KT Corporation (KTCD) - EGM Statement RNS Number : 4227P KT Corporation 24 October 2012 Notice of the Extraordinary General Meeting of Shareholders CONTENTS Notice of Extraordinary General Meeting of Shareholders Matter Requiring Resolution General Information for Voting 3 ■ Agenda Item No. 1 4 Approval of Spin-Off Agreement * To be presented at the meeting Notice of Extraordinary General Meeting of Shareholders October 24, 2012 To our Shareholders, You are invited to attend an Extraordinary General Meeting of Shareholders, which KT will hold on November 23, 2012 as described below in detail, to obtain shareholder approval of Spin-Off Agreement. Shareholders holding KT's common shares as of October 8, 2012 will be entitled to vote at the Extraordinary General Meeting of Shareholders. I look forward to your participation. Suk Chae Lee Chief Executive Officer ■ Date and Time:Friday,November 23, 2012 10:00 a.m. (local time) ■ Place: Lecture Hall (2F) of KT Corporation's R&D Center located at 17 Woomyun-dong, Seocho-gu, Seoul, Korea ■ Record Date : October 8, 2012 General Information for Voting ● Number and Classification of Voting Shares The record date for exercising voting rights at the ExtraordinaryGeneral Meeting of Shareholders is October 8, 2012. As of the record date, the number of KT's total shares issued was 261,111,808 shares and the number of common shares entitled to exercise voting rights (excluding treasury shares and shares held by an affiliate company) was 243,635,806 shares. ● Method of Resolution Pursuant to the provisions of the Korean Commercial Code, Agenda Item No.1 shall be passed by at least two-thirds of the votes cast by the shareholders present at the meeting and at least one-third of total shares entitled to vote. Agenda Item No. 1 Approval of Spin-Off Agreement Pursuant to Articles 530-3, Sections 1 and 2 of the Korean Commercial Code, KT seeks shareholder approval to spin-off its satellite service business, resulting in establishment of an independent satellite business company. All shares of the new satellite business company will be allocated to KT after the spin-off. Thus, there will be no impact on shareholders' ownership. KT will remain a listed company while the new satellite business company will be a non-listed company. KT 's Board of Directors believes that the spin-off of the satellite business from KT submitted for shareholder's approval at the Extraordinary General Meeting is in the best interests of KT and its shareholders. Unless otherwise indicated, references in this proxy statement to "Surviving Company" refer to KT Corp. and to "Spin-off Company" refer to its spun-off satellite business. 1. Surviving Company Description KT is an integrated wired/wireless telecommunication service provider in Korea. KT has information & communications businesses as well as the largest portion of the South Korean local telephone and high-speed Internet business. KT is the market leader in the wired communication and the second largest wireless communication provider in Korea. KT is also in the midst of expanding its non-telecommunication businesses such as media services and real estate business. 2. Background and Reasons for Spin-off KT believes that its satellite service business's value has not reached to its potential maximum level under the KT's current structure where its core wired and wireless businesses have been the most focused with most available resources. For this reason, the Company strongly believes that this spin-off will provide enough resources and focuses needed for the satellite service business's long-term growth while maximizing not only the satellite service business's value, but also KT shareholders' values. KT's Board of Directors also believes that the spin-off would provide the following benefits to KT and its shareholders, and that such benefits would likely not be attainable if the spin-off were not implemented. Attainment of these potential benefits is the primary reason underlying KT's Board of Directors' determination to pursue the spin-off of its satellite business. · By separating the satellite service business of the KT Corporation, both KT and its satellite service business will be able to enhance business specialization and foster management efficiency, thereby maximizing shareholder value. · By establishing an appropriate decision-making structure and a fair governance system in light of the peculiarities of each business, a system of responsible management can be instituted. · By specializing each own business, the spin-off will enable KT more to focus on investment for the Surviving Company's core business, thereby allowing each business to respond promptly to the fast-changing market environments. · By fostering efficiency in management and distributing business assets and risks relating to each business, global competitiveness can be secured and thereby achieving maximum shareholder value in the long-run for KT's shareholders. - Method of Spin-off The Spin-off Company will be incorporated through a spin-off of the satellite service business ("Spin-off Business") of the Surviving Company as below, pursuant to Articles 530-2 through 530-12 of the Korean Commercial Code. The spin-off will be in the form of a simple vertical spin-off whereby all of the shares in the Spin-off Company will be allocated to the Surviving Company. Thus, there will be no material impact on the Surviving Company from this spin-off. The Surviving Company will remain a listed company while the Spin-off Company will be a non-listed company. Company Name Business Surviving Company KT Corporation All businesses other than the business of the Spin-off Company Spin-off Company [KT Sat] (tentative)* Satellite business including lease business of satellite repeaters and devices and satellite service business and other businesses related to satellites * (Note) The name of the Spin-off Company may change at the extraordinary shareholders' meeting for approval of the Spin-off Plan, or the inaugural meeting of the Spin-off Company. - The effective date for the spin-off: December 1, 2012 3. Pro Forma Financial Summary Based on the balance sheet as of June 30, 2012, the breakdown of assets, liabilities, and shareholders' equity between the Surviving Company and the Spin-off Company after the spin-off would be as follows: (Unit : KRW billion) KT Corporation (Surviving Company) [KT Sat] (tentative)* (Spin-off Company) Assets 26,385.5 424.9 Liabilities 14,571.3 206 Shareholders' equity 11,814.2 404.3 Authorized shares 1,000,000,000 shares 40,000,000 shares Issued shares 261,111,808 shares 10,000,000 shares *(Note) The above figures are based on the book value of the surviving company as of June 30, 2012 and are subject to changes due to operation of business, changes in legal, accounting standards. 