[Bio Shaking the Market] Helixmith Minority Shareholders Gather 37% Voting Rights to Request Extraordinary General Meeting

[Asia Economy Reporter Jang Hyowon] Small shareholders of Helixmith have begun to take action in earnest. They have gathered 37% of voting rights and requested the company to convene an extraordinary general meeting of shareholders. The small shareholders stated that they will dismiss all directors, pointing out the current management's moral hazard.

According to the financial investment industry on the 12th, the Helixmith Small Shareholders Emergency Response Committee secured proxy votes amounting to about 37% of the total issued shares, mainly through the ‘Helixmith Shareholders Cafe,’ and requested the company to convene an extraordinary general meeting of shareholders. Shareholders holding more than 3% can request the convening of an extraordinary general meeting.

Helixmith, having received the request to convene an extraordinary general meeting, can decide whether to hold it after its own review. If the company refuses to convene the meeting, the small shareholders plan to request the court to permit the holding of the extraordinary general meeting.

The goal of Helixmith’s Emergency Response Committee is the total resignation of the current management and the appointment of new management. The committee claims that the current management’s incompetence and moral hazard have reached an extreme level, making it impossible to trust and entrust the company. Accordingly, they are seeking competent and ethical global clinical experts and global financial experts for the new management.

The conflict at Helixmith arose in September 2019 with the failure of the U.S. Phase 3-1 clinical trial of the diabetic neuropathy treatment Engensis (VM-202). At that time, Helixmith’s stock price hit the lower limit for two consecutive days, plummeting from the 130,000 won range to the 50,000 won range within three days.

There was also controversy over the rights offering that Helixmith pushed through last year. Previously, in August 2019, Helixmith conducted a rights offering worth 146.9 billion won. At that time, CEO Kim Sun-young firmly stated that there would be no additional rights offerings for the next two years. However, this was broken when another large-scale rights offering was announced in September last year. Moreover, CEO Kim lost shareholders’ trust by not participating in the rights offering.

Additionally, it was revealed that Helixmith invested 264.3 billion won in high-risk assets such as private equity funds and derivative-linked securities (DLS) over about five years since 2016, which angered shareholders. The reason was that funds that should have been used for clinical trials were spent on ‘money games.’ It was even found that the investments incurred losses of several tens of billions of won, adding fuel to the conflict.

There was also a case where CEO Kim’s son took shares when spin-off subsidiaries were established. Helixmith established subsidiaries Neuromyon and Cartexell by contributing existing patents as in-kind contributions.

Since these subsidiaries were established with Helixmith’s assets, there would be no problem if Helixmith were the 100% shareholder. However, CEO Kim, his son, and key executives of Helixmith participated as shareholders in these companies. The structure was such that if these companies succeeded, the results would benefit CEO Kim and others. When this was pointed out, Helixmith stated that it would liquidate the subsidiaries and revert the shares to the company.

The Helixmith Emergency Response Committee said, “Although they announced plans to liquidate subsidiaries such as Neuromyon, no significant action has been shown yet,” and added, “We cannot trust the management that has already lost trust, and before the extraordinary general meeting is held, we will secure more than 50% of voting rights through proxies to appoint new management.”

According to the committee, about 37% of voting rights from small shareholders have been gathered through proxy forms. As of the end of last year, CEO Kim and others held a 7.24% stake, which is lower than the small shareholders’ stake.

In fact, the small shareholders’ emergency committee rejected the agenda for ‘approval of the director remuneration limit’ at the regular shareholders’ meeting in March. If the director remuneration limit is not approved, auditors and directors must return all remuneration received before the shareholders’ meeting that year and future payments will be suspended.

A financial investment industry official said, “It is rare for small shareholders to gather about 37% of voting rights,” and added, “The shareholder actions of small shareholders will have a positive impact on the company.”

Meanwhile, the dismissal of directors is a special resolution at the shareholders’ meeting, requiring two-thirds of the shares of attending shareholders to approve it, and the approving shares must be at least one-third of the total issued shares. If 90% of shareholders attend the meeting, 60% approval is needed for the dismissal of directors.

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