RULES

ON

OPERATION OF THE FINANCIAL SUPERVISORY

COMMISSION

Rules on Operation of the Financial Supervisory Commission

CONTENTS

I.	General Supervision

§1.	Purpose

§2.	Fair and Transparent Operation

II.	Board Operations

§3.	Composition of the Board

§4.	Chairman

§5.	Emergency Actions by the Chairman

III.	Operation of FSC Board Meetings

§6.	Convocation of Meetings

§7.	Resolutions

§8.	Resolution by Written Consent

§9.	Preparation of Resolution Documents

§10.	Minutes

§11.	Proxy Attendance

§12.	Hearings

§13.	Attendance and Explanation Requirements at Meetings

§14.	Submitting Proposals

§14-2.	Subcommittee

IV.	Delegation of Powers and Functions of the FSC

§15.	Delegation of Powers and Functions of the FSC

§16.	Delegation to the Securities and Futures Commission

§17.	Delegation to the FSS Governor

V.	Supplementary Provisions

§18.	Secretary

§19.	Advisory Panel

§20.	Allowance

§21.	Detailed Matters for Operation

Addenda

Enacted on April 1, 1998

Amended on May 8, 1998

Amended on July 16, 1998

Amended on July 9, 1999

Amended on August 31, 2001

Amended on September 27, 2001

CHAPTER I.

GENERAL SUPERVISION

§1. Purpose

The purpose of these Rules is to prescribe matters necessary for operations of the Financial Supervisory Commission (hereinafter, "the FSC") pursuant to the provisions under Article 16 of the Act on the Establishment of Financial Supervisory Organization (hereinafter, the Act).

§2. Fair and Transparent Operation

(1) The FSC shall, in conducting its duties, endeavor to maintain fairness, to secure transparency, and not to infringe upon the autonomy of any financial institution.

(2) The FSC shall independently conduct its duties under powers vested in it.

CHAPTER II.

BOARD OPERATIONS

§3. Composition of the Board

The FSC shall be composed of nine Commissioners including one Chairman, one Vice Chairman and the following members:

1. The Vice Minister of Finance and Economy;

2. The Deputy Governor of the Bank of Korea;

3. The President of the Korea Deposit Insurance Corporation;

4. An accounting expert appointed by the President of the Republic of Korea upon the recommendation of the Minister of Finance and Economy;

5. An expert in banking and finance appointed by the President of the Republic of Korea upon the recommendation of the Chairman of the FSC;

6. A legal expert appointed by the President of the Republic of Korea upon the recommendation of the Minister of Justice; and

7. A representative of the business community appointed by the President of the Republic of Korea upon the recommendation of the President of the Korea Chamber of Commerce and Industry.

§4. Chairman

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

(2) In case the Chairman is unable to carry out his duties due to unavoidable reasons, the Vice Chairman and the Commissioner pursuant to Articles 3 subparagraph 5 shall carry them out in that order. In case both the Vice Chairman and the Commissioner are unable to conduct the stipulated duties due to unavoidable reasons, the other Commissioners pursuant to Article 3 paragraphs (1), (2), (3), (4), (6) and (7) shall carry them out in that order.

§5. Emergency Actions by the Chairman

(1) The Chairman may, at a time of internal disorder, external contingencies, natural disasters, or grave financial and economic crisis, and when emergency measures on financial supervision are required, but there is not ample time to call a meeting of the Commission, take necessary actions within the authority of the FSC.

(2) When actions pursuant to paragraph (1) are taken, the Chairman shall, without delay, call a board meeting and report the agenda thereof.

(3) The FSC may confirm or amend the emergency actions taken under the provisions of paragraph (1) or may suspend the implementation of such actions.

CHAPTER III.

OPERATION OF FSC BOARD MEETINGS

§6. Convocation of Meetings

(1) FSC board meetings shall be called upon by the Chairman.

(2) Meetings are classified into regular meetings and ad hoc meetings. Regular meetings shall be called upon the second and fourth Friday of each month, and ad hoc meetings shall be called upon the request of at least three Commissioners or when the Chairman deems necessary.

(3) The Chairman shall, when intending to call a meeting, give a written notice in which the time, date, place, and matters on the agenda of the meeting and proposals stated, no later than three days prior to the scheduled date of the meeting, to each Commissioner and participants. However, this shall not apply to cases where it is deemed not appropriate to send written notice or proposals, or in case of emergency.

(4) The FSC shall hold joint sessions other than regular and ad hoc meetings under the provisions of paragraph (2) so that the following matters could be reported or discussed; provided that this shall not be applied to inevitable cases like documentary resolution.

1. Matters concerning financial and economic trend.

2. Matters scheduled for submission to regular meetings

3. Matters concerning consultations and ensuing results of laws and regulations of financial supervisory

4. Important matters concerning duties, operation and management of pertinent organization under the FSC

5. Matters concerning reorganization of the FSC

6. Matters concerning the business and reorganization of the FSS

7. Matters concerning quarterly performance of the requirement issued as a result of meetings and joint sessions of the FSC and the SFC

8. Other important matters pertaining to the financial supervisory policy

(5) The secretary shall prepare and submit meeting reports to the next joint session

(6) The joint session held under paragraph (4) shall consist of members of the FSC and the SFC including Chairman and Vice Chairman

§7. Resolutions

(1) Board meeting resolutions of the FSC shall be adopted by the attendance of a majority of its members and by the concurrence of a majority of those present unless other provisions of the Act or other laws require a particular method of resolution.

