Proxy advisor KCGS backs Hanmi founder's sons return to board

South Korea’s top proxy advisory firm has recommended that shareholders of Hanmi Science Co. vote in favor of Hanmi Pharmaceutical Group’s late founder's two sons in their bid to return as board members of the group’s holding firm to prevent its merger with chemical giant OCI Holdings Co., according to industry insiders on Tuesday.

Korea Institute of Corporate Governance and Sustainability (KCGS), the proxy advisor, has voted in favor of appointing the two sons, Lim Jong-yoon and Lim Jong-hoon, as inside directors of the holding firm Hanmi Science Co.

Eldest son Lim Jong-yoon is Hanmi Pharmaceutical Co. co-president, and his younger brother Lim Jong-hoon has the same title as well as Hanmi Fine Chemical Co. Chief Executive. 

The advisory firm has recommended that Hanmi Science shareholders not exercise their voting rights to nominate Lim Ju Hyun, the late founder’s daughter and Hanmi Pharmaceutical co-president, and OCI Chairman Lee Woo-hyun as inside directors of the holding firm. They were recommended by the current board of Hanmi Science.

KCGS is understood to be backing the two Hanmi Pharmaceutical Group sons in their aim to cancel the drugmaker’s 770.3 billion won ($574 million) merger plan.

In addition, KCGS has voted in favor of two board director candidates recommended by the two sons – Kwon Kyu-chan, chief executive of biotech Dx&Vx, and Bae Bo-kyung, an outside director of Dohwa Engineering Co. However, the proxy advisor has opposed nominating Sa Bong Kwan, a partner at Seoul-based law firm Jipyong LLC, as an outside director. He was also recommended by the Lim brothers.

The advisory firm has also recommended shareholders not vote for the other four director candidates proposed by Hanmi Science.

The candidates are Hanmi Pharmaceutical Co. Research and Development Center Chief Choi In Young, Myongji University’s business administration Professor Park Kyung-jin, Shinsegae Group’s former managing director Seo Jeong-mo and Korea Advanced Institute of Science & Technology (KAIST) medical science and engineering Associate Professor Kim Hail.

FAMILY OWNER FEUD

Meanwhile, global proxy advisor Glass Lewis & Co. on Tuesday took the opposite stance.

The US advisor recommended that Hanmi Science shareholders vote for all the six board director candidates proposed by Hanmi Science’s board. In addition, it recommended stakeholders vote against the Lim brothers and the three candidates they had proposed.

Glass Lewis also said Hanmi Science’s plan for a 240 billion rights offering to OCI for the merger is reasonable. The Lim brothers in January filed a preliminary injunction against the issuance of an 8.4% new stake.

US proxy advisory firm Institutional Shareholder Services Inc. (ISS) has taken a neutral stance, in favor of some proposals from both the Hanmi Science board and the two brothers. 

The merger plan has been pushed by Lim Ju Hyun, her mother Hanmi Science Chairwoman Song Young-sook and OCI Chairman Lee Woo-hyun. 

The Lim brothers have opposed the merger plan, making efforts to return to the holding firm’s management. They have argued that it was the late founder’s will to grow Hanmi as a leading global drugmaker.

Hanmi Science will hold its general meeting of shareholders on March 28 and decide on the firm’s key agendas including the selection of board members.

Write to Jong-Kwan Park at pjk@hankyung.com

Jihyun Kim edited this article.