Governance

Chapter Ⅰ General Provisions

Article 1 (Name)

The name of this company shall be “Chusik Hoesa KRAFTON” (the “Company”), which shall be “KRAFTON, INC” in English and simply KRAFTON as abbreviation.

Article 2 (Objectives)

The objective of the Company shall be to engage in the following business activities:

  • 1.Development of softwares;
  • 2.Distribution of software;
  • 3.Real estate lease business;
  • 4.Arts, sports and recreation related services;
  • 5.Educational service and other services related to business including lifelong education and management of its facilities;
    • 6.. Blockchain related business and research and development;
    7.Production, distribution of movies, videos, digital contents;
    8.Production, distribution of music, musing sources;
    9.Production, distribution of comics, web comics;
    10.Management consulting and support business
    11.Any and all other businesses incidental to the foregoing

Article 3 (Location)

  • 1.The Company shall have its head office in Seoul.
  • 2.The Company may establish branches, sub-branches, offices or overseas subsidiaries within or outside Korea, by resolution of the Board of Directors, whenever necessary.

Article 4 (Method of Giving Public Notice)

Public notices by the Company shall be made through the Company’s internet homepage (http://www.krafton.com). However, in cases of unavoidable circumstances including system outage, public notice shall be made through publication in the “Hankook Kyongje Shinmoon”, a Korean language daily newspaper published in Seoul.

Chapter Ⅱ SHARES OF STOCK

Article 5 (Total Number of Authorized Shares)

The total number of shares to be issued by the Company shall be 300,000,000 shares.

Article 6 (Par Value per Share)

The par value per share to be issued by the Company shall be one hundred (100) Won.

Article 7 (Total Number of Shares to Be Issued at the Time of Incorporation)

The Company shall issue 1,200,000 shares at the time of its incorporation.

Article 8 (Types of Share Certificates)

  • 1.The shares to be issued by the Company shall be common shares and class shares.
  • 2.The class shares to be issued by the Company shall be preferred shares with respect to dividend of profits or distribution of residual property, shares havingno or restricted voting rights, redeemable shares, convertible shares or shares combining all or some of the foregoing.

Article 8-2 (Number and Contents of Preferred Shares)

  • 1.The issuance limit of preferred shares to be issued by the Company shall be pursuantto the relevant statutes such as Commercial Act and the Financial Investment Services and Capital Markets Act.
  • 2.With respect to preferred shares, the preferred divided rate shall be determined at the time of issuance pursuant to a resolution of the Board of Directors, but the minimum dividend rate shall be 1% of annual par value.
  • 3.With respect to preferred shares, pursuant to a resolution of the Board of Directors at the time of issuance, participating preferred shares may be issued which, if the dividend rate of common shares exceeds the dividend rate of preferred shares, shall be permittedto participate in the excess at the same ratio as the common shares, and non-participating preferred shares may be issued which shall not be permitted to participate in the dividend of common shares other than the preferred dividend rate.
  • 4.With respect to preferred shares, pursuant to a resolution of the Board of Directors at the time of issuance of the shares, cumulative preferred shares may be issued which, if predetermined dividends corresponding to preferred dividend rate is not made in any given business year, the cumulative amount not paid oud as dividends is paid out in preferentially as dividends in the following business year, and non-cumulative preferred shares may be issued which shall not receive cumulative amount not paid out as dividends.
  • 5.With respect to preferred shares, pursuant to a resolution of the Board of Directors at the time of issuance, preferred shares that may be converted into common shares (convertible preferred shares) or may be converted into profits within a certain period (redeemable preferred shares) may be issued.
  • 6.When issuing convertible preferred shares, the shares to be issued as a result of conversion shall be common shares, the conversion price shall be the price determined by the Board of Directors exceeding par value of common shares, and the period during which conversion may be demanded shall be a date determined by the Board of Directors falling 3 months following the issuance of convertible preferred shares. In this case, dividends of profits with respect to the shares issued as a result of conversion shall apply the provision of Article 9-5 mutais mutandis.
  • 7.When issuing redeemable preferred shares, the redemption price shall be the price determined by the Board of Directors exceeding the par value of the common shares, the redemption period during which redemption may occur shall be a date determined by the Board of Directors falling at least 3 years following the issuance of preferred shares but not later than 10 years following such date, and the method of redemption shall be by using redemption reserves from profits as determined by the Board of Directors .
  • 8.When issuing preferred shares, pursuant to the Board of Directors, an issuance may be made combining several matters laid forth in Paragrapgs 2 through 7 of Article 8 above.
  • 9.When the Company conducts a capital increase with or without consideration or share dividends, in principle, common shares shall be issued to common shares and preferred shares of the same condition shall be issued to preferred shares pursuant to the respective shareholding ratio. Provided, however, as necessary, the Company shall be able to issue only one class of shares in case of a capital increase with or without consideration or share dividends, and in such case, all shareholders shall have the right to receive allocation or dividend of the shares issued therewith.
  • 10.When there is a resolution of a General Meeting of Shareholders providing that the Company shall not make predetermined dividends for preferred shares, the preferred shares shall be deemed to have voting rights from the General Meeting of Shareholders immediately following the General Meeting of Shareholders during which such resolution was adopted until the General Meeting of Shareholders during which a resolution to pay such preferred dividends is adopted.

