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Corporate Governance

We protect shareholders’ rights through transparent management.
The governance of Samsung Electro-Mechanics consists of legal and transparent procedures based on the Commercial Act and the Company’s Articles of Association. Each member of the Board of Directors contributes to the management and growth of the Company, and effectively performs monitoring/checking functions.

* You may download and view a PDF file of Articles of Association. If revised through the shareholders’ meeting because of any fair reason, it will be updated to the newest version.

Board Composition

Election of Directors and Terms of Office

Directors are elected by shareholders at a general meeting of shareholders. Candidates for inside directors are nominated by the Board of Directors, while candidates for outside directors are nominated by the Outside Director Nomination Committee. The total number of directors shall be greater than three and no more than nine. In the case of electing two or more directors, the cumulative voting system prescribed in Article 382-2 of the Commercial Act is not applied. The term of office is three years, and a director may be re-elected at a shareholders’ meeting.

Election of Chairperson

The chairperson of the Board of Directors is elected from among the directors following a resolution of the Board. Currently, outside director Tae-gyun Kwon is serving as chairperson.

Board Expertise and Diversity

The Company does not set restrictions pertaining to race, sex, region of origin, or area of expertise when considering Board members. It actively considers individuals who can participate in the Board with new and diverse perspectives. In particular, for outside directors, the Company seeks candidates who meet the qualifications set forth by relevant laws and regulations, and have expertise or experience in areas such as management, economics, accounting, law or relevant technologies.

Independence of Outside Directors

The ‘independence’ of outside directors is evaluated in accordance with Article 382 and Article 542-8 of the Commercial Act, and with Article 22-2 of the Articles of Incorporation of the Company. If a requirement is not met, a determination of no ‘independence’ is made. In particular, individuals who engage in Company business, have key interests with major shareholders or with the Company, or have worked as employees of the Company within the past two years are prohibited from serving as outside directors.

Operations of
the Board of Directors

Board Types

- Regular Board Meetings: Meetings are held once every quarter as a general rule.
- Special Board Meetings: Meetings are held as needed.

Board Meetings

The chairperson calls the meeting of the Board of Directors and must notify each director of the meeting date at least 12 hours before the time of meeting. A director may request the chairperson convene a meeting of the Board by submitting the agenda and objectives if he or she has determined that there are justifiable reasons for business purposes. If the chairperson refuses to convene the Board without just cause, the director who raised the subject matter may himself or herself call a meeting of the Board.

Board Resolution

A resolution of the Board of Directors shall be made when a majority of the directors are in attendance and by a majority vote of the directors in attendance. However, to the extent permitted by relevant laws and ordinances, it is possible to conduct a meeting by means of telecommunication. In order to conduct a fair evaluation and engage in a rational decision-making process, directors with special interests in the subject matters being reviewed are prohibited from exercising their voting rights and are not included in the number of voting rights of the directors in attendance.

Main Matters Considered

Shareholders Meetings and Proposals

  • Convening general meetings of shareholders
  • Approval of operating reports and financial statements
  • Changes to the Articles of Incorporation
  • Appointment and dismissal of directors
  • Matters relating to the Company’s dissolution, mergers and acquisitions, and transfer of the entire business or key parts of the business, as well as transfer of the entire business or key parts of the business of another company that can have significant implications for the Company
  • Directors’ compensation, etc.

Management Matters

  • Decisions regarding basic management policies of the Company, and amendments to such
  • Approval of management plans and of quarterly and semi-annual reports

Financial Matters

  • Matters concerning issuance of shares(- Decisions regarding issuance of new shares, Issuance of convertible bonds and bonds with subscription rights)
  • Acquisition, disposal and retirement of treasury stock
  • Approval of internal transactions
  • Matters involving other key corporations and pertaining to investment/disposal, furnishing of collateral/debt guarantees, credit agreements, etc.

Matters Concerning Directors, Board of Directors, Committees

  • Approval of directors’ involvement in competitive businesses, of concurrent service for another business in the same industry, and of transactions between a director and the Company
  • Appointment of the chairperson of the Board of Directors
  • Appointment of the CEO of the Company and joint representatives
  • Establishment of committees, appointment and dismissal of committee members
  • Establishment and dismissal of other operating rules for the Board and committees

Other

  • Matters set forth in the law or the Articles of Incorporation
  • Matters delegated by the meeting of shareholders and matters deemed necessary by the CEO

Responsibilities
and Obligations

Fiduciary Duty of Directors

Directors have a duty of care in making decisions as corporate fiduciaries.

Duty in Good Faith

Directors must perform their duties faithfully for the Company in accordance with the provisions of the law and the Articles of Incorporation.

Prohibition of Directors’ Involvement in Managing Competitive Businesses

Unless approved by the Board or by a committee set by the Board, directors may not engage in operating businesses that are in the same industry as the Company.

