Kyobo Life Chairman Shin Chang-jae won some of the disputes with the Affinity Consortium over put options (the right to sell stocks back at a specific price at a specific time). However, the International Commercial Arbitration Commission (ICC) decided that it was true that Shin had violated the contractual obligation between shareholders, leading to another lawsuit.
According to the financial industry on the 7th, the arbitral tribunal under the ICC ruled on a case related to breach of contractual obligations between Kyobo Life shareholders. This is a judgment that came out after two years and six months since the FI’s application for arbitration in March 2019. An arbitral award of the ICC is single-trial, and has the same effect as a final court decision.
The Affinity Consortium exercised a put option in October 2018 in protest against Kyobo Life’s delay in IPO. Affinity asked Deloitte Anjin to calculate the fair market price, and Kyobo Life Insurance was evaluated at 409,000 won per share, but the dispute started as Chairman Shin did not accept it.
First, the ICC arbitral tribunal ruled in favor of Chairman Shin on the put option strike price, which is the core of the dispute between Chairman Shin and the shareholders of the affinity consortium. In particular, at the price of 409,000 won submitted by Affinity, it was decided that Chairman Shin did not need to purchase the put option or pay interest on it. This means that the financial burden of Chairman Shin has been eased. The court argued that the put option price was the sum of the put option price plus the management rights premium including Chairman Shin Chang-jae’s stake, but the court did not accept this.
In addition, regarding the affinity claim that Chairman Shin violated the provision of ‘to do his best for an IPO (initial public offering)’ in the shareholder contract, he said, “In September 2018, the Board of Directors In that they all opposed the IPO, the degree of violation of the contract between shareholders is minimal, and there is no need for Chairman Shin to compensate Affinity for damages.” It also ruled that it did not fall under Shin’s violation of his duty of confidentiality.
However, the court found that Chairman Shin was responsible for breaching the contract and found that the put option was valid. According to Affinity, Chairman Shin argued with the gist of ‘I did not go through the process of appointing a valuation agency because the put option clause in the contract was invalid’ on the last arbitration hearing, but the court said that there is no basis for this. judged
In addition, it was determined that Deloitte Anjin, which the FI commissioned to calculate the put option price, made an independent decision on the valuation as an independent, credible institution, and that Chairman Shin violated his obligation to submit a valuation report within 30 days. .
Based on this result, Affinity is expected to proceed with a litigation for the performance of the contract. As the put option remains in effect, the follow-up schedule is expected to follow.
An Affinity official said, “As one side did not pay the price, the pricing procedure was not met, but the put option was valid, and it was also acknowledged that Chairman Shin Chang-jae violated the contract, so we are reviewing additional procedures so that the price can be decided again as soon as possible.” said
Kyobo Life said that the Affinity Consortium is discussing the part where the arbitration tribunal recognized the validity of the put clause in the shareholder contract, but the core issue of the arbitration was ‘claim for the sale price due to the put exercise of the Affinity Consortium’, and this was all dismissed.
A Kyobo Life official said, “The dispute over the effectiveness of the put clause itself was only one of the various matters discussed in the arbitration.” “The core issue was the claim that the Affinity Consortium would exercise the put option at 409,000 won per share, and the arbitral tribunal They did not accept this,” he said.
“The ICC arbitral tribunal acknowledged that Chairman Shin Chang-jae violated some minimum shareholder contracts, but did not recognize the unilateral sale claim following the Affinity Consortium’s put exercise,” he added.
Meanwhile, the criminal trial against the key executives of Affinity and the accountants of Deloitte Anjin is still in progress.
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