Truston Demands Taekwang Review Cross-Appointment of Affiliate Directors

Truston Asset Management has openly criticized agenda items proposed for Taekwang Industrial's annual general shareholders' meeting. Taekwang Industrial nominated Director Seo Byung-sun, who served as an outside director at affiliate Daehan Synthetic Fiber, as a candidate for separately elected audit committee member. Conversely, Daehan Synthetic Fiber is seeking to appoint Director Choi Young-jin, who served as an outside director at Taekwang Industrial, to its audit committee. Truston holds more than 5% of Taekwang Industrial's shares.

Truston issued a statement on the 18th regarding Taekwang Industrial and its affiliate mutually recommending outside directors, formally demanding a review of the agenda items. Taekwang Industrial proposed an agenda item to appoint Director Seo as a separately elected audit committee member. Director Seo was appointed as an audit committee member at Daehan Synthetic Fiber, a Taekwang Industrial affiliate, in March last year, with his term originally running through March next year. Director Choi, nominated as an audit committee candidate at Daehan Synthetic Fiber, conversely served long-term as an audit committee member at Taekwang Industrial. Director Choi's term at Taekwang Industrial was also originally set to end in March next year. Truston criticized the arrangement, stating: "Cross-appointing outside directors between affiliates or forming a 'mutual recommendation loop' where they recommend each other establishes an affinity network rather than independence."

Truston demanded that Taekwang Industrial: disclose the entire process of vetting and screening outside director candidates; explain and reconsider the mutual recommendation and rotating appointment structure of outside directors between affiliates; and present a specific treasury share cancellation and shareholder return roadmap consistent with the purpose of the revised Commercial Act. Truston criticized Taekwang Industrial for holding treasury shares for more than 20 years without presenting a clear cancellation roadmap.

Meanwhile, Truston recently withdrew its shareholder proposal regarding KCC. This followed KCC's announcement of plans to liquidate held assets and cancel treasury shares in response to requests. Truston had been demanding liquidation, pointing out that KCC holds approximately 5 trillion won worth of listed company shares, including Samsung C&T, for investment purposes. KCC's board of directors recently sent an official letter accepting Truston's demands, according to sources. Truston holds a 1.88% stake in KCC.

A Taekwang Industrial official stated: "Director Seo is a candidate who received unanimous approval from all members of the outside director candidate recommendation committee."