ILJIN Electric

These Guidelines aim to establish fair and reasonable business practices by presenting the principles to be observed in the execution of subcontract agreements. They are intended to ensure that business partners are able to fairly reflect their interests when entering into contracts with ILJIN Electric Co., Ltd. (hereinafter referred to as the "Company") and to prevent the Company from abusing its superior bargaining position in a manner that undermines the principle of freedom of contract.

These Guidelines consist of the following three sections:

• Contract Formation Infrastructure: Measures that the Company should establish prior to entering into contracts.
• Contract Formation Based on Free Will: Recommended practices that contracting parties should include under circumstances where independent decision-making is guaranteed.
• Faithful Performance of Contracts in Accordance with Contracts and Applicable Laws: Matters to be observed during contract performance.

1. 1. Establishment of Standards for Contracting Methods

   1. 1.1. The Company shall select the appropriate contract formation method based on established internal standards, taking into consideration its market influence and bargaining position. The types of contract methods are as follows:

      • Private Contract: A contract concluded by directly selecting an appropriate counterparty without competitive bidding.
      • Open Competitive Contract: A contract awarded to the successful bidder through open competition without restrictions on bidder qualifications or designation of participants.
      • Restricted Competitive Contract: A contract awarded through competitive bidding limited to participants meeting specified qualification requirements.
      • Selective Competitive Contract: A contract awarded through competitive bidding among specifically designated participants.

   2. 1.2. The Company shall establish internal selection criteria considering factors such as the importance of the goods or services, the number of potential suppliers, previous transaction experience, and the transaction value.

      Contract Method	Requirements
      Private Contract	01. When there is insufficient time to conduct competitive bidding due to a sharp increase in raw material prices or similar circumstances. 02. When a contract can only reasonably be concluded with the current supplier. Where it is difficult to distinguish responsibility for future defects in construction work or for finishing work. Where the supplier that manufactured or supplied the goods must directly install, assemble, or maintain them. Where procurement from another supplier would result in compatibility issues. 03. Where competition is practically impossible. Construction using patented methods or new technologies. Procurement or manufacture of patented, utility model-registered, or design-registered products. 04. Where competition is not feasible due to specific technology, services, location, structure, quality, performance, efficiency, or other unique characteristics.
      Open Competitive Contract	01. No specific qualification requirements. Selected considering the type and importance of the goods or services, the number of potential suppliers, and other relevant factors.
      Restricted Competitive Contract	01. Contracting capacity, construction capability, or previous experience in similar projects. 02. Construction contracts requiring specialized technology or construction methods. 03. Manufacturing contracts requiring specialized equipment or technology. 04. Procurement contracts requiring specialized performance or quality standards. 05. Service contracts requiring specialized expertise. 06. Financial soundness of bidders, where necessary to prevent inadequate contract performance. * Where bidder qualifications are restricted, such restrictions and qualification criteria shall be clearly specified in the invitation to bid.
      Selective Competitive Contract	01. Where the nature or purpose of the contract requires suppliers with specialized facilities, technology, materials, products, or experience, and the number of potential bidders is ten (10) or fewer. 02. Procurement of products certified under applicable standards or carrying recognized environmental labels.

2. 2. Proposal System for Prospective Business Partners
   The Company may operate briefing sessions, online proposal platforms, or other appropriate channels that allow prospective business partners to submit proposals in accordance with the characteristics of its business.

3. 3. Partner Relationship Management (PRM)
   The Company shall establish a Partner Relationship Management (PRM) system to promote mutual growth between large enterprises and small and medium-sized enterprises (SMEs). The PRM system shall pursue an open supplier management approach that includes opportunities for new suppliers rather than maintaining a closed supplier network. The Company may also provide online communication platforms exclusively for business partners or organize regular meetings to facilitate information sharing and cooperation among suppliers.

4. 4. Operation of an SME Support Organization
   The Company operates a dedicated organization responsible for supporting business partners through technical assistance, financial support, education and training, and proposal programs, thereby promoting shared growth with SMEs.

The contracting parties shall comply with the following principles when entering into contracts.

1. 1. Prior Issuance of Written Contracts

   1. 1.1. As a general principle, a written contract shall be executed in advance. At a minimum, a contract bearing the signatures or seals of both parties (including electronic contracts executed using certified digital signatures) shall be concluded before any work related to delivery or performance commences.

   2. 1.2. The contract shall include all matters required by applicable laws and regulations, including the subcontract price, payment method, and the conditions, procedures, and methods for adjusting the subcontract price in response to changes in raw material prices.

   3. 1.3. In the case of recurring transactions, a master agreement shall first be executed, and settlement statements covering transactions during a specified period shall subsequently be issued.

   4. 1.4. Where minor and frequent additional work is expected to result in clear changes in quantities, a settlement agreement shall be issued immediately upon completion of the relevant deliveries or work.

   5. 1.5. Where additional work is requested within a period significantly shorter than the ordinarily accepted timeframe, the principal terms shall be agreed upon in writing in advance.

2. 2. Fair Pricing Based on Reasonable Cost Calculation

   1. 2.1. Unit prices for parts and components shall be determined through consultation with the business partner using a reasonable pricing methodology that takes into account factors such as quantity, quality, specifications, delivery schedule, payment terms, material costs, labor costs, manufacturing overhead, market price trends, and an appropriate level of administrative expenses and profit.

   2. 2.2. If circumstances requiring a unit price adjustment arise during the contract period, either party may request a price adjustment. In such cases, the parties shall complete consultations and determine the revised price within thirty (30) days from the date of the request (which may be extended by an additional thirty (30) days).

   3. 2.3. Where determination of the final unit price is delayed due to exceptional circumstances, a provisional unit price agreed upon by both parties shall apply. Any difference between the provisional and final unit prices shall be settled retroactively once the final price has been determined.

   4. 2.4. Standard labor rates used as the basis for cost estimation shall be reviewed periodically to ensure that pricing reflects current market conditions. Labor rates shall take into account prevailing industry wage levels as well as supplier-specific factors, including working conditions, company size, and technical capabilities.

   5. 2.5. Contracts shall specify the standards and procedures under which business partners may request consultations regarding changes to the initially agreed unit price.

   6. 2.6. Contracts shall clearly specify the grounds for unit price adjustments (such as inflation, raw material prices, and exchange rates), the consultation period, and payment terms.

3. 3. Clear Delivery Schedule

   1. 3.1. Delivery schedules shall be established through sufficient consultation with SME business partners, taking into consideration industry characteristics and normal business practices.

   2. 3.2. Delivery deadlines shall be clearly specified at the time of contract execution. Any subsequent changes shall also be clearly documented. Where shorter-than-normal lead times are requested due to urgent orders or similar circumstances, prior consultation and mutual agreement with the business partner shall be required.

   3. 3.3. Where a business partner incurs losses due to unreasonable delay in acceptance or refusal to accept deliveries without any fault attributable to the business partner, the Company shall compensate for such losses.

4. 4. Objective Inspection Standards

   1. 4.1. Inspection standards and methods for delivered goods shall be established through consultation with the business partner to ensure that inspections are objective, fair, and reasonable.

   2. 4.2. Upon receipt of delivered goods, a receipt confirmation shall be issued immediately, regardless of whether the inspection has been completed. Inspections shall be conducted promptly in accordance with predetermined inspection procedures and standards.

