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IR

Corporate Governance

Chapter 2 Stock and Stock Certificates

Article 5 (Total Number of Shares to be Issued)

Total number of shares that the Company is authorized to issue shall be one-hundred and sixtymillion (160,000,000) shares.

Article 6 (Par Value of a Share)

The par value of a share issued by the Company shall be five thousand (5,000) Korean Won pershare.

Article 7 (Total Number of Shares to be Issued at the Time of Incorporation)

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Article 8 (Type of Shares)
  • ① The shares to be issued by the Company shall be registered common shares andregistered class shares.
  • ② Class shares to be issued by the Company shall be dividend-preferred shares, shareswith no voting rights or with limited voting rights, redeemable shares, convertibleshares and blended shares with all or part of these classes mixed up.
Article 8-2 (Dividend Preferred Convertible Shares: Class I Shares)
  • ① The Company may issue non-voting dividend-preferred convertible shares (hereinafter“Class I Shares”). Total shares to be issued shall be twenty million (20,000,000) shares.
  • ② For Class I Shares, when it is issued at 1% per annum or higher on the basis of parvalue, the monetary amount according to the preferred rate set by the Board ofDirectors (BOD) shall be given in cash as preferred dividends.
  • ③ In case that the dividend rate of common shares exceeds the dividend rate of Class 1Shares, the exceeded portion thereof shall be allowed to participate and receivedividends at the same rate as that of the common shares.
  • ④ In cases where the predetermined dividend is not payable to Class I Shares in any givenbusiness year, the cumulative unpaid dividends shall be paid preferentially at the timewhen dividends are paid for the next business year.
  • ⑤ Class I Shares shall have voting rights from the general meeting of shareholders inwhich a resolution is passed in favor of not paying the predetermined dividends toClass I Shares until the time of ending of the general meeting of shareholders in whicha resolution is passed in favor of paying preferential dividends.
  • ⑥ Article 9.4, Article 48.2, Article 49.3 shall apply mutatis mutandis to allocation of newshares and payment of stock dividends for Class I Shares.
  • ⑦ The duration of Class I Shares shall be set by resolution of the Board of Directors whensaid shares are issued within the scope of five to ten (10) years, as determined. Class IShares shall be converted into common shares at the same time when the durationexpires. In case the predetermined dividends have not been paid for Class I Shareswithin this duration, the duration period shall be extended until the unpaid dividendsare paid. For dividend payment for Class I Shares issued as a result of conversion,Article 10 shall apply mutatis mutandis.
Article 8-3 (Dividend-Preferred Convertible Shares: Class II Shares)
  • ① Pursuant to each of the following subparagraphs, the Company may issue non-votingdividend-preferred convertible shares that can notify conversion to common shares atthe request of the shareholder (hereinafter “Class II Shares”). Total number of Class IIShares to be issued shall be twenty million (20,000,000), including Class I Shares.
    • (1) The number of shares to be issued as a result of conversion shall be identicalto the number of shares prior to the conversion.
    • (2) Period for notifying conversion shall be set by resolution of the Board ofDirectors within the scope of at least one month to maximum five (5) yearsfrom the issue date.
    • (3) Shares to be issued as result of conversion shall be common shares.
  • ② Provisions set forth in Paras. 2 through 6 of Article 8-2 shall apply mutatis mutandisto Class II Shares.
Article 8-4 (Dividend-Preferred Redeemable Shares: Class III Shares)
  • ① The Company may issue dividend-preferred redeemable shares (hereinafter “Class IIIShares”). Total number of Class III Shares to be issued shall be twenty million(20,000,000) shares.
  • ② The provisions set forth in Paras. 2 through 6 of Article 8-2 shall apply mutatismutandis to Class III Shares.
  • ③ Pursuant to each of the following subparagraphs, the Company may opt to redeem theshares.
    • (1) The redemption price shall be the issue price plus an added amount that is setwithin the scope not exceeding 10% per annum of the issue price. The addedamount is set by the Board of Directors at the time of issuance inconsideration of dividend rate, market terms and conditions, and other overallmatters related to the issuance of this class of shares. However, in order tomake the redemption price adjustable, the Board of Directors has to determine:the intent of making the redemption price adjustable, reason(s) for adjustment,the basis date of adjustment, and the method of adjustment.
    • (2) The redemption period shall be determined by the Board of Directors withinthe scope of one (1) month after the ending date of the general meeting ofshareholders held in one of the fiscal years into which the date from one (1)year to ten (10) years from the issue date falls. However, notwithstanding theexpiration of the redemption period, when a reason falling under any of thefollowing subparagraphs occurs, the redemption period may be extended untilthe reason is resolved.
