Examination and Negotiation of Transport documents 1 Negotiation

Examination and Negotiation of Transport documents. 1. Negotiation of Export bill of Exchange (1)Out line of Negotiation of Export bill of Exchange (2) L/C- based Negotiation of Export bill of Exchange. 2. Examination of transport documents (1) Letter of credit (2) Bill of Exchange (3) Invoice (4) Bill of Lading (5) Airway Bill (6) Insurance Documents (7) Certificate of Origin

1. Negotiation of export bill of exchange 1)Outline of Negotiation of Export bill of Exchange Significance of Negotiation of Export B/E Definition of Export B/E (Corporate banking article 2 ) L/C based Export B/E Including OAT(Open Account Transaction) Non-L/C based Export B/E Transport Document without B/E and L/C based B/E Without Transport Document Normal Export B/E L/C based and export B/E issued correspondent to L/C conditions. (foreign exchange business procedure in This export B/E need to suffice following conditions corporate banking article 4) * The letter of credit has to be issued or confirmed on a irrevocable basis. * There must be a clause in the letter of credit undertaking payment. Negotiation of acceptance * There should not be any unrealizable special condition • There muse be no needs for requirement of any collateral and guarantor as per internal provisions prescribing, by the head of Loan Approval Division, Credit Rating for the country where the issuing Bank is Located. (However, if the credit rating is lower than grade 7 in case of sight payment, and under grade 5 in case of deferred payment, special requirement of any collateral and guarantor as per internal provision prescribing is necessary. )

Authorized personal for approval of negotiation of export bill of exchange before collection Head of the Marketin g Support Head of branch (note 1) USD 500, 000 or less (per case) 　 　 Exceeding USD 500, 000 or less (per case) 　 USD 1 mil (or its equivalent) or less per item 　 Authorized Personnel 　 Kinds of Bill of Exchange Normal Export Bill under L/C (note 2) Other Export Bill under L/C 　 USD 1 mil (or its equivalent) or more per item Accounti ng Manager ○ ○ 　 Manager Remark 　 　 If the export bill bought amount is within the available collateral amount according to the kind of collateral stipulated in the Loan Policy, the approval can be given by the general Manager (branch or agency) 　 Export bill under L/C issued by a bank which has no correspondent bank relationship with the Bank or other domestic banks and under a revocable L/C Same as export bill under non L/C base 　 Export bill under Non L/C Base (L/C without undertaking for payment, negotiation and acceptance included) As per Loan Policy 　 Re-negotiation of Export bill requested by other domestic banks 　 　 　 ○ (note 1) Includes Head of (R/C) Section. (note 2) The approver of negotiation of bill from customers belonging to the Large Corporate Marketing Support Department (II) is the Head of Large Corporate Customer Support Team. 　

Flow of Negotiation of Export Bill of Exchange making foreign exchange transaction contract with customer Determine to negotiate them receive purchase application form with transport documents from the company Negotiation examine the documents forward them to the issuing bank make follow up procedures New Foreign Transaction Contract - Foreign Exchange Transaction Contract Make Foreign Exchange Transaction Contract Company Bank Required Document 준비서류 Juridical person registration book & Articles of Incorporation A copy of Business Registration Certificate Foreign Exchange Transaction Contract Forwarding “General Terms and Conditions for Credit Transaction” to the company Report on seals and nameplates A certificate of seal impression Limited continuing guarantee A certificate of seal impression of a joint surety 4

