RESTRICTED  WORLD TRADE  
ORGANIZATION  GPA/MOD/KOR/1 
19 March 2004  
 
(04-1238) 
Committee on Government Procurement Original:   English 
   
PROPOSED MODIFICATION TO APPE NDIX I OF THE REPUBLIC OF KOREA 
 
Communication from the Republic of Korea under Article XXIV:6(b)
1 of the GPA  
   
 The following communication, dated 18 Marc h 2004, from the Delegation of the Republic of 
Korea is being circulated to the Parties to  the Agreement on Government Procurement. 
 
_______________ 
  
 
I. INTRODUCTION 
 Pursuant to Article XXIV:6(b) of the WTO Agreement on Government Procurement (GPA), 
the Republic of Korea wishes to notify the Comm ittee on Government Procurement of the following 
modification relating to Annex 3 of Appendix I of the GPA. 
 
 This modification reflects the ongoing economic restructuring and privatization efforts by the 
Korean Government.  
II. PROPOSED MODIFICATION 
The modification is proposed with respect to the Annex 3 list of "All Other Entities that 
Procure in Accordance With the Provisions of this Agreement": 
 
 - Delete "Kookmin Bank". 
 
 This modification is based on the fact that Kookmin Bank has been privatized as the Korean 
Government completed the sale of its shares on 19 December 2003 (see Attachment A for details).  
With this privatization, the Korean Government's  control and influence over Kookmin Bank has been 
effectively eliminated.   Consequently, Kookmin Bank, a fully privatized company, is now completely subject to "the 
Commercial Act" of the Republic of Korea.  It is  no longer subject to "the Kookmin Bank Act" which 
was applied when Kookmin Bank remained a govern ment-invested enterprise.  "the Kookmin Bank 
Act" has been repealed.  
                                                     
 
1 Article XXIV:6(b) reads as follows:  Rectifications or Modifications   "(b) Where a Party wishes, in exercise of its 
rights, to withdraw an entity from Appendix I on the ground s that government control or influence over it has been 
effectively eliminated, that Party shall notify the Committee.  Such modification shall become effective the day after the end 
of the following meeting of the Committee, provided that the me eting is no sooner than 30 days from the date of notification 
and no objection has been made.  In the event of an objection, the matter may be pursued in accordance with the procedures 
on consultations and dispute sett lement contained in Article XXII.  In cons idering the proposed modification to Appendix I 
and any consequential compensatory adjustment, allowance shal l be made for the market-openi ng effects of the removal of 
government control or influence."  GPA/MOD/KOR/1 
Page 2  
 
 In this regard, the Korean Government pr oposes to delete Kookmin Bank from the Annex 3 
list of Appendix I of the GPA and confirms hereby th at it has no means, either legal or practical, to 
control or have influence over proc urement decisions by Kookmin Bank. 
  Further details concerning the privatiza tion of Kookmin Bank including its current 
shareholder and legal status are provided in Att achment A.  Attachment B shows the modification 
proposed by the Republic of Korea to page 1/2 of Annex 3 of Appendix I.  Attachment C indicates how page 1/2 of Anne x 3 of Appendix I would appear after th e proposed modification has been made.  
Attachments D and E provide the full texts of "the Kookmin Bank Act" and "the Act to Repeal the Kookmin Bank Act", respectively.
2 
 
                                                      
2 Attachments B, C, D and E are in English only. GPA/MOD/KOR/1 
Page 3 
 
 
ATTACHMENT A 
 
DETAILS CONCERNING THE PRIVATIZATION OF KOOKMIN BANK 
 
 
 
1. Overview 
 As part of its plan to privatize state enterp rises, the Korean Government has sought to convert 
Kookmin Bank from a government-invested enterp rise to a private company.  The Korean 
Government finished the privatization process by completing the sale of its shares in Kookmin Bank 
as of 19 December 2003.  With this completion of the privatization, the Korean Government's control 
and influence, both legal and practical, over K ookmin Bank has been effectively eliminated. 
  Accordingly, the Korean Government abolis hed "the Kookmin Bank Ac t" to which Kookmin 
Bank had been subject as a government-invested en terprise.  With the sale of all remaining 
government shares and the enforcement of "the Ac t to Repeal the Kookmin Bank Act (hereinafter 
referred to as "the Repeal Act" )", Kookmin Bank has been transformed into a fully privatized 
company which is now completely subject to the "Commercial Act" as in the case of other private 
entities.   Kookmin Bank has been listed on the Korea Stoc k Exchange since its initial public offering in 
November 2001, and since then has been subject  to the "the Securities and Exchange Act". 
  As a fully privatized company from both legal and practical viewpoints, Kookmin Bank conducts its procurement activities solely on the basis of commercial considerations without any 
control or influence by the Korean Government.  Therefore, the Korean Government proposes to 
remove Kookmin Bank from Korea's Anne x 3 list of Appendix I of the GPA. 
 