      • A. In case shares are not redeemed within the redemption period.
      • B. In case payment of preferred dividends is not completed.
    • (3) Class III shares may be redeemed in lump sum or in installment. However, incase shares are redeemed in installment, the Company may determine theapplicable shares of Class III based on lot drawing or pro rata method.Fractional shares resulting from pro rata method shall not be redeemable.
    • (4) Two weeks prior to the acquisition date of the shares subject to redemption,the Company shall notify or publicly announce it to shareholders of saidshares as well as the rights holders of said shares in the list of shareholders.
  • ④ For issuing Class III Shares, by resolution of the Board of Directors, the Companymay issue voting class of shares (“Class III-1 Shares”) or non-voting class of shares(“Class III-2 Shares). Class III-1 Shares with voting rights shall have one vote pershare.
Article 8-5 (Redeemable Dividend-preferred convertible shares: Class IV Shares)
  • ① The Company may issue non-voting redeemable dividend-preferred convertiblesshares (hereinafter “Class IV Shares”). Total shares of Class IV to be issued shall betwenty million (20,000,000) shares.
  • ② For Class IV Shares, the Company shall pay out cash dividends at 1% per annum ofthe par value. Terms and details of said preferred dividend payment for Class IV Sharesare provided in Schedule 1. The amount of preferred dividends may be reduced underthe terms and conditions set forth in the Agreement between the Company and theholders of Class IV Shares. Even in case the amount of preferred dividend payment isadjusted down, or preferential dividend payment does not occur, voting rights of ClassIV Shares shall not be revived.
  • ③ The provisions set forth in Article 9.4, Article 42-2, Article 49.3 shall apply mutatismutandis to the allocation of new shares and stock dividends for Class IV Shares.
  • ④ For Class IV Shares, by each of the following subparagraphs, the shareholder maynotify the Company to redeem shares.
    • (1) Redemption notice period shall be from the date when it is four (4) years andsix (6) months from the issue date (including the very date itself) to the datewhen it is five (5) years from the issue date (including the very date itself;“initial redemption date”), provided, however, in case redemption is notcompleted—regardless of its reason such as absence of distributable profits—despite a redemption notice carried out within the redemption notice period,the notice period shall be extended until the redemption is completed; and incase there is an agreement between the Company and the holders of Class IVShares, expiration date of the redemption notice period may be extended upto maximum ten (10) years from the issue date in accordance with theagreement.
    • (2) Shareholder of Class IV Shares may send only one (1) notice to the Companyfor redemption of Class IV Shares during the redemption notice period. TheCompany shall redeem the shares within one-hundred twenty days from thedate the request is made.
    • (3) The redemption amount shall be the sum (provided, however, that thedividend payment actually made until the redemption date or the sum ofdividend payment deemed to have been made as result of reduction in amountpursuant to foregoing subparagraph 2 is excluded from the sum) of the issueprice and the amount of preferential dividends paid until the redemption date(provided, however, in case the redemption notice period is extended pursuantto the 2nd proviso of Subparagraph 1, until the initial redemption date).
  • ⑤ Duration period of Class IV Shares shall be from the issue date of Class IV Shares tothe date of five (5) years from the issue date (including the very date itself), (hereinafter“Duration Period”). If Class IV Shares are not converted into common shares until theelapse of the Duration Period, the unconverted shares shall be automatically convertedinto common shares at the same time as the expiration of the Duration Period, provided,however, that: (A) in case redemption is not completed—regardless of its reason suchas absence of distributable profits—despite a redemption notice carried out within theredemption notice period, the Duration Period shall be extended until the reason isresolved, or (B) in case redemption notice period is extended, the Duration Period shallbe extended for the same period of time, each Duration Period extension shall beextended up to maximum ten (10) years. In this case, for payment of profit dividends,the provisions set forth in Article 10 shall apply mutatis mutandis.
  • ⑥ For Class IV Shares, by each of the following subparagraphs, the shareholder maynotify the Company to redeem shares.
    • (1) The number of shares to be issued as a result of conversion shall be identicalto the number of shares prior to the conversion; adjustment shall be performedaccording to the conversion price adjustment formula provided in Schedule 2.
    • (2) Period for notifying conversion shall be from the day immediately followingthe date of twelve (12) months having elapsed from the issue date to the dateof five (5) years from the issue date (including the very date itself). However,if the redemption notice period is extended, the conversion period shall beextended for the same period.
    • (3) Shares to be issued as result of conversion shall be common shares.
