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IR - Corporate Governance

The Articles of Incorporation

Hyundai Heavy Industries management and directors value the most our shareholders customers, and employees and we work on a continuous and long-tern relationship

Chapter 2. Stock and Stock Certificate

  • Article 5 (Total Number of Issued Stocks)

    The number of issued stocks of the Company shall be 160,000,000.

  • Article 6 (Par Value)

    A par value of a stock issued by the Company shall be 5,000 KRW.

  • Article 7 (Total Number of Issued Stocks at the Time of Incorporation)

    Deleted

  • Article 8 (Type of Stocks)
    • ① All stocks issued by the Company shall be common stock and class stock in registered nominative forms.
    • ② The class share issued by the Company shall consist of dividend preferred stock, non-voting or voting-restricted stock, convertible stock, redeemable stock and stock mixed with part of or entirety of the stocks mentioned above.
  • Article 8-2 (Dividend Preferred Convertible Stock: Class 1 Stock)
    1. ① The Company may issue non-voting dividend preferred convertible stock ("Class 1 Stock") where the total number of issued stock concerned shall be 20,000,000.
    2. ② When Class 1 Stock is issued at 1% or higher annually based on the par value, preferred dividend shall be allotted in cash with the amount under preferred ratio determined by the board of directors.
    3. ③ When dividend rate of common stock exceeds the dividend rate of Class 1 Stock, the exceeding amount concerned shall be allotted after being participated at the rate identical with that of common stock.
    4. ④ When Class 1 Stock fails to offer a certain amount of dividend in a certain fiscal year, accumulated undistributed dividends shall be preferentially allotted during the offering of dividends in the following fiscal year.
    5. ⑤ Upon resolution not to offer dividends for Class 1 Stock, voting right shall be bestowed to the stocks concerned from the next general meeting following the general meeting rendering the said resolution until the end of general meeting to render a resolution to deliver preferred dividends.
    6. ⑥ Upon subscription offering and dividend offering of Class 1 Stock, Paragraph 4 of Article 9, Paragraph 2 of Article 48 and Paragraph 3 of Article 49 shall apply mutatis mutandis.
    7. ⑦ Duration of Class 1 Stock shall be subject to resolution of the board of director within the scope of 5 years or longer and 10 years or less from the date of issuance: Provided that when dividends are not offered during this period above, the duration above shall be extended until the dividend concerned is completed. Upon such occasion, Article 10 shall apply mutatis mutandis to dividends of the stocks issued due to conversion.
  • Article 8-3 (Dividend Preferred Convertible Stock: Class 2 Stock)
    • ① The Company may issue non-voting dividend preferred convertible stock ("Class 2 Stock") which shareholders are entitled to request the Company for conversion to common stock pursuant to the followings, where the total number of stocks to be issued shall be 20,000,000 including the number of Class 1 Stocks.
      1. 1. The number of stocks to be issued due to conversion shall be identical with the number of stocks prior to conversion.
      2. 2. Duration to request conversion shall be subject to the resolution of the board of directors within the scope of one month or longer and 5 years or less from the date of issuance.
      3. 3. The stocks issued due to conversion shall be common stocks.
    • ② Paragraph 2 through Paragraph 6 of Article 8 shall apply mutatis mutandis to Class 2 Stock.
  • Article 8-4 (Dividend Preferred Convertible Stock: Class 3 Stock)
    • ① The Company may dividend preferred convertible stock ("Class 3 Stock"), where the total number of stocks to be issued shall be 20,000,000.
    • ② Paragraph 2 through Paragraph 6 of Article 8 shall apply mutatis mutandis to Class 3 Stock.
    • ③ Class 3 Stock may be redeemed subject to the selection of the Company pursuant to any of the following subparagraphs:
      1. 1. Redemption price shall be an accumulation of issue price and additional value determined within the scope not exceeding annual 10% of issue price, where additional value shall be determined by the board of directors under the consideration of dividend rate, market situation and various issues concerning issuance of class stock upon its issuance: Provided that when redemption price needs to be adjustable, the board of directors shall determine the meaning of adjustability, grounds for adjustment, standard date of adjustment and adjustment method.
      2. 2. Redemption period shall be determined by the board of directors within the scope of one month from the closing of regular general meeting of shareholders during the fiscal year which falls under between 1 year and 10 years from the issuance date: Provided that when any of the following subparagraphs arises, notwithstanding the expiration of redemption period, the redemption period concerned shall be extended until the grounds of extension concerned are resolved
        • A. When redemption is not completed within the redemption period
        • B. When preferred dividends are not completed
      3. 3. Class 3 Stock may be redeemed all at once or by installments: Provided that upon redemption by installment, the Company may determine the type of Class 3 Stock by the method of random drawing or proportional distribution, and odd-lock stocks arising during proportional distribution shall not be redeemed.
      4. 4. The Company shall notify or publicly announce shareholder of the said stock and right holders enlisted at the register of stockholders of the upcoming redemption 2 weeks prior to the acquisition date of the stocks subject to redemption.
    • ④ When issuing Class 3 Stock, the Company may issue voting-registered class stock ("Class 3-1 Stock") or non-voting class stock ("Class 3-2 Stock") subject to resolution of the board of directors, where voting right of Class 3-1 Stock shall be one vote per share.
  • Article 9 (Subscription Right of New Stock)
    • ① When the Company issues new stocks subject to resolution of the board of directors, the issuance concerned shall comply with the followings
      1. 1. Shareholders shall be given an opportunity to subscribe new stocks in order to offer new stocks according to the number of shares owned by the shareholder concerned
      2. 2. When necessary to achieve business goals of the Company, including introduction of new technology and improvement of financial structure, within the scope not exceeding thirty-one hundredth of the total number of stocks issued, an opportunity to subscribe new stock may be given to specified individuals (including shareholders of the Company) in order to offer new stocks to the said individuals, aside from Subparagraph 1 above
      3. 3. An opportunity to subscribe new stocks may be given to many and unspecified individuals (including shareholders of the Company) in order to offer new stocks to the said individuals within the scope not exceeding thirty-one hundredth of the total number of stocks issued, aside from Subparagraph 1 above
      4. 4. The Company may issue new stocks pursuant to issuance of depository receipt in accordance with applicable laws, including the Financial Investment Services and Capital Markets Act.
    • ② When issuing new stocks under the method prescribed at Subparagraph 3 of Paragraph 1, new stocks shall be issued under one of the following methods subject to resolution of the board of directors:
      1. 1. Where the Company offers new stocks to many and unspecified individuals without classifying the types of individuals granted with opportunity to subscribe new stocks
      2. 2. Where the Company grants opportunities to subscribe new stocks to many and unspecified individuals including stocks offered but not subscribed by members of the employee's stock holding association in accordance with applicable laws
      3. 3. Where the Company grants opportunities to subscribe new stocks to many and unspecified individuals when there are stocks not subscribed after a preferred opportunity to subscribe new stocks is given to shareholders
      4. 4. Where an investment trader or investment broker grants an opportunity to subscribe new stocks to specific type of individuals based on reasonable standards prescribed by applicable laws, including demand forecast prepared as subscriber or broker.
    • ③ When offering new stocks to individuals other than shareholders under Subparagraph 2 and 3 of Paragraph 1, the Company shall notify shareholders of or publicly announce the matters prescribed by Subparagraph 1, 2, 2-2, 3 and 4 of Article 416 of the Commercial Act: Provided that the notification and public announcement above may be replaced by disclosing a material fact report to the Financial Services Commission and an Exchange pursuant to Article 165-9 of the Financial Investment Services and Capital Markets Act.
    • ④ When issuing new stocks under any of the subparagraphs of Paragraph 1 above, the type, number and issue price of the stock to be issued shall be determined subject to resolution of the board of directors. Upon such occasion, the board of directors may assign new stocks to be allotted to common stock to either common stock or class stock, where new stocks to be allotted to class stocks shall be the same type of class stocks.
    • ⑤ When the Company allots new stocks and when new stocks are not subscribed by the deadline or there are shares of which payments are not made, subsequent processing methods shall be determined by the resolution of the board of directors in accordance with applicable laws including propriety of issue price.
    • ⑥ Odd shares arising when the Company allots new stocks shall be processed pursuant to the resolution of the board of directors.
    • ⑦ When the Company allots new stocks under Subparagraph 1 of Paragraph 1 above, the Company shall issue stock warrant to shareholders.
  • Article 9-2. (Stock Option)
    • ① The Company may grant stock option to executives and employees of the Company (including executives and employees of relevant companies prescribed by Article 30 of the Enforcement Decree of the Commercial Act, hereinafter the same shall apply) within fifteen-one hundredth of total number of stocks issued under Article 340-2 and Article 542-3 of the Commercial Act subject to special resolution of general meeting of shareholders: Provided that the Company may grant stock option within one-one hundredth of total number of stocks issued subject to resolution of the board of directors. When stop option is granted subject to resolution of the board of directors, approval shall be acquired from the first general meeting of shareholders convened after the Company grants stock option subject resolution of the board of directors. Stock options granted subject to resolutions of the board of directors or general meetings of shareholders may be performance-based options in connection with business performance goal or market index.
    • ② Persons to be granted stock option shall be an executive or employee of the Company who has contributed or has capability to contribute to establishment and management of the Company, overseas business or technical innovation; however those who fall under any of the followings shall be excluded. Notwithstanding the above, the foregoing shall not apply to persons (including part-time executives of affiliated companies) who fall within specially related persons (referring to specially related persons under Paragraph 4 of Article 34 of the Enforcement Decree of the Commercial Act, hereinafter the same shall apply) when they become executives of the company concerned.
      1. 1. The largest shareholder (referring to the largest shareholder under Subparagraph 5 of Paragraph 2 of Article 542-8 of the Commercial Act, hereinafter the same shall apply) and specially related persons
      2. 2. Major shareholder (referring to a major shareholder under Subparagraph 6 of Paragraph 2 of Article 542-8 of the Commercial Act, hereinafter the same shall apply) and specially related persons
      3. 3. Persons who become a major shareholder by exercising stock option.
    • ③ Stocks to be delivered by exercising stock option (When delivering cash or own shares for the difference of stock option between option price and market price, it means the stocks which serve as the calculation standards for the difference) shall be registered common stock or registered class stock, but the above shall be determined subject to resolutions of general meetings of shareholders under Paragraph 1 or the board of directors.
    • ④ Stock option shall not be granted at once to entire executives and employees currently in service, and stock option granted to a single individual of executive or employee shall not exceed ten-one hundredth of total number of stocks issued.
    • ⑤ Option price per share of the stocks to exercise stock option with shall be equal to or higher than the prices prescribed at the following subparagraphs below. The same shall apply when adjusting option price after granting stock option:
      1. 1. When issuing new stocks to grant stock option, its option price shall be higher one between the following two:
        A. Actual price of stock prescribed by Subparagraph 3 of Paragraph 2 of Article 340-3 of the Commercial Act based on the date of granting stock option;
        B. Face value of stock in the given year.
      2. 2. Actual price of stock prescribed by Subparagraph 3 of Paragraph 2 of Article 340-3 of the Commercial Act when transferring own shares.
    • ⑥ Stock option may be exercised within 5 years from the date exceeding 2 years from the date of resolution of general meeting of shareholders granting the stock option concerned.
    • ⑦ In any of the following cases, stock option granted by the resolution of the board of directors may be revoked:
      1. 1. When an executive or employee granted the stock option voluntarily retires or resigns from office
      2. 2. When an executive or employee granted the stock option intentionally or negligently inflicts substantial loss on the company
      3. 3. When the company is unable to accept the exercise of the stock option due to bankruptcy, dissolution or any similar event
      4. 4. When any other event stipulated as a ground for revocation in the stock option grant agreement made with the person granted the stock option occurs.
    • ⑧ Persons granted the stock option may exercise the stock option after working for the Company or remaining in office for 2 years or longer from the date of resolution under Paragraph 1: Provided that when the person granted appraisal rights deceases within 2 years from the date of resolution under Paragraph 1 or when the person above resigns or retires not due to the causes attributable the person him/herself, the person concerned may exercise the stock option during the period concerned.
    • ⑨ Article 10 shall apply mutatis mutandis to dividends of the stocks issued through exercise of appraisal rights.
  • Article 10 (Record Date of Dividend Payout of New Stock)