ARTICLE 8-3 (Electronic Registration of Rights to be Indicated in Shares Certificates and Certificates of Preemptive Rights on New Stocks)

The Company shall, in lieu of issuing share certificates and certificates of preemptive right to new stock, electronically register on the electronic register account of an electronic registration institution the rights that must be indicated on share certificates and certificates of preemptive right to new stocks.

Article 9 (Preemptive Rights)

  • 1.When the Company issues new shares pursuant to a resolution of the board of directors, the procedure laid out in the following Subparagraphs shall be followed. For the avoidance of doubt, the limit on new share issuance determined in each of the following Subparagraphs shall be determined based on the total number of issued and outstanding shares at the time of each issuance, where the total number of issued and outstanding shares shall be calculated by adding together new shares to be issued and previously issued and validly existing shares, and by a cumulative method by which any shares already issued and validly existing based on any of the following Subparagraphs shall be deducted from the limitation of the relevant Subparagraph at the time of calculation of issuance limit in the following instance.
    • (1)Method by which an opportunity to subscribe to acquisition of new shares is given to a shareholder in order to allocate new shares in proportion to the shareholder’s shareholding
    • (2)Method by which an opportunity to subscribe to acquisition of new shares is given to specified persons (including shareholders of the Company) in a manner other than as prescribed in Subparagraph 1 when necessary to achieve a management goal such as adoption of new technology or improvement of financial structure within a scope not exceeding 40/100 of the total number of issued and outstanding shares.
    • (3)Method by which an opportunity to subscribe to acquisition of new shares is given to unspecified persons (including shareholders of the Company) in a manner other than as prescribed in Subparagraph 1 within a scope not exceeding 40/100 of the total number of issued and outstanding shares and allocating new shares to persons subscribing in such manner
  • 2.When allocating new shares by the method prescribed in Paragraph 1 Subparagraph (3), such new shares must be allocated in a manner as prescribed in one of the following Subparagraphs pursuant to a resolution of the board of directors.
    • (1)Method by which new shares are allocated to unspecified multiple subscribers without categorizing persons given the opportunity to subscribe to new share acquisition
    • (2)Method by which the opportunity to subscribe to new share acquisition, including shares not subscribed to following allocation of new shares to members of an employment stock ownership association, is given to unspecified multiple persons pursuant to relevant statutes
    • (3)Method by which shareholders are preferentially given the opportunity to subscribe to new share acquisition and, if there are any shares not subscribed to, the opportunity to receive allocation of new shares is given to unspecified persons
    • (4)Method by which the opportunity to subscribe to new share acquisition is given to certain types of persons such as investment traders or investment brokers as underwriters or intermediaries based on reasonable standards prescribed in relevant statutes such as preparation of demand forecast
    • (5)Method by which new shares are issued pursuant to issuance of depository receipts by a resolution of the board of directors in accordance with provisions of relevant statutes such as the Financial Investment Services and Capital Markets Act
  • 3.When allocating new shares pursuant to Paragraph 1 Subparagraphs 2 and 3, matters set forth in Article 416 Subparagraphs 1, 2, 2-2, 3, and 4 of the Commercial Act must be noticed to shareholders or published by two weeks prior to the deadline for payment. Provided, however, that pursuant to Article 165-9 of the Financial Investment Services and Capital Markets Act, notice of a material fact report ispublicly disclosed at the Financial Services Commission and an exchange not later than one week before the deadline for payment in lieu of the foregoing notice or publication.
  • 4.When issuing new shares pursuant to a method prescribed in any of the Subparagraphs of Paragraph 1, the class, number, and issue price of shares to be issued shall be determined by a resolution of the board of directors.
  • 5.When allocating new shares, if there are shares that are not subscribed to or payment is not made for by the deadline, the disposition of such shares shall be pursuant to the resolution of the board of directors in accordance with the provisions of relevant statutes such as appropriateness of issue price.
  • 6.Disposition of fractional shares occurring as a result of allocation of new shares shall be pursuant to the resolution of the board of directors.
  • 7.When allocating new shares pursuant to Paragraph 1 Subparagraph 1, the Company shall issue to shareholders certificates of preemptive right to new stocks.

