Chairman Cho Yang-rae of Hankook Tire to Undergo Adult Guardianship Investigation by Court on the 10th of This Month

Court Conducts Investigation at Chairman Cho's Home Considering His Age...Physical Examination Also Planned
Korea & Company and Hankook Tire Shareholders' Meetings Face Inevitable Vote Battle Among Chairman Cho's Children
Eldest Daughter Cho Hee-kyung, Chairwoman's Side: "Focusing on Adult Guardianship Lawsuit Rather Than Shareholder Proposal"

[Asia Economy Reporter Ki-min Lee] Jo Yang-rae, chairman of Hankook & Company and head of the Korean Tire family, which is embroiled in a management rights dispute, will undergo a family investigation and physical examination related to adult guardianship judgment on the 10th of this month.

Following Chairman Jo's family investigation, a shareholder meeting of Hankook & Company and Hankook Tire & Technology is scheduled on the 30th, where a vote battle between brothers Jo Hyun-sik, vice chairman of Hankook & Company, and Jo Hyun-beom, president of Hankook & Company, is also anticipated.

Seoul Family Court to Conduct Family Investigation Related to Jo Yang-rae’s Adult Guardianship Judgment

According to the court and business circles on the 1st, the Seoul Family Court plans to dispatch investigators to Chairman Jo’s residence on the afternoon of the 10th to conduct a family investigation related to the adult guardianship judgment. Considering Chairman Jo’s advanced age, the investigation is known to be conducted at his residence rather than at the court.

After the family investigation, a physical examination of Chairman Jo will also be conducted. The Seoul Family Court currently has agreements with three institutions?the National Mental Health Center, Seoul National University Hospital, and Asan Medical Center?for cooperation regarding the commencement of adult guardianship. Since Seoul National University Hospital is Chairman Jo’s treating hospital and has already submitted existing medical records to the court, the examination is expected to be conducted at one of the other two institutions. However, since the physical examination is not mandatory, there is a possibility that Chairman Jo’s side may avoid it.

Earlier, in July last year, Chairman Jo transferred 23.59% of his shares to his second son, Jo Hyun-beom, president of Hankook & Company, through an off-hours block trade, increasing Jo Hyun-beom’s stake in Hankook & Company to 42.90%. In July last year, Jo Hee-kyung, chairman of the Hankook Tire Sharing Foundation, filed a petition for adult guardianship judgment, stating, “Decisions that are very different from the beliefs and thoughts my father had have been suddenly made,” and “An objective judgment is needed to determine whether these decisions were made voluntarily in a healthy mental state.”

Two months later, on October 5 last year, Jo Hyun-sik, vice chairman of Hankook & Company, submitted an application to participate as a party with the same status as the petitioner, expressing his active intention to participate in the adult guardianship judgment petition. It is also known that the second daughter, Jo Hee-won, submitted a statement expressing concern about Chairman Jo’s condition. The second son, Jo Hyun-beom, submitted a statement opposing limited guardianship.

Chairman Jo Hee-kyung and Vice Chairman Jo Hyun-sik appeared at the family court in November last year and January this year, respectively, and underwent interview investigations. During the interview, Vice Chairman Jo reportedly said, “My father’s values have changed so much that they are difficult to understand,” and “Previously, he wanted management based on integrity and a professional management system, but recently that has changed.” After the family investigation and physical examination are completed, the court will set a hearing date and summon the parties for the hearing.

Vote Battle Inevitable at Hankook & Company and Hankook Tire Shareholders’ Meetings on the 30th

With Chairman Jo’s adult guardianship judgment scheduled this month, attention is also focused on the vote battle between the brothers engaged in the management rights dispute at the shareholders’ meetings. In business circles, there is a forecast that the family investigation and physical examination of Chairman Jo could influence the conflict within the Korean Tire family.

Before the shareholders’ meeting scheduled for the 30th, Vice Chairman Jo announced that he would recommend Professor Han Sang Lee of Korea University as an outside director and audit committee candidate for the holding company Hankook & Company and resign from his CEO position. For the affiliate Hankook Tire & Technology, Chairman Jo proposed Lee Hye-woong, CEO of BRB Korea Advisors, as an outside director candidate who would serve as an audit committee member.

However, since the boards of directors of Hankook & Company and Hankook Tire & Technology have separately recommended outside director candidates who would serve as audit committee members apart from Vice Chairman Jo’s shareholder proposals, a vote battle between the two sides is inevitable at the shareholders’ meetings on the 30th.

First Daughter Jo Hee-kyung’s Side: “Focusing on Adult Guardianship Judgment Lawsuit Rather Than Shareholder Proposals”

While business circles view the adult guardianship judgment lawsuit as having escalated the Korean Tire family’s management rights dispute through shareholder proposals, Chairman Jo Hee-kyung’s side maintains that “the adult guardianship judgment is unrelated to the management rights dispute.”

A close aide to Chairman Jo told Asia Economy in a phone interview, “Chairman Jo is focusing on the adult guardianship judgment lawsuit rather than shareholder proposals,” and added, “As the eldest daughter of the family, she is acting out of a sense of responsibility to check her father’s health, resolve conflicts within the family, and ensure a reasonable and smooth succession of the family business inherited from previous generations.”

Regarding the shareholder proposals for outside directors and audit committee members at Hankook Tire & Technology, Chairman Jo’s side explained that “Chairman Jo believes that both Hankook & Company and Hankook Tire & Technology currently have various issues with healthy governance and transparent corporate management,” emphasizing that this is unrelated to the management rights dispute. Regarding the recommendation of CEO Lee Hye-woong, they said, “Chairman Jo is not personally acquainted with CEO Lee,” and added, “He is a figure recommended by Vice Chairman Jo.”

Regarding the view that there might have been prior coordination between Chairman Jo and Vice Chairman Jo about the latter’s announcement to resign as CEO, they said, “Vice Chairman Jo made the decision alone, and Chairman Jo only learned about it after the news was published.”