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Photo = DB HiTek Bucheon Plant |
[Alpha Biz= Paul Lee] A shareholder derivative lawsuit filed by minority shareholders and the Solidarity for Economic Reform against DB HiTek founder Chairman Kim Jun-ki and Chairman Kim Nam-ho has been dismissed by the court, rejecting claims that their compensation was excessive.
On March 27, the Bucheon Branch of the Incheon District Court (Civil Division 1, Presiding Judge Cho Jung-min) ruled against the plaintiffs, dismissing the case brought against the company’s top executives.
In the lawsuit, minority shareholders argued that the Kim family and other executives received a total of KRW 23.8 billion in compensation from DB HiTek between 2021 and 2024, which they claimed was excessive. They also contended that the executives effectively received “double benefits,” having additionally collected KRW 30.2 billion in dividends during the same period.
Under Korean commercial law, shareholders holding at least 1% of outstanding shares (or 0.01% for listed companies) are entitled to file a derivative suit to hold directors accountable if the company fails to do so within 30 days. Any damages awarded in such cases are paid to the company, not to individual shareholders.
The Solidarity for Economic Reform and minority shareholders had previously requested in December 2024 that DB HiTek file a damages claim against the executives, alleging self-dealing through excessive compensation. After the company declined, they proceeded with the derivative lawsuit in March of the following year.
Plaintiffs also raised procedural concerns, arguing that the decision to grant high compensation to the controlling family was made solely by executive authority without a formal board resolution. However, the court found that such decisions did not constitute an abuse of managerial discretion or an illegal act, ruling in favor of the defendants.
The plaintiffs stated that they will review the ruling before deciding whether to file an appeal.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