   3. 4.3. Unless there are justifiable reasons, the inspection results shall be notified to the business partner within ten (10) days from the date of receipt of the delivered goods.

   4. 4.4. Ordered parts and materials shall be managed with the due care of a prudent administrator before and during the inspection period.

5. 5. Establishment of Reasonable Payment Terms

   1. 5.1. Where manufacturing or other services are subcontracted to a business partner, payment shall be made by the agreed payment date, which shall be the shortest practicable period and no later than sixty (60) days from the date of receipt of the delivered goods (or, in the case of construction, the date of acceptance; in the case of services, the date of completion of the commissioned services; or, where deliveries are made frequently and the parties have agreed to issue tax invoices at least once per month, the agreed invoice date).

   2. 5.2. Where the Company receives payment from its customer upon completion of manufacturing, repair, construction, or services, payment to the business partner shall be made within fifteen (15) days from the date of receipt of such payment (or by the agreed payment date if earlier).

   3. 5.3. Where progress payments are received according to the completion status of manufacturing, repair, construction, or services, the Company shall pay the business partner an amount corresponding to the completed portion of the work within fifteen (15) days from the date of receipt of such payment (or by the agreed payment date if earlier).

   4. 5.4. Cash payments to business partners shall be made at a cash payment ratio equal to or greater than the ratio received by the Company from its customer in connection with the relevant subcontract.

   5. 5.5. Where payment is made by promissory note, the maturity period of the note shall not exceed that of the promissory note received from the customer for the relevant subcontract.

   6. 5.6. Promissory notes used for payment shall be discountable by financial institutions established under applicable laws. The applicable discount charges (based on the discount rate publicly announced by the Korea Fair Trade Commission) covering the period from issuance to maturity shall be paid on the date the promissory note is delivered.

   7. 5.7. Where a promissory note is issued within sixty (60) days from receipt of the delivered goods, discount charges applicable to the period exceeding sixty (60) days until maturity shall be paid within sixty (60) days from the date of receipt of the delivered goods.

   8. 5.8. Where payment is made using alternative payment instruments (including purchasing cards, accounts receivable-backed loans, or purchase financing), any applicable fees, including financing interest, covering the period from the payment date to the subcontract payment due date shall be paid on the payment date.

   9. 5.9. Where alternative payment instruments are used within sixty (60) days from receipt of the delivered goods, any applicable fees covering the period exceeding sixty (60) days until repayment of the subcontract amount shall be paid to the subcontractor within sixty (60) days from the date of receipt.

   10. 5.10. Where payment is made more than sixty (60) days after receipt of the delivered goods, interest for the overdue period shall be paid at the rate publicly announced by the Korea Fair Trade Commission.

6. 6. Reasonable Return Procedures for Defects Identified After Delivery
   Where defects are identified after delivery, returns shall be processed based on mutual agreement between the contracting parties. The agreement shall specify the party responsible for determining the cause of the defect, the classification of defect types, and the allocation of responsibility accordingly.

7. 7. Termination of Contract

   1. 7.1. Grounds for contract termination shall be mutually agreed upon by the contracting parties and classified into cases where termination is permitted without prior notice and cases where prior notice is required. Where grounds for termination arise, the other party shall be notified promptly in writing.

   2. 7.2. Termination without prior notice may be permitted under the following circumstances:

      • Where the other party has been suspended from commercial transactions by a financial institution or has been subject to business suspension, business license revocation, or similar administrative sanctions imposed by the competent authority.
      • Where the other party has resolved to dissolve the business, transfer its business, merge with another company, or where both parties acknowledge that performance of the master agreement or individual contract has become impracticable due to natural disasters or other unavoidable circumstances.

   3. 7.3. Where prior notice is required, the notifying party shall provide the other party with a cure period of at least one (1) month. If the breach is not remedied within such period, the contract may be terminated. Examples include:

      • Where the other party materially breaches the master agreement or an individual contract, or where the ordering party unreasonably delays providing information or materials necessary for manufacturing the ordered products, thereby disrupting the business partner's work.
      • Where the business partner, without justifiable cause, refuses to manufacture the ordered products or delays commencement of production to the extent that timely delivery is unlikely.
      • Where there are reasonable grounds to conclude that the business partner lacks the technical capability, production capacity, or quality management capability necessary to perform the contract satisfactorily.

8. The contracting parties shall refrain from the following practices when entering into contracts.

   8. Failure to Issue or Retain Written Documentation

   The following practices shall be prohibited:

   1. 8.1. Issuing a written document that omits matters which are difficult to determine at the time of commissioning without stating the reasons for such omission or the expected date on which the omitted matters will be determined.

   2. 8.2. Delaying or failing to issue an amended written document to the business partner after omitted matters have been finalized.

   3. 8.3. Failing to respond in writing within fifteen (15) days to a business partner's request to confirm the details of an oral order, including the scope of work, subcontract price, and date of commissioning, by either confirming or denying the requested information.

   4. 8.4. Responding to confirmation requests regarding an oral order without the signature or official seal of the person responsible for the contract.

   5. 8.5. Failing to issue a written amendment, additional contract, or work instruction for substantial additional work involving a clearly distinguishable scope and significant value.

   6. 8.6. In construction projects, failing to issue an amended contract or settlement statement where additional or revised work quantities have been verified but settlement remains disputed between the parties.

   7. 8.7. Destroying legally required documents before the mandatory three-year retention period has expired.

   8. 8.8. Retaining false documents or documents containing false information, or creating such documents after the fact during the mandatory three-year retention period following termination of the business relationship.

   9. 8.9. Failing to retain documents related to determining subcontract prices, including bid specifications, bid award approval documents, quotations, and, for construction projects, site briefing materials and technical specifications.

9. 9. Unfair Determination of Subcontract Prices

   The contracting parties shall refrain from the following practices when determining subcontract prices:

   1. 9.1. Reducing unit prices by applying a uniform reduction rate without reasonable justification when determining subcontract prices.

   2. 9.2. Unilaterally allocating a predetermined amount under the pretext of requesting cooperation or for any other reason, and deducting such amount when determining the subcontract price.

   3. 9.3. Determining payment by unfairly discriminating against a particular business partner without reasonable justification, or unilaterally determining a lower unit price without prior consultation and agreement with the business partner.

   4. 9.4. Deceiving a business partner regarding transaction conditions, such as order quantities, or using another company's quotation or a false quotation to influence and determine the subcontract price.

   5. 9.5. In a private contract, determining the subcontract price at an amount lower than the total direct construction costs without reasonable justification.

   6. 9.6. In a competitive bidding process, determining the subcontract price at an amount lower than the successful bid price without reasonable justification.

   7. 9.7. Uniformly reducing unit prices without objective and reasonable grounds, such as decreases in material costs or labor costs.

   8. 9.8. Determining a lower subcontract price for a particular business partner through discriminatory treatment despite there being no differences in payment terms, order quantities, work complexity, or other relevant conditions.

   9. 9.9. Requesting quotations based on the assumption of large-volume orders but subsequently placing only small-volume orders while applying the quoted unit price.

   10. 9.10. Commissioning manufacturing or other services without first determining the subcontract price and subsequently unilaterally setting a price lower than the ordinary market rate without consultation with the business partner.

   11. 9.11. Requesting and obtaining technical information related to product delivery, providing such information to another company, and reducing the subcontract price based on that company's quotation or pricing information.

