1. Purpose

The purpose of these Regulations is to enable partners to accurately represent their interests in contracts between Hyosung Heavy Industries Co., Ltd. (hereinafter referred to as the "Company") and small and medium-sized businesses (hereinafter referred to as "partners"), as well as to establish reasonable and fair trade practices by presenting the contents to be observed in contract formation to prevent the Company from abusing its superior bargaining position in transactions with partners and undermining the concept of contract freedom.

2. Composition

These Regulations consist of "Contract conclusion infrastructure," which the Company must construct prior to concluding a contract; "Conclusion of a contract with the right to self-determination guaranteed" in a situation in which the right to self-determination is guaranteed; and "Faithful performance of contracts in accordance with their terms and applicable laws," which outlines contract fulfillment provisions.

3. Establishment of contract conclusion infrastructure

3.1 Establishment of contract conclusion selection criteria

The Company must select a method for concluding contracts based on specific criteria, taking into account its trading status and market impact. Methods of contract conclusion include the following:

• 3.1.1 Private contract
  • In the case of concluding a contract by arbitrarily choosing a suitable counterparty without recourse to methods such as bidding
• 3.1.2 Open tendering
  • Where a contract is awarded by determining the successful bidder through open competition without limiting the qualifications of bidders or nominating bidders
• 3.1.3 Limited competitive bidding
  • Where a contract is awarded by determining the successful bidder through competition by limiting the qualifications of bidders or nominating bidders
• 3.1.4 Nominated competitive bidding
  • Where a contract is awarded by determining the successful bidder through competition by nominating bidders

3.2 Selection criteria for contract conclusion method

• 3.2.1 Consideration must be given to the significance of the goods, the number of partners available for transaction, previous transaction experience, and standards relative to the total transaction amount when establishing detailed selection criteria.

  Selection criteria for contract conclusion method

  	Many( ≥5 companies)	Few( less than 5 companies)
  High	Limited competitive bidding, Nominated competitive bidding	Private contract
  Low	Open tendering	Limited competitive bidding, Nominated competitive bidding

  • The following criteria can be modified based on the characteristics of individual businesses.
• 3.2.2 When determining detailed selection criteria, the Company should consider the following criteria.

  계약체결 방식 선택기준

  Conclusion Method	Requirements
  Private contract	If there is no room for competition as a result of a sharp increase in the cost of raw materials or other similar circumstances If there is no other option but to conclude a contract with the existing counterparty If it is difficult to divide responsibility for deficiencies in the construction of future facilities or in the case of finishing works If the manufacturer or supplier directly installs, assembles, or maintains the product In the event of incompatibility, if the goods were manufactured or supplied by a party other than the original manufacturer or supplier When competition is practically impossible Construction using a patented technique or new technology In the case of manufacturing or purchasing a product for which a patent, utility model registration, or design registration has been registered If competition is impossible due to the technology service of a particular individual, a particular location, structure, quality, performance, or efficiency
  Open tendering	No special criteria Selection based on the type and significance of the goods, the number of counterparties, etc.
  Limited competitive bidding	Contract amount limit, construction capacity, or experience in construction of the same type Construction contracts requiring specialized technologies or construction techniques Contract for the manufacture of goods necessitating specialized equipment or technology Purchase contract for goods requiring specialized performance or quality Service contracts requiring specialized technology Financial standing of competitors, if required to prevent insolvency during contract performance When limiting the qualifications of bidders, the restrictions and criteria must be outlined in the tender notice.
  Nominated competitive bidding	If the nature or purpose of the contract makes it difficult to achieve the contract's purpose without a person/entity with specialized facilities, technologies, materials, goods, or performance, and there are fewer than 10 bidders In the case of construction work, manufacturing consignment, or service consignment for which the estimated price is equal to or less than a certain amount standard (set by the Company) In the event of purchasing a product with a standard mark or an Eco-Label certification * A minimum of five bidders must be nominated, and there must be a minimum of two bidders. (However, if there are less than 5 nominees, all the nominees)

  • The criteria can be modified based on the characteristics of individual businesses.

3.3 Operation of a proposal system for businesses desiring to trade

The Company may operate on-site briefing sessions or an online proposal system where companies interested in doing business can directly submit a proposal based on the characteristics of their business.

3.4 Partner Relationship Management (PRM)

The Company establishes PRM as well as promotes the coexistence of large enterprises and SMEs through open partner management, which includes transactions with new businesses, rather than closed partner management. In addition, we facilitate the exchange of information and cooperation between partners by creating a cyberspace for them and holding regular meetings.

3.5 Operation of an SME support organization

The Company operates the Shared Growth Promotion Team, a support organization dedicated to providing partners with technical support, financial support, training, and assistance for making proposals.

4. Conclusion of a contract with the right to self-determination guaranteed

The parties to the transaction must observe the following conditions in order to conclude a contract.

4.1 Prior document issuance

• 4.1.1 It is standard practice to sign a contract in advance; however, before beginning work on delivery (“transfer” in the case of construction; hereinafter the same applies), at least a contract with a signature and seal (including electronic contracts using accredited certificates) must be submitted.
• 4.1.2 A contract must include the contents of the subcontract, such as the subcontracting cost and payment method, as well as the contents specified in the Enforcement Decree of the Fair Transactions in Subcontracting Act, such as the adjustment requirements, methods, and procedures of the subcontracting cost in response to fluctuations in the cost of raw materials.
• 4.1.3 In the case of frequent transactions, a basic contract must be issued first, followed by a statement of settlement for a certain period of time.
• 4.1.4 If volume changes are evidently anticipated as a result of minor and frequent additional work, a settlement agreement must be issued immediately following the completion of delivery.
• 4.1.5 The main contents must be agreed upon in advance in writing if additional requests are made within a significantly shorter time frame than is customary.

4.2 Calculation of unit price using a reasonable formula

• 4.2.1 The unit price of components should be determined in consultation with partners using a reasonable calculation method that takes into account the quantity, quality, specification, delivery date, payment method, material price, labor cost, manufacturing cost, or market price trends, and that adds the necessary management costs and profits.
• 4.2.2 During the contract period, if there is a reason for a change in the initial unit price, a request for unit price adjustment may be submitted to the counterparty. In this case, the unit price must be recalculated through mutual consultation within thirty (30) days (can be extended for 30 days) from the request date.
• 4.2.3 The temporary unit price determined through consultation must be applied if the unit price is delayed for special reasons, and the difference between the temporary unit price and the final unit price shall be settled retroactively upon the determination of the final unit price.
• 4.2.4 In cost estimation, the standard wage rate should be investigated on a regular basis in order to present an accurate unit price; however, the wage rate should be set according to the characteristics of each partner, such as working conditions, company size, and technological level, as well as labor costs in the same industry.
• 4.2.5 In the event of changes in the initial unit price, the contract must specify standards and procedures for discussing such changes with partners.
• 4.2.6 Reasons for unit price changes (e.g. price, price of raw materials, exchange rate), consultation period, payment terms, and other matters must be specified in detail in the contracts.

