Community Credit Cooperatives Act


Published: 2013-03-23

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CHAPTER I GENERAL PROVISIONS
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 Article 1 (Purpose)   print
The purpose of this Act is to cultivate a healthy national spirit and to contribute to the development of the national economy through the raising and utilization of funds, the improvement of economic, social and cultural status of members and the development of communities on the basis of the spirit of mutual assistance peculiar to our nation based on voluntary and cooperative organizations of the people.
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 Article 2 (Definitions and Names)   print
(1) The term "credit cooperative" in this Act means a community credit cooperative which is a nonprofit corporation incorporated in accordance with this Act to achieve the purpose prescribed in Article 1.
(2) The term "regional credit cooperative" in this Act means a credit cooperative, the business area of which is the same administrative district, economic bloc or living zone among credit cooperatives defined in paragraph (1).
(3) The term "Federation" in this Act means the Korean Federation of Community Credit Cooperatives which is a nonprofit corporation incorporated in accordance with this Act to promote the common interests and continuous development of all credit cooperatives. <Amended by Act No. 10437, Mar. 8, 2011>
(4) A credit cooperative or the Federation shall use the words "community credit cooperative" or "the Korean Federation of Community Credit Cooperatives" in its name. <Amended by Act No. 10437, Mar. 8, 2011>
(5) Unless an organization is a credit cooperative or the Federation, it shall not use the name prescribed in paragraph (4) or a name similar thereto. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 3 (Duty of State, etc. to Cooperate)   print
(1) The Government or a local government shall give necessary support to encourage the development of projects conducted by a credit cooperative or the Federation, and where a credit cooperative or the Federation needs State property or public property, the Government or a local government may lend such property thereto or allow it to use or profit from such property preferentially. <Amended by Act No. 10437, Mar. 8, 2011>
(2) The Government or a local government may grant subsidies to the Federation within budgetary limits to facilitate development of credit cooperatives. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 4 (Cooperation with other Cooperatives)   print
Credit cooperatives and the Federation shall endeavor to mutually cooperate with cooperatives prescribed in other Acts and foreign cooperatives. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 5 (Prohibition of Participation in Politics)   print
Credit cooperatives and the Federation shall not engage in any act that leads to participation in politics. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 6 (Relationships with other Acts)   print
(1) The credit business division of the Federation under Article 67 (1) 5 (c) (only applicable to domestic exchange business) or (e) shall be deemed a bank as defined in Article 2 of the Banking Act or a financial institution under Article 11 of the Bank of Korea Act. <Amended by Act No. 10303, May 17, 2010; Act No. 10437, Mar. 8, 2011>
(2) The provisions of the Insurance Business Act shall not apply to the business of credit cooperatives and the Federation. <Amended by Act No. 10437, Mar. 8, 2011>
(3) Where Article 45-2 of the Act on the Efficient Disposal of Non-Performing Assets, etc. of Financial Companies and the Establishment of Korea Asset Management Corporation applies to a credit cooperative or the Federation, it shall be deemed an institution to which the same Article applies. <Amended by Act No. 10437, Mar. 8, 2011; Act No. 10682, May 19, 2011>
CHAPTER II CREDIT COOPERATIVES
SECTION 1 Incorporation
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 Article 7 (Incorporation)   print
(1) A credit cooperative shall come into existence by registration for incorporation at the seat of its main office with approval from the Minister of Security and Public Administration (hereinafter referred to as "competent Minister") through the Chairperson of the Federation (hereinafter referred to as the "Chairperson") after not less than 50 promoters prepare the articles of incorporation according to a model articles of incorporation determined by the Chairperson, and pass a resolution of approval in the inaugural general meeting. <Amended by Act No. 8852, Feb. 29, 2008; Act No. 10437, Mar. 8, 2011; Act No. 11690, Mar. 23, 2013>
(2) Persons who have submitted a written consent to the incorporation of a credit cooperative to the promoters before the inaugural general meeting is held shall pass the vote of its proceedings with the attendance of a majority thereof and with the concurrent vote of more than two thirds of those present.
(3) Matters necessary for the incorporation of a credit cooperative, such as a public announcement of the inaugural general meeting, agenda items for resolution, procedures for application for the approval of incorporation, grounds for restrictions on approval, shall be prescribed by Presidential Decree.
(4) and (5) Deleted. <by Act No. 10437, Mar. 8, 2011>
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 Article 7-2 (Requirements for Approval for Incorporation)   print
(1) A person who intends to obtain approval for the incorporation of a credit cooperative under Article 7 (1) shall satisfy all the following requirements:
1. He/she shall possess investments more than the amount of money prescribed by Presidential Decree;
2. He/she shall have specialized human resources and physical facilities, such as electronic data processing equipment, sufficient to protect its members and conduct its projects;
3. An operation plan shall be workable and sound;
4. Promoters shall have sufficient capacity for investment, healthy financial standing and social credit.
(2) Detailed requirements for approval for incorporation under paragraph (1) shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 8 (Matters to be Stated in Articles of Incorporation)   print
The following matters shall be stated in the articles of incorporation of a credit cooperative:
1. Objectives;
2. Its name;
3. Seat of its offices;
4. Business area of the relevant credit cooperative;
5. Matters concerning membership, joining, withdrawal and expulsion;
6. The amount of one share of investment and methods of payment;
7. Matters concerning organizations and the number of executives and the election thereof;
8. Matters concerning kinds of business and accounting;
9. Methods of making public announcements;
10. Matters concerning dissolution;
11. Other necessary matters.
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 Article 8-2 (Offices)   print
(1) The main office of a credit cooperative shall be prescribed by the articles of incorporation.
(2) A credit cooperative may have branch offices where necessary, as prescribed by the articles of incorporation.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
SECTION 2 Members and Investment
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 Article 9 (Members and Capital)   print
(1) A member of a credit cooperative shall be a person who has his/her domicile or residence, or who is engaged in a business as a means of livelihood in the business area prescribed by the articles of incorporation thereof, and has paid not less than one share of investment in money.
(2) The number of members of one credit cooperative shall be not less than 100.
(3) No credit cooperative shall refuse joining of a person qualified to be its member without any justifiable reason, and matters necessary for joining shall be prescribed by the articles of incorporation.
(4) The amount of one share of investment shall be prescribed by the articles of incorporation, and the maximum number of shares of investment one member may have shall not exceed 15 percent of the total number of shares of investment.
(5) Members shall have equal voting rights and suffrage regardless of the number of shares of investment: Provided, That a minor or member, the period of whose membership of the relevant credit cooperative is less than six months, may be restricted in his/her voting right and suffrage, as prescribed by the articles of incorporation.
(6) A member may exercise his/her voting right by designating another member as his/her agent. In such cases, the number of members represented by one member shall not exceed two.
(7) An investment to be paid in a credit cooperative by a member shall not be offset by a claim on the credit cooperative.
(8) An investment shall not be the object of pledge.
(9) A member may transfer his/her investment to another member with the chairperson's approval. In such cases, a transferee shall succeed to rights and duties on property concerning an investment of a transferor.
(10) Liability of a member shall be limited to the amount of his/her investment paid.
(11) Capital of a credit cooperative shall be the sum total of investments paid by its members.
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 Article 10 (Withdrawal)   print
(1) A member may withdraw from a credit cooperative at any time, as prescribed by the articles of incorporation.
(2) Where a member falls under any of the following subparagraphs, he/she shall be deemed withdrawn from a credit cooperative naturally:
1. Where he/she dies (where a corporation is dissolved);
2. Where he/she is declared bankrupt;
3. Where he/she is declared incompetent;
4. Where he/she loses his/her membership.
(3) Matters concerning the relinquishment of membership under paragraph (2) 4 shall be prescribed by the articles of incorporation.
(4) A member who has withdrawn from a credit cooperative pursuant to paragraph (1) (including cases where he/she is deemed withdrawn from a credit cooperative pursuant to paragraph (2)) may claim the refund of his/her investment, deposit and installment savings, as prescribed by the articles of incorporation, and such claim shall lapse due to prescription unless he/she exercise such claim for his/her investment for two years, for deposit and installment savings for five years from the day following his/her withdrawal therefrom.
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 Article 11 (Preferential Reimbursement)   print
If a member fails to perform his/her obligation to a credit cooperative, the credit cooperative shall be preferentially reimbursed from his/her investment, deposit and installment savings.
SECTION 3 Organizations
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 Article 12 (General Meetings)   print
(1) A credit cooperative shall organize general meetings.
(2) General meetings shall be classified into ordinary general meetings and extraordinary general meetings; an ordinary general meeting shall be called once a year, as prescribed by the articles of incorporation, and an extraordinary meeting shall be called whenever deemed necessary.
(3) A general meeting shall be comprised of the members of a credit cooperative and the chairperson of the board of directors shall call general meetings.
(4) The following matters shall be subject to the resolution of a general meeting:
1. Amendments to the articles of incorporation;
2. Dissolution, merger or suspension of business;
3. Election and dismissal of executives;
4. Disposal of an endowment;
5. Approval of a statement of accounts (including business reports, balance sheets, profit and loss statements and proposals for disposal of surplus funds or proposals for settlement of losses);
6. Determination of a business plan and budget;
7. Methods of imposing and collecting expenses;
8. Other important matters.
(5) No matter under paragraph (4) 1 shall take effect unless a credit cooperative obtains approval from the competent Minister through the Chairperson.
(6) A credit cooperative shall take the minutes of a general meeting, as prescribed by Presidential Decree.
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 Article 13 (Holding of General Meeting and Resolutions)   print
(1) A general meeting shall be held when a majority of all incumbent members are present, and pass the vote with the concurrence of a majority of the members present, except as otherwise prescribed in this Act:Provided, That where the incumbent members exceed 300, a general meeting may be held when not less than 151 members are present, and pass the vote with the concurrence of a majority of the members present.
(2) A general meeting shall be held when a majority of all incumbent members (in cases falling under the proviso to paragraph (1), referring to not less than 151 members) are present, and pass a resolution on matters under Article 12 (4) 1 and 2 with the concurrence of not less than two thirds of the members present.
(3) A general meeting may only pass a resolution on matters publicly announced pursuant to Article 15 (2): Provided, That this shall not apply to cases where a general meeting is held when a majority of the incumbent members (in cases falling under the proviso to paragraph (1), referring to not less than 151 members) are present, and pass a resolution with the concurrent vote of not less than two thirds of the members present, as a matter of urgency.
(4) Where a general meeting passes a resolution on matter related to a specific member and a credit cooperative, such member shall not have the voting right.
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 Article 14 (Request for Convocation of General Meeting)   print
(1) A member may request the chairperson of the board of directors to convoke an extraordinary general meeting by submitting a written request in which the purposes of and reasons for the meeting are stated, with the consent of not less than one third of the members and their signatures and seals affixed thereto.
(2) Where the chairperson of the board of directors receives a request under paragraph (1), he/she shall hold a general meeting within two weeks from the date he/she receives such request.
(3) Where no person convokesa general meeting, or the chairperson of the board of directors fails to convene a general meeting within the period under paragraph (2) without any justifiable ground, the auditor shall convoke a general meeting within five days. In such cases, the auditor shall perform the duties of the chairperson of the board of directors on his/her behalf.
(4) Where the auditor fails to convoke a general meeting within the period under paragraph (3), the representative of members who have requested the chairperson of the board of directors to convoke a general meeting pursuant to paragraph (1) shall hold a general meeting. In such cases, the representative of such members shall perform the duties of the chairperson of the board of directors on his/her behalf.
