"The Craziest Thing in Life"... Dentist Who Visited the Company of a Stock He Lost Became an Inside Director [Tears of Small Shareholders]⑥

The Power of Small Shareholders and Employees Uniting
Holding Management Accountable for Repeated Business Failures and Corporate Raider Involvement
"Shareholders Are Not Guests, But Owners of the Corporation"

Editor's Note402.5 billion KRW. This is the amount of embezzlement and breach of trust disclosed by 29 listed companies last year, during which the government's value-up project was underway to enhance corporate value. Small shareholders are neither protected nor included when crimes occur within companies. Even if executives commit embezzlement and breach of trust, causing stock trading to be suspended and delisting to occur, small shareholders cannot monitor these actions in advance nor hold anyone accountable. They have no choice but to bear the losses and wait. Ahead of the regular shareholder meeting season in March for listed companies, we focus on the tears of small shareholders excluded from the domestic stock market, which continuously calls for enhancing corporate value.

"It was the craziest thing I've ever done in my life." So summarized So Ji-seong, the 45-year-old male representative of the Amicogen Small Shareholders Solidarity, whom we met at Amicogen's Seoul branch in Bundang-gu, Seongnam-si, Gyeonggi Province. A dentist for 15 years, he successfully united shareholders as the head of the small shareholders solidarity and ousted Amicogen's founder, Shin Yong-cheol, who was sued on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud) involving about 5 billion KRW.

So Ji-sung, representative of Amicogen Minority Shareholders Alliance (left), is taking a commemorative photo with Lee Sang-mok, CEO of ACT, after the temporary shareholders' meeting of the bio company Amicogen held on the 26th of last month in Yeonsu-gu, Incheon. Provided by Amicogen Minority Shareholders Alliance

According to a recent survey by the Korea Chamber of Commerce and Industry targeting 300 listed companies on the 'Impact of Expanding Shareholder Activism on Companies,' 90.9% of companies (multiple responses allowed) identified 'small shareholders and small shareholder solidarity' as the main actors in shareholder engagement, followed by pension funds at 29.2%, and private equity and activist funds at 19.2%. The proportion of small shareholders and their solidarity among shareholder proposal initiators disclosed by listed companies nearly doubled from 27.1% in 2015 to 50.7% last year. This indicates that the voice of small shareholders is growing. However, most small shareholder participation has focused on limited issues such as dividend increases and share buybacks and cancellations. Cases where small shareholders unite to bring about changes in management rights, like Amicogen, are rarely seen in the history of domestic shareholder activism.

So first connected with the small shareholders solidarity in June last year. It was a time when shareholders' anxiety was growing due to Amicogen, a KOSDAQ-listed bio-material company, attempting to bring in a strategic investor (SI). He was just one of the small shareholders and had little interest in shareholder meetings, but as shareholders' concerns grew, he decided to take the lead to hear the company's side directly. Feeling it would be strange to go without any title, he also took on the title of representative of the small shareholders solidarity. That was the beginning of his activities with the small shareholders solidarity.

"It's hard to believe, but I dislike meeting people or going out. I rarely attend dentist-related gatherings, and my hobby is just working out alone. But somehow, I ended up doing this work."

Amid SI recruitment attempts and shareholder dissatisfaction... stepping up as a 'rookie' small shareholder solidarity leader

Amicogen had lost shareholders' trust due to consecutive business failures. In 2023, Amicogen invested 3 billion KRW in Teraland, the parent company of Geumgok Venture Valley, which was conducting a real estate project financing (PF). However, it was hit hard by the real estate downturn. Additionally, the 60 billion KRW acquisition of bio-material company Bifido in 2021 resulted only in losses. Eventually, it was sold at a bargain price of 15 billion KRW last August. Amicogen's stock price, which reached 28,952 KRW intraday on June 25, 2015, plummeted to 3,075 KRW on December 10 last year.

Hong (50, male), an Amicogen shareholder, could not contain his anger recalling the regular shareholder meeting last March. About 30 small shareholders, including Hong, gathered at 4 a.m. in front of Yangju Station on Seoul Metropolitan Subway Line 1 in the metropolitan area to attend the regular shareholder meeting held in Jinju-si, Gyeongnam Province. They took a chartered bus to confront Chairman Shin, who was attempting to be reappointed as an inside director, holding him accountable for business failures. Hong had invested tens of millions of KRW and had also recommended investments to relatives and acquaintances, so he needed to hear some response.

However, Chairman Shin refused to communicate with small shareholders. When shareholders raised management issues, the company expelled them from the meeting hall, accusing them of causing disturbances. After a four-hour bus ride to Jinju-si, the small shareholders were left in despair. Chairman Shin succeeded in his reappointment as inside director. Hong described the atmosphere on the bus back to Yangju Station as gloomy. He said, "We even called the police to let small shareholders enter the meeting, but it was useless. Shareholders had no choice but to express their frustration standing in the rain in front of the locked building."

Focusing not only on uniting shareholders but also on money management and communication with employees

Mr. Hong (50, male) was unable to attend the Amicogen regular shareholders' meeting held in Jinju, Gyeongnam, last March. Photo of the building taken outside the shareholders' meeting venue. Photo by Mr. Hong

In the chaotic situation, So first focused on uniting small shareholders. He judged that without uniting, they would have no power to fight the company. In August last year, he created an online community to communicate with small shareholders. Based on this, he traveled nationwide to meet Amicogen small shareholders.

