Shin & Kim successfully represented Hyundai Elevator in defending a claim filed by Schindler Group, the world’s second largest multinational elevator company and the second largest shareholder of Hyundai Elevator, for the right to inspect and copy the accounting books and board minutes of Hyundai Elevator.
Schindler Group demanded the right to inspect and copy a vast amount of Hyundai Elevator’s internal records, including accounting books and the minutes of board meetings, on grounds that: (i) valuation losses from derivative contracts entered into with respect to shares of Hyundai Merchant Marine were too excessive and (ii) Hyundai Elevator had overstretched itself in its failed attempt to acquire Hyundai Engineering and Construction. Schindler Group argued that rights of inspection and copying of company records are basic and fundamental shareholders’ rights.
In response, Shin & Kim effectively argued on behalf of Hyundai Elevator that Schindler Group’s claim lacked any appropriate basis and should not be sustained, for the following reasons: (i) the management activities with which Schindler Group has taken issue are normal corporate activities that do not give rise to any need for shareholder scrutiny of Hyundai Elevator’s internal records; (ii) Schindler Group is a competitor of Hyundai Elevator; and (iii) Schindler Group has continued to amass Hyundai Elevator shares following its aborted attempt to acquire the elevator business of Hyundai Elevator, suggesting an ulterior motive in filing its claim. The court accepted all of Shin & Kim’s arguments and dismissed Schindler Group’s claim.
In summary, the judgment indicates that the court’s stance on access to internal information of a company is that it should be limited in cases where a person or entity: (a) is in competition with the company, even if the person or entity is the shareholder of the company; or (b) is seeking to further its own interests by using the information to pressure the company rather than oversee the company’s activities. Given that the Korean Commercial Code provides that any shareholder of a listed company who holds shares representing 0.1% or more of the total issued and outstanding shares may exercise the right to request inspection and copying of the accounting books of the company, the decision in the present case is of great significance to managers of listed companies who are responsible for protecting the interests of the company from unfair exercise of shareholders’ rights.
Shin & Kim is proud to have secured this legal victory for Hyundai Elevator.
Having freed Hyundai Elevator from the grasp of Schindler Group’s unreasonable information demands, this legal victory not only solidifies Hyundai Elevator’s leading position in the domestic market, but provides the springboard for Hyundai Elevator’s advance into the global market.
