The owner family of Samyang Foods, the pioneer of Korean instant ramyeon noodles, faces the risk of losing management rights as the company becomes the latest target for activist shareholders that have lately been pressuring traditional family-owned corporate dynasties in Korea.

HDC Hyundai Development Co., invoking its rights backed by a 16.99 percent stake, will propose a motion in Samyang Foods’ upcoming shareholder meeting on Mar. 22 to include a clause in the corporate articles demanding suspension of board directors convicted of criminal charges.

If approved, the owner family members are at risk of being removed from the board.

Last month, the Seoul District Court sentenced Samyang Foods Chairman Jeon In-jang to three years in prison for embezzling 5 billion won ($4.44 million) in corporate funds. His wife, the company’s CEO Kim Jung-soo, was also convicted, receiving a two-year jail term suspended for three years on the same charges.

“This is not a move to meddle with Samyang Foods management or to gain an edge before a stake sale,” said an HDC Hyundai Development official. “We’re simply exercising our shareholder rights to call out for stronger corporate governance.”

But market experts suspect a masked design behind HDC Hyundai Development’s move. The company acquired Samyang shares in 2005 and had worked favorably for the management as the second-largest shareholder. But it has been required to unload more than 12 percent of its stake in Samyang after turning into a holding entity last year due to local regulations that cap holding companies’ ownership in non-core affiliates to 5 percent.

HDC Hyundai Development may be trying to make news in the market to prop up the stock price before its sale, observers noted.

The company must gather proxy votes if it wants to pull off the plan. As of late September 2018, Jeon and other related parties owned 47.21 percent of Samyang Foods, followed by HDC at 16.99 percent and the National Service Pension at 5.27 percent. A change in the corporate articles requires at least two-thirds of the shareholder vote.

Shares of Samyang Foods closed Friday up 3.95 percent at 71,000 won.

By Cho Si-young and Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]