Samsung Group Structure

COMPANY REPORT CGCG -1-

Company Report

Samsung Life Insurance [032830, KOSPI] CENTER FOR GOOD CORPORATE GOVERNANCE Analyst: Sun Woong Kim [email protected] Dec. 21, 2010

Characteristics of Corporate Governance 1. The Company is a financial affiliate of Samsung Group which is the largest business

group in South Korea. As such, it has both merits and demerits; corporate value can be enhanced by transactions with affiliates, but corporate governance can be damaged by the Group’s strategies or the controlling shareholder’s interest.

2. The value of the Company’s shareholdings in affiliates amounts to 8.18% of its total assets, but these are idle shares held for control purposes.

3. The Company may adopt a holding company structure in the future, but it will depend on whether the controlling shareholder can acquire a sufficient number of shares in the holding company.

4. It is doubtful whether the Company’s stock price will further increase, since it was overvalued at the time of the IPO. In addition, there are several factors that may affect the Company, such as change in the ownership structure, reinforced influence of the controlling shareholder and transfer of control to the next generation.

1. Corporate Governance Overview

Ownership Structure The largest shareholder of Samsung Life Insurance (“Samsung Life”) is Chairman Kun-Hee Lee who holds a 20% stake as of the end of September 2010. Other affiliates and foundations of Samsung Group, which are under Lee’s control, collectively own 51.76% of the Company. Apart from Samsung Group’s affiliates, Shinsegae Co., Ltd. is the second largest shareholder of Samsung Life, holding a 11.07% stake in it. In the past, Shinsegae was an affiliate which belonged to Samsung Group. As a recently listed company, Samsung Life has relatively fewer foreign shareholders (with a 5.18% stake), and the Company’s employee shareholders also hold a 5.85% stake. Other domestic shareholders own 26.14% of the Company. Before the IPO, Samsung Life’s shareholders were comprised of Kun-Hee Lee, Samsung Group’s affiliates, the Company’s officers and employees and Samsung Motors’ creditors. However, the creditor group made a tender offer for their shares at the time of the IPO in May 2010.

CENTER FOR GOOD CORPORATE GOVERNANCE SAMSUNG LIFE INSURANCE

COMPANY REPORT CGCG -2 -

(unit: %) Controlling Shareholder

& Related Parties Shinsegae Employee

Shareholders Domestic

Shareholders Foreign

Shareholders

51.76 11.07 5.85 26.14 5.18

Board Composition The Board of Directors (“BOD”) of Samsung Life consists of nine directors (four internal directors and five outside directors) as of September 2010. Under the Insurance Business Act, outside directors should constitute the majority of the Company’s BOD, and the number of directors should not exceed nine. The term of directors is three years, but the second term of reelected outside directors is only one year. An outside director may hold the directorship for five years in total. In addition, the Company has a staggered board, where one-fifth of the outside directors come up for election annually. As subcommittees under the BOD, the Company has established three mandatory committees (the Audit Committee, the Outside Director Nomination Committee and the Risk Management Committee) as well as three non-mandatory ones (the Related Party Transaction Committee, the Steering Committee and the Evaluation & Compensation Committee). Under the Insurance Business Act, the Company has set up the Audit Committee that consists of one internal director and two outside directors. One of the outside directors sits as the Chair.

Number of Internal Directors

Number of Outside Directors

Number of Audit Committee

Members

Number of Directors’ Seats Vacant on BOD

4 5 1 internal director & 2 outside directors 1

Major Provisions of Articles of Incorporation & Statutory Regulations The Articles of Incorporation (“AOI”) of Samsung Life stipulate that the Company may issue new shares to third parties for business purposes, but may not issue stock-related bonds (convertible bonds or bonds with warrants). The AOI allow proxy voting at the General Shareholders’ Meeting, but cumulative voting and voting-by-mail are not permitted. In addition, the Company may not pay interim dividend, but may cancel shares upon the BOD’s approval.



Samsung Group’s Affiliates Samsung Life is a financial affiliate of Samsung Group, which has been designated as a ‘large business group’ by the Fair Trade Commission. As of October 2010, Samsung Group ranks the 1st among South Korean large business groups in terms of asset size, and has 67 affiliates in the business fields of electronics, construction, trade, heavy industry, insurance, securities, investment trust, chemicals, textiles, security services, hotel management, etc. Shareholder Return Samsung Life was not listed until 2009, and its dividend payout ratio had been below 10% until 2007. At the end of 2009, however, the Company raised its dividend by 562%, from 200 KRW to 1,125 KRW per share, immediately before it went public. Yet, it is doubtful whether the Company will maintain the same dividend payout ratio after the IPO.

