ENFORCEMENT DECREE OF THE ACT ON THE STRUCTURAL IMPROVEMENT OF FORESTRY COOPERATIVES

Article 1(Purpose) #

The purpose of this Decree is to prescribe matters mandated by the Act on the Structural Improvement of Forestry Cooperatives and matters necessary for the enforcement thereof.

Article 2(Subjects excluded from scope of deposits) #

(1) "Persons prescribed by Presidential Decree, such as the Government and local governments" in the proviso, with the exception of the items, of subparagraph 6 of Article 2 of the Act on the Structural Improvement of Forestry Cooperatives (hereinafter referred to as the "Act") means any of the following: <Amended on Nov. 4, 2014; Mar. 11, 2016; Jan. 10, 2017>

1. The Government and local governments;

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

3. The Financial Supervisory Service established pursuant to the Act on the Establishment of Financial Services Commission;

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

5. An insured financial company under the Depositor Protection Act;

6. Cooperatives.

Article 3(Contents of management normalization implementation agreement) #

(1) "Standards for financial soundness prescribed by Presidential Decree" in Article 9(2)1 of the Act means the ratio of net capital to total assets prescribed by the Financial Services Commission for cooperatives pursuant to Article 83-3(1)1 of the Credit Unions Act. In such cases, allowances for bad debts and non-performing loans related to the calculation of the ratio of net capital to total assets shall include those arising from businesses other than credit business. <Amended on Feb. 29, 2008>

(2) "Standards for profitability prescribed by Presidential Decree" in Article 9(2)2 of the Act means any of the following standards:

1. Ratio of return on assets or capital;

2. Ratio of expenses to revenue;

3. Productivity per employee.

(3) "Asset soundness prescribed by Presidential Decree" in Article 9(2)4 of the Act means any of the following standards:

1. Ratio of overdue claims;

2. Ratio of non-performing loans.

(4) "Matters prescribed by Presidential Decree" in Article 9(2)5 of the Act means matters concerning an increase in equity capital.

(5) Detailed standards for the ratio of net capital to total assets under paragraph (1), the ratio of earnings to assets or capital under paragraph (2), the ratio of overdue claims to loan claims under paragraph (3), and matters concerning an increase in equity capital under paragraph (4) shall be determined by the Fund Management Committee under Article 18 of the Act (hereinafter referred to as the "Fund Management Committee").

(6) The valuation and calculation of liabilities and assets pursuant to paragraphs (1) through (5) shall be in accordance with the standards prescribed by Decree of the Ministry of Agriculture, Food and Rural Affairs pursuant to the latter part of subparagraph 3a of Article 2 of the Act. <Amended on Sep. 8, 2020>

Article 4(Non-disclosure of Agreement) #

"Matters prescribed by Presidential Decree" in the proviso of Article 9(3) of the Act means any of the following matters:

1. Matters concerning the sale of assets held, such as real estate and claims;

2. Matters concerning methods for implementing the management normalization plan.

Article 5(Explanation of administrative dispositions) #

Where the Special Metropolitan City Mayor, Metropolitan City Mayor, Special Self-Governing City Mayor, Do Governor, or Special Self-Governing Province Governor (hereinafter referred to as the "Mayor/Do Governor") intends to give an insolvent cooperative an opportunity to explain pursuant to the proviso of the part, with the exception of the subparagraphs, of Article 10(2) of the Act, he or she shall send to the insolvent cooperative a notice of explanation stating the details of the disposition, the time limit for explanation, the method of explanation, the method of handling a failure to provide an explanation, and other matters necessary for explanation, no later than 10 days prior to the date of explanation. <Amended on Sep. 8, 2020>

Article 6(Largest creditor) #

In Article 14(1), "largest creditor prescribed by Presidential Decree" means a person who is revealed, as a result of an investigation into the financial status of the relevant cooperative based on any of the following subparagraphs, to hold the largest amount of claims against the cooperative (including any claim arising from the payment of insurance proceeds, purchase of deposit and other claims, or financial assistance by the Mutual Finance Depositor Protection Fund established and operated under Article 17 of the Act (hereinafter referred to as the "Fund") after the date of business suspension, the date of a decision on contract transfer, the date of a resolution for dissolution, or the date of revocation of authorization for establishment:

1. A cooperative dissolved due to bankruptcy: The date of business suspension;

2. A cooperative dissolved through contract transfer: The date of a decision on contract transfer;

3. A cooperative dissolved for any other reason: The date of a resolution for dissolution or the date of revocation of authorization for establishment.