4.3 Clear delivery dates

• 4.3.1 Taking into account the characteristics of each industry, standard delivery dates must be determined through adequate consultation with the partner.
• 4.3.2 The delivery date must be established upon signing a contract, and if the date is altered, it must be clarified. In the event that a shorter delivery date than usual is necessary due to reasons such as a sudden order, it must be agreed upon in consultation with the partner.
• 4.3.3 Where there is no reason attributable to the partner, the Company shall compensate the partner for damages caused by unreasonable delay or refusal to accept the goods

4.4 Objective inspection criteria

• 4.4.1 In the case of an inspection of deliverables (“finished products” in the case of construction; hereinafter the same applies), objective and fair/reasonable inspection criteria and procedures must be established in consultation with the partner.
• 4.4.2 Where delivery takes place, a receipt must be issued immediately even prior to inspection, and inspection must be conducted expeditiously in accordance with predetermined inspection regulations and procedures.
• 4.4.3 Unless there is a justifiable reason, inspection results must be communicated within ten (10) days of receiving the deliverables from the partner.
• 4.4.4 A competent manager must oversee the management of ordered components prior to or during inspection.

4.5 Determination of reasonable payment due dates

• 4.5.1 In the case of the consignment of manufacturing, etc. to a partner, payment must be made by the shortest possible payment due date within sixty (60) days of the delivery date of the deliverables (the acceptance date in the case of construction; the date on which the entrusted service is completed in the case of services; the date specified in cases where the parties to the transaction set the date of issuance of tax invoices at least once a month due to reasons such as frequent delivery; hereinafter the same applies).
• 4.5.2 When manufacturing, etc. is consigned to a partner, payment must be made within fifteen (15) days of receiving payment for the completion of manufacturing, repair, construction, or service performance from the ordering party (if the payment due date arrives before then, the payment due date).
• 4.5.3 In the case of receiving payment for completion according to the progress of manufacturing, repair, construction, or service performance, the amount corresponding to the manufacturing, repair, construction, or service performed by the partner must be paid within fifteen (15) days of the date that payment was received (if the payment due date arrives before that, the payment due date).
• 4.5.4 The price must be paid in excess of the cash ratio paid for the consigned manufacturing, etc. from the ordering party.
• 4.5.5 Where payment is made by promissory note, the promissory note must be delivered within the payment period (from the date of issuance to the date of maturity) of the promissory note issued by the ordering party in relation to the consigned manufacturing, etc. in the same year.
• 4.5.6 Where payment is made by a promissory note, the promissory note must be discountable by a financial institution established in accordance with the law, and the discount rate (determined and publicly disclosed by the Fair Trade Commission) for the period between the date the bill was delivered and its maturity date must be paid on the date the promissory note was issued.
• 4.5.7 If a promissory note is issued within sixty (60) days from the date of receiving the deliverables, the discount rate for the period exceeding sixty (60) days until the maturity date must be paid within sixty (60) days from the date of receiving the deliverables.
• 4.5.8 When using a payment method other than a promissory note, the fee (including loan interest) for the period between the payment date (the card payment approval date in the case of corporate purchase-only cards; the delivery date in the case of secured loan of credit sales; and the purchase capital payment date in the case of purchase loans) and the subcontracting cost payment due date must be paid on the payment date.
• 4.5.9 When using a payment method other than a promissory note to make payment within sixty (60) days from the date of receiving the deliverables, the fee for the period from the date of receiving the items, etc. to the date of repayment of the subcontract fee after exceeding sixty (60) days must be paid to the partner within sixty (60) days from the date of receiving the deliverables.
• 4.5.10 If the payment is made more than sixty (60) days after the date of receiving the deliverables, the interest rate for the excess period shall be the rate announced by the Fair Trade Commission.

4.6 Reasonable return process for after-delivery defects

Returns must be processed in accordance with an agreement between the parties involved, specifying the subject of defect cause investigation, the type of cause of the defect, and the proportion of liability of each party.

4.7 Cancellation and termination of a contract

• 4.7.1 The reason for contract cancellation or termination should be determined by agreement between the parties and divided into "cases where notice is required,” and "cases where notice is not required."
• 4.7.2 Cases where notice is not required are as follows:
  • ① Where the counterparty receives a disposition to suspend transactions from a financial institution or other dispositions such as cancellation or suspension of business from a regulatory agency; or
  • ② Where the counteryparty decides to dissolve, transfer business, or merge with another company, or where both parties agree that it is difficult to fulfill the terms of the basic contract or an individual contract due to a natural disaster or other circumstances.
• 4.7.3 Cases where notice is required are as follows. In this case, the contract may be canceled or terminated if the counterparty is issued a notice to make corrections within a set period of at least one (1) month and the performance is not completed within the timeframe.
  • ① Where the counterparty violates the essential terms of this contract or a specific contract, or where the Company delays the fulfillment of matters necessary for manufacturing ordered components without justification, thereby disrupting the work of the partner
  • ② Where a partner refuses to manufacture ordered components without a justifiable reason or delays the start, and it is recognized that delivery within the delivery period is difficult; or
  • ③ Where a significant reason exists for the partner's inability to fulfill the contract due to a lack of technology, production, and quality management capabilities.
    • In addition to the above, the following items are recommended when concluding a contract, if necessary.

      Technical data deposit system

      Use the "technical data deposit system" to deposit technical data with a third-party institution in order to safeguard the source technology of partners

      Improvement of occasional ordering

      If possible, quarterly predictions are recommended for occasional orders that result in managerial instability for partners

5. The parties to the transaction must refrain from conducting the following acts when entering into a contract.

5.1 Failure to issue or preserve documents

• 5.1.1 Conducting the following acts without justifiable grounds: issuing a document without specifying matters that are difficult to determine at the time of consignment with no reasons stating why the matters were not determined, as well as the scheduled due date for determining the unspecified matters.
• 5.1.2 Acts of delaying or failing to issue a new document to a partner after the relevant matter has been confirmed for a document issued with certain matters omitted.
• 5.1.3 Regarding the contents of an oral consignment (order), acts of failing to respond in writing within fifteen (15) days of receiving a request from a partner to confirm the contents of the consignment as either approved or rejected, including the consigned work, subcontracting cost, and the date and time of consignment.
• 5.1.4 Acts of failing to provide the signature or seal of the person in charge of the contract when approving or rejecting the contents of an oral consignment (order).
• 5.1.5 Acts of failing to issue specific additional contracts or work instructions despite the fact that the scope and cost of additional work are distinct and substantial.
• 5.1.6 For construction work, acts of failing to issue a contract for changes or a statement of settlement due to disputes over the settlement between the parties, despite the fact that it has been proven that the work volume has been added to or changed.
• 5.1.7 Acts of arbitrarily destroying legal documents within three (3) years, in accordance with the original contractor's rules, without preserving such documents for three (3) years.
• 5.1.8 Acts of creating and storing false documents or documents with false content despite preserving documents for three (3) years after the date of transaction closure.
• 5.1.9 Acts of failing to preserve documents related to the subcontracting cost decision, such as the successful bidder's pricing statement, a quote, and a site description and specifications (in the case of a construction consignment).