(5) Where the auditor or the representative of members convokes a general meeting pursuant to paragraph (3) or (4), he/she shall inform the chairperson of the board of directors of such fact before he/she makes a public announcement of the convocation thereof. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 15 (Notice to Members)   print
(1) A credit cooperative shall give notice to members at their domiciles or residences entered in the roll of members.
(2) The convocation of a general meeting shall be announced publicly by methods prescribed by the articles of incorporation by presenting the time and place of the holding of a general meeting, and the purpose of a general meeting seven days prior to the day fixed for the general meeting.
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 Article 16 (Meeting of Representatives)   print
(1) A credit cooperative which has more than 300 members may organize a meeting of representatives that takes the place of a general meeting, as prescribed by Presidential Decree.
(2) The term of office of a representative shall be three years: Provided, That the term of office of a representative elected to fill a vacancy shall be the remainder of the term of office of his/her predecessor.
(3) Matters necessary for qualifications for, the fixed number and methods of election of representatives, etc. shall be prescribed by Presidential Decree.
(4) No representative shall hold a position of a representative of another credit cooperative concurrently.
(5) The provisions on a general meeting shall apply mutatis mutandis to a meeting of representatives.
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 Article 17 (Board of Directors)   print
(1) A credit cooperative shall organize a board of directors.
(2) The board of directors shall be comprised of directors, including the chairperson and the vice-chairperson, and chairperson shall call meetings of the board of directors.
(3) The following matters shall be subject to the resolution of the board of directors: <Amended by Act No. 10437, Mar. 8, 2011>
1. Establishment, amendments or repeal of regulations;
2. Determination of basic policies on the conduct of projects;
3. Borrowing of money required: Provided, That where the Federation borrows money, the maximum thereof;
4. Appointment and dismissal of the managing staff and disciplinary action against employees prescribed by the articles of incorporation;
5. Matters delegated by a general meeting and matters to be brought before a general meeting;
6. Other matters to be brought by the chairperson before a meeting.
(4) The chairperson shall report the following matters to the board of directors:
1. The result of audit under Article 76;
2. The result of management assessment under Article 79 (6);
3. The result of inspections under Articles 79 (2) and 81 (1).
(5) The board of directors shall hold a meeting when a majority of the incumbent directors are present, and pass a resolution with the concurrent vote of a majority of the directors present.
(6) Methods of convoking a meeting of the board of directors, preparation of the minutes, etc., shall be prescribed by the articles of incorporation.
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 Article 18 (Election of Executives)   print
(1) A credit cooperative shall keep not less than seven directors but not more than 15, including one chairperson and one vice-chairperson, and not more than three auditors, and an executive shall not hold another position of the credit cooperative concurrently.
(2) In cases of a credit cooperative prescribed by Presidential Decree, it may keep one or more persons among executives as full-time executives, in consideration of its value of assets, financial structure, etc., as prescribed by the articles of incorporation, however, the number of full-time executives shall not exceed two of the directors including the chairperson, and one of the auditors.
(3) For the purposes of paragraph (2), in cases of a credit cooperative where the chairperson is not in full-time employment, it shall keep a full-time director elected pursuant to paragraph (4).
(4) A director who is not the chairperson, among executives in the full-time employment pursuant to paragraph (2), shall be elected in a general meeting on the recommendation of the board of directors from among persons satisfying the necessary conditions prescribed by Presidential Decree, who have abundant expertise and experience relating to the credit cooperative business.
(5) Executives shall be elected by a secret vote in a general meeting, and the chairperson and the vice-chairperson shall be those who receive a majority of votes of the voters present, and other executives shall be those falling under the fixed number of executives in order of persons who receive a large number of votes: Provided, That where candidates for chairperson, vice-chairperson, directors and auditors under paragraph (1) are less than the fixed number thereof, respectively, they may be elected by a method determined specially by a general meeting.
(6) Where no person receives a majority of votes in the vote for the election of the chairperson and the vice-chairperson as a result of the vote under paragraph (5), a general meeting shall determine the chairperson-elect and the vice chairperson-elect by taking another vote with persons who are in the first rank and the second rank only as candidates.
(7) Executives of a credit cooperative shall be honorary offices: Provided, That it may pay a salary to executives in full-time employment pursuant to paragraph (2).
(8) Except as otherwise prescribed in this Act, matters necessary for methods of, and procedures for the election of executives shall be prescribed by the articles of incorporation.
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 Article 19 (Executives and Employees)   print
(1) The chairperson of the board of directors shall represent a credit cooperative and preside over its business.
(2) The chairperson of the board of directors shall preside at a general meeting and a meeting of the board of directors.
(3) Where a vacancy occurs in the office of the chairperson of the board of directors or an accident happens to him/her, the vice chairperson shall perform the duties of the chairperson on his/her behalf, and where an accident occurs to the chairperson and vice chairperson, a director designated by the board of directors shall perform the duties of the chairperson on his/her behalf: Provided, That where the chairperson is unable to engage in business of a credit cooperative and convoke a general meeting by reason that he/she is placed under restraint or is hospitalized for a long term of not less than 60 days, the Chairperson may designate a representative director pro tempore, from among the executives. <Amended by Act No. 10437, Mar. 8, 2011>
(4) The auditor shall audit property of a credit cooperative and inspect the status of the performance of business at least once in every quarter, and report the result thereof to a general meeting and the board of directors.
(5) Articles 402 and 412-4 of the Commercial Act shall apply mutatis mutandis to the duties of auditors.
(6) Where juristic acts, such as a lawsuit and contract, are done between a credit cooperative and its chairperson, the auditor shall represent the credit cooperative.
(7) The auditor may attend generalmeetings or meetings of the board of directors, and state his/her opinions.
(8) An executive shall be dismissed by resolution at a general meeting, and procedures therefor and other necessary matters shall be prescribed by Presidential Decree.
(9) A credit cooperative may employ a managing director, executive director and other employees as its employees, and necessary matters, such as credit cooperatives that may employ a managing director or executive director, and qualifications for employees, shall be prescribed by Presidential Decree.
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 Article 20 (Terms of Office of Executives)   print
(1) The terms of office of directors shall be four years, and the terms of office of auditors shall be three years: Provided, That the chairperson of the board of directors may be reelected for second time. <Amended by Act No. 10437, Mar. 8, 2011>
(2) Where a vacancy occurs in the position of an executive, the term of office of an executive elected for a vacancy shall be the remainder of the term of office of his/her predecessor.
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 Article 21 (Disqualifications for Executives)   print
(1) None of the following personsshall be an executive of a credit cooperative: Provided, That subparagraph 16 shall not apply to a full-time director under Article 18 (3): <Amended by Act No. 10437, Mar. 8, 2011>
1. A minor, incompetent or quasi-incompetent;
2. A person declared bankrupt and has not yet been reinstated;
3. A person in whose case five years have not passed since his/her imprisonment without labor or heavier punishment was completely executed (including cases where the execution thereof was deemed completed; hereafter in this paragraph the same shall apply) or exempted, as declared by a court, for committing a crime (only applicable to a crime related to businesses of a credit cooperative or the Federation) under Article 85 (1), and Articles 355 through 357 of the Criminal Act;
4. A person subject to a suspended sentence of imprisonment without labor or a heavier punishment, for committing a crime under subparagraph 3, and in whose case three years have not passed from the date the period of such suspension of execution was completed;
5. A person subject to a suspended sentence of imprisonment without labor or a heavier punishment for committing a crime under subparagraph 3, and in whose case three years have not passed from the date the period of such suspension of sentence was completed;
6. A person in whose case three years have not passed since he/she was sentenced to punishment by a fine for committing a crime under subparagraph 3;
7. A person in whose case three years have not passed since his/her imprisonment without labor or a heavier punishment was completed or exempted, as declared by a court, for committing a crime under Article 85 (2), (4) and (5);
8. A person in whose case three years have not passed since his/her imprisonment with hard labor or punishment by a fine more than one million won was completely executed or exempted, as declared by a court, for committing a crime under Article 85 (3);
9. A person in whose case two years have not passed since his/her imprisonment without labor or heavier punishment was completed or exempted, as declared by a court, for committing a crime other than crimes under subparagraphs 3, 7 and 8;
10. A person subject to a suspended sentence of imprisonment without labor or a heavier punishment, as declared by a court, for committing a crime other than crimes under subparagraphs 3, 7 and 8;
11. A person subject to a suspended sentence of imprisonment without labor or a heavier punishment, as declared by a court, for committing a crime other than a crime under subparagraph 3;
12. A person subject to disciplinary dismissal or discharge from office (including the reelection for executives; hereafter in this paragraph the same shall apply) in accordance with this Act or Acts and subordinate statutes related to finance, and in whose case five years have not passed from the date he/she was subjected to disciplinary dismissal or discharge from office;
13. A retired employee or executive notified that he/she would be subjected to disciplinary dismissal or release from office in accordance with this Act or Acts and subordinate statutes related to finance if he/she held office or was in office, and in whose case five years have not passed since such notification is made to him/her (where five years from the date of notification exceeds seven years from the date of his/her retirement or resignation, seven years from the date of his/her retirement or resignation);
14. A person who has been disqualified or whose qualification has been suspended by ruling of the court or other Acts;
15. A person subject to disciplinary dismissal from a public institution, other corporation or company, and in whose case two years have not passed from the date he/she was subjected to disciplinary dismissal;
16. A member who fails to own more than the number of shares of investment prescribed by the articles of incorporation for more than two years continuously as of the date of a public announcement of the day fixed for election of executives: Provided, That this shall not apply to credit cooperatives in which case two years have not passed after the incorporation or merger thereof;
17. A person who is in arrears of an obligation exceeding the amount or period prescribed by the articles of incorporation to the relevant credit cooperative as of the date of a public announcement of the day fixed for election of executives;
18. A person disqualified, as prescribed by the articles of incorporation.
(2) Where a ground under paragraph (1) is found or arises, the relevant executive shall retire from office automatically.
(3) An act in which an executive who retired from office pursuant to paragraph (2) had been involved before his/her retirement shall not lose its effect.
(4) A credit cooperative or the Federation may request the chief of a police station having jurisdiction over its main office to give it necessary assistance, such as inquiries about criminal records falling under paragraph (1) 3 through 11, in order to ascertain whether executives or candidates for executives have disqualifications under paragraph (1), and the chief of the relevant police station shall give it an answer about the result thereof. <Newly Inserted by Act No. 10437, Mar. 8, 2011>
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 Article 22 (Restrictions on Election Campaign of Executives)   print
(1) A publicly-managed election campaign shall be the principle of election campaign for executives.
(2) No person shall do any of the following acts for the purpose of making himself/herself or a specific person be elected as an executive of a credit cooperative or be defeated in an election:
1. Providing, expressing an intention to provide, or promising to provide a member or his/her family (referring to a spouse of a member, lineal ascendants and descendants, brothers and sisters of a member or his/her spouse, and spouses of lineal ascendants and descendants, brothers and sisters of a member; hereinafter the same shall apply) with money or other valuables, entertainment, other economic profits, public or private posts;
2. Doing acts prescribed in subparagraph 1 to persons who intend to be candidates or candidates for the purpose of hindering them from being candidates or having them withdraw candidacy respectively;
3. Receiving a profit or post prescribed in subparagraph 1 or 2, accepting the intention of providing such profits or posts, or requesting or mediating the provision thereof;
4. Circulating false information (including a school career) about candidates or maligning candidates by exposing useless information;
5. Calling on members from door to door (including places of business) or having them assemble at a specific place during the period prescribed by the articles of incorporation.
(3) No person shall engage in election campaign other than by the following methods in connection with the election for executives: <Newly Inserted by Act No. 10437, Mar. 8, 2011>
1. Production and distribution of the official gazette for election published by a credit cooperative;
2. An appeal for support at the joint speech session held by a credit cooperative.
(4) Necessary matters concerning methods of, expenses for election campaign, etc. shall be prescribed by the articles of incorporation. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 23 (Organization and Operation of Election Administration Committee)   print
(1) A credit cooperative shall organize and operate an election administration committee to fairly administer an election for executives.
