"As red flags rose over KCGI's acquisition of Hanyang Securities, CEO Lim Jae-taek of Hanyang Securities decided to stay in his position. Originally, he was set to finish his term at the end of this month and start anew at DAOL Investment & Securities, a competing firm."
Until recently, Kim Byeong-cheol of KCGI was mentioned as a strong candidate for the position of CEO at Hanyang Securities. However, as the head of KCGI, Jeong Sang-bu faced a tax investigation, the move of CEO Kim was disrupted.
Following the board meeting on the 14th, CEO Lim stated in a press release, "I had planned to take on the CEO position at DAOL Investment & Securities and embark on a new challenge, but for various reasons, I decided to change that decision and maintain my position as CEO of Hanyang Securities." He cited minimizing organizational uncertainty due to mergers and acquisitions (M&A), expectations from the Hanyang Foundation, and changes in major shareholders as reasons for this decision.
However, the market points to the possibility of KCGI's acquisition failure as the reason Lim remains at Hanyang Securities. Last year, KCGI signed a share purchase agreement (SPA) to acquire 29.6% (3,766,973 common shares) of Hanyang Securities from its largest shareholders, including Hanyang Institute, Baek Nam-gwan Tourism, and HBC, for 220.4 billion won, as part of its expansion from asset management to securities.
Just earlier this year, KCGI's acquisition of Hanyang Securities seemed certain. KCGI had completed preparations to pass the Financial Services Commission's eligibility review for major shareholders by settling issues with OK Financial, which provided funding for the acquisition of Hanyang Securities. To become a major shareholder in a financial company such as Hanyang Securities, one must undergo scrutiny from the Financial Services Commission regarding financial soundness and previous criminal records. It is recognized that eligibility is met only if there have been no violations of the Fair Trade Act or tax penalty laws in the past five years.
What was thought to be a smooth acquisition process for KCGI turned into a reversal this month. On the 11th, the Seoul Regional Tax Service's Investigation Division 4 commenced a tax investigation into KCGI. This division is responsible for large-scale planned investigations, focusing on substantial cases involving high-income individuals and large corporations. If tax evasion and other issues are confirmed here, KCGI will not be able to pass the eligibility review for major shareholders of Hanyang Securities.
Due to this, the identity of the person who would be endorsed as the new CEO at Hanyang Securities became a topic of significant interest in the industry. Until the previous day, the strong candidate was CEO Kim from KCGI. Appointing him would indicate that KCGI believed no reasons for disqualification as a major shareholder would arise from the National Tax Service's tax investigation. However, with CEO Kim not being appointed as the CEO of Hanyang Securities this time, it is interpreted that KCGI is considering the worst-case scenario of failing to acquire Hanyang Securities.
With CEO Lim deciding to remain at Hanyang Securities, DAOL Investment & Securities, which had initially planned to appoint him as the new CEO, finds itself in a perplexing situation. A representative from DAOL Investment & Securities noted, "Due to CEO Lim's sudden decision, future procedures and other matters have yet to be determined," adding that they plan to conduct a legal review over the weekend to prepare measures related to the appointment of a CEO.
Meanwhile, as the agenda to reappoint Hwang Jun-ho, the current CEO of DAOL Investment & Securities, as an inside director is on the regular shareholders' meeting agenda, the possibility remains for CEO Hwang to continue leading DAOL Investment & Securities. CEO Hwang has been expected to be promoted to vice chairman of DAOL Financial Group. The regular shareholders' meeting of DAOL Investment & Securities will be held on the 21st.
CEO Lim began his career in the securities industry in 1987 when he joined Ssangyong Investment & Securities (currently Shinhan Investment & Securities). After serving as the CEO of IM Investment & Securities, he took on the role of CEO at Hanyang Securities in 2018. Last month, DAOL Investment & Securities had planned to appoint CEO Lim as the new CEO, subject to a regular shareholders' meeting.