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KT Corporation KTCD EGM Statement

  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
 
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