2. Corporate Governance Analysis

De Facto Holding Company of Samsung Group

Samsung Life is the pillar of Samsung Group, an entity controlled by Chairman Kun-Hee Lee, and acts as a de facto holding company using its ample financial resources to control other affiliates. As a de facto financial holding company, Samsung Life is the largest shareholder of the Group‘s financial affiliates, which include Samsung Fire & Marine Insurance, Samsung Card, Samsung Securities and Samsung Asset Management. Moreover, Samsung Life is also the largest shareholder of the Group‘s non-financial affiliates, such as Samsung Electronics and Samsung C&T. Ostensibly, Samsung Everland appears to be the Group’s holding company because it controls Samsung Life. In fact, however, it is Samsung Life that is the largest shareholder of the Group’s major affiliates. The Company has continuously invested its profits in Samsung Electronics and other affiliates. On the other hand, Samsung Life’s shareholdings in affiliates are an impediment to its conversion into a holding company. The conversion will be easier if the Company unloads its entire stake in Samsung Electronics, or if the Company acquires more than a 20% stake in it. In the case of the former, however, the Company will lose control of Samsung Electronics. In the case of the latter, the Company will be restricted by the regulations under the Insurance Business Act and the Capital Markets Consolidation Act, and also by the Company’s limited



financial capacity. In sum, it is not easy for Samsung Life to adopt a holding company structure under current circumstances. In the end, Samsung Group will adopt a holding company structure only when Kun-Hee Lee and his family can reinforce their control of the Group’s major affiliates, or when Samsung Life comes up with a solution for the problem of its shareholdings in Samsung Electronics. [Samsung Group]

42.32

20.8 19.3 1.5

10.4

11.4

5.5

41.0

65.3

51.0

5.17.535.32.4

25.6

2.9

20.4

17.2

21.7

46.0

35.7

25.5

2.6

5.1

23.7

17.6

50.0

13.1

21.4

27.3

12.6

4.3

18.3

5.6

38.7

11.5

10.7

7.4

4.0

8.4

3.9

13.0

26.4

11.0 5.3

7.3

3.4

88.3

50.0

2.4

14.1

14.1

40.86

7.42

33.2

9.713.4

1.4

3.72Kun-Hee Lee

Samsung SDI

Hotel Silla

Samsung Heavy

Samsung LED

Samsung SDS

Credu

Cheil IndustriesSeoul commtech

Samsung Techwin

Cheil Worldwide

S1

I market Korea

Samsung

Corp

Jae-Yong Lee

Everland

Samsung Life

Samsung F& M

Samsung Securities

Samsung Card

Samsung

Electronics

Samsung

Asset

Samsung

future

Sansung ElectronicsService

Samsung

Petrochemical

Samsung Engineering

Samsung General

Chemical

Samsung fine

Chemical

Samsung elctromechanics



Financial Supervision on Management Quality & Transparency Pursuant to the Insurance Business Act, Samsung Life is regulated by the Financial Supervisory Service (”FSS”) with regard to management quality and corporate governance. Ostensibly, transparency in management is higher in Samsung Life than in other listed companies, since its management and financial soundness are officially supervised. In 2007, however, the so-called ‘Samsung slush fund scandal’ revealed that Samsung Life’s shares had been held in false-name accounts, and also that Samsung’s controlling family had been involved in other irregular activities. Despite these facts, Samsung Life is still relatively free from sanctions or restrictions due to the Group’s overwhelming influence.

[Restrictions under Insurance Business Act] Qualifications of Major Shareholders

Fit and proper test in terms of the financial soundness / Subject to approval from the FSS

Restriction on Insurer’s Concurrent Operation of Life Insurance Business, Non-Life Insurance Business and Non-Insurance Businesses

Prohibition of concurrent operation of life insurance business and non-life insurance business / Prohibition of operation of non-insurance businesses

Restriction on Qualifications of Officers and Concurrent Holding of Other Offices

Disqualification of officers: Persons who have been given criminal sanction or discharged due to violation of financial laws; Persons who served at any financial institution whose license and permit were cancelled; Persons who held a responsible position at any troubled financial institution. Officers of insurance companies shall not concurrently serve at other profit-making corporations.

Restriction on Transactions with Large Shareholders

1. An insurer shall be prohibited from performing directly or indirectly the act falling under each of the following subparagraphs with any of its large shareholders:

1)The act of extending any credit for the purpose of assisting any large shareholder in his equity investment in other company 2)The act of transferring any asset without compensation, or the act of

selling or exchanging any asset or extending credit on terms greatly disadvantageous to the relevant insurance company in light of the conventional terms of transactions 2. In case of any transactions with its large shareholders falling under each of the following subparagraphs, the insurer shall obtain the consent of all directors on the Board. * The act of extending any credit in excess of the lesser amount between 1/1,000 of its equity capital and KRW 1 billion * The act of acquiring bonds or shares issued by its large shareholders in excess of the lesser amount between 1/1,000 of its equity capital and KRW 1 3. Obligation to publicly disclose transactions with its large shareholders * The act of extending any credit in excess of the lesser amount between 1/1,000 of its equity capital and KRW 1 billion * The act of acquiring bonds or shares issued by its large shareholders in excess of the lesser amount between 1/1,000 of its equity capital and KRW 1 billion