4. Corporate Governance After the spin-off, there will be no change in corporate governance of the Surviving Company. The Spin-off Company is expected to nominate its own directors and an auditor(s) at its first shareholder meeting. Please refer to AOIin the Supplementary Document for any corporate governance matters related to the Spin-off Company. For further details, please refer to the supplementary document which describes "Spin-off Plan". Spin-off Supplementary Document 1. Purpose and Background Information of Spin-off (1) By separating the satellite service business of KT Corporation, both KT and its spun-off satellite service business will be able to enhance each own business specialization and foster management efficiency, thereby maximizing the shareholders' value. (2) By establishing an appropriate decision-making structure and a fair governance system in light of the characteristics of each business, a system of responsible management can be instituted. (3) Through specialization of each business, the spin-off will enable KT to execute intensive investment more for the Surviving Company's core business, thereby allowing each business to respond promptly to the altering market environments. (4) By fostering efficiency in management and properly distributing business assets and risks relating to each business, global competitiveness can be secured, thereby achieving the maximum shareholders' value in the long-run. 2. Summary of Method of Spin-off (1) Method of Spin-off ① The Spin-off Company will be incorporated through a spin-off of the satellite service business ("Spin-off Business") of the Surviving Company as below, pursuant to Articles 530-2 through 530-12 of the Korean Commercial Code. The spin-off will be in the form of a simple vertical spin-off whereby all of the shares in the Spin-off Company will be allocated to the Surviving Company. The Surviving Company will remain a listed company while the Spin-off Company will be a non-listed company. <Details of Spin-off> Company Name Business Surviving Company KT Corporation All businesses other than the business of the Spin-off Company Spin-off Company [KT Sat] (tentative)* Satellite business including lease business of satellite repeaters and devices and other businesses related to satellites * (Note) The name of the Spin-off Company may be changed at the extraordinary shareholders' meeting for approval of the Spin-off Plan or at the inaugural meeting of the Spin-off Company. ② The effective date of the spin-off will be December 1, 2012. ③ The spin-off will take place pursuant to a special resolution of the shareholders' meeting in accordance with Article 530-3, Sections 1 and 2 of the Korean Commercial Code. Pursuant to Article 530-9, Section 1 of the Korean Commercial Code, the Surviving Company and the Spin-off Company are jointly and severally liable for the obligations of the Surviving Company accrued prior to the spin-off. ④ In accordance with Article 530-3 Sections 3, in the event where the Surviving Company pays any debt that is transferred to the Spin-off Company pursuant to the Spin-off Plan, or otherwise both companies are released from liability through outlay of funds by the Surviving Company, due to the joint and several liability of the Surviving Company and the Spin-off Company for the obligations of the Surviving Company accrued prior to the spin-off, the Surviving Company will have a right of recovery from the Spin-off Company. In the event where the Spin-off Company pays any debt which belongs to the Surviving Company pursuant to the Spin-off Plan, or where both companies are released from liability through outlay of funds by the Spin-off Company, the Spin-off Company will have a right of recovery from the Surviving Company. ⑤ Any and all assets and liabilities, rights/obligations, and anything of value (including licenses and permits, employment relationships, contractual relationships, and litigations) of the Surviving Company shall belong to the Spin-off Company in accordance with Article 530-4 Sections 4 if it is related to the Spin-off Business, and to the Surviving Company if it relates to any other business. ⑥ Any obligation that arises/accrues in relation to the business of the Surviving Company after the date of spin-off, due to an act or event taking place prior to such date, or obligation (any type of obligation including potential liabilities under public and private laws) that already had been accrued prior to such date but is not reflected in the Spin-off Plan for any reason including failure to recognize such obligation, shall belong to the Spin-off Company if the act or fact giving rise to the obligation relates to the Spin-off Business, and to the Surviving Company if it relates to any other business. In the event where it cannot be determined whether an obligation is related to the Spin-off Business, the obligation shall be shared by the Surviving Company and the Spin-off Company in proportion to their respective share of the value of net assets distributed pursuant to the spin-off. ⑦ Any claim or other right acquired in relation to the business of the Surviving Company after the date of spin-off, due to an act or event taking place prior to such date, or a claim or other right (any type of claim including potential claims under public and private laws) that already had been acquired prior to such date but is not reflected in this Spin-off Plan for any reason including failure to recognize such right, shall be treated in the same manner as the preceding paragraph. ⑧ In the event where the Surviving Company is a party of any contract or litigation prior to the Spin-off date, the contract or litigation shall be transferred to the Spin-off Company if it relates to the Spin-off Business, and remain with the Surviving company if it relates to any other business. ⑨ The assets, liabilities and capital of the Spin-off Company shall be determined by distribution of the assets and liabilities belonging to the Spin-off Business or relating directly or indirectly thereto, but the amounts of assets, liabilities and capital shall be determined by collectively taking into account the future operational and investment plans of the Spin-off Company. (2) Spin-off Schedule Event Date Board Resolution for Approval of Spin-off Plan September 20, 2012 Record Date for Extraordinary General Meeting of October 8, 2012 Shareholders Board Resolution for Extraordinary General Meeting of October 23, 20122 Shareholders Extraordinary General Meeting of Shareholders for Approval November 23, 2012 of Spin-off Plan Date of Spin-off December 1, 2012 Inaugural (Shareholder) Meeting of Spin-off company December 3, 2012 Expected Date of Registration of Spin-off December 4, 2012 Other events Announcement of Shareholder Registry Closure September 21, 2012 Duration of Registry Closure October 9, 2012 ~ October 16, 2012 Dispatch of Extraordinary General Meeting of November 8, 2012 Shareholders Notice * (Note 1) The above schedule is subject to adjustments based on relevant laws and consultations with the relevant authorities. * (Note 2) Board's announcement or notice may be adopted in lieu of Inaugural (shareholder) Meeting of the Spin-off company. * (Note 3) A separate Board meeting might take place prior or after the shareholders' meeting in the event where there are substantial changes to the spin-off plan. (3) Matters Relating to Spin-off Company ① Name, purpose, headquarters, and method of public notice Name Korean Chusik Hoesa KTSAT (tentative) English KTSAT Co. Ltd (tentative) Purpose 1. Telecommunication business with satellite spectrum 2. Sales and leasing of equipment and facilities related to the activities mentioned in Subparagraph 1 3. Any overseas business or export and import business related to activities mentioned in Subparagraphs 1 and 2 4. Information and communication business 5. Sale and distribution of information communication equipment; 6. Testing and inspection of information communication equipment, device or facilities; 7. IT facility construction business and electrical construction business; 8. Value-added telecommunications business 9. Research and technical development, education, training and promotion, overseas businesses, and export and import, manufacture and distribution related to activities mentioned in Subparagraph 1 10. Any and all other activities or businesses incidental to or necessary for attainment of the foregoing mentioned in all of the subparagraphs HeadquartersAddress 100 Sejongro, Jongro-gu, Seoul, Korea Methodof Publication in The Maeil Economic Daily, a newspaper of general circulation in Seoul PublicNotice * (Note) The name of the Spin-off Company may be changed at the extraordinary shareholders' meeting for approval of the Spin-off Plan or at the inaugural shareholder meeting of the Spin-off Company. ②Total number of authorized shares and par value per share Total number of shares issued 40,000,000 Par / Non-Par shares Par Value : 5,000 Won per share ③Total number, type, and number of each type, of shares to be issued upon the spin-off Total number of shares issued 10,000,000 Number of shares for each type Registered common shares :10,000,000 