Articles of Incorporation

Genera Provisions

Article 1(Name)

This company shall be called Daekyo Co., Ltd. (hereinafter referred to as the company).

Article 2(Purpose)

The purpose of the company shall be to run the following businesses:

  1. Education service business
  2. Education publication and cultural business
  3. Education consulting and evaluation business
  4. Internet-based education business
  5. Database and online information provision business
  6. Books and home-school materials wholesale and retail business
  7. Professional design business
  8. Educational toy manufacturing and selling business
  9. Baby products (education) wholesale and retail discount distribution and agency business
  10. Infant educational program (sports and play learning) operation and management business
  11. Foreign language private educational institute operation business
  12. Private design school operation business
  13. Private computer school operation business
  14. Private refresher training institute operation business
  15. Mental calculation private educational institute operation business
  16. College entrance exam private educational institute operation business
  17. Computer program manufacturing and selling business
  18. Information and communication business
  19. Tourist accommodation business
  20. Newspaper and magazine publishing and selling business
  21. Insurance agency business
  22. Parking lot management and operation business
  23. Youth center operation and management business
  24. Research center (social science, management strategy, science of education) operation and management business
  25. Trading business (educational materials and books)
  26. Sports, games and other related business
  27. Information service (education, culture, tourism, agency) business
  28. Wholesale and retail distribution business (department store, franchise, super center)
  29. Warehousing and logistics business
  30. Installation and operation of an in-house language institute
  31. Cable television program supply business
  32. Video program manufacturing, selling and rental business
  33. Video program export and import business
  34. Audio and video material manufacturing and selling business
  35. Broadcasting equipment rental business
  36. Video program character business
  37. Video business and records and video materials manufacturing and selling business
  38. Korean movie production and selling business
  39. Foreign movie import business
  40. Park operation business (including the selling of beverages and products)
  41. Resort complexes
  42. Computers and peripherals manufacturing, development, selling, rental and service business
  43. Multimedia hardware and software manufacturing, development, selling, rental and service business
  44. Door-to-door selling and mail order business
  45. Transport business, custody services and distribution business
  46. Stationery manufacturing, wholesale and retail business
  47. Transport service and transport agency
  48. Freight transport service and door-to-door service
  49. Training center operation business
  50. Cultural business
  51. Accommodation
  52. Food service
  53. Water-related leisure and water-related leisure facility rental business
  54. Construction business
  55. Housing construction and selling, and real estate rental business
  56. Knowledge information provision business
  57. Education and training, and research service
  58. Commissioned education
  59. Education and training management consulting and evaluation business
  60. Education consulting and counseling
  61. Instruction and learning program development and supply business
  62. Interior business (interior finishing)
  63. Government-authorized textbook publishing and selling business
  64. Lifetime education facility operation business
  65. General tourism business
  66. Incidental business related to each of the above
Article 3(Location of Head Office and Establishment of Branches, etc.)
  • The head office of the company shall be located in Seoul.
  • The company may install branches, local offices, offices and subsidiaries at home and abroad if necessary.
Article 4(Method of Giving Public Notice)

Notices of the company shall be posted only on the Internet homepage (http://www.daekyo.co.kr). If it is impossible to post notices on the Internet homepage of the company due to computing problems or other inevitable reasons, however, they shall be posted in the Korea Economic Daily published in Seoul.

Shares

Article 5(Total number of shares issued)

The company shall issue 1,500,000,000 shares in total.

Article 6(Par value)

The company shall issue shares at an opening price of KRW500.

Article 7(Shares to be issued at the time of Incorporation)

At the time of the company's establishment, the company shall issue 40,000 shares in total.

Article 8(Classes of Shares)

The shares to be issued by the Company shall be common shares and preferred shares, both in registered form.

Article 8-2(Number and details of preferred shares)
  • ① The total number of preferred shares issued by the company shall be 375,000,000.
  • ② The Board of Directors will decide the preferred dividend rate at 9% or more of the face value at the time of issue. If the dividend of common shares exceeds the dividend of preferred shares, the dividend of the preferred shares shall be raised accordingly to match that of the common shares.
  • ③ If, in a given fiscal year, the company is unable to issue the allotted number of preferred shares, the accumulated portion of the undistributed dividends shall be issued at the time of the following fiscal year’s stock issuance.
  • ④ The preferred shares issued by this company shall not have any voting right. In the event that it is determined that dividends shall not be paid, holders of preferred shares will be given temporary voting rights beginning with the General Meeting at which the decision not to pay dividends was made and until the end of the General Meeting at which the decision to pay dividends is made.
Article 9(Types of Share Certificates)

The stocks which the Company issues shall come in eight denominations: one share, five shares, ten shares, fifty shares, one hundred shares, five hundred shares, one thousand shares, and ten thousand shares.

