[Edaily Reporter Kwon Oh-seok] The conflict between minority shareholders and management at KOSDAQ-listed #Dongyang E&P appears to be intensifying. Minority shareholders, who have been ramping up pressure—including holding rallies to protest the company’s low dividend payout ratio and passive shareholder return policies—have now gone so far as to file a petition with financial authorities. In response, the company is attempting to appease shareholders by unveiling a corporate value enhancement plan (Value-Up).

According to the financial investment industry on the 18th, Dongyang ENP’s minority shareholders submitted a petition to the Financial Supervisory Service the previous day (the 17th), raising concerns about the company’s past decision to donate 4.97% (390,319 shares) of its treasury stock to a scholarship foundation affiliated with the major shareholder, free of charge. This represents a 14.99% stake (1,178,000 shares), and a total of 78 shareholders agreed to submit the petition.
The shareholders highlighted the seriousness of the issue, noting that the donation was made in December 2020 without a resolution from the general meeting of shareholders and that the foundation exercised its voting rights against shareholder proposals (demands for cash dividends and a stock split) at the regular general meeting of shareholders in March of this year. They pointed out that the foundation, chaired by Kim Jae-man, CEO of Dongyang E&P, is effectively under the influence of the major shareholder.
They emphasized, “Through the donation of treasury stock, voting rights that could have been eliminated upon cancellation have been revived and are being used as a means to defend management control,” adding that “this constitutes a violation of shareholder value and an infringement on the rights of minority shareholders.”
The minority shareholders have requested that the Financial Supervisory Service (FSS) investigate whether the process involved any violations of the Capital Markets Act and whether the board of directors may have committed breach of fiduciary duty, in addition to demanding the restoration of the treasury shares (return to the company). The shareholders argue that administrative guidance of the same level is necessary, citing a past case where “Suprema HQ” attempted to contribute treasury shares in a similar manner but was blocked by financial authorities.
Shareholders had been voicing complaints that shareholder returns remained limited—with the dividend payout ratio hovering around 6% despite the company’s solid performance. Although some indicators slowed year-over-year in the first quarter of this year—with revenue of 122.8 billion won, operating profit of 6.5 billion won, and net profit of 13.3 billion won—the company has been evaluated as having stable cash generation capabilities, given the solid foundation of its core businesses, such as “SMPS” (switching power supplies).
In addition, shareholders criticized the company for not announcing plans to cancel its treasury shares—of which it currently holds approximately 3.9% (308,342 shares)—and appealed, “Please oversee the major shareholders and management to ensure they respond to minority shareholders’ legitimate demands for shareholder returns and enhance management transparency.”
In response, the company explained, “Since the assets contributed to the scholarship foundation have already been designated as public-interest assets and are being managed for the foundation’s specific purposes, we are not considering returning them to the company or using them as a source of shareholder returns.”
The company also announced via a “Value-Up” disclosure that day that it would consider: △ the cancellation of 308,342 treasury shares; △ a phased increase in fixed dividends linked to sales targets; and △ additional dividends in the event of excess profits.