2. Current Shareholder Status 
 Table 1 shows the composition of Kookmin Bank shareholders as of 19 December 2003.  As 
indicated above, the Korean Government no longer h as a stake in Kookmin Bank.  Table 2 shows the 
breakdown of Kookmin Bank shareholders.  In par ticular, it indicates the change in shareholders 
before and after the Korean Government's sale of its remaining shares in Kookmin Bank.  Finally, 
Table 3 shows the privatization process of Kookmin  Bank by the Korean Government, including the 
change in government shares and the number of issuing stocks.  
Table 1 
 
Breakdown of Current Shareholders 
 
(%) Gov't Domestic  
Investors 
 Foreign  
Investors Others Total 
Shares 0 59,035,854 246,326,639 31,016,623 336,379,116 
% 0.0 17.55 73.23 9.22 100.0 
 GPA/MOD/KOR/1 
Page 4  
 
 
Table 2 
 
Change of Shareholders Before and After the Government Sale 
 
Before Sale (18 December 2003) After Sale(19 December 2003)  
Shareholders Number of Stocks (Ratio) 
 Number of Stocks (Ratio) 
Government of Korea 30,623,761 (9.10%) 0(0%) 
Foreign Investors 246,051,139(73.15) 246,326,639(73.23%) 
  - Capital Group 20,154,700 (5.99%) 20,154,700 (5.99%) 
  - ING Bank 12,716,691 (3.78%) 12,716,691 (3.78%) 
  - Goldman Sachs 3,983,932 (1.18%) 3,983,932 (1.18%) 
  - Bank of New York 34,828,836(10.35%) 34,839,086(10.36%) 
Domestic Investors 56,111,354(16.68%) 59,035,854(17.55%) 
Treasury Stock 3,592,862 (1 .07%) 31,016,623 (9.22%) 
Total 336,379,116 (100%) 336,379,116 (100%) 
 
Table 3 
 
Privatization Process of Kookmin Bank 
 
Date Number of 
Issuing Stocks Government Shares 
(Ratio) Events 
1 Nov. 2001  299,697,462 28,890,341 (9.64%) Merge with H&CB 
15 Apr. 2002 317,677,416 30,623,761(9.64%) Stock Dividend 
25 Nov. 2002 328,258,685 30,623,761(9.33%) Conversion of CB 
30 Sep. 2003 336,379,116 30,623,761(9.10%) Merge with Kookmin Card 
19 Dec. 2003 336,379,116 0 Sale of Government Shares 
 
3. Current Legal Status 
 As already mentioned before, with the abo lishment of "the Kookmin Bank Act" and the 
enforcement of "the Repeal Act", Kookmin Bank has been transformed from a government-invested 
enterprise to a private company.  The legal st atus of Kookmin Bank, therefore, has changed 
completely.  Now Kookmin Bank is subject to the Korean "Commercial Act" as in the case of other 
private companies.   The current legal status of Kookmin Bank signi fies that it is no longer subject to laws or 
regulations that cover a government-invested enterp rise.  For instance, Kookmin Bank is no longer 
subject to "the Board of Audit and Inspection (BA I) Act" and "the Act on Inspection and Investigation 
of the Government Administration".  It is, therefor e, no longer subject to in spections conducted by the 
BAI or the National Assembly.  In this sense, th e legal rights and obligations of Kookmin Bank are 
now identical to those of other private companies.  
4. Effective Elimination of Government Control and Influence 
 As shown by the Tables 1-3, the Korean Govern ment has sold out all the remaining shares, 
i.e. 9.10%, in Kookmin Bank.  The Korean Gove rnment has also taken such legal measures as 
mentioned above to guarantee the managerial freedom of Kookmin Bank.  GPA/MOD/KOR/1 
Page 5 
 
 
 The Board of Directors of Kookmin Bank is now composed of the executive directors and external directors recommended by its shareholders , both foreign and domestic.  In particular, the 
shares of foreign investors account for about 73% of th e total.  In this regard, the Korean Government 
has no legal or practical means to intervene in  the appointment of Kookmin Bank's directors. 
 
 Kookmin Bank is now a financial institution ope rated and controlled solely by its private 
shareholders.  The important managerial decisions  by Kookmin Bank are made in the shareholders' 
meeting in accordance with the position of the sharehol ders.  This fact, together with the change in 
Kookmin Bank's legal status explai ned above, confirms that the Korean Government has no means to 
intervene in its managerial decisions including those relating to procurement activities. 
 
