Corporate governance charter
Corporate governance charter
Preface
HD Hyundai Construction Equipment Co., Ltd. (hereafter referred to as the “company”) aims to become the world’s best general heavy industry company and to lead the world with a management philosophyof “Creative wisdom, positive thinking, unwavering drive!”
The company's management principles are focused on increasing corporate value by achieving sustained growth, practicing fair and transparent management and pursuing safe and eco-friendly management.
Thecompany will also realize a labor-management culture based on mutual respect and trust and contribute to social development as a global corporate citizen.
The company will do its very best to impress its customers, ensure its employees feel rewarded by their work and increase its shareholders’ satisfaction by increasing corporate value, based on theHyundaiSpirit, management vision and management philosophy.
Accordingly, HD Hyundai Construction Equipment has established the Corporate Governance Charter in order to establish, maintain and develop a sound and transparent governance structure.
The company's management principles are focused on increasing corporate value by achieving sustained growth, practicing fair and transparent management and pursuing safe and eco-friendly management.
Thecompany will also realize a labor-management culture based on mutual respect and trust and contribute to social development as a global corporate citizen.
The company will do its very best to impress its customers, ensure its employees feel rewarded by their work and increase its shareholders’ satisfaction by increasing corporate value, based on theHyundaiSpirit, management vision and management philosophy.
Accordingly, HD Hyundai Construction Equipment has established the Corporate Governance Charter in order to establish, maintain and develop a sound and transparent governance structure.
Contents
- Chapter 1. ShareholdersArticle 1 (Rights of Shareholders)
- Shareholders shall have all basic rights as the owners of the company.
- Any matters that could result in significant changes to the existence or status of the company and the shareholders’ rights shall be determined at the general shareholders' meeting in such a waythatthe shareholders’ rights are guaranteed to the fullest possible extent.
- The company shall inform its shareholders of the date, place and agenda of the general shareholders' meeting in advance and the date and place of the general shareholders' meeting shall be determinedso as to allow as many shareholders to attend it as possible.
- The shareholders shall have the right to propose items of agenda for the general shareholders' meeting to the board of directors, ask questions about the agenda and request explanations thereofatthegeneral shareholders' meeting.
- Decisions shall be made transparently and fairly at the general shareholders' meeting and the shareholders shall be able to exercise their right to vote directly or indirectly as easily as possible.
- The shareholders shall have one voting right for each of their common stocks; and their essential rights shall not be violated. In addition, the voting right of a specific shareholder shall berestrictedin a limited way as stipulated by the relevant law.
- The shareholders shall be able to receive necessary information from the company in a timely, fair and sufficient manner and the company shall provide information to all shareholders fairly evenif thecompany does not have the obligation to disclose such information.
- The shareholders shall be protected from unfair internal transactions and transactions on one’s account by other shareholders, such as a dominant shareholder.
- The shareholders shall make efforts to exercise their rights to vote actively for the beneficial development of the company, in consideration of the fact that it can affect company management.
- A dominant shareholder who exerts influence on the company management shall act for the benefit of all the company’s shareholders and shall be responsible for any damages incurred by the companyand/orother shareholders as a result of the dominant shareholder’s violation of this principle.
- Chapter 2. Board of DirectorsArticle 4 (Functions of the Board of Directors)
- The Board of Directors (BOD) shall have comprehensive authority over the company’s management and shall be responsible for making decisions and supervising the company’s management.
- The Board of Directors may delegate its authority to the representative director or the committee within the BOD. However, this provision shall not be applicable to major matters stipulated bythelaw,the articles of incorporation, or the board regulations.
- The size of the BOD shall be appropriate for careful discussion and decision-making and shall consist of a sufficient number of directors, so that the committees established within the board ofdirectorscan be active.
- The Board of Directors shall have non-executive directors who can perform their functions independently of the management and the dominant shareholders. The number of non-executive directors shallbe large enough for the Board of Directors to maintain substantial independence. The majority of the directors (at least three directors) shall be non-executive directors.
- A person who is found to have damaged the enterprise’s value and/or infringed the shareholders’ rights and interests shall not be appointed as an executive.
