A 50 billion won paid-in capital increase that Hanyang Securities is pursuing for the largest shareholder will proceed as planned after a court rejected an injunction to ban the issuance of new shares.
Hanyang Securities said in a filing on the 8th that the Seoul Southern District Court dismissed a request by minority shareholders for an injunction to ban the issuance of new shares against the company.
Earlier, on the 25th, the board of Hanyang Securities decided on a third-party allotment paid-in capital increase of about 50 billion won, issuing 2,380,952 common shares to the largest shareholder, KCGI No. 2 Private Equity Partnership. The funds raised will be used to strengthen equity capital.
Some minority shareholders applied to the court for an injunction, arguing that the paid-in capital increase is intended to strengthen the largest shareholder's control and that the third-party allotment method infringes on the rights of existing shareholders.
However, the court found that the need for Hanyang Securities to bolster its capital is recognized.
The panel said, "Hanyang Securities has been preparing to enter the over-the-counter derivatives business since October last year, and the need to strengthen equity capital to bolster the net capital ratio (NCR) is recognized," adding, "It is difficult to conclude that the new share issuance is solely for the purpose of strengthening the largest shareholder's control or that there is no business purpose."
It also saw no issue with the appropriateness of the issue price.
The panel said, "The new share issue price was calculated by applying a 12.9% premium to the reference price under the relevant rules," and judged, "It is difficult to deem the issue price significantly unfair based solely on net worth per share or the acquisition price of management control by the largest shareholder."
It added, "Decisions on the need, method, timing, and size of financing should be respected as matters of the board's business judgment," and "The fairness-enhancing measures demanded by creditors are not matters that must necessarily be carried out under the relevant laws and regulations."
With the court's decision, Hanyang Securities is set to complete the paid-in capital increase as originally planned. The payment date for the new shares is today, and the scheduled listing date for the new shares is on the 20th.