(2) An election administration committee shall be comprised of persons commissioned by the board of directors as committeemen from among the members (excluding executives), and if necessary, the board of directors may commission outsiders who have abundant experience in election administration as committeemen.
(3) Matters necessary for the fixed number of committeemen, duties and operation of an election administration committee shall be prescribed by the articles of incorporation.
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 Article 23-2 (Entrustment of Election Administration)   print
A credit cooperative may entrust the administration of an election for executives to a Gu/Si/Gun election administration committee established under the Election Commission Act having jurisdiction over the seat of its main office, as prescribed by the articles of incorporation.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 24 (Prohibition of Inauguration as Executive and Employee by Competitive Business Operators)   print
(1) No person who conducts business or is engaged in such business in substantial competition with the business of a credit cooperative shall be its executive or employee.
(2) The scope of business in substantial competition under paragraph (1) shall be prescribed by Presidential Decree.
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 Article 25 (Duty and Responsibility of Good Faith of Executives)   print
(1) Executives of a credit cooperative shall observe the provisions of this Act and directions given in accordance with this Act, the articles of incorporation, the regulations and matters for resolution in a general meeting and a meeting of the board of directors, and perform their duties faithfully for the credit cooperative.
(2) An executive shall be jointly and severally liable to compensate for any loss he/she causes to a credit cooperative intentionally or by gross negligence (in cases of a part-time executive, referring to intention or gross negligence) when he/she performs his/her duties.
(3) An executive shall be jointly and severally liable to compensate for any loss he/she causes to another person intentionally or by gross negligence when he/she performs his/her duties.
(4) Where an executive causes damage to a credit cooperative or another person by making a false record in a statement of accounts, a false registration or false public announcement, the same shall also apply to such executive as prescribed in paragraphs (2) and (3).
(5) Where the board of directors causes damage to a credit cooperative intentionally or by gross negligence, executives present at a meeting of the board of directors related to such intention or gross negligence shall be jointly and severally liable to compensate for such loss : Provided, That this shall not apply to executives who have expressed their dissenting opinion at the meeting thereof.
(6) The auditor shall exercise a right to indemnity pursuant to paragraphs (2) through (5) to directors including the chairperson and vice chairperson, and the representative of members who has obtained consent of more than one third of the members shall exercise a right to indemnity to all the executives.
(7) An executive prescribed by the articles of incorporation shall furnish personal references for his/her duties.(8) No full-time executive pursuant to Article 18 (2) shall hold a full-time position in another corporation or company concurrently. <Newly Inserted by Act No. 10437, Mar. 8, 2011>
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 Article 26 (Application Mutatis Mutandisof the Civil Act and the Commercial Act)   print
(1) Articles 35 and 63 of the Civil Act and Articles 382 (2) and 386 (1) of the Commercial Act shall apply mutatis mutandis to executives of a credit cooperative, respectively.
(2) Articles 11 (1) and (3), 12, 13 and 17 of the Commercial Act and Articles 17 (2), 53 through 55 of the Commercial Registration Act shall apply mutatis mutandis to full-time directors or the managing staff prescribed by the articles of incorporation, respectively. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 27 (Duty to Keep Documents)   print
(1) The chairperson shall keep the articles of incorporation, the minutes of general meetings and the roll of members in the main office.
(2) Members or creditors of a credit cooperative may inspect the documents enumerated in paragraph (1), and request a copy of such documents at their own expense, as prescribed by the credit cooperative.
SECTION 4 BUSINESS
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 Article 28 (Kinds of Business)   print
(1) A credit cooperative shall conduct all or some of the following business to achieve the purpose prescribed in Article 1: <Amended by Act No. 10437, Mar. 8, 2011>
1. Credit business:
(a) Receipt of deposits and installment savings from members;
(b) Lending of money to members;
(c) Domestic exchange and exchange services under the Foreign Exchange Transactions Act;
(d) Agency of services of the Government, public institutions and financial institutions;
(e) Safeguard deposit for members
2. Cultural and welfare work;
3. Educational work for members;
4. Community development work;
5. Mutual-aid business for members;
6. Business entrusted by the Federation;
7. Business entrusted by the Government or a public institution, or business prescribed by other Acts and subordinate statutes as business of a credit cooperative;
8. Other business required to achieve the objective, which are approved by the competent Minister.
(2) The limit of investment in work under paragraph (1) 2 through 4 shall be prescribed by the articles of incorporation within the extent not exceeding 50 percent of the total sum of investments and reserve funds of a credit cooperative.
(3) The limit of borrowing of required funds related to credit business under paragraph (1) 1, investment of surplus funds, the scope of entrusted businesses under paragraph (1) 6, and other necessary matters shall be prescribed by Presidential Decree.
(4) Matters necessary for performing business under paragraph (1) 5 shall be prescribed by Presidential Decree.
(5) A credit cooperative shall hold more than ten percent of the balance of deposits and installment savings as of the end of the preceding month as reserves for reimbursement, and deposit more than half of reserves for reimbursement with the Federation. In such cases, necessary matters concerning the possession and deposit of reserves for reimbursement shall be prescribed by Presidential Decree. <Amended by Act No. 10437, Mar. 8, 2011>
(6) If necessary to perform business prescribed in paragraph (1), a credit cooperative may invest in other corporations, as prescribed by the articles of incorporation within the limit set for in paragraph (2). In such cases, the limit of investment in the same corporation shall not exceed 20 percent of the total sum of investments and reserve funds.
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 Article 29 (Credit Line to Same Person)   print
(1) Loans of a credit cooperative to a same person shall not exceed a larger amount of 20 percent of the total sum of investments and reserve funds or 1 percent of the total assets: Provided, That this shall not apply to cases where a credit cooperative has obtained approval from the chairperson according to the standards determined by the competent Minister. <Amended by Act No. 10437, Mar. 8, 2011>
(2) For the purpose of paragraph (1), a loan made in the name of another person for account of the person himself/herself shall be deemed a loan to such person himself/herself.
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 Article 30 (Utilization of Business by Nonmembers)   print
A credit cooperative may permit a nonmember to utilize its business within the extent not hampering the utilization thereof by members.
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 Article 31 (Restrictions on Possession of Real Estate)   print
A credit cooperative shall not possess movable property or real estate except as it is necessary in the course of business or inevitable to get debts repaid.
SECTION 5 Accounting
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 Article 32 (Business Year)   print
The business year of a credit cooperative shall be prescribed by the articles of incorporation.
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 Article 33 (Plan of Operation and Budget)   print
(1) A credit cooperative shall prepare an operation plan and draft budget according to an operation plan and guidelines for budget determined by the chairperson each business year, and pass a resolution thereon in a general meeting. <Amended by Act No. 10437, Mar. 8, 2011>
(2) Where a credit cooperative intends to change an operation plan and budget, it shall pass a resolution thereon in a meeting of the board of directors: Provided, That where it formulates a revised supplementary budget, it shall pass a resolution on such revised supplementary budget in a general meeting.
(3) Except as otherwise prescribed in this Act, necessary matters concerning accounting and settlement of accounts shall be prescribed by Presidential Decree.
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 Article 34 (Presentation, Keeping and Perusal of Documents Related to Settlement of Accounts)   print
(1) The chairperson shall present a statement of accounts (including a business report, balance sheet, profit and loss statement, proposal for disposition of surplus funds or proposal for settlement of losses) to the auditor by no later than one week prior to the day fixed for an ordinary general meeting and keep the same in the main office.
(2) The chairperson shall present a statement of accounts along with a written opinion of the auditor to an ordinary general meeting and obtain its approval, and if he/she deems it necessary, he/she may request an auditor under Article 3 of the Act on External Audit of Stock Companies to audit a statement of accounts.
(3) Members or creditors of a credit cooperative may inspect documents enumerated in paragraph (1), and request a copy of such documents at their own expenses set by the credit cooperative.
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 Article 35 (Disposition of Reserve Funds and Profits and Losses)   print
(1) A credit cooperative shall reserve not less than 15 percent of surplus funds as a legal reserve until the same reaches the total amount of equity capital (referring to an amount computed by adding or subtracting an amount according to errors in the settlement of accounts to or from, the total amount of capital, all reserve funds and surplus funds; hereinafter the same shall apply) in every business year. <Amended by Act No. 10437, Mar. 8, 2011>
(2) No credit cooperative shall use reserve funds under paragraph (1) or appropriate the same for dividends other than in cases of writing off bad debts or the dissolution thereof.
(3) A credit cooperative may accumulate special reserve funds within the limit of 15 percent of surplus funds as a reserve for coverage of the loss and appropriation for an accounting accident by force majeure in every business year.
(4) A credit cooperative may accumulate some of surplus funds as a voluntary reserve for business or a dividend reserve each business year.
(5) Where a credit cooperative has suffered a loss upon the settlement of accounts of the business year, it shall cover such loss with reserve funds in order of a special reserve and a voluntary reserve, and if there is a remaining loss, it shall carry forward such loss to the following business year.
(6) Where a credit cooperative has suffered a loss for several consecutive business years and has no reserve funds to cover such loss, it may diminish its capital in a general meeting with the attendance of a majority of the members (in cases falling under the proviso to Article 13 (1), referring to not less than 151 members) and with the concurrence of more than two thirds of the members present, and regard such diminution as diminution of the amount of investment paid-in by each member. Where it diminishes its capital, it shall report such diminution to the chairperson. <Amended by Act No. 10437, Mar. 8, 2011>
(7) Where a credit cooperative has diminished its capital pursuant to paragraph (6), it shall announce such diminution publicly in a period fixed for filing objections, and where no creditor files an objection to the diminution of capital during the period for filingobjections announced publicly, it shall be deemed that there is no objection.
(8) Where a creditor has filed an objection, unless a credit cooperative settles such diminution or provides reasonable security, the diminution of capital under paragraph (6) shall not take effect.
(9) Necessary matters concerning a report under paragraph (6) and a public announcement, etc. under paragraph (7) shall be prescribed by Presidential Decree.
(10) No credit cooperative shall pay dividends from surplus funds unless it has covered the loss and deducted reserve funds, and dividends shall be in proportion to the number of shares of investment paid-in. In such cases, it may pay dividends in proportion to the actual results of the utilization of its business by members.
SECTION 6 Merger, Dissolution and Liquidation
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 Article 36 (Grounds for Dissolution)   print
When any of the followinggrounds arises, a credit cooperative shall be dissolved:
1. Arising of a ground for dissolution prescribed by the articles of incorporation:
2. A resolution of dissolution in a general meeting;
3. Merger or bankruptcy;
4. Cancellation of approval of incorporation.
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 Article 37 (Merger)   print
(1) Where a credit cooperative intends to effect a merger, it shall prepare a contract for merger and pass a resolution in a general meeting.
(2) Where credit cooperatives pass a resolution on incorporation of a credit cooperative based on a merger pursuant to paragraph (1), each credit cooperative shall elect incorporation committee members in a general meeting. In such cases, the fixed number of incorporation committee members shall be not less than 20, and they shall be elected in the same number from among the members of each credit cooperative to be merged.
(3) Incorporation committee members elected pursuant to paragraph (2) shall hold a meeting of the incorporation committee, prepare the articles of incorporation according to an example of the articles of incorporation determined by the chairperson, select and appoint executives, and then obtain approval under Article 7 (1). <Amended by Act No. 10437, Mar. 8, 2011>
(4) Where the incorporation committee selects and appoints executives, it shall select and appoint executives from among those recommended by incorporation committee members with the attendance of a majority of the incorporation committee members and with the concurrence of a majority of the incorporation committee members present.