- The Board of Directors shall be composed of competent persons equipped with sufficient expertise to make a substantial contribution to corporate management and the selected director’s term ofofficeshall be respected.
- The Board of Directors shall be composed of directors from diverse backgrounds.
- The company shall ensure that the shareholders can exercise their right to vote by providing them with sufficient information on candidates for the position of director and sufficient time to evaluatethem.
- Non-executive directors shall have no significant interest in the company and shall be able to make decisions independently of the management and the dominant shareholders.
- The company shall establish a committee that recommends non-executive director candidates to recommend non-executive director candidates fairly so as to secure the fairness and independence ofthenon-executive director candidate recommendation process.
- The company shall announce a non-executive director candidate to the public after checking that the candidate has no significant interest in the company. When accepting the inauguration request,thenon-executive director shall submit a confirmation statement to the effect that he/she has no significant interest in the company.
- The non-executive director shall not hold too many concurrent positions so as to ensure his/her faithful performance of his/her duties.
- The company shall provide the non-executive director(s) with all the information needed to allow them to perform their duties and the non-executive director(s) may request the prompt provisionofallinformation they need to perform their job.
- The non-executive director shall dedicate sufficient time to the performance of his/her duties and shall review related data in advance before attending the board of directors.
- If necessary, the non-executive director can request support from employees or external experts according to the appropriate procedure and the company shall support the expenses thus incurred.
- In principle, board meetings shall be held on a regular basis and regular board meetings shall be held at least once per quarter.
- The regulations for the Board of Directors shall be established and they shall stipulate in detail the authorities and responsibilities, operating procedure, etc. of the Board of Directors soasto ensure the efficient operation thereof.
- The Board of Directors shall create detailed minutes and record the contents of each meeting and maintain and retain them. The details of particularly important discussions and decisions shallberecorded and submitted to each director.
- The details of the activities of each director shall be disclosed publicly, such as the rate of attendance at the board meeting, agreement or disagreement with major items on the agenda, etc.
- If necessary, the board members should attend the board meeting as much as possible by using a means of telecommunication.
- Committees shall be established within the Board of Directors and each committee shall be composed of an appropriate number of members to perform specific functions and roles.
- A majority of the committees within the Board of Directors shall be non-executive directors.
- The organization, operation and authority of all committees shall be stipulated in the text. The committee’s decisions on matters delegated by the board shall have the same effect as those oftheBoardof Directors.
- The director shall perform the job by fulfilling his/her fiduciary duties. The director shall make decisions reasonably after devoting sufficient time and effort to the work based on sufficientinformation.
- The director shall not exercise authority for his/her own interest or that of a third party and shall pursue the result that is the best interests of the company and the shareholders.
- The director shall not disclose any company secrets learned while performing his/her duties to any external party and shall not use it for his/her own interests or those of a third party.
- In the event that the director violates the laws or articles of incorporation or neglects his/her duties, the director shall be liable for damages by the company as a result of such violation ornegligence. If the director cause damages to a third party due to his or her malicious intent or gross negligence, the director shall also bear the responsibility to compensate such damages.
- When the director performs his/her duties in a way that is deemed to be in the best interests of the company, having made sincere and reasonable management decisions after collecting a significant amount of data and information and reviewing them carefully and thoroughly, such management decisions of the director shall be respected. The company may take out liability insurance for the director at the company's expense to secure the effectiveness in holding the director to account and to recruit a competent person as a director.
- Article 11 (Evaluation and compensation)
- The management activities of the executives shall be fairly evaluated and the results thereof shall be appropriately reflected in their remuneration. The remuneration of the director shall bedeterminedby the Board of Directors within the limit approved at the general shareholders' meeting.
- Chapter 3. Audit organizationArticle 12 (Audit committee)
- The audit committee shall be composed of three or more directors and more than two-thirds of the members including the chairperson shall be non-executive directors in order to its maintain independence and expertise. One of the committee members shall be a person with expertise of auditing tasks. The member who is not a non-executive director shall have no grounds for disqualification in accordance with the law, such as the Commercial Act.
- The audit committee shall faithfully carry out its auditing tasks, such as checking the legality and feasibility of the duties performed by the directors and the management.
