Court: "Hong Won-sik Family Prohibited from Exercising Voting Rights at Namyang Dairy Products' General Meeting"

Hong Won-sik, Chairman of Namyang Dairy Products, attended the National Assembly's inspection of the Fair Trade Commission held by the National Assembly's Political Affairs Committee on the 5th, listening to questions from lawmakers. Photo by Yoon Dong-joo doso7@

[Asia Economy Reporter Kim Daehyun] A court ruling has prohibited the Hong family, led by Hong Wonsik, chairman of Namyang Dairy Products, from exercising voting rights at the shareholders' meeting after attempting to transfer shares to the private equity firm Hahn & Company (Hahn & Co) but subsequently canceling the contract. Chairman Hong, his wife Lee Unkyung, an advisor, and their grandson Hong Mo will be unable to exercise voting rights in favor of the agenda to appoint three inside directors and one outside director at the Namyang Dairy Products extraordinary shareholders' meeting scheduled for the 29th.

According to the legal community on the 27th, the Seoul Central District Court Civil Division 50 (Chief Presiding Judge Song Kyunggeun) partially granted an injunction filed by Hahn & Co 19 Limited Company to prohibit Chairman Hong, Advisor Lee, and Hong Mo from exercising voting rights. It also stated, "If Chairman Hong and others violate this decision and exercise voting rights, they must pay 10 billion KRW to Hahn & Co."

The court stated, "The closing date of the stock purchase agreement between both parties was confirmed as 10 a.m. on July 30 this year, and the notice of contract cancellation by Chairman Hong and other debtors is ineffective, so the stock purchase agreement is still valid," adding "The stock purchase agreement between both parties aims for the creditor (Hahn & Co) to secure management rights of Namyang Dairy Products." It further added, "As the creditor, there is a right to preserve to prohibit the debtors from acts that interfere with achieving that purpose."

Earlier, Chairman Hong signed a stock purchase agreement (SPA) with Hahn & Co in May for shares held in Namyang Dairy Products but notified contract cancellation on the 1st of last month, claiming that Hahn & Co unfairly interfered with management and violated confidentiality obligations.