The Direction of Hanmi Pharm Group's Management Conflict Likely to Be Decided at Next Month's General Meeting

The direction of the management rights conflict within the founding family of Hanmi Pharmaceutical Group is expected to be decided at next month's shareholders' meeting.

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On the 13th, the founding family's eldest and second sons announced that Lim Jong-hoon would take the position of CEO of the holding company Hanmi Science, and Lim Jong-yoon would become CEO of the subsidiary Hanmi Pharmaceutical, each stepping forward as co-CEOs. Accordingly, on the 8th, they exercised their shareholder proposal rights against Hanmi Science, requesting that the agenda to appoint six directors?including themselves and four candidates they designated?to Hanmi Science's board be submitted to the shareholders' meeting.

The management rights conflict arose as the founding family's eldest and second sons opposed the integration plan between Hanmi Pharmaceutical Group and OCI Group. Excluded from the integration decision process, Lim Jong-yoon, CEO of Hanmi Pharmaceutical and eldest son, and Lim Jong-hoon, CEO of Hanmi Precision Chemical and second son, expressed their intention to return to management as directors and CEOs of Hanmi Pharmaceutical Group. The Hanmi Group side stated, "We will proceed with the integration process according to laws and procedures."

Their claim is that the current management of Hanmi Group has damaged corporate value through behind-the-scenes management following the death of the late Chairman Lim Sung-gi. They said, "The purpose of the shareholder proposal is not simply to enter the board of directors, but to clearly express the intention to manage Hanmi Group as co-CEOs of the holding company and subsidiaries in accordance with the wishes of the late chairman."

Shareholder proposals submitted by shareholders holding more than 3% of the total issued shares are automatically placed on the agenda of the shareholders' meeting. Whether they will be appointed to the board will be decided by a vote at the shareholders' meeting.

Currently, the combined shares of the two brothers, their spouses, and children amount to 28.4%. Last month, they disclosed this in a "Report on Large Shareholding Status" that resolved special relationships with their mother, Song Young-sook, Chairwoman of Hanmi Pharmaceutical Group.

However, this shareholding is less than the 31.9% held by Chairwoman Song and her special affiliates, as calculated by the two brothers. The brothers forecast that the shares of Chairwoman Song will not increase because the Gahyeon Cultural Foundation (4.9% stake) and the Lim Sung-gi Foundation (3% stake) will not be able to exercise voting rights.

They argue that since OCI Group belongs to a large business group and public interest foundations of large business groups cannot exercise voting rights, the foundations of Hanmi Science, which decided to integrate with OCI, also cannot exercise voting rights.

In response, the Hanmi Group side rebutted, "At the time of the March shareholders' meeting, the integration process with OCI Group has not yet been completed, so we believe that the public interest foundations can exercise voting rights."

Both sides are expected to attempt to win over Shin Dong-guk, Chairman of Hanyang Precision Chemical, who is known to hold a neutral position, to gain a shareholding advantage. Chairman Shin holds about 12% of Hanmi Science's shares.

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