 GPA/MOD/KOR/1 
Page 6  
APPENDIX I KOREA  ANNEX 3 Page 1/2
 
 
18 March 2003 (WT/Let/456)  ATTACHMENT B 
 
KOREA 
 
(Authentic in the English language only) 
 
ANNEX 3 
 
All Other Entities which Procure in Accordance 
With the Provisions of this Agreement  
 
Supplies  
 
Threshold : 450,000 SDR 
 List of Entities : 
 
- Korea Development Bank 
- Industrial Bank of Korea -
 Kookmin Bank  
- Korea Tobacco & Ginseng Corporation - Korea Minting and Security Printing Corporation 
- Korea Electric Power Corporation (except pur chases of products in the categories of 
HS Nos. 8504, 8535, 8537 and 8544) 
- Korea Coal Corporation - Korea Resources Corporation - Korea National Oil Corporation - Korea General Chemical Corporation 
- Korea Trade-Investment Promotion Agency 
- Korea Highway Corporation - Korea National Housing Corporation - Korea Water Resources Corporation - Korea Land Corporation 
- Korea Agriculture and Rural Infrastructure Corporation 
- Agricultural and Fishery Marketing Corporation - Korea Telecom (except purchases of comm on telecommunications commodity products and 
telecommunications network equipment) 
- Korea National Tourism Organization - Daehan Printing and Publishing Co. Ltd. 
- Korea Labor Welfare Corporation 
- Korea Gas Corporation  
Construction Services  
 Threshold : 15,000,000 SDR 
 List of Entities which Procure Services Specified in Annex 5 : 
 Same as "Supplies" section GPA/MOD/KOR/1 
Page 7 
 
APPENDIX I KOREA  ANNEX 3 Page 1/2
 
 
... (WT/Let/...)  ATTACHMENT C 
 
KOREA  
 
(Authentic in the English language only) 
 
ANNEX 3 
 
All Other Entities which Procure in Accordance 
With the Provisions of this Agreement  
 
Supplies  
 
Threshold : 450,000 SDR 
 List of Entities : 
 
- Korea Development Bank 
- Industrial Bank of Korea - Korea Tobacco & Ginseng Corporation - Korea Minting and Security Printing Corporation - Korea Electric Power Corporation (except pur chases of products in the categories of 
HS Nos. 8504, 8535, 8537 and 8544) 
- Korea Coal Corporation - Korea Resources Corporation - Korea National Oil Corporation - Korea General Chemical Corporation - Korea Trade-Investment Promotion Agency 
- Korea Highway Corporation 
- Korea National Housing Corporation - Korea Water Resources Corporation - Korea Land Corporation - Korea Agriculture and Rural Infrastructure Corporation 
- Agricultural and Fishery Marketing Corporation 
- Korea Telecom (except purchases of comm on telecommunications commodity products and 
telecommunications network equipment) 
- Korea National Tourism Organization - Daehan Printing and Publishing Co. Ltd. - Korea Labor Welfare Corporation 
- Korea Gas Corporation 
 
Construction Services  
 
Threshold : 15,000,000 SDR 
 
List of Entities which Procure Services Specified in Annex 5 : 
 Same as "Supplies" section GPA/MOD/KOR/1 
Page 8  
 
  
ATTACHMENT D 
 
KOOKMIN BANK ACT 
  
 
Enacted on December 7, 1962 
Amended on December 16, 1963 
December 25, 1968 
July 5, 1973 
December 19, 1977 December 31, 1981 December 31, 1982 
December 30, 1989 
Repealed on January 5, 1995 
 
 
Article 1 (Purpose) The purpose of this Act is to improve  the economic status of the general 
public and small and medium enterprises by estab lishing the Kookmin Bank Corporation (hereinafter 
referred to as "Kookmin Bank") to  provide financial services to the general public and small and 
medium enterprises. 
 Article 2 (Character, etc.) (1) Kookmin Bank shall be operated under this Act, any decree 
under this Act and the articles of incorporation of the Kookmin Bank. 
 (2) Except as provided in this Act, the provisi ons of the Banking Act shall apply to Kookmin 
Bank: Provided, That Articles 6, 7, 9 through 12, 15, 16, 20 through 22, 27 (1) 2-2 and 10, and 
subparagraphs 4 and 5 of Artic le 30, and Articles 34, 38, 39 and 40 shall not do so. 
 
(3) The scope of small and medium enterprises as provided in Article 1 shall be determined by 
the Presidential Decree according to the number of employees and total amount of capital, etc. 
 
Article 3 (Capital)  The authorized capital of Kookmin Bank shall be five hundred 
billion(500,000,0 00,000) won. 
 