5.2 Unreasonable subcontracting cost determination

• 5.2.1 Acts of determining the subcontracting cost by reducing the unit price at a uniform rate without a justifiable reason.
• 5.2.2 Acts of determining the subcontracting cost by unilaterally allocating a certain amount and then reducing the amount, despite the contract items, for instance, a request for cooperation.
• 5.2.3 Without a justifiable reason, acts of discriminating against a specific partner in determining the price or unilaterally determining the price based on a low unit price without reaching an agreement with the partner.
• 5.2.4 Acts of deceiving a partner and using such deception to determine the price by causing errors in terms of transaction, such as order quantity, or by displaying another business operator's estimate or false estimate.
• 5.2.5 Without a justifiable reason, acts of establishing a price that is lower than the sum of the direct construction cost items when entering into a private contract.
• 5.2.6 Without a justifiable reason, acts of determining a price that is lower than the lowest bid amount when concluding a contract through competitive bidding.
• 5.2.7 Acts of establishing a price by uniformly reducing the unit price without objectively valid reasons for such a reduction, such as a decrease in the cost of materials or wages.
• 5.2.8 Acts of discriminating against a specific partner and setting a low price despite the fact that there is no difference in payment, transaction volume, or work difficulty.
• 5.2.9 After quoting a price based on the premise of a large order, acts of determining the actual price based on the large order while placing a small order.
• 5.2.10 Acts of consigning manufacturing, etc. without determining the price, and then determining a price below the price normally paid, without consulting the partner.
• 5.2.11 After requesting and receiving delivery-related technical data, acts of providing such data to another business operator and reducing the price based on the quoted price of the respective business operator.
• 5.2.12 Acts of setting a low price due to a significantly lower execution budget than the original contract price, with construction work required to be completed within the scope of the same execution budget.
• 5.2.13 Acts of setting a price that is significantly lower than the standard price for reasons such as export, discount sales, giveaways, and samples.

5.3 Oral requests for proposal or development

Acts of canceling development after completion of equipment or production preparations, or requesting reduction of a verbally presented unit price.

5.4 Unreasonable interference with business

• 5.4.1 Acts of interfering with human resource management by having a partner obtain direction or approval from the Company for appointing or dismissing employees or hiring a specific individual against the partner's will.
• 5.4.2 Acts of intervening in a subcontracting and restricting its content, for instance, selecting and setting contract conditions without regard for the purpose of the subcontracting, such as maintaining the quality and on-time delivery of the Company's consigned deliverables.
• 5.4.3 Contrary to the subcontractor's intention, acts of mobilizing on-site workers to perform construction work despite the fact that construction is already in progress.
• 5.4.4 Acts of putting restrictions on a partner's production items or facility size, or prohibiting a partner from doing business with the Company's competitors or affiliates.
• 5.4.5 Acts of requesting and supplying delivery-related technical information to a partner without a justifiable reason.
• 5.4.6 Acts of forcing partners to participate in special sales events, such as giveaways or special discounts, or to purchase merchandise or gift certificates.

5.5 Acts that do not account for increased construction expenses (limited to construction-related contracts)

• 5.5.1 Acts that prevent the Company from requesting an additional volume settlement when additional volume occurs subsequent to the completion of construction.
• 5.5.2 Acts of prohibiting partners from bearing the cost of installing and operating a supervisor's office, or prohibiting any modification to the initial contract in regard to wage increases or price fluctuations.
• 5.5.3 Acts of refusing to recognize additional contracts for reasons such as construction delays and suspensions caused by the construction company's circumstances, or natural disasters resulting from climatic conditions and the rainy season, since a construction period excludes such delays and suspensions.

5.6 Non-adjustment of subcontracting cost due to design changes, etc.

• 5.6.1 Acts of failing to make the payment despite receiving an additional amount from the ordering party for reasons such as a design change or a change in economic situation, or paying less than the received rate or volume.
• 5.6.2 Acts of failing to adjust the contract amount by the date exceeding thirty (30) days, or adjusting the contract amount beyond thirty (30) days after the ordering party has paid has adjusted the amount due to changes in design or economic conditions.
• 5.6.3 Acts of failing to pay late interest, promissory discount charges, or fees for the excess period when making payment in cash or by a promissory note or an alternative payment method fifteen (15) days after the ordering party has paid the additional amount due to changes in design or economic conditions.
• 5.6.4 Acts of failing to notify a partner of the reason and specifics of the adjustment within fifteen (15) days when the ordering party has increased or decreased the contract amount due to changes in design or economic conditions (except for cases directly notified by the ordering party).

5.7 Non-adjustment of subcontracting cost due to fluctuating raw material costs

• 5.7.1 Acts of failing to respond to a request for consultation or to engage in actual consultation procedures, such as holding a meeting, exchanging opinions, or submitting a unit price adjustment proposal after being notified that consultation will take place.
• 5.7.2 Acts in which the person with the authority to adjust unit price does not engage in consultation despite a consultation request was made thirty (30) days in advance.
• 5.7.3 Acts of repeatedly presenting a price that is unacceptable to the other party without objective evidence, such as market research for unit price adjustment or cost calculation.

5.8 Demanding exclusive transactions

Acts of restricting a partner to conduct business with a company designated by the Company (except when an exclusive transaction is agreed with the partner on the grounds of jointly developing technology with the partner).

5.9 Unilateral transfer of complaint handling

Acts of deducting the total cost of handling a civil complaint from the pre-established cost if the complaint is not resolved and the cause of dispute continues despite the fact that the Company takes full financial and administrative responsibility for civil complaints arising during construction.

5.10 Unfair special contracts

• 5.10.1 Acts of imposing contract terms that infringe upon or restrict the interests of partners
• 5.10.2 Acts of establishing an agreement for the partner to bear the costs of requested matters not specified in the contract.
• 5.10.3 Acts of establishing an agreement for the Company to bear the costs associated with civil complaints, industrial accidents, and similar matters.
• 5.10.4 Acts of establishing an agreement for the partner to bear the costs of requested matters not specified in the bidding statement.