* The act of exercising voting right of the stocks issued by its large shareholders 4. Prohibition of large shareholders’ exertion of unfair influence * The act of requiring the insurance company to provide him with undisclosed material or information for the purpose of exerting unfair influence * The act of exerting unfair influence on the personnel administration or management of the insurance company in collusion with other shareholders or equity investors on the condition that he provides them with economic interests and other benefits * The act of receiving credits from the insurance company or the act of urging the insurance company to hold stocks or bonds issued by its large shareholders in excess of the ratio prescribed by the law * The act of extending credit to its large shareholders’ competitors on unfavorable terms 5. Measures to be taken when its large shareholders (their companies) are financially distressed * Prohibition of extending additional credit to its large shareholders * Prohibition of acquiring marketable securities issued by its large shareholders * Limitation of transactions with its large shareholders in the nature of financial supports

Restriction on Equity Investment

An insurer shall not acquire shares of any other company in excess of 15% of the total outstanding shares of such company; provided, however, that subject to the approval of the FSS, it may acquire shares of its subsidiaries without limitation.

Group’s Influence & Risks in Corporate Governance Being an affiliate of Samsung Group, Samsung Life has both merits in business and risks in corporate governance. The Company earns profits by selling insurance products and leasing real estate to other affiliates of the Group. In particular, the ratio of inter-affiliate sales is exceptionally higher in Samsung Life than in its competitors. These related-party transactions contribute to the enhancement of the Company’s value. [Comparison of Top Insurers’ Sales] (unit: million KRW, %)

Insurer Sales from Affiliates Total Sales Ratio Samsung

Life Insurance 1,851,840 25,889,944 7.15

Korea Life Insurance 47,456 12,096,999 0.39

Tong Yang Life Insurance 23,983 3,309,352 0.72

Moreover, Samsung Life sells insurance products to the Group’s employees, which is not included in the official records. This also helps Samsung Life gain an advantage against competitors. Despite the aforementioned merits, however, transactions with affiliates and specially related persons can also create the risk of capital outflow.



The biggest risk in Samsung Life’s corporate governance is that the Group and its controlling family can use the Company for their own interests. The Company has already invested a large amount of money in Samsung Motors, Samsung Card and other affiliates. It should be noted that Chairman Kun-Hee Lee, who resigned from office after the Samsung slush fund scandal in 2007, made a comeback in 2010. He also restored the Group’s Strategic Planning Office that had been dismantled in the wake of the scandal. Now, Kun-Hee Lee and the Strategic Planning Office control the Group’s operations even more strongly. Their presence is an important factor in Samsung Life’s decision-making process, which compromises the independence of the Company’s BOD and increases risks in the Company’s governance structure. 1) Financial Support to Samsung Card When Samsung Card went insolvent in 2003, Samsung Life and Samsung Electronics participated in Samsung Card’s rights issue to acquire a 20% stake in it. They also provided more credits to Samsung Card. 2) Financial Support to Samsung Economic Research Institute During a three-year period from 2006 to 2008, Samsung Life paid 8 billion KRW to Samsung Economic Research Institute for a service which was not provided so that the Institute could cover its deficit resulting from various government-run research projects. This was revealed during a general inspection conducted by the FSS, for which the Company was sanctioned by the FSS. 3) Debt Guarantees to Samsung Motors In 1999, Samsung Group Chairman Kun-Hee Lee and Samsung Motors’ creditors signed an agreement on the liquidation of Samsung Motors’ debt. As the Group’s major affiliate, Samsung Life agreed to provide debt guarantees to Samsung Motors. The Company still bears the contingent liabilities. Doubt over Stock Value

When Samsung Life went public in May 2010, its stock price was considered to be overvalued. The Company’s IPO was related to the liquidation of Samsung Motors’ debt. As Samsung Motors went insolvent in 1999, Chairman Kun-Hee Lee gave two million shares of Samsung Life to Samsung Motors’ creditors as collateral for the debt on condition that he would repay 2.4 trillion KRW by 2001, which was based on the premise that Samsung Life’s stock value would be 700,000 KRW per share. Then, Samsung Life and other affiliates entered into an agreement with the creditors that, if the value of Samsung Life shares provided by Kun-Hee Lee should fall short of principal and interest repayments, they would collectively



repay the balance. Yet, Samsung Life remained unlisted for a considerable time, with its stock value undetermined. Finally, the creditor group brought the matter into court in 2006, alleging that the affiliates involved, including Samsung Life, should repay 4.7 trillion KRW. Then, the court sharply reduced the amount of interest, and the creditors appealed against the decision. While the case was pending in the Court of Appeals, Samsung Life went public at 1,100,000 KRW per share in May 2010. Due to the IPO of Samsung Life, the Group can now repay 2.3 trillion KRW, which was decided at the first trial, without additional payment by the affiliates involved. Still, they may have to repay a maximum of two trillion KRW according to the ruling of the Court of Appeals, since the creditors still claim the repayment of 4.7 trillion KRW. In conclusion, the IPO of Samsung Life was closely related to the liquidation of Samsung Motors’ debt, and the stock price at the time of the IPO was overvalued so that the Group could repay the debt. On the other hand, Kun-Hee Lee still retains a 20% stake in Samsung Life, which is expected to be inherited in the future. If the Company’s stock price goes down, it will reduce the tax burden of Lee’s inheritors, unless they want to pay the inheritance tax with shares. Transfer of Control Samsung Group’s controlling family has never directly participated in Samsung Life’s management. The CEO of Samsung Life is usually an executive officer from the Group’s Secretary Office. Jae-Yong Lee, who is Chairman Kun-Hee Lee’s son, has been recently promoted to Director of Samsung Electronics, but is not likely to sit on the BOD of Samsung Life. On the other hand, it is speculated that the Group’s Strategic Planning Office will influence the Company more strongly.

