Hanjin Kal Submits Request to FSC for Investigation of 3-Party Alliance for 'Capital Markets Act Violation'

Bandoen: "False Disclosure of Shareholding Purpose... Request to Order Disposal of 3.28% Shares"
Also a Warning to KCGI

[Image source=Yonhap News]

[Asia Economy Reporter Yu Je-hoon] Hanjin KAL announced on the 17th that it submitted a request for investigation to the Financial Supervisory Service’s Corporate Disclosure Division on the 16th, demanding an investigation and disposition regarding the alleged violations of the Capital Markets and Financial Investment Business Act (Capital Markets Act) by the shareholder coalition for the normalization of the Hanjin Group (commonly known as the 3-party coalition).

The violations of the Capital Markets Act raised by Hanjin KAL against the 3-party coalition include ▲false disclosure ▲management rights investment ▲regulations on executives and major shareholders. Hanjin KAL judged that Bando Construction violated the large shareholding reporting obligation, which requires anyone holding more than 5% of shares to report the purpose of holding to the Financial Services Commission and the stock exchange.

Bando Construction had previously reported its purpose of holding Hanjin KAL shares as a “simple investment,” but since Chairman Kwon Hong-sa met with major shareholders of the Hanjin Group in August and December of last year, before changing the purpose to management participation in January this year, and demanded positions such as honorary chairman of the group, rights to appoint registered executives, and real estate development rights, it was deemed to have effectively aimed for management participation.

Accordingly, Hanjin KAL requested the Financial Supervisory Service on January 10 to issue a stock disposal order for 3.28% of the Hanjin KAL shares held by Bando Construction exceeding the 5% threshold out of the total 8.28% stake.

Hanjin KAL also demanded corrective action, claiming that KCGI, a member of the 3-party coalition, violated regulations on proxy solicitation activities. According to Hanjin KAL, KCGI submitted proxy forms and reference documents on the 6th and began proxy solicitation from the 7th. The company explained that this violated the Capital Markets Act provision which states that proxy solicitors can only start solicitation activities after two business days have passed since submitting the forms and reference documents to the Financial Services Commission and the stock exchange.

Hanjin KAL further pointed out that the investment method of the Special Purpose Companies (SPCs) held by KCGI violates the Capital Markets Act. According to the Capital Markets Act, management participation-type private equity funds (PEFs) can jointly invest in management rights exceeding 10%, but there is no provision allowing SPCs to invest jointly.

Hanjin KAL stated, “Interpreting this under the positive regulation system, which requires strict adherence to what is legally specified, means that SPCs must make ‘sole’ management rights investments exceeding 10%, not joint investments,” adding, “If an SPC fails to make a management rights investment exceeding 10% within six months from the initial stock acquisition date, it must dispose of all shares within six months thereafter and report to the Financial Services Commission.”

Continuing, Hanjin KAL emphasized, “Among the six SPCs currently held by KCGI, except for Grace Holdings, the others have not made management rights investments. Among them, Emma Holdings, which holds 2.42%, acquired its initial Hanjin KAL shares on February 28 of last year, and since it has held shares without management rights investment for over 12 months, it is confirmed to have violated the Capital Markets Act, necessitating strict disposition.”

Additionally, Hanjin KAL included in the investigation request that KCGI violated disclosure obligations as a major shareholder under the Capital Markets Act. A Hanjin KAL official stated, “These violations of the Capital Markets Act by Bando Construction and KCGI undermine the fairness and reliability of the capital market and disrupt market order,” adding, “We cannot overlook the illegal acts of the 3-party shareholder coalition that increase corporate operational instability and cause losses to ordinary shareholders, and thus have requested a strict investigation by the Financial Supervisory Service.”

This content was produced with the assistance of AI translation services.