[Invest&Law] Hanmi Pharm Management Dispute in Court, Provisional Seizure Granted

Regarding the management rights dispute within the Hanmi Pharm Group between the mother-daughter (母女) and brother (兄弟) factions, the court has accepted the provisional seizure application filed by Im Juhyun, Vice Chairman of Hanmi Science and the mother-daughter side, against her older brother, Director Im Jongyun. The court's provisional seizure decision has made it difficult for Director Im to sell his assets. Attention is focused on whether this will affect the external investor attraction efforts led by the brothers, Director Im and younger brother Im Jonghun, CEO of Hanmi Science.

원본보기 아이콘

What impact on investor attraction?

Vice Chairman Im filed a lawsuit in March demanding the return of 26.6 billion KRW she lent to her older brother, Director Im. Along with the lawsuit, she applied for a provisional seizure as a creditor protection measure, which the court confirmed was accepted at the end of July.

[Image source=Beomryul Newspaper]

원본보기 아이콘

The seized assets include Hanmi Science shares and land owned by Director Im.

The debtor (Director Im) finds it difficult to dispose of the seized assets. Some of Director Im’s shares and real estate are effectively frozen until the main lawsuit is resolved.

It is noteworthy whether the court’s decision will affect the external investment attraction efforts led by Director Im, who is in a management rights dispute with the mother-daughter faction. Although the provisional seizure decision does not directly impact investor attraction, investors may become psychologically hesitant and thus less willing to invest.

In addition, it is known that a significant portion of other shares owned by Director Im are pledged as collateral for loans from financial institutions. Therefore, he may also face difficulties in securing funds to pay inheritance taxes. Following the passing of the late Chairman Im Seonggi, the heirs were imposed with inheritance taxes totaling approximately 540 billion KRW, all of which must be paid. It is reported that about half of the tax amount remains unpaid.

Complicated scenarios in the boardroom battle

Interest also lies in how the court’s decision will affect the family conflict over Hanmi Science’s management rights. A partner lawyer from a mid-sized law firm said, “Even if shares are provisionally seized, voting rights are not affected, so it can be seen that it does not directly impact investor attraction. However, from an investor’s perspective, concerns are inevitable, so it will psychologically influence them.”

The Hanmi Pharm Group management rights dispute has seen repeated twists depending on the actions of Shin Dongguk, Chairman of Hanyang Precision and one of the key shareholders holding a casting vote. Chairman Shin sided with the brothers at the Hanmi Science shareholders’ meeting in March, leading to the brothers’ victory in the boardroom battle. As a result, the merger plan with OCI, which the mother-daughter faction was pursuing, was effectively canceled.

However, Chairman Shin recently switched to the mother-daughter side and reportedly signed a management agreement with them.

The ‘three-party alliance’ of Chairman Shin and the mother-daughter faction requested the convening of an extraordinary shareholders’ meeting of Hanmi Science on June 29. The agenda includes two items: increasing the number of Hanmi Science’s board members from the current maximum of 10 to 12, and appointing three new directors (two inside directors and one outside non-executive director). The plan is to change the board composition controlled by the brothers to secure management rights.

To increase the number of directors, the articles of incorporation must be amended. The mother-daughter faction has gathered 48.19% of shares through the three-party alliance, but amending the articles requires a special resolution at the shareholders’ meeting under the Commercial Act, meaning at least 66.7% of voting rights of attendees must approve, making it practically difficult to amend the articles. Therefore, attention is focused on how to overturn the current 5 (brother side) to 4 (mother-daughter side) board composition.

Park Suyeon, Reporter, Legal Newspaper

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.