   12. 9.12. Establishing an execution budget significantly lower than the amount received under the main contract and determining the subcontract price based on the requirement that the work be completed within such reduced budget.

   13. 9.13. Determining the subcontract price at a level substantially below the ordinary market price on the grounds that the products are intended for export, special discount sales, promotional giveaways, samples, or similar purposes.

10. 10. Improper Requests for Proposals or Development by Verbal Instruction
    The contracting parties shall refrain from canceling development projects after production facilities or manufacturing preparations have been completed, or from requesting reductions in quoted prices based solely on verbal requests for proposals or product development.

11. 11. Improper Interference with Business Management

    The contracting parties shall refrain from the following practices:

    1. 11.1. Interfering in a business partner's personnel decisions by requiring the Company's instruction or approval for the appointment or dismissal of employees, or by compelling the hiring of specific individuals against the business partner's wishes.

    2. 11.2. Intervening in subcontracting arrangements by restricting the selection of subcontractors, contractual terms, or other subcontracting conditions for reasons unrelated to the legitimate objectives of the subcontract, such as maintaining product quality or ensuring timely delivery.

    3. 11.3. Requiring on-site workers to perform construction work against the business partner's wishes, despite the project being carried out properly and in accordance with the contract.

    4. 11.4. Restricting a business partner's product lines or production capacity, or preventing the business partner from conducting business with the Company's competitors or those of its affiliates.

    5. 11.5. Requesting technical information related to product delivery from a business partner without reasonable justification and requiring its disclosure.

    6. 11.6. Compelling a business partner to participate in promotional events, special discount sales, or similar marketing campaigns, or requiring the purchase of products, gift certificates, or similar items.

12. 12. Failure to Adjust Subcontract Prices Following Design Changes or Other Changes

    The contracting parties shall refrain from the following practices:

    1. 12.1. Receiving additional payments from the customer due to design changes or changes in economic conditions but failing to pass such payments on to the business partner, or paying less than the amount or proportion received.

    2. 12.2. Receiving an adjustment to the contract amount from the customer due to design changes or changes in economic conditions but failing to increase or decrease the subcontract price within thirty (30) days, or making such adjustment after the thirty-day period.

    3. 12.3. Receiving additional payments from the customer due to design changes or changes in economic conditions and making payment to the business partner more than fifteen (15) days later in cash, by promissory note, or through alternative payment instruments without paying applicable default interest, promissory note discount charges, or payment processing fees for the delayed period.

    4. 12.4. Receiving an increase or decrease in the contract amount from the customer due to design changes or changes in economic conditions but failing to notify the business partner of the reasons for and details of such adjustment within fifteen (15) days of receipt (except where the customer has directly notified the business partner).

13. 13. Failure to Adjust Subcontract Prices Due to Changes in Raw Material Prices

    The contracting parties shall refrain from the following practices:

    1. 13.1. Receiving additional payments from the customer due to changes in raw material prices or economic conditions but failing to pass such payments on to the business partner, or paying less than the amount or proportion received.

    2. 13.2. Receiving an adjustment to the contract amount due to changes in raw material prices or economic conditions but failing to increase or decrease the subcontract price within thirty (30) days, or making such adjustment after the thirty-day period.

    3. 13.3. Receiving additional payments due to changes in raw material prices or economic conditions and making payment to the business partner more than fifteen (15) days later in cash, by promissory note, or through alternative payment instruments without paying applicable default interest, promissory note discount charges, or payment processing fees for the delayed period.

    4. 13.4. Receiving an increase or decrease in the contract amount due to changes in raw material prices or economic conditions but failing to notify the business partner of the reasons for and details of such adjustment within fifteen (15) days of receipt (except where the customer has directly notified the business partner).

14. 14. Exclusive Dealing Requirements
    The contracting parties shall refrain from requiring a business partner to refrain from conducting business with other companies or to transact exclusively with the Company or suppliers designated by the Company, except where exclusive dealing has been mutually agreed upon in connection with jointly conducted technology development.

15. 15. Unilateral Transfer of Civil Complaint Handling Responsibilities
    The contracting parties shall refrain from unilaterally imposing on the business partner full economic and administrative responsibility for handling all civil complaints arising during construction, or deducting from progress payments any costs incurred by the Company in resolving such complaints where disputes remain unresolved.

16. 16. Unfair Special Contract Terms

    The contracting parties shall refrain from the following practices:

    1. 16.1. Establishing contractual terms that unfairly infringe upon or restrict the legitimate interests of the business partner.

    2. 16.2. Requiring the business partner to bear costs arising from requests for work or obligations that are not specified in the contract.

    3. 16.3. Requiring the business partner to bear costs that should properly be borne by the Company, including costs related to handling civil complaints or industrial accidents.

    4. 16.4. Requiring the business partner to bear costs arising from work or requirements that were not included in the original bidding documents or bill of quantities.

The contracting parties shall comply with the following principles in the performance of contracts.

1. 1. Compliance with Applicable Laws
   The contracting parties shall comply with applicable laws and regulations, including the principle of good faith, the Subcontracting Act, and the Monopoly Regulation and Fair Trade Act. Any disputes shall be resolved based on written records and supporting documentation.

2. 2. Prior Consultation and Written Documentation for Unit Price Reductions
   Where unit prices are reduced due to factors such as decreases in raw material prices or increased order volumes, the Company shall provide a reasonable basis for the price reduction and reach sufficient agreement with the business partner in advance. Any agreed changes shall be documented in writing.

3. 3. Adjustment of Payments Following Contract Changes
   Where contract modifications, including additional specifications or other changes, result in additional costs for the business partner, the corresponding contract amount shall be adjusted accordingly and paid in a timely manner.
   The contracting parties shall refrain from the following practices during contract performance.

4. 4. Unreasonable Refusal to Accept Deliveries

   The following practices shall be prohibited:

   1. 4.1. Refusing to accept delivered goods or completed work where the scope of the commissioned work is unclear and it is difficult to determine whether the delivered goods conform to the commissioned specifications.

   2. 4.2. Refusing to accept goods that have already been ordered due to complaints from customers, overseas importers, or end users, or due to poor sales performance.

   3. 4.3. Delaying the supply of materials or construction materials that the Company is obligated to provide, thereby making timely delivery or construction impossible, and subsequently refusing acceptance on the grounds of delayed delivery.

   4. 4.4. Applying inspection standards that are stricter than ordinary industry standards without having established inspection criteria in advance.

   5. 4.5. Refusing acceptance by applying inspection standards that are unclear or more stringent than those originally specified in the contract.

   6. 4.6. Refusing to accept deliveries requested by the business partner without justifiable reasons, such as claiming insufficient storage space.

   7. 4.7. Arbitrarily refusing to accept goods that have already been ordered solely because the Company believes the business partner may be unable to maintain stable supply due to bankruptcy or financial difficulties.

   8. 4.8. Refusing to accept other products because defects are found in only some of the ordered items, or refusing acceptance due to cancellation or suspension of orders by the Company's customer.

5. 5. Unreasonable Returns

   The following practices shall be prohibited:

   1. 5.1. Returning products due to order cancellations by customers or changes in economic conditions.

   2. 5.2. Returning products after unfairly determining that they have failed inspection by establishing unclear inspection standards or inspection methods.