Article 4 (Establishment of Kookmin Bank) (1) The establishment of Kookmin Bank shall be 
completed at the time when such an establishment is registered after shares equivalent to half of its 
authorized capital are underwritten and ha lf of underwritten shares is paid. 
 
(2) Except as provided in paragraph (1), the President of Kookmin Bank shall decide the 
underwriting and payment of shares with the resolution of the general meeting of shareholders within 
six months after the establishment of Kookmin Bank. 
 
Article 5 (Articles of Incorporation) The articles of incorporation of Kookmin Bank shall include 
the following matters: 
 
 1. Purpose;  2. Name; 
 3. Location of head office; 
 4. Matters concerning capital;  4-2. Matters concerning shares; GPA/MOD/KOR/1 
Page 9 
 
 
  5. Matters concerning executive officers and employees; 
 5-2. Matters concerning the ge neral meeting of shareholders; 
 5-3. Matters concerning the operation of the board of directors; 
 6. Matters concerning business and the performance thereof; 
 7. Matters concerning accounting;  8. Methods of public notification; 
 9. Matters concerning the issuance of the National Savings Bond; 
 10. Matters concerning the modification of the articles of incorporation; and 
 11. Other matters as provided by the Presidential Decree. 
 Article 6 (Matters Subject to Approval) Those matters which fall under the following 
subparagraphs shall be subject to a pproval by the Minister of Finance: 
  1. Moving of the head office; 
 2. Modification of the articles of incorporation;  and 
 3. Suspension of business or merger.  
Article 7 (Restriction of Use of Name) Any person other than Kookmin Bank shall not use the name 
of Kookmin Bank or any other name confused therewith.  
Article 8 (Executive Officers) (1) Executive officers of Kookmin Bank shall be one president, 
senior managing directors, directors and one auditor.  
(2) The prescribed number of senior managing directors and directors shall be determined by the 
articles of incorporation.  
Article 9 (Duties of Executive Officers) (1) The president shall represent Kookmin Bank 
and exercise the overall control of the affairs thereof.  
(2) A senior managing director shall assist the president in accordance with the articles of 
incorporation, act on behalf of the president if he /she is not able to perform his/her duties for any 
unforeseen reason, and perform duties of the president if he/she is vacant. 
 
(3) A director shall assist the president and a senior managing director and perform duties which 
are divided in accordance with the articles of incorporation. 
 
(4) In case the president and a senior managing dir ector are not able to perform their duties for 
any unforeseen reason, a director who is designated in  accordance with any such order of priority as 
determined in the articles of incorporation shall act on their behalf, and in case they become vacant, 
that director shall perform duties of the president.  
(5) The auditor shall audit and inspect the business and accounting of Kookmin Bank. 
 
Article 10 (Appointment of Executive Officers) (1) The president shall be appointed by 
the President of the Republic of Korea upon the r ecommendation of the Minister of Finance with the 
nomination of the general meeting of shareholders. 
 
(2) A senior managing director and a director shall be appointed by the Minister of Finance upon the recommendation of the president with the nomin ation of the general meeting of shareholders. 
 
(3) The Auditor shall be appointed by the Minister of Finance.  GPA/MOD/KOR/1 
Page 10  
 
 Article 11 (Term of Office of Executive Officers) (1) The term of office of the president, a 
senior managing director and a director shall be thr ee years and the term of office of the auditor shall 
be two years, but consecutive appointment may be permitted. 
 
(2) In case there is any vacancy in the office of the president, a senior managing director, a director and the auditor, a new executive officer who se term of office is any such period as prescribed 
in paragraph (1) shall be appointed. 
 
Article 12 (Restriction on Concurrent O ffices Taken by Executive Officer) The president, a 
senior managing director, a director and the audito r shall neither be engaged in any business the 
purpose of which is profit-gaining other than thei r duties nor concurrently take any other office 
without the permission of the Minister of Finance. 
 Article 13 (Restriction on Representative Authority of Executive Officers) (1) The 
president or a senior managing director and a director shall not represent Kookmin Bank with respect 
to those matters in which the interests of the presi dent or a person who acts on behalf of the president 
under paragraphs (2) and (4) of Article 9 are in  conflict with the interests of Kookmin Bank. 
 
(2) In any case as stated in paragraph (1) above, if there is any director who falls under the 
following order of priority under Article 9 (4), the director shall represent Kookmin Bank, and if there 
is no director who falls under the following order of priority, the auditor shall do so. 
 Article 14 (Status of Executive Officers) The executive officers of Kookmin Bank shall be 
deemed to be public officials in applying penal provi sions of the Criminal Act and other related Acts. 
 