6. Faithful performance of contracts in accordance with their terms and applicable laws

6.1 The parties to the transaction must observe the following conditions during contract performance.

• 6.1.1 Compliance with applicable laws and regulations, such as the Civil Act
  • The parties to the transaction must comply with applicable laws and regulations, such as the principle of good faith, the Fair Transactions in Subcontracting Act, and the Monopoly Regulation and Fair Trade Act; however, if a dispute arises, it must be resolved based on written documents.
• 6.1.2 Adequate prior agreement and written document issuance in the case of unit price reduction
  • In the case of a unit price reduction due to a drop in raw material costs or an increase in volume, reasonable grounds must be presented for the extent of the unit price reduction due to volume increase.
• 6.1.3 Price adjustment based on contract amendments
  • If additional costs are incurred as a result of contract amendments, such as requests for additional specifications, the corresponding payment must be made.
  • Recommendations
    Cancel or terminate the contract in accordance with its terms, but notify the partner in writing as soon as possible, at least two (2) to three (3) months in advance, of any cancellation or suspension of business that is not due to a reason specified in the contract.

6.2 The parties to the transaction must refrain from conducting the following acts during contract performance.

• 6.2.1 Unreasonable refusal to accept delivery
  • ① Acts of refusing to accept delivery despite the inability to determine whether the contents of the delivery or construction differ from the contents of the consignment due to ambiguous consignment details.
  • ② Acts of refusing to accept previously consigned goods due to complaints from the ordering party, foreign importer, or customer; or poor sales.
  • ③ Acts of refusing to accept delivery due to late supply of raw materials or construction materials contracted for supply despite the fact that delivery or construction cannot be completed within the deadline.
  • ④ Acts of using stricter than usual criteria without first establishing inspection criteria.
  • ⑤ Acts of refusing to accept delivery due to unclear contents or applying criteria higher than those specified in the original contract despite the fact that the inspection criteria have been set.
  • ⑥ Acts of refusing to accept delivery without a justifiable reason, such as a lack of storage space, despite the partner's request for acceptance.
  • ⑦ Acts of refusing arbitrarily to accept previously ordered goods because stable supply is deemed difficult due to reasons such as the bankruptcy of the partner.
  • ⑧ Acts of consigning the production of multiple items and refusing to accept other items due to some items being defective, or refusing to accept delivery because the ordering party has canceled or suspended an order.
• 6.2.2 Return of goods without justifiable reasons
  • ① Acts of returning goods due to reasons such as the counterparty canceling the order or changes in economic conditions.
  • ② Acts of returning goods by unreasonably deeming them as inadequate according to ambiguous inspection criteria and procedures.
  • ③ Acts of returning goods despite the fact that they have been verified to be nonconforming due to defects in raw materials.
  • ④ Acts of returning goods due to delivery delay caused by a delay in raw material supply.
  • ⑤ Acts of returning goods due to complaints from the ordering party, foreign importers, and customers; or poor sales.
  • ⑥ Acts of returning goods despite the fact that the partner has made the delivery after passing a third-party inspection.
  • ⑦ Acts of returning goods due to a delay in the delivery or construction period on the part of the partner despite objectively allowing such a delay.
• 6.2.3 Unreasonable price reduction
  • ① Acts of reducing the price for unjustifiable reasons, such as a request for cooperation after consignment, the cancellation of an order by the counterparty, or a change in economic conditions, without specifying the conditions for price reduction at the time of consignment.
  • ② If an agreement on unit price reduction has been concluded, acts of unilaterally reducing the price by applying a retroactive method to the portion consigned before the agreement was concluded.
  • ③ Acts of excessively reducing the price for cash payment or payment before the due date.
  • ④ Acts of unilaterally reducing the price due to minor negligence on the part of the partner that does not materially affect the occurrence of damage.
  • ⑤ Acts of deducting from the price an amount that exceeds the appropriate purchase price or use price when having the Company purchase goods required for manufacturing, repair, construction, or service performance, or when using the Company's equipment, etc.
  • ⑥ Acts of reducing the price on the grounds that the cost of goods or materials has decreased between the time of delivery and the time of payment.
  • ⑦ Acts of reducing the price for unjustifiable reasons such as business deficit or lower sales price.
  • ⑧ Acts of reducing indirect labor costs, general management costs, profits, value-added tax, etc. contrary to the original contract.
  • ⑨ Acts of forcing a partner to bear employment insurance premiums, occupational safety and health management expenses, and other expenses that the Company is required to bear under the Act on the collection of Insurance Premiums for Employment Insurance and Industrial Accident Compensation Insurance, the Occupational Safety and Health Act, and other applicable laws.
  • ⑩ Acts of delaying the supply of materials or equipment or reducing the price due to failure to deliver or complete construction within this period after setting an unreasonable delivery or construction period.
  • ⑪ Acts of reducing subcontracting cost that has already been confirmed due to continuous ordering or due to specific manufacturing or construction details after the total amount has been contracted.
  • ⑫ Acts of reducing the price contrary to the original contract for reasons such as receiving an order for deliverables at a lower cost.
  • ⑬ Acts of reducing the price, such as by amending the contract even though the consignment contents and terms remain unchanged.
  • ⑭ Acts of transferring foreign exchange loss, etc., to the partner in a manner different from the original contract terms in order to reduce the price.
• 6.2.4 Unreasonable demand for financial benefits
  • ① Acts of demanding financial benefits such as sponsorships, incentives, or subsidies for commencing a transaction or multiple transactions.
  • ② Acts of demanding financial benefits such as sponsorships, incentives, or subsidies for unreasonable reasons such as for-profit or deteriorating business conditions.
  • ③ Acts of demanding financial benefits such as sponsorships, incentives, or subsidies despite the fact that the partner has no legal obligation to provide them.
• 6.2.5 Transfer of cost burden due to own reasons
  • Acts of transferring to the partner cost burdens such as internal wage increase and delay in the internal evaluation process.
• 6.2.6 Unreasonable payment in substitutes
  • Acts of paying a fixed price in substitutes against the partner's will and requiring acceptance of such contrary to the original contract.
• 6.2.7 Retaliatory action
  • Acts of limiting contract opportunities or imposing suspension or other disadvantages on a partner for reporting a violation of the Fair Transactions in Subcontracting Act to the Fair Trade Commission.
• 6.2.8 Evasion of the law
  • ① Acts of using indirect means to evade the application of the Fair Transactions in Subcontracting Act to subcontracting transactions.
  • ② Acts of collecting payment after payment to a partner or deducting this from the delivery price in accordance with the Fair Trade Commission's corrective measures.
  • ③ Acts of reducing the unit price by an amount equal to the amount paid to a partner as promissory note discounts, late interest, etc.
• 6.2.9 Forced purchase of goods, etc.
  • ① Acts of compelling a partner to purchase or use products or services of the Company, its affiliates, or a specific company without a justifiable reason.
  • ② Acts of forcing a partner to purchase materials for its construction site against the partner's will, or demanding a partner to purchase or use specified items or equipment without a justifiable reason.
  • ③ Acts of continuously requesting a purchase despite the partner's indication that it has no intention to purchase, or while recognizing that there is no intention to purchase.
• 6.2.10 Demand for unreasonable payment, such as the purchase price of goods
  • ① Acts of forcing a partner to purchase goods required for delivery, etc. from the Company or to use the Company's equipment, etc., and to pay all or a portion of the purchase or use price before the payment due date.
  • ② Acts of forcing a partner to purchase goods required for delivery, etc. from the Company, or to use the Company's equipment, etc., and to make payment based on significantly less favorable terms than the terms of purchase or use by the Company or terms of supply to a third party.
• 6.2.11 Forced disclosure of technical data
  • ① Acts of demanding partners to provide the following technical data to the Company or a third party without a justifiable reason:
    • Data on the methods of manufacturing, repair, construction or service performance kept confidential by considerable effort;
    • Information concerning intellectual property rights, including patent rights, utility model rights, design rights, and copyrights; and
    • Other technical or managerial information with independent economic value that benefits business activities.
  • ②Acts of misappropriating technical data obtained from a partner for the benefit of the Company or a third party.

