[Invest&Law] Dentium and Align to Hold Injunction Hearing on Suspension of Duties on July 8

Injunction to Suspend Duties of Outside Director Kim Heetaek

Align: "Duties Must Be Suspended Pending Final Ruling"

The legal battle surrounding the shareholder meeting dispute between Dentium, a dental implant company, and the activist fund manager Align Partners Capital Management (Align) will begin in earnest next month. The court will hold its first hearing to determine whether to suspend the duties of Kim Heetaek, an outside director at Dentium who was appointed at the regular general meeting of shareholders in March.

According to the legal community on June 24, the 31st Civil Division of the Suwon District Court (Presiding Judge Shin Woo-jeong) has scheduled the first hearing on the injunction request to suspend the duties of Director Kim, which was filed by Align, Samsung Securities, and Align Korea Fund LP against Kim and Dentium, for July 8.

1 Percentage Point Margin at Shareholders’ Meeting... Debate Over Proxy Validity

Align is challenging the validity of the resolution to appoint Kim Heetaek as an outside director and audit committee member at the Dentium regular shareholders’ meeting held on March 31. The purpose of the injunction request is to prevent Director Kim from performing his duties until a final ruling is made in the main lawsuit. In other words, they are asking the court to temporarily stop the director appointed by the contested resolution from executing his duties until the court determines whether to annul the resolution.

The dispute began with a vote at the regular shareholders’ meeting to appoint an outside director as an audit committee member. Dentium nominated Kim Heetaek, while Align put forward Yoon Mooyoung. Kim won the vote with 50.3% in favor, narrowly beating Yoon, who received 49.3%, by a margin of 1 percentage point.

Align argues that there were issues in the handling of proxy forms for exercising voting rights during this process. Dentium allegedly relaxed the requirements for accepting proxy forms before the meeting, and a significant number of proxy forms were deemed valid despite the shareholders’ identities and true intent not being properly verified. An Align official stated, "More than 1,000 proxy forms were accepted as valid voting rights without objective verification materials such as copies of identification cards. Among overlapping proxy forms provided to both management and the shareholder proposal side, there were cases where the handwriting differed or another person's contact information was listed, raising doubts about their authenticity."

On the other hand, Dentium maintains that the procedures and handling of the agenda at the regular shareholders’ meeting were conducted legally. The company stated in a related disclosure, "We plan to respond according to legal procedures."

Decision on Injunction to Impact Align’s Shareholder Activism

Align previously sought and obtained a court order in April to preserve evidence related to the shareholders’ meeting. Subsequently, it filed both a lawsuit to annul the shareholders’ meeting resolution and an injunction to suspend duties. Given the small margin in the voting, the validity of the proxies is expected to be a central issue in the upcoming proceedings.

If the injunction is granted, Director Kim would be restricted from performing his duties until a final verdict is reached. Conversely, if the injunction is dismissed, Kim will continue his duties even as the main lawsuit proceeds. This case, involving an activist fund’s attempt to join the board and the company’s defensive efforts, is drawing attention as a legal example of shareholder activism following this year’s regular shareholders’ meetings.

Meanwhile, the outcome of the injunction is expected to be a crucial turning point for Align’s ongoing shareholder activism against Dentium. At this year’s regular shareholders’ meeting, Align submitted a shareholder proposal to limit director remuneration, which passed with 61.0% approval. However, shareholder proposals to amend the articles of incorporation to strengthen board independence and improve internal transactions and compensation structures were rejected. Align noted, "Even for the articles of incorporation amendment proposal, 64-66% of ordinary shareholders in attendance voted in favor, and about 600 individual shareholders, representing approximately 7.5% of voting shares, supported the proposal through proxies."

This content was produced with the assistance of AI translation services.