(5) The provisions on new incorporation under Section 1 of Chapter II shall apply mutatis mutandis to the incorporation of a credit cooperative prescribed in paragraphs (2) through (4) unless it violates the purpose of such contract for merger.
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 Article 38 (Recommendation for Merger)   print
(1) The Chairperson may recommend credit cooperatives to merge between them for their smooth merger. In such cases, the chairperson of the board of directors of a credit cooperative recommended to merge shall announce such fact publicly without delay. <Amended by Act No. 10437, Mar. 8, 2011>
(2) Where the Government or the Federation promotes merger between credit cooperatives or merges credit cooperatives in one credit cooperative, it may give support necessary for such merger, as prescribed by Presidential Decree. <Amended by Act No. 10437, Mar. 8, 2011>
(3) The Chairperson may reduce or suspend financial support, etc. to a credit cooperative that fails to follow procedures for passing a resolution on merger within six months from the date it is recommended to merge without justifiable grounds though he/she has recommended it to merge pursuant to paragraph (1). <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 39 (Succession to Rights and Duties Following Merger)   print
(1) A credit cooperative surviving a merger or a credit cooperative to be incorporated by merger shall succeed to rights and duties of a credit cooperative to be dissolved.
(2) The name of a credit cooperative dissolved, but shown in the register or other official books after the merger of credit cooperatives shall be deemed the name of a credit cooperative surviving a merger or credit cooperative incorporated by merger.
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 Article 40 (Reduction of, and Exemption from Taxes)   print
Where credit cooperatives are merged, they may be exempted from corporate tax according to transfer of real estate, etc., asset revaluation tax, acquisition tax according to the acquisition of real estate, registration and license tax according to registration of a corporation, real estate, etc., corporate tax on income at liquidation of a credit cooperative dissolved due to merger, income tax on deemed dividends to members of a credit cooperative dissolved due to merger, and other taxes, as prescribed by the Restriction of Special Taxation Act, the Restriction of Special Local Taxation Act and other Acts and subordinate statutes concerning the reduction of, and exemption from taxes. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 41 (Liquidators)   print
(1) Where a credit cooperative is dissolved, a liquidator shall be elected in a general meeting except the dissolution thereof due to bankruptcy.
(2) In cases falling under paragraph (1), where a credit cooperative is unable to form a general meeting although it has called a general meeting more than twice, the Chairperson may select and appoint a liquidator. <Amended by Act No. 10437, Mar. 8, 2011>
(3) The Chairperson shall supervise the business for liquidation of a credit cooperative. <Amended by Act No. 10437, Mar. 8, 2011>
(4) Where the Chairperson deems that a liquidator is feared to inflict a loss on the assets of a credit cooperative in his/her performing business for liquidation, the Chairperson may select and appoint a new liquidator. <Newly Inserted by Act No. 10437, Mar. 8, 2011>
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 Article 42 (Duties of Liquidators)   print
(1) A liquidator shall investigate the financial status immediately after his/her assumption of office, prepare an inventory of property and balance sheet, determine the methods of disposition of property, submit such methods to a general meeting and obtain its approval.
(2) In cases falling under paragraph (1), where a liquidator is unable to form a general meeting although he/she has called a general meeting more than twice, approval from the Chairperson may take the place of a general meeting. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 43 (Remaining Property after Liquidation)   print
Where a credit cooperative is dissolved, if property remains after the full repayment of its debts, such residual property shall be disposed of, as prescribed by the articles of incorporation.
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 Article 44 (Application Mutatis Mutandisof Civil Act)   print
Articles 79, 81, 87, 88 (1) and (2), 89 through 92, 93 (1) and (2) of the Civil Act and Article 121 of the Non-Contentious Case Litigation Procedure Act shall apply mutatis mutandis to the dissolution and liquidation of a credit cooperative respectively, except those matters prescribed by this Act.
SECTION 7 Registration
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 Article 45 (Registration of Incorporation)   print
(1) Where a credit cooperative obtains approval for incorporation pursuant to Article 7 (1), it shall register the following matters within three weeks from the date such written approval of incorporation reaches:
1. Objectives;
2. Its name;
3. Its business area;
4. Seat of its offices;
5. Date of approval for incorporation;
6. The amount of one share of investment;
7. When the term of existence or a ground for dissolution is determined, such term or ground;
8. Names and domiciles of executives;
9. Methods of making public announcements.
(2) When a credit cooperative applies for registration pursuant to paragraph (1), it shall submit an application along with a certified copy of a written approval of incorporation, the minutes of the inaugural general meeting and the articles of incorporation.
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 Article 46 (Registration for Establishment of Branch Offices)   print
(1) Where a credit cooperative establishes a branch office, it shall register the establishment of a branch office within three weeks at the seat of its main office, and register matters prescribed in Article 45 (1) within the same period at the seat of such branch office, and register the establishment of such branch office within the same period at the seat of another branch office.
(2) Where a credit cooperative establishes a branch office within the jurisdiction of a registry office having jurisdiction over the seat of its main office or branch office, it shall register the establishment of such office within the period under paragraph (1).
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 Article 47 (Registration of Changes)   print
(1) In cases falling under the proviso to Article 19 (3) and where matters registered under Articles 45 (1) and 46 have been changed, a credit cooperative shall register such change along with documents proving the matters changed within three weeks.
(2) Where a credit cooperative relocates its office, it shall register such relocation at the former seat of its office, and matters under Articles 45 (1) and 46 at the new seat of its office within three weeks: Provided, That where it relocates its office within the jurisdiction of the same registry office, it shall register such relocation.
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 Article 48 (Change of Name of Place of Administrative District and Registration)   print
(1) Where the name of a place of an administrative district is changed, the name of a place concerning the seat of an office of a credit cooperative and the business area thereof entered in the register and the articles of incorporation shall be deemed changed automatically.
(2) Where any matters are changed pursuant to paragraph (1), a credit cooperative shall inform the registry office of such matters without delay.
(3) If the registry office receives a notice under paragraph (2), it shall change matters entered in the register.
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 Article 49 (Registration of Merger)   print
Where credit cooperatives are merged, a credit cooperative surviving a merger shall register its change, a credit cooperative dissolved by merger shall register its dissolution, and a credit cooperative incorporated by merger shall register its incorporation under Article 45 (1) at the seat of its office within three weeks.
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 Article 50 (Registration of Dissolution and Registration of Conclusion of Liquidation)   print
(1) Where a credit cooperative is dissolved, a liquidator shall register the following matters at the seat of its office within three weeks from the date of his/her assumption of office, except in cases of merger and bankruptcy:
1. Grounds for dissolution and the date of dissolution;
2. Name and domicile of a liquidator;
3. Where power of attorney of a liquidator has been restricted, matters concerning such restriction.
(2) Where a liquidator concludes the liquidation of a credit cooperative, he/she shall register the conclusion of liquidation at the seat of the office of the credit cooperative within two weeks.
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 Article 51 (Applicants for Registration)   print
The chairperson shall be an applicant for registration of the incorporation of a credit cooperative and registration of a change in accordance with this Act: Provided, That in cases of registration of dissolution, a liquidator shall be an applicant and submit an application for such registration along with documents proving the grounds for dissolution.
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 Article 52 (Initial Date in Counting Registration Date)   print
A period of application for registration of matters that should be registered and require authorization or approval from an administrative agency shall be counted from the date such written authorization or approval reaches.
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 Article 53 (Register)   print
The competent registry office shall keep a "register of community credit cooperatives".
CHAPTER III THE FEDERATION
SECTION 1 General Provisions
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 Article 54 (Purposes and Incorporation)   print
(1) The Federation shall be established by credit cooperatives as its members to guide and supervise the business of credit cooperatives and promote the advancement of their common interests and healthy development. <Amended by Act No. 10437, Mar. 8, 2011>
(2) One Federation shall be established and it shall have its main office in Seoul Special Metropolitan City and may have branch offices, as prescribed by the articles of incorporation. <Amended by Act No. 10437, Mar. 8, 2011>
(3) The Federation shall be incorporated when more than 30 credit cooperatives promote the incorporation thereof and prepare the articles of incorporation, and register the incorporation thereof at the seat of its main office with approval from the competent Minister after passing a resolution in the inaugural general meeting. <Amended by Act No. 10437, Mar. 8, 2011>
(4) Articles 7 (2) and (3), 7-2, 45 through 47, 51 through 53, and 82 (1) and (3) shall apply mutatis mutandis to the Federation. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 55 (Matters to be Stated in Articles of Incorporation)   print
The following matters shall be stated in the articles of incorporation of the Federation: <Amended by Act No. 10437, Mar. 8, 2011>
1. Its objectives;
2. Its name;
3. Seat of its offices;
4. Matters concerning investment;
4-2. Matters concerning preferential investment;
5. Matters concerning the joining and withdrawal of credit cooperatives;
6. Matters concerning the rights and duties of credit cooperatives;
7. Matters concerning organizations, and executives and employees;
8. Matters concerning the imposition and collection of membership fees;
9. Matters concerning kinds of business and accounting;
10. Matters concerning methods of making public announcements;
11. Other necessary matters.
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 Article 56 (Investment by Members)   print
(1) Credit cooperatives shall be members of the Federation. <Amended by Act No. 10437, Mar. 8, 2011>
(2) A credit cooperative shall invest not less than one share and pay in money without fail.
(3) The amount of one share of investment shall be prescribed by the articles of incorporation and the responsibility of a credit cooperative shall be limited to such paid-in investment.
(4) Capital of the Federation shall be the total sum of investments (including preferential investment). <Amended by Act No. 10437, Mar. 8, 2011>
(5) The Federation may have credit cooperatives pay membership fees according to a resolution in the general meeting. <Amended by Act No. 10437, Mar. 8, 2011>
(6) Where a credit cooperative is dissolved or goes bankrupt, it shall be deemed seceded from the Federation automatically. <Amended by Act No. 10437, Mar. 8, 2011>
(7) Article 9 (4), the main sentence of paragraph (5), paragraphs (7) through (9) of the same Article, Article 10 (4) and 11 shall apply mutatis mutandis to the Federation. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 57 (Dissolution)   print
The dissolution of the Federation shall be separately prescribed by law. <Amended by Act No. 10437, Mar. 8, 2011>
SECTION 2 General Meetings
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 Article 58 (General Meetings)   print
(1) The Federation shall organize a general meeting therein. <Amended by Act No. 10437, Mar. 8, 2011>
(2) General meetings shall be classified into an ordinary general meeting and an extraordinary general meeting, and the Federation shall call an ordinary general meeting once every year, as prescribed by the articles of incorporation, and an extraordinary general meeting whenever the Federation deems it necessary.
(3) A general meeting shall be comprised of the Chairperson and credit cooperatives, and the Chairperson shall call a general meeting and preside over the general meeting. <Amended by Act No. 10437, Mar. 8, 2011>
(4) A general meeting shall be held when a majority of the credit cooperatives are present, and pass resolutions with the concurrent vote of a majority of the credit cooperatives present, except as otherwise prescribed in this Act: Provided, That it shall pass resolutions on matters provided in Article 59 (1) 1 when more than two thirds of the credit cooperatives are present and more than two thirds of the credit cooperatives present concur.
(5) A general meeting may only pass the vote of matters announced publicly pursuant to paragraph (6): Provided, That this shall not apply to a matter of urgency when more than two thirds of the credit cooperatives are present and more than two thirds of the credit cooperatives present concur.