1. Purpose

The purpose of these Regulations is to contribute to the establishment of a fair subcontracting order by enhancing transparency and fairness in the process of selecting and operating partners, and to establish in the Guidelines on Fair Transactions in Subcontracting the general matters for the prevention of violations of the Fair Transactions in Subcontracting Act.

2. Definition of Terms

• 2.1 The term "partners" refers to businesses that are anticipated to be involved in manufacturing, construction, service consignment transactions, etc. They include both general consignment business operators and subcontractors as defined by the Fair Transactions in Subcontracting Act.
• 2.2 The term “partner pool” refers to a group of partners registered, managed, and operated in accordance with Company's standards.
• 2.3 The term “parter selection” refers to registering a partner in the partner pool.
• 2.4 The term “partner operation” refers to the process of managing the partner pool based on certain criteria, such as granting opportunities to initiate transactions to companies selected and registered as partners, and canceling registration.

3. Basic Principles

These Regulations outline only the bare minimum of general matters so as to ensure autonomy, transparency, and fairness in the Company's partner selection and operation of the partner pool. The holding company may determine and implement specific and individual matters in light of a variety of conditions.

4. Disclosure of Criteria, Procedures, and Results for Supplier Selection

• 4.1 The criteria and procedures for partner selection shall be disclosed at least fifteen (15) days prior to the expiration of the partner registration period or thirty (30) days prior to the beginning of registration review (including renewal registration) at its business sites and via electronic media (the Company's website, hereinafter the same applies).
• 4.2 In the event of a change in partner selection criteria, the business subject to renewal registration shall be notified in writing (including electronic documents) at least forty-five (45) days in advance.
• 4.3 Within fifteen (15) days from the date of partner selection, the results shall be individually notified in writing, and the reasons for non-selection shall also be communicated in writing.

5. Concreteness and Clarity of Selection Criteria

The Company shall establish the criteria for partner selection in a concrete and clear manner to ensure that there is no possibility of arbitrary interpretation.

6. Fairness of Selection Criteria and Procedures

• 6.1 The criteria for partner selection shall relate to the contents of the transaction to be entrusted, and the weighting of each detailed criterion shall be appropriate.
• Examples of reasonable and fair selection criteria
  • Holding pertinent professional licenses in accordance with applicable laws and regulations
  • Financial soundness of the target company as determined by an independent professional evaluation agency
  • Violation of applicable laws and regulations, such as the Fair Transactions in Subcontracting Act, for a specified time period
  • Performance on transaction-related technology development and ownership of facilities and equipment
• Examples of unreasonable and unfair selection criteria
  • Selecting a company based on retired employees, school ties, regional ties, family ties, etc.
  • Obstructing the entry of new companies by assigning excessive points based on past transaction history
  • Giving disadvantages due to a company's transaction with a rival or duplicate registration
• 6.2 The application and receipt period for partner registration shall be at least fifteen (15) days.
• 6.3 Companies excluded from the partner selection due to reasons attributable to the Company shall have at least fifteen (15) days from the date of receipt of the notice of non-selection to file an objection.
• 6.4 Existing registrants and new registrants shall not be treated differently in the selection criteria without a justifiable reason.

7. Provision of Fair Trade Opportunities

Businesses selected and registered as partners shall not be restricted or discriminated against for initiating transactions without a justifiable reason.

8. Openness of Cancellation Criteria and Procedures for Registered Suppliers

In addition to disclosing the criteria and procedures for partner selection, the Company shall also disclose the criteria and procedures for canceling the registration at its business sites and via electronic media for at least fifteen (15) days.

9. Concreteness and Clarity of Cancellation Criteria for Registered Suppliers

The Company shall establish the criteria for canceling the registration of partners in a concrete and clear manner to ensure that there is no possibility of arbitrary interpretation.

10. Fairness of Cancellation Criteria and Procedures for Registered Suppliers

• 10.1 The criteria for canceling the registration of partners shall be based on objective and pertinent reasons.
• Examples of reasonable and fair cancellation criteria
  • Cases where a significant and obvious cause attributable to the partner has occurred in relation to a subcontract transaction
  • Cases where normal management is impossible due to insolvency, suspension, or business closure
  • Cases where a violation of applicable laws and regulations, such as the Fair Transactions in Subcontracting Act, has occurred
  • Cases where a license is revoked in accordance with applicable laws and regulations
• Examples of unreasonable and unfair cancellation criteria
  • Canceling a registration due to a partner's non-cooperation with matters unilaterally suggested by the Company, such as cost reduction plans and unit price reduction requests
  • Canceling a registration due to a partner's duplicate registration as a partner of a competitor
  • Canceling a registration of a partner with no transaction history resulting from the Company's fault, such as non-ordering or consignment to another partner (provided, that the cancellation may be valid if a partner has not engaged in transactions for an extended period of time as a result of withdrawing from fair competition to initiate a transaction)
  • Canceling a registration due to a partner's noncompliance with the instructions of the Company's employees
• 10.2 In the event that a partner's registration is canceled, the reason shall be communicated in writing, and the relevant business shall be able to file an objection within a period of at least fifteen (15) days of receiving the notification. If registration is canceled for reasons attributable to the Company, immediate re-registration measures shall take place.

11. Handling of Violations

In the event that an employee of the Company fails to comply with these Regulations intentionally or due to gross negligence, appropriate sanctions shall be imposed in accordance with the Company's employment rules, disciplinary regulations, and other applicable provisions.

1. Purpose

The purpose of these Regulations is to contribute to the establishment of a just subcontracting order by requiring the Company to assess the fairness and legality of subcontracting transactions that meet or exceed a certain threshold, and to outline in the Fair Transactions in Subcontracting Guidelines the general matters for the prevention of violations of the Fair Transactions in Subcontracting Act.

2. Basic Principles

These Regulations outline only the bare minimum of general matters so as to ensure autonomy, appropriateness, and effectiveness in the Company's installation and operation of the Internal Deliberation Committee for fair subcontracting. The Company may determine and implement specific and individual matters in light of a variety of conditions.

