NewG Lab Pharma, Gentle Master Jegi Lawsuit First Trial Result "Will Immediately Appeal"

[Asia Economy Reporter Jang Hyowon] Newgelab Pharma announced on the 16th that the Seoul Central District Court ruled partially in favor of the plaintiffs in a lawsuit related to a paid-in capital increase filed by a Chinese investor, Gentle Master Limited (hereinafter Gentle Master), and one other.

The Chinese investors, Gentle Master Limited and one other, who are related to the company’s former major shareholder, filed a damages lawsuit claiming they suffered losses by missing the opportunity to participate in the paid-in capital increase in June 2019. This ruling is the first trial result for the lawsuit.

In July 2018, Newgelab Pharma decided on a third-party allotment paid-in capital increase worth 10 billion KRW targeting Chinese investors including Gentle Master. However, the investors who had agreed to participate did not fulfill their payment obligations, and Next I, the former major shareholder of Newgelab Pharma, was pursuing the sale of Newgelab Pharma, so the paid-in capital increase was ultimately forfeited.

Subsequently, on December 19, 2018, Arenel International acquired Next I’s shares through a stock transfer agreement involving a change of management rights, becoming the major shareholder of Newgelab Pharma, and in April of the following year, conducted a paid-in capital increase targeting new subscribers to add new businesses.

After the capital increase, as the stock price rose through the promotion of new businesses such as distribution and new drug development, Gentle Master and others claimed that they were deprived of the opportunity to participate in the paid-in capital increase and that Newgelab Pharma did not issue a forfeiture notice, causing them losses. They filed a damages lawsuit against Newgelab Pharma seeking compensation for the difference.

Park Daewoo, CEO of Newgelab Pharma, expressed regret over the court’s ruling reflecting the position of the Chinese companies claiming damages based simply on forfeiture notices, stating, “Newgelab Pharma has immediately filed an appeal, and since the investors’ demands are unreasonable and one-sided, we believe we can achieve a favorable verdict.”

He added, “We will hold accountable not only the investors who filed the lawsuit but also the former major shareholders involved in this matter.”

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