    • (4) Under any circumstances, as result of conversion, in case a shareholder ofClass IV Shares is expected to become the largest shareholder base onindividual voting rights, the shareholder shall not carry out a notice forconversion of said portion of shares.
  • ⑦ Pursuant to each of the following subparagraphs, the Company may opt to convertClass IV Shares.
    • (1) The number of shares to be issued as a result of conversion shall be identicalto the number of shares prior to the conversion. Adjustment shall beperformed according to the conversion price adjustment formula provided inSchedule 2.
    • (2) Subject to the precondition that terms and conditions set forth in subparagraph4 hereunder are satisfied, the time period within which the shares may beconverted shall be from the day immediately following the date of twelve (12)months from the issue date to the date of five (5) years from the issue date(including the very date itself). However, if the redemption notice period isextended, the conversion period shall also be extended for the same period.
    • (3) Shares to be issued as result of conversion shall be common shares.
    • (4) If, during the period set forth in the preceding Para. 2, the closing price ofcommon shares is equal to or higher than the initial conversion price of ClassIV Shares (provided, however, in case diluted adjustment has been made, itmeans the resulting adjusted conversion price), then the Company, within fivedays therefrom, by using the notification method set forth in Article 346.3 ofthe Commercial Act, may convert Class IV Shares corresponding to the 50percent of the number of Class IV Shares issued at the time of issuance ofClass IV Shares.
Article 9 (Preemptive Rights)
  • ① If the Company issues new shares by resolution of the Board of Directors, the issuanceshall comply with the following:
    • (1) The Company’s shareholders shall have an opportunity to subscribe to newshares in proportion to their respective shareholdings. ;
    • (2) To the extent not exceeding thirty hundredths (40/100) of the total number ofoutstanding shares, an opportunity to subscribe to new shares may be givento specific individual (including shareholders of the Company) in order toachieve the Company’s management aims, such as introducing newtechnologies, improving the financial structure, among others in a manner notdescribed in Subparagraph (1) above. ;
    • (3) To the extent not exceeding thirty hundredths (30/100) of the total numberoutstanding shares, an opportunity to subscribe to new shares may be givento unspecified individuals (including shareholders of the Company)allocating new shares to the subscriber in a manner not described inSubparagraph (1) above. ;
    • (4) The Company may issue new shares pursuant to issuance of depositoryreceipt in accordance with applicable laws, including the FinancialInvestment Services and Capital Markets Act.
  • ② When offering new shares to individuals other than shareholders under Subparagraph3 of Paragraph 1, new shares shall be issued by one of the following methods byresolution of the Board of Directors:
    • (1) A method of issuing new shares to unspecified number of subscribers withoutclassifying the types of individuals eligible for an opportunity to subscribe tonew shares;
    • (2) A method of granting an unspecified number of individuals the opportunityto subscribe to new shares including those shares yet to be subscribed afterallocating the new shares to the members of the employee stock ownership inaccordance with the applicable laws and regulations;
    • (3) A method of granting an unspecified number of individuals the opportunityto receive the new shares if there are shares yet to be allocated after grantingthe shareholders preferential rights to subscribe to new shares;
    • (4) A method of granting a certain individual an opportunity to subscribe to newshares in accordance with the reasonable standards set by the applicable lawsand regulations such as the demand forecast prepared by the investmentbroker as an underwriter or an agent.
  • ③ When offering new shares to individuals other than shareholders under Subparagraphs2 and 3 of Paragraph 1, the Company shall announce or notify shareholders of thematters prescribed by Subparagraphs 1, 2, 2-2, 3 and 4 of Article 416 of theCommercial Act within two (2) weeks prior to the date set for payment; Provided thatthe notification and announcement above may be replaced by disclosing a material factreport to the Financial Services Commission and an Exchange pursuant to Article 165-9 of the Financial Investment Services and Capital Markets Act.
  • ④ When issuing new shares in the manner prescribed in provision of Paragraph 1 above,the class, number and price thereof shall be determined by resolution of the Board ofDirectors. At such time, the Board of Directors may issue new shares, either commonshares or different class of shares as new shares to the common shares. Different classof shares issued shall be of the same class.
  • ⑤ If there are shares of which the payment has not been made or subscription has notbeen made by the due date after allocation, the Board of Directors shall resolve themethod of processing such as the adequacy of the issuing price as prescribed by theapplicable laws and regulations.
  • ⑥ The Company shall determine the method of dealing with fractional shares resultingfrom allocation of new shares by resolution of the Board of Directors.