3. Appropriateness of the Composition of the Internal Deliberation Committee

• 3.1 Composition
  • ①The Internal Deliberation Committee shall be comprised of a minimum of three employees, including an executive in charge of subcontracting. The Committee may also designate external experts, such as outside directors, if deemed necessary.
  • ②In the case where a deliberation body dedicated to the operation of the compliance program (CP) meets the criteria outlined in (1), it may function as an internal deliberation committee.
• 3.2 Chairperson and assistant
  The executive in charge of subcontracting shall serve as the chairperson of the Internal Deliberation Committee, and the Purchasing Team leader shall serve as the assistant.
  • Chairperson : Executive in charge of subcontract purchasing
  • Members : Purchasing Team leader or leaders of teams related to subcontracting, such as technology or quality assurance
  • Assistant : Purchasing Team leader or an individual designated by the chairperson

4. Operational Efficiency of the Internal Deliberation Committee

• 4.1 The Internal Deliberation Committee shall meet regularly, at least once a month, and can meet at any time when pending issues arise. The Committee may make written resolutions in writing, if necessary.
• 4.2 The Committee shall conduct a preliminary deliberation on the fairness of contract signing and pricing process for contracts exceeding KRW 2 billion, as well as the legality based on laws and regulations such as the Fair Transactions in Subcontracting Act. In this case, the Company shall utilize "[Form 1] Check Sheet for Legitimacy Review of Individual Subcontractor Agreements" of these Regulations as the standard template.
• Examples of matters requiring preliminary deliberation under the Fair Transactions in Subcontracting Act
  • Compliance with the obligation to issue written contracts
  • Compliance with the obligation to open a local letter of credit
  • Compliance with the obligation to guarantee payment of subcontracting cost
  • Violation of the prohibition against unfair subcontracting cost determination
  • Violation of the prohibition of forced purchase of goods, etc.
  • Violation of the prohibition against unreasonable demands for financial benefits

5. Internal Deliberation Committee Agenda

• 5.1 Preliminary deliberation on the suitability of the partner registration and cancellation criteria and procedures.
• 5.2 Deliberation on objections to the non-selection of partners or the cancellation of registration.
• 5.3 The Committee can, if necessary, listen to the opinions of related partners, with anonymity guaranteed.
• 5.4 The Committee shall make corrective measures if the agenda for deliberation violates applicable laws and regulations, such as the Fair Transactions in Subcontracting Act. In the event of intentional misconduct or gross negligence by the relevant employees, the Committee shall implement sanctions commensurate with the gravity of the violation (such as a disadvantage in HR evaluation).
• 5.5 The Committee shall review annual contracts at least once a year, and review individual contracts for any legal violations upon expiration. In this case, the Company shall utilize "[Form 2] Check Sheet for Post-Deliberation on Subcontractor Agreements" of these Regulations as the standard template.

6. Storage of Documents

Documents pertaining to deliberation outcomes and actions taken by the Internal Deliberation Committee shall be kept for at least three (3) years following the conclusion of deliberation.

1. Purpose and Composition

1.1 Purpose

The purpose of these Regulations is to enhance the Company's awareness of matters related to the issuance of written documents prescribed in the Fair Transactions in Subcontracting Act so as to facilitate the Company's exercise of rights and the fulfillment of obligations thereto. It also aims at promoting advanced practices in issuing written documents and establishing a fair subcontracting order that will contribute to firmly establishing and propagating a culture of fair transactions in subcontracting. these Regulations outlines in detail the obligations and efforts of the Company in relation to the issuance and retention of written documents in the course of subcontracting and trading.

1.2 Composition

These Regulations consist of three sections: (a) the issuance of various written documents during the subcontracting process; (b) the retention of the documents issued; and (c) the contents and procedures of the Fair Trade Commission's policy to promote the practice of issuing and retaining written documents.

2. Matters Regarding the Issuance of Various Subcontracting-related Documents

In the course of concluding and performing subcontracts, the Company shall issue the documents outlined belows.

3. Issuance of Subcontractor Agreements

3.1 Obligation to issue contacts in writing (Article 3 of the Fair Transactions in Subcontracting Act)

• 3.1.1 In the case of entrusting a partner with the manufacture, repair, construction, or service performance (hereinafter referred to as "manufacturing, etc.") of the items, etc. under the Fair Transactions in Subcontracting Act, the Company shall issue a subcontractor agreement in writing after consulting with the partner on the principal terms of the agreement, such as the contents, quantity, unit price, etc., of the consigned items.
• 3.1.2 Unless there are exceptional circumstances, additional or modified documents shall be prepared and issued in writing if the original contract terms have been altered due to a change in design or the consignment of additional construction.

3.2 Contents to be included

• In principle, a written subcontractor agreement shall include each of the following items in order to ensure consistency with actual transactions.
• 3.2.1 The date of consignment; the contents, quantity, and unit price of consigned items, etc.; the time and place of delivery, transfer, or provision of the items, etc.; the method and timing of inspection of items, etc.; and the subcontract payment (advance payments, progress payments, and final payment in the case of construction work), payment method, and due date
• 3.2.2 If the Company intends to provide partners with raw materials, etc. required for the manufacturing, etc. of the items, etc., the name, quantity, date of provision, payment method, and payment due date of raw materials, etc.
• 3.2.3 After entrusting the manufacturing, etc. of the items, etc. to a subcontractor, the requirements, methods, and procedures for adjusting the subcontracting cost to reflect price fluctuations of raw materials, etc.

3.3 Point of issuance

• 3.3.1 After consulting with the partner on the principal terms of the consignment contract, the Company shall, in principle, issue a contract in writing without delay..
• 3.3.2 Even if circumstances make it difficult for the Company to issue a contract in writing to the partner without delay, the contract shall be issued in writing no later than the deadlines specified in the following subparagraphs.
  • Manufacturing consignment : Before a partner commences work for the delivery of goods, etc.
  • Repair consignment : Before a partner begins work for a contractually obligated repair work
  • Construction consignment : Before a partner commences contracted construction
  • Service consignment : Before a partner performs a contracted service

3.4 How to issue written documents

• 3.4.1 The Company shall issue a contract signed (including a certified electronic signature in accordance with subparagraph 3, Article 2 of the Digital Signature Act) or signed and sealed by the Company or its representative to a partner.
• 3.4.2 In the event that a written document is issued without the signature or seal of the subcontracting party, it shall be considered non-issuance.
• 3.4.3 A written document may be issued according to the following methods.
  • Transmitting a document over a telecommunications line and storing it in a file on a partner's electronic recording device (e.g. e-mail);
  • Allowing a parter to access a document by transmitting it over a telecommunications line and storing it in a file on a partner's electronic recording device (e.g. web); or
  • Sending electronic data saved in storage media such as floppy disks and CD-ROMs to a partner.