3. Measures for Corporate Governance Improvement

Enhancement of BOD’s Independence Samsung Life needs to make decisions independently of the Group’s Strategic Planning Office or Chairman Kun-Hee Lee’s family, since their influence creates risks in the Company’s corporate governance. For this, the BOD should be comprised of new outside directors who can represent the interest of ordinary shareholders, instead of those who are nominated by the controlling shareholder and management.



Management of Shareholdings in Affiliates Currently, Samsung Life is holding too many shares in affiliates for control purposes. As of the end of March 2010, the value of the Company’s shareholdings in listed affiliates amounts to 10 trillion 891.4 billion KRW, which comes up to 8.18% of its total assets. The Company needs to manage these idle shares adequately, for example, by effectively unloading part of the shares. Minority Shareholders Have No Leverage to Improve Corporate Governance Minority shareholders can exercise their rights by soliciting the exercise of voting rights as proxy (0.01%~0.03% of the total outstanding shares) in order to hold directors accountable for damaging the Company’s interest by illegal activities or mismanagement. Their rights include the right to bring shareholders’ derivative actions, the right to inspect accounting books, the right to make shareholder proposals and the right to nominate outside directors. Samsung Life is controlled by the powerful Samsung Group, and even financial supervisory authorities take a back seat in the case of Samsung Life. Thus, it is not easy for minority shareholders to improve the Company’s corporate governance by exercising their ordinary rights. In the election of audit committee members, the voting rights of the largest shareholder are restricted by the three-percent rule. The Group controls 27% of the total voting stock in electing audit committee members who also sit as outside directors and 6.95% in electing audit committee members who also sit as internal directors. However, since only incumbent directors can be candidates for the Audit Committee, it is virtually impossible for minority shareholders to nominate audit committee members. Still, minority shareholders can exercise their veto. In conclusion, in cases where Samsung Life has serious problems related to corporate governance, minority shareholders need to consider the possibility of criminal charges in order to pressure the Company’s management or controlling shareholder.

Samsung Life Insurance [032830, KOSPI]

1. Ownership Structure and Voting Rights

(As of

Individual* Collective**

Controlling Shareholder & Persons with Special Interest 41,519,180 20.76 20.76 5.51 -

Samsung Everland 38,688,000 19.34 19.34 5.51 -Samsung Culture Foundation 9,360,000 4.68 4.68 5.51 -Samsung Life Foundation 9,360,000 4.68 4.68 5.51 -Samsung Gwangju Electronics 1,315,880 0.66 0.66 1.21 -Samsung Electro-Mechanics 1,206,380 0.60 0.60 1.11 -Samsung Fine Chemical 944,090 0.47 0.47 0.87 -Samsung SDS 708,910 0.35 0.35 0.65 -Cheil Worldwide 425,560 0.21 0.21 0.39 -

103,528,000 51.76 51.76 26.26 6.95Other Shareholders

Shinsegye 22,144,000 11.07 11.07 5.51 6.95Foreign Shareholders 10,357,360 5.18 5.18 9.51 12.00ESOP 11,694,188 5.85 5.85 10.74 13.55Domestic Shareholders 52,276,452 26.14 26.14 47.99 60.56

(Unit: number of shares, %)

Number ofShares

Restricted by 3% Rule

Shareholdings Voting Rights

OrdinaryItems

StakeRatio

September 30, 2010)

Sub-Total

Kun-Hee Lee

96,472,000 48.24 48.24 73.74 93.05

Treasury Stock - - - - - 200,000,000 100.00 100.00 100.00 100.00

Dilutable securities Not applicable

* Individual Restriction by 3% Rule: With respect to the election of an auditor who also sits as an outsidedirector and an amendment to the Articles of Incorporation for the introduction/exclusion of the cumulativevoting system, each shareholder holding more than 3% of the total voting stock cannot exercise the votingrights for the stock in excess of 3%.

** Collective Restriction by 3% Rule: With respect to the election of an auditor or an auditor who also sits asan internal director, the combined voting rights of the majority shareholder and the related parties cannotexceed 3% of the total voting stock. Besides, a shareholder holding more than 3% of the total voting stockcannot individually exercise the voting rights in excess of 3%.

Sub-Total

Total

COMPANY REPORT © CGCG 1


Disparity between Control & Ownership(unit : %, multiple)

Sep. 2010 Dec. 2009 Dec. 2008 Dec. 2007 Dec. 2006Disparity 21.64 21.64 21.64 27.73 27.73Multiplier 1.72 1.72 1.72 3.00 3.00

1) the disparity between ownership - control rights: voting rights - cash flow rights2) the voting rights multiplier: voting rights/ cash flow rights 3) the higher the disparity in (1) or the voting multiplier in (2), the greater the risk of tunneling.

