[Column] Hanmi Pharm Group Dispute, the Powerful Resonance of 'Donghak Ants' Victory

The management dispute within Hanmi Pharmaceutical Group, which was more dramatic than a drama, ended with the victory of the two sons (brothers) of the founding family who opposed the merger (Hanmi Science-OCI). Looking solely at the support from major shareholders holding more than 5% stakes, the 'big player' (National Pension Service) favored the mother-daughter faction supporting the merger. However, the support of minority shareholders for the brothers decided the outcome. As a result, the Hanmi Science shareholders' meeting was a 'victory for the brothers' and a 'victory for minority shareholders.' On the other hand, the 'dream of a hybrid merger' between the pharmaceutical company and the solar energy firm was dashed.

Regarding this shareholders' meeting, the dominant evaluation is that "there has never been such an emphasis on the importance of retail investors in the history of Korea's capital market." In the past, there were occasional cases where minority shareholders influenced the results of shareholders' meetings in listed companies with low market capitalization. However, Hanmi Pharmaceutical Group is a mid-sized company with a market capitalization of about 3 trillion KRW just for its holding company, Hanmi Science, and is one of the leading pharmaceutical companies. In disputes of companies of this scale, the voices of minority shareholders were always treated as 'eggs hitting a rock.'

According to the Korea Securities Depository, as of the fiscal year ending December 2022, there are 14.41 million stock owners in listed companies in Korea. This is an increase of 5.27 million from 9.14 million in 2020 over two years. A new term, 'Donghak Ants,' referring to retail investors who mainly invest in the domestic stock market, has also emerged. It is not just the number that has increased. They actively take action to make their voices heard. They exercise influence at shareholders' meetings by using electronic voting and proxy voting platforms.

The outcome of the Hanmi Science shareholders' meeting marks a new chapter in the capital market created by this 'Donghak Ants movement.' The shares supporting the brothers through the minority shareholder solidarity platform 'ACT' amounted to about 2%. When the tide turned before the meeting due to the National Pension Service's support for the mother-daughter faction, they rallied, saying, "If we unite, we have more shares than the National Pension Service." In a situation where neither side of the owner family could predict the outcome, the minority shareholders showed confidence that "eggs can break rocks if gathered." A representative of the brothers' side said, "We were surprised by the overwhelming support."

The actions of the 'Donghak Ants' are not to be taken lightly. Recently, voices opposing aggressive shareholder return demands have also grown louder. This means they pursue long-term value enhancement rather than short-term profits. One reason why activist funds' shareholder proposals were overwhelmingly defeated in this year's shareholders' meetings is that they failed to gain the 'public sentiment' of minority shareholders. The owners of a company are not only the corporate head, chairman, or major shareholders. It must be remembered that minority shareholders are also 'another owner' of the company.