(6) Articles 13 (4), 14 (1) through (4), 15, 16 (1) through (3), and (5) shall apply mutatis mutandis to the Federation. In such cases, "auditor" in Article 14 (3) and the forepart of paragraph (4) shall be construed as "representative of the audit committee", respectively. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 59 (Matters to be Resolved in General Meeting)   print
(1) The Federation shall pass a resolution on the following matters in a general meeting:
1. Amendmentsof the articles of incorporation;
2. Determination of the methods of imposing membership fees and the amount thereof;
3. Approval of an operation plan, budget and settlement of accounts;
4. Selection and appointment, and dismissal of executives;
5. Matters brought before a general meeting with the consent of not less than one fifth of the credit cooperatives;
6. Matters prescribed by the articles of incorporation and matters brought before a meeting of the board of directors.
(2) The Federation shall obtain approval from the competent Minister for the amendment of the articles of incorporation under paragraph (1) 1.
(3) Where the Chairperson is unable to call a general meeting due to a war, incident, natural disaster or otherforce majeure events, he/she may take the necessary measures concerning paragraph (1) 2 and 3.
SECTION 3 Board of Directors
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 Article 60 (Board of Directors)   print
(1) The Federation shall organize a board of directors, and its Chairperson shall call a meeting of the board of directors and preside over the meeting. <Amended by Act No. 10437, Mar. 8, 2011>
(2) The board of directors shall be comprised of the Chairperson, Vice Chairperson and directors including the representative directors of credit business and mutual-aid business.
(3) The board of directors shall pass a resolution on the following matters:
1. Establishment, amendments and repeal of the regulations;
2. Maximumceiling on loans;
3. Matters delegated by a general meeting and matters to be brought before a general meeting;
4. Appointment and dismissal of the managing staff and determination of remuneration prescribed by the articles of incorporation;
5. Disciplinary actions against employees prescribed by the articles of incorporation;
6. Other matters deemed necessary by the Chairperson.
(4) Article 17 (5) and (6) shall apply mutatis mutandis to the Federation. <Amended by Act No. 10437, Mar. 8, 2011>
SECTION 4 Audit and Inspection Committee
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 Article 61 (Audit and Inspection Committee)   print
(1) The Federation shall organize a committee to inspect its business and audit its accounting (hereinafter referred to as "audit and inspection committee") in the board of directors. <Amended by Act No. 10437, Mar. 8, 2011>(2) The audit and inspection committee shall be comprised of three directors, and include not less than two directors, other than the Chairperson, the representative director of credit business or mutual-aid business, a full-time director or the chairperson of the board of directors of a credit cooperative.
(3) The audit and inspection committee shall appoint a person to represent the committee by its resolution.
(4) Where the composition of the audit and inspection committee does not satisfy requirements prescribed in paragraph (2) by reason that a committee member of the audit and inspection committee resigns or dies, etc., the Federation shall manage so that the composition of the audit and inspection committee satisfies requirements prescribed in paragraph (2) in the first general meeting called after such reason has arisen.
(5) The Federation shall select and appoint committee members of the audit and inspection committee with the concurrence of a majority of the directors present when a majority of the incumbent directors are present, and dismiss committee members with the concurrence of not less than two thirds of the incumbent directors.
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 Article 62 (Duties of Audit and Inspection Committee)   print
Article 19 (4) through (7) shall apply mutatis mutandis to the audit and inspection committee. In such cases, "auditor" in Article 19 (6) shall be construed as "representative of the audit and inspection committee", and "auditor" in other provisions shall be construed as "audit and inspection committee", respectively.
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 Article 63 (Standards for Internal Controls)   print
(1) The Federation shall determine the basic procedures and standards that its executives and employees should observe (hereinafter referred to as "standards for internal controls") in the course of performing their duties in order to observe Acts and subordinate statutes and manage assets healthily. <Amended by Act No. 10437, Mar. 8, 2011>
(2) The Federation shall check whether its executives and employees observe standards for internal controls, and keep not less than one person who investigates any violation of standards for internal controls when any person violates standards for internal controls, and report the same to the audit and inspection committee (hereinafter referred to as "compliance officer"). <Amended by Act No. 10437, Mar. 8, 2011>
(3) Where the Chairperson intends to appoint or dismiss a compliance officer, he/she shall obtain resolution by the board of directors.
(4) Standards for internal controls and requirements for qualifications for a compliance officer, and other necessary matters shall be prescribed by Presidential Decree.
SECTION 5 Executives and Employees
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 Article 64 (Fixed Number and Selection and Appointment of Executives)   print
(1) The Federation shall keep not less than 11 but not more than 21 directors, including one Chairperson, two Vice Chairpersons and one representative director in charge of credit business or mutual-aid business as executives. In such cases, the Federation shall select and appoint more than one third of executives, including the representative director in charge of credit business or mutual-aid business and full-time directors from among those who are not the chairpersons of credit cooperatives. <Amended by Act No. 10437, Mar. 8, 2011>
(2) The Federation shall elect the Chairperson in a general meeting, who shall be a member of a credit cooperative.
(3) The Chairperson shall appoint the representative director to be in charge of credit business or mutual-aid business from among those who have expertise and abundant experience in business in charge and satisfy the necessary conditions prescribed by Presidential Decree with the consent of a general meeting, and also dismiss him/her with the consent of a general meeting.
(4) The Federation shall elect directors (including Vice Chairpersons) excluding the Chairperson and the representative director in charge of credit business or mutual-aid business in a general meeting, as prescribed by the articles of incorporation.
(5) The Chairperson, the representative director in charge of credit business or mutual-aid business and executives prescribed by the articles of incorporation shall be full-time executives, and the Federation may pay salaries to full-time executives.
(6) The terms of office of the Chairperson, Vice Chairpersons, the representative director in charge of credit business or mutual-aid business, full-time directors and directors who are the chairpersons of credit cooperatives shall be four years, and the terms of office of other directors shall be two years: Provided, That the Chairperson may be reelected only once.(7) When a vacancy arises in the office of the representative director in charge of credit business or mutual-aid business or an accident happens to him/her, a director designated by the Chairperson shall perform his/her duties on his/her behalf.
(8) The main sentence of Article 18 (7) and (8), Articles 19 (3) and (8), 21 (1) 1 through 15, and 18, Articles 22 through 25, 26 (1) and 27 shall apply mutatis mutandis to the Federation. In such cases, "Chairperson" in Article 19 (3) shall be construed as "competent Minister", the "chairperson and vice chairperson" in Article 25 (6) as the "Chairperson, Vice Chairperson, and the representative director in charge of credit business or mutual-aid business", and "auditor" as "representative of the audit and inspection committee", respectively. <Amended by Act No. 10437, Mar. 8, 2011>
(9) Where an executive of a credit cooperative is elected as the Chairperson, he/she shall resign from such office before he/she assumes office of the Chairperson.
(10) The Chairperson and the representative director in charge of credit business or mutual-aid business may appoint an agent to do all judicial or extrajudicial acts concerning the business of the Federation from among executives or employees. <Amended by Act No. 10437, Mar. 8, 2011>
(11) Where the Chairperson and the representative director in charge of credit business or mutual-aid business appoints an agent pursuant to paragraph (10), he/she shall register such agent, as prescribed by Presidential Decree.
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 Article 65 (Duties of Executives)   print
(1) The Chairperson shall represent the Federation and preside over the business of the Federation: Provided, That this shall not apply to the business for which the representative director in charge of credit business or mutual-aid business is exclusively responsible pursuant to paragraph (2). <Amended by Act No. 10437, Mar. 8, 2011>
(2) The representative director in charge of credit business or mutual-aid business shall conduct and take exclusive charge of the following business, and represent the Federation concerning such business: <Amended by Act No. 10437, Mar. 8, 2011>
1. Business related to credit business or mutual-aid business and businesses incidental thereto among businesses under Article 67 (1) 5 and 6 and business under subparagraphs 7 through 11 of the same paragraph;
2. Setting objectives of management concerning its business under subparagraph 1;
3. Formulating an operation plan and funds planning concerning its business under subparagraph 1.
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 Article 66 (Appointment and Dismissal of Employees)   print
(1) The Chairperson shall appoint and dismiss employees, and consult on the promotion and transference of employees engaged in business under the jurisdiction of the representative director in charge of credit business or mutual-aid business under Article 65 (2) with him/her, as prescribed by the articles of incorporation.
(2) Matters necessary for qualifications for employees, etc. shall be prescribed by the articles of incorporation.
SECTION 6 Business
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 Article 67 (Business)   print
(1) The Federation shall engage in all or some of the following business in order to achieve its objectives: <Amended by Act No. 8635, Aug. 3, 2007; Act No. 10437, Mar. 8, 2011>
1. Guidance of business and management of credit cooperatives;
2. Education, training, enlightenment, investigation and research, dissemination and public relations;
3. Supervision and inspection of credit cooperatives;
4. Support to business of credit cooperatives;
5. Credit business:
(a) Receipt of deposits, installment savings and other surplus funds from credit cooperatives;
(b) Lending of money for credit cooperatives and their members;
(c) Domestic exchange and foreign exchange services under the Foreign Exchange Transactions Act for credit cooperatives and their members;
(d) Safeguard deposits for credit cooperatives and their members;
(e) Agency of services of the Government, public organizations, or financial institutions;
(f) Payment guarantee and discount on bills;
(g) Underwriting and sale of national and municipal bonds under Article 4 (3) of the Financial Investment Services and Capital Markets Act;
(h) Credit card business permitted in accordance with the Specialized Credit Finance Business Act.
6. Mutual-aid business for credit cooperatives and their members;
7. Business entrusted or assisted by the Government or public organizations;
8. Business prescribed by other Acts and subordinate statutes as business of the Federation;
9. Methods of accounting of credit cooperatives or standardization and coordination of other books and documents;
10. Business incidental to business under subparagraphs 1 through 8;
11. Other business necessary to achieve the objectives, and approved by the competent Minister.
(2) If necessary to engage in business under paragraph (1) smoothly, the Federation may borrow necessary money with approval from the competent Minister: Provided, That where it borrows money necessary for credit business under paragraph (1) 5, it may borrow money without obtaining approval. <Amended by Act No. 10437, Mar. 8, 2011>
(3) If necessary to engage in business under Article 28 (1) 2 and 4 applicable mutatis mutandis pursuant to paragraphs (1) and (4), the Federation may finance other corporations within the limit of its equity capital. <Amended by Act No. 10437, Mar. 8, 2011>
(4) Article 28 (1) 2 and 4, and (3), the main sentence of Article 29 (1) and (2), and Article 30 shall apply mutatis mutandis to the Federation. <Amended by Act No. 10437, Mar. 8, 2011>
(5) The Federation may pay interest or distribute the profits based on the actual results of management to credit cooperatives on surplus funds that it has received from credit cooperatives and manages pursuant to paragraph (1) 5 (a). <Newly Inserted by Act No. 10437, Mar. 8, 2011>
(6) Where the Federation distributes the profits pursuant to paragraph (5), the Financial Investment Services and Capital Markets Act shall not apply to such distribution. <Newly Inserted by Act No. 10437, Mar. 8, 2011>
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 Article 68 (Regulations Defining Mutual Aid)   print
(1) When the Federation engages in business under Article 67 (1) 6, it shall establish regulations defining mutual aid and obtain approval from the competent Minister.
(2) The Federation shall establish methods for engaging in business, mutual-aid contract, mutual-aid dues, etc. in the regulations defining mutual aid under paragraph (1), as prescribed by Ordinance of the Ministry of Security and Public Administration. <Amended by Act No. 8852, Feb. 29, 2008; Act No. 11690, Mar. 23, 2013>
(3) If the Federation intends to amend or repeal any regulations defining mutual aid under paragraph (1), it shall obtain approval from the competent Minister.
