TruStone Demands Full Reconsideration of Mutual Outside Director Recommendations at Taekwang Industrial

Criticism of Opaque Board Structure
"Taekwang Must Show Commitment to Value Enhancement, Including a Roadmap for Treasury Stock Cancellation"

Trusston Asset Management, the second-largest shareholder of Taekwang Industrial, reiterated its strong stance on March 18, stating, "The Taekwang Industrial board of directors continues to ignore key demands and maintains an opaque and closed management approach."

On the same day, Trusston said, "Taekwang Industrial has still failed to provide a satisfactory explanation regarding the public shareholder letter and seven shareholder proposals sent on February 12," expressing its disappointment.

Trusston argued, "Even though the company’s price-to-book ratio (PBR) stands at just 0.2x—one of the lowest among listed companies—Taekwang Industrial seems more concerned with representing the interests of its controlling shareholders than with improving its share price."

The asset manager especially took issue with procedural problems evident in the selection process for outside director candidates. According to Trusston, the Outside Director Recommendation Committee of Taekwang Industrial merely rubber-stamped the candidates notified by management on the same day the committee was convened, March 12, without any substantial discussions, calling the process a mere formality rather than a genuine review.

Trusston also pointed out the formation of a "mutual recommendation loop," in which outside directors are either replaced among affiliates or recommended by each other across group companies.

Regarding treasury shares, Trusston criticized Taekwang Industrial for failing to present a clear roadmap for the cancellation of its treasury shares, which have accounted for 24.4% of shares for over 20 years, and argued that merely issuing a value-up notice to the market is insufficient to restore investor trust.

Trusston called on Taekwang Industrial to: ▲ fully disclose the entire process of verifying and reviewing outside director candidates; ▲ explain the mutual recommendation and circular appointment structure involving candidates such as Choi Youngjin and Seo Byungseon between affiliates, and reconsider candidates whose independence is in question; ▲ and present a concrete roadmap for treasury share cancellation and shareholder returns in line with the intent of the amended Commercial Act.

On March 16, Trusston had announced its decision to withdraw its shareholder proposal to KCC, explaining that KCC had positively reviewed Trusston’s suggestions and provided a sincere response.

A Trusston official commented, "As demonstrated in the KCC case, communication with shareholders is the starting point for enhancing corporate value," adding, "If Taekwang Industrial continues to disregard the rules for listed companies, we will mobilize every available means in response."

Meanwhile, a Taekwang Industrial representative stated, "Trusston’s claim that outside director candidates were mutually recommended between affiliates is not true."

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