Will the Ownership Conflict Between Namyang Dairy and Hahn&Co Come to an End?

29th Regular Shareholders' Meeting
Chairman Hong Won-sik Faces Han&Co's Proposal for Director Appointment
Han&Co, Despite Being Largest Shareholder, Lacks Voting Rights and Management Control
Approval of Director Appointment Needed to Begin Management Normalization

The management conflict between Hong Won-sik, chairman of Namyang Dairy Products, and Hahn & Company, which has lasted for two years and six months, is coming to an end. Namyang Dairy Products plans to propose a resolution at this month's regular shareholders' meeting to appoint Hahn & Company's personnel as directors, raising expectations that the normalization of management could accelerate.

Hong Won-sik, chairman of Namyang Dairy Products, is holding a public apology press conference related to the 'Bulgaris incident' at the Namyang Dairy Products headquarters in Gangnam-gu, Seoul, in May 2021. Photo by Hyunmin Kim kimhyun81@

According to industry sources on the 8th, Namyang Dairy Products will hold the 60th shareholders' meeting on the 29th in the large conference room of its headquarters on Dosan-daero, Gangnam, Seoul. The agenda items include ▲appointment of a temporary chairman ▲approval of financial statements ▲partial amendment of the articles of incorporation ▲appointment of new directors ▲approval of the director remuneration limit ▲approval of the auditor remuneration limit, among others.

A notable point is that Namyang Dairy Products has put forward a proposal to seat Hahn & Company's personnel in key positions. At the regular shareholders' meeting, Lee Dong-chun, vice president of Hahn & Company, will be appointed as the temporary chairman, and Yoon Yeo-eul, chairman of Hahn & Company, and Bae Min-gyu, vice president of Hahn & Company, will be appointed as non-executive directors of Namyang Dairy Products.

In January, Hahn & Company became the largest shareholder after finally winning the management rights dispute with Chairman Hong, which began in August 2021. However, since the shareholder registry was closed at the end of last year, Hahn & Company was unable to exercise voting rights at this shareholders' meeting. As Chairman Hong resisted relinquishing management rights and there was a growing possibility of him manipulating the regular shareholders' meeting, Hahn & Company submitted injunction applications to propose agenda items in succession to counter this.

As a result, the fact that Namyang Dairy Products accepted Hahn & Company's opinion instead of proposing the reappointment of Chairman Hong, whose term is ending, as an inside director suggests that the management conflict may be reaching its final stages. An industry insider said, "Since the proposal is on the agenda for the regular shareholders' meeting, the appointment of Hahn & Company's directors is highly likely to materialize," adding, "It seems that Chairman Hong, who is facing various damages claims, has ultimately raised the white flag."

However, variables remain. Whether the agenda passes depends on how Chairman Hong's family, who hold a total of 53% of shares as of the shareholder registry closure date, exercise their voting rights. Given that Chairman Hong has previously reversed his resignation and attempted to cancel a stock purchase agreement, the conclusion of the management conflict cannot be hastily predicted. It is known that Chairman Hong is demanding that Hahn & Company appoint him as an advisor to Namyang Dairy Products, guarantee management rights for Baekmidang, and provide preferential treatment for family executives.

If the director appointment agenda does not pass at this regular shareholders' meeting, Hahn & Company will have to hold an extraordinary shareholders' meeting to gain management rights. The extraordinary shareholders' meeting is expected to be possible only by mid-next month if procedures proceed as planned. A Namyang Dairy Products official said, "Although Hahn & Company's claims have been reflected in the agenda of the regular shareholders' meeting, the conclusion will only be known on the day of the meeting," and refrained from further comment.

Meanwhile, Namyang Dairy Products, established in 1964, once held the top position in the domestic dairy industry but suffered a sharp decline in stock price and deteriorating performance due to repeated owner risks such as distributor bullying controversies and the drug scandal involving the founder's granddaughter. Chairman Hong announced in May 2021 that he would step down and sell the owner's shares to Hahn & Company, but suddenly claimed the contract was invalid, triggering the management rights dispute.