2. Change of Ownership Structure(Unit : %)

Sep. 2010 Dec. 2009 Dec. 2008 Dec. 2007 Dec. 2006Controlling Shareholder & Persons with Special Interest

Kun-Hee Lee 20.76 20.76 20.76 4.54 4.54 Foundations 9.36 9.36 9.36 9.36 9.36 Affiliates 21.64 21.64 21.64 21.64 21.64 Directors - - - 6.08 6.08 Sub-Total 51.76 51.76 51.76 41.62 41.62

Other ShareholdersOther Foreign 5.18 - - - - Other domestic 43.06 48.24 48.24 58.38 58.38 S b T t l 48 24 48 24 48 24 58 38 58 38

* "the disparity between ownership and control right" is defined as [{the stakes directly held by the controlling family} -{the voting rights exercisable by the controlling family}]

Sub-Total 48.24 48.24 48.24 58.38 58.38

Treasury Stock - - - - - 100.00 100.00 100.00 100.00 100.00

3. Board Structure and Auditorship

Related Provisions in AOI

Board Auditor (Committee)Term of officeBoard chairmanship

Risk Management Committee 3 Internal / 2 outsideInside Trading Committee 3 outside

Person who held BOD

Outside Director Nomination Committee(ODNC)

Audit Committee

Sub-Committee

Steering Committee

Resolution for BOD

1 Internal / 2 OutsideCompensation Committee3 Internal

At least 50% of director must be present / more than50% of the attending director must approve

2 Internal / 2 outside

More than 3 members, More than 2/3 outside Director

Provisions

Director 3 years / Auditor 3 years

Content

Total

4 Internal / 5 Outside More than 3 directors (Outside director : More than25%)

-

3 years1 Internal / 2 Outside

1 Internal / 2 Outside

Soo-Woong Hwang, Outside Director



Board Structure(As of

Name End ofTerm

Soo-ChangLee May. 2012

Sang-HangKim Jan. 2013

Jong-YoonHan Jan. 2013

Tae-GonMoon Jan. 2013

Soo-WoongHawng May. 2012

Jong-NamLee Jan. 2013

Young-JinKim May. 2012

Remarks*Position orCommittee

-

Samsung life Direcor

Chairman of Korea FutureAssociation

Former Officer of NationalTax Service

Vice President -

Samsung life Direcor

Career

-

InternalDirector

Attandance rate 100%

Member of AuditCommittee

Former Officer of Board ofAudit & Inspection of Korea

Member o f AuditCommittee,

Compensationcommittee


Chairman of BODMember of Risk

Management committeeAttandance rate 100%

Former Rep. Director ofSamsung Fire & Marine

President

OutsideDirector

Vice ChairmanRep.Director -

Attorney at Law

Chairman of InsideTrading Committee,

Member ofCompensation

committee

September 30, 2010)

Keun-OkRyu May. 2012

Jeong-DongKim May. 2012

9* Remarks: the relationship with the controlling shareholder, interlocking positions in the affiliated entities,

attendance rate of last year, newly elected or not

Auditor

Name End ofTerm

Keun-OkRyu May. 2012

Jong-NamLee Jan. 2013

Tae-GonMoon Jan. 2013

OtherParticulars*

Professor of Seoul IndusrtyUniv.(Business)

Chairman of AuditCommittee, Member of

Inside tradingcommittee


Attandance rate 75%

Career

Professor of Seoul IndusrtyUniv.(Business)

Position orCommittee

Professor of YonseiUniv.(Business)

Member of Riskmanagement

Committee, Insidetrading committee

Chairman of Korea FutureAssociation

Total

-Chairman

- -

OutsideDirector

OutsideDirector

Standing

-

Former Officer of Board ofAudit & Inspection of Korea

-



Compensation(Unit : mil. KRW, shares)

Fair Value AmountInternal Director 4,511 64 - - Outside Director 191 61 - - Auditor - 122 1,128 - - Internal Director 1,290 430 - - Outside Director 191 64 - - Auditor - 127 64 - -

4. Exercise of Shareholder's Right

Minimum Shareholdings Required for the Exercise of Minority Shareholders’ Rights(As of

MinimumNumber of

Shares

MinimumStake (%)

MinimumNumber of

Shares

MinimumStake (%)

10,000 0.005 2,000,000 1250,000 0.125 2,000,000 1250 000 0 125 6 000 000 3

September 30, 2010)

20,000

20,000

Minority Shareholders’ Rights

AveragePayment

Stock Option

Right to claim injunctive relief for directors’ illegal activities

2009

2008

AGM approvalon remunerationYear

Right to bring shareholders’ derivative actions

Shares Held Less Than6 Months

Ri ht t d d di i l f di t / dit

TotalPayment

Shares Held More Than 6 Months

250,000 0.125 6,000,000 3500,000 0.25 6,000,000 3

1,500,000 0.75 6,000,000 31,500,000 0.75 6,000,000 3

500,000 0.25 6,000,000 32,000,000 1 6,000,000 3

Exercise of Shareholder's Right associated with AGM

Voting available through proxy Cumulative voting excluded/ Vote-by-Mail excluded

Expected Timeline and Proposals Available at the next AGM

Agenda disclosure dateSubmission Deadline

No upper limit regarding the number of directors, thus additional election possible

