Hanjin KAL, the holding entity of South Korea’s Hanjin Group, will review the appointment of two outside board directors and one auditor named by its second largest shareholder KCGI this year as the South Korean activist fund won a court injunction on the proposal on Thursday.
Upon the decision, Hanjin KAL is expected to put it on the agenda for its shareholders’ meeting scheduled on Mar. 27, according to sources on Thursday.
Hanjin KAL had claimed that the fund was disqualified from the recommendation as its holding period is less than six months. The Korean Commercial Act allows a shareholder with a 0.5 percent stake or more for over six months to exercise its shareholder proposal rights.
The court, however, said KCGI is subject to the other provision of the Commercial Act that allows a stakeholder with a 3 percent stake or more to exercise the right six weeks before a shareholders’ meeting.
KCGI bought an 8 percent stake in Hanjin KAL through its wholly-owned subsidiary Grace Holdings in December and became the second largest shareholder after Hanjin Group’s owner family. It also emerged as the second largest shareholder of another Hanjin Group company, Hanjin Transportation, through stake acquisition. Since then, the fund has publicly demanded the group to overhaul the corporate governance and improve corporate value.
Hanjin KAL right after the court decision said it would appeal the injunction.
The injunction also asked Hanjin KAL to review a reduction in the total compensations allowed for directors to 3 billion won ($2.7 million) from 5 billion won, for directors doubling as executive-level positions at affiliates to 500 million won each, and for auditors to 300 million won.
Shares of Hanjin KAL closed Thursday 2.49 percent down at 25,500 won, and Hanjin Transportation 4.16 percent lower at 42,650 won.
By Song Gwang-sup and Lee Ha-yeon
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]