Article 10(Preemptive Rights)
  • ① If new stocks are issued, the company's stockholders shall have the right to be issued stocks proportional to the number of stocks they own.
  • ② Notwithstanding Paragraph 1, the Board of Directors may allocate new stock to a given party, other than a stockholder, in one of the following events:
    1. In the event that new stocks are issued through guaranteed rights offering;
    2. In the event that the company issues new shares through public offering to the extent that the number of such new shares does not exceed 15/100 of outstanding shares issued;
    3. In the event that the company issues new shares to members of the Employees Share Ownership Association pursuant to Paragraph 7 of Article 165 of the Capital Market and Financial Investment Business Act;
    4. In the event that the company issues new shares as a result of the exercise of stock options, pursuant to Articles 340-2 and 542-3 of the Commercial Act;
    5. In the event that the company issues new shares in accordance with issuance of depositary receipts (DR) to the extent that the number of such new shares does not exceed 15/100 of outstanding shares issued;
    6. In the event that the company issues new shares to domestic and foreign financial institutions or institutional investors in order to raise emergency funding, given that the number of such new shares does not exceed 15/100 of outstanding shares issued; and
    7. In the event that the company issues new shares to a counterpart in order to form a capital partnership for the purpose of enhancing the company’s interest in technology, R&D, production or sales, given that the number of such new shares does not exceed 15/100 of outstanding shares issued.
  • ③ In the event that the company allots new stocks to a person other than shareholders pursuant to Paragraph 2, matters stipulated according to Paragraphs 1, 2, 2-2, 3 and 4 of Article 416 of the Commercial Act shall be notified or announced to shareholders by two weeks prior to the date of payment.
  • ④ In the event that new stocks will be issued according to one of the methods in Paragraph 2, the type, number and price of the stocks to be issued shall be determined by the Board of Directors.
  • ⑤ In the event that a shareholder gives up or loses the preemptive rights, or if an odd-lot should occur during the allotment of new shares, the Board of Directors shall decide upon the method of handling them.
Article 10-2(Commencement Date for Dividends on New Shares)

If the Company, through paid or unpaid capital increase or stock dividends, issues new shares, with regard to profit sharing for the new shares, such shares shall be deemed to have been issued at the end of the fiscal year immediately preceding the fiscal year to which the time of issuance thereof belongs.

