[Invest&Law] Family Feuds Over Inheritance and Gifts? ... The Real Issue Is Management Rights Disputes

Kolmar Korea: Lawsuit Over Gifted Shares
Hanmi Pharmaceutical: Inheritance Tax Sparks Family Feud
Second and Third Generation Leaders Take the Helm
Fierce Battles Over Corporate Governance Structures
SK Divorce Case: Asset Division May Ignite Management Rights Dispute

Disputes among family members, such as inheritance, gifts, and divorce, are escalating into corporate management rights conflicts. As first-generation founders step down and second- and third-generation management becomes more common, what appears on the surface to be family discord is, in reality, an intense battle over corporate control structures. This also applies to divorces involving founders or their second-generation successors.

The recent family feud at Kolmar Korea, which has come to public attention, is a representative example where a first-generation founder's gift has led to a group management rights dispute. Kolmar Korea's founder, Chairman Yoon Donghan, entered into a three-party management agreement with his eldest son, Vice Chairman Yoon Sanghyun, and his eldest daughter, President Yoon Yeowon. The agreement stipulated that Vice Chairman Yoon would be in charge of Kolmar Holdings and Kolmar Korea, while President Yoon would oversee the management rights of Kolmar BNH. Based on this agreement, Chairman Yoon gifted 2.3 million shares of Kolmar Holdings to Vice Chairman Yoon. However, as the siblings clashed over management rights, Chairman Yoon filed a lawsuit demanding the return of the holding company shares previously gifted to Vice Chairman Yoon. He is seeking to reclaim the shares he had already given away six years ago.

At Hanmi Pharmaceutical, conflicts between mother and daughter, as well as between brothers, have also escalated into a management rights struggle. Although the trigger was an inheritance tax amounting to 540 billion won, the essence of the dispute was control over management. Chairwoman Song Youngsook and her daughter sought to merge Hanmi Science and OCI Group to pay the inheritance tax. However, her sons, Lim Jonghoon and Lim Jongyoon, opposed the plan, bringing the conflict to the surface. At one point, the mother and daughter lost management control, but a decline in stock prices and the involvement of outside investors shifted the balance, and Chairwoman Song returned as CEO at the board meeting in February 2025.

At Hankook & Company (the holding company of Hankook Tire & Technology), the possibility of renewed management rights disputes among siblings emerged after Chairman Cho Hyunbum was sentenced to three years in prison and taken into custody on May 29. The management rights conflict at Hankook & Company began in June 2020, when Honorary Chairman Cho Yangrae transferred his shares to Chairman Cho Hyunbum. In response, his eldest son, Cho Hyunsik, an advisor to Hankook & Company, and his eldest daughter, Cho Heekyung, chair of the Hankook Tire Welfare Foundation, claimed that Honorary Chairman Cho made the decision while not fully competent and filed for adult guardianship. However, the case was ultimately dismissed in July 2024, bringing the issue to a temporary close.

LG Group is also facing an unresolved dispute over inheritance shares. In February 2023, Kim Youngsik, the mother of LG Group Chairman Koo Kwangmo, and his half-sisters filed a lawsuit against Chairman Koo, demanding a redistribution of the inheritance left by the late former Chairman Koo Bonmoo. The case has been in the preparatory hearing stage for more than two years.

Divorce among business owner families can also spark management rights conflicts. In the divorce case between SK Group Chairman Chey Taewon and Art Center Nabi Director Noh Soyeong, the first trial in January 2022 ordered Chairman Chey to pay Noh 100 million won in consolation money and 66.5 billion won in asset division. However, the appellate court in 2024 included SK Inc. shares in the division, awarding 2 billion won in consolation money and 1.3808 trillion won in asset division.

The divorce between Smilegate founder and Chief Visionary Officer (CVO) Kwon Hyukbin and his spouse is also expected to bring inevitable changes to the group’s governance structure, depending on whether the divorce is finalized. According to recent court appraisals, the value of company shares subject to division could reach up to 8 trillion won. The scale of the asset division could also lead to management conflicts within the company.

Private equity fund involvement can also be a factor in management rights disputes. The conflict between Korea Zinc and Young Poong, involving MBK Partners (hereafter 'MBK'), is a representative case. The two groups, which had been business partners for 75 years, began to fracture in 2022 when Choi Yoonbum became chairman of Korea Zinc. Young Poong joined forces with MBK to strengthen its stake, and the market interpreted this as an attempt at a hostile M&A.

At Hanjin Group, Hoban Construction recently increased its stake in holding company Hanjin KAL to 18.46%, narrowing the gap with the largest shareholder, Chairman Cho Won-tae (19.96%), to just 1.5 percentage points. In the past, Chairman Cho defended his control against a "three-party alliance" involving private equity fund KCGI, Bando Construction, and former Vice President Cho Hyun-ah.

Chun Kyunghoon, a professor at Seoul National University Law School, said, "As corporate generations shift to the second and third generations, shareholdings become dispersed and disputes are increasing. Recently, financial investors such as hedge funds are also getting involved, sometimes aligning with certain parties in the dispute or seeking support from general shareholders."

Legal Times Reporter An Jaemyung

Legal Times Reporter Park Suyeon

※This article is based on content supplied by Law Times.