Minority shareholders of Sunjin, an affiliate of Harim Group, have launched collective action, citing opaque cash management and a lack of shareholder return policies. They argued that although the company holds a large amount of surplus cash, it has been reluctant to enhance shareholder value through measures such as increasing dividends or buying back treasury shares.
According to mid-sized business circles on the 30th, the previous day, minority shareholders' representative Kim Jin-han sent Sunjin a request for "inspection and copying of accounting books." If the company refuses, the group plans to consider legal steps such as filing for an injunction.
The shareholders' concerns start with retained earnings. As of the end of the third quarter last year, Sunjin's retained earnings were about 354.5 billion won, and including additional paid-in capital, the surplus cash held by the company is said to be about 540 billion won. That exceeds twice the current market capitalization. By contrast, the view is that the scale of dividends is low relative to operating profit.
Shareholders also believe that most of the operating profit, reaching 100 billion won in the past, was lost through foreign exchange investments and the like. They say it is necessary to verify the investment decision-making process and where responsibility lies. Citing a past record of sanctions by the Korea Fair Trade Commission for unfair support to affiliates, some shareholders argue that a review of the overall internal transaction structure is needed.
They also point out that affiliates of Harim Holdings, including Sunjin, show low price-to-book ratios (PBR) and price-to-earnings ratios (PER), indicating limited market evaluation. Minority shareholders say low dividend payout and the absence of owner policies are weighing on the stock price.
The minority shareholder alliance plans to pursue legal procedures if the company does not comply with the request to inspect the books. Based on the materials secured, they plan to demand governance improvements, including appointing audit committee members, at the regular shareholders meeting.
Kim said, "Social demand for protecting shareholder rights has risen recently, and under last year's amendments to the Commercial Act, directors face liability for actions that think only of the interests of controlling shareholders and continue to harm other shareholders," adding, "The Sunjin case will serve as a catalyst for the spread of 'shareholder activism' among mid-sized food and feed groups that have been stingy with shareholder returns despite having quality subsidiaries."