Article 10-4(Stock options)
  • ① The company may grant its employees stock options pursuant to Article 542-3 of the Commercial Act by a special resolution of the general meeting of shareholders, to the extent that they do not exceed 15/100 of outstanding shares issued. Notwithstanding the foregoing provision, such stock options may be given to person other than directors by a resolution of the Board of Directors, to the extent that they do not exceed 3/100 of outstanding shares issued. If stock options are granted by a resolution of the board of directors, it shall be approved by the first general meeting of shareholders convened after such stock options are granted. Those stock options granted by a special resolution of a general meeting of shareholders or a resolution of the Board of Directors may be linked to the performance of the company measured by targeted managerial results or capital market indices.
  • ② Those eligible for a stock option shall be those who contribute or are capable of contributing to the company’s incorporation or management, overseas operation or technological innovation, etc., but not the company’s largest shareholder or principal shareholders.
    1. ~ 3. Deleted
  • ③ The shares to be delivered as a result of the exercise of stock options hereunder (or, if the difference between the share price at which such stock options are exercised and the market value of relevant share is paid in cash or treasury stock, the share on the basis of which such difference is calculated) shall be common shares in registered form.
  • ④ The number of employees who are eligible for stock options hereunder shall not exceed 20/100 of the total number of employees and the number of shares covered by a stock option that may be granted to an employee of the company shall not exceed 10/100 of outstanding shares issued.
  • ⑤ The per-share price at which stock options are exercised ("stock option exercising price’) shall not be lower than either of the following prices, and this provision shall also apply to where the relevant stock option exercising price is adjusted subsequently after the grant of stock options.
    1. If new shares are to be issued and delivered, the higher of the following prices:
      1. A. The market value of the share as of the date when such stock options were granted
      2. B. Face value of the share.
    2. If treasury stock is transferred, the market value of the share as of the date when such stock options were granted
  • ⑥ A stock option granted hereunder may be exercised within 7 years from the date after 2 years have elapsed from the date when the resolution mentioned in Paragraph 1 above is adopted.
  • ⑦ A person who is granted a stock option is entitled to exercise the stock option only if he/she has been in office in the company or employed by the company at least for two years from the date of the resolution; provided, however, that, if the said grantee dies or resigns from the company within two years from the date of the resolution due to the age limit or any other reason not attributable to him/her, such stock option may be exercised within the period originally set for exercising the same.
  • ⑧ The provision of Article 10-2 hereof shall apply, mutatis mutandis, with respect to payment of dividends on the shares issued as a result of the exercise of stock options hereunder.
  • ⑨ The grant of a stock option may be cancelled by a resolution of the Board of Directors, if:
    1. After the grant of such a stock option, the grantee thereof has resigned voluntarily from the company;
    2. The grantee is fired or dismissed punitively as he/she has caused material damages to the company by willful acts or negligence;
    3. The company is unable to respond to the exercise of such a stock option, due to the company’s bankruptcy, dissolution or otherwise; or
    4. Any event has occurred constituting a cause of cancellation thereof as provided in a relevant stock option agreement.
Article 11(Transfer Agent)
  • ① The company shall appoint a transfer agent.
  • ② The Transfer Agent, its office and the scope of services to be provided by the Transfer Agent on behalf of the company shall be determined by a resolution of the Board of Director.
  • ③ The company shall have the list of shareholders or a copy thereof kept and maintained at the office of the Transfer Agent and shall cause the Transfer Agent deal with the transfer of shares, registration or cancellation of pledges created on shares, registration or cancellation of the property in trust, issuance (including reissuance) of share certificates, acceptance of reports and other share-related matters.
  • ④ The procedure of dealing with such matters as mentioned in Paragraph 3 above shall be subject to the regulation concerning the securities transfer agency by the Transfer Agent, etc.
Article 12(Report of Addresses, Names and Seals or Specimen Signatures, etc. of Shareholders)
  • ① Shareholders and pledge registrants shall report to the Transfer Agent, mentioned in Article 11, their names, addresses, seals or specimen signatures, etc.
  • ② Each of the shareholders and pledge registrants residing abroad shall designate and report to the Transfer Agent his/her provisional address to which and his/her agent to whom notices may be given by the company within the Republic of Korea.
  • ③ Any change of the information mentioned in Paragraphs 1 and 2 above shall also be reported to the Transfer Agent accordingly.
Article 13(Suspension of Altering Entry in the List of Shareholders and Record Date)
  • ① The company shall suspend entry of alterations in the list of shareholders with respect to shareholders’ rights from January 1 through January 15 of each year.
  • ② The company shall deem those shareholders whose names appear in the list of shareholders on December 31 of each year to be the shareholders who are entitled to exercise their rights as shareholders at the annual meeting of shareholders to be convened in respect of said period for the settlement of accounts.
  • ③ The company may suspend entry of alterations in the list of shareholders with respect to shareholders’ rights for a given period not exceeding three months, if necessary for convening a special meeting of shareholders or otherwise, or the company may deem those shareholders whose names appear in the list of shareholders on the day specified by a resolution of the Board of Directors to be the shareholders who are entitled to exercise the rights as shareholders in relation to the aforementioned purposes. The Board of Directors may designate such a record date, together with suspension of altering entry in the list of shareholders, if the Board of Directors deems it necessary. The company shall give at least two weeks’ prior public notice of such suspension of entry and such a record date.