2) Purchasing L/C form Export B/E - Foreign Exchange Transaction Contract : One initial agreement to make all foreign exchange transactions between bank and the customer. - Major Contents of the Contract General Articles Special 특약 Articles • 약정서 Application range contract and exercising right , 적용의 범위of 및the 권리행사, • 담보, Mortgage, • 환율의 Application 적용, of foreign exchange rate, • 수수료 Terms & Commission, 비용 • 손해의 Responsibility 부담 등 for loss, etc • 수출, 수입, 내국신용장 발행 • Issue export, import, local L/C • 내국신용장 환어음매입(추심) §Negotiation of export bill of exchange and collection etc. Limitation of Rights and Responsibility between Bank and the Customer - Guarantee and exemption at point of foreign exchange transaction contract (Foreign exchange business procedure in Corporate banking article 3 ) : You must guarantee more than 1 guarantor if you want to do export B/E transaction < Cases for Exemption > 　 * When negotiating of export bill of exchange within range of Collateral available amount by collateral type that is decided by credit loan provision * When purchasing within range of guaranty limit of comprehensive guarantor * When handling only normal export bill of exchange * When doing only negotiation of export bill of exchange after collection * When the client’s credit rating is 1 st grade or 2 nd grade, or when Head of Corporate Customer Support Team specially authorizes it

2. 2. . 서류심사 Examination of transport documents 신 of 용 Credit 장 Letter Written Conditions of L/C • Written Conditions about transport document Written condition about L/C itself -Issuing bank and issue date -L/C type indication -L/C number -Expiry date and location -Applicant, beneficiary and advising bank. -L/C amount. -Details of transport document -Details of the goods • Other written conditions • Special conditions • - Bank commission payer Written conditions about B/E -How to use L/C -Due date and bill amount of B/E -Drawee • - Document presentation due date • - Sentence which a L/C is subject to UCP latest version • - Reimbursing bank (in case of reimbursement L/C) • Written conditions about transportation -Whether it allows installment shipment and transshipment -Port of registration, arriving port and registration date

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- Bill of Exchange -Items on examination of transport documents • Has the bill of exchange been issued based on related L/C? • Has the beneficiary issued and signed it? • Is the maturity date the same with the condition on L/C? • Has the bill been properly endorsed? • Does the bill amount and currency of bill of exchange conform to that of L/C? Does the lettered amount and numbered amount coincide with each other? • Is the drawee correspondent with L/C condition? • Is the amount within the L/C balance range? Is it within limit allowed by L/C? • Is the bill amount same with amount of invoice? • Is there any correction? If it has been corrected, has the issuer made indication about it? • Does it include items required by L/C? < Sample> BILL OF EXCHANGE NO. Date: ② Seoul, Korea FOR ① AT ③ SIGHT OF THIS FIRST BILL OF EXCHANGE (SECOND OF THE SAME TENOR AND DATE BEING UNPAID) PAY TO KOREA EXCHANGE BANK , ④ OR ORDER THE SUM OF ⑤ VALUE RECEIVED AND CHARGE THE SAME TO ACCOUNT OF DRAWN UNDER ⑦ L/C NO. ⑧ DATED ⑨ TO ⑩ ⑪ EP-B-FM-002(2/2)(‘ 1989, January Revised, 210 x 110) 환어음 Bill of Exchange Mentioned Items ① B/E amount : Written in Numbers (e. g : USD 10, 000) ② Issued Place and issued date ③ Maturity date of bill of exchange. * Maturity date indication method - AT SIGHT - AT 30 DAYS AFTER B/L DATE - ON XX(Month)-XX(Date)-20 XX(Year) ④ Payee : The negotiating bank ⑤ Bill of exchange amount : Written in Letters ⑥ ACCOUNTEE : Applicant ⑦ , ⑧, ⑨ : L/C Issuing Bank, L/C NO, Issued date ⑩ DRAWEE : L/C issuing bank ⑪ Signs of exporter, the issuer, of bill of exchange ⑥

