SEOUL — The high-stakes boardroom battle at South Korea’s Hanmi Pharm Group has taken a volatile turn, placing key financier and shareholder Shin Dong-guk in the crosshairs of financial regulators, legal challenges, and competing founding family factions.

Chairman Shin of Hanyang Precision, a hometown acquaintance of the late Hanmi founder Lim Sung-ki, has dramatically increased his influence by becoming the single largest individual shareholder of the group’s holding company, Hanmi Science, through aggressive stock accumulation. However, this aggressive expansion has triggered heavy financial leverage scrutiny, court disputes, and potential regulatory penalties.

A Swift Collapse of the "Four-Party Alliance"

The ongoing factional dispute has spanned nearly three years. Following the death of founder Lim Sung-ki in 2020, his bereaved family faced heavy inheritance tax burdens. When group Chairwoman Song Young-sook and Vice Chairwoman Lim Joo-hyun pursued a merger with the OCI Group, Chairman Shin initially aligned with the founder’s sons, Lim Jong-yoon and Lim Jong-hoon, successfully blocking the deal.

Months later, however, Shin shifted alliances by purchasing a 6.5% stake from Chairwoman Song and her daughter, forming a formidable "four-party alliance" alongside private equity firm La Debance Partners. This coalition briefly consolidated control over Hanmi’s management.

The partnership dissolved rapidly over disagreements regarding senior care investments. Chairwoman Song’s faction subsequently filed a 60 billion won penalty lawsuit against Shin—which they lost in the first trial in October and have since appealed. Meanwhile, former Hanmi Pharm executives lodged criminal complaints accusing Shin and his son of corporate embezzlement and breach of trust involving 44.4 billion won from Hanyang Precision used for personal stock buying. Shin’s camp has counter-sued for false accusation, while DXVX, led by Chairman Lim Jong-yoon, has demanded a special internal audit.

Regulatory Scrutiny over Heavy Leverage

To finance his aggressive equity acquisitions, Shin has relied heavily on debt. As of late September, his total borrowings backed by Hanmi Science and Hanmi Pharm shares as collateral reached approximately 432.2 billion won ($310 million+), distributed between Hana Securities and Korea Securities Finance Corporation.

The Financial Supervisory Service (FSS) has launched an inquiry into whether Hana Securities adequately vetted Shin's repayment capabilities and whether the collateral valuation meets required maintenance thresholds. Hana Securities maintains that its 200% collateral maintenance ratio provides sufficient protection for debt recovery. Compounding these pressures, a Seoul court recently issued a 10 billion won provisional attachment order affecting portions of Shin’s pledged stock collateral.

Public Tender Offer and "Parking Deal" Allegations

Regulatory scrutiny has also extended to potential regulatory violations regarding over-the-counter (OTC) share acquisitions. Through contracts signed in February, July, and October, Shin acquired stakes totaling 13.74% of Hanmi Science. Under South Korean capital markets regulations, purchasing shares from multiple sellers within a six-month window can trigger mandatory public tender offer rules.

While legal advisors for Shin argue that exceptions apply and the seller count remains below statutory thresholds, a ruling against him could strip voting rights from the disputed shares and force a mandated divestment by the Financial Services Commission (FSC). Furthermore, regulators are probing allegations of "parking deals"—suspicions that private equity funds pre-acquired shares on Shin's behalf before transferring them. Shin’s legal representatives have firmly denied any pre-arranged acquisition agreements.

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