SOUTH KOREA: Glovis shareholders unhappy at charity donation
Hyundai Automotive Group's announcement on Wednesday that its chairman and his son will donate their 60% stake in Glovis to charity caused the car transporter's shares to plunge 14.97% and obviously rattled many of the company's minority shareholders who are now moving to take collective action against the Chungs, according to the Korea Herald.
Industry insiders reportedly say minority shareholders are indignant over the Chungs' decision to make the donation in the form of Glovis shares, calling it unethical, and claim they have become scapegoats to an "unlawful political act."
"I invested 50 million won in Glovis, and I was forced to sell it after losing 10 million won. I plan on forming an assembly with other minor shareholders to file a class action suit; we have been made scapegoats as a result of [Chungs'] shady acts," a former shareholder who identified himself as Cho told the paper.
Writing on the message boards at an online investors' portal, Glovis shareholders reportedly are venting their anger against the Chungs, demanding that they make their donation in cash and offer compensation for their losses.
However, legal experts told the Korea Herald that the potential class action, if ever taken, is not likely to succeed in court.
"We certainly understand why Glovis shareholders would be aggravated, but there are no legal grounds on which the Chungs can be found guilty of any crime by donating their Glovis stake," said Kim Sang-jo of the People's Solidarity for Participatory Democracy.
"Offering charity out of one's own pocket, regardless of its shape, is an enjoyment of his or her own property right, and one cannot be found guilty of exercising it," he reportedly added.
The consensus is that major shareholders' discarding their shares in this manner may be unethical, but not illegal.
On the other hand, should Glovis be found guilty of providing slush funds, the shareholders will then have enough grounds to file class action to demand adequate compensation, another legal source said, adding: "Forming a slush fund is obviously the misuse of shareholders assets, and should the Chungs be found guilty of such an act, shareholders would be able to make their case."
The Korea Herald said the junior and senior Chungs originally invested 5bn won of their own money to found Glovis, but it is the affiliates of Hyundai Automotive Group that contributed the most in supporting the freight company, by providing it with orders.