SNT Holdings Protests Smac's Treasury Stock Disposal

"No Discounted Sales or Free Donations of Treasury Shares Right Before Shareholders' Meeting"
SNT Holdings, the Largest Shareholder, Demands Immediate Suspension of Disposal

SNT Holdings, the largest shareholder of Smac, has demanded the suspension and withdrawal of Smac's large-scale treasury stock disposal plan, calling it "an act of breach of trust that violates the principle of shareholder equality and the fiduciary duty of directors."

On December 29, SNT Holdings announced that it had sent a letter to Smac, the employee stock ownership association, and Manho Steel on December 29, requesting the immediate suspension of the transaction regarding the treasury stock disposal plan disclosed by Smac on December 26. SNT Holdings is the largest shareholder of Smac, holding approximately 20.20% of its shares.

Previously, just three days before the record date for the 2025 regular shareholders' meeting, Smac disclosed plans to: sell 770,000 treasury shares to Manho Steel at a 5% discount per share for 6,498 won; donate 1 million treasury shares free of charge to the employee stock ownership association; and sell 907,031 treasury shares to 67 members of the employee stock ownership association at a roughly 20% discount per share for 5,196 won.

SNT Holdings argued that, although the disposal is formally presented as employee compensation or a strategic alliance, in substance, it is a transaction intended to strengthen the voting rights of the existing controlling shareholders. The company claims that transferring treasury shares at a low price or for free to specific friendly parties, without giving general shareholders the opportunity to purchase, violates the principle of shareholder equality under the amended Commercial Act.

They also pointed out that, since the transaction is taking place just before the implementation of strengthened treasury stock disclosure regulations, there may be suspicions of regulatory evasion. SNT Holdings suspects an intention to influence the voting rights structure ahead of the regular shareholders' meeting. They further argued that this move contradicts the previously stated purpose of enhancing shareholder value when the treasury shares were acquired, and that the financial loss from the discounted sales and free donations amounts to at least 8.5 billion won.

SNT Holdings referenced the Korea Zinc management dispute, stating, "In recognition of the problem that treasury shares can be misused as a tool in management disputes, cancellation was ultimately chosen," and emphasized that withdrawal or cancellation of the treasury stock disposal would also be a reasonable solution in this case.

They also highlighted that there is a precedent where Manho Steel attempted to transfer treasury shares during a past management dispute, but withdrew the plan following an external auditor's objection, indicating that the use of treasury shares could lead to legal controversy. SNT Holdings stated that if the transaction proceeds, it will consider taking legal action.