OCI-Hanmi Merger at a Crossroads... Legal Battle Begins Over Hanmi Family's Rights Offering

Im Jong-yoon and Jong-hoon Injunction Application
Judges May Be Assigned as Early as Today
Court Respects Ordinary Management Decisions in Paid-in Capital Increase Lawsuit
High Possibility of Injunction Dismissal

The hearing for the injunction request to prohibit the issuance of new shares filed by brothers Lim Jong-yoon and Lim Jong-hoon of Hanmi, which will determine the success of the merger between Hanmi Pharmaceutical Group and OCI Group, will begin on the 19th. The presiding court will be decided as early as that day. Once the court is assigned, a case number will be designated and the first trial date will be set. Attention is focused on the final stage of the merger between different industries.

Lim Jong-yoon, President of Hanmi Food. Photo by Asia Economy DB

According to a summary of reports from the business and legal sectors on that day, the injunction request filed by Lim Jong-yoon, President of Hanmi Pharmaceutical, and Lim Jong-hoon, CEO of Hanmi Precision Chemical, had not been received by the Suwon District Court as of the previous day. This means the court has not yet been assigned. The Suwon District Court is expected to assign the court and allocate the case within the day.

Earlier, on the 17th, the Lim brothers filed an injunction request at the Suwon District Court to block a third-party allotment capital increase worth 240 billion KRW that Hanmi Science intends to carry out targeting OCI Holdings. This legal action was taken to prevent the major shareholder share swap agreement between Hanmi Pharmaceutical Group, led by Song Young-sook, Chairwoman of Hanmi Pharmaceutical Group, and Lim Joo-hyun, President of Hanmi Pharmaceutical, and OCI Group. President Lim has repeatedly claimed procedural illegality in the process of pushing for the third-party allotment capital increase.

Although the trial has not yet started, the standoff between the mother-daughter duo Song Young-sook and Lim Joo-hyun and the brothers Lim Jong-yoon and Lim Jong-hoon has already begun. The law firm Jipyung, representing the Lim brothers, reportedly instructed its internal members to keep all information about the case strictly confidential and to refuse any external inquiries regarding the case. This is interpreted as a trial strategy to prevent information related to the Lim brothers from reaching the mother-daughter side.

The biggest issue in this matter, according to the legal community, is how the court will judge the purpose of the capital increase. If the court determines that the capital increase and group integration do not bring significant benefits to the company and were carried out merely to prevent the loss of management rights, the injunction request by the Lim brothers could be granted. President Lim argues that the group integration decision was made amid a management rights dispute, including his forced removal from the CEO position after his reappointment as an inside director was not put to a vote at the Hanmi Science shareholders' meeting in March 2022.

On the other hand, if the court finds no major defects in the capital increase, the injunction request is likely to be dismissed. Hanmi Pharmaceutical Group maintains that the capital increase was pursued to improve financial structure and establish cooperative management relations. They particularly cite the example of Bayer in Germany, which transformed from a petroleum and chemical specialist company into a global pharmaceutical and bio company, emphasizing that "the combination of Hanmi's independence and OCI's global value chain network will lay the foundation for becoming a global enterprise."

Summary of Key Issues in Hanmi Group's Injunction Request to Prohibit New Share Issuance. Table=Photo by Kim Chaeryeong

The legal community generally views that courts tend to respect management's judgment in lawsuits concerning capital increase decisions, so they see a higher probability of dismissal for the Lim brothers' injunction request. Hanmi Group's statement that "the possibility of injunction approval is very low according to our legal review" appears to reflect this legal atmosphere.

However, some analysts suggest that the possibility of approval is not insignificant. This is because the case clearly stems from a family management rights dispute, and considering the sudden passing of the late Lim Sung-ki, founder of Hanmi Pharmaceutical, and the fact that Song, who legally inherited the largest share, appears to have systematically tried to exclude President Lim from management.

Regardless of the injunction result, the integration process between the two groups is expected to be somewhat delayed. If dismissed, the Lim brothers may file a main lawsuit and proceed with a formal trial; conversely, if approved, Hanmi Pharmaceutical will immediately appeal, and the case could be re-examined by the High Court. Therefore, it is expected to take considerable time until a final conclusion is reached.

The OCI side, the counterpart in the integration, is also closely monitoring the injunction request outcome. An OCI official said, "(Since it is an internal matter within Hanmi) no separate position has been organized," adding, "We are watching the progress."

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