1981 BANKING LAW. COPYRIGHT RODERICK H. SEEMAN

Article 17-2. Designated Transactions Account

Banks, with the approval of the Ministry of Finance, can establish, based on the provisions of Ministry of Finance Ordinance, a special account (hereinafter in this Article called "designated transactions account") in order to account for designated transactions (meaning the financial futures transactions, etc. provided for in Article 10, Paragraph 2, Item 12 and such others as determined by Ministry of Finance Ordinance that are transactions the makes on its own account with any of the objectives that are listed in the Items hereunder. Hereinafter in this Article, the same.) and the assets that are the object of the designated transaction, and distinguish them from other transactions and assets.

(1) Those which obtain profit by using differences in markets and short term fluctuations in markets related to markets and other indicators in interest rates, currency prices and securities

(2) Those which reduce the losses arising out of designated transactions which have the objectives of the previous Item.

2. Banks which have received the approval of the previous Paragraph and established a designated transactions account, concerning the securities and other assets determined by Ministry of Finance Ordinance the accounting for which shows them as belonging in the designated transactions accounts, must have a price based on the provisions of Ministry of Finance Ordinance, regardless of the provisions of Article 285-2 (Evaluation of Current Assets) of the Commercial Code or Article 285-5 (Evaluation of Bonds) of the Commercial Code.

3. Banks which have received the approval of Paragraph 1 and established a designated transactions account, when from among the designated transactions there are those which are, as designated by Ministry of Finance Ordinance, not settled by the end of the business year, the said designated transaction shall be treated as though it had been settled by the end of the business year and must be calculated in the earnings of the said business year. In that situation, an amount concerning the said designated transaction corresponding to the profits or to the loss of the said busines year (in the following Paragraph called the "corresponding profit amount" or the "corresponding loss amount") shall be calculated based on the determinations of Ministry of Finance Ordinance.

4. In those situations where at banks which have received the approval of Paragraph 1 and established a designated transactions account, the total of the amount of the profit from the re-evaluation based on the provisions of Paragraph 2 and the corresponding profit amount of the previous Paragraph is greater than the total of the loss from the re-evaluation based on the provisions of Paragraph 2 and the corresponding loss amount of the previous Paragraph, concerning the application of the provisions of Commercial Code Article 204-3 -2(Acquisition of Company's Own Shares at the Time of Sale)(including those situations applying mutatis mutandis in Commercial Code Article 204-5(Requesting Authorization from the Acquisitor of Transfer Restricted Shares)); Commercial Code Article210-2(Acquisitions of Company's Own Shares in order to Transfer to an Employee); Commercial Code Article 210-4(Restrictions on Acquisitions by Directors); Commercial Code Article 212-2(Redemption of Company's Own Shares); Commercial Code Article 290(Profit Dividends); Commercial Code Article 293-5 (Midterm Dividends); to the said bank, the "net assets" found in these provisions shall become " the net assets amount (when there are re-evaluation profits(meaning the amount achieved by deducting the total amount of the loss from the re-evaluation based on the provisions of Article 17-2, Paragraph 2 and the corresponding loss amount of Paragraph 3 of the same Article, from the total of the amount of the profit from the re-evaluation based on the provisions of Article 17-2, Paragraph 2 of the Banking Law and the corresponding profit amount of Paragraph 3 of the same Article) reduced by that amount)" and the "total amount of the same Paragraph" of Commercial Code Article 210-4, Paragraph 2, Commercial Code Article 212-2, Paragraph 6, and Commercial Code Articel 293-5, Paragraph 5, shall become "the total of the amounts of each of the items of Article 290, Paragraph 1."