Bonds

Article 14(Issuance of Convertible Bonds)
  • ① The company may issue convertible bonds to any person(s) other than the company’s shareholders by a resolution of the Board of Directors to the extent that their aggregate par value does not exceed KRW200 billion in any of the following events:
    1. In the event that the company issues convertible bonds through public offering;
    2. In the event that the company issues convertible bonds to a third party (including domestic and foreign individuals and corporations) for the purpose of business partnership;
    3. In the event that the company issues convertible bonds to financial institutions, domestic and overseas, for the purpose of raising emergency funds; and
    4. In the event that the Company issues convertible bonds abroad pursuant to the Commercial Act.
  • ② As for the convertible bonds referred to in Paragraph 1 above, the Board of Directors may also issue such bonds on condition that only a part thereof be granted the right to convert to capital shares.
  • ③ The shares to be issued as a result of conversion of such bonds shall be common or preferred shares and the applicable conversion price shall be equal to or higher than the par value per share of such new shares, as determined by the Board of Directors at the time of issuance of such bonds.
  • ④ The period in which holders of convertible bonds are entitled to make a request for conversion hereunder shall begin on the day after 1 month has elapsed from the date of issuance thereof and end on the day immediately preceding the maturity date thereof provided, however, the period for requesting conversion may be adjusted by a resolution of the Board of Directors within the aforementioned period pursuant to the provisions of related laws.
  • ⑤ As for payment of dividends on the new shares to be issued as a result of conversion hereunder and the payment of interest on such convertible bonds, the provisions of Article 10-2 hereof shall apply, mutatis mutandis.
Article 15(Issuance of Bonds with Warrant)
  • ① The company may issue bonds with warrant by a resolution of the Board of Directors to the extent that their aggregate par value does not exceed KRW200 billion in any of the following events:
    1. In the event that the company issues convertible bonds through public offering;
    2. In the event that the company issues convertible bonds to a third party (including domestic and foreign individuals and corporations) for the purpose of business partnership;
    3. In the event that the company issues convertible bonds to financial institutions, domestic and overseas, for the purpose of raising emergency funds; and
    4. In the event that the Company issues convertible bonds abroad pursuant to the Commercial Act.
  • ② The amount within which a holder of such bonds with warrant is entitled to request issuance of new shares shall be determined by the Board of Directors, to the extent of not exceeding the aggregate face value of such bonds.
  • ③ The shares to be issued as a result of the exercise of such warrant hereunder shall be common or preferred shares and the applicable price thereof shall be equal to or higher than the par value per share of such new shares, as determined by the Board of Directors at the time of issuance thereof.
  • ④ The period in which holders of bonds with warrant are entitled to exercise such warrant hereunder shall begin on the day after 1 month has elapsed from the date of issuance thereof and end on the day immediately preceding the maturity date thereof provided, however, that such a period for exercising warrant may be adjusted by a resolution of the Board of Directors within the aforementioned period pursuant to the provisions of related laws.
  • ⑤ As for payment of dividends on the new shares to be issued as a result of the exercise of such warrant hereunder, the provisions of Article 10-2 hereof shall apply mutatis mutandis.
Article 16(Application of Provisions concerning Issuance of Bonds)

The provisions of Articles 11 and 12 hereof shall apply mutatis mutandis to the issuance of bonds.

General meetings of shareholders

Article 17(Time to Convene Meetings of Shareholders)
  • ① The company’s meetings of shareholders shall consist of annual meetings and special meetings.
  • ② The annual meeting shall be held within three months after the end of each fiscal year, and special meeting may be held at any time whenever necessary.
Article 18(Person Authorized to Convene Meetings of Shareholders)
  • ① The representative director shall convene a meeting of shareholders by a resolution of the Board of Directors unless stipulated otherwise by laws. If there are many representative directors, however, the representative director named by the Board of Directors shall convene a meeting of shareholders.
  • ② In the absence of the representative director, the provision of Paragraph 2 of Article 34 shall apply mutatis mutandis.
Article 19(Personal and Public Notice of Convening a Meeting of Shareholders)
  • ① In convening a meeting of shareholders, the company shall give notice in writing or electronically to each shareholder of the date, time and place of the meeting and the list of agenda to be dealt with at the meeting, at least two weeks prior to the date set for such a meeting.
  • ② For shareholders holding one percent or less of the total number of outstanding shares issued with voting rights, the company may insert, twice or more in MK Business News and Korea Economic Daily currently published in Seoul, a public notice of its intention to convene such a meeting and the list of agenda to be dealt with at the meeting two weeks in advance, or post it on the DART System operated by the Financial Supervisory Service or KRX , in lieu of giving such written or electronic notice mentioned in Paragraph 1 above.
Article 20(Place of Convening a Meeting of Shareholders)

The meeting of shareholders shall be held in the place where the head office of the company is located and may also be held in any other place near to it, whenever circumstances require.

Article 21(Chairperson)
  • ① The company’s representative director shall preside over all of the meetings of shareholders as chairperson. If there are many representative directors, however, the provision of Paragraph 1 of Article 18 shall apply mutatis mutandis.
  • ② In the absence of the representative director, the provision of Paragraph 2 of Article 34 shall apply mutatis mutandis.
Article 22(Chairperson’s Authority to Maintain Order)
  • ① The chairperson of a meeting of shareholders may stop a person who significantly disturbs order in such a meeting with speech or behavior to interfere with the proceedings of the meeting intentionally from speaking or may order such a person out of the meeting.
  • ② The chairperson of a meeting of shareholders may limit the duration and/or the number of speeches by each shareholder, whenever the chairman deems it necessary for smooth proceedings of the meeting.
Article 23(Shareholders’ Voting Rights)

Each shareholder shall have one vote for each share he/she owns.