Par / Non-Par shares Par Value : 5,000 Won per share ④Matters relating to allocation of shares to shareholder of the Spin-off Company The spin-off is a simple vertical spin-off, and thus all shares issued by the Spin-off Company will be allocated to the Surviving Company. ⑤Provision on amount to be paid to shareholders of the Spin-off Company, if determined Not applicable. ⑥Share Capital and Reserve of Spin-off Company Item Amount Share Capital 50,000,000,000 Won Reserve 354,268,867,192 Won *(Note 1) Reserve consists of capital surplus. *(Note 2) The above figures may change on the date of the spin-off, and will be confirmed once the items subject to the spin-off as of December 1, 2012 are determined and are reviewed by public accountants. ⑦Summary of Financial Position and Income Statement of Spin-off Company as of June 30, 2012 (Unit: 100 million Won) Financial Position Income Statement (1H 2012) Total Assets 4,249 Revenue 723 Current Assets 347 Non-current Assets 3,902 Operating Expenses 521 Total Liabilities 206 Current Liabilities 125 Operating Income 202 Non-current Liabilities 81 Total Stockholders' Equity 4,043 Net Income 158 Total Assets and Liabilities 4,249 ⑧ Industry characteristics The Spin-off Company plans to enhance its corporate value through global expansion in South East Asia and Middle East while maintaining its leadership in the satellite transponder rental, video and data transmission, and mobile satellite service ('MSS') with Koreasat. a. Satellite transponder rental business The Spin-off Company is the only satellite service provider in Korea with Koreasat No. 5, 6 and 7, covering the Korean peninsula, Philippines and some other overseas areas. Currently, we are offering rental services of satellite transponder and we plan to add satellites that cover overseas areas including South East Asia, Middle East and Africa in order to become a major global satellite service provider. b. Video transmission business Video transmission, which receives and transfers video contents, allows clients to provide broadcasting services such as advertising, in-house broadcasting, and remote controlled lectures. Moreover, video-on-demand is available when subscribers install IPTV. We run backup stations to secure the stabilized transmission of data from satellites. Also, we maintain Satellite News Gathering ("SNG") service which broadcasts on-site sports and events. With SNG service, clients are able to offer broadcasting to users in areas where on-ground line installment is not available. c. Data transmission business Data transmission service provides clients - who require high security network or need a back-up service for their fixed-line such as government organizations and financial institutions - their own separate telecommunication lines by installing satellite stations in their offices, providing them private data, voice and video transmissions. It also offers an overseas broadband service by installing micro stations to connect overseas and domestic intranet in rural areas or construction sites. In the near future, we plan to offer a low-end broadband service for additional growth. d. Mobile Satellite Service ('MSS') MSS refers to 1) maritime satellite service that allows internet and intranet services at the sea; 2) telecommunication - telephony, fax, and telex - between vessels, land-sea, land-aircraft at the Pacific, Atlantic, Indian Oceans, using Inmarsat located equator altitude of 35,786km. As there have been increased focuses on the ship management along with satellite communication development, many of our competitors are providing various value added services to ship builders. These value added services provided by MSS are expected to assist Korean ship builders to maintain their global leadership position in the shipbuilding industry. (4) Assets to be Transferred to Spin-off Company and Value of Such Assets ① The Surviving Company shall transfer any and all assets and liabilities of the Surviving Company (the "Spin-off Assets") in accordance with the Spin-off Plan. ② The list of the Spin-off Assets is set forth in the [Attachment 1] Spin-off Financial Status Table and in [Attachment 2] List of the Spin-off Assets on the Spin-off Plan based on the value of the Spin-off Assets as of June 30, 2012. Any change in assets or liabilities of the Spin-off Business due to operations or financial activities of the Spin-off Business from June 30, 2012 to the date of spin-off, or discovery of asset or liability that is omitted or incorrectly reflected in the list of Spin-off Assets, or changes in the amount of assets or liabilities, may be corrected or additionally reflected in the Spin-off Financial Status Table and List of the Spin-off Assets. ③ The value of the Spin-off Assets under the preceding paragraph shall be the book value as of June 30, 2012. However, the final list of the Spin-off Assets and the value of related assets shall be determined after the review of public accountants. ④ Any right or obligation of which the transfer pursuant to the spin-off is not possible by law or by nature shall be deemed to remain with the Surviving Company. The same shall apply where transfer pursuant to the spin-off requires approval/ permission/clearance of the government authority, but such approval/permission/clearance cannot be obtained. ⑤ Any intellectual property right including patents, utility model, design, trademark and service mark (whether registered or pending registration, and including all rights and obligation attached thereto), which are owned by the Surviving Company prior to the date of the spin-off, shall belong to the Spin-off Company if it relates to the Spin-off Business, and to the Surviving Company if it relates to any other business. ⑥ Summary of Financial Position, Before and After Spin-off (As of June 30, 2012) (Unit: 100 million Won) Accounts Before After Spin-off After Spin-off Spin-off KT Corp. KT Corp. KT SAT (tentative) Surviving Company Spin-off Company Current assets 63,073 62,725 348 Cash and cash equivalents 7,908 7,728 180 Trade and other receivables 45,003 44,849 154 Other financial assets 427 427 - Other assets 2,117 2,103 14 Inventories 7,618 7,618 - Non-current assets 201,052 201,130 3,901 Other financial assets 2,160 2,160 - Investments in subsidiary and 16,597 20,576 - affiliated companies (Note 1) Trade and other receivables 10,988 10,988 - Property and equipment 137,465 133,637 3,828 Intangibles 18,010 18,001 9 Investment property 11,149 11,149 - Other assets 342 342 - Deferred Tax assets 4,341 4,277 64 Total Assets 264,125 263,855 4,249 Current Liabilities 65,816 65,691 125 Trade and other payables 43,217 43,174 43 Borrowings 16,571 16,571 - Other liabilities 1,204 1,122 82 Tax liabilities 1,236 1,236 - Provisions 2,112 2,112 - Deferred income 1,476 1,476 - Non-current Liabilities 80,103 80,022 81 Trade and other payables 5,430 5,372 58 Borrowings 66,582 66,582 - Retirement benefit 4,749 4,726 23 Others 595 595 - Provisions 1,352 1,352 - Deferred income 1,395 1,395 - Total Liabilities 145,919 145,713 206 Capital stock 15,645 15,645 500 Additional paid-in capital 14,544 14,544 3,543 Capital adjustments (12,513) (12,513) - Accumulated other (187) (187) - comprehensive income Retained earnings 100,717 100,653 - Total Stockholders' Equity 118,206 118,142 4,043 *(Note 1) The above figures are based on the book value of the Surviving Company as of June 30, 2012 and are subject to changes due to the operation of the business, and changes in legal and accounting standards. *(Note 2) List of the Spin-off Assets: See [Appendix 2] List of the Spin-off Assets. This list is subject to change on the date of the spin-off. (5) Matters Relating to Surviving Company ①Name, Headquarters and Method of Public Notice Name Korean Chusik Hoesa KT English KT Corporation Headquarters Address 206 Jeongja-dong, Bundang-gu, Seongnam-si, Gyeonggi-do, Korea Method of Publication in Seoul Shinmun, a newspaper of general circulation in Seoul. However, if Seoul Shinmun is