Article 15 (Guarantee of Term of Office of Executive Officers) The president, a senior 
managing director, a director and the auditor of Kookmin Bank shall not be dismissed during their 
term of office: Provided, That in any case falli ng under any of the follow ing subparagraphs, the 
president shall be dismissed by the President of  the Republic of Korea upon the recommendation of 
the Minister of Finance, a senior managing director and a director by the Minister of Finance upon the 
recommendation of the president, and the auditor by the Minister of Finance; 
 
 1. In case it is impossible for them to perform their duties due to any mental disorder 
and physical disability; 
 2. In case they are sentenced to imprisonmen t without prison labor or heavier against 
any criminal case; 
 3. In case they violate this Act, any Decree under this Act and the articles of 
incorporation; and 
 4. In case they are sentenced to bankruptcy.  
Article 16 (Appointment of Agent) The president may, in accordance with the articles of 
incorporation, appoint an agent who is duly empow ered to act for Kookmin Bank in connection with 
the affairs thereof in all judicial and extra-judi cial matters from among a senior managing director, a 
director or employees. 
 
Article 17 (Appointment and Dismissal of Employees) The president shall appoint and dismiss 
employees of Kookmin Bank.  
Article 18 (Business) Kookmin Bank shall perform any business falling under the following 
subparagraphs:  GPA/MOD/KOR/1 
Page 11 
 
 
  1. Mutual instalment savings (meaning any r eceipt of installments within any specified 
period of time after agreeing on the payment of  any specified amount of money either 
at the time when the said period of time expires or during that period; 
 2. Deposit and regular instalment deposit; 
 3. Loan; 
 4. Discount of bills;  5. Payment acceptance and guarantee; 
 6. Domestic remittance and foreign exchange; 
 7. Safeguard deposit;  8. Acquisition, purchase and sale, underwr iting and guarantee of national bonds, public 
bonds, and shares and corporate bonds which are issued by small and medium 
enterprises under Article 2 (3); 
 9. Business incidental to that which is provided in subparagraphs 1 through 8; and 
 10. Other businesses which are necessary to ach ieve the purpose as stated in Article 1 and 
which are approved by the Minister of Finance, except for those as provided in 
subparagraphs 1 through 8. 
 
(2) Kookmin Bank may, if funds are required in the course of performing its business under 
paragraph (1), borrow loans from the Bank of Korea, other financial institutions or those institutions 
which are approved by the Minister of Finance. 
 
(3) Kookmin Bank may borrow financial funds for small loan finance.  
Article 18-2 (Foreign Capital) (1) Kookmin Bank may borrow foreign capital for small and 
medium enterprises with the approval of the Minister of Finance. 
 
(2) Kookmin Bank may loan such foreign capital as borrowed under paragr aph (1) above without 
any restriction under Article 19 with the approval of the Minister of Finance. 
 
Article 18-3 (Approval of Business Plan) (1) Kookmin Bank shall prepare an annual 
business plan every business year and submit it to the Minister of Finance. The same shall apply to 
any modification of the business plan. 
 (2) The annual business plan as provided in the former  part of paragraph (1) shall be submitted to 
the Minister of Finance one month prior to the beginning of the relevant business year. 
 Article 18-4 (Issuance of the National Savings Bond) (1) Kookmin Bank may issue National 
Savings Bonds. 
 (2) The issuing amount of the National Savings Bond shall not exceed ten times of the total 
amount of the capital and reserved fund. 
 Article 18-5 (Issuance to Refund Outstanding Bonds) (1) Kookmin Bank may, if necessary to 
refund outstanding National Savings Bonds, issue Nati onal Savings Bonds over the limit as prescribed 
in Article 18-4 (2). 
 
(2) When the Kookmin Bank issues National Savings  Bonds under paragraph (1), it shall, within 
one month after such issuance, refund the outstandi ng National Savings Bonds in an amount equal to 
the aggregate par value of the National Savings Bonds in the time appointed for payment. 
 Article 18-6 (Discount) National Savings Bonds may be issued on a discount basis. 
 GPA/MOD/KOR/1 
Page 12  
 
 Article 18-7 (Government Guarantee of Bond) The payment of the principal of and interest 
on National Savings Bonds may be  guaranteed by the Government. 
 
Article 18-8 (Extinctive Prescription of Bonds) The right to receive the principal of and 
interest on National Savings Bonds shall be termin ated unless exercised within five years and three 
years, respectively. 
 
