ISS Supports All Kumho Petrochemical Agenda Items Ahead of General Meeting... Opposes Cha Partners' Proposal

Kumho Petrochemical Group Headquarters located in Jung-gu, Seoul

Global proxy advisory firm ISS has sided with Kumho Petrochemical ahead of the upcoming shareholder meeting where a vote battle is expected.

According to industry sources on the 12th, ISS recently stated in its report that it supports all the agenda items proposed by Kumho Petrochemical's board of directors for the shareholder meeting. On the other hand, it opposed all shareholder proposals put forward by activist fund Cha Partners Asset Management (hereafter Cha Partners).

ISS explained, "The detailed materials from the shareholder proposer were disclosed only 14 and 11 days before the shareholder meeting, on March 8 and March 11 respectively, which did not allow sufficient time to thoroughly evaluate and communicate regarding the materials."

It added, "The company's value and stock performance have been influenced by multiple factors, including the cyclical nature of its core petrochemical business," and "(The shareholder proposer) failed to provide sufficient evidence to prove that treasury shares were or would be used to strengthen control."

Regarding the amendment to the articles of incorporation proposed by Cha Partners, ISS also opposed it, stating, "There is no precedent among domestic listed companies for canceling treasury shares solely by shareholder resolution, nor is it stipulated in any company's articles of incorporation."

Previously, Cha Partners, which received delegated rights from former Kumho Petrochemical executive director Park Cheol-wan, proposed shareholder agenda items to amend the articles of incorporation to allow treasury shares to be canceled by shareholder resolution, to cancel all existing treasury shares held, and to appoint Kim Kyung-ho, chairman of the KB Financial Group board, as an outside director and audit committee member.

In response, Kumho Petrochemical has shown a difference in stance by announcing a plan to cancel 50% of treasury shares over three years. The company has also proposed appointing Choi Do-sung, president of Handong Global University, as an audit committee member.