Truston Draws a Line in the Sand Over Taekwang Management Council, Considers Extraordinary Shareholders’ Meeting [fn Market Watch]

[Financial News] Truston Asset Management, the second-largest shareholder of Taekwang Industrial, has publicly raised questions about whether the Taekwang Group Management Council intervened in the company’s management.
The asset manager is demanding clarification on whether the council was involved in key decision-making processes, including the controversy over the issuance of KRW 318.6 billion in exchangeable bonds (EB), the corporate value enhancement plan and shareholder return measures.
According to investment banking industry sources on the 3rd, Truston sent an open letter to Taekwang Industrial’s board and all of its directors, asking about the nature of the Management Council and whether it had been involved in running the company. The letter contained 10 questions and five requested actions, and called for a response within 30 days.
The dispute between Truston and Taekwang Industrial appears to be expanding from shareholder returns to the issue of board independence.
In July, Truston said Taekwang Industrial’s average payout ratio over the past 20 years was only 1% and called for it to be raised to the average level for listed companies.
Taekwang Industrial responded last month that it would pursue a higher dividend per share for the 2026 year-end dividend than in the previous year, but did not present a specific target.
The company also said it would prepare a plan to hold or dispose of its treasury shares and seek approval at the 2027 annual general meeting of shareholders. It said a stock split would be considered over the medium to long term. Truston is asking whether the Management Council influenced the absence of specific figures and timelines in the major shareholder return measures.
Truston has also revived the controversy over the KRW 318.6 billion EB issuance. Last year, plans for a KRW 1.5 trillion new business and an EB issuance were disclosed externally under the name of the “Taekwang Group Public Relations Office” before board approval and public disclosure. Taekwang Industrial later pursued, and then withdrew, an EB issuance backed by 24.4% of its treasury shares.
Truston maintains that it is necessary to determine whether the Management Council was involved throughout the process, from the EB issuance and the corporate value enhancement plan to the company’s recent response to a shareholder letter. It argues that if an organization outside the board exercised substantive influence over a listed company’s investments and capital policies, the allocation of authority and responsibility must be clarified.
Regulators have also taken action concerning the Management Council. Taekwang Industrial received six penalty points for inadequate disclosure and a sanction of KRW 76 million from the Korea Exchange (KRX), including over the release of related information under the group public relations office’s name before disclosure. Heungkuk Life Insurance also received a management-improvement notice from the Financial Supervisory Service concerning support for the Management Council’s personnel and expenses.
An investment banking industry official said, “Regardless of differences over the size of dividends or treasury shares, the extent to which an organization outside the board was involved in large-scale investments and capital raising is a corporate governance issue. The key question is how Taekwang Industrial’s board will explain its relationship with the Management Council.”
Truston plans to consider seeking inspection and copying of accounting books and records, filing a shareholder derivative suit and requesting the convening of an extraordinary general meeting of shareholders if it does not receive a sufficient response within 30 days. It has also left open the possibility of filing a complaint over whether the Management Council obstructed the board’s duties. As a result, the dispute between the two sides is expected to spread beyond the level of shareholder returns, such as dividends and treasury shares, to Taekwang Industrial’s actual decision-making structure and the independence of its board.


[email protected] Reporter Kim Kyung-ah Reporter