Article 9-2 (Deleted)

Article 9-3 (Stock Options)

  • 1.The Company may grant to its officers and employees (including officers and employees of affiliated companies as defined in Article 30 of the Enforcement Decree of the Commercial Act; hereinafter the same) stock options within scope of 15/100 of total issued and outstanding shares pursuant to a special resolution of the general meeting of shareholders. Provided, however, within the scope as prescribed in Article 542-3(3) of the Commercial Code and Article 30(4) of the Enforcement Decree of the same Act, stock options may be granted to persons other than directors pursuant to a resolution of the board of directors. When granting stock options pursuant to a resolution of the board of directors, the Company must receive approval of the general meeting of shareholders first convened following such grant.
  • 2.Officers and employees or outside personnel with technical or management capabilities subject to the stock option grant shall be officers and employees that have contributed to the establishment of the company, management improvement, sales growth, or technological innovation, officers and employees that has the capability to do the same, or officers and employees of affiliated companies as defined in Article 30(1) of the Commercial Act, but shall not include persons falling under any of the following.
    • (1)Largest shareholder, major shareholder, and persons specially related to the foregoing pursuant to Article 542-8(2) Subparagraphs 5 and 6. Provided, however, persons becoming specially related persons by becoming an officer of the Company or affiliated company as defined in Paragraph 2 shall be excluded.
    • (2)Persons becoming a major shareholder as a result of exercise of stock options
  • 3.Shares to be granted as a result of exercise of stock options (when the difference of the exercise price of the stock option and the market price is paid in cash or treasury shares, the shares being the basis of calculation for such difference) shall be registered common shares.
  • 4.The exercise price per share of shares subject to exercise of stock options shall be at or above the price described in each of the following Subparagraphs. The same shall apply when the exercise price is adjusted following grant of stock options.
    • (1)When new shares are issued and granted, the higher of the following.
      • a.The substantial price as of the date of granting the stock option
      • b.The face value of the relevant shares
    • (2)When transferring treasury shares, the substantial price as of the date of granting the stock option
  • 5.A person who has been granted stock options may exercise such options from the date falling two years following the date of the resolution in Paragraph 1 until the date as determined in the relevant grant agreement within 10 years from the date of such resolution. However, a person who becomes deceased or retires or resigns due to a cause not attributable to the person within two years of the date of resolution in Paragraph 1 shall be able to exercise the stock option during the exercise period.
  • 6. In case of any of the following or as provided in the stock option grant agreement, the grant of stock options may be revoked by a resolution of the board of directors.
    • (1)When the relevant officer or employee voluntarily and arbitrarily retires or resigns following grant of stock options
    • (2)When the relevant officer or employee causes significant damage to the Company willfully or negligently
    • (3)When there has been a cause for revocation as provided in the stock option grant agreement
    • (4)In the event of bankruptcy or dissolution of the Company causing the Company to be unable to respond to the exercise of stock options
  • 7.The Company shall grant stock options in a method prescribed in one of the following Subparagraphs.
    • (1)Method by which new registered common shares are issued at the stock option exercise price and granted
    • (2)Method by which registered common treasury shares are granted at the stock option price
    • (3)Method by which the difference between the stock option exercise price and the market price is paid in cash or granted in treasury shares
  • 8.With respect to the dividend of profits for the new shares issued as a result of exercise of stock options, provisions of Article 9-5 shall apply mutatis mutandis.

Article 9-4 (Deleted)

Article 9-5 (Equal Dividend)

The Company shall pay equal dividends to all shares of a same class issued (including converted) and outstanding as of the dividend date without regard to the issue date.

Article 10 (Transfer Agent)

  • 1.The Company shall have a transfer agent for its shares.
  • 2.The transfer agent, its office, and the scope of delegated duties shall be pursuant to a resolution of the board of directors.
  • 3.The Company shall furnish the shareholders register or its copy at the office of the transfer agent, and shall cause the transfer agent to conduct electronic registration of shares, maintenance of shareholders register, and other tasks relating to the shares.
  • 4.The procedures for the performance of tasks in Paragraph 3 shall be pursuant to the relevant operation rules determined by the transfer agent.

Article 11 (Deleted)

Article 12 (Record Date)

  • 1.The Company shall deem the shareholders registered on the final shareholders register as of December 31 of each year as the shareholders who may exercise their rights during the general meeting of shareholders for that fiscal period.
  • 2.When necessary, such as convocation of an extraordinary general meeting of shareholders, the Company may deem the shareholders registered on the shareholders register as of a date determined by a resolution of the board of directors as shareholders who may exercise their relevant rights, and the Company shall notify such fact at least two weeks prior to the date determined by the resolution of the board of directors.