The Audit FunctionNo upper limit regarding the number of auditors, thusadditional election possible

The BOD

* based on shares with voting rights

AvailableProposal

Apr. 21, 2011

Right to demand adoption of cumulative voting*

Right to inspect accounting books

May. 17, 2010

Right to demand appointment of inspector

Right to demand dismissal of director/auditor

Shareholder proposal right*

AGM Date

ContentProxy

Jun. 1, 2010

Right to call an extraordinary shareholders’ meeting*

Resolution of ordinary items

Content



5. Available Defensive Measures

Not applicablePossible but no special provision existsNoneNot applicableNo provision in AOI but staggered board is partially in existenceNone

- Not applicable

6. Restrictions by Applicable Laws

Monopoly Regulation and Fair Trade Act

Supervoting stocks

Defense Mechanism in Relevant Laws

Allocation of New Stocks to the third party

Content

Finance and insurance companies affiliated to an FTC-designated large business group shall

Treasury Stocks (%)

Limitation of Voting

Not applicableGolden Parachute

AOIRestrictions on the number of DirectorsOthers

RestrictionsRelevant Law

A company that belongs to an FTC-designated large business group shall not provide newdebt guarantees to its domestic affiliates.

Prohibition of Cross-Shareholdings

A company that belongs to a large business group designated by the Fair Trade Commission("FTC") shall not acquire shares of an affiliate that has acquired or owns its shares.

OperationalStaggered BODFriendly Shareholder

Prohibition of Cross-Debt Guarantees

Transactions with specially related parties in excess of 10% of the company's equity capital or10 billion KRW in the following cases;- Offering or trading funds in forms of provisional payments or loans.- Offering or trading securities, such as stocks or company bonds.- Offering or trading assets in forms of real estate or intangible property rights.

not exercise more than 15% of their voting rights on the shares owned by themselves and/orpersons with special interests regarding certain items at the General Meeting of Shareholdersof an affiliate in which they hold a stake.

In case where a company that belongs to an FTC-designated large business group and/or itspersons with special interest intends to establish a holding company, it must annul preexistingdebt guarantees between the holding company and its subsidiary, or between its subsidiaries.

Limitation of VotingRights in Finance andInsurance Companies

Restriction on Practice ofHolding Company

Maintaining the debt-to-equity ratio under 200%Publicly held subsidiaries 20%, non-publicly held subsidiaries 40%　　

Cannot own a financial institution as a subsidiaryCannot own stocks of entities other than the subsidiaries for the control purpose

Restriction onEstablishment of HoldingCompany

Board’s Resolution,Public Disclosure



Commercial Act

Relevant Law

Act on the Structural Improvement of the Financial Industry (“ASIFI”)

Relevant Law Restrictions

Restrictions onacquiring shares of

other entities

Any financial company must first acquire approval from the Financial Services Commission inany of the following cases ~- in case the financial company, alone or with its financial affiliate, own 20% or more in othercompany's equity with voting rights; or- in case the financial company owns 5% or more equities (w/ voting rights) in other affiliatedfinancial company or in a company that belongs to the same business enterprises

Major Shareholders,Persons with SpecialInterest, Directors,Auditors

Restrictions

A company cannot enter into the following transactions with persons with special interest,directors or auditors;- Providing loans based on economic valuables, such as money, securities, real assets,intangible property rights, etc.- Providing guarantees based on real property, personal property and/or securities.- Providing debt-guarantee for these parties

Board’s Resolution,Report to GeneralMeeting of Shareholders

(Total Asset exceeding KRW 2 trillion) Transactions with the largest shareholder or otherspecially related parties in the following cases;- The volume of a single transaction exceeds 1% of the company’s total assets or total sales.- The total value of such transactions for the relevant year exceeds 5% of the company’s totalassets or total sales.

Insurance Business Act

Restrictions

Qualifications of MajorShareholders Fit and proper test in terms of the financial soundness; Subject to approval from the FSS

Restriction on Insurer’sConcurrent Operation ofLife Insurance Businessand Non-Life InsuranceBusiness as well as Non-Insurance Businesses

Prohibition of concurrent operation of life insurance business and non-life insurance business/ Prohibition of operation of non-insurance businesses

Restriction onQualifications of Officersand Concurrent Holdingof Other Offices

Disqualification of officers: Persons who have been given criminal sanction or discharged dueto violation of financial laws; Persons who served at any financial institution whose licenseand permit were cancelled; Persons who held a responsible position at any troubled financialinstitution

Officers of insurance companies shall not concurrently serve at other profit-makingcorporations.



