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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] UK-based hedge fund Palliser Capital, which has been pursuing activist engagement with LG Chem, has filed for a court injunction seeking to require the company to place shareholder proposals on the agenda of its upcoming annual general meeting (AGM).
LG Chem disclosed on Sunday that Palliser Capital Master Fund filed an application with the Seoul Southern District Court for a provisional injunction to mandate the inclusion of shareholder-proposed items on the AGM agenda. A hearing has been scheduled for March 4.
In its filing, Palliser requested that the court order LG Chem to:
(i) include the shareholder-proposed items on the agenda of the AGM;
(ii) notify shareholders of each proposed item at least two weeks prior to the AGM date through the official notice of convocation or an equivalent public announcement; and
(iii) bear the legal costs associated with the application.
The injunction request is widely seen as a preemptive legal move, as Palliser’s shareholder proposals—submitted to LG Chem on February 10—may not be adopted as formal AGM agenda items. Palliser is reported to have held more than a 1 percent stake in LG Chem on a long-term basis.
Palliser has called for amendments to LG Chem’s articles of incorporation to allow for non-binding shareholder proposals, as well as the introduction of a lead independent director system. The fund has also urged the company to enhance management transparency and capital allocation by proposing measures including:
regular disclosure of the net asset value (NAV) discount;
the adoption of key performance indicators (KPIs) reflecting capital efficiency; and
a review of equity-linked compensation schemes.
In particular, Palliser has recommended that LG Chem reduce its ownership stake in LG Energy Solution to below 70 percent and use the proceeds to fund share buybacks as part of its value enhancement strategy. LG Chem currently holds approximately a 79 percent stake in LG Energy Solution.
Palliser argues that LG Chem continues to trade at a significant discount to its net asset value, asserting that weaknesses in corporate governance and capital allocation policies are the primary drivers of the company’s undervaluation.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
