Taekwang Industries (003240), the second-largest shareholder of Lotte Home Shopping, has publicly opposed the reappointment of CEO Kim Jae-gyeom as a director and vowed to take legal action if necessary. The company alleges that Lotte Home Shopping committed illegal acts by continuing to sell consignment products from affiliates despite the board rejecting an internal transaction approval earlier this year.
"We plan to demand CEO Kim's resignation at Lotte Home Shopping's shareholders' meeting scheduled for the 13th," Taekwang Industries stated on the 12th. "If he is reappointed as a director, we will push for his dismissal at an extraordinary shareholders' meeting, and if that fails, we will petition the court for his removal."
Taekwang pointed out that Lotte Home Shopping operates a separate "Lotte Department Store" category on its website, selling consignment products from Lotte Shopping (023530). These include luxury goods, fashion accessories, electronics, and food items, with certain products broadcast 18 times this month alone. The company also noted that products from Himart, a Lotte Group affiliate, are sold through Lotte Home Shopping, with 1,324 registered items.
Taekwang Industries emphasized that Lotte Home Shopping's sale of affiliate consignment products constitutes illegal activity. Under Article 398 of the Commercial Act, internal transactions require prior board approval with consent from at least two-thirds of sitting directors. "The internal transactions themselves are problematic, but failing to follow the board approval procedures stipulated in the Commercial Act is a clear violation of the law," a Taekwang Industries official stated.
Lotte Home Shopping countered: "They are damaging the company with inaccurate claims, such as characterizing directly purchased products as consignment sales. We expect the abnormal management environment to improve through the shareholders' meeting."
The renewed conflict between Taekwang and Lotte Group stems from a restructuring of Lotte Home Shopping's board. The board currently comprises nine members—five from Lotte and four from Taekwang. Taekwang is concerned that this shareholders' meeting will add one director favorable to Lotte, shifting the composition to six Lotte-aligned directors and three from Taekwang. If Lotte Group controls two-thirds of the board, it could unilaterally pass special resolution items.
Lotte Shopping holds a 53% stake in Lotte Home Shopping, while Taekwang Group holds approximately 45% as the second-largest shareholder.