not Public Notice applicable, notice will be publicized on any other dailies circulated in Seoul. ②Reduction of Capital and Reserve Not applicable. ③Method of Capital Reduction Not applicable. (6) Miscellaneous Matters for Shareholder Protection ①Revision or Amendment of Spin-off Plan The Spin-off Plan may be revised or amended by a Board's resolution or CEO before or after the Extraordinary Shareholders' Meeting based on changes in operations, circumstances and related regulations or approval process by the relevant government authorities. Moreover, this Spin-off Plan may be revised or amended as to any of the following items, by a Board's resolution of the Surviving Company, if it is approved at the Extraordinary Shareholders' Meeting to be held on November 23, 2012, without further approval of the shareholders' meeting before the registration of the spin-off, (i)so long as such revision or amendment is reasonably necessary and the shareholders of the Surviving Company or the Spin-off Company are not thereby disadvantaged; and (ii)to the extent that the substance of the relevant provision is not thereby altered. Such revision or amendment shall take effect upon a notice or a public announcement pursuant to the relevant laws. - Name of the Surviving Company and the Spin-off Company - Spin-off schedule - Assets to be transferred due to the spin-off and the values thereof - Financial structure before and after the spin-off - Number of shares issued at the time of spin-off - AOI of the Spin-Off company ② Execution of Spin-off Plan and Condition of Effectiveness The Spin-off Plan may be revised or amended by a Board's resolution if Korea Communications Commission (KCC) disapproves the spin-off or approval conditions, and/or the contents may have major adverse effects on the financials and the operation of the Spin-off Company. ③Matters Requiring Change of Hands between Surviving Company and Spin-off Company Matters requiring a change of hands between the Surviving Company and the Spin-off Company in relation to implementation of this Spin-off Plan (including documents, data and other materials and facts relating to the Spin-off Business) shall be determined by separate discussions between the Surviving Company and the Spin-off Company. 3. Financial Position and Income Statement of Surviving Company (In the event of the spin-off) KT Corporation <Statement of Financial Position> (Unit: Million Won ) Account December 31, 2011 December 31, 2010 Assets Current assets 6,375,600 5,800,060 Cash and cash equivalents 790,107 901,308 Trade and other receivables 4,832,373 3,944,795 Short-term loans 57,473 167,093 Inventories 514,076 593,479 Other current assets 181,571 193,385 Non-current assets 20,078,007 18,545,055 Cash and cash equivalents 1,607,843 1,037,862 Other financial assets 216,078 178,877 Property and equipment 13,305,475 12,957,143 Investment property 1,118,757 1,129,175 Intangibles 1,745,976 1,333,789 Investments in jointly controlled 1,577,406 1,341,090 entities and associates Deferred income tax assets 467,890 537,342 Other non-current assets 38,582 29,777 Total Assets 26,453,607 24,345,115 Liabilities Current liabilities 6,035,682 6,842,087 Trade and other payables 4,425,214 4,295,331 Borrowings 1,086,193 1,940,367 Other financial lease liabilities 5,000 Deferred income tax liabilities 149,543 272,333 Provisions 114,324 51,726 Deferred income 160,889 143,764 Other current liabilities 94,519 138,566 Non-current liabilities 8,683,992 6,411,891 Trade and other payables 596,930 310,965 Borrowings 7,415,355 5,556,984 Other financial lease liabilities 1,076 19,837 Retirement benefits 395,741 242,160 Provisions 101,612 103,930 Deferred income 146,662 151,257 Other non-current liabilities 26,616 26,758 Total Liabilities 14,719,674 13,253,978 Stockholders' Equity Total Stockholders' Equity 11,733,933 11,091,137 Capital Stock 1,564,499 1,564,499 Additional paid-in capital 1,440,258 1,440,258 Retained earnings 10,008,964 9,399,171 Accumulated other comprehensive income (28,684) (56,165) Other components of equity (1,251,104) (1,256,626) Total liabilities and stockholders' equity 26,453,607 24,345,115 <Income Statement> (Unit: Million Won ) Account 2011 2010 Operating Revenue 20,166,817 19,918,378 Operating Expenses 18,140,891 17,914,807 Operating Income 2,025,926 2,003,571 Financial Income (367,648) (363,457) Financial income 243,789 225,795 Financial expenses (611,437) (589,252) Earnings before the income tax 1,658,278 1,640,114 Income tax expense 369,223 391,268 Net income 1,289,055 1,248,846 Basic earnings per share (Unit: won) 5,299 5,135 Diluted earnings per share (Unit: won) 5,298 5,135 ※Others 【Attachment 1】Spin-off Financial Status Table (Unit: Won) After Spin-off After Spin-off KT Corp. KT SAT Account Before Spin-off Surviving Company (tentative) Spin-off Company Assets 26,412,450,460,830 26,385,465,900,262 424,890,011,578 Current assets 6,307,258,640,215 6,272,545,214,295 34,713,425,920 1. Cash and cash 790,807,018,531 772,807,018,531 18,000,000,000 equivalents Cash and cash 790,807,018,531 772,807,018,531 18,000,000,000 equivalents 2. Trade and other 4,500,266,234,970 4,484,946,293,582 15,319,941,388 receivables Short-term loans 14,675,885,375 14,667,100,981 8,784,394 Trade receivables 4,258,366,811,526 4,243,985,772,365 14,381,039,161 Accrued receivables 219,736,891,541 218,806,773,708 930,117,833 Accrued revenue 6,626,844,700 6,626,844,700 0 Deposits 341,607,740 341,607,740 0 Other current assets 518,194,088 518,194,088 0 3.Other Financial 42,653,206,792 42,653,206,792 0 Assets Derivatives 38,958,817,918 38,958,817,918 0 Short-term investments 3,694,388,874 3,694,388,874 0 4. Other Assets 211,727,006,337 210,333,521,805 1,393,484,532 Advance payment 67,817,653,905 67,817,651,361 2,544 Advance expenses 143,909,352,432 142,515,870,444 1,393,481,988 5. Inventories 761,805,173,585 761,805,173,585 0 Non-current assets 20,105,191,820,615 20,112,920,685,967 390,176,585,658 1. Other financial 215,976,206,125 215,976,206,125 0 assets LT financial assets 8,000,000 8,000,000 0 AFS securities 105,895,096,155 105,895,096,155 0 Contribution 26,683,686,194 26,683,686,194 0 Derivatives 83,389,423,776 83,389,423,776 0 2. Investments in subs. 1,659,651,505,537 2,057,556,956,547 0 & affiliates Investments in 1,659,651,505,537 2,057,556,956,547 0 subs. & affiliates 3. Trade and other 1,098,813,651,757 1,098,777,790,064 35,861,693 receivables LT loans 56,399,342,293 56,394,477,500 4,864,793 LT loans & credit 785,249,426,280 785,249,426,280 0 Guarantees 248,190,545,694 248,159,548,794 30,996,900 LT accrued receivables 8,974,337,490 8,974,337,490 0 4. Property & 13,746,530,228,235 13,363,650,559,255 382,879,668,980 Equipments Land 1,095,067,087,673 1,091,771,262,212 3,295,825,461 Buildings 2,082,701,141,980 2,073,066,561,511 9,634,580,469 Structures 99,608,003,588 98,535,342,167 1,072,661,421 Equipments 6,011,387,254,474 5,703,566,402,729 307,820,851,745 Fixed lines 3,187,379,386,385 3,187,379,386,385 0 Vehicles 89,635,532 89,111,210 524,322 Construction in 822,142,841,801 761,645,564,200 60,497,277,601 progress Machinery 13,693,099,429 13,693,099,429 0 Tools 156,165,867,708 155,643,761,880 522,105,828 Financial lease assets 214,890,723,808 214,854,881,675 35,842,133 Other tangible assets 63,405,185,857 63,405,185,857 0 5. Intangibles 1,800,937,596,459 1,800,039,957,656 897,638,803 Goodwill 65,056,745,909 65,056,745,909 0 Patents 11,407,883,395 11,379,273,536 28,609,859 Rights to utilities 35,959,768,141 35,959,768,141 0 Development cost 518,531,538,293 517,974,744,349 556,793,944 Software 210,317,907,290 210,316,155,890 1,751,400 Spectrum 853,673,617,180 853,673,617,180 0 Memberships 93,041,781,314 92,731,297,714 310,483,600 Rental rights 12,862,745,395 12,862,745,395 0 Other intangibles 85,609,542 85,609,542 0 6. Investment 1,114,935,155,106 1,114,935,155,106 0 property Investment 1,114,935,155,106 1,114,935,155,106 0 property 7. Other assets 34,248,296,583 34,248,296,583 0 LT advance 34,248,296,583 