Shareholder derivative lawsuit on behalf of the shareholders of Sungshin Cement Co., Ltd.,

   Writer 한누리    l    Hit 33
2024.02.01 원문보기


Hannuri is pleased to announce its recent victory in a shareholder derivative lawsuit on behalf of the shareholders of Sungshin Cement Co., Ltd., a publicly traded company in South Korea. In a country where shareholder derivative lawsuits are relatively uncommon, Hannuri has established itself as a leader in this field by achieving consecutive victories in recent shareholder derivative cases.


The lawsuit was related to the collusion of six domestic cement companies, including Sungshin Cement Co., Ltd., who conspired to control market share and increase cement prices from March 2011 to April 2013. The Korea Fair Trade Commission (KFTC) found that this collective action violated antitrust regulations and unfair trade practices, resulting in penalty surcharges imposed on the cement companies. Sungshin Cement Co., Ltd. was one of the fined companies, and certain executives involved in the collusion faced criminal penalties.


Hannuri initiated a shareholder derivative lawsuit in 2020 on behalf of Sungshin Cement Co., Ltd.'s shareholders. Hannuri's attorneys, Sunghyun Song, Hyunju Ku, and Minsu Choi, argued for compensation from the executives to cover the company's losses resulting from the collusion. The First Instance Court acknowledged the executives' responsibility for damages, stating that they had neglected their duty to supervise and oversee the unlawful actions of employees involved in the collusion, failed to establish an effective internal control system, and deliberately ignored their duty to monitor and supervise through the internal control system.


A noteworthy aspect of this lawsuit is that the Court of First Instance recognized the liability for damages of the executives, including those who did not face criminal sanctions for their involvement in the collusion.


Hannuri intends to argue for a higher level of compensation for the executives in the Court of Appeal. We anticipate that the Court of Appeal will assign greater responsibility to the executives during the appeal process.