Article 7(Method and procedure of investigation) #

(1) Where necessary for conducting an investigation under Article 15(7) of the Act, the management authority that manages the Fund pursuant to Article 19 of the Act (hereinafter referred to as the "management authority") may have its employees inspect books, documents, and other materials concerning the business affairs and financial status of the liquidating corporation or bankruptcy estate of an insolvent cooperative or a cooperative likely to become insolvent.

(2) Where the management authority conducts an investigation pursuant to paragraph (1), it shall notify the person subject to the investigation in advance of the grounds for the investigation, the scope of the investigation, and other necessary matters; provided, the same shall not apply where the purpose of the investigation cannot be achieved because there is a concern that evidence may be destroyed or otherwise impaired if prior notice is given.

(3) Where the management authority conducts an investigation pursuant to paragraph (1), it shall give the person subject to the investigation a sufficient opportunity to state his or her opinion.

(4) Upon completion of an investigation, the management authority shall notify the parties in writing of the results thereof.

Article 8(Types of public institutions) #

In Article 16 of the Act, "other public institutions and financial institutions prescribed by Presidential Decree" means any of the following institutions: <Amended on Mar. 11, 2016>

1. Public institutions pursuant to the Act on the Management of Public Institutions;

2. Insured financial company under the Depositor Protection Act;

3. A clearinghouse designated under the Bills of Exchange and Promissory Notes Act or the Check Act;

4. Corporations established under a special Act.

Article 9(Operation of Fund Management Committee) #

(1) The chairperson of the Fund Management Committee shall convene meetings of the Fund Management Committee and preside over them.

(2) Where the Chairperson is unable to perform his or her duties due to unavoidable circumstances, the vice chairperson, and thereafter a person designated by the Fund Management Committee from among its members, in that order, shall perform such duties on his or her behalf.

(3) The Fund Management Committee shall constitute a quorum, and any resolution thereof shall require the concurring vote of a majority of those present.

(4) Other matters necessary for the operation of the Fund Management Committee shall be determined by the Fund Management Committee.

Article 10(Issuance of fund bonds) #

Where the management authority issues fund bonds (hereinafter referred to as "fund bonds") at the expense of the Fund pursuant to Article 25(1) of the Act, it shall do so by means of public offering or sale.

Article 11(Par value and form of fund bonds) #

The par value of fund bonds shall be not less than 10,000 won, and fund bonds shall be issued in bearer form with interest coupons attached; provided, upon request of a subscriber or holder, bearer bonds may be converted into registered bonds, and registered bonds into bearer bonds.

Article 12(Public offering of fund bonds) #

(1) A person intending to subscribe for Fund bonds shall prepare 2 copies of an application for subscription to Fund bonds, stating therein the quantity, amount, and address for the Fund bonds he or she intends to subscribe for, and shall affix his or her name and seal thereto.

(2) Subscription forms for fund bonds shall be prepared by the head of the management institution and shall contain the following matters:

1. Name of the management authority;

2. Total amount of fund bonds to be issued;

3. Par value of each class of fund bonds;

4. Interest rate of fund bonds;

5. Method and timing of redemption of principal;

6. Issue price of fund bonds or the minimum price thereof;

7. Where there remains any outstanding amount of fund bonds already issued, the total amount thereof;

8. Timing and method of interest payment.

Article 13(Underwriting of fund bonds under contract) #

Where the total amount of fund bonds is underwritten under contract, Article 12 shall not apply. The same shall also apply where a person entrusted with the subscription of fund bonds underwrites part of the fund bonds on his or her own account.

Article 14(Total amount of fund bonds to be issued) #

When issuing fund bonds, the head of the management authority may indicate in the subscription forms for fund bonds that fund bonds are to be issued even where the total amount actually subscribed falls short of the total amount of fund bonds stated therein. In such cases, the total amount of fund bonds to be issued shall be the total amount subscribed.

Article 15(Matters to be stated on fund bonds issued by public offering) #

Where fund bonds are to be issued by means of public offering, the matters referred to in Article 12(2) 1 through 5 and 8, and the serial number of each fund bond, shall be stated thereon.

Article 16(Payment for fund bonds) #

(1) Upon completion of the subscription for fund bonds, the head of the management authority shall, without delay, have the full par value of each fund bond paid in.

(2) Except where fund bonds are issued pursuant to Article 18, certificates therefor shall not be issued unless the full amount thereof has been paid.

Article 17(Entrustment of public offering of fund bonds) #

A person entrusted with the public offering of fund bonds may perform the acts under Article 16 in his or her own name.