34,248,296,583 0 payments 8. Deferred Tax 434,099,180,813 427,735,764,631 6,363,416,182 assets Deferred Tax 434,099,180,813 427,735,764,631 6,363,416,182 assets Liabilities 14,591,891,433,467 14,571,270,289,081 20,621,144,386 Current Liabilities 6,581,633,831,769 6,569,105,362,382 12,528,469,387 1.Account Payables 4,321,702,432,675 4,317,388,724,378 4,313,708,297 Account payables 925,980,225,527 925,980,225,527 0 Accrued payables 2,104,554,970,904 2,103,385,671,784 1,169,299,120 Accrued expenses 434,037,182,546 430,970,114,333 3,067,068,213 111,866,706,083 111,816,706,083 50,000,000 Withholdings-Guarantee Financial lease 83,331,345,823 83,308,331,704 23,014,119 payables Withholdings 601,962,941,602 601,962,439,631 501,971 Accrued interests 59,969,060,190 59,965,235,316 3,824,874 2.Borrowings 1,657,112,412,132 1,657,112,412,132 0 ST borrowings 500,000,000,000 500,000,000,000 0 Current portion 1,157,112,412,132 1,157,112,412,132 0 of LT debt 3.Other Debt 120,375,386,491 112,160,625,401 8,214,761,090 Accrued receipts 103,019,139,180 94,856,643,340 8,162,495,840 Withholdings 10,724,145,440 10,724,145,440 0 Accrued revenue 6,632,101,871 6,579,836,621 52,265,250 4.Deferred tax 123,589,840,925 123,589,840,925 0 liabilities 5.Provision 211,220,752,720 211,220,752,720 0 6.Deferred revenue 147,633,006,826 147,633,006,826 0 Non-current liabilities 8,010,257,601,698 8,002,164,926,699 8,092,674,999 1. Account Payables 542,990,475,670 537,222,811,145 5,767,664,525 LT account payables 11,666,693,958 11,666,693,958 0 Financial lease 141,134,983,881 141,095,967,509 39,016,372 liabilities Lt. Accrued Payable 346,857,409,120 341,128,760,967 5,728,648,153 LT Withholdings 43,331,388,711 43,331,388,711 0 2.Borrowings 6,658,184,197,864 6,658,184,197,864 0 Bonds 6,642,752,877,864 6,642,752,877,864 0 LT debt 15,431,320,000 15,431,320,000 0 3.Allowance for 474,962,139,630 472,637,129,156 2,325,010,474 severance pay 4.Other non-current 59,450,152,401 59,450,152,401 0 liabilities LT Accrued 59,450,152,401 59,450,152,401 0 payables 5.Provisions 135,171,253,664 135,171,253,664 0 Provision for LT 135,171,253,664 135,171,253,664 0 debt 6.Deferred revenue 139,499,382,469 139,499,382,469 0 Stockholders' equity 11,820,559,027,363 11,814,195,611,181 404,268,867,192 1.Capital 1,564,498,835,000 1,564,498,835,000 50,000,000,000 2.APIC 1,454,364,274,885 1,454,364,274,885 354,268,867,192 Premium on Stock 1,440,258,153,395 1,440,258,153,395 354,268,867,192 Issuance Other Capital 14,106,121,490 14,106,121,490 0 Surplus 3.Capital (1,251,321,828,677) (1,251,321,828,677) 0 adjustments Treasury stock (928,049,638,057) (928,049,638,057) 0 Loss on Disposal (6,797,338,937) (6,797,338,937) 0 of TS Adjustments on (318,430,959,304) (318,430,959,304) 0 equity method Other 1,956,107,621 1,956,107,621 0 adjustments 4. Other Accumulated (18,714,201,330) (18,714,201,330) 0 Comprehensive Income Gain on Valuation of 2,156,874,060 2,156,874,060 0 AFS Gain on hedging 8,733,310,323 8,733,310,323 0 derivatives Loss on valuation of (1,990,935,007) (1,990,935,007) 0 AFS Loss on hedging (27,613,450,706) (27,613,450,706) 0 derivatives 5.Retained earnings 10,071,731,947,485 10,065,368,531,303 0 Retained earnings 5,693,611,885,728 5,693,611,885,728 0 RE before 4,378,120,061,757 4,371,756,645,575 0 Appropriations Unapp. RE from Prior 3,856,876,596,489 3,856,876,596,489 0 Year Gain on revaluation 927,021,754,446 927,021,754,446 0 of RE Loss on revaluation of (726,732,477,335) (726,732,477,335) 0 RE Accu. Actuarial (231,609,062,286) (231,609,062,286) 0 Gain/Loss Net income 552,563,250,443 546,199,834,261 0 【Attachment 2】List of Spin-off Assets (Unit: Won) Accounts Amount Description Assets 424,890,011,578 Current assets 34,713,425,920 1. Cash and cash equivalents 18,000,000,000 Cash and cash equivalents 18,000,000,000 Cash and bank deposits 2. Trade and other receivables 15,319,941,388 Short-term loans 8,784,394 Education loans Trade receivables 14,381,039,161 Bonds on repeaters rentals Accrued receivables 930,117,833 VAT on receivables Other Assets 1,393,484,532 Advance payment 2,544 Advance payments for biz trips Advance expenses 1,393,481,988 Advance expenses on satellite insurance Non-current assets 390,176,585,658 1. Other financial assets 35,861,693 LT financial assets 4,864,793 Education loans Guarantees 30,996,900 Deposits on global satellites 4. Tangible assets 382,879,668,980 Land 3,295,825,461 Satellite center in KeumSan Buildings 9,634,580,469 Satellite center in KeumSan Structures 1,072,661,421 Satellite center in KeumSan 307,820,851,745 Olleh 1 (215.8bn), Equipments Moogoonghwa 5 (23.7bn), CondoSat (38.1bn) Vehicles 524,322 Construction in progress 60,497,277,601 CondoSat 2 Tools 522,105,828 Satellite center in KeumSan Financial lease assets 35,842,133 Leased assets ex. vehicles 5. Intangibles 897,638,803 Patents 28,609,859 Patents Development cost 556,793,944 Inmarsat related Software 1,751,400 Inmarsat related Memberships 310,483,600 4. Deferred Tax assets 6,363,416,182 Deferred Tax assets 6,363,416,182 Liabilities 20,621,144,386 Current Liabilities 12,528,469,387 1.Account Payables 4,313,708,297 Account payables 0 Accrued payables 1,169,299,120 Payables on CondoSat Accrued expenses 3,067,068,213 Rental expense on global satellites Withholdings-Guarantee 50,000,000 Guarantees on HimsKorea Co. Financial lease liabilities 23,014,119 Leased assets ex. vehicles Withholdings 501,971 Refunds to Samtan Co. Accrued interests 3,824,874 Accrued interests on financial lease liabilities 2.Borrowings 0 3.Other Debt 8,214,761,090 Accrued receipts 8,162,495,840 Accrued receipts on World Phone Card Accrued revenue 52,265,250 Accrued rental revenue from Skylife Non-current liabilities 8,092,674,999 1. Account Payables 5,767,664,525 Financial lease liabilities 39,016,372 Leased assets ex. vehicles Lt. Accrued Payable 5,728,648,153 Accrued payables on CondoSat 2.Borrowings 0 Bonds 0 LT debt 0 3. Allowance for severance pay 2,325,010,474 Allowance for severance pay 2,325,010,474 【Attachment 3】Articles of Incorporation of the Spin-off Company ARTICLES OF INCORPATION CHAPTER 1. GENERAL PROVISION Article 1. Corporate Name The name of the Company shall be "Chusik Hoesa KT SAT" (here after "the Company"), which shall be written as "KTSAT Co. Ltd" in English. Article 2. Objectives The Company's objective is to carry on the following businesses: 1. Telecommunication business with satellite spectrum 2. Sales and leasing of equipment and facilities related to the activities mentioned in Subparagraph 1 3. Any overseas business or export and import business related to activities mentioned in Subparagraphs 1 and 2 4. Information and communication business 5. Sale and distribution of information communication equipment; 6. Testing and inspection of information communication equipment, device or facilities; 7. IT facility construction business and electrical construction business; 8. Value-added telecommunications business 9. Research and technical development, education, training and promotion, overseas businesses, and export and import, manufacture and distribution related to activities mentioned in Subparagraph 1 10. Any and all other activities or businesses incidental to or necessary for attainment of the foregoing mentioned in all of the Subparagraphs Article 3. Headquartersand Other Offices ① The Company shall have its headquarters in Seoul. ② The Company may establish, relocate or close branch offices within or outside Korea, as necessary, pursuant to a resolution of the Board of Directors. Article 4. Method of Public Notice Public notices by the Company shall be published in The Maeil Economic Daily, a daily newspaper - in Seoul. Provided, however, that if the public notices cannot be published in The Maeil Economic Daily due to unavoidable circumstances, such public notices may be given in any daily newspaper published in Seoul, Korea. CHAPTER 2. SHARES OF STOCK Article 5. Amount of Authorized Capital The total number of shares authorized to be issued by KT shall be up to