[At a Crossroads: Listed Companies] Hiteuron, Controversy Over 'Unreported' Shareholding Status of Major Shareholder's Stock Buyer ①

Major Shareholder's 12% Stake Transfer Contract
Acquiring Party Fails to Disclose
FSS to Investigate Reasons for Non-Disclosure

[Asia Economy Reporter Jang Hyowon] The largest shareholder of security equipment manufacturer Hightone Systems has sold all of their shares, but the transferee did not disclose their stock holding status. According to the Capital Markets Act, if an individual or entity holds more than 5% of a listed company's shares, they must disclose a large shareholding report.

Furthermore, although the largest shareholder transferred all of their shares and management rights, it was confirmed that the company did not actively announce the change in management rights through disclosures such as a 'stock transfer contract involving a change of the largest shareholder.'

Capture of Haitron Systems homepage.

Dream High Acquires Shares but Fails to Disclose

According to the Financial Supervisory Service's electronic disclosure on the 26th, Hightone's largest shareholder, President Choi Youngdeok, announced on the 12th that he had signed an over-the-counter sale contract to sell 839,981 shares (12.51%) to Dream High Private Equity Fund (Dream High).

On the contract date, the 11th, President Choi first transferred about half of the shares, 419,981 shares (6.25%), at 10,000 KRW per share. Considering that Hightone's stock price had been moving between 7,000 and 8,000 KRW for the month prior to the contract, Dream High effectively valued the largest shareholder's shares at a premium of approximately 20-40%.

However, Dream High, which acquired more than 6% of the shares, did not submit a 'large shareholding report' to the Financial Supervisory Service. Under the Capital Markets Act, individuals or corporations holding more than 5% of a listed company's shares must submit a report and disclose it to the Financial Supervisory Service.

A Financial Supervisory Service official stated, "Since the stock transaction contract date of Hightone's largest shareholder was the 11th, Dream High, which acquired the shares, should have made the large shareholding disclosure by the 18th. We will verify the stock transaction contract and related documents with the company and Dream High."

Repeated inquiries to Dream High representatives were made, but no response was received.

Simple OTC Sale Despite Transfer of Management Rights?

After the share transfer contract was executed, on the 16th, Hightone submitted a proposal at the regular shareholders' meeting to appoint six new directors and one auditor. As of the end of last year, Hightone had four registered executives. If six directors are newly appointed at this shareholders' meeting, management rights will effectively transfer to the new board.

In the director appointment proposal, the representative of Dream Private Equity was listed first. Dream Private Equity is the corporation that established Dream High. Other board members are also known to be nominees proposed by Dream Private Equity. Once all new directors are appointed at the shareholders' meeting, Dream Private Equity will effectively hold management rights over Hightone.

However, Hightone did not disclose the change in management rights through announcements such as 'stock transfer contract involving a change of the largest shareholder,' and instead disclosed President Choi's share sale as a simple over-the-counter transaction contract.

Some have pointed out that this may be due to the revised tax law enacted this year. According to the tax law revision, when trading listed shares involving a transfer of management rights, a 20% premium is applied. For example, if management rights shares are transferred at 100 KRW per share, the tax base becomes 120 KRW per share.

An official from the tax authorities said, "If a major shareholder transfers shares and the board of directors is replaced, it should be regarded as a stock transaction involving a transfer of management rights."

Regarding this, Hightone stated, "We have nothing to respond to beyond the disclosed information."

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