Intervention by Foreign Shareholders Becoming Reality at Blue Chip Firms

Article excerpt

Intervention by foreign investors in the management of blue chip companies is becoming a reality as their shareholding increases in the aftermath of rapid market liberalization.

According to business sources yesterday, their part in management decisions is naturally associated with the protection of investments by foreigners, but management is nevertheless disturbed.

In most cases, foreign investors are not seeking participation in management but these companies are having a difficult time making decisions concerning new rights offerings and business swaps.

Companies which are facing increasing influence from foreign investors are such blue chips companies as Samsung Electronics, SK Telecom, Samsung Display Devices and Dongwha Duty Free.

In the case of SK Telecom, its bid to issue new shares has run into difficulties after Tiger Fund, which owns about 15 percent of its shares, voiced its opposition.

Instead, the American investment house is demanding a liquidation of SK Telecom's stock and has asked for an extraordinary shareholders meeting, now scheduled for Aug. 27.

In addition to the issues involving stock, the shareholders meeting is expected to deal with the ouster of SK chairman Sohn Kil-seung as a director of the company, thus making it that much more sensitive.

Over at the Samsung camp, both Samsung Electronics and Samsung Display Devices are holding back from volunteering to absorb a portion of the debts of Samsung Motors, in which they have a combined shareholding of 88 percent, due to complaints from foreign investors.

Industry analysts are quick to point out that the takeover of Samsung Motors by Daewoo Motors would have proceeded much more smoothly if foreign shareholdings at the two firms were less.

While others argue that the delay in the decision to absorb portions of the debts of Samsung Motors is not entirely due to foreign investors, since its board of directors is well represented by minority shareholders, it has certainly played a significant role. …