CHAPTER III CORPORATE BONDS

Article 13 (Issuance of Corporate Bonds)

  • 1.The Company may issue corporate bonds pursuant to a resolution of the board of directors.
  • 2.The board of directors may entrust the representative director to issue corporate bonds within a period not exceeding one year by determining the amount and type of corporate bonds.

Article 13-2 (Issuance of Convertible Bonds)

  • 1.The Company may issue convertible bonds to persons other than shareholders in case of any of the following by a resolution of the board of directors within a scope not exceeding 500 billion Korean Won. For clarity, the issuance limit of bonds set forth in this Paragraph is calculated based on a cumulative method by which the face value of bonds that have already been issued and remain in effect are deducted from the limit when calculating the next issuance limit (the same shall apple to Articles 14(1), 15(1), and 16(1)).
    • (1)Case in which convertible bonds are issued by granting the opportunity to subscribe to corporate bond acquisition for the allocation of corporate bonds to a person specified by a method other than as prescribed in Article 9(1)1 (including shareholders of the Company) when necessary to achieve management goals such as adoption of new technology or improvement of financial structure
    • (2)Case in which convertible bonds are issued by granting an opportunity to subscribe to corporate bond acquisition to a person specified by a method other than as prescribed in Article 9(1)1 (including shareholders of the Company) and allocating corporate bonds to subscribing persons
  • 2.With respect to the convertible bonds in Paragraph 1, the board of directors may issue such corporate bonds by granting conversion rights to only some of the bonds.
  • 3.Shares issued as a result of conversion shall be common shares or preferred shares, and the conversion price shall be the par value of the share or a price above the par value as determined by the board of directors at the time of bond issuance.
  • 4.The period for requesting conversion shall be from the date falling 90 days following the issuance date of the relevant bond to the date immediately preceding the redemption date. However, within the above period, the conversion request period may be adjusted by a resolution of the board of directors.
  • 5.Dividend of profits for shares issued as a result of conversion and payment of interest for convertible bonds shall apply the provisions of Article 9-5 mutatis mutandis.

Article 14 (Issuance of Bonds with Warrants)

  • 1.The company may issue bonds with warrants to persons other than a shareholder by a resolution of the board of directors if the total face value of the bonds does not exceed five hundred billion Korean Won in cases as prescribed in Article 13(1) of these Articles of Incorporation.
  • 2.The amount subject to request for acquisition of new shares shall be determined by the board of directors within the scope not exceeding the total face value of the bonds.
  • 3.Shares issued as a result of exercise of warrants shall be common shares or preferred shares, and the issue price shall be the par value or a price above the par value as determined by the board of directors at the time of bond issuance.
  • 4.The period for exercising warrants shall be from the date falling 90 days following the issuance date of the relevant bond to the date immediately preceding the redemption date. However, within the above period, the warrant issue period may be adjusted by a resolution of the board of directors.
  • 5.Dividend of profits for shares issued as a result of exercise of warrants shall apply the provisions of Article 9-5 mutatis mutandis.

Article 15 (Issuance of Participating Bonds)

  • 1.The company may issue participating bonds to persons other than a shareholder by a resolution of the board of directors if the total face value of the bonds does not exceed five hundred billion Korean Won.
  • 2.The value of the participating bonds shall be determined by the board of directors at the time of issuance.
  • 3.The participating bonds under Paragraph 1 may participate in the dividend at the rate of 5/100 of the dividend to common shares.
  • 4.Participating bonds shall not be subject to interim dividends under Article 47-2.

Article 16 (Issuance of Exchangeable Bonds)

  • 1.The company may issue exchangeable bonds by a resolution of the board of directors if the total face value of the bonds does not exceed five hundred billion Korean Won.
  • 2.Detailed matters for the issuance of exchangeable bonds shall be determined by a resolution of the board of directors.

Article 17 (Regulations Applicable Mutatis Mutandis on Bond Issuance)

Provisions of Article 10 shall apply mutatis mutandis in case of bond issuance.

Article 17-2 (Electronic Registration of Rights to be Indicated on Bond and Warrant Securities)

The Company shall, in lieu of issuing bond and warrant securities, register electronically on the electronic registration account of an electronic registration institution the rights that must be indicated on bond and warrant securities. Provided, however, in case of bonds, electronic registration shall not be made in case other than listed bonds that are required to make electronic registration pursuant to statutes.

CHAPTER IV GENERAL MEETING OF SHAREHOLDERS

Article 18 (Timing of Convening)

  • 1.General meeting of shareholders of the Company shall consist of ordinary general meeting of shareholders and extraordinary general meeting of shareholders.
  • 2.Ordinary general meeting of shareholders shall be convened within 3 months of the record date determined in Article 12(1) and extraordinary general meeting of shareholders shall be convened when necessary.