    When the Company issues new stocks due to capital increase for consideration, capital increase without consideration and stock dividends, the issuance of the new stocks subject to dividends shall be deemed as issued at the end of fiscal year preceding the fiscal year when the new stocks concerned were issued.

  • Article 11 (Types of Stock Certificate)

    ① The types of stock certificates issued by the Company shall be 8 types, including one stock certificate, ten stock certificate, fifty stock certificate, one hundred stock certificate, five hundred stock certificate, one thousand stock certificate and ten thousand stock certificate.

  • Article 12 (Transfer Agent)
    • ① The Company shall have transfer agents of stocks.
    • ② The scope of transfer agents, their place of business and their business shall be determined by the resolution of the board of directors.
    • ③ Register of shareholders or its copy shall be displayed at the business place of transfer agent where the transfer agent shall handle the transfer of the title, registration or cancellation of trust property, issuance of stock certificate, receipt of report and other businesses concerning other stocks.
    • ④ Procedures of administrative affairs under Paragraph 3 shall comply with provisions on transfer of stocks by transfer agent.
  • Article 13 (Report of Address, Name and Seal Impression or Signature of Shareholder)
    • ① Shareholders and pledgees shall report their name, address and seal impression or signature to the Company or transfer agents under Article 12.
    • ② Shareholders and pledgees residing in overseas shall make a report after designating the location and agent to receive notifications in Korea.
    • ③ The same shall apply when changes are made to the matters under Paragraph 1 and 2.
  • Article 14 (Closure of Register of Shareholders and Record Date)
    • ① The Company shall suspend the change of entry in the register of stockholder concerning rights from January 1st until 31st every year.
    • ② The Company shall recognize the stockholders registered at the final register of stockholder on December 31st every year as a stockholder to exercise the rights at the general meeting of shareholders.
    • ③ When convocation of extraordinary meeting of shareholders is required, the Company may suspend the register of stockholders or determine its record date by designating a specified period not exceeding one month after making public announcement 2 weeks in advance subject to the resolution of the board of directors; however, when deemed necessary by the board of directors, the Company may suspend the register of stockholders and determine its record at the same time.