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 Article 69 (Establishment and Operation of Mutual-Aid Grievance Mediation Deliberative Committee)   print
(1) The Federation shall organize a mutual-aid grievance mediation deliberative committee in order to resolve a grievance related to mutual-aid business expeditiously and fairly. <Amended by Act No. 10437, Mar. 8, 2011>
(2) The organization and operation of the mutual-aid grievance mediation deliberative committee under paragraph (1), and other matters necessary for procedures for adjustment, deliberation, etc. shall be prescribed by Presidential Decree.
SECTION 7 Accounting
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 Article 70 (Budget for Business and Settlement of Accounts)   print
(1) The Federation shall prepare an operation plan and draft budget each business year and report the same to the competent Minister after it has passed a resolution in a general meeting: Provided, That with regard to a business to which the Government subsidizes or provides all or some of funds or working expenses, it shall obtain approval from the competent Minister for a plan of such business. <Amended by Act No. 10437, Mar. 8, 2011>
(2) When the Federation intends to amend its budget, paragraph (1) shall apply thereto also.
(3) The Federation shall settle accounts of the business year and prepare a statement of accounts (including a business report, balance sheet, profit and loss statement, proposal for disposal of surplus funds, or proposal for settlement of losses) within two months after the close of the business year, obtain approval of the same in a general meeting, and submit the statement of accounts and the audit and inspection report to the competent Minister within two weeks after the ordinary general meeting is closed. <Amended by Act No. 10437, Mar. 8, 2011>
(4) Articles 31, 32, 33 (3), 34 and 35 shall apply mutatis mutandis to the Federation. <Amended by Act No. 10437, Mar. 8, 2011>
SECTION 8 Preferential Investment
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 Article 70-2 (Preferential Investment)   print
(1) The Federation may have credit cooperatives make preferential investment that has preferred status in the receipt of distributions of surplus funds in order to promote the soundness of management through the increase in equity capital, as prescribed by the articles of incorporation.
(2) The amount of one share of preferential investment under paragraph (1) shall be same as the amount of one share of investment under Article 56 (3), and the sum total of preferential investment shall not exceed half of paid-in investments.
(3) Preferential investors shall have no voting rights and suffrage.
(4) The Federation shall pay dividends on preferential investment in preference to dividends on investment under Article 56, and determine the dividend rate thereof between the lowest and highest dividend rates prescribed by the articles of incorporation in an ordinary general meeting. [This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 70-3 (Issuance of Preferential Investment Securities)   print
(1) The Federation shall issue preferential investment securities immediately after the due date of preferential investment.
(2) The Chairperson shall make a list of preferential investors and keep the same at the main office.
(3) Members, preferential investors or creditors of the Federation may inspect the list of preferential investors during the business hours, and request the Federation to reproduce a copy thereof at their own expense set by the Federation.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 70-4 (Liability of Preferential Investors)   print
Liability of a preferential investor shall be limited to the value of underwriting of preferential investment he/she owns.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 70-5 (Transfer of Preferential Investment)   print
(1) Preferential investment shall be transferable: Provided, That transfer before the issuance of preferential investment securities shall have no effect on the Federation.
(2) When a preferential investor transfers preferential investment, he/she shall issue preferential investment securities.
(3) A possessor of preferential investment securities shall be presumed a lawful holder.
(4) Where the title of preferential investment securities is transferred, an acquirer of preferential investment securities shall not oppose the Federation or other third party unless the name and domicile of the acquirer is registered in the list of preferential investors and his/her name is inscribed in securities.
(5) Where preferential investment securities are used for pledge, no pledgee shall oppose the Federation or other third party unless the name and domicile of the pledgee is registered in the list of preferential investors.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 70-6 (General Meeting of Preferential Investors)   print
(1) Where the amended articles of incorporation inflict a loss on preferential investors, the Federation shall pass a resolution in a general meeting of the preferential investors.
(2) A general meeting of the preferential investors shall pass a resolution under paragraph (1) with the concurrence of more than two thirds of the number of shares of investment present when a majority of the total number of shares of preferential investment issued is present.
(3) Matters necessary for the operation of a general meeting of preferential investors under paragraph (1) shall be prescribed by the articles of incorporation.
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 Article 70-7 (Other Matters concerning Preferential Investment)   print
Except as otherwise prescribed by this Act, matters necessary for the issuance and floatation of preferential investment shall be prescribed by Presidential Decree.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
SECTION 9 Depositor Protection Reserve
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 Article 71 (Establishment of Depositor Protection Reserve)   print
(1) The Federation shall establish and operate a depositor protection reserve (hereinafter referred to as the "Reserve") therein to ensure the refund of deposits and installment savings paid by members (including nonmembers under Article 30) of credit cooperatives, other income, mutual-aid funds, special deposits to cash cashier's checks, protect members' property and promote the healthy development of credit cooperatives. <Amended by Act No. 8553, Jul. 27, 2007; Act No. 10437, Mar. 8, 2011>
(2) Credit cooperatives and the Federation shall join the Reserve under paragraph (1). <Amended by Act No. 8553, Jul. 27, 2007; Act No. 10437, Mar. 8, 2011>
(3) The Federation shall organize the Reserve Management Committee to deliberate and decide upon important matters concerning the operation of the Reserve, and the operation of the Reserve and the organization and operation of the Reserve Management Committee, and other necessary matters shall be prescribed by Presidential Decree. <Amended by Act No. 10437, Mar. 8, 2011>
(4) Where a credit cooperative is unable to pay deposits, installment savings and other income, or the Federation is unable to pay mutual-aid funds and cash cashier's checks, the Chairperson may repay in lieu of such credit cooperative or the Federation, as determined by the Reserve Management Committee. <Amended by Act No. 8553, Jul. 27, 2007; Act No. 10437, Mar. 8, 2011>
(5) Articles 482 through 485 of the Civil Act shall apply mutatis mutandis to paragraph (4).
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 Article 72 (Creation of Reserve)   print
(1) The Reserve shall be created with the following funds: <Amended by Act No. 8553, Jul. 27, 2007; Act No. 10437, Mar. 8, 2011>
1. Contributions made by credit cooperatives and the Federation;
2. Money transferred from other accounts and borrowed money;
3. Profits made by the operation of the Reserve;
4. Money borrowed from the Government;
5. Other income.
(2) Necessary matters concerning the raising of funds under the subparagraphs of paragraph (1) shall be prescribed by Presidential Decree.
(3) No credit cooperative nor the Federation shall request the Reserve to refund contributions made pursuant to paragraph (1) 1. <Amended by Act No. 8553, Jul. 27, 2007; Act No. 10437, Mar. 8, 2011>
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 Article 73 (Exercise of Right to Claim Damages)   print
(1) Where the Reserve Management Committee has determined financial support, lending of money or subrogation to a credit cooperative pursuant to Article 71 (3) and (4), it may request such credit cooperative to file a claim for damages with the former or present executives and employees deemed responsible for insolvency of such credit cooperative, persons falling under any subparagraph of Article 401-2 (1) of the Commercial Act and other third party. <Amended by Act No. 10437, Mar. 8, 2011>
(2) Where a credit cooperative fails to comply with a request made under paragraph (1), the Federation may immediately file a claim for damages in lieu of such credit cooperative. <Amended by Act No. 10437, Mar. 8, 2011>
(3) If necessary to exercise a claim for damages and a right to claim damages under paragraphs (1) and (2) in lieu of a credit cooperative, the Federation may investigate the business and financial status of the relevant credit cooperative. <Amended by Act No. 10437, Mar. 8, 2011>
(4) Where a credit cooperative brings a claim against a person for a claim for damages under paragraph (1), the Federation may participate in an action to assist such credit cooperative during the pendency of such action. In such cases, Articles 71 through 77 of the Civil Procedure Act shall apply mutatis mutandis thereto. <Amended by Act No. 10437, Mar. 8, 2011>
(5) Where the Federation wins a case by exercising a right to claim damages in lieu of a credit cooperative pursuant to paragraph (2) or participates in an action under paragraph (4) at the request of the relevant credit cooperative, such credit cooperative shall bear such expenses. <Amended by Act No. 10437, Mar. 8, 2011>
CHAPTER IV BUSINESS
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 Article 74 (Supervision)   print
(1) The competent Minister shall supervise credit cooperatives and the Federation incorporated, as prescribed by this Act: Provided, That the competent Minister shall supervise credit business and mutual-aid business in consultation with the Financial Services Commission. <Amended by Act No. 8852, Feb. 29, 2008; Act No. 10437, Mar. 8, 2011>
(2) If the competent Minister deems it necessary for supervision under paragraph (1), he/she may direct the Federation to submit a report on its business and financial status, or request the Governor of the Financial Supervisory Service to inspect the Federation. <Amended by Act No. 10437, Mar. 8, 2011>
(3) The competent Minister may issue instructions necessary for supervision, such as correction, as a result of a report or inspection under paragraph (2). The same shall also apply to cases where matters determined by a credit cooperative or the Federation are illegal or unjust. <Amended by Act No. 10437, Mar. 8, 2011>
(4) Where the competent Minister deems that the Federation violates this Act and instructions issued under this Act or the articles of incorporation in conducting its business, he/she may direct it to correct such conduct.<Amended by Act No. 10437, Mar. 8, 2011>
(5) If the Federation fails to follow instructions under paragraph (4), the competent Minister may suspend all or some of its business, or direct it to reelect the relevant executive or suspend the performance of his/her duties with a period fixed. <Amended by Act No. 10437, Mar. 8, 2011>
(6) The competent Minister shall determine standards necessary for supervision in consultation with the Chairperson of the Financial Services Commission in order to develop mutual-aid business of credit cooperatives and foster the Federation and protect the members thereof. <Amended by Act No. 8852, Feb. 29, 2008; Act No. 10437, Mar. 8, 2011>
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 Article 75 (Public Announcement of Management)   print
Credit cooperatives and the Federation shall publicly announce important information and data concerning their management status, as prescribed by Presidential Decree. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 76 (External Audits)   print
(1) The Federation shall be audited by an auditor prescribed in Article 3 of the Act on External Audit of Stock Companies (hereafter in this Article referred to as "auditor") not less than once every fiscal year.
(2) Within 20 days after an audit is completed, the Chairperson shall report the results thereof to the competent Minister.
(3) If necessary to protect the members in relation to supervision under Article 74 and a public announcement of management under Article 75, the competent Minister may direct a credit cooperative prescribed by Presidential Decree to be audited by an auditor.
(4) When an auditor has conducted an audit under paragraph (3), he/she shall prepare an audit report and submit the same to the board of directors, the auditor and the chairperson of the relevant credit cooperative.
(5) A credit cooperative audited by an auditor pursuant to paragraph (3) shall report the result thereof to the competent Minister within 20 days from the date it receives the audit report under paragraph (4).
[This Article Wholly Amended by Act No. 10437, Mar. 8, 2011]
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 Article 77 (Standards for Soundness of Management)   print
(1) In order to maintain soundness of management and prevent a financial incident, credit cooperatives and the Federation shall observe standards for soundness of management determined by the competent Minister concerning the following matters, as prescribed by Presidential Decree:
1. Matters concerning the soundness of financial structure;
2. Matters concerning asset quality;
3. Matters concerning accounting and settlement of accounts;
4. Matters concerning risk management;
5. Other matters necessary to secure soundness of management.
(2) If the competent Minister deems that the Federation is feared to seriously harm the management soundness, such as a failure in meeting the standards for soundness of management under paragraph (1), he/she may direct the Chairperson to formulate a plan to stabilize management and report matters for such promotion. <Amended by Act No. 10437, Mar. 8, 2011>
(3) If the competent Minister deems that a credit cooperative is feared to seriously harm the soundness of management, such as a failure in meeting the standards for soundness of management, under paragraph (1), he/she may direct it to take measures for the improvement of management conditions, such as increasing capital or reducing holding assets.
