RULES

ON

OPERATION OF THE SECURITIES AND FUTURES COMMISSION

Rules on Operation of Securities and Futures Commission

CONTENTS

I.	General Provisions

§1.	Purpose

II.	The Commission

§2.	Composition of the SFC

§3.	Chairman

III.	Meetings

§4.	Convocation of Meetings

§5.	Resolution

§6.	Resolution by Written Consent

§7.	Preparation of Resolution Documents

§8.	Minutes

§9.	Hearings

§10.	Other participants

§11.	Preparation of agenda

IV.	Delegation Of Powers And Functions

§12.	Delegation to the Chairman

§13.	Delegation to the FSS Governor

V.	Supplementary Provisions

§14.	Secretary

§15.	Advisory Panel

§16.	Allowance

§17.	Detailed Matters for Operation

Addenda

Enacted on April 1, 1998

Amended on August, 31 2001

CHAPTER I.

GENERAL PROVISIONS

§1. Purpose

The purpose of these Rules is to prescribe the matters necessary for the operations of the Securities and Futures Commission (hereinafter, "the SFC") pursuant to the provisions under Article 22 paragraph (2) of the Act on Establishment of Financial Supervisory Organizations.

CHAPTER II.

THE COMMISSION

§2. Composition of the SFC

(1) The SFC shall be composed of the Vice Chairman of the Financial Supervisory Commission (hereinafter, "the FSC") and four commissioners appointed by the President of the Republic of Korea upon recommendation of the FSC Chairman among the persons who meet the criteria stipulated in one of the following subparagraphs:

1. A person who has served as a government officer at the rank of class 2 or higher with experiences in the fields of finance, securities, futures, or accounting;

2. A person with a college degree in law, economics, business administration, or accounting who has served for fifteen (15) years or more at a university at the rank of an associate professor or higher, or as a staff commissioner holding a corresponding position at a publicly authorized research institution; or

3. A person with extensive knowledge and experience in finance, securities, futures, or accounting.

(2) The Vice Chairman of the FSC shall concurrently hold the office of Chairman of the SFC, and one of the commissioners under each subparagraph of paragraph (1) shall be the standing commissioner of the SFC.

§3. Chairman

(1) The Chairman shall represent the SFC, preside over board meetings, and exercise control over general affairs.

(2) In case the Chairman is unable to carry out his duties due to unavoidable reasons, the standing commissioner shall carry them out on his behalf; in case both the Chairman and the standing commissioner are unable to conduct their duties due to unavoidable reasons, the commissioners shall assume the duties of the Chairman in the order of the appointment (in the order of seniority when they are appointed on the same date).

CHAPTER III.

MEETINGS

§4. Convocation of Meetings

(1) A meeting of the SFC shall be called upon by the chairman.

(2) Meetings are classified into regular meetings and ad hoc meetings, and regular meetings shall be called upon the second and fourth wednesday of each month, and an ad hoc meeting shall be called upon request of at least two commissioners or when the Chairman deems necessary.

(3) The Chairman shall, when he intends to call a meeting, send to each commissioner of the SFC a written notice in which the time and date, the place, and the purpose of the meeting and the agenda, no later than three days prior to the scheduled date of the meeting. However, this shall not apply to cases where it is deemed not appropriate to send a written notice or in case of emergency.

§5. Resolution

(1) A resolution shall be adopted by the concurrence of at least three commissioners.

(2) A commissioner of the SFC shall be excluded from the deliberation and resolution on the matters pertaining to one of the following subparagraphs:

1. Matters which are directly pertain to the interests of such a commissioner;

2. Matters which are related to the interests of the persons who is a spouse, a relative by blood within the fourth degree, or a relative by marriage within the second degree of such a commissioner or the legal entity to which such a commissioner belongs.

§6. Resolution by Written Consent

When the Chairman deems inevitable, proposals may be resolved in writing, in which case he or she shall attach explanation.

§7. Preparation of Resolution Documents

When making resolution of proposals, the SFC shall prepare a resolution document, on which the participating commissioners shall write down their names and affix their seals or signatures.