   3. 5.3. Returning products that were deemed defective due to poor quality of raw materials supplied by the Company.

   4. 5.4. Returning products on the grounds of delayed delivery where such delay resulted from the Company's late supply of raw materials.

   5. 5.5. Returning products that have already been accepted due to complaints from customers, overseas importers, or end users, or due to poor sales performance.

   6. 5.6. Returning products that have already passed inspection by an independent third-party inspection body designated by the Company.

   7. 5.7. Returning products on the grounds of delayed delivery or construction after the Company has accepted the delay or where objective evidence demonstrates that such delay had been tolerated.

6. 6. Unfair Reduction of Payments

   The contracting parties shall refrain from the following practices:

   1. 6.1. Reducing the subcontract price after commissioning the work without having specified the conditions for such reduction in advance, citing unreasonable reasons such as requests for cooperation, order cancellations by customers, or changes in economic conditions.

   2. 6.2. Retroactively applying an agreed unit price reduction to work that had already been commissioned before the agreement on the price reduction was reached.

   3. 6.3. Excessively reducing the subcontract price on the grounds that payment is made in cash or before the agreed payment due date.

   4. 6.4. Unilaterally reducing the subcontract price due to minor errors or omissions by the business partner that have no material impact on the occurrence of damages.

   5. 6.5. Deducting from the subcontract price amounts exceeding the reasonable purchase price or usage fee where the business partner is required to purchase materials from the Company or use equipment owned by the Company for manufacturing, repair, construction, or service performance.

   6. 6.6. Reducing the subcontract price on the grounds that market prices or material costs have declined between the date of delivery and the payment date.

   7. 6.7. Unfairly reducing the subcontract price for unreasonable reasons, such as operating losses or reductions in the Company's selling prices.

   8. 6.8. Reducing indirect labor costs, general administrative expenses, profit, value-added tax, or other agreed cost components in a manner inconsistent with the original contract.

   9. 6.9. Requiring the business partner to bear costs that should be borne by the Company under applicable laws, including employment insurance premiums, occupational safety and health management expenses, or other statutory costs.

   10. 6.10. Delaying the supply of materials or equipment that the Company is obligated to provide, or imposing impracticable delivery or construction schedules, and subsequently reducing the subcontract price because delivery or completion could not be achieved within such period.

   11. 6.11. Reducing an already agreed subcontract price on the grounds of continuous future orders, or reducing the contract amount after concluding a lump-sum contract by citing detailed manufacturing or construction costs.

   12. 6.12. Reducing the subcontract price contrary to the original contract on the grounds that the Company secured the order at a low price.

   13. 6.13. Modifying the contract in a manner that effectively reduces the subcontract price despite no changes to the scope of work or contractual conditions.

   14. 6.14. Reducing the subcontract price by transferring foreign exchange losses or similar financial burdens to the business partner in a manner inconsistent with the original contract terms.

7. 7. Unfair Demands for Economic Benefits

   The contracting parties shall refrain from the following practices:

   1. 7.1. Requesting sponsorships, incentives, financial contributions, or other economic benefits as a condition for commencing or maintaining business relationships, including large-volume transactions.

   2. 7.2. Requesting sponsorships, incentives, financial contributions, or other economic benefits for unreasonable reasons, such as declining profitability or deteriorating business conditions.

   3. 7.3. Requesting sponsorships, incentives, financial contributions, or other economic benefits where the business partner has no legal obligation to provide them.

8. 8. Transfer of Costs Caused by the Company
   The contracting parties shall refrain from transferring to the business partner costs arising from the Company's own circumstances, including increases in employee wages or delays caused by the Company's internal approval procedures.

9. 9. Unfair Payment in Kind
   The contracting parties shall refrain from paying the agreed contract amount with goods or products instead of monetary payment, contrary to the original contract and against the business partner's wishes, or requiring the business partner to accept such payment.

10. 10. Retaliatory Actions
    The contracting parties shall refrain from taking retaliatory measures against a business partner for reporting violations of the Subcontracting Act to the Korea Fair Trade Commission, including restricting business opportunities, suspending transactions, or imposing any other disadvantage.

11. 11. Circumvention of Applicable Laws

    The contracting parties shall refrain from the following practices:

    1. 11.1. Circumventing the application of the Subcontracting Act through indirect means or arrangements that effectively evade its requirements in connection with subcontract transactions.

    2. 11.2. Recovering payments made to a business partner in accordance with corrective measures ordered by the Korea Fair Trade Commission by subsequently reclaiming such amounts or deducting them from future payments.

    3. 11.3. Paying promissory note discount charges, default interest, or similar amounts to a business partner and subsequently reducing unit prices by an equivalent amount.

12. 12. Forced Purchase of Goods or Services

    The contracting parties shall refrain from the following practices:

    1. 12.1. Requiring a business partner, without reasonable justification, to purchase or use products or services supplied by the Company, its affiliates, or designated third parties.

    2. 12.2. Requiring a business partner, without reasonable justification and against its wishes, to purchase construction materials used at the worksite, or compelling the purchase or use of goods or equipment designated by the Company.

    3. 12.3. Repeatedly requesting a business partner to purchase goods or services despite the business partner having clearly indicated no intention to do so, or where it is otherwise evident that the business partner has no intention of purchasing them.

13. 13. Unfair Collection of Payments for Goods or Services

    The contracting parties shall refrain from the following practices:

    1. 13.1. Requiring a business partner to purchase materials necessary for delivery or performance from the Company or to use the Company's equipment, and demanding payment for all or part of the purchase price or usage fees before the agreed payment due date.

    2. 13.2. Requiring a business partner to purchase materials necessary for delivery or performance from the Company or to use the Company's equipment under terms that are significantly less favorable than those applied by the Company when purchasing, using, or supplying the same goods or equipment to third parties.

14. 14. Prohibition of Coercive Requests for Technical Information

    The contracting parties shall refrain from the following practices:

    1. 14.1. Requiring a business partner, without reasonable justification, to provide the Company or a third party with any of the following technical information:

       • Information relating to manufacturing, repair, construction, or service methods that has been maintained as confidential through substantial effort;
       • Information related to intellectual property rights, including patents, utility models, design rights, and copyrights;
       • Other technical or business information that is useful for business operations and possesses independent economic value.

    2. 14.2. Using technical information obtained from a business partner for the benefit of the Company or a third party without proper authorization.

These Guidelines shall take effect on May 1, 2016.

These Guidelines aim to enhance transparency and fairness in the selection and management of suppliers by ILJIN Electric Co., Ltd. (hereinafter referred to as the "Company"), thereby contributing to the establishment of fair subcontracting practices. They also set forth general principles for the prevention of violations of the Fair Transactions in Subcontracting Act (hereinafter referred to as the "Subcontracting Act"), as provided under the Guidelines for Fair Subcontracting Transactions.

1. 1.1. Supplier
   A "Supplier" refers to a business entity that is either expected to engage in, or is currently engaged in, manufacturing, construction, service outsourcing, or similar transactions with the Company. The term includes not only subcontractors as defined under the Subcontracting Act but also general contractors and service providers.

2. 1.2. Supplier Pool
   A "Supplier Pool" refers to the group of suppliers that are registered, managed, and maintained by the Company in accordance with its established standards.

3. 1.3. Supplier Selection
   "Supplier Selection" refers to the registration of a supplier in the Supplier Pool.

