Prolonged Lotte Family 'Sibling Feud' Resurfaces... Shin Dong-joo Declares Legal Battle

Lotte Chairman Shin Dong-bin Files Lawsuit to Remove Director Position at Lotte Holdings, Backed by His Representative and Largest Shareholder Gwangyunsa

Shin Dong-ju, Chairman of SDJ Corporation (Former Vice Chairman of Lotte Holdings Japan)

[Asia Economy Reporter Cha Min-young] As the 'brothers' conflict' ended with Shin Dong-bin, chairman of Lotte Group, emerging victorious, Shin Dong-ju, chairman of SDJ Corporation (former vice chairman of Japan Lotte Holdings), has launched a legal battle to overturn the decision. With the prolonged management dispute, noise surrounding Lotte Group is expected to continue.

According to industry sources on the 25th, Kwangyunsa, where Shin Dong-ju, chairman of SDJ Corporation (former vice chairman of Japan Lotte Holdings), serves as CEO and largest shareholder, announced that it filed a lawsuit in a Japanese court on the 22nd seeking the dismissal of Shin Dong-bin, chairman of Lotte Group, from his director position at Lotte Holdings.

Kwangyunsa stated, "We have filed a lawsuit at the Tokyo District Court demanding the dismissal of Chairman Shin Dong-bin from his director position at Lotte Holdings, targeting both Lotte Holdings and Chairman Shin Dong-bin."

Earlier, Chairman Shin Dong-ju submitted a shareholder proposal in April that included amendments to the articles of incorporation to establish disqualification criteria for directors, targeting Chairman Shin Dong-bin. However, all such proposals were rejected at the regular shareholders' meeting held on the 24th of last month. This was because shareholders of Lotte Holdings, excluding Kwangyunsa, sided with Chairman Shin Dong-bin.

This lawsuit is also an extension of that effort. Chairman Shin Dong-ju had previously announced that he was considering legal action under Article 854 of the Japanese Companies Act immediately after all shareholder proposals to dismiss Chairman Shin Dong-bin from the director position at Lotte Holdings were rejected at the regular shareholders' meeting.

Chairman Shin Dong-ju explained, "It is unacceptable from a compliance management perspective that a person who has been convicted in relation to duties at Korean Lotte Group affiliates holds a director position at Lotte Holdings. Since the dismissal proposal was rejected at the shareholders' meeting, the position must be revoked through judicial judgment."

He added, "Lotte Group declares fairness and integrity as one of its codes of conduct and regards compliance with laws, including overseas regulations, as an important corporate philosophy. The criminal acts committed by Chairman Shin Dong-bin violate this corporate philosophy, and his holding the director position as well as the roles of CEO and chairman of the group is a direct violation of Lotte Group’s corporate philosophy."

Japan Lotte Holdings has shares held by Kwangyunsa at 28.1%, the employee stock ownership association at 27.8%, Lotte Strategic Investment (LSI) at 10.7%, and affiliates at 6.0%. Chairman Shin Dong-bin holds 4.0%, and Chairman Shin Dong-ju holds 1.6%.

Chairman Shin Dong-bin was appointed chairman of Lotte Holdings at the board meeting in March. The business community evaluated this as a reaffirmation of the Japanese Lotte management’s trust in Chairman Shin Dong-bin. Since July 2015, Chairman Shin Dong-ju has attempted six times at Japan Lotte Holdings shareholders' meetings to dismiss Chairman Shin Dong-bin and regain his director position, but all attempts failed.

Some express concern that, amid the difficult situation faced by major Lotte Group affiliates due to the COVID-19 pandemic, the owner family’s management dispute could cause further damage. According to the securities industry, Lotte Shopping, a distribution affiliate, is estimated to have recorded an operating profit of 28.9 billion KRW in the second quarter of this year, a sharp 68.4% decline year-on-year, and sales of 4.183 trillion KRW, down 6.1%. A business insider sharply criticized, "Former Vice Chairman Shin has no qualification to discuss compliance management, having once slandered the company he was part of, driven it to the brink, and hired outsiders to imprison his family members."

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