Board Composition Tied 5 to 5
Rematch at Next Month's Hanmi Pharm Shareholders Meeting
In the management rights dispute within Hanmi Pharmaceutical Group, the three-party alliance consisting of Chairwoman Song Young-sook, Vice Chairman Lim Joo-hyun, and Chairman Shin Dong-guk of Hanyang Precision achieved a 'partial victory.' With the board structure now evenly split between the brothers Lim Jong-hoon, CEO of Hanmi Science, and Lim Jong-yoon, an inside director, each holding five seats, neither side can unilaterally make major decisions, suggesting that the management dispute is likely to continue for the time being.
On the 28th, CEO Lim Jong-hoon is entering the meeting room to attend the temporary shareholders' meeting of Hanmi Science held at the Seoul Transportation Center. Photo by Heo Young-han
At the Hanmi Science extraordinary shareholders' meeting held on the 28th at the Seoul Metropolitan Government Transportation Hall in Songpa-gu, Seoul, the three-party alliance led by Chairwoman Song, Vice Chairman Lim, and the largest individual shareholder Chairman Shin proposed an amendment to the articles of incorporation, which was rejected. However, through the second agenda item concerning the appointment of directors, Shin Dong-guk, Chairman of Hanyang Precision, was appointed as a director of Hanmi Science.
The proposed amendment to increase the number of directors from the current maximum of 10 to 11 requires a special resolution with approval from two-thirds (approximately 66.7%) of the shareholders present. The voting results showed only 57.89% in favor of the amendment. On the other hand, the agenda item 2-1, 'Appointment of Non-Executive Director Shin Dong-guk,' which passed with a simple majority of the shareholders present, received 57.86% approval. The attendance rate was 84.7% (57,340,864 shares) out of the total voting shares of 67,713,706.
After the extraordinary shareholders' meeting, CEO Lim stated in an interview with reporters, "We will demonstrate stronger leadership for the company." Chairman Shin also expressed in a statement immediately after the meeting, "I feel a heavy responsibility upon entering the board," and added, "We will quickly resolve the ongoing intense dispute."
With the three-party alliance failing to secure control over the holding company, the management dispute appears to be prolonged. Following the results of this extraordinary shareholders' meeting, the Hanmi Science board is evenly split with five directors from the three-party alliance and five from the brothers' side, resulting in a 5-5 deadlock. In such a structure, neither side can unilaterally make decisions regarding CEO changes or major management issues.
Both sides are scheduled to face a vote on the agenda to dismiss Hanmi Pharmaceutical CEO Park Jae-hyun at the Hanmi Pharmaceutical extraordinary shareholders' meeting on the 19th of next month. It is interpreted that, similar to the three-party alliance's attempt, the brothers' side also intends to appoint friendly personnel to the board at the upcoming meeting to gain control.
Hanmi Science holds a 41.42% stake in Hanmi Pharmaceutical. However, this is also a special resolution requiring approval from two-thirds of the shareholders present, so its passage is uncertain. Additionally, the three-party alliance, now holding half of the Hanmi Science board seats, may demand board resolutions and potentially block Hanmi Science's exercise of voting rights.
If no clear winner emerges from the Hanmi Pharmaceutical extraordinary shareholders' meeting, both sides are expected to continue their dispute until the Hanmi Science regular shareholders' meeting in March next year.
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