Taekwang Industrial Board Approved EB Issuance on June 27
On July 1, Truston stated, "Taekwang Industrial's decision to issue EBs not only undermines shareholder value but also directly contradicts the new administration's policy to protect minority shareholder rights. Therefore, we have decided to take legal action, including filing for an injunction."
Previously, on June 27, Taekwang Industrial's board of directors resolved to issue exchangeable bonds worth 320 billion KRW, using all of its treasury shares (representing a 24.41% stake) as the underlying assets.
Truston pointed out that this issuance of exchangeable bonds violates the Commercial Act. Truston maintains that the board approved the issuance without finalizing key matters that should have been determined, which constitutes a violation of the Commercial Act.
Truston further stated, "This is not a rational business decision but rather an illegal attempt to circumvent the government's ongoing Commercial Act amendments (such as the mandatory cancellation of treasury shares) and shareholder protection policies. In particular, issuing EBs with treasury shares as the underlying assets, if the exchange rights are exercised, effectively has the same effect as a third-party allotment capital increase. This severely infringes upon the interests of existing shareholders."
The Financial Supervisory Service also intervened. On this day, the FSS issued a correction order regarding Taekwang Industrial's 'decision to dispose of treasury shares' and 'decision to issue exchangeable bonds,' both submitted on June 27. The FSS cited Taekwang Industrial's failure to properly disclose information regarding the counterparties to the treasury share disposal and other related matters as the reason.
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