4. 1.4. Supplier Management
   "Supplier Management" refers to the administration of the Supplier Pool according to established standards, including granting selected suppliers opportunities to commence business transactions and cancelling supplier registration where appropriate.

1. 1. Basic Principles

   These Guidelines set forth only the minimum general principles necessary to ensure the autonomy, transparency, and fairness of the Company's supplier selection process and the operation of its Supplier Pool. Matters not specifically addressed herein may be determined and implemented by the Company at its discretion, taking into account relevant business circumstances and operational requirements.

2. 2. Disclosure of Supplier Selection Criteria, Procedures, and Results

   1. 2.1. Information regarding the supplier selection criteria and procedures shall be publicly disclosed for at least fifteen (15) days at the Company's business premises or through electronic media (including the Company's website and email) at least thirty (30) days prior to the expiration of the supplier registration period or thirty (30) days before the commencement of the registration review process (including renewal registration).

   2. 2.2. Where the supplier selection criteria are revised, the Company shall individually notify suppliers subject to renewal registration in writing (including electronic documents, hereinafter the same) at least forty-five (45) days prior to the implementation of the revised criteria.

   3. 2.3. The Company shall notify each applicant of the selection results in writing within fifteen (15) days from the date of supplier selection. Applicants that are not selected shall also be notified in writing of the reasons for non-selection.

3. 3. Specificity and Clarity of Selection Criteria

   The supplier selection criteria shall be established in a clear, specific, and objective manner so as to eliminate the possibility of arbitrary interpretation.

4. 4. Fairness of Supplier Selection Criteria and Procedures

   1. 4.1. When establishing supplier selection criteria, the weighting assigned to each evaluation criterion shall be appropriately balanced to ensure a fair and objective assessment.

      
      

      <Examples of Appropriate Selection Criteria>

      • Possession of the professional licenses or certifications required under applicable laws and regulations.
      • Compliance with applicable laws and regulations, including whether the applicant has committed any violations of the Subcontracting Act or other relevant legislation during a specified period.
      
      

      <Examples of Inappropriate Selection Criteria>

      • Using personal relationships—such as former employment with the Company, school ties, regional ties, or family relationships—as supplier selection criteria.
      • Assigning excessive weight to previous transaction history in a manner that unfairly restricts opportunities for new suppliers to enter the Supplier Pool.
      • Disadvantaging suppliers because they conduct business with competitors or are registered as suppliers with multiple companies.
      
      

   2. 4.2. The application and registration period for supplier registration shall be at least fifteen (15) days.

   3. 4.3. Where an applicant has been excluded from supplier selection due to reasons attributable to the Company, the applicant shall be provided with an opportunity to file an objection for a period of at least fifteen (15) days from the date of receiving the notice of non-selection.

   4. 4.4. The Company shall not, without reasonable justification, apply different selection criteria to existing registered suppliers and newly applying suppliers.

5. 5. Fair Opportunity to Commence Business Transactions

   Business partners that have been selected and registered as suppliers shall not, without reasonable justification, be restricted or discriminated against in being provided opportunities to participate in bidding or otherwise commence business transactions with the Company.

6. 6. Disclosure of Supplier Deregistration Criteria and Procedures

   At the time the supplier selection criteria and procedures are disclosed, the Company shall also disclose the criteria and procedures for supplier deregistration at its business premises and through electronic media for a period of at least fifteen (15) days.

7. 7. Specificity and Clarity of Supplier Deregistration Criteria

   The criteria for supplier deregistration shall be established in a clear, specific, and objective manner so as to eliminate the possibility of arbitrary interpretation.

8. 8. Fairness of Supplier Deregistration Criteria and Procedures

   1. 8.1. Supplier deregistration criteria shall be established based on objective and reasonable grounds.

      
      

      <Examples of Appropriate Deregistration Criteria>

      • Where a material and evident fault attributable to the supplier has occurred in connection with the relevant subcontract transaction.
      • Where normal business operations have become impossible due to bankruptcy, business suspension, business closure, or similar circumstances.
      • Where the supplier has violated the Subcontracting Act or other applicable laws and regulations.
      
      

      <Examples of Inappropriate Deregistration Criteria>

      • Deregistering a supplier because it refuses to cooperate with unilateral requests by the Company, such as cost reduction plans or requests for lower supply prices.
      • Deregistering a supplier because it is also registered as a supplier of the Company's competitors.
      • Deregistering a supplier due to the absence of transaction records where no orders or subcontracting opportunities were provided by the Company, despite there being no fault attributable to the supplier. (However, deregistration may be permitted where the supplier has had no transaction record for a considerable period because it was not selected through a fair competitive bidding process.)
      • Deregistering a supplier because it refuses to comply with the Company's instructions regarding the appointment or management of the supplier's employees.
      
      

   2. 8.2. Where a supplier is deregistered, the Company shall provide written notice stating the reasons for the deregistration. The supplier shall be given at least fifteen (15) days from the date of receipt of such notice to file an objection. Where the deregistration results from reasons attributable to the Company, the Company shall promptly reinstate the supplier's registration.

9. 9. Handling of Violations

   Where an employee of the Company intentionally or through gross negligence violates these Guidelines and causes loss or damage to the Company, the matter may be referred to the Company's Disciplinary Committee for appropriate action.

These Guidelines shall take effect on May 1, 2016.

These Guidelines establish the procedures governing the operation of the Internal Review Committee, which reviews the fairness and legal compliance of subcontract transactions exceeding a specified threshold between ILJIN Electric Co., Ltd. (hereinafter referred to as the "Company") and its business partners. The purpose of these Guidelines is to promote fair subcontracting practices and establish reasonable and transparent business relationships.

These Guidelines set forth only the minimum general principles necessary to ensure the autonomy, appropriateness, and effectiveness of the Internal Review Committee established and operated by the Company to promote fair subcontracting practices. Matters not specifically addressed herein may be determined and implemented by the Company at its discretion, taking into account its business circumstances and operational requirements.

1. 3.1. The Internal Review Committee shall consist of at least three (3) officers or employees, including the executive responsible for subcontracting affairs. Where necessary, external experts, including independent directors, may be appointed as members of the Committee.

2. 3.2. Where an existing review body established for the operation of the Company's Compliance Program (CP) satisfies the requirements set forth in Section 3.1, such body may serve as the Internal Review Committee.

1. 4.1. The Internal Review Committee shall convene on a regular basis at least once each month and may hold additional meetings whenever necessary.

2. 4.2. The Internal Review Committee shall conduct a prior review of subcontract transactions with an expected contract value of KRW 1 billion or more, focusing on the fairness of the contract execution and pricing process, as well as compliance with the Subcontracting Act and other applicable laws and regulations.

   
   

   <Examples of Matters Subject to Prior Review under the Subcontracting Act>

   • Compliance with the obligation to issue written contracts
   • Compliance with the obligation to establish domestic letters of credit where required
   • Compliance with the obligation to provide payment guarantees for subcontract payments
   • Compliance with the prohibition against unfair determination of subcontract prices
   • Compliance with the prohibition against forcing the purchase of goods or services
   
   

3. 4.3. The Internal Review Committee shall conduct a prior review of the appropriateness of the criteria and procedures for supplier registration and deregistration.

4. 4.4. The Internal Review Committee shall review objections submitted regarding supplier non-selection or deregistration.

