Lotte Homeshopping said on the 13th that at its regular shareholders meeting, a proposal to change the board composition from five from Lotte and four from Taekwang Industrial to six from Lotte and three from Taekwang Industrial was approved.
At the shareholders meeting that day, Lotte Homeshopping changed the board structure from five from Lotte (three executives and two outside directors) and four from T. K. Corporation (three executives and one outside director) to six from Lotte (three executives and three outside directors) and three from T. K. Corporation (one executive and two outside directors).
With the board shifting from 5-4 to 6-3, Lotte can now single-handedly pass special resolutions that typically require a two-thirds majority.
Earlier, on Jan. 1, at a Lotte Homeshopping board meeting, an agenda item on approving internal transactions related to dealings with Lotte affiliates was voted down due to opposition from Taekwang Industrial, and citing this, Taekwang Industrial has argued that Lotte Homeshopping's consignment sales of affiliate products are illegal and has demanded the resignation of Chief Executive Kim Jae-gyeom, fueling conflict.
A Lotte Homeshopping official said, "Expanding outside directors is an unavoidable measure to strengthen the board's independence and transparency in decision-making from T. K. Corporation's baseless claims," adding, "We will take all legal measures against any future baseless assertions or acts that defame the company's reputation."
The dispute between the two companies began when Lotte Shopping secured about 53% equity during the acquisition of Woori Homeshopping in 2006. Since then, T. K. Corporation, the No. 2 shareholder with about 45% equity, has demanded in key decision-making processes the resale of the headquarters building, the dismissal of the chief executive, the discontinuation of the Lotte brand, and the suspension of affiliate transactions, according to Lotte Homeshopping.