Article 24(Limitation on the Voting Rights of Cross-held Shares)

If the company, its parent company and subsidiary(s), or a subsidiary(s) of the company owns more than 1/10 of the outstanding shares issued of a third company, then the shares of the company held by that third company shall have no voting rights.

Article 25(Split Exercise of Voting Rights)
  • ① If a shareholder having more than two votes wishes to split his/her votes at a meeting of shareholders, said shareholder shall give the company notice in writing of his/her intention to do so and the reason therefor at least three days prior to the date set for such a meeting.
  • ② The company may refuse to allow a shareholder to split his/her votes, except for the case where said shareholder has shares in trust or holds shares on behalf of a third party.
Article 26(Exercise of Voting Rights by Proxy)
  • ① Each shareholder may exercise his/her vote by proxy.
  • ② In such a case, the proxy shall present to the company an appropriate document (a power of attorney) evidencing his/her power of representation prior to opening of that meeting.
Article 27(Method of Adopting Resolutions at Meetings of Shareholders)

Unless otherwise provided in the relevant laws and regulations or in the Articles of Incorporation, all resolutions of a meeting of shareholders shall be passed by the affirmative votes of a majority of the shares represented by the shareholders present at the meeting of shareholders, which shall not be less than a quarter of the outstanding shares issued.

Article 28(Minutes of Meetings of Shareholders)

The proceedings and results of a meeting of shareholders shall be recorded in minutes, which shall be kept in the head office and branches of the company after the chairperson and all directors present at the meeting have signed and sealed the same or affixed their signatures thereto.

Directors and Board of Directors

Article 29(Number of Directors)

The company shall have not less than three directors, and the number of outside directors shall be more than a quarter of the total number of directors.

Article 30(Election of Directors)
  • ① Directors shall be elected by a meeting of shareholders.
  • ② A resolution for electing directors shall be passed by the affirmative votes of a majority of the shares represented by the shareholders present at the meeting of shareholders, which shall not be less than a quarter of the outstanding shares issued.
  • ③ If the company elects two or more directors at a meeting of shareholders, the cumulative vote stipulated in the Commercial Act shall not apply.
Article 31(Term of Office)
  • ① The term of office of directors shall be not more than three years after inauguration; provided, however, that such term of office shall be extended until the close of the annual meeting of shareholders convened in respect of the last period for the settlement of accounts in their term of office if their term of office expires before the close of the said meeting of shareholders.
  • ② The aggregated term of office of an outside director shall be not more than ten years.
Article 32(Election to Fill a Vacancy)
  • ① If there is a vacancy in the number of directors, a director shall be elected at a meeting of shareholders to fill such a vacancy; provided, however, that the foregoing provision shall not apply if the number of the existing directors in office is not less than the number of directors provided in Article 29 hereof and no hindrance is caused in carrying on the company’s business thereby.
  • ② If, as a result of resignation or death of an outside director, there is a vacancy in the number of directors as provided in Article 29 hereof, the requirements concerning such a vacancy shall be met at the first meeting of shareholders convened after such a cause of vacancy has occurred.
  • ③ The term of office of the director in such an election to fill a vacancy shall start with the inauguration thereof.
Article 33(Appointment of Representative Director, etc.)
  • ① The company may appoint a few representative directors from among the directors elected at a meeting of shareholders by resolutions of the Board of Directors.
  • ② If the company has many representative directors, the Board of Directors shall decide whether they will represent the company respectively or jointly.
Article 34(Duties of Directors)
  • ① The representative director shall represent the company and direct the company’s overall business.
  • ② In the absence of a representative director, another director shall perform the duties of the representative director as stipulated by the Board of Directors. If the representative director cannot perform duties normally for six months or longer, a representative director shall be re-appointed.
  • ③ Directors shall faithfully perform their duties in accordance with relevant laws and the Articles of Incorporation.
Article 34-2(Executive Officers)
  • ① The Company may appoint executive officers by a resolution of the Board of Directors.
  • ② Executive officers shall assist representative directors and take charge of the company’s business as determined by the Board of Directors.
  • ③ The number, term of office, duties, remuneration and appointment of executive officers shall be determined by the Board of Directors.
Article 34-3(Committees in the Board of Directors)
  • ① The Company shall establish committees in the Board of Directors, as described below:
    1. Audit committee
    2. Policy Review Committee
    3. HR and Performance Committee
    4. CS Management Committee
  • ② The details concerning the composition, power and operation of each of such committees shall be determined by resolutions of the Board of Directors.
  • ③ Provisions of Articles 37, 38 and 39 hereof shall apply mutatis mutandis to such committees.
Article 34-4(Directors’ Obligations to Report)
  • ① A director shall report the status of executing his/her duties to the Board of Directors at least once every three months.
  • ② If a director finds anything that is likely to cause material damages to the Company, he/she shall immediately report the same to the audit committee.
Article 37(Composition of Board of Directors and Convening of Meetings)
  • ① The Board of Directors shall be composed of directors and make major decisions on the company’s business.
  • ② The representative director or an acting representative director in the absence of the representative director shall convene all meetings of the Board of Directors by giving notice thereof to each director seven days prior to the date set for each of such meetings pursuant to Paragraph 2 of Article 34. If all directors unanimously consent to holding a meeting of the Board of Directors, the procedure of convening a meeting may be omitted.
  • ③ The chairperson of the Board of Directors shall be separately appointed by the Board of Directors.
Article 37-2(Resolutions of the Board of Directors)