Article 19 (Person Authorized to Convene)

  • 1.Except as otherwise prescribed by other statutes, all general meetings of shareholders shall be convened by the representative director in accordance with a resolution of the board of directors.
  • 2.In the absence of the representative director, provisions of Article 38(2) shall apply mutatis mutandis.

Article 20 (Convocation Notice and Announcement)

  • 1.In convening a general meeting of shareholders, the date, place, and purpose of the meeting shall be notified in writing or electronically sent to shareholders two weeks prior to the date of the meeting.
  • 2.The notice of convocation to shareholders holding 1/100 or less of all issued and outstanding voting shares may be made by publishing two weeks prior the fact of convocation of general meeting of shareholders and the purpose of such meeting with the Maeil Business Newspaper published by Maeil Business Newspaper Co., Ltd. and the Korea Economic Daily published by Korea Economic Daily Co., Ltd. on two or more occasions or publishing on the electronic disclosure system operated by the Financial Supervisory Service or Korea Exchange in lieu of notice of convocation in Paragraph 1.

Article 21 (Place of Convocation)

The general meeting of shareholders shall be held at the location of the head office, but may also be held in an adjacent area if necessary.

Article 22 (Chairperson)

The representative director shall chair the general meeting of shareholders. However, in the absence of the representative director, another director appointed by the board of directors shall be the chairperson.

Article 23 (Chairperson’s Authority to Maintain Order)

  • 1.The chairperson of the general meeting of shareholders may order any person who purposely speaks or takes actions to disturb a general meeting to be prohibited from speaking, to retract his or her words or to be dismissed from the meeting, and a person who is so ordered by the chairperson shall comply with such order.
  • 2.The chairperson of the general meeting of shareholders may restrict the time and number of shareholders speeches when the chairperson deems such action to be necessary for the proceedings to be conducted in a smooth manner.

Article 24 (Voting Rights of Shareholders)

  • 1.A shareholder shall have one voting right per share.
  • 2.Where the company, its parent company and its subsidiaries, or subsidiaries own more than 1/10 of the total issued stock of another company, the shares of this company held by such other company have no voting rights.

Article 25 (Exercise of Voting Right in Disunity)

  • 1.If a shareholder who has more than two shares of voting rights intends to exercise its voting rights in disunity, such shareholder must notify the Company of the intention and reason in writing three days prior to the date of the general meeting of shareholders.
  • 2.The Company may refuse such exercise of the voting rights in disunity by a shareholder. However, the foregoing shall not apply if the shareholder has acquired a trust of shares or holds the shares on behalf of another person.

Article 26 (Exercise of Voting Rights)

  • 1.A shareholder may exercise its voting rights in writing without attending the general meeting.
  • 2.A shareholder that wishes to exercise its voting rights in writing must state in writing the necessary matters in the document regarding the exercise of its voting rights and submit it to the Company by the day before the date of general meeting of shareholders.
  • 3.A shareholder may have its proxy exercise its voting rights, and in such case, the representative must submit a document (power of attorney) certifying the power of representation before the start of the general meeting of shareholders.

Article 27 (Method of Resolution of a General Meeting of Shareholders)

A resolution at a general meeting of shareholders shall, absent other provisions in the statutes or these Articles of Incorporation, be made by the attendance of shareholders who hold shares equivalent to a majority of the total number of issued shares, and the majority of the voting rights of the shareholders present, but not less than 1/4 of the total number of issued shares.

Article 28 (Minutes of the General Meeting of Shareholders)

With respect to the resolutions of the general meeting of shareholders, the process and the results of the proceedings shall be recorded in the minutes which shall be sealed or signed by the chairperson and directors in attendance and furnished at the headquarters and branch offices.

CHAPTER V OFFICERS AND BOARD OF DIRECTORS

Article 29 (Number of Directors)

The number of directors of the Company shall be three or more, and the number of outside directors shall be a majority of the total number of directors.

Article 30 (Appointment of Directors)

  • 1.Directors shall be appointed by the general meeting of shareholders.
  • 2.The appointment of directors shall be made by a majority of the voting rights of the shareholders present, but not less than 1/4 of the total number of issued shares.
  • 3.When two or more directors are appointed, the concentrated voting system stipulated in Article 382-2 of the Commercial Act shall not apply.

Article 30-2 (Recommendation of Candidates for Outside Directors)

  • 1.The Outside Director Candidate Recommendation Committee shall recommend outside director candidates from among those who meet the qualifications stipulated in the relevant laws and regulations such as the Commercial Act.
  • 2.Details on the recommendation and qualification of outside director candidates are determined by the Outside Director Candidate Recommendation Committee.