Relevant Law

3) Obligation to publicly disclose transactions with its large shareholders

4) Prohibition of large shareholders’ exertion of unfair influence

Restrictions

Restriction onTransactions with Large

Shareholders

* The act of requiring the insurance company to provide him with

* The act of exercising voting right of the stocks issued by its largeshareholders

* The act of acquiring bonds or shares issued by its large shareholders inexcess of the lesser amount between 1/1,000 of its equity capital and KRW 1billion

* The act of extending any credit in excess of the lesser amount between1/1,000 of its equity capital and KRW 1 billion

* The act of acquiring bonds or shares issued by its large shareholders inexcess of the lesser amount between 1/1,000 of its equity capital and KRW 1billi

* The act of extending any credit in excess of the lesser amount between1/1,000 of its equity capital and KRW 1 billion

2) In case of any transactions with its large shareholders falling under each of the followingsubparagraphs, the insurer shall obtain the consent of all directors on the Board.

2. The act of transferring any asset without compensation, or the act of sellingor exchanging any asset or extending credit on terms greatlydisadvantageous to the relevant insurance company in light of theconventional terms of transactions.

1. The act of extending any credit for the purpose of assisting any largeshareholder in his equity investment in other company

1) An insurer shall be prohibited from performing directly or indirectly the act falling undereach of the following subparagraphs with any of its large shareholders:

5) Measures to be taken when its large shareholders (their companies) are financially distressed

* The act of receiving credits from the insurance company or the act of urgingthe insurance company to hold stocks or bonds issued by its largeshareholders in excess of the ratio prescribed by the law

* Prohibition of acquiring marketable securities issued by its largeshareholders

* The act of exerting unfair influence on the personnel administration ormanagement of the insurance company in collusion with other shareholdersor equity investors on the condition that he provides them with economicinterests and other benefits

undisclosed material or information for the purpose of exerting unfairi fl

* Limitation of transactions with its large shareholders in the nature offinancial supports

* Prohibition of extending additional credit to its large shareholders

* The act of extending credit to its large shareholders’ competitors onunfavorable terms

Restriction on EquityInvestment

An insurer shall not acquire shares of any other company in excess of 15% of the totaloutstanding shares of such company; provided, however, that subject to the approval of theFSS, it may acquire shares of its subsidiaries without limitation.



7. Adoption of the International Financial Reporting Standards ('IFRS')

Effect (Change in Net Asset)Status in year 2009

8. Dividend Policy

Related Provisions in AOI

Provisions Interim Dividend Allowed Stock cancellation/redemption Upon BOD's resolution /Approval by supermajority at the AGM

Dividend - Common Stock (unit: KRW, %)

2009 2008 2007 2006 2005 20044,530 565 3,573 2,573 3,131 2,8791125 200 200 200 200 150

- - - - - -24.83 35.39 5.6 7.78 6.39 5.21

Treasury Stock Not applicable

Dividend Payout Ratio

DividendDividend Yield Ratio

EPS

-Not Adopted Adopted or not

9. Risk Related to Affiliates(Unit: KRW million)

AcquisitionValue

Book Value AcquisitionValue

Book Value

1,299,336 1,516,036 1,321,991 1,400,901

SalesPurchase

35,850

2009

88,784

2008

Transactionswith affiliates

44,570

80,914

Securities based on Equity method

Guarantees for affiliates - -



10. Group Snapshot

Ownership Structure of Group(As of June 30, 2010)

42.32

20.8 19.3 1.5

10.4

11.4

5.5

41.0

65.3

51.0

5.17.535.32.4

25.6

2.9

20.4

5.1

23.

17.6

5.6

38.7

11.5

10.7

7.4

4.0

8.4

3.9

26.4

11.0 5.3

7.3

3.4

2.4

14.1

14.17.4

9.713.4

1.4

3.72Kun-Hee Lee

Samsung SDI

Hotel Silla

Samsung Heavy

S1

I market Korea

Samsung

Corp

Jae-Yong Lee

Everland

Samsung Life

Samsung F& M

Samsung Securities

Samsung

Samsung

Samsung

Asset

Samsung

futureSamsung General

Chemical

Samsung fine

Chemical

S

17.2

21.7

46.0

35.7

25.5

2.6

23.50.0

13.1

21.4

27.3

12.6

4.3

18.3

13.0

88.3

50.0

2.4

40.86

33.2

9.713.4

Samsung LED

Samsung SDS

Credu

Cheil IndustriesSeoul commtech

Samsung Techwin

Cheil Worldwide

Sansung Electronics

Service

Samsung

Petrochemical

Samsung Engineering

Samsung



Summarized Financial Statements of the Group Affiliates(Unit: KRW million)

As of Sales Operating Net Income Total Asset Net AssetSamsung SDI KOSPI Dec. 2009 3,550,584 88,229 217,992 6,619,819 4,987,098Samsung Corp. KOSPI Dec. 2009 10,875,929 280,505 307,542 13,884,591 7,454,927Samsung Life Insurance KOSPI Dec. 2009 25,695,233 848,749 906,095 133,045,073 12,132,820Samsung Engineering KOSPI Dec. 2009 3,471,401 315,615 258,896 2,452,484 776,664

