Taekwang: "Lotte Homeshopping Engaged in Internal Transactions Without Board Approval... Kim Jaekyum Must Be Dismissed"

Retroactive Approval Does Not Resolve Illegality
Considering a Claim for Damages Against Outside Directors

Taekwang Industrial announced on March 26 that Lotte Homeshopping's management has admitted to conducting internal transactions worth several billion won during January and February of this year without prior approval from the board of directors. As the illegal internal transactions by Lotte Homeshopping have been clearly confirmed, Taekwang Industrial plans to proceed as scheduled with the process to dismiss the CEO and also intends to hold the directors who approved the transactions retroactively legally accountable.

According to Taekwang Industrial, although the proposal for internal transaction approval was rejected at the board meeting held on January 14, Lotte Homeshopping still carried out internal transactions over the course of approximately two months from January to February. At the shareholders' meeting on March 24, Lotte increased the number of directors and then passed the agenda for approving the internal transactions. Taekwang Industrial maintains that obtaining retroactive approval does not resolve the illegality of the internal transactions. According to Article 389 of the Commercial Act, when a company transacts with a director or major shareholder, it must disclose key details of the transaction in advance to the board of directors and obtain approval from at least two-thirds of the directors.

Taekwang Industrial has requested the convening of an extraordinary general meeting of shareholders to hold CEO Kim Jaekyum accountable for the illegal internal transactions and seek his dismissal. A representative from Taekwang Industrial stated, "If the motion to dismiss the CEO is rejected at the extraordinary general meeting, we will not hesitate to initiate a dismissal lawsuit," adding, "We are also considering filing a claim for damages against the outside directors who participated in the retroactive approval of the illegal internal transactions despite being aware of the wrongdoing without raising any objections."

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