28th HanmiScience Shareholders' Meeting
All Director Appointment Proposals by the Brothers' Side Approved... Board Control Secured
Mother-Daughter Side Absent Since Before the Meeting
'Funding for Inheritance Tax Resolution' Remains a Challenge
The 'Mother and Daughter Conflict' within Hanmi Pharmaceutical Group, which had dragged on for about two months, ended with the victory of the brothers, Im Jong-yoon and Jong-hoon. The two brothers, who completely halted the merger with OCI Group, emphasized, "We hope such an incident never happens again," and "We will reestablish and restore the Hanmi brand."
Lim Jong-yoon, Director of Hanmi Science (left), and Director Lim Jong-hoon are shaking hands at a press conference held after the regular shareholders' meeting on the 28th. [Photo by Lee Chun-hee]
The Hanmi Science shareholders' meeting held on the 28th at the Lavideol Hotel in Hwaseong, Gyeonggi Province ended with the brothers' side winning. Among the 2,160 shareholders who voted, the brothers secured a majority support of around 52%, successfully taking control of the Hanmi Science board of directors. On the other hand, the mother and daughter side, led by Song Young-sook, Chairwoman of Hanmi Pharmaceutical Group, and Im Ju-hyun, Vice Chairman of Hanmi Pharmaceutical Group, garnered about 48% support and failed to get a single director candidate onto the board.
The shareholders' meeting faced difficulties from the start. With numerous proxy votes pouring in, the verification of proxies, which began at 5 a.m., only finished after noon. Although proxy verification started a full four hours earlier than the scheduled 9 a.m. meeting time, it encountered obstacles. Consequently, the meeting itself was delayed and only commenced around 12:30 p.m., more than three and a half hours late. The meeting seemed to proceed smoothly but slowed again at the critical agenda item of director appointments. Voting concluded around 1 p.m., but both sides disputed the counting and compilation of results, delaying the final decision until exactly 3 p.m., more than two hours later.
As a result, the brothers succeeded in appointing a total of five directors to the board with majority support, including themselves, Kwon Kyu-chan, Bae Bo-kyung, and Sa Bong-gwan. The mother and daughter side proposed appointing six new directors, including Vice Chairman Im and OCI Group Chairman Lee Woo-hyun, their merger partner, but all proposals were rejected. Consequently, the brothers' side now holds five directors on the Hanmi Science board, overwhelming the mother and daughter side's four directors. However, the appointment of auditors, including directors Bae Bo-kyung and Sa Bong-gwan, was canceled due to the impact of the Commercial Act provision limiting the exercise of major shareholder voting rights related to this matter to 3%.
'Mother and Daughter' Absent Even Before the Meeting... 'Brothers' Win with Minority Shareholders' Support
A subtle atmosphere was sensed at the meeting venue even before the results were announced. Unlike the brothers who arrived before the scheduled start time, the mother and daughter did not appear. Since it was already known last week that Chairwoman Song was unwell, her absence was anticipated, but Vice Chairman Im's absence as well led to speculation that the outcome might have been decided by the morning's vote tally. After the meeting began, the brothers repeatedly requested 'quick vote counting,' and even Lee, the only key figure from the mother and daughter side attending in person, left the venue around 2:25 p.m. before the results were announced, fueling analysis that defeat was imminent.
The decisive factor in this vote battle was the minority shareholders, not the major shareholders. Among the major shareholders, Shin Dong-guk, Chairman of Hanyang Precision, sided with the brothers, while the National Pension Service declared support for the mother and daughter side, giving them an advantage. However, the brothers succeeded in overturning the situation by winning the support of minority shareholders. According to the voting results on the director appointments, out of approximately 59.6 million shares voted, the brothers secured about 31 million shares (52%), while the mother and daughter side obtained about 28.6 million shares (48%). Excluding shares publicly declared by major shareholders, only about 1 million shares of minority shareholders supported the mother and daughter side, compared to about 5 million shares for the brothers. In other words, about 84% of minority shareholders who participated in the vote supported the brothers.
The overwhelming support from minority shareholders for the brothers appears to stem from concerns that the merger would harm shareholder interests. The minority shareholder coalition that supported the brothers stated regarding this dispute, "It is a third party, not the company, that is gaining benefits," and "The value of Hanmi Science is seriously damaged, causing harm to existing Hanmi Science shareholders."
On the 28th, the '51st Hanmi Science Annual General Meeting of Shareholders' was held at Syntex in Hwaseong-si, Gyeonggi-do. Photo by Jinhyung Kang aymsdream@
Related stocks also moved actively. Hanmi Science shares, which had fallen as much as 6.5% compared to the previous day's closing price in the afternoon, surged up to 15% after news of the brothers' victory, closing the day up 9.10%. DXVX, a listed company affiliated with the Kori Group led by Director Im Jong-yoon, also soared by 28.5% compared to the previous day's closing price immediately after the brothers' victory.
Merger Between the Two Groups Fully Halted... Im Jong-yoon: "We Will Restore the Hanmi Brand"
Following the brothers' victory, the merger with OCI Group, which had been pursued since January, is completely halted. OCI Holdings announced, "We humbly accept the shareholders' will and will suspend the merger process." The mother and daughter side also stated, "We humbly accept the shareholders' will," and "We express our gratitude to shareholders and current and former employees and ask for continued support for Hanmi."
Director Im Jong-yoon, who won the victory, told reporters immediately after the shareholders' meeting, "I hope such a thing never happens again," expressing gratitude to shareholders and Chairman Shin Dong-guk, regarded as a 'key man.' He added, "I want to move forward together with my mother and younger sister," and conveyed his determination to "reestablish and restore the Hanmi brand."
Lim Jong-yoon, President of Hanmi Pharm, and Lim Jong-hoon, CEO of Hanmi Fine Chemical, are attending the '51st Hanmi Science Annual General Meeting' held on the 28th at Syntex in Hwaseong-si, Gyeonggi-do. Photo by Kang Jin-hyung aymsdream@
The top priority task remaining for the brothers is considered to be fundraising. The core issue of this conflict is the 540 billion KRW inheritance tax imposed on the owner family following the sudden passing of Im Seong-gi, the founding chairman of Hanmi Pharmaceutical Group, in 2020. The mother and daughter side's advocacy for the merger with OCI was also seen as a strategy to secure funds for the inheritance tax and to guarantee management rights of Hanmi Pharmaceutical Group. The mother and daughter side even raised suspicions that a private equity fund was behind the brothers, demanding that the brothers clarify their funding sources.
If this inheritance tax issue is not resolved, stable management will be difficult for the brothers who must lead Hanmi Pharmaceutical Group going forward. However, while the brothers have stated during the dispute that "there is no problem," they have not clearly disclosed the source of funds to resolve the inheritance tax. Director Im Jong-yoon previously explained, "There are talks about lack of funds, but you have to look at net assets," and "I am personally handling the tax issue well."
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