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 Article 78 (Delegation of Authority)   print
The competent Minister may delegate part of his/her authority under this Act to the Special Metropolitan City Mayor, a Metropolitan City Mayor, a Do Governor or the Chairperson.
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 Article 79 (Guidance and Supervision of Federation)   print
(1) The Chairperson shall guide and supervise credit cooperatives, establish regulations necessary therefor and direct credit cooperatives, as prescribed by this Act, and instructions issued under this Act, or the articles of incorporation.
(2) If the Chairperson deems it necessary to perform duties under paragraph (1), he/she may direct a credit cooperative to submit a report on its business and financial status, and have an employee under his/her jurisdiction inspect the credit cooperative.
(3) If the Chairperson deems that a credit cooperative has violated this Act or any instructionissued under this Act, or the articles of incorporation when it conducts its business, he/she may direct it to correct such violation.
(4) If the Chairperson deems that it is impracticable for a credit cooperative to make correction by instructions under paragraph (3) because its property loss is too heavy, he/she may direct it to reelect the relevant executive or suspend the performance of his/her duties.
(5) If a credit cooperative fails to follow instructions under paragraph (3), the Chairperson may suspend all or some its business, or direct it to replace the relevant executive or suspend the performance of his/her duties with a period fixed.
(6) The Chairperson may assess the management status of a credit cooperative and request such credit cooperative to take necessary measures, such as improving its management or the recommendation of merger, according to the result of such assessment.
[Heading of This Article Amended by Act No. 10437, Mar. 8, 2011]
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 Article 79-2 (Sanctions against Executives and Employees Prosecuted)   print
(1) When an executive or employee of the Federation or a credit cooperative is prosecuted because he/she has committed a crime prescribed in Articles 355 through 357 of the Criminal Act, and Articles 5, 7 and 8 of the Act on the Aggravated Punishment, etc. of Specific Crimes, the competent Minister or the Chairperson may direct the Federation or a credit cooperative to suspend the relevant executive or employee's performance of duties.
(2) When an executive of the Federation or a credit cooperative violates Article 25 (8), the competent Minister or the Chairperson may direct the Federation or a credit cooperative to suspend the relevant executive's performance of duties.
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 Article 79-3 (Notification of Details of Directions to Executives Retired)   print
(1) Where the competent Minister or the Chairperson deems that an executive retired from the Federation or a credit cooperative would have received instructions prescribed in Article 74 (5) or 79 (5) if he/she was in office, the competent Minister shall notify the Federation of the details of the instructions deemed that he/she would have received and the Chairperson shall notify the relevant credit cooperative of the same.
(2) The Federation or a credit cooperative notified pursuant to paragraph (1) shall notify the relevant executive of the details of instructions, and record and administer such details.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 80 (Management Guidance)   print
(1) Where the competent Minister deems that a credit cooperative is feared to face difficulty in protecting its members because it falls under any of the following subparagraphs, he/she may guide such credit cooperative on its management:
1. Where the competent Minister deems that equity capital of a credit cooperative is feared to be impaired because it has non-performing loans exceeding its equity capital and faces difficulty in collecting such non-performing loans in the usual manner within the short term;
2. Where the competent Minister deems that a credit cooperative faces difficulty in promoting the stabilization of business by its own means because illegal and unjust conduct of its executives or employees have inflicted losses on its property;
3. Where a credit cooperative is in the conditions that it is unable to pay its deposits, installment savings and other income with its funds because its bankruptcy seems imminent or there is a bank run of deposits, installment savings and other income due to illegal or unjust conduct of its executives or employees:
4. Where the Chairperson makes a proposal because he/she deems management guidance necessary as a result of inspection under Article 79 (2).
(2) "Management guidance" in paragraph (1) means guidance on the following matters:
1. Business concerning supply and demand of funds, and credit and depository;
2. Collection of illegal or non-performing loans and securing claims;
3. Other matters prescribed by Presidential Decree concerning the management of credit cooperatives.
(3) Where the competent Minister begins management guidance under paragraph (1), he/she may suspend the payment of debts, such as deposits, or the performance of duties of executives (including the management staff under Article 26 (2); hereafter in this Article the same shall apply) within six months. In such cases, the competent Minister may have the Chairperson inspect the financial status (hereinafter referred to as "actual inspection of property") of the relevant credit cooperative without delay.
(4) The Chairperson shall take the necessary measures to cover the loss, such as inquiries about property and applications for provisional attachment of property, against executives and employees who have inflicted losses on a credit cooperative by their illegal or unjust conduct as a result of the actual inspection of property pursuant to the latter part of paragraph (3).
(5) Where the competent Minister deems that there are special grounds, such as cases where the stabilization of business of the relevant credit cooperative is possible, as a result of the actual inspection of property pursuant to the latter part of paragraph (3), he/she shall release such credit cooperative from all or some of the suspension of payment of debts or the suspension of performance of duties of executives pursuant to the forepart of paragraph (3).
(6) The competent Minister may entrust the Chairperson with the business concerning management guidance under paragraph (1).
(7) Necessary matters concerning methods of management guidance, and methods, period of and procedure for the suspension of payment of debts or the performance of duties of executives under paragraphs (1) through (3) shall be prescribed by Presidential Decree.
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 Article 80-2 (Determination for Transfer of Contracts)   print
(1) The competent Minister may determine the transfer of a contract (hereinafter referred to as "transfer of a contract") related to business of a credit cooperative falling under any of the subparagraphs of Article 80 (1) (hereinafter referred to as "insolvent credit cooperative") after hearing the Chairperson's opinion.
(2) When the competent Minister determines the transfer of a contract pursuant to paragraph (1), he/she shall determine the extent of a contract to be transferred within the necessary extent, the conditions thereof, and a credit cooperative that acquires a contract (hereinafter referred to as "credit cooperative that acquires a contract"). In such cases, he/she shall obtain the consent of a credit cooperate that acquires a contract in advance.
(3) The Federation may present the amount and conditions of financial support to a credit cooperative that acquires a contract on the premise that the latter conducts the transfer of a contract.
(4) Where a credit cooperative that acquires a contract calls a general meeting to obtain the consent under the latter part of paragraph (2), the Federation shall notify the members of the relevant credit cooperative that acquires a contract of matters related to a resolution in the general meeting, such as the degree of insolvency of an insolvent credit cooperative and measures concerning the transfer of a contract, in advance.
(5) When the Government or a local government deems financial support to a credit cooperative that acquires a contract necessary, it may grant a subsidy to such credit cooperative within budgetary limits.
(6) The competent Minister shall appoint a trustee for an insolvent credit cooperative from which he/she has determined the transfer of a contract pursuant to paragraph (1).
(7) When the competent Minister has appointed a trustee pursuant to paragraph (6), he/she shall notify a district court having jurisdiction over the seat of the main office of the relevant insolvent credit cooperative, of the effect of such appointment without delay, and entrust the registry office having jurisdiction over its main office or branch office with registration of such appointment.
(8) No resolution by the board of directors nor of a general meeting of an insolvent credit cooperative shall be required for the transfer of a contract according to the determination of the transfer of a contract under paragraph (1).
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 80-3 (Effect of Determination for Transfer of Contract)   print
(1) Where the competent Minister determines the transfer of a contract pursuant to Article 80-2 (1), a credit cooperative that acquires a contract shall succeed to rights and duties and the business area of an insolvent credit cooperative included in matters of such determination when he/she determines such transfer.
(2) Where the competent Minister determines the transfer of a contract pursuant to Article 80-2 (1), the relevant insolvent credit cooperative and credit cooperative that acquires a contract shall publicly announce the gist of such determination and the fact of the transfer of a contract, respectively, without delay, as prescribed by Presidential Decree.
(3) When an insolvent credit cooperative and a credit cooperative that acquires a contract make a public announcement under paragraph (2), a credit cooperative that acquires a contract shall succeed to juridical relations among creditors, obligors, persons who have pledged their property to secure another's obligations, and other relevant persons (hereinafter referred to as "creditors, etc.") related to the transfer of such contract and the relevant insolvent credit cooperative in the same details: Provided, That creditors, etc. may oppose a credit cooperative that acquires a contract for reasons arising in relation to the relevant insolvent credit cooperative before a public announcement under paragraph (1) is made.
(4) When an insolvent credit cooperative and a credit cooperative that acquires a contract make a public announcement under paragraph (2), they shall be deemed to satisfy the necessary conditions of opposition to the assignment of nominative claims under Article 450 of the Civil Act: Provided, That creditors, etc. may oppose a credit cooperative that acquires a contract for reasons arising in relation to the relevant insolvent credit cooperative before a public announcement is made.
(5) Where the competent Minister determines the transfer of a contract under Article 80-2 (1), a credit cooperative that acquires a contract shall acquire the right to real estate, etc. requiring registration or record for transfer of property when a public announcement under paragraph (2) is made.
(6) Where the competent Minister determines the transfer of a contract under Article 80-2 (1), he/she shall have the relevant insolvent credit cooperative and a credit cooperative that acquires a contract keep and manage information related to the transfer of a contract and provide them for inspection by creditors, etc. In such cases, the competent Minister shall determine standards and procedures necessary to keep and manage such information and provide them for inspection by creditors.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 80-4 (Qualifications for and Authority of Trustees)   print
(1) A person who has an interest in or special relation prescribed by Presidential Decree with the relevant credit cooperative shall not be appointed as a trustee under Article 80-2 (6) (hereafter in this Article referred to as "trustee").
(2) A trustee shall be entitled to manage and dispose of assets and liabilities of a credit cooperative within the extent of business related to the transfer of a contract. In such cases, unless he/she has completed registration under Article 80-2 (7), he/she shall not oppose the third party in doing juristic acts, such as disposal of property of the credit cooperative.
(3) If necessary to secure obligations attributed to illegal or non-performing loans, a trustee shall inspect property of executives and employees (including former executives and employees) deemed responsible for such illegal or non-performing loans or of obligors, and take necessary measures, such as applications for provisional attachment.
(4) When the competent Minister deems it necessary, he/she may dismiss a trustee.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 80-5 (Petitions in Bankruptcy)   print
(1) When the transfer of a contract of an insolvent credit cooperative is completed according to the determination of the transfer of a contract under Article 80-2 (1), the competent Minister may file for bankruptcy with a district court having jurisdiction over the seat of the main office of the relevant credit cooperative.
(2) When a credit cooperative has gone bankrupt, the competent Minister may recommend a trustee in bankruptcy to a court, notwithstanding the provisions of Article 355 of the Debtor Rehabilitation and Bankruptcy Act.
[This Article Newly Inserted by Act No. 10437, Mar. 8, 2011]
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 Article 81 (Members' Requests for Inspection)   print
(1) Where a member has requested the competent Minister to inspect a credit cooperative to which he/she belongs with the consent of not less than one tenth of the incumbent members by reason that its management status of business or accounting violates Acts and subordinate statutes, the articles of incorporation or the regulations defining mutual aid, the competent Minister may have the Chairperson inspect the status of business of the relevant credit cooperative.
