Mutual growth - Seohan Innobility

01

Purpose

The purpose of these Guidelines is to contribute to the establishment of a fair subcontract transaction order by enhancing transparency and fairness in the process of new registration and operation for partners, and to inform general matters about the Company’s partner registration and operation.

02

Composition of the Guidelines

1) Matters related to new registration of partners
2) Matters related to registering and modifying changes made by the partners
3) Matters related to suspension of transactions with partners

03

Definition of Terms

1)Scope of the “partners” in the Guidelines

(1) Partners: Companies that are classified into raw/subsidiary materials and processing companies, and registered according to the partner evaluation approval guidelines to supply materials that have a major impact on product quality, delivery date, and cost to the company

2) “Partner registration” means that a company that supplies materials to the company has completed the evaluation and procedure prescribed by the company and is judged as a company eligible for the transaction.

04

Disclosure of evaluation criteria, procedures and results of partner registration

1) When partner registration is decided, the partner is notified individually.

05

Giving opportunities to initiate fair trades

With respect to business operators selected and registered as partners, there shall not be no restrictions or discrimination in terms of opportunities to participate in bids for initiating transactions, without a justifiable reason.

06

Registration process for new partners

6.1 Application for registration

A company selected as a target partner to develop a new partner at the request of the relevant internal teams or at the discretion of the parts purchasing team shall submit the following documents.

1) Partner status table (fill out and submit after receiving the form from the parts purchasing team)

6.2Initial evaluation of partners

1) Evaluation standards

① Out of 500

Business general (150 points), Technology development capability (100 points), Production management (100 points), Quality control (100 points), Quality system (50 points)

6.3Synthesis of evaluation results

The parts purchasing team prepares an evaluation report by synthesising the evaluation results.
As a result of the comprehensive evaluation, in principle, the score to be able to transact with the Company shall be 1st grade (370 points or higher) or higher.
However, in the case of 2nd grade (300 points or more), the partner shall follow the re-examination result.

6.4Submission and approval for registration

As a result of evaluating a partner, the head of the parts purchasing team, if it is determined that the partner is eligible for a transaction, shall notify the partner cooperation team of the relevant information, and the partner cooperation team shall prepare the following documents and proceeds with the new registration submission, the partners shall cooperate to prepare the relevant documents.

When registering tier 1 partner

① Company evaluation report

6.5 Registration

The parts purchasing team proceeds with registration according to the following procedure:

1) For the eco-friendly parts supply agreement, the Company and the newly registered partner prepare two copies, seal the seals of both companies, and keep one copy each of the Company and the newly registered partner.
2) The transparent transaction pledge is prepared in two copies by the Company and the newly registered partner, notarised and kept one copy each.
3) The partner is registered on the computer and a transaction code is assigned.
4) The Company and the newly registered partner prepare two copies of the transaction contract, seal the seals of the representative directors of both parties, and keep one copy.
5) In the case of electronic contract conclusion, it has the same effect as written storage.

07

Change registration when changes occur to transaction registration partners

1) The Company’s partners shall notify the relevant partner cooperation team when any changes in registration contents such as name change, representative change, or location transfer occur.

2) However, when the representative changes due to the sale of shares, except for the change of the representative due to inheritance or simple delegation of representative authority, the representative changes due to transfer to a third party, in order to decide whether or not to continue to do business with the Company, the change registration shall be requested to the relevant partner cooperation team including the following items:

• Personal information of the new representative and reason for transfer of ownership
• Corporate investment plan

In this case, for partner evaluation, the regular evaluation (initial evaluation) score of the previous partner is inherited, and the basic transaction contract and other documents shall be concluded again and submitted.

08

Cancellation/termination of contract with a transaction registration partner

1) The reasons for cancellation/termination of the contract shall be determined by agreement between the parties, and a distinction should be made between “when possible without notice” and “when notifying is necessary”, and in the event of cancellation/termination, it shall be notified in writing without delay.

2) The following cases are possible without notifying.

• Where the other party has received a transaction suspension disposition from a financial institution or a disposition such as business cancellation or business suspension from a supervisory authority
• Where it is recognised that the contract cannot be performed due to significant business reasons such as bankruptcy, compulsory execution by a third party, insolvency, commencement of reconciliation, and the application for a company reorganisation procedure
• Where the other party decides on dissolution, transfer of business, or merger with another company, or where both parties acknowledge that it is difficult to perform the contents of the basic contract or individual contract due to disaster or other reasons
3) The cases where notifying is required are as follows and in these cases, the other party shall set a period of one month or more and notify the execution thereof, and if the execution is not performed within the period, the contract may be cancelled/terminated.

• Where the other party has violated the important content of the original contract or individual contract; and where the receiving company delays the implementation of the items necessary for the production of ordered parts without a justifiable reason, causing disruption to the supplier’s work
• Where the supplier refuses to manufacture ordered parts without a justifiable reason or delays initiation and it is recognised that delivery within the delivery period is difficult
• Where there is a good reason for not being able to perform the contract smoothly due to the lack of technical production and quality control capabilities of the supplier
• Where B commits an act of bribery, commercial bribery, embezzlement, breach of trust, accounting irregularity or equivalent in connection with the production and delivery of ordered items and in case of non-payment of the subcontract price