Lotte Corp. co-CEO Goh Jung-uk, center, speaks during the company's annual general meeting of shareholders at Lotte World Tower in Seoul, Tuesday. Courtesy of Lotte Corp.

Lotte Corp., the holding company of Lotte Group, sidestepped a regulation requiring it to cancel 27.5 percent of its treasury shares by approving a new provision in its articles of incorporation at its annual general meeting of shareholders on Tuesday.

Lotte Corp. said it approved all six agenda items proposed at the shareholders meeting, including the new provision and the appointment of directors.

The provision drew attention from the local business community, as it allows the company to hold or dispose of treasury shares with shareholder approval when necessary to achieve management objectives, such as introducing new technologies and improving its financial structure.

In February, Korea passed a revision to the Commercial Act requiring companies to cancel their existing treasury shares within 18 months. For Lotte Corp., which holds treasury shares accounting for 27.5 percent, the new commerce law would have forced it to cancel shares worth 880 billion won ($586.4 million).

The law permits companies to retain their treasury shares if their articles of incorporation, approved by shareholders, allow it for business purposes such as adopting new technologies or improving their capital structure. With Tuesday’s approval, Lotte Corp. can bypass the treasury stock cancellation requirement.

Since the treasury share cancellation rule is a key policy of the ruling Democratic Party of Korea and the Lee Jae Myung administration, the National Pension Service, which holds a 6.4 percent stake in Lotte Corp., had opposed the provision, saying it could undermine shareholder value. The measure, however, was ultimately approved as originally proposed, with Chairman Shin Dong-bin, the largest shareholder, and his related parties holding a combined 43.5 percent stake.

Meanwhile, the company reappointed Shin to its board, along with co-CEOs Goh Jung-uk and Rho Jun-hyung.

“This year, Lotte will base all business and investment decisions on profitability and efficiency,” Goh said.

“We will proactively streamline non-core businesses that do not align with our growth strategy and continue to review the feasibility of ongoing projects.”

Source: Korea Times News