NK Max Shareholders' Meeting Turns into a Venue for Shareholder Complaints

The shareholders' meeting started at 9 AM and lasted nearly 2 hours
Minority shareholders demand an extraordinary general meeting... CEO Park Sang-woo says, "I will do it if there is no problem"

"Forced sales occurred, and the directors sold all their shares. Yet, the company issued statements claiming there were no problems. How can there be trust between the company and its shareholders?"

"Even as we speak, tensions are rising. I cannot hold back. What is there to discuss? Shouldn't this stop immediately?"

"The company's stock trading is currently suspended, and as the CEO, I feel unlimited responsibility. I am truly sorry." (Park Sang-woo, CEO of NKMAX)

The NKMax shareholders' meeting held on the 29th at the Healthcare Innovation Park of Bundang Seoul National University Hospital in Bundang-gu, Seongnam-si, Gyeonggi-do. Photo by Yoo Hyun-seok

The NKMAX shareholders' meeting held on the 29th at the Healthcare Innovation Park of Bundang Seoul National University Hospital in Bundang-gu, Seongnam-si, Gyeonggi-do, was met with continuous criticism from shareholders.

NKMAX's stock price plummeted earlier this year due to forced sales, and trading has been suspended since the 25th. This was because the company received 20 penalty points due to failure to disclose and reversal of disclosures, triggering a substantive review of listing eligibility.

The shareholders' meeting, which started at 9 a.m., lasted nearly two hours and ended close to 11 a.m. The meeting did not proceed smoothly from the start. Shareholders protested against Vice President Lee Jin-yeol, who was acting as the moderator, questioning his qualifications to serve as the moderator.

When the meeting resumed, Park Sang-woo, CEO of NKMAX, apologized to the shareholders and explained the circumstances leading to the forced sales. He said, "During the process of listing our U.S. subsidiary on NASDAQ, we faced a shortage of funds and proceeded with a stock-collateralized loan through a private lender," adding, "The stock price drop triggered the forced sales."

He continued, "On top of that, we failed to properly disclose information, resulting in the trading suspension," and stated, "We will do our best to receive an improvement order and attract investors, whether strategic investors (SI) or financial investors (FI), to resume trading."

Despite Park's apology, there were renewed protests regarding the delay in submitting the audit report. NKMAX announced on the 21st that the submission of the audit report was delayed. Shareholders demanded, "Stop making excuses and clarify why it is not possible."

Park explained, "In Korea, audit reports must be submitted by the end of March, while in the U.S., the deadline is April 15, so the submission timings differ," adding, "We have not yet received the materials from the U.S. side, which is causing the delay."

The approval of agenda items was also not smooth. NKMAX presented agenda items including △approval of financial statements △amendment of articles of incorporation △appointment of directors △appointment of auditors △approval of director remuneration limits △approval of auditor remuneration limits.

Among these, the amendment of the articles of incorporation was not approved due to a lack of quorum. The appointment of auditors also failed due to insufficient votes. During this process, some shareholders questioned the backgrounds and qualifications of those nominated as inside directors.

During the Q&A session following the shareholders' meeting, shareholders continuously raised questions. One shareholder pointed out, "How could 20 penalty points be assigned?"

Park responded, "We did not expect to receive 20 penalty points," and explained, "We misunderstood that forced sales require immediate disclosure within five days."

He also explained the future response plan. "We recently received documents related to our defense, and submissions will be accepted starting next month on the 1st," he said. "We are currently preparing with professional lawyers and plan to make efforts to receive an improvement period. We expect to receive a decision from the exchange around June or July."

Another shareholder expressed concern that the company might be classified as a management item due to poor performance. Park replied, "Currently, the deficit has increased because the U.S. entity became a subsidiary," adding, "After the NASDAQ listing, our shareholding dropped to 40%, and if the funding underway in the U.S. succeeds, the shareholding will fall to 20-30%, moving to equity method accounting." He further explained, "In this case, the Korean entity is expected to turn a profit this year."

Regarding how the company plans to improve, Park emphasized, "I believe the current issues can be resolved as much as possible this year," and added, "Once the audit report is released, there should be more progress related to investments."

Meanwhile, the small shareholders' coalition demanded that NKMAX hold an extraordinary shareholders' meeting in two months. Park responded that he would hold it if there were no issues. The coalition stated, "If the company normalizes within about two months, we will support CEO Park," but added, "Otherwise, we will not be able to go together."