  • ⑦ When the Company allocates new shares under Subparagraph 1 of Paragraph 1 above,the Company shall issue preemptive right certificate to shareholders.
Article 9-2 (Stock Option)
  • ① The Company may grant stock option to its executives and employees as permitted byArticle 340-2 and Article 542-3 of the Commercial Act (including executives andemployees of relevant companies prescribed by Article 30 of the Enforcement Decreeof the Commercial Act) to the extent not exceeding fifteen hundredths (15/100) of totalnumber of issued shares by a special resolution of general meeting of shareholders.However, the Company may grant stock option not exceeding one hundredths (1/100)of total number of issued shares by resolution of the Board of Directors. When stockoption is granted by resolution of the Board of Directors, approval shall be acquiredfrom the first general meeting of shareholders convened after the Company grantsstock option by resolution of the Board of Directors. Stock options granted byresolution of the Board of Directors or general meeting of shareholders may be linkedto performance-based options in connection with business performance or share priceindex.
  • ② Those eligible for stock options are Company’s executives or employees whocontribute to or have the capability to contribute to the Company’s establishment andmanagement, overseas business, or technical innovation, etc., provided that those whofall under any of the following shall be excluded. However, this exclusion does notapply if the person became a specially related person(s) as defined in Paragraph 4 ofArticle 34 of the Enforcement Decree of the Commercial Act following a promotionor joining of the Company as an executive and such person includes non-standingofficers of an affiliate.
    • (1) The Company’s largest shareholder (referring to the largest shareholder underSubparagraph 5 of Paragraph 2 of Article 542-8 of the Commercial Act) andspecially related person(s);
    • (2) The Company’s principal shareholder (referring to a principal shareholderunder Subparagraph 6 of Paragraph 2 of Article 542-8 of the Commercial Act)and specially related person(s); or
    • (3) Person(s) who becomes a principal shareholder of the Company as a result ofexercising his/her stock options.
  • ③ Shares to be delivered as a result of the exercise of stock options hereunder (in casethere is a difference between the share price at which such stock options are exercisedand the market value of relevant stock is paid in cash or treasury share, referring to theshare on the basis of which such a difference is calculated) shall be registered commonshares or registered class shares as determined by resolution of general meeting ofshareholders under Paragraph 1.
  • ④ Stock options shall not be granted at once to all executives and employees currently inservice, and stock option granted to a single executive or employee shall not exceedten hundredths (10/100) of the total number of issued shares.
  • ⑤ The price per-share at which the stocks options are exercised shall not be less than theprices prescribed below. The same shall also apply when the relevant stock optionexercising price is subsequently adjusted after grant of stock options.
    • (1) When issuing new shares to grant stock option, its option price shall be thehigher of the following two:
      • A. Actual market value of relevant shares as prescribed bySubparagraph 3 of Paragraph 2 of Article 340-3 of the CommercialAct as of the date of such stock options granted;
      • B. Face value of the relevant share.
    • (2) If treasury shares are transferred, the actual market value of the relevantshares as prescribed by Subparagraph 3 of Paragraph 2 of Article 340-3 of theCommercial Act as of the date such stock options is granted.
  • ⑥ Stock options may be exercised within five (5) years from the date exceeding two (2)years from the date of resolution of general meeting of shareholders granting the stockoption concerned.
  • ⑦ The grant of the stock option may be revoked by the resolution of the Board ofDirectors in any of the following cases:
    • (1) Where the relevant executive or employee of the Company granted the stockoption voluntarily retires or resigns from office;
    • (2) Where the relevant executive or employee granted the stock option causessubstantial damages to the Company due to his/her willful misconduct ornegligence;
    • (3) Where the Company is unable to accommodate an exercise of the stock optiondue to bankruptcy, dissolution or any similar event;
    • (4) Where any event stipulated as a cause for revocation in the stock optionagreement, occurs.
  • ⑧ Executive or employee granted the stock option may exercise the stock option onlyafter working for the Company or remaining in office for two (2) years or longer fromthe date of resolution under Paragraph 1. However, if he/she is deceased within two (2)years form the date of the resolution set forth in in Paragraph 1 above, or retires orresigns from office due to causes not attributable to him/herself, he/she may exercisestock options during the above period.
  • ⑨ Article 10 shall apply mutatis mutandis to the dividend of the profit gained from thenew shares as a result of an exercise of stock options.
Article 10 (Base Date for Calculation of Dividend of New Shares)