Article 18(Issuance of fund bonds by sale) #

(1) Where fund bonds are issued by means of sale, the head of the management authority shall make a public announcement of the following matters:

1. The sales period;

2. The matters referred to in Article 12(2) 1 through 6 and 8.

(2) In cases under paragraph (1), subscription forms for fund bonds are not required.

(3) Fund bonds issued pursuant to paragraph (1) shall state the matters referred to in Article 12(2)1, 3 through 5, and 8, and the serial number thereof.

Article 19(Total amount of fund bonds sold) #

Where the total amount of fund bonds sold during the sales period falls short of the total amount of fund bonds publicly announced pursuant to Article 18(1), the total amount sold shall be deemed the total amount of fund bonds.

Article 20(Declaration of payment) #

The head of the management authority shall, within 2 weeks from the date payment is made pursuant to Article 16 or the sale period ends, file a report thereon with the Administrator of the Korea Forest Service, attaching the documents specified in the following subparagraphs thereto: <Amended on Jan. 10, 2017>

1. The final balance sheet;

2. Documents proving the underwriting of fund bonds or the total amount sold;

3. Subscription forms for fund bonds;

4. Documents proving payment for fund bonds.

Article 21(Notification of change) #

Where any matters reported pursuant to Article 20 is changed, the head of the management authority shall, within 2 weeks, report such change to the Administrator of the Korea Forest Service, attaching documents proving the grounds therefor.

Article 22(Fund bond register) #

(1) The head of the management authority shall keep a fund bond register at its principal office and enter therein the matters specified in the following subparagraphs:

1. The number and serial numbers of each class of fund bonds;

2. The issuance date of fund bonds;

3. The matters referred to in Article 12(2)2 through 5 and 8;

4. Payment amount and payment date for each fund bond;

5. In cases of registered fund bonds, the address and name of the holder, and the date of acquisition thereof.

(2) The head of the management authority shall, at any time during business hours, allow any creditor or member under Article 89 of the Forestry Cooperative Act to inspect the fund bond register upon request.

Article 23(Purchase and retirement of fund bonds) #

The head of the management authority may, upon a resolution of the Fund Management Committee, purchase fund bonds and retire them.

Article 24(Notice and demand) #

(1) Any notice to, or demand upon, a subscriber for fund bonds shall be sent to the address of the subscriber stated in the subscription form for fund bonds (or, where the subscriber has separately notified the head of the management authority of an address, to that address).

(2) Notice to, and demand upon, a holder of registered fund bonds shall be made to the address stated in the fund bond register, unless the holder has separately notified the head of the management authority of an address.

(3) Notice to, and demand upon, a holder of bearer fund bonds shall be made by public announcement.

Article 25(Establishment of pledge) #

When a pledge is established on registered fund bonds, Articles 338 and 340 of the Commercial Act shall apply mutatis mutandis.

Article 26(Defects in interest coupons) #

(1) In redeeming bearer fund bonds with interest coupons attached, the amount corresponding to any missing interest coupon shall be deducted from the amount of redemption.

(2) The holder of an interest coupon for which the amount corresponding thereto has been deducted from the redemption amount pursuant to paragraph (1) may, at any time, claim payment of the deducted amount in exchange for such coupon.

Article 27(Calculation and payment of insurance premiums) #

(1) Pursuant to Article 31(1) of the Act, each cooperative shall pay to the Fund, within 15 days after the end of each quarter, insurance premiums calculated in accordance with the formulas under the following subparagraphs; provided, in the case of mutual aid business, such premiums shall be paid within 2 months after the end of each fiscal year:

1. Insurance premium for credit business = the average balance of deposits and installment savings as of the end of each quarter × 1/4 × the rate determined and publicly notified by the Administrator of the Korea Forest Service, within the limit of 5/1,000;

2. Insurance premium for mutual aid business = (the balance of policy reserves at the end of each business year + the total amount of mutual aid premiums received at the end of each business year) × 1/2 × the rate determined and publicly notified by the Administrator of the Korea Forest Service, within the limit of 5/1,000.

(2) In calculating the insurance premiums for credit business and mutual aid business under paragraph (1), deposits, etc. received from persons specified in Article 2 shall be excluded.

(3) Where a cooperative fails to pay the insurance premiums under paragraph (1) by the due date, it shall pay to the Fund an additional charge for arrears equal to the amount obtained by multiplying the number of days from the day following the due date to the date of payment by an interest rate determined by the Fund Management Committee on the basis of the overdue interest rate applicable to mutual finance loans extended by the NFCF to cooperatives.