§8. Minutes

(1) With respect to a SFC board meeting, the secretary of the SFC shall prepare minutes which include matters of the following:

1. The time and date of opening, suspending and closing of the meeting;

2. Place of the meeting;

3. Names of commissioners, both present and absent, and other participants;

4. Agenda of the meeting (summary of the proceedings);

5. Other matters which are deemed necessary.

(2) The Chairman and the secretary shall write down their names and affix their seals or signatures on the minutes pursuant to paragraph (1).

(3) The secretary shall submit the minutes prepared pursuant to paragraph (1) and (2) to the next SFC board meeting.

§9. Hearings

Whenever the SFC deems it necessary to hold a hearing for the deliberation of a certain matter, it may listen to the Deputy Governors, the Assistant Governors, the Auditor, other staff members of the Financial Supervisory Service (hereinafter, "FSS"), and other pertinent experts.

§10. Other participants

The Chairman may, when it is deemed necessary, allow the public officials of the SFC (including the FSC), the Deputy Governors, the Assistant Governors, the Auditor, and staff members of the FSS to attend the meeting of the SFC to offer explanations on specific proposals.

§11. Preparation of Agenda

Proposals shall be classified for either resolution or report prepared by using the annexed Form 1 or 2 in accordance with the guidelines stated in Form 3.

CHAPTER IV.

DELEGATION OF POWERS AND FUNCTIONS

§12. Delegation to the Chairman

(1) The SFC shall delegate matters stipulated in one of the following subparagraphs to the Chairman:

1. Matters that require urgent action but it is difficult to convene a meeting for a considerable period of time due to a natural disaster, a war, a grave incident, a sudden change in economic situation, and other incidents similar thereto;

2. Matters that require immediate measures for the sake of investor protection and maintenance of sound market order, where the effectiveness of such measures would be reduced beyond any doubt it they were decided at a meeting.

(2) When the Chairman has executed the delegated matters due to circumstances pursuant to paragraph (1), he must report the results at the next meeting.

§13. Delegation to the FSS Governor

The SFC may delegate or mandate to the FSS Governor the matters pertaining to one of the following subparagraphs:

1. matters concerning the procedures and methods necessary for the implementation of its decisions;

2. matters concerning the handling and registration of filings and reports for which procedures are so clearly stipulated in the regulations and orders of the SFC that any formal decision making is deemed necessary;

3. matters concerning the execution of the duties of management, supervision, surveillance, and investigation which are conducted in accordance with the procedures and criteria determined by the SFC;

4. other matters concerning the execution of simple and routine duties.

CHAPTER V.

SUPPLEMENTARY PROVISIONS

§14. Secretary

(1) The SFC shall have one secretary who is in charge of the general affairs of the SFC.

(2) The secretary shall be the Director General of the Office of Planning and Administration of the SFC.

§15. Advisory Panel

(1) The SFC may appoint experts to an advisory group when it needs to hear expert opinions pursuant to the provisions of Article 9 or when it is considered necessary for the purpose of carrying out its duties.

(2) Issues regarding the composition and operation of the advisory panel pursuant to the provisions of paragraph (1) shall be separately determined by the Chairman.

§16. Allowance

(1) The SFC may pay allowance and necessary expenses to the participating commissioners except the Chairman and the standing commissioner.

(2) The provisions of paragraph (1) shall apply mutatis mutandis to outsiders who present their opinions at the SFC meeting pursuant to Article 9 and to pertinent experts who are the members of the advisory panel pursuant to the provisions of Article 15

§17. Detailed Matters for Operation

The Chairman may determine detailed matters necessary for the enforcement of these Rules.

Addenda

§1. Enforcement Date

The Rules shall be effective on April 1. 1998.

§2. Interim Measures

Until the FSS is established, the Deputy Governors, the Assistant Governors, the Auditor, and employees of the FSS, stated in Article 9 and Article 10, shall be deemed the persons stated in the following subparagraphs:

1. Governor, Deputy Governors, Assistant Governors, and employees of the Banking Supervisory Authority, the Securities Supervisory Board, and the Insurance Supervisory Board;

2. Governor, Deputy Governors, Assistant Governors, Auditor, and employees of the Non-banking Supervisory Authority.

Addendum

(August 31, 2001)

The Rules shall be effective on August 31, 2001