Article 18-9 (Delegation) Except as provided in this Act, necessary matters concerning 
National Savings Bonds shall be dete rmined by the Presidential Decree. 
 Article 19 (Business Manual) Kookmin Bank shall prepare a business manual including the 
following matters, which, in turn, shall be approved by  the Minister of Finance. The same shall apply 
to any modification of the business manual.  
 1. Matters concerning mutual installment savings; 
 2. Matters concerning loan, discount  of bills and payment guarantee; 
 3. Matters concerning the maximum loan amount of delivery or payment, loan, discount 
of bills, and payment guarantee to one person; 
 4. Matters concerning acquisition, purc hase and sale, underwriting and guarantee of 
securities under Article 18 (1) 8; and 
 5. Other matters necessary for the performance of any such business as provided in 
Article 18. 
 
Article 20 (Aggregate Limit on Payments) The aggregate payments shall not exceed the sum of 
the amount of all instalment savings  pursuant to Article 18 (1) 1 and ninety-hundredths of the sum of 
regular instalment deposits. 
 Article 20-2 (Payment and Loan to Local Governments) Kookmin Bank may make payment 
and loan to the following persons, if it does not  impede the accomplishment of its purpose of 
establishment under Article 1.  
 1. Non-profit corporations or organizati ons such as local governments or educational 
corporations; and 
 2. Enterprises which are financed by Kookmin Bank. 
 
Article 21 (Limitation on Ownership of Movable or Immovable Property) Kookmin Bank may 
not own movable or immovable property unless acqui red for use in its business, or taken over for 
repayment of obligations, or otherwise de emed necessary for performing its business. 
 Article 22 (Management of Reserved Fund) Except as provided in the following subparagraph, 
Kookmin Bank shall not mange the reserved fund: 
  1. Currency stabilization bond of the Bank of Korea, national bond, investment to 
securities approved by the Minister of Finance; 
 2. Deposit to the Bank of Korea or other fi nancial institutions, short term loans to the 
financial institutions 
 3. Other cases as approved by the Minister of Finance  
Article 23 <Deleted> 
 Article 24 (Fiscal Year and Settlement of Accounts) (1) The fiscal year of Kookmin Bank 
shall correspond to that of the Government. 
 GPA/MOD/KOR/1 
Page 13 
 
 
 (2) <Deleted> 
 (3) Kookmin Bank shall submit the settlement of ac counts to the Minister of Finance, and equip 
the balance sheet and the statement of profit and lo ss with the head office, branch office and local 
branch office.  
Article 25 (Disposal of Profits) (1) Annual net profits of Kookmin Bank shall be disposed of as 
follows, after making adequate allowances for depreciation of assets for each fiscal year:  
 
 1. To reserve not less than twenty five one-hundredths of the net profits, until such 
reserves have reached the level of total paid-in capital; and  
 2. To distribute the profits to capital contributors other than the Government on a 
preferential basis with the approval of the Minister of Finance as determined by the 
presidential Decree. 
 
(2) To dispose of the remaining profits othe r than reserves and dividends as provided in 
subparagraph 1 with the approval of the Minister of Finance. 
 
Article 26 (Offset of Losses) The annual net losses of Kookmin Bank shall be offset each year by 
the reserve, and if the reserve is insufficient, the de ficit shall be transferred into the next fiscal year. 
 
Article 27 (Supervision) The Minister of Finance shall supervise Kookmin Bank in 
accordance with this Act and may issue an order necessary for the supervision. 
 
Article 28 (Submission of Reports and Inspection) (1) The Minister of Finance may, when 
deemed necessary, order Kookmin Bank to submit reports and have a public official under his/her 
control to inspect the status of affairs, books , records and other necessary matters of the Bank. 
 
(2) The Minister of Finance may, when deemed necessary, entrust to the Superintendent of the 
Bank of Korea or a public official under his/her control with the power of inspection as provided in paragraph (1). 
 
(3) A person who conducts the inspection under para graphs (1) and (2) shall show the related 
persons a document indicating his/her authorities. 
 
Article 29 (Consultation) The Minister of Finance shall cons ult the important matter regarding 
the operation of Kookmin Bank with the Monetary Board. 
 
Article 30 (Investment by Financial Institutions) Notwithstanding the provisions of 
subparagraph 10 of Article 27 of th e Banking Act, financial institu tions may finance Kookmin Bank. 
 
Article 30-2 (Special Exception in Transactions) If a small and medium enterprise, in the 
course of its transactions with K ookmin Bank, expands to such an extent that it no longer meets the 
definition of a small and medium enterprise, Kook min Bank may, in accordance with the Presidential 
Decree, continue transactions with such a business w ithin the remaining term of repayment if it holds 
a loan from the Kookmin Bank yet to mature. 
 Article 31 (Penal Provisions) Any person who violates the provisions of Article 7 shall be punished 
by a fine not exceeding five  million (5,000,000) won. 
 Article 32 <Deleted> 
 GPA/MOD/KOR/1 
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 Article 33 (Enforcement Decree) Necessary matters for the enforcement of this Act shall be 
prescribed by the Presidential Decree. 
 
