Hong Won-sik, Chairman of Namyang Dairy Products, on the ruling recognizing the stock sale validity... "Will appeal immediately"

Chairman Hong: "Seller's Rights Not Properly Protected Due to Dual Agency"
Han&Co: "Confirming Basic Contract Principles... Urging Swift Execution of Management Rights"

[Image source=Yonhap News]

[Asia Economy Reporter Eunmo Koo] Amid a court ruling that the Hong family, owners of Namyang Dairy Products, must transfer their shares to the private equity fund Hahn & Company (Hahn & Co), Chairman Hong has expressed an intention to immediately appeal.

On the 22nd, the Civil Division 30 of the Seoul Central District Court ruled in favor of the plaintiff, Hahn & Co, in a lawsuit filed against Chairman Hong and his family regarding the transfer of shares. The court stated, "The defendant's claims of dual agency and violation of the Attorney-at-Law Act are not accepted," and added that the defendant must bear the litigation costs.

Following the ruling, Chairman Hong’s side announced plans to appeal immediately. Through their legal representatives, they emphasized, "The defendant did not properly protect the seller’s rights during the sale of the family business, including acts of dual agency."

They further stated, "The plaintiff claimed prior consent for dual agency but failed to provide any evidence related to this and made an unreasonable argument that clear legal acts were merely advisory acts. Additionally, they did not fulfill the pre-agreed terms."

Meanwhile, Hahn & Co evaluated the court ruling as a confirmation that a legitimate stock purchase agreement, mutually agreed upon by the parties, cannot be annulled based on one party’s falsehoods and slander, and that the fundamental principles of contracts and market order must be upheld.

Hahn & Co urged, "As Namyang Dairy’s employees, minority shareholders, dealerships, and dairy farmers are suffering serious damages, we accept the court ruling so that management normalization can be achieved swiftly. We hope Chairman Hong will fulfill his promise to step down from frontline management and promptly transfer management rights, as pledged publicly."

Previously, in May last year, Hahn & Co signed a stock purchase agreement (SPA) to acquire shares held by Chairman Hong’s family at 820,000 KRW per share, but Chairman Hong’s side notified contract termination on September 1 of the same year.

Hahn & Co filed a lawsuit demanding the transfer of shares, stating, "Chairman Hong’s side unilaterally notified contract termination," and obtained a temporary injunction from the court to prevent the Hong family from exercising voting rights on the shares.

In the lawsuit, Chairman Hong’s side argued that Hahn & Co interfered improperly in management and violated confidentiality obligations, leading to contract termination. They also claimed the contract was invalid because Hahn & Co deceived them by stating that "negotiation details could be supplemented later" during the contract process.