Other

Liability Insurance

- In accordance with internal regulations and with approval from the Board or the appropriate committee, the Company provides directors with liability insurance.

Scope of indemnification : The insurance covers the damages to shareholders and other stakeholders arising from a director’s violation of his or her duty of care as a fiduciary and of his or her duty in good faith.

Efforts to Support Outside Directors

In accordance with relevant regulations, outside directors, who play an integral role in maintaining the independence of the Board of Directors, may receive the assistance of external specialists in making important decisions. To this end, the Company has made it a policy to provide external support to the greatest extent possible, such as providing the services of legal or accounting advisers, upon request by outside directors.

In order to provide opportunities for outside directors to exchange opinions and suggestions on matters of overall management of the Company, meetings of outside directors without members of management present are held regularly (at each quarterly meeting of the Board) or when needed.

The Company does not hesitate to provide all the support necessary for outside directors to actively and independently serve the Company. The Company supports regular educational or training efforts such as visits to domestic and international management sites and reports on the status of operations.

Business Management Structure Charter

The first chapter General Rules

Article 1 (enterprise structure basic spirit of Samsung Electro-Mechanics)

Samsung Electro-Mechanics intends world top enterprise which contribute to human society inventing the best product and service with competent person and a technology under fair and transparent business management.All we wish to establish as standard of our action and value-judgement enacting『 Samsung Electro-Mechanics corporate governance improvement constitution 』 as following by belief that can be world top enterprise respected and trusted in international community when try to one direction for new technology development and realization of top quality based on wholesome corporate governance and clean corporate culture,

The second chapter Customer

Article 2 (justice of customer)

We define everyone related Samsung Electro-Mechanics, employeeㆍcooperation companyㆍrival companyㆍstockholderㆍbuyerㆍetc... as our customer.

Article 3 (pursuit of customer satisfaction)

We make customer satisfaction as primary value, and seek common prosperity with mutual trust and respect as companion of new value creation with customer.

The third chapter Stockholder

Article 4 (stockholder's right)

Stockholder must be able to be offered necessary information suitable to exercise all of own rights and exercise with appropriate and reasonable method.
- The right of self benefit, the right to participate of profit sharing
- The right of public benefit, attending general meeting of stockholders and voting right
- The right to be offered suitable and important information by regular and easy method

Article 6 (stockholder's liability)

Stockholder recognizes importance of own voting right and exercise voting right toward direction for development and profit of enterprise. In case give damage by counteraction, stockholders must take responsibility that is suitable accordingly

Article 7 (stockholder's fair treatment)

Stockholder has 1 voting right every a common stock, and the essential right must not be infringed except special occasion and special stockholder in law. Also, stockholder should be protected from other stockholder's unfair transaction (unfair insider trading, self-dealing etc..)

Article 8 (company's liability about stockholder)

As creating stable profit through strong business management, so that can protect stockholder's investment benefit and construct mutual trust with stockholder, company respects stockholder's right to know and right request, proposal, official resolution and opens to the public actively management substance, business activity circumstance according to related laws. Also, the company does not offer information that affects management to some specified stockholders, and does not deal securities such as buying and selling of stocks using information acquired officially inside or of other companies.

The fourth chapter board of directors

Article 9 (board of directors)

Board of directors has comprehensive right as an institution which is responsible for substantial management, and decides effective managerial policy for the profit of company and stockholder and achieve function of following management decision-making and management supervision.
- Strategy and target establishment about management
- Estimation for supervison and achievement on management
- Estimation and approval for important management decision-making such as business plan, budget etc...
- Deliberation, examination, and approval of company's basic policy
- Selection and estimation, compensation of CEO
- Deliberation and decision of director such as selection of chairman of the board of directors.
- Approval for alteration of management purpose
- Important fluctuating item supervision such as main capital expenditure and merger
- Supervision, examination, approval about accounting and main business action
- Supervision of regulation observance such as statute, bylaws, moral principle regulation

Article 10 (director's qualification)

A director as a meber of board of directors who take the responsibility for company's management must equip exemplary moral principle and occupational consciousness, and professionalism and must equip reasonable judgment and driving force, wisdom, honesty and service.
Also, a director must be able to medicate enough time and speak for long-term profit of stockholder in own job achievement.

Article 11 (director's duty and responsibility)

A director should be faithful for enterprise and stockholder profit according to duty of carefulness and faithfulness of good administrator and should face in the job sincerely and should not leak information that is gotten outside or not use for individual's profit.
Also, a director is liable for damage on company in case a director violates statute or articles of association or it takes liabilities for damages on company in case there is heavy mistake or malice to a director.
For the sake of faithful and careful activity of directors, attendance of the board of directors' meeting, major career and concurrent job of each director should be made public in an appropriate way.
But, director's management judgment by proper formality and sincere and reasonable judgment should be respected and in order to secure effectiveness of responsibility inquiry about a director and recruit able person, joins to insurance of compensation for damages.