ADDENDA 
 
Article 1 (Enforcement Date) This Act shall enter into force on the date of its promulgation. 
 
Article 2 (Repeal of Act) The Kookmin Bank Act (Act No. 944) shall be repealed: Provided, 
That Kookmin Bank at the time when this Act ente rs into force shall continue its business until it 
merges with any other Kookmin Bank (hereinafter  referred to as “Kookmin Bank”) established under 
this Act.  
Article 3 (Establishment) (1) The Minister of Finance sh all appoint the members of the 
Establishment Committee and have them deal with matters related to the establishment of Kookmin 
Bank. 
 
(2) The establishment members shall prepare the ar ticles of incorporation, which are authorized 
by the Minister of Finance. 
 
(3) The articles of incorporation of Kookmin Ba nk shall become effective when authorized under 
paragraph (2) above, notwithstanding the provisi ons of Article 167 of the Commercial Act. 
 
Article 4 (Merger) Kookmin Bank shall merge with any ot her Kookmin Bank at the time when 
this Act enters into force. 
 Article 5 (Fiction Provisions) The name of Korean Kookmin Ba nk succeeded by the Korean 
Kookmin Bank in the property register book or public  register book shall be deemed to be changed 
into the name of Kookmin Bank.  
Article 6 (Non-application of the Commercial Act) The provisions of Article 173 of the 
Commercial Act shall not apply to the establishment of Kookmin Bank.  
Article 7 (Transitional Measures) Notwithstanding the provisions of Article 23 of this Act, a 
company (hereinafter referred to as the "mutual financing company") which conducts any mutual 
financing business under the Kookmin Bank Act (Act No. 944) and which exists at the time when this 
Act enters into force, may continue to perform its business until December 31, 1964. 
 Article 8 (Ditto) The Industrial Bank of Korea shall convert small loan finance under 
Article 56 (2) of the Industrial Bank of Korea Act into general loan finance. 
 Article 9 (Merger or Transfer and Acquisition of Business) (1) Kookmin Bank shall, if it 
resolves to be merged with any other Kookmin Bank at  the time when this Act enters into force or the 
mutual financing company or to acquire all or part  of business by transfer, notify, within two weeks 
after having so resolved, those creditors who have obj ections against such reso lutions that they shall 
present their opinion within one month and give resp ective creditors a peremptory notice to urge such 
presentation separately. 
 
(2) The period of notification and peremptory noti ce under paragraph (1) shall apply to any other 
Kookmin Bank at the time when this Act enters into  force or the mutual financing company which is 
the mergee or all or part of business of which is transferred. 
 GPA/MOD/KOR/1 
Page 15 
 
 
 (3) In any case as stated in paragraphs (1) and (2 ), a peremptory notice shall not be given to 
depositors and instalment payers.  
(4) If a creditor who has an objection does not present his/her opinion thereon within any period 
as referred to in paragraph (1), it sha ll be deemed that the merger or the transfer or acquisition of all or 
part of the business is inherited. 
 
(5) If a creditor who has an objection presents his/her opinion thereon within any period as 
provided in paragraphs (1) and (2), Kookmin Ba nk, any other Kookmin Bank at the time of the 
enforcement of this Act or the mutual financing company shall repay its debt, offer any equivalent 
security, place any corresponding property repayable to  a debtor on deposit, or trust the said property 
to a trust company. 
 (6) If the mutual financing company is merged with Kookmin Bank or transfers all or part of its 
business thereto, any authorization or approval grante d, orders issued or dispositions or other acts 
taken under the previous Chosun Mutual Financing Bu siness Decree shall, in case there are provisions 
corresponding thereto in this Act, be deemed to  be granted, issued or taken under this Act. 
 
ADDENDUM (DECEMBER 16, 1963) 
  This Act shall enter into force on the enforc ement date of the revised Constitution which was 
promulgated on December 26, 1962.  
ADDENDUM (JULY 25, 1968) 
  This Act shall enter into force on the date of its promulgation. 
 
ADDENDA (MARCH 5, 1973) 
 
(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation. 
 
(2) (Transitional Measures) The term of office of  the executive officers who hold their office at 
the time when this Act enters into force shall be  governed by this Act and reckoned from respective 
dates on which they were appointed under previous provisions. 
 
(3) (Ditto) Any executive officer whose term of o ffice expires under this Act shall continuously 
perform his/her duties until his/her successor is appointed , and in this case, the term of office of such 
executive officer shall expire on the day before that on which his/her successor is appointed. 
 
ADDENDUM (DECEMBER 19, 1972) 
 
 This Act shall enter into force on the date of its promulgation.  
ADDENDUM (DECEMBER 31, 1981) 
  This Act shall enter into force on the date of its promulgation. 
 