    The company shall not do the following unless by the resolution of the Board of Directors:

  • Establish annual management goals and approve settlement of accounts;
  • Purchase or and sell important assets;
  • Enter into contracts greatly affecting the management of the company;
  • Guarantee payment to a third party and related behavior;
  • Make decisions on important matters including the basic policy of the company; and
  • Execute dealings on matters delegated by other laws and the general meetings of shareholders.
Article 38(Method of Adopting Resolutions)
  • ① A quorum for holding a meeting of the Board of Directors shall be a majority of all directors in office, and all resolutions of the Board of Directors shall be adopted by the affirmative votes of a majority of directors present at the meeting. However, resolutions on matters corresponding to Article 397-2 (Prohibition of usurpation of corporate opportunity) and Article 398 (Prohibition of self-dealings) of the Commercial Act shall be adopted by the affirmative votes of 2/3 or more of the directors.
  • ② The Board of Directors may allow all directors or a part thereof to participate in resolutions of the Board of Directors through the means of communication through transmitting and receiving voices simultaneously, in lieu of attending such a meeting in person. In such a case, said director(s) shall be deemed to have attended such a meeting in person.
  • ③ No directors having a specific interest in any resolution of the Board of Directors shall be allowed to exercise their voting rights upon such a resolution.
Article 39(Minutes of Meeting of the Board of Directors)
  • ① The Board of Directors shall record the proceedings of every meeting of the Board of Directors.
  • ② The minutes shall include the agenda, procedure and results of the proceedings of the meeting, names of the directors against each resolution and the reason for their objection thereto and all directors and auditor(s) present at the meeting shall sign and seal the same or affix their signatures thereto.
Article 40(Directors’ Remuneration and Retirement Allowances)
  • ① Directors’ remuneration shall be determined by a resolution of a meeting of shareholders.
  • ② Retirement allowances for directors shall be paid in accordance with the company’s regulations concerning retirement allowances for officers which shall have been duly approved by a resolution of a meeting of shareholders.
Article 41(Consultants and Advisors)

The Company may appoint a few consultants and advisors through a resolution of the Board of Directors.

Audit committee

Article 41-2(Composition of Audit Committee)
  • ① The company shall establish an audit committee pursuant to Article 34-3 hereof, in lieu of auditor(s).
  • ② The Audit Committee shall be composed of three or more directors. Two-thirds or more of the total number of Audit Committee members shall be outside directors. An Audit Committee member, who is not an outside director, shall meet the qualifications under Paragraph 2 of Article 542-10 of the Commercial Act.
  • ③ If the number of shares held by any shareholder exceeds 3/100 of the outstanding shares issued with voting rights, said shareholder may not exercise his/her voting rights with respect to the shares in excess of such 3/100 in electing any Audit Committee member who is not an outside director.
  • ④ In electing or dismissing Audit Committee members none of whom is an outside director, if the aggregate total number of shares held by the largest shareholder who will exercise his/her voting rights and his/her related person(s), those who possess shares on account of the largest shareholder or his/her related person(s) and those to whom the largest shareholder or his/her related person(s) have delegated their votes exceeds 3/100 of the outstanding shares issued with voting rights, such shareholders may not exercise their voting rights with respect to the shares in excess of such 3/100.
  • ⑤ By a resolution, the Audit Committee shall appoint the person who will represent the Audit Committee, where the chairperson shall be an outside director.
Article 41-3(Duties of Audit Committee)
  • ① The Audit Committee shall audit the company’s accounting and general operations.
  • ② The Audit Committee may request the Board of Directors to convene a special meeting of shareholders by submitting a document stating the agenda to be dealt with at the meeting of shareholders and the reason for convening such a meeting of shareholders to a director (the person authorized to convene such meetings if there is such a person. The same hereinafter).
  • ③ If the director fails to immediately convene a meeting of the Board of Directors despite the request mentioned in Paragraph 2, the Audit Committee, which made the request, may convene a meeting of the Board of Directors.
  • ④ The Audit Committee may request the convention of a special meeting of shareholders by submitting a document stating the agenda to be dealt with at the meeting of shareholders and the reason for convening such a meeting of shareholders, to the Board of Directors.
  • ⑤ The Audit Committee may request the company’s subsidiary(s) to make a report on its (their) operations, if the Audit Committee deems it necessary to perform its duties. In such a case, if the subsidiary(s) fails to immediately make such a report as requested, the Audit Committee shall have the right to inspect that subsidiary’s operations and status of assets.
  • ⑥ In electing an independent auditor, the Audit Committee shall approve such an independent duly elected auditor.
  • ⑦ In addition to the matters in Paragraph 1 through 6 above, the Audit Committee shall deal with the matters delegated to it by the Board of Directors.
  • ⑧ The Board of Directors shall not make a resolution again on the resolutions of the Audit Committee.
  • ⑨ The Audit Committee may seek the help of experts at the expense of the company.
Article 41-4(AMinutes of Audit)