forty million (40,000,000) shares. Article 6. Shares to be Issued at Time of Incorporation The total number of shares to be issued at the time of incorporation shall be ten million (10,000,000) shares. Article 7. Par Value of Share Par value per share issued shall be 5,000 Korean Won. Article 8 Types of the Shares and Share Certificates The type of shares shall be registered common shares. Share certificates shall be in eight (8) denominations of one (1), five (5), ten (10), fifty (50), one hundred (100), five hundred (500), one thousand (1,000) and ten thousand (10,000) shares. However, if requested by a shareholder, certificate may be issued in other denomination. Article 9. Preemptive Rights ① In the event that the Company issues or proposes to issue any new shares, shareholders of the Company will have preemptive rights that entitle them to purchase a number of shares, so that the shareholders will be able to maintain the identical ownership interest in the Company that the shareholders had immediately prior to such issuance or proposed issuance. ② In accordance with Article 419 of the Korean Commercial Code, the Company shall inform subscription of new shares to existing shareholders. If shareholders do not subscribe or express abstention of new shares, they lose their preemptive rights. In this case, remaining shareholders shall be entitled to subscribe for unsubscribed new shares in proportion to their existing shareholdings. ③ Notwithstanding Paragraph ①&② above, new shares may be issued to persons other than the shareholders of KT, in the following cases: But, in accordance with the laws and regulations and other relevant provisions of the Financial Investment Services and Capital Markets Act, the Company should be a stock-listed corporation 1. When the new shares are issued by public offering; 2. When the members of the Employee Stock Ownership Association of KT have preemptive rights to subscribe for such new shares pursuant to Financial Investment Services and Capital Markets Act ("FSCMA"); 3. When the new shares are represented by depositary receipts 4. When the new shares are issued in overseas to be traded on overseas exchanges 5. When the new shares are issued to attract foreign investments for the Company management purpose in pursuant to the Foreign Investment Promotion Act. 6. When the new shares are issued in order to accomplish specific business purposes such as a strategic alliance, inducement of foreign funds, other capital raising requirements, an introduction of new technology, and an improvement of the financial structure of the Company. 7. When there is an immediate need for the Company to raise funds, new shares can be issued to domestic and foreign financial institutions 8. When the new shares are issued to domestic and international corporations and personnel in order to fulfill the minimum debt-to-equity ratio for the listing requirement in the capital market or the KOSDAQ market. ④ When new shares are issued according to each Section in Article 3, the number of new shares and its issuing price shall be determined by a Board's resolution. ⑤ When shareholders do not subscribe or lose the subscription right of new shares, in case of odd-lot shares, its handling method will be determined by a Board's resolution. Article 10. Capital Increase by Public Offering ① When the new shares are issued through a general public offering, the total number of the shares to be issued shall not exceed fifty percent (50%) of the total number of shares issued. ② In accordance with Article 9-3 Sections 5 - Sections 7 regulations, all new share issuance shall not exceed fifty percent (50%) of the total number of shares issued. ③ When new shares are issued according to Section 1 and Section 2, the number of new shares and its issuing price shall be determined by a Board's resolution. Article 11. Base Date Regarding Dividends of New Shares In case the Company issues new shares through rights issues, bonus issues and stock dividends, with respect to the distribution of dividends on the new shares, the new shares shall be deemed to have been issued at the end of the fiscal year immediately prior to the fiscal year during which the new shares are issued. Article 12. Transfer of Title/Name Shareholders and registered pledges who want to register the transfer of shares, stocks or other collateral causes should submit related sovereignty and supporting documents that the Company requires. Article 13. Report of Names, Addresses and Seals of Shareholders ① Shareholders and registered pledges shall report their names, addresses, and seals to the Company. ② Shareholders and registered pledges who reside in foreign countries shall appoint and report the place where, and an agent to whom, notices will be given in Korea. Any changes shall be reported. ③ Applies in same manner in case of any changes in Paragraph ① & ② Article 14. Closing of Register of Shareholders and Record Date ① The Company shall suspend the entries of any changes into the Register of Shareholders regarding any rights on shares from January 1 to January 31 of each year. ② The Company shall let the shareholders who are registered in the Register of Shareholders on December 31 of each year exercise their rights thereof at the Ordinary General Meeting of Shareholders. ③ The Company may, for convening an Extraordinary General Meeting of Shareholders or when necessary, by a resolution of the Board of Directors, set the record date or close the register of shareholders for a certain period not exceeding three (3) months by giving at least two (2) weeks' prior public notice. CHAPTER 3. DEBENTURES Article 15. Issuance of Bonds The Company may issue bonds by a Board's resolution, to the extent that the aggregate face value of the bonds issued shall not exceed four times of its net assets. Article 16. Issuance of Convertible Bonds ① The Company may issue convertible bonds to persons other than shareholders to the extent that the aggregate face value of the convertible bonds issued shall not exceed that of Article 15. 1. When convertible bonds are issued through a public offering or a shareholders' preemptive rights in public offering 2. When there is an immediate need for the company to raise funds, convertible bonds can be issued to domestic and foreign financial institutions 3. When convertible bonds are issued to counter a company with whom the Company has a strategic alliance. ② The Board of Directors may determine that convertible bonds referred to in Paragraph ① may be issued on the condition that conversion rights will be attached to only a portion of the convertible bonds. ③ The type of shares to be issued upon the conversion of convertible bonds shall be common shares. The conversion price, which shall be equivalent to or more than the par value of the shares, shall be determined by the Board of Directors at the time of such issuances. ④ The period during which conversion rights may be exercised shall commence on the date passing third month after the date of issuance of the relevant convertible bonds and end on the date immediately preceding the redemption date thereof. However, the Board of Directors may adjust the conversion period in accordance with relevant laws within the above period by a Board's resolution. ⑤ For the purposes of any distribution of dividends on the shares issued upon conversion or any payment of interest on convertible bonds, the convertible bonds shall be deemed to have been converted into shares at the end of the fiscal year immediately preceding the fiscal year in which the relevant conversion rights are exercised. Article 17. Issuance of Bond Warranty ① The Company may issue a bond warranty to persons other than shareholders to the extent that the aggregate face value of the bond warranty issued shall not exceed amount mentioned in Article 15. 