This excerpt taken from the LPL 20-F filed Apr 16, 2008.
Our two major shareholders, LG Electronics and Philips Electronics, which together currently own approximately 51.1% of our voting stock, have significant influence over corporate decisions.
LG Electronics and Philips Electronics together have control of all matters submitted to our shareholders for approval, including electing certain of our directors, amending our articles of incorporation and approving changes of control that may impact you as a minority shareholder. The directors elected by these shareholders are able to make decisions affecting our capital structure, including decisions to issue additional capital stock, implement stock repurchase programs and incur indebtedness.
In addition, we engage in a variety of related party transactions with our two major shareholders and their respective affiliates:
Pursuant to our articles of incorporation and the terms of a shareholders agreement entered into between LG Electronics and Philips Electronics in July 2004, we currently have a nine-member board of directors which is composed of three non-outside directors selected by LG Electronics, one non-outside director selected by Philips Electronics and five outside directors. In March 2005, we established the Outside Director Nomination and Corporate Governance Committee which will nominate our future outside directors. The right to nominate the four non-outside directors depends on the respective ownership interest in us of each of LG Electronics and Philips Electronics. The two shareholders have also agreed to a co-voting arrangement under which each party is obligated to vote in favor of the non-outside director candidates selected by the other party as well as the outside candidate jointly selected by the two shareholders. On October 10, 2007, Philips Electronics sold 46.4 million shares of our common stock to financial institutions in a capital markets transaction, which represented approximately 13.0% of our issued share capital, and reduced Philips Electronics ownership interest in us to 19.9%. On March 12, 2008, Philips Electronics sold 24.0 million shares of our common stock to institutional investors and further reduced its ownership interest in us to 13.2%. Pursuant to the terms of the shareholders agreement and the minimum shareholding requirements thereunder, Philips Electronics is thereafter no longer entitled to nominate any non-outside directors, while LG Electronics is entitled to nominate four non-outside directors. In addition, LG Electronics has the right to nominate our representative director and both LG Electronics and Philips Electronics must vote their shares for the removal of the director nominated by Philips Electronics at the next annual general meeting of shareholders. See Item 6.A. Directors and Senior Management for a description of the composition of our board and the representative director system under Korean law, and Item 7.A. Major Shareholders for a more detailed discussion of the shareholding structure and arrangements between our two major shareholders. Until the next annual general meeting of shareholders, persons with ties to LG Electronics and Philips Electronics may account for as many as four directors on our board and will continue to exert substantial influence over the operation of our business. Following the next annual general meeting of shareholders, persons with ties to LG Electronics may account for as many as four directors on our board.