(2) Where a member has requested the competent Minister to inspect the Federation with the consent of not less than one tenth of the incumbent members by reason that its management status of business or accounting violates Acts and subordinate statutes, the articles of incorporation or the regulations defining mutual aid, the competent Minister may have the Governor of the Financial Supervisory Service inspect the Federation. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 82 (Cancellation of Approval for Incorporation)   print
(1) Where a credit cooperative falls under any of the following subparagraphs, the competent Minister may cancel approval for its incorporation after hearing the Chairperson's opinion:
1. Where a credit cooperative fails to register for its incorporation within 90 days from the date it obtains approval for its incorporation;
2. Where a credit cooperative obtains approval for its incorporation deceitfully or by other unlawful means;
3. Where a credit cooperative fails to satisfy the necessary conditions of approval for its incorporation under Article 7-2;
4. Where the number of members of a credit cooperative falls below 100 for not less than one year continuously;
5. Where a credit cooperative fails to conduct its business for not less than one year continuously without justifiable grounds;
6. Where a credit cooperative fails to follow instructions under Article 79 (5);
7. Where a credit cooperative fails to pass a resolution in a general meeting within six months from the date it receives a recommendation to merge under Article 79 (6).
(2) Where a credit cooperative falls under any subparagraph of paragraph (1), the Chairperson shall request the competent Minister to cancel approval for the incorporation of the relevant credit cooperative.
(3) Where the competent Minister has cancelled approval for the incorporation of a credit cooperative pursuant to paragraph (1), he/she shall immediately announce such fact publicly.
[This Article Wholly Amended by Act No. 10437, Mar. 8, 2011]
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 Article 83 (Hearings)   print
If the competent Minister or the Chairperson intends to cancel any of his/her orders to suspend business, the performance of duties of the relevant executive or to reelect the relevant executive under Article 74 (5) or 79 (5), or his/her approval for incorporation pursuant to Article 82, he/she shall give the other party to such disposition or his/her agent an opportunity to state his/her opinion: Provided, That this shall not apply to cases where the other party to such disposition or his/her agent declines to state his/her opinion without justifiable grounds, or the competent Minister or the Chairperson is unable to give him/her an opportunity to state his/her opinion due to unknown whereabouts, etc.
CHAPTER V SUPPLEMENTARY PROVISIONS
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 Article 84 (Establishment of Welfare Organizations)   print
(1) The Federation may establish and operate special organizations for the stabilization of livelihood and the promotion of welfare of executives and employees of credit cooperatives and the Federation. <Amended by Act No. 10437, Mar. 8, 2011>
(2) The establishment and operation of organizations under paragraph (1), and other necessary matters shall be prescribed by Presidential Decree.
CHAPTER VI PENAL PROVISIONS
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 Article 85 (Penal Provisions)   print
(1) Where any executive or employee of a credit cooperative or the Federation does any of the following acts, he/she shall be punished by imprisonment for not more than five years or by a fine not exceeding ten million won: <Amended by Act No. 10437, Mar. 8, 2011>
1. Where he/she uses or lends money for the purposes other than the business purpose of a credit cooperative or the Federation, or disposes of or utilize property of a credit cooperative or the Federation for speculation purposes;
2. Where he/she fails to follow management guidance under Article 80 (1).
(2) Where any executive or employee of a credit cooperative or the Federation, or a liquidator does any of the following acts, he/she shall be punished by imprisonment for not more than three years or by a fine not exceeding five million won: <Amended by Act No. 10437, Mar. 8, 2011>
1. Where he/she fails to obtain authorization or approval on a matter subject to authorization or approval from a supervisory agency, or he/she conducts business continuously even after authorization is cancelled;
2. Where he/she has made a registration deceitfully;
3. Where he/she makes a false statement to a supervisory agency, general meeting or the board of directors;
4. Where he/she conducts any matter requiring a resolution by a general meeting or the board of directors without passing a resolution;
5. Where he/she violates Article 29 (including cases where it is applied mutatis mutandis in Article 67 (4));
6. Where he/she has a cooperative or the Federation violate directions under Article 28 (3) (including cases where it is applied mutatis mutandis in Article 67 (4)), or paragraph (5) of the same Article or Article 35 (including cases where it is applied mutatis mutandis in Article 70 (4));
7. Where he/she has a credit cooperative or the Federation possess movable property or real estate, in violation of Article 31 (including cases where it is applied mutatis mutandis in Article 70 (4));
8. Where he/she violates the provisions of the Civil Act applied mutatis mutandis pursuant to Article 44;
9. Where he/she refuses, interferes with or evades an inspection by a supervisory agency, or makes a false statement to an inquiry of the relevant inspector;
10. Where he/she fails to make a public announcement of management under Article 75 or makes a false public announcement.
(3) A person who violates Article 22 (2) and (3) (including cases where it appliesmutatis mutandis in Article 64 (8)) shall be punished by imprisonment for not more than two years or by a fine not exceeding five million won. <Newly Inserted by Act No. 10437, Mar. 8, 2011>
(4) A person who has a credit cooperative or the Federation cooperate in politics, in violation of Article 5, shall be punished by imprisonment for not more than one year or a fine not exceeding three million won, except in cases expressly prescribed by other Acts. <Amended by Act No. 10437, Mar. 8, 2011>
(5) A person who violates Article 2 (5) shall be punished by imprisonment for not more than one year or by a fine not exceeding two million won. <Amended by Act No. 10437, Mar. 8, 2011>
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 Article 86 (Joint Penal Provisions)   print
If the representative, agent, employee or other servant of a credit cooperative or the Federation commits an offense under Article 85 (1) or (2) in connection with the business of the credit cooperative or the Federation, not only such offender shall be punished but such credit cooperative or the Federation also shall be punished by a fine under the relevant Article: Provided, That this shall not apply to cases where such credit cooperative or the Federation has not been negligent in giving due attention and supervision concerning the relevant business in order to prevent such offense. <Amended by Act No. 10437, Mar. 8, 2011>
[This Article Wholly Amended by Act No. 9197, Dec. 26, 2008]
ADDENDA
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Article 2 (Applicability to Chairperson's Holding of Office according to Amendment of Former Act)
Part concerning the continuous holding of office in the amended provisions of Article 19 (1) in accordance with the amended Community Credit Cooperatives Act, Act No. 6493, shall begin to apply to the term of office of the first chairperson elected after October 25, 2001, the enforcement date of the same Act.
Article 3 (Applicability to Full-time Directors of Regional Credit Cooperatives according to Amendment of Former Act)
The amended provisions of Article 17 (3) in accordance with the partly amended Community Credit Cooperatives Act, Act No. 7658, shall begin to apply to cases where the first chairperson elected after November 5, 2005, the enforcement date of the same Act, works part-time.
Article 4 (Applicability to Reelection of Chairperson according to Amendment of Former Act)
The amended provisions of Article 19 (1) in accordance with the partly amended Community Credit Cooperatives Act, Act No. 7658, shall begin to apply to the first chairperson elected after November 5, 2005, the enforcement date of the same Act.
Article 5 (Transitional Measures concerning Disqualifications for Executives according to Amendment of Former Act)
The former provisions shall apply to matters concerning disqualifications for an executive who holds office as at the time the partly amended Community Credit Cooperatives Act, Act No. 7658, enters into force, notwithstanding the amended provisions of Article 20 (1) of the same Act.
Article 6 (Transitional Measures concerning Executives of Federation according to Amendment of Former Act)
The board of directors shall organize the audit and inspection committee and appoint a compliance officer under the amended provisions of Articles 52-2 (1) and 52-4 (2) of the partly amended Community Credit Cooperatives Act, Act No. 7658, at the first meeting called after the expiration of the term of office of the auditor who holds office as at the time the same Act enters into force.
Article 7 (General Transitional Measures concerning Disposition)
An act done by or in relation to an administrative agency under the former provisions as at the time this Act enters into force shall be construed as an act done by or in relation to an administrative agency under this Act corresponding thereto.
Article 8 (Transitional Measures concerning Penal Provisions)
When the penal provisions apply to an act done before this Act enters into force, the former provisions shall apply thereto.
Article 9 (Amendment of other Acts)
Article 10 (Relationships with other Acts and Subordinate Statutes)
Where the former Community Credit Cooperatives Act or the provisions thereof have been cited by other Acts and subordinate statutes as at the time this Act enters into force, if provisions corresponding thereto exist in this Act, this Act or the relevant provisions of this Act shall be deemed cited in lieu of the former provisions.
ADDENDUM<Act No. 8553, Jul. 27, 2007>
This Act shall enter into force 30 days after the date of its promulgation.
ADDENDA<Act No. 8635, Aug. 3, 2007>
Article 1 (Enforcement Date)
This Act shall enter into force one year and six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 44 Omitted.
ADDENDA<Act No. 8852, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)
Articles 2 through 7 Omitted.
ADDENDA<Act No. 8863, Feb. 29, 2008>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 through 5 Omitted.
ADDENDUM<Act No. 9197, Dec. 26, 2008>
This Act shall enter into force on the date of its promulgation.
ADDENDA<Act No. 10220, Mar. 31, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force on January 1, 2011.
Articles 2 through 5 Omitted.
ADDENDA<Act No. 10303, May 17, 2010>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation. (Proviso Omitted.)
Articles 2 through 10 Omitted.
ADDENDA<Act No. 10437, Mar. 8, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Applicability to Election of Executives)
The amended provisions of Article 18 (2) shall begin to apply to the first executive elected after this Act enters into force.
Article 3 (Applicability to Restrictions on Reelection of Chairperson)
The amended provisions of the proviso to Article 20 (1) shall begin to apply to the first chairperson elected after November 5, 2005.
Article 4 (Applicability to Legal Reserve)
The amended provisions of Article 35 (1) shall begin to apply to the fiscal year following the fiscal year to which the enforcement date of this Act belongs.
Article 5 (Applicability to External Audit)
The amended provisions of Article 76 (1) and (2) shall begin to apply to the fiscal year following the fiscal year to which the enforcement date of this Act belongs.
Article 6 (Transitional Measures concerning Change of Name of Korean Federation of Community Credit Cooperatives)
The name of the Federation of Community Credit Cooperatives noted in the register on its property, and other official books as at the time this Act enters into force shall be construed as the name of the Korean Federation of Community Credit Cooperatives under this Act.
Article 7 (Transitional Measures concerning Approval for Incorporation)
A credit cooperative incorporated as at the time this Act enters into force shall be construed as a credit cooperative incorporated in accordance with this Act: Provided, That it shall satisfy the necessary conditions of approval for incorporation under the amended provisions of Article 17-2 within two years from the enforcement date of this Act.
Article 8 (Transitional Measures concerning Disqualifications for Executives)
Where a person who is an executive of a credit cooperative or the Federation as at the time this Act enters into force falls under disqualifications under the amended provisions of Article 21 (1) by reasons arising before this Act enters into force, notwithstanding the same amended provisions, the former provisions shall apply thereto.
Article 9 (Transitional Measures concerning Prohibition of Holding Concurrent Positions of Full-Time Executives)
Where a person who is an executive of a credit cooperative or the Federation as at the time this Act enters into force falls under the amended provisions of Article 25 (8), he/she shall resign from a full-time position in the other corporation or company within six months.
Article 10 (Transitional Measures concerning Penal Provisions)
The former provisions shall apply to a person prosecuted pursuant to the former Article 85 (4) (limited to cases of violation of Article 22 (2)) as at the time this Act enters into force.
Article 11 (Relationships with other Acts and Subordinate Statutes)
Where the Federation of Community Credit Cooperatives is cited by other Acts and subordinate statutes as at the time this Act enters into force Act, the Korean Federation of Community Credit Cooperatives under this Act shall be deemed cited in lieu of the former provisions.
ADDENDA<Act No. 10682, May 19, 2011>
Article 1 (Enforcement Date)
This Act shall enter into force on the date of its promulgation.
Articles 2 and 3 Omitted.
ADDENDA<Act No. 11690, Mar. 23, 2013>
Article 1 (Enforcement Date)
(1) This Act shall enter into force on the date of its promulgation.
(2) Omitted.
Articles 2 through 7 Omitted.