- The Board of Directors shall stipulate the regulations on the objectives, organization, authorities and responsibilities and duties of the audit committee. In addition, the audit committee shall evaluate the feasibility of those regulations every year and announce the details to the public.
- The audit committee shall hold a meeting at least once per quarter; and, if necessary, it may request the attendance of the management, the director in charge of finance, the head of the internalauditdepartment and the external auditors.
- The audit committee shall take the minutes of every meeting and all matters discussed and decisions shall be clearly written in the minutes in detail. The audit committee shall create an auditbook thatspecifically records the audit details.
- The audit committee shall be able to freely access the information necessary for auditing tasks and receive advice from external experts, if necessary.
- The audit committee shall report the results of the evaluation of its own independence and major activities to the general shareholders' meeting; and the CEO shall announce the report togetherwiththebusiness performance report to the public.
- The members of the audit committee shall be independent from the management and the dominant shareholders. Therefore, the members of the audit committee may receive remuneration as a director only,andcannot receive any other form of remuneration.
- The external auditor shall maintain legal and substantial independence from the company to be audited, its management and the dominant shareholders.
- The external auditor shall attend the general shareholders' meeting and answer the questions of the shareholders if they have any question about the audit report.
- The external auditor shall be liable for damages incurred by the audited company and other information users as a result of a careless accounting audit. The external auditor shall check whetheranyinformation that is regularly disclosed with the audited financial statements conflicts with the result of the audit.
- The external auditor shall attempt to monitor the unjust and illegal behavior of the company while conducting an audit.
- The external auditor shall consider the viability of the company to be audited as required by the related laws, such as the “Act on External Audit of Stock Companies”, etc.
- The external auditor shall report important matters found while conducting an audit to the audit committee.
- Chapter 4. StakeholdersArticle 14 (Protection of the Rights of Stakeholders)
- The company shall make efforts not to infringe on the rights of the stakeholders.
- The company shall not neglect its social responsibilities, such as consumer protection, environmental protection, etc.
- The company shall respect the rights of its workers and make efforts to improve the quality of their working conditions.
- The company shall promote the establishment of a fair market order by complying with the fair trade laws and seek the balanced development of the national economy.
- The company shall comply with the creditor protection procedure for matters that affect a creditor's position significantly, such as merger, capital reduction and split.
- If a stakeholder is also a shareholder, it shall be ensured that the rights of that stakeholder-shareholder are protected and can be exercised.
- The type and level of a creditor’s management monitoring shall be determined by consultation between the persons directly involved according to the characteristics of the company.
- The type and level of workers’ management monitoring shall be determined in such a way that the sound development of the company can be promoted.
- The company shall provide information needed to protect the rights of the stakeholders to the stakeholders as long as it is permitted by the laws and regulations and the stakeholders shall beable toaccess the related information.
- Chapter 5. Management monitoring by the marketArticle 16 (Public announcement)
- The company shall announce any matters that may affect the decision-making of the shareholders and stakeholders significantly, besides matters required by the laws and regulations.
- The company shall specify the differences between its corporate governance structure and this standard on the website, etc.
- Besides regular public announcement, the company shall announce the contents of important decisions in detail and accurately.
- The company shall write public announcements that are easy to understand and ensure that stakeholders can access them easily.
- The company shall appoint a person in charge of public announcements and shall be equipped with an internal information delivery system to deliver important company information to that person quickly.
- The company shall announce the stock ownership of actual dominant shareholders and their affiliate persons in detail.
- The CEO and the chief financial officer (CFO) of the company shall certify the accuracy and completeness of the financial reports.
- The company shall establish the Code of Ethics and post it on the website.
- Actions that cause changes in the company’s management rights, such as merger and acquisition, split and transfer of business, shall be conducted according to transparent and fair procedures.
- The management rights of the company shall not be defended in a way that sacrifices the interests of the company and shareholders merely to maintain the management rights of certain shareholdersorthemanagement.
- The company shall allow a shareholder who objects to an important structural change, such as merger, transfer of business, etc., to exercise his/her right to demand the purchase of shares at afairvaluethat reflects the real value of his/her shares in accordance with the law.