[Alpha Biz= Kim Jisun] A South Korean court has upheld the validity of Oscotec’s supermajority voting rule in its articles of incorporation, making it significantly harder for minority shareholders to secure seats on the company’s board.
According to Oscotec on March 6, the court rejected a request by minority shareholders to suspend the effectiveness of the supermajority clause through an injunction.
Under Article 27(3) of Oscotec’s articles of incorporation, the appointment or dismissal of directors proposed by shareholders requires approval from at least four-fifths (80%) of the total issued shares. This threshold is far higher than the typical requirement for director appointments, which generally requires a majority vote of attending shareholders and approval from at least one-quarter of total issued shares.
Because of this rule, even if the minority shareholder alliance combines its holdings with those of the second-largest shareholder, Chairman Lee Ki-yoon, their total stake amounts to only about 22.9%, far below the 80% threshold needed to pass shareholder-proposed board appointments.
The minority shareholder group has nominated five candidates for the board, including Professor Kang Jin-hyung of St. Mary’s Hospital and Yoon Soon-nam, CEO of Stanley Consulting.
Earlier, the minority shareholders argued that the supermajority provision violates the principle of shareholder equality and filed for an injunction to suspend its effect. In the first trial of the main lawsuit, Oscotec initially lost, but the company appealed the decision, which restored the clause’s validity. The court in the latest injunction ruling determined that there was no need to suspend the provision until the final ruling in the main case.
The upcoming shareholders’ meeting has drawn attention as a potential showdown over board restructuring. Currently, Oscotec’s board consists of three inside directors, one outside director and two auditors. The terms of inside director Yoon Tae-young and outside director Hong Nam-ki are set to expire at the meeting.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