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

1. Matters which pertain to the interests of such a Commissioner;

2. Matters in relation to the interests of the person who is a spouse, a relative by blood within the fourth degree, a relative by marriage within the second degree of such a Commissioner, or the legal entity to which such a Commissioner belongs.

§8. Resolution by Written Consent

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

§9. Preparation of Resolution Documents

The FSC shall, when making resolutions of proposals, prepare a resolution document on which participating members shall write their names and affix their seals or signatures.

§10. Minutes

(1) With respect to a FSC board meeting, the secretary of the FSC shall prepare the 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 meeting(summary of proceedings); and

5. Other matters which are deemed as necessary.

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

(3) The secretary shall report the minutes pursuant to paragraphs (1) and (2) to the next FSC board meeting.

§11. Proxy Attendance

(1) When Commissioners of Article 3 subparagraphs 1 through 3 are unable to attend board meetings, persons who hold subordinate positions thereto may attend instead.

(2) Persons attending board meetings as proxies may present their opinions on proposals but shall not participate in voting.

§12. Hearings

(1) When the FSC deems it necessary to hold a hearing for the deliberation of a certain matter, it may listen to the Deputy Governor, Assistant Governor, Auditor, and other staff members of the FSS and other pertinent experts.

(2) When the FSC recognizes that hearings are necessary for deliberation of a certain matter, it may allow interested parties to attend meetings and to present their opinions.

§13. Attendance and Explanation Requirements at Meetings

The Chairman may, when deems necessary, have FSC government officials, FSS Deputy Governor, Assistant Governor, Auditor and staff attend at board meetings or provide clarification on any questionable issues that may arise during meetings.

§14. Submitting Proposals

(1) Any FSC board member may submit a proposal with the support of three or more members. The Chairman, however, may solely submit a proposal.

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

(3) Proposals shall, except for cases falling under Article 6 paragraph (3), be presented to the FSC five days prior to the appointed meeting date.

§14-2. Subcommittee

(1) The FSC may compose and operate a subcommittee in order to deliberate, in advance, matters selected by the FSC.

(2) The members of a subcommittee shall be appointed among the Commissioners of the FSC, a lead member shall be appointed among the subcommittee personnel.

(3) The lead member shall call and preside over meetings, and when deliberation of proposals is completed, shall report the result thereof to the FSC.

(4) Article 20 paragraph (1) shall apply mutatis mutandis to the subcommittee.

CHAPTER IV.

DELEGATION OF POWERS AND FUNCTIONS OF THE FSC

§15. Delegation of Powers and Functions of The FSC

The FSC shall delegate certain powers and duties as stipulated in the Annex to the Chairman.

§16. Delegation to the Securities and Futures Commission

(1) The FSC may, when it deems necessary for efficient management, supervision, and surveillance of securities and futures markets, delegate part of its powers and functions to the Securities and Futures Commission (hereinafter referred to as the SFC).

(2) The SFC shall, when resolving a delegated matter pursuant to paragraph (1), promptly report the results to the FSC.

(3) The FSC may, when it recognizes that the resolution adopted by the SFC pursuant to paragraph (2) is against the law or deemed extremely improper for the protection of investors and of public interests, nullify all or part of such resolution.

§17. Delegation to the Governor

The FSC may delegate and mandate matters falling under one of the following subparagraphs to the FSS Governor for efficient execution of its powers and functions:

1. Matters concerning procedures and methods necessary for the execution of its decision;

2. Matters concerning the handling and registration of the declarations and reports which do not require a decision since the precise handling criteria are stated in regulations or orders by the FSC;

3. Matters concerning managerial duties, supervision, surveillance, and investigation which are conducted in accordance with the procedures and criteria determined by the FSC;

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

CHAPTER V.

SUPPLEMENTARY PROVISIONS

§18. Secretary

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

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

§19. Advisory Panel

(1) The FSC may when necessary for hearings pursuant to Article 12 and performance of its duties thereto, have an advisory panel composed of experts relevant to the FSC.

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

§20. Allowance

(1) The FSC may, when Commissioners under Article 3 subparagraphs 4, 6, and 7 attend board meetings and joint sessions, pay allowance and necessary expenses to the participating Commissioners.

(2) The provisions of paragraph (1) shall apply mutatis mutandis to outsiders who present their opinions at the FSC meetings pursuant to Article 12 and to pertinent experts who are members of the advisory panel pursuant to Article 19.

§21. Detailed Matters for Operation

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

Addenda

(April 1, 1998)

§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 12 and Article 13, 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

(May 8, 1998)

The Rules shall be effective on May 8, 1998

Addendum

(July 16, 1998)

The Rules shall be effective on July 16, 1998

Addendum

(July 9, 1999)

The Rules shall be effective on July 9, 1999

Addendum

(August 31, 2001)

The Rules shall be effective on August 31, 2001

Addendum

(September 27, 2001)

The Rules shall be effective on September 27, 2001