Truston Asset Management, the No. 2 shareholder of Taekwang Industrial, on the 3rd sent an open letter raising suspicions that the Taekwang Group management council was interfering in Taekwang Industrial's management.
Truston said it sent an open letter to Taekwang Industrial's board of directors and all directors asking about the identity of the Taekwang Group management council and its relationship with the company.
Truston argued that since its launch, the council "has few records of benefiting the group and has repeatedly stood at the center of controversies and criminal matters."
It also raised questions about the corporate value enhancement plan Taekwang Industrial released in June and the open shareholder letter issued on the 13th of last month.
On July 14, Truston, through a shareholder letter, said Taekwang Industrial's average dividend payout ratio over the past 20 years was only 1% and demanded it be raised to the level of the average for listed companies.
In response, in a reply dated the 13th of last month, Taekwang Industrial said that rather than fixing a specific dividend payout ratio, it would seek to raise the per-share dividend of the 2026 settlement of account dividends paid in 2027 compared with the previous year.
Truston said, "There was no target figure, no size of the increase, and no timeline," adding, "Regarding the demand for cancellation of treasury shares, the company gave only a principled answer that it would draw up a plan to hold or dispose of treasury stock and seek approval at the 2027 regular shareholders' meeting without confirming whether to cancel, and for the demand for a stock split, it answered with ongoing medium- to long-term review without standards or timing."
It continued, "If a company with an average 1% dividend payout ratio over 20 years answers with a 'pursuit of an upward direction' without a target figure, that is effectively meaningless," noting, "For all three demands, the same rhetoric was repeated of avoiding confirmation without figures or deadlines and deferring decisions to the board or shareholders' meeting."
It added that it included in this open inquiry whether these responses were influenced by the management council's intervention.
Truston also believes there was interference by the management council in Taekwang Industrial's issuance of exchangeable bonds (EB). Taekwang Industrial pursued the issuance of 318.6 billion won in EBs in 2025 but withdrew it.
Truston said, "From forcing and then withdrawing the EB, to a value-up plan without direction, to a perfunctory reply, Truston judges that the council interfered whenever there was controversy."
It also mentioned past affiliate controversies. Regarding the case in which affiliates were made to take on kimchi and wine from the owner family's company, Truston said the court acknowledged instructions from the management planning office, the predecessor of the management council, and indications of involvement by former Chairman Lee Ho-jin.
In addition, it pointed out that Taekwang Industrial received 6 penalty points for unfaithful disclosure and a 76 million won sanction from the Korea Exchange (KRX) over issues including distributing a press release under the Taekwang Group PR office's name before disclosure, and that Heungkuk Life Insurance received a management advisory notice from the Financial Supervisory Service regarding improper support of the management council's personnel and expenses.
Truston demanded an end to the management council's involvement and presented 10 questions and 5 requests. Truston plans to consider requesting inspection and copying of accounting books, a shareholder derivative lawsuit, a call for an extraordinary shareholders' meeting, and a complaint for business obstruction if there is no reply from Taekwang Industrial within 30 days from receipt of this letter or if the reply is merely formal.
A Truston official said, "If a decision was made, responsibility must be taken, and if responsibility is not to be taken, hands must be off," adding, "Taekwang Industrial's board must prove directly that it is not a place that merely stamps decisions crafted by a phantom body, and that the numberless reviews shown in the latest reply will not be repeated."