3.5 Exceptions

• In contrast to the contents and point of issuing written documents in the preceding paragraphs, the obligation to issue written documents can be satisfied if the documents are issued in a manner consistent with the actual subcontracting, as illustrated below.
• 3.5.1 Where there are matters that are difficult to determine at the time of consignment
• If there is a justifiable reason, the Company may issue a document without including the pertinent information for matters that are difficult to determine at the point of consignment. Nonetheless, even in this case, the reason why the relevant matter has not been determined and the anticipated date of determination shall be specified, and as soon as the relevant matter has been determined, a document must be issued without delay.
  • ①If there is frequent subcontracting and there is no significant difficulty in establishing and maintaining the contract in light of the nature of the industry or circumstances
  • ②When the basic contract is issued and the order is objectively clear when a fax or other electrical or electronic form is used to place an order
  • ③If some statutory items are omitted from the contract, but the omission can be identified through the quantity list and work instructions provided at the time of each order
  • ④If the basic contract can be replaced with individual contracts while the partner submits offer sheets during the manufacturing of products for export
  • ⑤If the contract is replaced with a settlement agreement immediately following the completion of construction for work for which a change in quantity is clearly anticipated as a result of minor and frequent additional work in relation to the consignment of additional construction materials
• 3.5.2 The following cases shall be deemed non-issuance of written documents:
  • ①If a specific additional contract or work instruction is not issued despite the scope and cost of additional construction are distinct and substantial;
  • ②In the event that an additional or altered construction quantity has been established during the construction process, but a contract for change or statement of settlement has not been issued due to a dispute between the parties.

3.6 Presumption of subcontracting

• 3.6.1 If the Company entrusting manufacturing, etc. does not issue a written subcontractor agreement containing the provisions of Article 3(2) of the Fair Transactions in Subcontracting Act (including the issuance of documents in which certain matters are absent pursuant to paragraph (3)), the partner may request confirmation by sending written documents indicating the contents of the consigned work, subcontracting cost, the date and time of the consignment, the business name and address of the Company and the partner, as well as any other consigned matters by the Company. In this case, the partner shall utilize "[Form 3] Request for Confirmation of Consignment Details" of these Regulations as the standard template.
• 3.6.2 The Company shall provide a written response to the partner within fifteen (15) days of receiving the notification of the request for confirmation of consignment details as outlined in the preceding paragraph. In this case, the Company shall utilize "[Form 4] Reply to Request for Confirmation of Consignment Details" of these Regulations as the standard template.
• 3.6.3 Unless it is impossible to provide a response due to natural disasters or other circumstances, it shall be deemed that the details of the consignment as notified by the partner are settled if the Company does not respond within fifteen (15) days.
• 3.6.4 The written notification of the request for confirmation of consignment details and the corresponding written response described above shall be sent to the Company's and the partner's addresses; however, the use of content-certified mail or other methods (excluding email) that can objectively confirm the content and receipt of notifications and responses is required.
• 3.6.5 In the case of a joint contract under the joint performance method, all joint subcontractors may sign a subcontractor agreement under joint signature and issue written documents, individually conclude a subcontractor agreement for each portion of their share, or the joint contractor's representative may sign a subcontractor agreement on behalf of the joint contractor and issue a written document.

4. Issuance of Subcontracting Cost Reduction Documents in Writing

4.1 Obligation to issue written documents (Article 11 of the Fair Transactions in Subcontracting Act)

• 4.1.1 If the Company fails to pay the subcontracting cost as specified "when entrusting" manufacturing, etc. to a partner and intends to pay it by deducting it from the total amount, the Company shall provide the partner with the details of cost reduction in writing.
• 4.1.2 If the basic contract includes general information regarding the terms of transaction such as payment, transportation, inspection, and return; specifications; materials; and manufacturing process due to frequent transactions when signing a subcontractor agreement, and if the subcontracting cost details, such as the unit price and quantity, are established through a special contract or purchase order, and the price is determined based on a separate special contract or order, the point when the partner is notified of the special contract or order shall be deemed to be "when entrusted."

4.2 Contents to be included

If the Company intends to reduce the subcontracting cost, the document to be issued shall include the reason and standards for the reduction, the quantity of the items, etc., the reduced amount, the method of reduction, and other information to demonstrate the justification of the reduction.

4.3 Point of issuance of written documents

If the Company intends to reduce the subcontracting cost, it shall issue a written document to the partner prior to such a reduction.

4.4 How to issue written documents

• 4.4.1 When the Company intends to submit a request to reduce the subcontracting cost in writing, the Company shall issue a written document signed (including a certified electronic signature in accordance with subparagraph 3, Article 2 of the Digital Signature Act) or signed and sealed by the Company or its representative to a partner.
• 4.4.2 If the Company wishes to reduce the subcontracting cost, it shall utilize "[Form 5] Subcontracting Cost Reduction Form" of these Regulations as the standard template.
• 4.4.3 A written document may be issued according to the following methods:
  • ①Transmitting a document over a telecommunications line and storing it in a file on a partner's electronic recording device (e.g. e-mail);
  • ②Allowing a parter to access a document by transmitting it over a telecommunications line and storing it in a file on a partner's electronic recording device (e.g. web); or
  • ③Sending electronic data saved in storage media such as floppy disks and CD-ROMs to a partner.

4.5 Exceptions

If there is a justifiable reason, the Company may issue a document without including the pertinent information for matters that are difficult to determine at the point of issuing a written document on cost reduction. Nonetheless, even in this instance, the reason why the relevant matter has not been determined and the anticipated date of determination shall be specified, and as soon as the relevant matter has been determined, a document must be issued without delay.

5. Issuance of a Written Request for Provision of Technical Data

5.1 Obligation to issue written documents (Article 12-3 of the Fair Transactions in Subcontracting Act)

• If the Company requests a partner to provide technical data for a valid reason, it shall submit a written request to the partner.
• Examples of valid reasons for requesting technical data
  • When requesting technical data from a partner for evaluating the partner's technological prowess, preparing standard prices for ordered products, reviewing proposals, joint technology development, and meeting the requirements of the client's request for proposal (RFP) in the course of concluding subcontracts through private contracts and competitive bidding (e.g. open tendering, limited competitive bidding, nominated competitive bidding)
  • Where the Company requests technical data from a partner under the pretext of technical guidance, quality control, performance testing, joint patent application, support for patent application, joint technology development, and request for cost data for adjusting the delivery unit price
  • If the conditions for issuance set forth in the deposit contract are met regarding technology for which the technical data deposit contract was concluded, and the Company requests a partner to provide technical data

5.2 Contents to be included

A written document requesting the provision of technical data shall include the name and scope of the technical data, the purpose of the request, matters pertaining to confidentiality, ownership of rights, the cost of technical data, the request date, the delivery date, the delivery method, and other evidence of the legitimacy of the Company's request.

