SNT Holdings, which became the largest shareholder of SMEC listed on KOSDAQ, issued a statement on the 25th, saying, "In the process of pursuing participation in SMEC's management, access to information is being restricted," and, "The exercise of rights as a shareholder is not proceeding smoothly."
SNT Group and Chair Choi Pyeong-gyu became the largest shareholders starting last year by acquiring 13.65% and 6.55% of SMEC's equity, respectively. In response, SMEC CEO Choi Young-seop pushed back, additionally acquiring equity and disposing of treasury shares to friendly parties, triggering a management control dispute.
The problem is that shareholder rights are not being properly exercised amid the management control dispute. Ahead of the regular shareholders meeting scheduled for next month, SNT Holdings formalized its management participation by submitting a shareholder proposal on appointing directors and members of the audit committee, but delivery of the shareholder proposal did not take place due to SMEC's refusal.
According to the statement, SMEC intentionally closed its entire office even on normal business days to avoid receiving the shareholder proposal, refusing service on the grounds of "closed and absent" (no party present and the door closed).
SNT Holdings pointed out that access to information needed to assess SMEC's investment value itself is restricted. SNT Holdings said, "Since investing in SMEC, suspicions have been raised about accounting fraud related to related-party transactions, and the legality of the urgent disposal of a large volume of treasury shares at no cost or at low prices to benefit the existing management—issues that could affect the company's value—and although we requested the company's position, we repeatedly did not receive answers."
SMEC is also not responding to SNT Holdings' request to inspect and copy accounting books. SNT Holdings said, "We are not being provided even minimal information, so rather than dispelling market-raised suspicions, the situation is amplifying them," adding, "We have come to seriously question whether any incentive remains for further investment and management participation."
SNT Holdings also noted, "With the hearing date for the injunction to place the agenda on the meeting, filed on the basis of the shareholder proposal, set for Mar. 16, we judge that it has become realistically difficult even to place the item on the agenda and to have a normal proxy contest at this shareholders meeting."
As SMEC's management control dispute intensifies, some abnormal actions by certain SMEC executives have also been detected. According to SNT Holdings, some SMEC executives bought 1 to 10 shares of subsidiaries of SNT Group, including SNT Holdings, and then, just days before the regular shareholders meeting date, requested inspection and copying of the shareholder registers.
Meanwhile, SNT Holdings added that it asked questions about the key terms of the co-investment agreement related to SMEC's acquisition of WIA machine tools and is awaiting a response.