1. When a bond warranty is issued through a public offering or a shareholders' preemptive rights in public offering 2. When there is an immediate need for the company to raise funds, a bond warranty can be issued to domestic and foreign financial institutions 3. When a bond warranty is issued to counter a company with whom the Company has a strategic alliance. ② The Board of Directors may determine that a bond warranty may be issued on the condition that conversion rights will be attached to only a portion of the bond warranty. ③ The type of shares to be issued upon issuance of a bond warranty shall be common shares. The par value of issuance, which shall be equivalent to or more than the par value of the shares shall be determined by the Board of Directors at the time of issuance. ④ The period during which conversion rights may be exercised shall commence on the date passing third month after the date of issuance of the relevant bond warranty and end on the date immediately preceding the redemption date thereof. However, the Board of Directors may adjust the conversion period in accordance with relevant laws within the above period by its Board's resolution. ⑤ For the purposes of any distribution of dividends on the shares issued upon conversion or any payment of interests on a bond warranty, the bond warranty shall be deemed to have been converted into shares at the end of the fiscal year immediately preceding the fiscal year in which the relevant conversion rights are exercised. Article 18. Applicable Provisions regarding Issuance of Bonds The provisions of Articles 11 and 12 shall apply mutatis mutandis to the issuance of bonds. CHAPTER IV. GENERAL MEETING OF SHAREHOLDERS Article 19. Convening of General Meeting ① General Meetings will include the Ordinary General Meeting of Shareholders and an Extraordinary General Meeting of Shareholders. ② The Ordinary General Meeting of Shareholders shall be convened within three (3) months after the end of each fiscal year, and an Extraordinary General Meeting of Shareholders may be convened according to a Board's resolution if necessary. Article 20. Convener of General Meeting ① General Meetings shall be convened by Chief Executive Officer ("CEO") according to a Board's resolution, unless in the presence of other laws. ② In the event of absence or death of CEO, a General Meeting shall be convened according to the Paragraph② of Article 37. Article 21. Notice of General Meeting of Shareholders The notice of a General Meeting of Shareholders specifying a meeting time, a place and a purpose thereof shall be sent to each shareholder two (2) weeks prior to the date set for the General Meeting of Shareholders. However, in the event where such notice does not reach shareholders' address written on the registry, the Company may not notice such shareholders. Article 22. Place of General Meeting of Shareholders A General Meeting of Shareholders shall be held at the location of the Company's headquarters or its neighboring place. Article 23. Chairperson CEO of the Company shall preside at a General Meeting of Shareholders; provided, however, that Paragraph②of Article 37 shall apply mutatis mutandis in the event that CEO fails to perform his/her duties. Article 24. Chairperson's Right to Maintain Order ① The Chairperson shall suspend or cancel the proposal of any person who intentionally disrupts, by speech or behavior, the proceedings of a General Meeting of Shareholders or shall order such person to leave the General Meeting of Shareholders. ② If the Chairperson deems it necessary for the smooth proceeding of a General Meeting of Shareholders, the Chairperson may restrict the time and the frequency of a shareholder's proposal. Article 25. Voting Rights Each shareholder shall have one (1)vote per share. Article 26. Disunitary Exercise of Voting Rights ① If a shareholder who holds two (2)or more shares with voting rights wishes to exercise them in disunity, such shareholder shall notify the Company in writing of his/her intention and reason for disunitary voting at least three (3)days prior to the meeting. ② The Company may reject an exercise of votes in disunity by a shareholder except in the event that he/she has accepted a trust of shares or he/she holds the shares on behalf of another person. Article 27. Voting by Proxy ① Shareholders may exercise its voting rights by proxy. ② The proxy described in Paragraph① must file with - the Company a power of attorney before the opening of a General Meeting. Article 28. Matters Requiring Approval A General Meeting of Shareholders shall approve following agendas. ① Appointment of directors and auditors ② Approval of remuneration of directors ③ Approval of financial statements ④ Decrease in equity ⑤ Changes in articles of incorporation ⑥ Merge or dissolution of company ⑦ Other matters required by the Board or relevant laws Article 29. (Method of Adoption of Resolutions) Resolutions of a General Meetings of Shareholders, except as otherwise provided by the relevant laws and regulations, shall be adopted if the approval of a majority vote of the shareholders present at such meeting is obtained and such majority also represents at least one-fourth (1/4) of the total number of shares issued and outstanding. Article 30 (Exercise of Voting Rights by Writing) ① Shareholders of the Company may exercise their voting rights by writing without attending a General Meetings of Shareholders in person. ② In case of Paragraph①above, the Company shall send the notice of convening a General Meeting of Shareholders, together with written documents and reference materials necessary for the Shareholders to exercise their voting rights. ③ The shareholders desiring to exercise their voting rights by writing shall write necessary matters in the written documents under Paragraph② and submit them to the Company by the date immediately preceding the date set for the Meeting. ④ The number of voting rights by writing will be added to the total voting rights by shareholders present at a General Shareholders Meeting. Article 31. Minutes of General Meeting of Shareholders The substance of the course and proceedings of a General Meeting of Shareholders and the results thereof shall be recorded in minutes on which the names and seals of the Chairperson and the Directors present at the meeting shall be affixed or which shall be signed by such persons, and shall be kept at the Company's headquarters and branch offices. CHAPTER 5. DIRECTORS Article 32. Number of Directors The Company shall have three Directors and one Auditor. Article 33. Election and Dismissal of Director and Auditors ① Directors and an Auditor shall be appointed at a General Meeting of Shareholders. ② The Directors shall be appointed at a General Meeting of Shareholders by affirmative votes of the majority of the voting rights of the shareholders present and such majority also represents at least one-fourth (1/4) of the total number of shares issued and outstanding. However, as for the appointment of an Auditor, the shareholders with more than three-one hundredth (3/100) of voting rights should not exercise for the excess voting rights. ③ For appointment of Directors, the cumulative voting system pursuant to Article 382-2 of the Commercial Act shall not be applied. Article 34. Term of Office of Directors ① The term of directorship shall be not more than three (3) years; where the term of office shall be decided according to the approval at a General Shareholders' meeting. However, when the term ends after the end of fiscal year and before the General Meeting of Shareholders for that fiscal year, the term may be extended to the General Meeting of Shareholders. ② The term of directorship shall be until the close of the third Ordinary General Meeting of Shareholders convened after he/she is elected. Article 35. By-election of Directors ① Any vacancy in the office of Directors shall be filled by a resolution of a General Meeting of Shareholders. However, if the number of Directors required by the Articles 31 is met and if there is no difficulty in the administration of the Board business, an appointment may not be made. ② The term of