Article 27-2(Reduction or exemption of insurance premiums) #

(1) Where, pursuant to Article 31-2(4) of the Act, the amount accumulated in the Fund as of the end of the immediately preceding fiscal year of the management authority is not less than the lower limit and not more than the upper limit of the target amount (including the upper and lower limits; hereinafter referred to as the "target amount" in this Article) of fund reserves established or re-established under paragraphs (1) through (3) of that Article, the management authority shall, subject to a resolution of the Fund Management Committee, reduce the insurance premiums payable by cooperatives for the relevant fiscal year.

(2) Where, pursuant to Article 31-2(4) of the Act, the amount accumulated in the Fund as of the end of the immediately preceding fiscal year of the management authority exceeds the upper limit of the target amount, the management authority shall, subject to a resolution of the Fund Management Committee, exempt cooperatives from paying the insurance premiums for the relevant fiscal year.

(3) Matters necessary for the specific procedures and methods, etc. for setting the target amount and reducing or exempting insurance premiums under paragraphs (1) and (2) shall be determined by the management authority, subject to a resolution of the Fund Management Committee.

(4) The management authority shall publicly announce on its website the matters determined pursuant to paragraph (3).

[This Article Added on Aug. 19, 2020]

Article 28(Calculation of insurance benefits) #

In calculating the insurance proceeds payable by the management authority upon claims filed by depositors, etc. pursuant to Articles 32(1) and 33(1) of the Act, the total amount of claims for deposits, etc. shall be the aggregate of the amounts specified in the following subparagraphs:

1. Amount of deposits, etc.;

2. The amount obtained by multiplying the amount under subparagraph 1 by an interest rate determined by the Fund Management Committee, taking into account the average interest rate on deposits, etc. of all cooperatives.

Article 29(Payment of provisional payments) #

The management authority may, pursuant to Article 32(2) of the Act, make an advance payment to depositors, etc. of an amount determined by the Fund Management Committee within the payment limit for insurance benefits under Article 32 (hereinafter referred to as "provisional payment"); provided, where a provisional payment exceeds the amount of insurance benefits calculated pursuant to Article 33(1) of the Act, such amount of insurance benefits shall be the maximum amount payable.

Article 30(Public announcement of procedures for payment of insurance benefits) #

Pursuant to Article 32(3) of the Act, the management authority shall make a public announcement of the commencement date of payment of insurance benefits and provisional payments, the payment period, the method of payment, and other necessary matters, by applying Article 33(4) mutatis mutandis.

Article 31(Suspension of payment of insurance benefits) #

(1) "Amount prescribed by Presidential Decree" in Article 32(6) of the Act means the following amounts:

1. The amount of deposit and other claims that depositors, etc. provide as collateral to the relevant cooperative on behalf of another person;

2. The amount of guarantee obligations owed by depositors, etc. to the relevant cooperative.

(2) Where the management authority withholds payment of insurance benefits for the amounts referred to in paragraph (1) pursuant to Article 32(6) of the Act, it shall issue to the depositor, etc. who has claimed payment of such insurance benefits a written document stating the matters specified in the following subparagraphs:

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

2. The grounds for withholding payment of insurance benefits;

3. The period of withholding payment of insurance benefits;

4. Procedures and methods for claiming payment of withheld insurance benefits when the grounds for withholding payment of insurance benefits cease to exist or the withholding period expires.

Article 32(Limit on payment of insurance benefits) #

The limit on payment of insurance benefits under Article 33(2) of the Act shall be 100 million won each for credit business and mutual aid business. <Amended on Jul. 29, 2025>

Article 33(Determination of estimated payment rate and estimated amount) #

(1) Where the management authority purchases deposit and other claims pursuant to Article 34(1) of the Act, it shall determine the estimated payment rate in consideration of the financial condition of the cooperative and the amount expected to be recovered in respect of the deposit and other claims related to the cooperative where bankruptcy proceedings are instituted. <Amended on Aug. 19, 2020>

(2) The estimated value of deposit and other claims to be paid by the management authority to depositors, etc. pursuant to Article 34(2) of the Act shall be the amount calculated by multiplying the value of deposit and other claims purchased by the management authority from depositors, etc., as calculated as of the date of the public announcement of payment of insurance benefits (excluding the amount of deposit and other claims corresponding to guarantee obligations of depositors, etc. who owe guarantee obligations and the amount of deposit and other claims serving as the subject matter of security rights), by the estimated payment rate under paragraph (1). <Amended on Aug. 19, 2020>

