The motion to dismiss CEO Kim Jae-gyeom, brought by Taekwang Industrial, the No. 2 shareholder of Lotte Homeshopping, was voted down at an extraordinary shareholders meeting on the 14th.
Lotte Homeshopping said in a statement immediately after the meeting, "The company respects the exercise of shareholders' rights. We also expect shareholders to accept the outcome with a responsible attitude and work together for the company's development," and stated accordingly.
Taekwang Industrial argued for CEO Kim's management responsibility, saying that related transaction continued even though a motion to approve internal transaction between Lotte Homeshopping and Lotte Shopping affiliates was voted down at the board of directors in January. It also opposed Kim's reappointment in March for the same reason.
The defeat of the motion was due to the equity advantage of Lotte Shopping, the largest shareholder. Currently, Lotte Homeshopping's equity is 53% held by Lotte Shopping and 45% by Taekwang Industrial. The two sides have been in conflict over management control since the acquisition of Woori Homeshopping, the predecessor of Lotte Homeshopping, in 2006.
Taekwang Industrial said in a statement that "CEO Kim continued large-scale internal transaction with Lotte affiliates despite the board's decision," and that it was "a clear violation of the rules on internal transaction set forth in Article 398 of the Commercial Act and Article 38 of Woori Homeshopping's articles of incorporation."
It added, "We plan to apply for an injunction to suspend CEO Kim's duties for unlawful acts, while reviewing a plan to file a dismissal claim with the court."