Hanmi Pharm Management Rights Battle at March 19 Shareholders Meeting... Siblings' Side Requests 'Behind-the-Scenes Talks'

Temporary Injunction Filed by Four-Party Alliance Including Mother and Daughter 'Dismissed'
Major Voting Advisory Firms Including National Pension Oppose
Eldest Son Requests Dialogue Ahead of April 19 Extraordinary General Meeting

The management dispute within Hanmi Pharmaceutical Group has been ongoing for nearly a year, and the extraordinary general meeting of shareholders (EGM) of Hanmi Pharmaceutical scheduled for the 19th is expected to be a turning point. The EGM was first requested by the 'brothers' side, including Lim Jong-yoon, an inside director of Hanmi Science, and Lim Jong-hoon, the CEO, aiming to take control of Hanmi Pharmaceutical, which is led by the mother and daughter duo of Song Young-sook, Chairwoman of Hanmi Pharmaceutical Group, and Lim Joo-hyun, Vice Chairman. Both sides have been fiercely competing for the votes of minority shareholders while engaging in legal battles. Amid this, when CEO Lim recently demanded the cancellation of the EGM, the pharmaceutical industry analyzed that the momentum is shifting toward the mother and daughter side.

According to the pharmaceutical industry on the 18th, the agenda for Hanmi Pharmaceutical's EGM on the 19th includes the dismissal of Park Jae-hyun, CEO of Hanmi Pharmaceutical, and Shin Dong-guk, a non-executive director (Chairman of Hanyang Precision). Based on their dismissal, there is also a proposal to appoint Park Joon-seok, Vice President of Hanmi Science, and Jang Young-gil, CEO of Hanmi Fine Chemical, as new directors.

The Lim brothers, Jong-yoon and Jong-hoon, have been engaged in a management dispute with the mother and daughter side's 'four-party alliance.' The four-party alliance consists of the mother, Chairwoman Song, her younger sister Vice Chairman Lim, Shin Dong-guk, Chairman of Hanyang Precision, and La Defense Partners, which acquired part of the mother and daughter side's shares. The Hanmi Pharmaceutical board has a total of 10 members, with six from the mother and daughter side and four from the brothers' side. The brothers aim to dismiss CEO Park and Chairman Shin from the mother and daughter side and bring in their allies, Vice President Park and CEO Jang, to the board to secure a majority.

Currently, Hanmi Science, the holding company, holds 41.42% of Hanmi Pharmaceutical's shares as the largest shareholder, followed by the National Pension Service with 10.1%, Chairman Shin with 7.72%, and Hanyang Precision with 1.42%. Minority shareholders are estimated to hold about 39%. Since the dismissal of directors is a special resolution requiring at least two-thirds of the voting rights of attending shareholders, the exercise of voting rights by Hanmi Science, the largest shareholder, is crucial. The four-party alliance claims, "CEO Lim is exercising voting rights unilaterally," and argues that this is "an abuse of authority for the private benefit of the brothers' side without a proper decision-making system." They filed an injunction with the court on the 3rd to prevent CEO Lim from exercising voting rights alone, but the court dismissed it the day before.

Meanwhile, major domestic and international proxy advisory firms, including the National Pension Service, have expressed opposition to all the agenda items proposed by the brothers' side for the EGM. They found no grounds for dismissing CEO Park. Typically, the National Pension Service does not support the dismissal of inside directors unless there is evidence of legal violations such as embezzlement, breach of trust, unfair support, or private gain that damages corporate value or infringes on shareholder rights, based on judgments by state agencies like the prosecution. Accordingly, Hanmi Pharmaceutical is confident that it has secured enough voting rights to reject the dismissal proposal.

As the EGM approaches, tensions between the two sides have intensified. Hanmi Pharmaceutical recently appealed to shareholders in materials sent out, stating, "Please oppose all agenda items at the EGM to achieve innovative results. The dismissal of directors is an opaque decision made without board approval." The brothers' side, on the 9th, issued an appeal titled "An Appeal to Hanmi Pharmaceutical Shareholders," stating, "We will establish an innovative management system aimed at achieving a Hanmi Pharmaceutical stock price of 1 million won. We will accelerate research and development (R&D) by appointing Park Joon-seok, a new director who combines medical experience and managerial expertise at Hanmi Science, as the right person for new drug development."

Meanwhile, CEO Park filed a defamation lawsuit against CEO Lim and others earlier this month. Hanmi Pharmaceutical claims that Hanmi Science has repeatedly accused its employees and distorted and fabricated information to suit their narrative. The brothers' side previously alleged that the mother and daughter side caused company funds to be leaked by incurring excessive costs on unnecessary real estate through Hanmi Pharmaceutical's subsidiary Online Pharm. Hanmi Pharmaceutical denied this, calling it a distortion of facts.

Lim, an inside director under pressure to pay inheritance tax and repay stock-backed loans, has been selling shares one after another, which is unfavorable to the brothers' side. On the 13th, Lim issued a statement proposing the withdrawal of the Hanmi Pharmaceutical EGM. It is also analyzed that Lim, disadvantaged in the vote, has requested behind-the-scenes talks with the four-party alliance and is attempting negotiations.

Regarding this, Hanmi Science stated that "(the withdrawal of the EGM) has not been officially decided," and Hanmi Pharmaceutical also said, "At this point, it is nearly impossible physically and time-wise to review or reverse the cancellation of the EGM," so the meeting will proceed as scheduled. The pharmaceutical industry analyzes, "If the brothers' side, whose shares are decreasing due to stock sales to pay inheritance tax, fails to secure strong allies to defend management rights at next year's Hanmi Science regular shareholders' meeting, they are likely to seek compromise again by emphasizing family coexistence."

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