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088
KIA MOTORS 2006 Annual Report
Financial institutions, whose loans to the Company had been forgiven or converted into the Company’s common stock, and Hyundai Motor Consortium were
granted rights to subscribe to the registered non-voting preferred stock with a par value of ￦5,000. On December 28, 1998, the financial institutions acquired
rights equal to 10 percent of the forgiven debt and liabilities converted into new capital stock. Also, on December 28, 1998, the Hyundai Motor Consortium
acquired rights to the extent that the Consortium shall own up to 51 percent of all the additional preferred shares to be issued. These pre-emptive rights can be
exercised at once or several times in the fifth or tenth year from December 28, 1999, the date the court approved the reorganization plan and the Company shall
pay a dividend equal to at least two percent for the preferred shares to be issued for the exercise of the rights. In 2003, the fifth year from the December 28, 1999,
no pre-emptive right was exercised. In addition, the Asia Motors-invested financial institutions and Hyundai Motor Consortium were granted pre-emptive rights
under the same conditions as described above.
The Company completed stock retirement of 10 million shares of treasury stock on July 2, 2003, which had been acquired for such retirement purposes based on
the decision of the Board of Directors on May 9, 2003. Also, the Company completed stock retirement of 12.5 million shares of treasury stock on May 28, 2004,
which had been acquired for ￦136,701 million for such retirement purposes based on the decision of the Board of Directors on March 19, 2004 and remaining
shares of common stock are 347,230,455 shares. The remaining shares of common stock are reduced from 359,730,455 shares to 347,230,455 shares. Due to these
stock retirements, the aggregate par value of issued shares of ￦1,736,152 million differs from the capital stock amount.
As of December 31, 2006, 602,050 shares of treasury stock (0.17% of total stock) lost their voting rights due to clause 2 of Article 369 of the Korea, Commercial Code.
In addition, 4,368,690 shares of common stock (1.26% of total shares) owned by Hyundai Capital Co. also lost their voting rights under Article 11 of the Monopoly
Regulation and Fair Trade Act of Korea.
(22) Capital Surplus
Capital surplus as of December 31, 2006 and 2005 are summarized as follows:
(23) Retained Earnings
Retained earnings as of December 31, 2006 and 2005 are summarized as follows:
(a) Legal reserve
The Korean Commercial Code requires the Company to appropriate as legal reserve an amount equal to at least 10% of cash dividends for each accounting period
until the reserve equals 50% of stated capital. The legal reserve may be used to reduce a deficit or transferred to common stock in connection with a free issue of
shares.
1,580,065
119,859
3,920
1,703,844
￦
￦
2006 2005
1,580,065
119,859
3,087
1,703,011
Paid-in capital in excess of par value
Gain on capital reduction
Other
Won (millions)
42,800
1,750,700
39,361
1,832,861
￦
￦
2006 2005
34,100
1,262,900
583,153
1,880,153
Legal reserve
Reserve for technology development
Unappropriated retained earnings
Won (millions)
December 31, 2006 and 2005
Notes to Non-Consolidated Financial Statements