- Invoice u General Mentioned Items • Invoice number §Order sheet or contract number. §Name of goods, quantity, unit price, quality §Price terms, payment terms §expenses, commission, invoice amount §Related items with B/E and L/C of B/E and L/C §Insurance Related items with Insurance §Name and address of buyer §Name and address of seller §Packing method and brand mark, etc, u Document examination Items §Has it been formed within expiry date of L/C? §Is the issuer beneficiary of L/C? (Is the name of beneficiary correct? ) §Has it been issued towards the applicant? (Is the name of applicant correct? ) §Do the product details correspond with the L/C? §Do the invoice amount and unit price conform to the L/C? §Bank do not have to confirm the authenticity of details and calculation that have not been stated on the L/C §Is the price term same with that of L/C? (Is there any expenditure that exceeds price term? ) §Do the invoice amount same with B/E amount? (Have it not exceeded L/C amount? ) §Is it signed? (Necessary only when L/C demands it) §Is there a signature in case invoice demands certification? §Do the shipping mark and number coincide with other documents? §Are quantity, weight, volume same with other documents? §Has it been presented in numbers required by L/C? §As long as L/C do not approve it, have expressions such as ‘provisional’, ‘proforma’ been used?

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Ocean B/L 해상선하증권 on항목 examination of B/L - -Items 서류심사 • Has The original full set of B/L been presented unless the L/C indicates otherwise? • 신용장에서 별도로 명시하지 않는 한 선하증권은 전통이 제시되었는가? • Is the name and qualification of carrier indicated? • 운송인의 명칭 및 자격이 표시되어 있는가? • Is the name and qualification of issuer indicated? • 발행자의 명칭 및 자격은 표시되어 있는가? • Does it indicate whether it is loaded on board or shipped? • 본선적재(loaded on board) 또는 선적 (shipped) 표시는 되어 있는가? • If there is any mention on intended vessel or any similar expression on the • 예정된 선박(intended vessel) 또는 이와 유사한 표현이 있는 경우 본선적재부기상에 실 document, has the actual vessel name been mentioned on board notation? 제의 선박명이 표시되어 있는가? • Do port of loading and port of discharge fit to the L/C condition? • 선적항 및 도착항은 신용장의 조건과 일치하는가? • If the word ‘intended’ or any similar vocabulary used related to the port of • 선적항과 관련하여 예정된 (intended) 또는 이와 유사한 표현이 있는 경우 본선적재부기 loading, has the actual port of loading mentioned on board notation ? 상에 실제의 선적항이 표시되어 있는가? • If port of loading and other port of discharge are mentioned, have the actual name • 선적항과 다른 수탁지 또는 인수지가 표시된 경우, 본선적재부기상에 실제의 선적항 및 of loading port and vessel name written on board notation ? 선박명이 표시되어 있는가? • Does B/L contains terms and conditions of carriage? • 선하증권의 약관은 표시되어 있는가? • Do the consignee and arrival Notify party coincide with the L/C? • 수하인 및 도착통지처는 신용장과 일치하는가? 배서는 신용장 조건에 맞게 되어 있는가? • Has it been endorsed according to L/C condition? • 운임의 지급여부 표시는 신용장 조건과 일치하는가? • Does the indication on carriage payment correspond with L/C condition? • 물품이나 포장의 하자상태에 대한 언급은 없는가? • Is there any indication on defect of goods or package? • 선적일자 및 서류제시일자는 신용장에서 허용된 기일 이내인가? • Is the shipping date and document presentation date within period allowed by L/C? ※ How to Indicate Carrier and agent (☞ ICC POSITION PAPER NO. 4 ) ① If the carrier is issuer ※Indication Method n Write it on the heading of the transport document (e. g. : ABC Lines, carrier) n Put the name of the carrier on the space next to ‘carrier’ or write the fact that document issuer is the carrier himself in front of the document. ② If it has been issued by the agent (e. g : carrier → XYZ shipping, agent → ABC Co. , Ltd) ㉮ When the indication about ‘carrier’ is put in front of the transport document, and the vocabulary of ‘carrier’ has not been used. as agent for(or on behalf of) XYZ shipping, carrier (Signature) ㉯ When the indication about ‘carrier’ is put in front of the transport document, and the vocabulary of ‘carrier’ has been used, you can choose either method as agent for(or on behalf of) XYZ shipping, carrier XYZ shipping (Signature) as agent for(or on behalf of) the above named carrier the carrier (Signature) ㉰ Document that has been signed by the captain does not have to include his name. If captain’s proxy signs on the document, name of agent and captain has to be indicated as following. (Suppose that the name of the captain is John Doe) as agent for John Doe, Master (Signature)

