On December 3, 2008, amendments to the enforcement decrees for the Bank Act and the Financial Holding Company Act respectively were promulgated, resulting in the relaxation of the test for a "non-financial business operator" ("NFBO") whose ownership of a bank or bank holding company is restricted.

Currently, an NFBO is not allowed to own more than 4% of the voting shares of a bank or bank holding company1, except that it may own up to 10% of the shares of a bank or bank holding company with the approval of the FSC subject to the condition that it will not exercise any voting rights with respect to the shares that exceed the 4% limit. If the aggregate gross capital of an investor's non-financial affiliate companies (including the investor itself, if applicable) is 25% or more of the aggregate gross capital of such investor and all its affiliate companies or the aggregate asset value of an investor's non-financial affiliate companies (including the investor itself, if applicable) is 2 trillion Won or more, such investor and its affiliates as a group will be deemed an NFBO.

In the amendment to the enforcement decrees for the Bank Act and the Financial Holding Company Act noted above, the following two types of affiliate companies are expressly excluded from the investor's affiliate companies when applying the "non-financial business operator" test (i.e., 25% rule or 2 trillion Won rule): (1) a special purpose company that manages infrastructure projects that have been approved by the government to be financed through private investment pursuant to the Act on Private Participation in Infrastructure and (2) a company that becomes an affiliate company of the investor as a result of debt-equity swap in the process of the company's restructuring pursuant to the Debtor Rehabilitation and Bankruptcy Law or Corporate Restructuring Promotion Law. In the past, the National Pension Service ("NPS") was generally perceived as being ineligible to become a major shareholder of banks or bank holding companies because it was considered an "NFBO"; however, the afore-mentioned types of companies under the control of the NPS are now excluded from its affiliate companies for purposes of determining its NFBO status, enabling the NPS to become a major shareholder of banks or bank holding companies.

Footnote

1 On October 13, 2008, the Korean government announced its plans to amend the Bank Act and the Financial Holding Company Act to heighten the holding restrictions regarding banks and bank holding companies from the current 4% to 10% and is currently collecting opinions from the public.

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