Cha Partners "Must Correct Illegal General Meeting"... Kumho Petrochemical "Not Illegal"

Cha Partners Applies to Court for Appointment of Proper Investigation Officer
Kumho Petrochemical "Incompatible... Voting Method Is Chairman's Authority"

Ahead of the Kumho Petrochemical shareholders' meeting, the off-market dispute between Kumho Petrochemical and Cha Partners Asset Management (hereinafter Cha Partners) is intensifying.

On the 14th, Cha Partners issued a press release stating that Kumho Petrochemical refused to correct illegal actions related to the progress of the shareholders' meeting held the previous day.

Cha Partners expressed regret over "Kumho Petrochemical's outdated attitude that disregards even shareholders' fair and reasonable requests for the shareholders' meeting process," and urged, "We ask the shareholders of Kumho Petrochemical to make a wise choice at the shareholders' meeting to be held on the 22nd to restore the damaged shareholder value and shareholder rights."

Earlier, Cha Partners filed a request to maintain (prohibit) illegal acts against the directors, claiming that the Kumho Petrochemical board abused its authority by announcing mutually compatible shareholders' meeting agenda items as mutually incompatible. Although the shareholder proposal regarding treasury stock cancellation is not a clause restricting the board's related resolution, the company announced Cha Partners' shareholder proposal and the board's agenda as mutually incompatible, infringing on shareholder rights.

Cha Partners also argued that the order of agenda items and voting methods for the appointment of outside directors were unfair. They raised objections to the fact that the agenda for appointing Choi Do-sung, recommended by the board, was placed before the agenda for appointing Kim Kyung-ho, a shareholder proposal candidate, and that the voting was conducted sequentially rather than by batch, with the notice stating that if one is approved, the other would be automatically discarded.

The photo shows shareholders attending the '44th Kumho Petrochemical Annual General Meeting' held at Kumho Petrochemical in Jung-gu, Seoul, on March 26, 2021 / Photo by Jinhyung Kang aymsdream@

Kumho Petrochemical responded, "The company's agenda does not allow exceptions to the cancellation of treasury stock by shareholders' meeting resolution, whereas the shareholder proposal agenda allows exceptions to cancellation by shareholders' meeting resolution, so the two agendas clearly conflict and are mutually incompatible."

Regarding the voting method for the appointment of outside directors, they stated, "The shareholder proposal right does not include the authority to designate the order of agenda items or voting methods at the shareholders' meeting," adding, "This is a matter under the authority of the chairman of the shareholders' meeting according to the Commercial Act." They also noted, "This was explicitly stated in the injunction decision on agenda submission filed by former Executive Director Park Cheol-wan, who delegated rights to Cha Partners, in 2021."

According to the Financial Supervisory Service's electronic disclosure system, Cha Partners and individual largest shareholder former Executive Director Park Cheol-wan applied to the Seoul Central District Court on the 8th to appoint an inspector to investigate the legality of the Kumho Petrochemical shareholders' meeting convening procedures and resolution methods. Specifically, they requested that the inspector investigate matters related to the board resolution deciding the convening of the shareholders' meeting, the automatic discard of shareholder proposal agendas according to the voting method, and the legality of these matters.

Kumho Petrochemical stated, "We plan to respond according to legal procedures."