Sovereign Asset Management ("Sovereign") today confirms that its subsidiary, Crest Securities Limited, has written to the outside directors of SK Corp responding to their enquiries made in an open letter on 2 November 2004.
Sovereign took the opportunity to reiterate the reasons for its EGM request and highlight the duty of care of outside directors to their shareholders.
James Fitter, Chief Executive of Sovereign, said,
"We are delighted to hear directly from the SK Corp outside directors and have the opportunity to explain why we have requested an EGM.
This is all about protecting the interests of each and every shareholder. We are simply asking the question: Why would any company, which has a stated aim of embracing fundamental principles of good corporate governance, countenance the presence of any convicted criminal in a stewardship role over the shareholders' investment and interest?"
Sovereign believes that the EGM will provide shareholders with the opportunity to have recognised in the company's Articles of Incorporation the principle that persons indicted for serious crimes should be suspended and that persons convicted of serious crimes should be barred from acting as a director.
Fitter added, "It is clear to us that this is an occasion where the outside directors can assert their independence and demonstrate their responsibility to fulfil their fiduciary duty and act in the interests of all shareholders by supporting our request for an EGM.
We are not asking for anything revolutionary. The adoption of our suggested amendment to the Articles is a given at an international level, is common sense and is already applicable to outside directors in Korean law. Such a bar on convicted directors already has precedence in the SK Telecom Articles of Incorporation. This should not be a difficult issue for the Board to support."
Valuation
Despite being one of the largest refiners in the world with the second largest single oil refining facility SK Corp continues to be significantly undervalued compared to its industry peers. Sovereign believes that the outstanding issues surrounding governance and leadership are a significant hindrance to the company achieving greater value recognition and increased investor support.
Fitter said, "SK Corp's share price may have appreciated in recent times, but the fact is that the company remains at the bottom of the league table compared to its industry peers. SK Corp has enormous potential, but it must build a strong foundation of good governance for its future, in order to create lasting value for shareholders and the Korean economy. Sovereign remains committed to assisting SK Corp to achieve these goals."
Sovereign, whose subsidiary companies own a stake of 14.9%, is committed to SK Corp realising its full potential to become Asia's leading energy company.
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