Article 31 (Term of Directors)

The term of office of directors shall be three years after taking office. However, if the term of office of a director expires before the regular general meeting of shareholders regarding the final settlement period during the term, the term shall be extended until the end of such general meeting of shareholders.

Article 32 (By-election of Directors)

When a director is vacant, an extraordinary general meeting of shareholders shall be convened and the vacancy shall be appointed. However, the appointment of a vacancy may be withheld or postponed until the next regular general meeting of shareholders if the legal minimum is met and there is no obstacle in the execution of the duties. Provided, that the term of a director appointed by the vacancy shall be the remaining period of the predecessor, unless otherwise determined by the general meeting of shareholders.

Article 33 (Appointment of Representative Director, etc.)

  • 1.The Company shall appoint its representative director by a resolution of the board of directors.
  • 2.The Company may appoint a small number of officers such as Vice President, etc., by a resolution of the board of directors.

Article 34 (Composition and Convocation of the Board of Directors)

The board of directors convenes by the chairperson of the board by giving notice to each director one week before the meeting date. However, the convocation procedure may be omitted if all directors agree.

Article 34-2 (Appointment of the Chairperson of the Board of Directors)

The Company may appoint a chairperson of the board of directors by a resolution of the board of directors.

Article 35 (Method of Resolution of the Board of Directors)

  • 1.The director composes the board of directors and decides on important matters related to the appointment of the representative director and the execution of the Company’s business.
  • 2.The resolution of the board of directors shall be made by the attendance of a majority of directors and a majority of the directors present, except as otherwise provided in laws and regulations and these Articles of Incorporation.
  • 3.The board of directors may permit all or some of the directors to participate in a resolution without attending the meeting in person but by means of telecommunication that transmits and receives voices from all directors at the same time. In this case, the director is deemed to have attended the board meeting
  • 4.With respect to a resolution of the board of directors, a person who has a special interest in a resolution of the board of directors may not exercise its voting right.

Article 36 (Minutes of the Meeting of the Board of Directors)

Minutes shall be prepared regarding the resolutions of the board of directors, and the chairperson and the directors present shall seal or sign such minutes which shall be furnished at the head office.

Article 36-2 (Committees)

  • 1.If necessary, the company may have the following committees within the board of directors.
    • (1)Audit Committee
    • (2)Evaluation and Compensation Committee
    • (3)Outside Director Candidate Recommendation Committee
    • (4)Other committees recognized to be necessary by the board of directors
  • 2.Details regarding the composition, authority, and operation of each committee are determined by a resolution of the board of directors.
  • 3.Articles 34, 35 and 36 of these Articles of Incorporation shall apply mutatis mutandis to the committees, except as otherwise provided in these Articles of Incorporation.

Article 37 (Representative Director)

The representative director shall represent the Company, and if there are several representative directors, a resolution of the board of directors shall determine matters which shall be individually or jointly represented.

Article 38 (Acting Representative Director)

  • 1.(Deleted)
  • 2.In the absence of a representative director, a director that shall act on behalf of the representative director shall be determined based on the order of precedence separately determined by the board of directors.

Article 39 (Duty of Directors)

  • 1.Directors shall faithfully perform their duties for the Company in accordance with laws and regulations and the Articles of Incorporation.
  • 2.Directors must perform their duties for the Company with the care of a good manager.
  • 3.Directors shall not divulge the business secrets of the Company acquired in the course of their duties, not only during their tenure but also after their retirement.
  • 4.When a director discovers a fact that is likely to cause significant damage to the Company, such director shall immediately report it to the Audit Committee or a member of the Audit Committee.

Article 40 (Composition of the Audit Committee)

  • 1.In lieu of an auditor, the Company shall have an Audit Committee pursuant to the provisions of Article 36-2.
  • 2.The Audit Committee shall be composed of three or more directors.
  • 3.At least 2/3 of the members must be outside directors, and members who are not outside directors must meet the requirements of Article 542-10(2) of the Commercial Act.
  • 4.Audit Committee members must be appointed from among directors appointed at a general meeting of shareholders. In this case, one of the members of the Audit Committee shall be separately from other directors by a resolution of the general meeting of shareholders.
  • 5.The appointment of members of the Audit Committee shall be made by a majority of the voting rights of the shareholders present, but at least 1/4 of the total number of issued shares. However, in the case where the company allows exercise of voting rights electronically in accordance with Article 368-4(1) of the Commercial Act, a member of the audit committee may be appointed with a majority of the voting rights of shareholders present.
  • 6.For the appointment and dismissal of members of the Audit Committee, shareholders who hold more than 3/100 of the total number of issued shares (on the case of the largest shareholder, when a member of the Audit Committee other than an outside director is appointed or dismissed, the shares owned by the related persons and other persons prescribed by the Enforcement Decree of the Commercial Act shall be combined), excluding shares without voting rights, shall not exercise their voting rights on the shares exceeding such threshold.
  • 7.The Audit Committee shall select a person to represent the Committee by its resolution. In this case, the chairperson must be an outside director.
  • 8.If the number of outside directors falls short of the requirements for the Audit Committee stipulated in this Article due to reasons such as resignation or death of outside directors, the requirements shall be met at the first general meeting of shareholders convened after the occurrence of such reasons.
  • 9.Other matters related to the composition, authority, and operation of the Audit Committee, which are not stipulated in these Articles of Incorporation, are subject to the audit committee regulations, related laws and resolutions of the board of directors.

