[Featured Stock] HanmiScience Jumps 11%...Hopes Rise for Renewed Management Rights Battle

HanmiScience's share price has surged, apparently reflecting expectations that the management rights dispute could flare up again.

As of 9:45 a.m. on the 24th, HanmiScience was trading at 47,700 won, up 11.58% from the previous day.

Investor sentiment appears to be focusing on signs that the conflict between Hanmi Pharmaceutical CEO Park Jaehyun and Hanyang Precision Chairman Shin Dongguk is escalating in earnest. Before the market opened that day, Chairman Shin disclosed that he had additionally purchased a 6.45% stake in HanmiScience in an over-the-counter transaction at 48,469 won per share, spending a total of 213.7 billion won. The purchase funds were raised through a loan secured by Hanyang Precision shares.

As a result, Chairman Shin's stake in HanmiScience is now approaching 30%. His previous total stake of 23.38% - consisting of 16.43% held personally and 6.95% held by Hanyang Precision - has been increased to 29.83%.

Chairman Shin is classified as a related party of Sohn Youngsook, chairwoman of Hanmi Pharmaceutical Group. The combined stake held by Chairwoman Sohn and her related parties stands at 63.89%, and roughly half of that portion is now controlled by Chairman Shin. In effect, Chairman Shin alone is now in a position to wage a proxy battle against Chairwoman Sohn's side at the shareholders' meeting.

Chairman Shin serves as an outside non-executive director at both HanmiScience and Hanmi Pharmaceutical. When a management rights dispute erupted in 2024 between the mother-and-daughter faction and the son, Chairman Shin, who then held about a 10% stake, acquired the mother-and-daughter side's shares through a shareholders' agreement. At the time of the agreement, Chairman Shin, Chairwoman Sohn and Vice Chairman Lim Juhyun agreed to establish a structure under which professional managers would be entrusted with management authority.

However, controversy over Chairman Shin allegedly sidelining the professional management has recently intensified, after Hanmi Pharmaceutical CEO Park publicly released an audio recording suggesting that Chairman Shin had exerted pressure in connection with allegations that he was shielding an executive accused of sexual harassment. It has also been reported that Hanmi Group employees recently raised objections at headquarters to Chairman Shin's involvement in management. The criticism is that the largest shareholder bypassed the board of directors and the management team and made unilateral decisions. With the amended Commercial Act now stipulating that directors owe a duty of loyalty to all shareholders, some observers expect tensions between the board and management on one side and Chairman Shin on the other to escalate further.

An extraordinary shareholders' meeting of HanmiScience, part of the Hanmi Pharmaceutical Group that is facing a management rights dispute, was held on November 28, 2024, at the Transportation Hall in Seoul. Officials, shareholders and members of the press are standing at the entrance to the meeting hall. Photo by Heo Yeonghan