5. 4.5. Where necessary, the Committee may hear opinions from the relevant business partners. In such cases, anonymity shall be protected where appropriate.

6. 4.6. Where a matter under review is found to potentially violate the Subcontracting Act or other applicable laws and regulations, corrective action shall be taken voluntarily. Where such violation results from the intentional misconduct or gross negligence of the Company's officers or employees, disciplinary measures proportionate to the severity of the violation (including personnel actions where appropriate) shall be imposed.

Documents relating to the review results, decisions, and follow-up actions of the Internal Review Committee shall be retained for a minimum of three (3) years from the date on which the review is concluded.

These Guidelines shall take effect on May 1, 2016.

These Guidelines set forth the requirements that ILJIN Electric Co., Ltd. (hereinafter referred to as the "Company") shall comply with or endeavor to follow regarding the issuance and retention of written documents in the course of entering into and performing subcontract agreements. The purpose of these Guidelines is to ensure that the Company and its business partners clearly understand the documentation requirements under the Fair Transactions in Subcontracting Act (hereinafter referred to as the "Subcontracting Act"), thereby facilitating the proper exercise of rights and fulfillment of obligations. In addition, these Guidelines aim to promote sound documentation practices in subcontracting transactions and establish a fair subcontracting environment by presenting the policies and procedures implemented by the Korea Fair Trade Commission to encourage advanced documentation practices.

These Guidelines consist of the following three sections:

• Requirements for the issuance of various written documents during subcontract transactions;
• Requirements for the retention of issued written documents; and
• Policies and procedures implemented by the Korea Fair Trade Commission to promote the establishment of proper documentation issuance and retention practices.

The Company shall issue written documents in accordance with the following requirements throughout the execution and performance of subcontract transactions. The written documents subject to issuance are as follows:

1. 1. Obligation to Issue Written Contracts (Article 3 of the Subcontracting Act)

   1. 1.1. Where the Company subcontracts the manufacturing, repair, construction, or provision of services (hereinafter collectively referred to as "Manufacturing, etc.") to a subcontractor under the Subcontracting Act, it shall first reach agreement with the subcontractor on the principal terms of the contract, including the description, quantity, and unit price of the commissioned goods or services, and shall then issue a written subcontract agreement.

   2. 1.2. Where the original contract is modified due to design changes, additional construction work, or other changes to the commissioned work, the Company shall prepare and issue a written amendment or supplementary agreement unless exceptional circumstances prevent it from doing so.

2. 2. Required Contents of Written Contracts

   The written subcontract agreement shall accurately reflect the actual transaction and, as a general principle, shall include the following information:

   1. The date of commissioning;
   2. The description, quantity, and unit price of the commissioned goods or services;
   3. The delivery, handover, or performance date and place;
   4. Inspection methods and inspection schedule;
   5. The subcontract price (including advance payments, progress payments, and final payments for construction projects), payment method, and payment due date;
   6. Where the Company supplies raw materials or other materials necessary for manufacturing or performance, the description, quantity, supply date, payment method, and payment due date for such materials; and
   7. The conditions, methods, and procedures for adjusting the subcontract price following changes in the prices of raw materials or other relevant factors after the subcontract has been awarded.

3. 3. Timing of Issuance

   1. 3.1. As a general principle, the Company shall issue the written subcontract agreement without delay after reaching agreement with the subcontractor on the principal terms of the subcontract.

   2. 3.2. Even where it is difficult for the Company to issue the written contract immediately, the contract shall, unless exceptional circumstances exist, be issued no later than the following deadlines:

      1. Manufacturing Subcontracts: Before the subcontractor commences work for the delivery of goods.
      2. Repair Subcontracts: Before the subcontractor commences the contracted repair work.
      3. Construction Subcontracts: Before the subcontractor begins construction work under the contract.
      4. Service Subcontracts: Before the subcontractor commences performance of the contracted services.

4. 4. Method of Issuance

   1. 4.1. The Company shall issue a contract bearing the signature or official seal of the Company or its authorized representative, including a qualified electronic signature as defined under the Electronic Signature Act.

   2. 4.2. A document that does not bear the signatures or official seals of the contracting parties shall be deemed not to satisfy the requirement for issuance of a written contract.

   3. 4.3. Written contracts may be issued by providing electronic records through any of the following methods:

      1. Transmitting the contract through a telecommunications network and recording it in a file stored on the subcontractor's electronic data storage system (e.g., email);
      2. Making the contract available to the subcontractor through a telecommunications network and allowing it to be recorded in a file stored on the subcontractor's electronic data storage system (e.g., a web-based system); or
      3. Delivering electronic storage media containing the contract, such as a floppy disk, CD-ROM, or other electronic recording medium.

5. 5. Exceptions

   As illustrated below, where written documents are issued in a reasonable manner that accurately reflects the actual subcontracting transaction, the Company may be deemed to have fulfilled its obligation to issue written documents even if the requirements regarding the contents or timing of issuance described above are not strictly met.

   1. 5.1. Matters That Cannot Be Determined at the Time of Commissioning

      Where certain contractual terms cannot reasonably be finalized at the time of commissioning, the Company may issue a written contract omitting such matters only where there are justifiable reasons. In such cases, the contract shall specify the reason why the relevant information cannot yet be determined and the expected date on which it will be finalized. Once the omitted information has been determined, the Company shall promptly issue a supplementary written document reflecting the finalized information.

   2. 5.2. Frequent Transactions

      Where frequent transactions occur and, in light of industry practice or business circumstances, there is no material concern regarding the formation or continuation of the contract, the following practices may be accepted:

      • Issuing a master agreement while placing individual orders via facsimile (Fax) or other electronic means where the order details are objectively identifiable;
      • Where certain legally required contract terms are omitted from the written agreement but can be clearly verified through documents issued for individual orders, such as quantity schedules or work instructions; or
      • For export products, replacing individual subcontract agreements with offer sheets submitted by the subcontractor, together with the master agreement.

   3. 5.3. Additional Construction Work

      Where additional work is minor and occurs frequently such that changes in work quantities are clearly anticipated, a settlement agreement executed immediately after completion of the construction work may replace a separate written contract for such additional work.

   4. 5.4. Cases Constituting Failure to Issue Written Documents

      The following shall be deemed a failure to issue the required written documentation:

      • Failing to issue a specific amendment agreement or work instruction despite additional work being clearly distinguishable in scope and involving a substantial contract amount; or
      • Failing to issue an amended contract or settlement agreement where additional or revised construction quantities have been verified during project execution but remain disputed between the contracting parties.

6. 6. Presumption of the Existence of a Subcontract Agreement

   1. 6.1. Where the Company fails to issue a written subcontract agreement containing the information required under Article 3(2) of the Subcontracting Act (including cases where certain information has been omitted pursuant to Article 3(3)), the business partner may request written confirmation by notifying the Company in writing of the commissioned work, subcontract price, date of commissioning, the names and addresses of both parties, and other relevant details of the subcontract. In such cases, the business partner shall use Form 1 – Request for Confirmation of Commissioned Work provided under the Guidelines for Fair Subcontracting Transactions as the standard form.

   2. 6.2. Within fifteen (15) days after receiving the written request for confirmation, the Company shall respond to the business partner in writing, either confirming or denying the contents of the request. In doing so, the Company shall use Form 2 – Response to Request for Confirmation of Commissioned Work provided under the Guidelines for Fair Subcontracting Transactions as the standard form.