ADDENDA (DECEMBER 31, 1982) 
 
(1) This Act shall enter into force on the date of its promulgation.  
(2) (Transitional Measures concerning Penal Pr ovisions) Any such act as committed before 
this Act enters into force shall be subject to  the application of previous penal provisions. GPA/MOD/KOR/1 
Page 16  
 
  
ADDENDA (DECEMBER 30, 1989) 
 (1) This Act shall enter into force on the date of its promulgation. 
 (2) (Transitional Measures concerning Executive Officers) The amended provisions of Article 8 
shall apply in case Kookmin Bank does not fall under th e application scope as referred to in Article 2 
of the Framework Act on the Management of Govern ment-Invested Institutions. In this case, the term 
of office of the president, executives and the a uditor who are appointed in accordance with the 
Framework Act on the Management of Government-Invested Instituti ons, shall be deemed to be 
appointed president, senior managing director, direct or, and auditor respectively under this Act, and 
their term of office shall be reckoned from resp ective dates on which they are appointed under the 
Framework Act on the Management of  Government-Invested Institutions. 
 GPA/MOD/KOR/1 
Page 17 
 
 
 ATTACHMENT E 
 
ACT TO REPEAL THE KOOKMIN BANK ACT 
 
Enacted by Act No. 4862, Jan. 5, 1995 
Amended by Act No. 5505, Jan. 13, 1998 (Act on the Adjustment of the Certified Public  
Accountant Act, etc. Following the Enactment of the Act on the Establishment, etc.  
of Financial Supervisory Organizations) 
  
The Kookmin Bank Act shall be repealed. 
 
ADDENDA 
 
Article 1 (Enforcement Date) This Act shall enter into force on the date of its promulgation. 
 
Article 2 (Change of Ground for Establishment) At the time when this Act enters into force, 
Kookmin Bank, Inc. shall be deemed to be est ablished in accordance with the Commercial Act. 
 
Article 3 (Business of Kookmin Bank) (1) Kookmin Bank may continuously conduct all the 
businesses which Kookmin Bank has performed in accordance with the Kookmin Bank Act which 
was abolished pursuant to the effective da te of this Act and other regulations. 
 
(2) In conducting the business in accordance with paragraph (1), Kookmin Bank is deemed to 
have performed the authorization, approval, ordina nce, disposal or other actions which are necessary 
pursuant to the Banking Act, simultaneously with the execution of this Act.  
Article 4 (Effect of Previous Legal Acts) The legal acts or other actions which had been 
extended to Kookmin Bank or had been perform ed by Kookmin Bank in accordance with the 
Kookmin Bank Act have been effective and valid. In  this case, it is deemed to have performed the 
authorization, approval, ordinance, disposal or other actions which are required pursuant to Banking 
Act, simultaneously with the execution of this Act.  
Article 5 (Transitional Measures concerning Executive Officers) The president of Kookmin 
Bank who is incumbent at the time when this Act en ters into force, shall be deemed representative 
director pursuant to the Commercial Act, the Ex ecutive Vice President and the Director as the 
Directors pursuant to the Commercial Act and the A uditor as the Auditor pursuant to the Commercial 
Act, and their term of o ffice shall be reckoned from the appointment date in accordance with the basic 
law for managing government-invested institutions or the Kookmin Bank Act. 
 
Article 6 (Transitional Measures concerning Limi ted Investment in Real Estates Used for 
Business Purpose) The provisions of Article 27 (1) 2-2 of the Banking Act does not apply to 
Kookmin Bank for the five consecutive years from the effective date of this Act. 
 
Article 7 (Provision of Loans to General Public, etc.) (1) The Kookmin Bank shall improve 
their economical status for the general public or small-medium business by providing financial 
services pursuant to the Articles of Incorporati on of the Kookmin Bank which was effective on the 
execution date of this Act. 
 (2) The Monetary Board shall consult with th e Minister of Finance and Economy when they 
approve to change the scope of sm all-medium business and the ratio of support to general people and 
small-medium companies in accordance with Article 10 (2) 1 of the Banking Act. <Amended on 
Jan. 13, 1998> GPA/MOD/KOR/1 
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ADDENDA (JANUARY 13, 1998) 
 (1) (Enforcement Date)  This Act shall enter into force on April 1, 1998. <Proviso Omitted> 
 (2) (Transitional Measures concerning Dispositions, etc.) Approvals given or actions taken by 
government agencies before the enactment of this Act shall be considered as approvals of or the 
actions of government departments or the acti ons provided to them pursuant to this Act. 
 (3) through (5)  Deleted. 
 
__________