The Audit Committee shall prepare minutes of audit with respect to the audit conducted by it. The minutes of audit shall record the proceedings and results of the audit, and be signed and sealed by or shall bear the signatures of the Audit Committee members who have conducted such audit.

Accounting

Article 42(Fiscal year)

The fiscal year of the company shall commence on January 1 and end on December 31 of each year.

Article 43(Preparation and Maintenance of Financial Statements)
  • ① The representative director of the company shall prepare and submit to auditor(s) for audit the following documents and their supplementary schedules together with a business report, six weeks prior to the date set for the annual meeting of shareholders convened for the fiscal year to which such documents are related and, upon auditor(s)’ audit, shall submit the aforementioned documents and the business report to the annual meeting of shareholders:
    1. Statement of financial position
    2. Income statement
    3. Statement of Appropriation of Retained Earnings or Statement of Disposition of Accumulated Deficit
  • ② The Audit Committee shall submit an auditor’s report to the representative director at least by one week prior to the date set for such annual meeting of shareholders.
  • ③ The representative director shall maintain the documents and their supplementary schedules referred to in Paragraph 1 above along with the business report and the auditor’s report in the head office of the company for five years and their copies in the branch office(s) of the company for three years, respectively, starting from one (1) week prior to the date set for the annual meeting of shareholders convened for the fiscal year to which such documents are related.
  • ④ Upon approval of the annual meeting of shareholders with respect to the documents referred to in Paragraph 1 above, the representative director shall promptly give public notice of the company’s statement of financial position and independent auditor’s report.
Article 43-2(Appointment of Independent Auditor)

The company shall appoint an independent auditor with approval of the Audit Committee under the Act on External Audit of Share Companies and shall report appointment thereof to the annual meeting of shareholders to be convened in the fiscal year in which such appointment was made, or give public notice of it to the shareholders, who are on the list of shareholders as of the date when alterations to the list of shareholders is suspended, in writing or electronically, or post it on the Internet homepage of the company.

Article 44(Disposition of Profits)

The company shall dispose of the unappropriated retained earnings of each fiscal year as follows:

