The Financial Supervisory Service has placed a hold on TAE KWANG CORPORATION's plan to issue exchange bonds based on its own shares. This is because information regarding the counterpart of the issuance was omitted.
According to the Financial Supervisory Service's electronic disclosure system (Dart) on 1st, the FSS issued a correction order regarding Taekwang Industrial's 'decision on the disposal of own shares' and 'decision on the issuance of exchange bonds' submitted on the 27th of last month. The Financial Supervisory Service pointed out that both disclosures did not accurately state the counterpart for the disposal and issuance.
Earlier, Taekwang Industrial approved the issuance of exchange bonds worth 320 billion won based on all of its held shares (271,769 shares) as exchange targets on the 27th of last month. The proportion of Taekwang Industrial's own shares is 24.41% of the number of shares issued.
Trustone Asset Management, the second largest shareholder of Taekwang Industrial, applied for a provisional injunction at the Seoul Central District Court the previous day, requesting the cessation of the directors' illegal activities. Trustone Asset Management pointed out that the issuance of exchange bonds decided by the Taekwang Industrial Board of Directors violates corporate law and infringes on shareholders' rights to subscribe for new shares. In particular, disposing of a large amount of own shares that could affect management rights at a level of one-fourth of the stock's net worth raises suspicions of breach of duty.
Trustone Asset Management said, "If Taekwang Industrial continues the issuance procedures for exchange bonds despite the injunction application, we plan to take further legal action against the relevant directors, including a shareholder derivative lawsuit and criminal complaint."