Taekwang Industrial (003240) has signaled legal action after a motion to dismiss CEO Kim Jae-gyeom of Lotte Home Shopping — in which it is the second-largest shareholder — was voted down at an extraordinary general meeting.
At the Lotte Home Shopping EGM held on the 14th, Taekwang Industrial put forward a motion to remove Kim, but it was rejected due to opposition from the largest shareholder, Lotte Shopping (023530). Taekwang Industrial said, "We will consider filing an injunction to suspend the duties of CEO Kim, who has committed unlawful acts, while also pursuing a lawsuit with the court seeking his dismissal."
With Taekwang Industrial signaling legal action, the management battle over Lotte Home Shopping is intensifying. Lotte Shopping currently holds 53% of Lotte Home Shopping, while Taekwang Industrial owns 45%. The two companies have feuded over management control since the 2006 acquisition of Lotte Home Shopping, then known as Woori Home Shopping.
Taekwang Industrial alleges that Kim has continued large-scale related-party transactions with Lotte affiliates including Lotte Shopping, Lotte Himart, and Korea STL, even after a board motion to approve such intra-group transactions was rejected in January. Taekwang Industrial said, "This is a clear violation of the related-party transaction provisions stipulated in Article 398 of the Commercial Act and Article 38 of Woori Home Shopping's articles of incorporation."