• 5.2.1 Confidentiality
  • A written document shall indicate which parts of the technical data shall be kept confidential, and any signed confidentiality agreement between the parties shall be attached.
• 5.2.2 Ownership of rights
  • Whether a mutual technology transfer agreement has been reached with the current owner of the technical data requested by the Company; whether or not the requested technology was jointly developed; matters mutually agreed upon regarding the ownership of rights following the provision of technical data, etc.

5.3 Point of issuance of written documents

If the Company requests the provision of technical data, matters such as the name and scope of the relevant technical data, the purpose of the request, the request date, the delivery date, the delivery method, matters pertaining to confidentiality, ownership of rights, and the cost of technical data shall be discussed in advance with the partner, and a written document shall be provided to the partner without delay.

5.4 How to issue written documents

• 5.4.1 The Company shall issue a written request for the provision of technical data that is signed (including a certified electronic signature in accordance with subparagraph 3, Article 2 of the Digital Signature Act) or signed and sealed by the Company or its representative to a partner.
• 5.4.2 If the Company wishes to request technical data from a partner in writing, it shall utilize "[Form 6] Request for Technical Data" of these Regulations as the standard template.
• 5.4.3 In addition to the above standard template, the Company may request technical data via a separate written contract, such as a special contract. A separate written contract shall include the contents specified in 4.2.
• 5.4.4 A written document may be issued according to the following methods:
  • ①Transmitting a document over a telecommunications line and storing it in a file on a partner's electronic recording device (e.g. e-mail);
  • ②Allowing a parter to access a document by transmitting it over a telecommunications line and storing it in a file on a partner's electronic recording device (e.g. web); or
  • ③Sending electronic data saved in storage media such as floppy disks and CD-ROMs to a partner.

5.5 Exceptions

• In contrast to the contents and point of issuing written documents in the preceding paragraphs, the obligation to issue written documents can be satisfied if the documents are issued in a manner consistent with the actual subcontracting, as illustrated below.
• 5.5.1 For matters that are difficult for the Company and its partners to determine beforehand among the items listed in the written request for the provision of technical data, the Company may issue a document without including the pertinent information only if there is a justifiable reason. Nonetheless, even in this instance, the reason why the relevant matter has not been determined and the anticipated date of determination shall be specified, and as soon as the relevant matter has been determined, a document must be issued without delay.
• 5.5.2 In a situation where frequent requests for technical data are unavoidable due to the nature of the industry or the reality of transactions, after indicating basic matters such as the name and scope of technical data, the purpose of the request, matters pertaining to confidentiality, ownership of rights, and compensation in a document signed or sealed by the parties, individual request forms can be used to set additional details, such as the request date, the delivery date, and the delivery method.

6. Issuance of Other Written Documents

6.1 Issuance of certificate of receipt of the items, etc. (Article 8 of the Fair Transactions in Subcontracting Act)

• 6.1.1 Unless there is a reason attributable to the partner, when the partner delivers, transfers, or provides the items, etc., the Company shall issue a certificate of receipt to the partner (except for cases where the supply of services is consigned).
• 6.1.2 Even before inspection of the items, etc., the Company shall immediately (immediately upon completion of inspection if a local letter of credit is opened in accordance with Article 7 of the Fair Transactions in Subcontracting Act) issue a certificate of receipt to its partner.

6.2 Issuance of certificate of inspection of the items, etc. (Article 9 of the Fair Transactions in Subcontracting Act)

• 6.2.1 After receiving the items, etc. from a partner, the Company shall conduct the necessary inspections to determine the completion of the items, etc. and the scope of payment obligations, and notify the partner of the results in writing.
• 6.2.2 The Company shall provide a written inspection report within ten (10) days of receiving the items, etc. from a partner. The date of receipt of the items, etc. shall include the date of notification of the completed part in the case of consigned manufacturing or repair, and shall refer to the date of notification of the completion of the construction or the completed part from a partner in the case of consigned construction.
• 6.2.3 However, the Company may notify the results of the inspection after ten (10) days if there is a valid reason, as outlined below:
  • ①Where inspection within ten (10) days is difficult due to an excessive number of items to be inspected;
  • ②Where the decision to pass or fail cannot be made until a considerable amount of time has passed after an inspection; or
  • ③Where the Company and its partner have reached a clear agreement regarding the extension of the inspection period.
• 6.2.4 If the Company fails to issue the results of the inspection in writing to its partner within ten (10) days of receiving the items, etc. without a justifiable reason, the items, etc. shall be deemed to have passed the inspection.

6.3 Issuance of a statement of changes to the contract amount due to design changes, etc. (Article 16 of the Fair Transactions in Subcontracting Act)

• 6.3.1 If the contract amount is adjusted due to changes in design or economic conditions, such as price fluctuations, after manufacturing, etc. has begun, the Company shall notify the partner of the reasons for and specifics of the change as determined by the ordering party. However, this shall not apply if the ordering party directly communicates the reasons and specifics to the partner.
• 6.3.2 Within fifteen (15) days of receiving notification of an adjustment of the contract amount from the ordering party, the Company shall provide the above written notice to the partner.

6.4 How to issue written documents

• 6.4.1 The Company shall issue a document signed (including a certified electronic signature in accordance with subparagraph 3, Article 2 of the Digital Signature Act) or signed and sealed by the Company or its representative to a partner.
• 6.4.2 A written document may be issued according to the following methods:
  • ①Transmitting a document over a telecommunications line and storing it in a file on a partner's electronic recording device (e.g. e-mail);
  • ②Allowing a parter to access a document by transmitting it over a telecommunications line and storing it in a file on a partner's electronic recording device (e.g. web); or
  • ③Sending electronic data saved in storage media such as floppy disks and CD-ROMs to a partner.

7. Matters Regarding the Retention of Written Documents

7.1 Retention of documents

Both the Company and its partners shall retain the documents listed in 2, 3, 4, 5, and 6 above as well as any other documents specified in paragraph 1, Article 6 (Retention of Documents) of the Enforcement Decree of the Fair Transactions in Subcontracting Act. Documents subject to retention are listed in below.

7.2 Form of documents for retention

Documents for retention shall be in their original form at the time they were used for issuance, consultation, and other uses. The same shall apply to the creation, transmission, receipt, or storage of documents in electronic form using a device capable of processing information, such as a computer.

7.3 Retention period

The Company and its partners shall retain the above documents for three (3) years from the date on which the subcontracting between the parties terminates. Here, the date when the subcontracting terminates refers to the following dates.

• Entrustment of knowledge and information outcomes among manufacturing, repair, and service consignment: The date on which the partner delivered or transferred the items, etc. entrusted to the Company
• Entrustment of supply among consigned services: The date on which the Company completed the supply of the consigned service to the partner
• Entrustment of construction: The date on which the consigned work is completed
• Where a subcontract is terminated or transactions are suspended: The date of termination or suspension

ADDENDUM

1. These regulations shall enter into force on July 1, 2018.