   3. 6.3. Where the Company fails to provide a written response within fifteen (15) days, the subcontract shall, except where a response is impossible due to force majeure or other extraordinary circumstances, be presumed to have been commissioned in accordance with the contents of the business partner's written notification.

   4. 6.4. The written request for confirmation and the Company's written response shall be sent to the respective business addresses of the Company and the business partner using certified mail or any other method capable of objectively verifying both the contents and receipt of the communication (excluding email).

   5. 6.5. In the case of a joint contract performed under a joint performance arrangement, either all joint contractors may jointly execute the subcontract agreement and issue the written contract, each contractor may separately execute a subcontract agreement for its allocated portion of the work, or the lead contractor may execute and issue the subcontract agreement on behalf of the joint venture.

1. 1. Obligation to Issue a Written Notice (Article 11 of the Subcontracting Act)

   1. 1.1. Where the Company intends to pay a subcontractor an amount less than the subcontract price originally agreed upon at the time the subcontract was awarded for manufacturing, repair, construction, or services, the Company shall issue a written notice of the payment reduction to the subcontractor.

   2. 1.2. Where, at the time of executing the subcontract, the master agreement sets forth general transaction terms—such as payment procedures, transportation, inspection, returns, specifications, materials, and manufacturing processes—while matters relating to the subcontract price, including unit price and quantity, are determined separately through special agreements or purchase orders, the time at which such special agreement or purchase order is delivered to the subcontractor shall be deemed the time the subcontract is awarded.

2. 2. Required Contents of the Written Notice

   A written notice of payment reduction shall include, at a minimum, the following information:

   1. The reason for the payment reduction;
   2. The basis and criteria for determining the reduction;
   3. The quantity of the goods or services subject to the reduction;
   4. The amount of the reduction;
   5. The method of reduction, including any deductions or offsets; and
   6. Any other information necessary to demonstrate that the payment reduction is justified.

3. 3. Timing of Issuance

   Where the Company intends to reduce the subcontract payment, it shall issue the written notice to the subcontractor before the reduction is implemented.

4. 4. Method of Issuance

   1. 4.1. Where the Company requests a reduction of the subcontract payment in writing, the notice shall bear the signature or official seal of the Company or its authorized representative, including a qualified electronic signature as defined under Article 2, Paragraph 3 of the Electronic Signature Act.

   2. 4.2. When issuing a written notice of payment reduction, the Company shall use Form 3 as the standard format.

   3. 4.3. The written notice may be issued by providing electronic records through any of the following methods:

      1. Transmitting the document through a telecommunications network and recording it in a file stored on the subcontractor's electronic data storage system (e.g., email);
      2. Making the document available to the subcontractor through a telecommunications network and allowing it to be recorded in a file stored on the subcontractor's electronic data storage system (e.g., a web-based system); or
      3. Delivering electronic storage media containing the document, such as a floppy disk, CD-ROM, or other electronic recording medium.

5. 5. Exceptions

   Where certain information cannot reasonably be finalized at the time the written notice of payment reduction is issued, the Company may omit such information from the notice only where there are justifiable reasons.

   In such cases, the notice shall specify the reason why the relevant information cannot yet be determined and the expected date on which it will be finalized. Once the omitted information has been determined, the Company shall promptly issue a supplementary written notice containing the finalized information.

1. 1. Obligation to Issue a Written Request (Article 12-3 of the Subcontracting Act)

   Where the Company has a legitimate reason to request technical information from a business partner, it shall issue a written request for the provision of such technical information.

   
   

   <Examples of Legitimate Reasons for Requesting Technical Information>

   1. Where technical information is required during the subcontracting process, including private contracts or competitive bidding (open, restricted, or selective bidding), for purposes such as evaluating a supplier's technical capabilities, establishing benchmark pricing, reviewing proposals, conducting joint technology development, or satisfying the requirements of a Request for Proposal (RFP) issued by the customer.
   2. Where the Company requests technical information during the course of a subcontract transaction for purposes such as technical guidance, quality management, performance testing, joint patent applications, patent application support, joint technology development, or reviewing cost information for subcontract price adjustments.
   3. Where technical information has been deposited under a Technology Escrow Agreement and the conditions for release specified in the escrow agreement have been satisfied.

2. 2. Required Contents of the Written Request

   A written request for the provision of technical information shall include, at a minimum, the following information:

   1. The title and scope of the requested technical information;
   2. The purpose of the request;
   3. Confidentiality requirements*;
   4. Ownership of rights relating to the technical information*;
   5. Compensation, if any, for the provision of the technical information;
   6. The date of the request;
   7. The delivery date;
   8. The method of delivery; and
   9. Any other information demonstrating that the Company's request for technical information is justified.

   * Confidentiality Requirements: The request shall clearly identify which portions of the technical information are to be treated as confidential. Where the parties have executed a Non-Disclosure Agreement (NDA) or similar confidentiality agreement, such agreement shall be attached.

   * Ownership of Rights: The request shall specify the current owner of the rights to the requested technical information, whether a technology transfer agreement exists between the parties, whether the requested technology was jointly developed, and any agreements regarding ownership of rights after the technical information has been provided.

3. 3. Timing of Issuance

   Where the Company requests technical information, it shall, as a general principle, first consult with the business partner and agree on the title and scope of the requested information, the purpose of the request, the request date, delivery date, delivery method, confidentiality requirements, ownership of rights, and any applicable compensation. The written request shall then be issued to the business partner without delay.

4. 4. Method of Issuance

   1. 4.1. The Company shall issue a written request for the provision of technical information bearing the signature or official seal of the Company or its authorized representative, including a qualified electronic signature as defined under Article 2, Paragraph 3 of the Electronic Signature Act.

   2. 4.2. Where the Company requests technical information in writing, it should, where practicable, use Form 4 (Standard Form for Requesting Technical Information) provided under the Guidelines for Reviewing Requests for and Misappropriation of Technical Information (Korea Fair Trade Commission Public Notice No. 115).

   3. 4.3. The Company may also request technical information through a separate written agreement, such as a special agreement or other contractual document. In such cases, the separate agreement shall include all of the information required under Section 2 above.

   4. 4.4. The written request may be issued by providing electronic records through any of the following methods:

      1. Transmitting the document through a telecommunications network and recording it in a file stored on the business partner's electronic data storage system (e.g., email);
      2. Making the document available to the business partner through a telecommunications network and allowing it to be recorded in a file stored on the business partner's electronic data storage system (e.g., a web-based system); or
      3. Delivering electronic storage media containing the document, such as a floppy disk, CD-ROM, or other electronic recording medium.

5. 5. Exceptions

   Where written requests are issued in a reasonable manner that accurately reflects the actual subcontracting transaction, as illustrated below, the Company may be deemed to have fulfilled its obligation to issue written requests even if the requirements regarding the contents or timing of issuance described above are not strictly met.

