Republic of Korea

5.100

22.000

313.000

Republic of Korea

Legal framework

 

The legal framework analysis aims to provide general knowledge of the national cooperative legislation and of its main characteristics and contents, with particular regard to those aspects of regulation regarding the identity of cooperatives and its distinction from other types of business organisations, notably the for-profit shareholder corporation.

It aims to evaluate whether the national legislation in place supports or hampers the development of cooperatives, and is therefore “cooperative friendly” or not, and the degree to which it may be considered so, also in comparison to the legislation in force in other countries of the ICA region, or at the supranational level.

In addition, the research aims to provide recommendations for eventual renewal of the legal frameworks in place in order to understand what changes in the current legislation would be necessary to improve its degree of “cooperative friendliness”, which is to say, to make the legislation more favourable to cooperatives, also in consideration of their specific identity. This webpage presents a snapshot of the legal framework analysis results for the Republic of Korea.

 

 

There are eight special laws and one general law – The Framework Act on Cooperatives. This research focuses on the Framework Act on Cooperatives, The Agricultural Cooperatives Act and the Consumers Cooperatives Act. The constitution of the Republic of Korea does not explicitly mention the term ‘cooperative’ but refers to organisations founded on the spirit of self-help.

Main Laws relevant to cooperatives in the Republic of Korea


Agricultural Cooperatives Act - Dedicated to Agricultural cooperatives and is under the supervision of the Ministry of Agriculture, Food and Rural Affairs.

Fisheries Cooperatives Act - Dedicated to Fisheries Cooperatives and is under the supervision of Ministry of Oceans and Fisheries

Tobacco Producers Cooperatives Act - Dedicated to Tobacco Producers Cooperatives and is under the supervision of the Ministry of Strategy and Finance

Forestry Cooperatives Act - Dedicated to Forestry Cooperatives and is under the supervision of Korea Forestry Service

Small and Medium Enterprise Cooperatives Act - Dedicated to Small and Medium Enterprise Cooperatives and is under the supervision of the Ministry of SMEs and Start-ups

Credit Unions Act - Dedicated to Credit Unions and is under the supervision of the Financial Supervisory Commission

Community Credit Cooperatives Act - Dedicated to Community Credit Cooperatives and is under the supervision of the Ministry of the Interior and Safety

Consumer Cooperatives Act - Dedicated to Consumer Cooperatives and is under the supervision of the Fair Trade Commission

Framework Act on Cooperatives - Dedicated to General and Social Cooperatives and is under the supervision of the Ministry of Strategy and Finance

 

The eight special cooperative laws partly reflect ICA cooperative principles, whereas the Framework Act reflects all seven principles, implicitly.


 

Cooperative Friendliness

The cooperative legislation of the Republic of Korea is notably friendly to cooperatives. In particular, the Framework Act on cooperatives established in 2012 complements the existing eight special cooperative laws and contains many provisions supportive of cooperatives while respecting their autonomy.

 

Key recommendations for improvement

  • Model Bylaws should be made by a federation of cooperatives rather than by the competent authorities.
  • Unfair treatment to cooperatives under certain laws that prevents them from getting financial/non-financial support from government organizations should be amended.
  • In certain cases of taxation, social cooperatives are considered at par with corporations, despite being organized for public interests.

 

Conclusions

The establishment of the Framework Act was the breakthrough in the history of the cooperative movement of the Republic of Korea by setting the open environment for organizing cooperatives. However, the Framework Act only complements existing special cooperative laws rather than functioning as the common law for all types of cooperatives.

 

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