If the Company issues new shares by paid-in capital increase, capital increase withoutconsideration, or stock dividends, the dividend on profits for new shares shall be deemed tohave been issued at the end of fiscal year immediately preceding the fiscal year to which thenew shares concerned were issued.

Article 11 (Electronic Registration of Rights Indicated in Shares and SubscriptionRights Certificates)

Instead of issuing the share certificates and subscription right certificates, the Company shallelectronically register in the electronic register of the electronic registry the rights that shall beindicated in the shares and subscription right certificates.

Article 12 (Transfer Agent)
  • ① The Company shall retain a transfer agent for shares.
  • ② The transfer agent, scope of its duties, and their place of business shall be determinedby a resolution of the Board of Directors.
  • ③ Register of shareholders of the Company or copy thereof shall be kept at the locationwhere transfer agent renders its services. The transfer agent shall handle the activitiesof electronic registration, the management of the shareholder list, and other mattersrelated to the shares.
  • ④ Procedures of dealing with such matters under Paragraph 3 shall be subject toregulation concerning securities transfer by transfer agent.
Article 13 (Report of Name, Address and Seal or Signature of Shareholders, Etc.)

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Article 13-2 (Electronic Register of Shareholders)

The Company shall prepare its Register of Shareholders in an electronic form.

Article 14 (Closing of Register of Shareholders and Record Date)
  • ① The Company shall suspend any entry of alterations in the register of shareholdersconcerning shareholders rights from January 1 to January 31 each year.
  • ② The Company shall deem those shareholders whose names appear in the list ofshareholders on December 31 of each year to be the shareholders entitled to exercisetheir rights as shareholders at the regular general meeting of shareholders.
  • ③ In the case where an extraordinary general meeting of shareholders is convened, or inany other necessary cases, the Company, by resolution of the Board of Directors, mayclose the entry of alterations in the register of shareholders with respect to theshareholders rights for a designated period not exceeding one (1) month, after makinga public announcement two (2) weeks in advance. However, if deemed necessary bythe Board of Directors, the Company may close the entry of alterations in the registerof shareholders and determine its record date at the same time.
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