KOSPI Dec. 2009 3,192,031 215,964 278,476 4,209,563 2,574,305

Samsung Electronics KOSPI Dec. 2009 89,772,834 6,348,528 9,649,487 86,024,154 66,824,711Samsung fine chemical KOSPI Dec. 2009 1,038,396 90,714 86,673 1,025,139 855,678Samsung Heavy Industries KOSPI Dec. 2009 13,094,944 793,631 669,855 20,187,524 2,840,562Samsung Securities KOSPI Dec. 2009 2,564,719 315,510 245,308 13,174,881 2,598,738Samsung Card KOSPI Dec. 2009 2,716,224 663,564 603,846 11,788,784 4,425,557Samsung techwin KOSPI Dec. 2009 2,642,743 205,329 172,111 2,444,361 1,082,900Samsung F&M KOSPI Dec. 2009 13,262,264 666,783 524,510 26,655,886 4,940,328I market Korea KOSPI Dec. 2009 1,182,116 28,044 21,105 347,396 97,777S1 KOSPI Dec. 2009 736,474 115,274 96,836 810,969 620,504Cheil Worldwid KOSPI Dec. 2009 540,278 47,456 91,050 1,032,373 565,976Cheil industries KOSPI Dec. 2009 4,261,096 263,833 126,983 3,118,705 1,969,508Hotel Silla KOSPI Dec. 2009 1,213,244 54,130 31,484 1,072,979 526,468Ace Digitech KOSDAQ Dec. 2009 577,261 36,424 16,587 312,326 95,393Credu KOSDAQ Dec. 2009 63,785 3,337 5,374 83,113 77,053Gamy plus Audited Dec. 2009 29,724 -144 -812 14,809 4,435Global Tech Audited Dec 2009 54 960 2 819 2 940 26 978 15 146

Samsung Electro-Mechanics

Company

Global Tech Audited Dec. 2009 54,960 2,819 2,940 26,978 15,146Living Plaza Audited Dec. 2009 1,463,213 -1,677 2,301 286,504 136,254Samsung Economy Institu Audited Dec. 2009 108,823 -1,173 185 115,001 88,115Samsung Gwangju Electro Audited Dec. 2009 3,204,650 36,422 42,589 1,066,202 768,530Samsung Linons Audited Dec. 2009 34,098 15 28 58,838 -2,429Samsung mobile Display Audited Dec. 2009 3,635,461 75,387 100,179 2,686,872 1,525,564Samsung Venture Audited Dec. 2009 12,959 3,250 2,524 48,207 44,528Samsung Petro-chemical Audited Dec. 2009 1,780,175 122,812 92,670 596,324 210,899Samsung Future Audited Dec. 2009 60,346 23,339 17,508 808,640 100,435Samsung Everland Audited Dec. 2009 1,726,474 168,582 149,745 3,930,370 2,315,875Samsung SDS Audited Dec. 2009 2,494,052 267,562 265,423 1,988,156 1,409,259Samsung LED Audited Dec. 2009 544,598 21,692 56,721 728,089 344,061Samsung Asset manageme Audited Dec. 2009 104,410 34,257 21,732 228,925 176,282Samsung Logitech Audited Dec. 2009 1,101,162 123 2,672 153,943 49,404Samsung Electronics servic Audited Dec. 2009 668,662 519 2,859 203,130 61,823Samsung General Chemica Audited Dec. 2009 177,653 176,979 170,781 1,044,186 1,020,915Samsung Corning Fine Audited Dec. 2009 5,231,245 3,190,462 2,597,892 6,298,736 5,646,206Samsung Thales Audited Dec. 2009 623,271 26,218 30,408 535,776 324,348Samsung Total Audited Dec. 2009 4,731,236 503,510 355,969 3,119,540 1,949,319Samsung Life Real trust Audited Dec. 2009 20,429 7,786 5,818 69,458 62,717Seoul Commtech Audited Dec. 2009 430,311 21,057 17,558 254,552 173,605Semes Audited Dec. 2009 315,510 22,240 12,108 244,715 119,966Secron Audited Dec. 2009 70,717 888 234 59,964 38,846



(Unit: KRW million)As of Sales Operating Net Income Total Asset Net Asset

Steco Audited Dec. 2009 247,279 2,426 3,648 90,474 67,093Scui.com Audited Dec. 2009 40,115 2,597 2,533 37,237 27,261CV net Audited Dec. 2009 72,721 2,920 2,815 38,212 15,577SD flex Audited Dec. 2009 5,011 -702 -2,121 10,236 6,514SB remotive Audited Dec. 2009 0 -64,645 -54,039 302,373 249,263SLCD Audited Dec. 2009 9,888,478 1,970 16,546 5,424,336 4,105,047SEHF Korea Audited Dec. 2009 340,739 15,576 12,857 87,383 52,432Open tide Korea Audited Dec. 2009 86,505 -1,856 -1,293 19,016 7,348Allat Audited Dec. 2009 28,717 -437 150 17,420 9,063E samsung International Audited Dec. 2009 0 -566 16,520 62,472 59,821Carecamp Audited Dec. 2009 236,525 3,210 2,255 123,885 14,161Handuk Chemical Audited Dec. 2009 44,982 11,121 9,707 40,666 35,295

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