 of the Act;

6. Making a demand for dismissal of executive officers of a cooperative, suspension of their duties, and disciplinary action against its employees under Article 28(5) of the Act;

7. Supervision, reporting, and inspection under Article 33 of the Act.

(2) The Governor of the Financial Supervisory Service may process data containing resident registration numbers, passport numbers, drivers' license numbers or alien registration numbers under Article 19 of the Enforcement Decree of the Personal Information Protection Act, if it is unavoidable to perform administrative affairs regarding inspections under Article 33 of the Act. <Amended on Nov. 24, 2020>

(3) The NACF may process data containing resident registration numbers, passport numbers, drivers' license numbers or alien registration numbers under Article 19 of the Enforcement Decree of the Personal Information Protection Act, if it is unavoidable to perform administrative affairs regarding requests for submission of data, fact-finding surveys on management status and requests for correction under Article 3(3) of the Act. <Amended on Nov. 24, 2020>

(4) The management institution may process data containing resident registration numbers, passport numbers, drivers' license numbers or alien registration numbers under Article 19 of the Enforcement Decree of the Personal Information Protection Act, if it is unavoidable to perform administrative affairs regarding the following:

Article 20-3(Re-examination of regulation) #

The Minister of Agriculture, Food and Rural Affairs shall examine the appropriateness of the following matters every 3 years, counting from respective base dates 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 Mar. 2, 2021; Feb. 27, 2024>

1. Deleted; <Dec. 12, 2017>

2. Methods, procedures, etc. for issuing and offering Mutual Finance Depositor Protection Fund Bonds under Article 5: January 1, 2015;

3. Deleted; <Mar. 2, 2021>

4. Matters regarding an agreement on the implementation of management normalization under Article 16: January 1, 2015;

5. Deleted. <Mar. 2, 2021>

[This Article Added on Sep. 11, 2014]

Article 21(Standards for imposition of administrative fines) #

The standards for imposing administrative fines under Article 36(1) through (3) of the Act shall be as specified in the Appendix.

[This Article Wholly Amended on Sep. 28, 2012]