1. Reasons for Amendment

The Small and Medium Enterprise Cooperatives Act was amended (promulgated on September 14) to strengthen the criteria for imposing administrative fines and accordingly, this Amendment amends the criteria for imposing administrative fines in Article 43 and attached Table 2 of the subordinate Decree.

The Amendment also improves qualification standards for full-time directors of small and medium enterprise cooperatives to enable the recruitment of bespoke talent required for the collaborative projects of small and medium enterprise cooperatives.

It eases mutual aid fund loan requirements for small and medium enterprises to ensure a timely response to demand for emergency business stabilization funding from small and medium enterprise mutual aid deposit subscribers, and strengthens requirements for designating inactive cooperatives to encourage prompt elimination of poorly operated cooperatives, improve the integrity of cooperative operation, and promote the normalization of operation.

2. Major Provisions

 A. Increase upper limits of administrative fines (Article 43)

Apply amendments to the law by modifying the upper limits of administrative fines imposed upon violation of the Act by small and medium enterprise cooperatives (amend [Table 2] Criteria for Imposing Administrative Fines).

 B. Improve qualification standards for full-time directors of cooperatives (Article 13)

Facilitate the utilization of experts from a variety of sectors by easing the currently complex restrictions on former public officials, etc.

※ Adjust to a level similar to that of other laws, such as qualification standards for executive directors of agricultural cooperatives, fisheries cooperatives, and credit unions.

 C. Ease loan requirements for the small and medium enterprise mutual aid fund (Article 21 (2))

Reduce the loan qualification requirement from at least 3 months of small and medium enterprise mutual aid deposit payments to 1 month.

 D. Expand the requirements for designating inactive small and medium enterprise cooperatives (Article 41-2)

Add “chairperson position vacant for at least 1 year, at least 1 year of time lapsed after total impairment of capital” as requirements for designating inactive cooperatives.

 ※ However, the capital impairment shall not apply to cooperatives for which 3 years have not lapsed since the date of authorization of establishment.