   1. 5.1. Where certain information required in a written request for the provision of technical information cannot reasonably be finalized in advance, the Company may omit such information only where there are justifiable reasons. In such cases, the written request shall specify the reason why the information cannot yet be determined and the expected date on which it will be finalized. Once the omitted information has been determined, the Company shall promptly issue a supplementary written document containing the finalized information.
   2. 5.2. Where frequent requests for technical information are unavoidable due to industry characteristics or established business practices, the parties may first execute a written agreement bearing their signatures or official seals that specifies the fundamental terms, including the title and scope of the technical information, the purpose of the request, confidentiality obligations, ownership of rights, and any applicable compensation. Additional details, such as the request date, delivery date, and delivery method, may then be specified in individual request forms.

1. 1. Issuance of Certificates of Receipt (Article 8 of the Subcontracting Act)

   1. 1.1. Except where the failure is attributable to the business partner, the Company shall issue a Certificate of Receipt when the business partner delivers, transfers, or provides the commissioned goods or services (excluding commissioned service transactions).

   2. 1.2. The Company shall issue the Certificate of Receipt immediately upon receipt of the commissioned goods, even before completion of inspection. Where a domestic letter of credit has been established pursuant to Article 7 of the Subcontracting Act, the Certificate of Receipt shall be issued immediately after completion of the inspection.

2. 2. Issuance of Written Notice of Inspection Results (Article 9 of the Subcontracting Act)

   1. 2.1. After receiving the commissioned goods or services from the business partner, the Company shall conduct any inspection necessary to determine whether the goods or services have been completed in accordance with the contract and to establish the extent of its payment obligations. The inspection results shall be notified to the business partner in writing.

   2. 2.2. As a general principle, the Company shall issue the written notice of inspection results within ten (10) days from the date of receipt of the commissioned goods or services.

      For the purposes of this provision:

      • In the case of manufacturing or repair subcontracts, the date of receipt includes the date on which notice of completion of any completed portion of the work is received.
      • In the case of construction subcontracts, the date of receipt means the date on which the Company receives notice from the business partner of completion of the construction work or any completed portion thereof.

   3. 2.3. Notwithstanding the foregoing, the Company may notify the business partner of the inspection results after the ten (10)-day period where there are legitimate reasons, including circumstances similar to the following:

      1. Where the inspection results are transmitted through a telecommunications network and recorded in a file stored on the business partner's electronic data storage system (e.g., email);
      2. Where the inspection results are made available to the business partner through a telecommunications network and recorded in a file stored on the business partner's electronic data storage system (e.g., a web-based system); or
      3. Where the inspection results are delivered to the business partner using electronic storage media such as a floppy disk, CD-ROM, or other electronic recording medium.

   4. 2.4. Where the Company fails, without justifiable reason, to issue a written notice of the inspection results to the business partner within ten (10) days from the date of receipt of the commissioned goods or services, the goods or services shall be deemed to have passed the inspection.

3. 3. Issuance of Written Notice of Contract Price Adjustments Following Design Changes or Other Changes (Article 16 of the Subcontracting Act)

   1. 3.1. Where, after a subcontract has been awarded for manufacturing, repair, construction, or services, the contract amount is increased or decreased due to design changes, changes in economic conditions (including fluctuations in market prices), or other similar reasons, the Company shall notify the relevant business partner of the reasons for and details of the adjustment received from the customer. This requirement shall not apply where the customer has directly provided such notification to the business partner.

   2. 3.2. The Company shall issue the written notice to the business partner within fifteen (15) days from the date on which it receives the adjusted contract amount from the customer.

4. 4. Method of Issuance

   1. 4.1. The Company shall issue a written notice bearing the signature or official seal of the Company or its authorized representative, including a qualified electronic signature as defined under Article 2, Paragraph 3 of the Electronic Signature Act.

   2. 4.2. The written notice may be issued by providing electronic records through any of the following methods:

      1. Transmitting the document through a telecommunications network and recording it in a file stored on the subcontractor's electronic data storage system (e.g., email);
      2. Making the document available to the subcontractor through a telecommunications network and allowing it to be recorded in a file stored on the subcontractor's electronic data storage system (e.g., a web-based system); or
      3. Delivering electronic storage media containing the document, such as a floppy disk, CD-ROM, or other electronic recording medium.

1. 8.1. Both the Company and its business partners shall retain the written documents listed above, as well as the documents specified in each subparagraph of Article 6(1) of the Enforcement Decree of the Subcontracting Act (Retention of Documents). The documents to be retained are as follows:

   No.	Documents to be Retained	Legal Basis
   1	Master Agreement (including amendments and supplementary agreements)	Article 3 of the Subcontracting Act
   2	Written Confirmation of the Subcontract Agreement	Article 3(6) of the Subcontracting Act
   3	Written Notice of Payment Reduction	Article 11 of the Subcontracting Act
   4	Written Request for the Provision of Technical Information	Article 12-3 of the Subcontracting Act
   5	Certificate of Receipt of Goods or Services	Article 8 of the Subcontracting Act
   6	Written Notice of Inspection Results	Article 9 of the Subcontracting Act
   7	Written Notice of Contract Price Adjustment	Article 16 of the Subcontracting Act
   8	Documents stating the inspection results and the date of completion of inspection for the commissioned goods or services	Article 6(1), Subparagraph 2 of the Enforcement Decree
   9	Documents stating the payment date, payment amount, and payment method of subcontract payments (including, where payment is made by promissory note, the issuance date, amount, and maturity date of the note)	Article 6(1), Subparagraph 3 of the Enforcement Decree
   10	Documents stating the payment date and amount of advance payments, default interest, promissory note discount charges, default interest, customs duty refunds, and any applicable delay interest	Article 6(1), Subparagraph 4 of the Enforcement Decree
   11	Where the Company supplies raw materials or other materials required for manufacturing or performance and deducts their cost from the subcontract payment, documents stating the details of the materials supplied, the deduction date, deduction amount, and reason for the deduction	Article 6(1), Subparagraph 5 of the Enforcement Decree
   12	Documents stating the adjusted subcontract amount and the reason for the adjustment where the subcontract price has been revised due to design changes or similar circumstances	Article 6(1), Subparagraph 6 of the Enforcement Decree
   13	Where the subcontractor requests an adjustment of the subcontract price due to changes in the prices of raw materials or similar circumstances, documents stating the details of the request, consultation records, the adjusted amount, and the reason for the adjustment	Article 6(1), Subparagraph 7 of the Enforcement Decree
   14	Documents related to the determination of subcontract prices, including bid specifications, bid award approval documents, quotations, site briefing documents, and design specifications	Article 6(1), Subparagraph 8 of the Enforcement Decree

2. 8.2. The documents required to be retained shall be preserved in their original form as they existed at the time they were issued, approved, or otherwise used. Documents created, transmitted, received, or stored electronically using computer systems or other information processing devices shall be deemed equivalent to original documents.

3. 8.3. The Company and its business partners shall retain the above documents for a period of three (3) years from the date on which the subcontract transaction is completed. For the purposes of these Guidelines, the completion date of a subcontract transaction shall mean:

   1. Manufacturing Subcontracts, Repair Subcontracts, and Service Subcontracts involving the creation of intellectual or informational deliverables: The date on which the subcontractor delivers or transfers the commissioned goods or deliverables to the Company.
   2. Service Subcontracts involving the provision of services: The date on which the subcontractor completes the commissioned services.
   3. Construction Subcontracts: The date on which the commissioned construction work is completed.
   4. Where the subcontract agreement is terminated or the transaction is discontinued before completion: The date of such termination or discontinuation.

These Guidelines shall take effect on May 1, 2016.