(3) Where the management authority pays to depositors, etc. the estimated value of deposit and other claims pursuant to Article 34(2) of the Act, it shall determine the estimated payment rate under paragraph (1), the period and method for purchasing deposit and other claims, and other matters, following a resolution of the Fund Management Committee. <Amended on Aug. 19, 2020>

(4) Where the management authority has obtained the resolution under paragraph (3), it shall make a public announcement of the details so resolved through a daily newspaper, the website of the management authority, broadcasting, or other similar means. <Amended on Nov. 24, 2020>

[Title Amended on Aug. 19, 2020]

Article 34(Requirement for subscription to liability insurance) #

(1) In Article 38(1) of the Act, "cooperatives falling under the standards prescribed by Presidential Decree" means cooperatives that, as a result of an evaluation of their management status conducted by the chairperson of the NFCF pursuant to Article 117(2) of the Forestry Cooperative Act, fail to meet the standards determined by the Fund Management Committee.

(2) Where the management authority requires a cooperative to purchase liability insurance pursuant to Article 38(1) of the Act, it shall do so in writing, clearly stating the matters determined by the Mayor/Do Governor, including the limit on payment of insurance benefits. <Amended on Sept. 8, 2020>

(3) A cooperative required by the management authority to purchase liability insurance pursuant to Article 38(1) of the Act shall purchase such liability insurance within 6 months from the date on which it receives such requirement (or, where any unavoidable ground recognized by the Fund Management Committee exists, such as where it is deemed difficult for the cooperative to conduct its business normally if it purchases liability insurance, within a period determined by the management authority, not exceeding 2 years).

Article 35(Delegation of authority) #

The authority delegated by the Mayor/Do Governor to the head of the management authority pursuant to Article 40 of the Act shall be as follows: <Amended on Sep. 8, 2020>

1. Determination of cooperatives at risk of insolvency;

2. Prompt corrective action under Article 4 of the Act against cooperatives at risk of insolvency, etc. and their executive officers.

Article 35-2(Processing of unique identification information) #

(1) Where unavoidable for performing duties related to supervision, reporting, and inspection under Article 39 of the Act, the Administrator of the Korea Forest Service may process data containing resident registration numbers, passport numbers, driver's license numbers, or alien registration numbers pursuant to Article 19 of the Enforcement Decree of the Personal Information Protection Act. <Added on Sep. 8, 2020>

(2) Where unavoidable for performing the affairs set forth in the following subparagraphs, a Mayor/Do Governor (including, in the case of subparagraph 1, the head of a management agency entrusted with the affairs of the Mayor/Do Governor pursuant to Article 35) may process data containing resident registration numbers, passport numbers, driver's license numbers, or alien registration numbers pursuant to Article 19 of the Enforcement Decree of the Personal Information Protection Act: <Amended on Sep. 8, 2020>

1. Affairs concerning the determination of insolvent cooperatives and cooperatives at risk of insolvency under subparagraphs 3 and 4 of Article 2 of the Act;

2. Affairs concerning the appointment of an administrator and the request for registration under Article 4(1)4, the former part of Article 10(1), paragraph (5) of that Article, and Article 12(2) and (5) of the Act;

3. Affairs concerning mergers, transfers of business, and transfers of contracts under Article 4(1)6 and 7 and Article 10(2) of the Act;

4. Affairs concerning requests for the dismissal or suspension from office of executive officers and employees of a cooperative, and requests for disciplinary action against employees, under Article 9(5) of the Act;

5. Affairs related to requests for the provision of data or information under Article 16 of the Act;

6. Deleted. <Sep. 8, 2020>

(3) Where unavoidable for performing duties related to inspections under Article 39 of the Act, the Governor of the Financial Supervisory Service under Article 24 of the Act on the Establishment of Financial Services Commission may process data containing resident registration numbers, passport numbers, driver's license numbers, or alien registration numbers pursuant to Article 19 of the Enforcement Decree of the Personal Information Protection Act. <Amended on Sep. 8, 2020>

(4) Where unavoidable for performing the affairs set forth in the following subparagraphs, a management authority may process data containing resident registration numbers, passport numbers, driver's license numbers, or alien registration numbers pursuant to Article 19 of the Enforcement Decree of the Personal Information Protection Act: <Amended on Sep. 8, 2020>

Article 36(Criteria for imposition of administrative fines) #

The criteria for the imposition of administrative fines under Article 44(1) through (3) of the Act shall be as set forth in the Appendix.

[This Article Wholly Amended Jan. 10, 2017]