How does the depositary issue ADSs?
The depositary will issue ADSs if you or your broker deposits common shares or evidence of rights to receive common shares with the custodian. In the case of the ADSs to be issued under this prospectus, we will arrange with the underwriters named herein to deposit such common shares. Common shares deposited in the future with the custodian must be accompanied by certain documents, including instruments showing that such common shares have been properly transferred or endorsed to the person on whose behalf the deposit is being made.
The custodian will hold all deposited shares (including those being deposited by us or on our behalf in connection with the offering to which this prospectus relates) for the account of the depositary. ADR holders thus have no direct ownership interest in the common shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited shares. The deposited shares and any such additional items are referred to as “deposited securities.” Upon each deposit of common shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name of the person entitled thereto evidencing the number of ADSs to which such person is entitled. Certificated ADRs will be delivered at a designated transfer office in New York. ADRs issued in book-entry form will be reflected on a statement which will be mailed to the address set forth on the books of the depositary.
When you make a deposit of common shares, you will be responsible for transferring good and valid title to the depositary bank. As such, you will be deemed to represent and warrant that:
Š The common shares are duly authorized, validly issued and outstanding, fully paid, non-
assessable and free of any preemptive rights.
Š You are duly authorized to deposit the common shares.
Š The common shares presented for deposit are not “restricted securities” (as defined in the
deposit agreement) or have been registered under the Securities Act.
If any of the representations or warranties are incorrect in any way, we and the depositary may, at your cost and expense, take any and all actions necessary to correct the consequences of the misrepresentations. Under Korean laws and regulations, the depositary is required to obtain our prior consent for the deposit of any number of common shares to be deposited in any given proposed deposit which exceeds the difference between (1) the aggregate number of common shares deposited by us or with our consent for the issuance of ADSs (including deposits in connection with the initial and all subsequent offerings of ADSs and stock dividends or other distributions related to these ADSs) and (2) the number of common shares on deposit with the depositary at the time of such proposed deposit.
We have agreed to consent to any deposit so long as the deposit would not violate our articles of incorporation or Korean law and the total number of our common shares on deposit with the depositary, including common shares deposited in connection with this offering, would not exceed 1,500,000. Additionally, we consented to the deposits of any and all common shares which result from a stock split, stock dividend and any rights offering. Currently our articles of incorporation would not prohibit any such deposits.
How do you cancel an ADS and obtain deposited securities?
Upon surrendering your ADSs at the depositary’s office, the depositary will, upon (1) payment of certain applicable fees, charges and taxes, (2) receipt of proof satisfactory to the depositary of such information as it may deem necessary and proper, and (3) compliance with such regulations as the depositary may establish consistent with the deposit agreement, deliver the deposited securities represented by your ADSs to your order at the custodian’s office in Korea.
At your risk, expense and request, the depositary may deliver deposited securities at such other place as you may request if it is permitted to do so by applicable law.
The depositary may only restrict the withdrawal of deposited securities in connection with:
Š temporary delays caused by closing our transfer books or those of the depositary or the
deposit of common shares in connection with voting at a shareholders’ meeting, or the payment of dividends;
Š the payment of fees, taxes and similar charges; and
Š compliance with any laws or governmental regulations relating to the ADSs or to the
withdrawal of deposited securities.
The ADSs may only be presented for cancellation and release of the underlying common shares. Holders of ADRs evidencing less than 10 ADSs will not be entitled to delivery of common shares
unless such ADRs, together with other ADRs presented by the same holder at the same time, represent in the aggregate at least 10 ADSs. If any ADSs are surrendered but not cancelled pursuant to the preceding sentence, the depositary will execute and deliver an ADR or ADRs evidencing the balance of ADSs not so cancelled to the person or persons surrendering the same. This right of withdrawal may not be limited by any other provision of the deposit agreement. On the date hereof, any holder of ADRs who wants to withdraw common shares must register its identity with the Financial Supervisory Service of Korea before the acquisition of common shares, if such registration has not been made unless such holder intends to sell the common shares within three months.