directorship appointed to fill a vacancy shall be within three years. Article 36. Appointment of CEO CEO is appointed by the Board of Directors. Article 37. Duties of Directors ① CEO shall respectively represent and supervise all businesses of the Company. ② Directors shall assist CEO and shall perform their duties. In the event CEO fails to perform his/her duties, an Inside Director shall perform his/her duties in accordance with the order as provided in the Office Regulation. However, in the event both CEO and the Inside Directors fail to perform their duties, an Outside Director shall perform his/her duties in accordance with the order as provided in the Office Regulation. ③ If a Director becomes aware of any event which may cause a material damage to the Company, such Director should immediately report to the Auditor thereof. Article 38. Duties of Auditor(s) ① Auditor(s) shall audit accounting and the operation of the Company. ② Auditor(s) may present his/her opinions and testify at the meeting of the Board of Directors. ③ Auditor(s) may request an Extraordinary Meeting of Shareholders by submitting a written document specifying the reasons and the purposes of such request. Article 39. Auditors' Records Auditor(s) should prepare written documents on the audit including the process of the audit and its results, on which the names and seals of the Auditor shall be affixed or shall be signed by such persons. Article 40. Remuneration and Severance Allowance for Directors and Auditors ① The Remuneration for the Directors shall be determined by a resolution of a General Meeting of Shareholders. Remuneration for the Auditors should be determined separately from the remuneration for the Directors. ② Severance allowances for Directors and Auditors shall be paid in accordance with regulations for payment of officers' severance allowance adopted at a General Meeting of Shareholders. CHAPTER 6. BOARD OF DIRECTORS Article 41. Composition and Management of Board of Directors ① The Board of Directors of the Company shall consist of only Directors. The Board of Directors shall resolve all important matters relating to the Company's business operations. ② Meetings of the Board of Directors shall be convened by CEO or Representative Director. A notice setting forth agenda of the meeting shall be provided to each Director at least seven (7)days prior to the date of the meeting. The procedure may be dispensed with upon the consent of all Directors and an Auditor(s). ③ A Director, other than Representative Director, may request Representative Directorto convenea Board meeting. If the Representative Director refuses such request and if the Director who proposed meeting determines that there is no justifiable reason for refusal, he/she may convene a meeting of the Board of Directors. ④ The Chairperson of the meeting should be Representative Director, as according to the Paragraph ②and ③. ⑤ Specifics for management of the Board of Directors may be based on by-laws of the Board. Article 42. Resolutions of the Board of Directors ① Resolutions of the Board of Directors shall be adopted by the presence of a majority of the Directors in office and by the affirmative vote of a majority of the Directors present. 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 audio-video communication system, in lieu of attending such a meeting in person. In such a case, such Director(s) shall be deemed to have attended such a meeting in person. ③ No Director who has an interest in a matter for resolution may exercise his or her vote upon such matter. Article 43. Minutes of the Meeting of the Board of Directors All agenda of the Board of Directors, the substance of the proceedings of the Board and the result thereof, name(s) of Director(s) who raise(s) an objection to the Board resolution and the reason therefor, shall be recorded in the minutes on which the names and seals of the Chairperson and all Directors and Auditors present shall be affixed or which shall be signed by such persons, and shall be kept at the Company's headquarters. CHAPTER 7. ACCOUNTING Article 44. Fiscal Year The fiscal year of the Company shall commence on January 1 and end on December 31 of each year. Article 45. Preparation of Financial Statements and Business Report ① CEO of the Company shall prepare the following documents, supplementary documents thereto and the business report and, after obtaining approval of the Board of Directors, submit such documents to the Auditor six (6) weeks prior to the day set for the Ordinary General Meeting of shareholders, and Representative Director shall submit the following documents and the business report to the Ordinary General Meeting of Shareholders: 1. Balance sheet; 2. Profit and loss statement; and 3. Any other documents indicating the financial status and management results of the Company as defined in the Presidential Decree to implement the Commercial Act ② The Company's Auditor shall submit the audit report to CEO one (1) week prior to the Ordinary General Meeting of Shareholders. ③ CEO shall keep the documents described in Paragraph① above, together with the audit report, at the headquarters of the Company for five (5) years and certified copies of all of such documents at the Company's branches for three (3) years beginning from one (1) week prior to the day of the Ordinary General Meeting of Shareholders. ④ Upon approval by the Ordinary General Meeting of Shareholders of the documents described in Items of Paragraph① above, Representative Director shall, without any delay, disclose the documents to the public. Article 46. Disposition of Surplus The unappropriated earned surplus of the Company during each fiscal year shall be disposed of pursuant to the resolution of a General Meeting of Shareholders and in accordance with the following: 1. Earned surplus reserves; 2. Other Statutory reserves; 3. Dividends; 4. Discretionary reserves; and 5. Other appropriation of retained earnings. Article 47. Dividends ① Dividends may be paid in cash or shares. ② Dividends under Paragraph①shall be paid to the shareholders or pledgees who are registered in the register of shareholders as of the last day of each fiscal year. Article 48. Extinctive Prescription of Dividends ① If there is no claim for the payment of dividends for five (5) years from the date when the allotment starts, the right to claim dividends shall be deemed to be waived. ② In such case, the unclaimed dividends shall be deemed to be the earning of the Company. CHAPTER 8. SUPPLEMENTARY PROVISIONS Article 49. Duty of Confidentiality ① The employees, or the former employees, of the Company shall not disclose any sensitive information or misuse any information and/or assets which were obtained in connection with his/her duty. ② If any officer or any person who was the officer of the Company discloses or misappropriates the information concerning the management of the Company, he/she shall be liable for the loss incurred to the Company due to his/her disclosure or misappropriation of the Company's information. Article 50. Appointment of Employee CEO of the Company shall appoint employees according to the by-laws of the company. Article 51. Adoption of By-Laws CEO may, pursuant to resolutions of the Board of Directors, establish by-laws as necessary for the operation and management of the Company. Article 52. Scope of Application Matters not specifically provided herein shall be determined in accordance to the resolutions adopted at a General Meeting of Shareholders of the Company and applicable provisions of relevant laws including the Commercial Code. ADDENDA Article 1. Effective Date These Articles of Incorporation shall take effect as of the date the Company is established. This information is provided by RNS The company news service from the London Stock Exchange END EGMZMMZGGDKGZZM -0- Oct/24/2012 10:27 GMT
Tesco Falls as Much as 11.8% After Saying Profit Overstated
KT Corporation KTCD EGM Statement
Press spacebar to pause and continue. Press esc to stop.