  1. Legal reserve;
  2. Other statutory reserves;
  3. Dividends;
  4. Voluntary reserves; and
  5. Other appropriated retained earnings.
Article 44-2(Retirement of Shares)
  • ① The company may retire shares by a resolution of the Board of Directors, to the extent that the amount does not exceed the amount of profit to be distributed to shareholders as dividends.
  • ② If the company intends to retire shares pursuant to Paragraph 1 above, the Board of Directors shall adopt a resolution for each of the following:
    1. The class and total number of shares to be retired;
    2. The aggregate value of the shares to be acquired for the purpose of retirement; and
    3. The period in which the company intends to acquire such shares, where such a period shall end prior to the date set for the first annual meeting of shareholders to be convened following adoption by the Board of Directors of such a resolution.
  • ③ In acquiring treasury stocks for the purpose of retiring shares pursuant to Paragraph 1 above, the company shall comply with the following criteria:
    1. Such acquisition shall be effected using any of the methods under Subparagraph 1 or 2 of Paragraph 2 of Article 165-2 of the Capital Market and Financial Investment Business Act; where, if by means of the method under Subparagraph 1 of Paragraph 2 of Article 165-2 of the same Act, such acquisition shall meet the criteria prescribed in the Enforcement Decree of the same Act in respect of the period and method of such acquisition; and
    2. The aggregate value of the shares to be acquired for the purpose of retirement shall not exceed the amount prescribed in the Enforcement Decree of the Capital Market and Financial Investment Business Act, within the limit of the amount available for dividends to shareholders at the end of the applicable fiscal year pursuant to Paragraph 1 of Article 462 of the Commercial Act.
  • ④ If the company has retired shares pursuant to paragraph 1 above, the company shall report the details set forth in Paragraph 2 above, together with the intention of such retirement of shares, to the first annual meeting of shareholders convened following adoption of the resolution for such retirement of shares.
Article 45(Dividends)
  • ① Dividends may be paid in cash, shares and/or other property.
  • ② If dividends are paid in shares and when the company has issued a few classes of shares, dividends may also be paid in any class of shares different from such shares by a resolution of a meeting of shareholders.
  • ③ The dividends referred to in Paragraph 1 above shall be paid to the shareholders or pledgees whose names appear or are duly registered in the list of shareholders as of the end of each fiscal year.
Article 45-2(Quarterly Dividends)
  • ① The company may pay quarterly dividends under Article 165-12 of the Capital Market and Financial Investment Business Act to its shareholders whose names appear in the list of shareholders as at the end of the 3rd, 6th and 9th month, respectively, of each fiscal year. Quarterly dividends shall be paid in cash.
  • ② Quarterly dividends referred to in Paragraph 1 above shall be paid by a resolution of the Board of Directors; provided, however, that such a resolution shall be made within 45 days from the record date in Paragraph 1 above.
  • ③ Quarterly dividends shall be paid within the limit of not exceeding the amount of the net worth shown on the statement of financial position as of the end of the immediately preceding period for the settlement of accounts, less the following amounts:
    1. The amount of capital, as of the end of the immediately preceding period for the settlement of accounts;
    2. The aggregate sum of the capital reserves and legal reserves appropriated up to the immediately preceding period for the settlement of accounts;
    3. The amount appropriated for dividends by a resolution adopted at the annual meeting of shareholders convened for the immediately preceding period for the settlement of accounts;
    4. The amount of voluntary reserves appropriated for specific purposes in accordance with the provisions of the Articles of Incorporation or by a resolution of the meeting of shareholders up to the immediately preceding period for the settlement of accounts;
    5. The aggregate amount of legal reserves for quarterly dividends during the current period for the settlement of accounts; and
    6. The aggregate amount of quarterly dividends paid during the current fiscal year, if any.
  • ④ If any new shares have been issued prior to the respective record dates specified in Paragraph 1 above following the commencement date of the current fiscal year (including capitalization of reserves, stock dividends, requests for conversion of convertible bonds to the capital stock and the exercise of warrant with respect to bonds with warrant), such new shares shall be deemed to have been issued at the end of the immediately preceding fiscal year with respect to quarterly dividends hereunder.
  • ⑤ With respect to quarterly dividends, the same dividend rate as applicable to common shares shall apply to preferred shares under Article 8-2 hereof.
Article 46(Statute of Limitation to the Claim for Dividends)
  • ① If a claim for dividends has not been exercised for five years, the statute of limitation applicable thereto shall expire.
  • ② The dividends with respect to which the statute of limitation mentioned in Paragraph 1 has expired shall revert to the company.

Supplementary Provisions

  1. Date of enforcement
  2. The Articles of Incorporation shall go into effect on March 5, 2001.


  3. Date of enforcement
  4. The Articles of Incorporation shall go into effect on March 10, 2003.


  5. Date of enforcement
  6. The Articles of Incorporation shall go into effect on March 12, 2004.


  7. Date of enforcement
  8. The Articles of Incorporation shall go into effect on March 17, 2006.


  9. Date of enforcement
  10. The Articles of Incorporation shall go into effect on March 16, 2007.


  11. Date of enforcement
  12. The Articles of Incorporation shall go into effect on October 8, 2008.


  13. Date of enforcement
  14. The Articles of Incorporation shall go into effect on March 19, 2010.
    However, the amendment of Article 4 shall go into effect on May 29, 2010.


  15. Date of enforcement
  16. The Articles of Incorporation shall go into effect on March 18, 2011.


  17. The Articles of Incorporation shall go into effect on March 23, 2012.

  18. However, amendments of Paragraph 3 of Article 10, the proviso of Paragraph 1 and Paragraph 2 of Article 38, and Paragraphs 2 and 3 of Article 41-3 shall go into effect on April 15, 2012.


  19. Date of enforcement
  20. The Articles of Incorporation shall go into effect on March 20, 2015.

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