Article 40-2 (Duty, etc., of the Audit Committee)

  • 1.The Audit Committee shall audit the operation and accounting of the Company.
  • 2.The Audit Committee may request the convening of an extraordinary general meeting of shareholders by submitting a document stating the purpose of the meeting and the reason for convening to a director (referring to the person authorized to convene if there is a convening person; hereinafter the same).
  • 3.If a director fails to convene the board of directors without delay despite a request under paragraph (2), the Audit Committee that requested the request may convene a board of directors meeting.
  • 4.The Audit Committee may request the convening of an extraordinary general meeting of shareholders by submitting a document stating the purpose of the meeting and the reason for convening to the board of directors.
  • 5.The Audit Committee may request a business report from a subsidiary when it is necessary to perform its duties. In this case, when the subsidiary fails to report without delay, or when it is necessary to confirm the details of the report, the subsidiary’s business and property status may be investigated.
  • 6.The Audit Committee shall select the Company’s external auditor.
  • 7.The Audit Committee shall handle matters delegated by the board of directors in addition to Paragraphs 1 through 6.
  • 8.The board of directors cannot re-resolve the resolution of the Audit Committee.
  • 9.The Audit Committee may seek expert assistance at the Company’s expense.

Article 41 (Audit Records of the Audit Committee)

  • 1.The Audit Committee shall prepare audit records regarding an audit.
  • 2.Audit records shall state the method of performing the audit and the result, and the Audit Committee member performing such audit must seal or sign the records.

Article 42 (Remuneration and Severance Pay of Directors)

  • 1.The limit of remuneration for directors shall be determined by a resolution of the general meeting of shareholders.
  • 2.The payment of severance pay for directors shall be in accordance with the executive retirement benefit regulations that have been approved by the general meeting of shareholders.

Article 43 (Counsel and Advisor)

The Company may have a small number of counsel or advisors by a resolution of the board of directors.

CHAPTER VI ACCOUNTING

Article 44 (Fiscal Year)

The fiscal year of the Company shall be from January 1 to December 31 of each year.

Article 45 (Preparation and Furnishing of Financial Statements and Business Reports)

  • 1.The representative director of the Company shall prepare the following documents and accompanying details and business report six weeks before the date of the ordinary general meeting of shareholders and submit them to the ordinary general meeting of shareholders with approval of the board of directors and audit by the Audit Committee.
    • (1)Balance sheet
    • (2)Income statement
    • (3)Statement of disposition of profits or statement of disposition of loss
    • (4)Other documents stipulated in Article 447 of the Commercial Act and Article 16(1) of the Enforcement Decree of the Commercial Act and their accompanying documents
  • 2.If the Company is a company subject to the preparation of consolidated financial statements prescribed by the Enforcement Decree of the Commercial Act, the consolidated financial statements shall be added to the documents in Paragraph 1.
  • 3.The Audit Committee must submit the audit report to the representative director no later than one week before the date of the ordinary general meeting of shareholders.
  • 4.The representative director shall keep the documents under each Subparagraph of Paragraph 1 and accompanying documents together with the business report and audit report at the head office for five years from one week before the date of the ordinary general meeting of shareholders and a certified copy at branch offices for 3 years.
  • 5.The representative director shall publish the balance sheet and the audit opinion of the external auditor without delay when it obtains approval from the general meeting of shareholders for the documents in each Subparagraph of Paragraph 1.

Article 45-2 (Appointment of External Auditor)

The Company must appoint external auditor selected by the Audit Committee pursuant to the provisions of Act on External Audit of Stock Companies and report such fact to the ordinary general meeting of shareholders being convened in the business year during which such appointment was made or notify or publish such fact to shareholders as prescribed by the Enforcement Decree of the Act on External Audit of Stock Companies.