What he paid the most attention to was money and information. Without trust among shareholders, the organization would quickly collapse. He transparently disclosed to shareholders that membership fees were collected and used solely for small shareholder solidarity activities. Furthermore, he avoided information that could affect Amicogen's stock price. So said, "Even though it's a small shareholder solidarity, it is ultimately a group united for profit. Some join because they are curious about stock price trends. To prevent misuse of information, we did not ask the company about confidential management matters such as sales trends, mergers, or acquisitions."

So did not think that gaining the trust of small shareholders alone would solve everything. Instead of fighting with executives and employees, he focused on actively communicating to gain their support. In this process, he met CEO Piao Zhe (Korean name Park Cheol). He felt that Piao was attached to the company and employees and was an honest person. Besides, he met inside director Yoon Young-cheol, outside director Oh Deok-geun, and even went down to Jinju-si to meet headquarters employees and listen to their difficulties. So said, "Since starting small shareholder solidarity activities, I feel like I haven't had a single day off. I made time to meet company employees and board members to build consensus on saving the company."

'Dismissal motion' arises... small shareholders, once overwhelmed by defeat, begin to act

The decisive moment when Amicogen employees and the small shareholders solidarity joined forces was when Chairman Shin selected battery company Gwangmu as the SI to secure liquidity. News that Gwangmu was linked to corporate raiders created a consensus that it must be stopped at all costs. Shareholders strongly opposed because if Gwangmu entered, the company would focus more on the chemical sector than the existing bio business. So said, "As news spread that Chairman Shin brought in corporate raiders as SI, the board tilted toward the small shareholders solidarity. We also explained to small shareholders how corporate raiders take over companies to raise awareness."

Afterward, the board began to reduce Chairman Shin's influence. First, in January, they dismissed Shin as chairman of the board. Then, on the 6th of last month, he was forced to resign from the Chief Strategy Officer (CSO) position. The process was not smooth. The most intense conflict among board members occurred when they proposed dismissal motions for Shin and his close associate, outside director Park Sung-gyu, at the board meeting to set the agenda for the extraordinary general meeting. At that time, Shin shouted that he would sue everyone trying to oust him, the founder, while the directors just hung their heads low.

On January 8, during the board meeting to set the agenda for the extraordinary general meeting, So was at a dental clinic in Hanam-si, Gyeonggi Province, treating patients. He was constantly anxious about whether the agenda would be approved. As soon as he finished treatment, he hurriedly called CEO Piao Zhe.

"How did it go?"

"It was decided by vote. Three to two... it passed."

Minority shareholders, including So Ji-sung, the representative of the Amicogen Minority Shareholders Alliance, traveled across the country to gather voting rights and share information with each other. Provided by Amicogen Minority Shareholders Alliance

So likened the agenda's approval to a "movie-like event." Now, only gathering voting rights to dismiss Chairman Shin from the board remained. As this movie-like event unfolded, small shareholders, who had been overwhelmed by defeat, began to take action. So organized a so-called '100-person task force' by gathering shareholders with large holdings and traveled nationwide requesting proxy voting rights. Small shareholders took half-days off to collect proxy votes or waited for 40 minutes at security offices to meet other small shareholders. So laughed, saying that collecting voting rights was not difficult at all. "Seeing the power unite was actually enjoyable. It even felt like fighting absolute evil."

Small shareholders, once expelled from the shareholder meeting a year ago, now stand at the center of the company

KOSDAQ-listed company Amicogen held an extraordinary general meeting of shareholders on the 26th of last month in Yeonsu-gu, Incheon. At the extraordinary general meeting, the proposal to dismiss Chairman Shin Yong-cheol from his position as an inside director was approved with 53.3% of the votes. Provided by Amicogen Minority Shareholders Solidarity

On the 26th of last month, Amicogen held an extraordinary general meeting in Yeonsu-gu, Incheon. Hong, who was rejected a year ago, also participated. He described this year's meeting atmosphere as the complete opposite of last year's. Small shareholders were not expelled and calmly watched the meeting. Chairman Shin, who always sat in the front row, took a seat in the back. Although there was some disturbance, the meeting proceeded normally. The first agenda was the dismissal motion for Chairman Shin as director. The vote passed with 53.3% approval. The opposition was only 13%. Upon the motion's approval, small shareholders cheered and shouted "banzai." Chairman Shin immediately stood up and left. Hong said, "At that moment, people burst into tears. We never thought we could accomplish something like this."

So said he lost 10 kg over the year of small shareholder solidarity activities. He suffered from insomnia, thinking, "Why am I doing this? What if I fail?" Whenever he felt this way, he recalled stories sent by small shareholders. "There were many shareholders with tragic stories, like someone who lost 180 million KRW and drinks every day, or someone working loading and unloading at 60 years old. At first, I started the solidarity activities just to confront the company because my stocks were stuck, but I realized it was a matter of many lives."

So was appointed as an inside director of Amicogen at the extraordinary general meeting. This was the result of shareholders agreeing with his goal to normalize governance and create a company where shareholders are the owners of the corporation. So said, "The agenda to mandate electronic voting also passed at this meeting. Amicogen shareholders are no longer guests but owners. I want to develop the company into a good one, provide dividends to shareholders, and incentives to employees."