(1) A company may, as prescribed by its articles of incorporation, grant by a resolution of a general meeting of shareholders as provided for in Article 434 an option for purchasing new shares or its own shares (hereinafter referred to as "stock option") at a fixed price established in advance (hereinafter referred to as "exercising price for stock option") to its directors, executive directors, auditors or other employees who will, or will be able to contribute to its incorporation and management, technological innovation, etc.: in cases where the exercising price for stock option is lower than the actual price of the relevant stock, the company may compensate for the relevant difference by cash or transfer its own shares equivalent to the relevant difference. In such cases, the actual stock price shall be appraised as of the date of exercising the stock option.
(2) The stock option referred to in paragraph (1) shall not be granted to any of the following persons:
1. A stockholder who holds 10 percent or more of the total outstanding shares of the company excluding non-voting shares;
2. A person who actually exercises influence over major management matters of the company, such as appointment or dismissal of directors, executive directors, and auditors;
3. The spouse and lineal ascendents or descendents of a person falling under subparagraph 1 or 2.
(3) The number of new shares to be issued or the company's own shares to be transferred under paragraph (1) shall not exceed 10 percent of the total outstanding shares of the company.
(4) The price for exercising a stock option as referred to in paragraph (1) shall exceed a price falling under any of the following subparagraphs:
1. In cases of issuing new shares, the higher amount between their substantial price as of the date of granting the stock option and their face value: Provided, That in cases where no par value shares are issued, the amount of one share, out of the amount to be included in paid-up capital, shall be deemed the face value;
2. In cases of transferring the company's own shares, their substantial price as of the date of granting the stock option.[This Article Wholly Amended by Act No. 10600, Apr. 14, 2011]