Article 46 (Disposition of Profits)

The Company shall dispose of retained earnings before disposal at the end of each business year as follows.

  • 1.Profit reserve
  • 2.Other statutory reserves
  • 3.Dividend
  • 4.Voluntary reserve
  • 5.Other dispositions of retained earnings

Article 47 (Dividend of Profits)

  • 1.Dividends of profits may be made by money and non-monetary property.
  • 2.Profit dividends shall be paid to the shareholders or pledgees listed in the shareholder register at the end of each settlement period.
  • 3.In the case of dividends of profits, if the Company has issued several types of shares, a different type of shares may be used by resolution of the general meeting of shareholders.
  • 4.The provisions of Article 9-5 shall apply mutatis mutandis to dividends of profits from new shares issued by the company through capital increase with or without consideration and share dividends.

Article 47-2 (Interim Dividends)

  • 1.The Company may pay interim dividends pursuant to Article 462-3 of the Commercial Act to shareholders on a fixed day by a resolution of the board of directors once during the business year.
  • 2.The interim dividend in Paragraph 1 shall be pursuant to a resolution of the board of directors.
  • 3.If new shares are issued after the start date of the business year and before the basis date determined pursuant to Paragraph 1 (includes capital transfer of reserves, share dividends, conversion requests for convertible bonds, and exercise of warrants for bonds with warrants), the provisions of Article 9-5 shall apply mutatis mutandis to the distribution of profits to the new shares.

Article 48 (Extinction of the Right to Claim Dividend Payment)

  • 1.If the right to claim payment of dividends is not exercised for five years, the statute of limitations is complete.
  • 2.Dividends resulting from the completion of the prescription in Paragraph 1 shall revert to the Company.

ADDENDA

  • 1.(Enforcement Date) These Articles of Incorporation shall be effective as of March 26, 2007.
  • 2.(Enforcement Date) These Articles of Incorporation shall be effective as of February 29, 2008.
  • 3.(Enforcement Date) These Articles of Incorporation shall be effective as of October 22, 2008.
  • 4.(Enforcement Date) These Articles of Incorporation shall be effective as of March 31, 2010.
  • 5.(Enforcement Date) These Articles of Incorporation shall be effective as of March 31, 2011.
  • 6.(Enforcement Date) These Articles of Incorporation shall be effective as of February 18, 2013.
  • 7.(Enforcement Date) These Articles of Incorporation shall be effective as of March 29, 2013.
  • 8.(Enforcement Date) These Articles of Incorporation shall be effective as of March 28, 2014.
  • 9.(Enforcement Date) These Articles of Incorporation shall be effective as of March 30, 2015.
  • 10.(Enforcement Date) These Articles of Incorporation shall be effective as of April 27, 2015.
  • 11.(Enforcement Date) These Articles of Incorporation shall be effective as of November 16, 2015.
  • 12.(Enforcement Date) These Articles of Incorporation shall be effective as of March 30, 2016.
  • 13.(Enforcement Date) These Articles of Incorporation shall be effective as of October 4, 2016.
  • 14.(Enforcement Date) These Articles of Incorporation shall be effective as of November 4, 2016.
  • 15.(Enforcement Date) These Articles of Incorporation shall be effective as of March 30, 2017.
  • 16.(Enforcement Date) These Articles of Incorporation shall be effective as of October 20, 2017.
  • 17.(Enforcement Date) These Articles of Incorporation shall be effective as of November 30, 2018.
  • 18.(Enforcement Date) These Articles of Incorporation shall be effective as of March 30, 2020.
  • 19.(Enforcement Date) These Articles of Incorporation shall be effective as of March 31, 2021. Provided, however, Article 3(1) shall be effective as of July 12, 2021, Article 6 shall be effective as of May 4, 2021, and special provisions for listed companies under relevant laws and regulations including Article 40 Paragraphs 4 through 6 and Paragraph 8 and Article 45(3) shall be effective as of the moment that the shares issued by the Company are listed on the Korea Exchange, while amendments to Articles 8, 8-2, 10, 11, 17, and 17-2 shall be effective upon completion of electronic registration pursuant to the Enforcement Decree of the Act on Electronic Registration of Stocks, Bonds, etc. When calculating the limit for issuance of new shares or bonds as stipulated in Articles 9, 13-2, and 14 through 16, new shares or bonds issued before the amendment of these Articles of Incorporation shall not be deducted from the limit, and the limit shall be calculated based on only new shares or bonds issued after the amendment of these Articles of Incorporation.
    • 20.(Enforcement Date) These Articles of Incorporation shall be effective as of March 31, 2022.

March 31, 2022

KRAFTON, Inc.

Yeoksam Center Field 231, Teheran-ro, Gangnam-gu, Seoul