※ Indication Method on Consignee of B/L ① To the order of xxx ② To xxx ③ To bearer ④ To xxx or bearer On L/C transaction, order B/L is generally used. If it is an order B/L that has been written ‘To Order’ or ‘To order of Shipper’ on the consignee item, exporter makes ‘Blank Endorsement’ and passes ownership of the goods to the bank. - Airway Bill (AWB) u. Document Inspection Items • • • • Has the original copy of AWB for ‘consignor/shipper’ been presented? Is the name and qualification of carrier indicated? Is it signed by carrier or his agent? Does it show that the goods are accepted? If the L/C requires actual date of flight, is it separately mentioned? Do the airport of departure and The airport of destination coincide with that of L/C? Does AWB contains terms and conditions of carriage? Is there any indication about damage on goods, etc. ? Do the details of the goods correspond with that of L/C and Invoice? Is the issuing date of transport document within the shipping date designated by L/C? Has the document been presented within the due date allowed by L/C? Do the consignee and notifying party correspond with that of L/C? Is carriage indication same with L/C condition? If it is corrected, has it been authenticated by the issuer?

◆Major mentioned items of AWB

- Insurance Document u Document Inspection Items • If the L/C requests insurance policy, has the insurance certificate been presented? • If the L/C requests insurance policy or insurance certificate, has the cover note been presented? • Is the presented all original insurance document? • Has the document been issued by insurance company, underwriter or their agent? • Is the date of the insurance document no later than the date of shipment? • Has it been endorsed by the party to whose order claims are payable? • Do the currency and amount coincide with L/C condition? • Do the clause related to A clause stating that the insurance cover is subject to a franchise of an excess deductable coincide with L/C condition? • Are the goods and their transportation method same with those mentioned on the Invoice? • If the L/C requests for special risk cover, is it covered? • In case there is annexed document, does it show that it is part of insurance document through serial number and stamp? ◆Variety of Insurance Document • Insurance Policy : Issued by insurance company or underwriter and their agent • Insurance Certificate), Insurance Declaration : Issued by insurance company or underwriter and their agent based on the periodical open policy • cover note : Issued by broker and cannot be accepted unless L/C separately allows it

◆Major Mentioned Insurance Document Items of

- Certificate of Origin u Document examination Items • Has the C/O been issued by the person who designated on the L/C? • Are the product details indicated on generally terms that do not contradict the L/C? • Is the consignee same with the consignee information on transport document? (If the consignee on transport is in order, shipper in order, issuing bank in order or if the issuing bank itself is the consignee, consignee of the C/O can be expressed as applicant) u Major Mentioned Items (1)Seller Exporter. However, If the applicant has qualification of agent, expressions such as “on behalf of” or “instead of” are used. (2) Consignee Name or the consignee is written and generally on L/C transaction, consignee is the L/C issuing bank but sometimes importer can be the consignee. ☞ If the B/L items o L/C are written as “issued to order, blank endorsed, marked “freight prepaid” and notify AAA. ”, when the consignee on L/C is designated as applicant it is accepted as normal document (ICC Official Opinion 470/TA. 126 rev) (3) Particulars of Transport Vessel name, port of loading, port of discharge and shipping date are written (4) Buyer In case the buyer and consignee are different, buyer is seperately indicated and if the two are the same, it is indicated as ‘Same as Consignee’ (5) Country of Origin If the country of origin is Korea, write ‘Republic of Korea’ (6) Invoice Number and Date (7) Shipping Marks (8) Number and kind of Packages : Description of Goods Number of product package and package type (9) Gross Weight or Other Quantity (10) Other Information 17

◆Major Mentioned Items of C/O 18