Article 12 (estimation and compensation for directors)

Business action of the management and external director, board of directors should be estimated fairly and the results are reflected reasonably and properly. Especially, the compensation of director is decided by director compensation committee within scope approved in general meeting of stockholders.

Article 13 (recommendation and selection of external directors)

External directors must be recommended fairly and for this, keeps recommendation committee of external director candidate and recommends new external director. Recommended director candidate is assigned in general meeting of stockholders. A director that equips professionalism should contribute to management and assigned director's tenure should be respected.

A person that corresponds to essential factor that decided in statute (16③ of stock exchange act 191, 5④9 of 54, the same law 6③3 of 37) can not be assigned and except, can not be assigned as external director that has following important matter.
- Former employee who 5 years are not passed since retire
- Person in special relationship with company, C.E.O. or largest stockholder
- Employee of company of which officer is external director
- Accounting firm's employee who take charge of company's audit business, person who 5 years are not passed since retire

Article 14 (Rights and duties of external directors)

External director must be able to take part in decision-making of company independently and supervise and support the management as a member who composes board of directors. For this, external director can require enough information and human·physical support to company, and the company answers faithfully to this.
Also, external director must medicate enough time for job achievement and is bound to participate board of directors and should take part in board of directors after examine related data faithfully before participation.

Article 15 (committee)

The company increases professionalism and efficiency of business achievement and solidifies independence that keeps following standing, emergency New Year committee.
-Standing committee : executive committee, committee of audit, recommendation committee of external directors candidate
-Emergency New Year committee : director compensation committee, the investment deliberation committee etc..

Committee's composition and operation are clarified to articles of association and regulation and in accordance with the regulation, compose and operates the committee. Committee's determination for mandatory item has an equal effect with board of directors, and the committee must report result to board of directors.

(The fifth chapter audit organization)

Article 16 (inside audit organization)

Audit committee is established by determination of board of directors and composed by all external directors of board of directors in order to achieve audit business sincerely in independent way from management and controlling stockholder.
Also, members of audit committee must be able to approach necessary information freely and it is necessary that they be consulted by external specialist and the company should answer faithfully on this request.
Audit committee reports item, main activity particulars and result about belonging member's career to general meeting of stockholders and CEO must publish this through annual report.

Article 17 (assignment of outside auditor)

Outside auditor should be assigned as a person who is able to audit accounting information of company fairly and effectively. Audit committee of company must assign relevant accounting firm with applying this standard and report the truth in annual meeting of shareholders.

Article 18 (responsibilities and duties of outside auditor)

Outside auditor must achieve audit business fairly in dependent way from management, company and largest shareholder so that accounting information of company could be delivered fairly and trusted.
Outside auditor has responsibility to indemnify damage which caused by own carelessness or poor audit by deliberation, and damage of information user caused from it. Also, outside auditor should identify whether there is arranged information or not among information particularly published with financial statement that was audited.

The sixth chapter accounting data processing and management watch

Article 19 (standard of accounting process)

Processing and reporting of accounting data is observed by internal accounting regulation or international accounting standards and in case of relating foreign countries, is observed by accounting regulation of each countries or international accounting standards.

Article 20 (management watch participation of the persons concerned)

Employee's management participation form and the level should be decided as a level that the company can keep and develop sound activity.
Also, the persons concerned can require information that is necessary for own right protection in accordance with related statute and the company should answer faithfully on this request within scope that permitted by statue.

Article 21 (management watch by market)

Company makes out information connected with contents of company so that is easy to know and should publish to whom it may concern such as investor, stockholder, the persons concerned quicklyㆍexactly, and cooperate so that whom it may concern use inexpensively.
Also company prepares information conveyance system with designating a person in charge of public announcement so that important information of company can be delivered to a person in charge quickly and exactly.
Company should open to stockholders immediately about issues that was decided in decision-making organization including board of directors as guidance enterprise of corporate governance, and be faithful to decision-making, making use of professional advisor on items that is expected not only profit of company but also disadvantage to the persons concerned.

The seventh chapter the persons concerned

Article 22 (right protection of the persons concerned)

The company must protect right of the persons concerned by statute and contract, and relevant stakeholder protects own rights and must possess suitable means that can be exterminated infringement of their rights.

Article 23 (right protection of creditor and employee)

The company observes protection procedure of creditor on matters which have significant influence on creditor's status such as merger, reduction of capital. Also, the company informs to relevant creditor in advance about items to influence creditor such as possibility of bond retrieve, bond order of creditor, etc...
Also, the company observes statue of labor relations including labor three laws and efforts for improvement of labor conditions.

(An additional law)
1. This regulations enforce from February 28, 2001.
2. This regulations enforce revision from February 28, 2003.