Hanyang Securities' 50 billion won third-party allocation capital increase received court approval after Seoul Southern District Court rejected minority shareholders' injunction request on May 8. The court recognized the company's rationale for capital strengthening to enter the over-the-counter (OTC) derivatives business, which Hanyang Securities has been preparing since October of last year. The ruling reduces legal uncertainty surrounding the capital raise, which involves issuing 2,380,952 common shares at 21,000 won per share to KCGI No. 2 Private Investment Partnership, the largest shareholder, with new shares scheduled for listing on the 20th.
Court Recognizes OTC Derivatives Business Capital Need
The court's ruling centered on acknowledging Hanyang Securities' capital increase justification. The court found that Hanyang Securities has been preparing to enter the OTC derivatives business since October of last year, and that the need to strengthen equity capital to reinforce the net capital ratio (NCR) is recognized. The court also stated it is difficult to conclude that the purpose is to strengthen the largest shareholder's control or that there is no management purpose under commercial law.
Hanyang Securities Sets Share Price at 12.9% Premium
The share issuance price of 21,000 won represents a 12.9% premium applied to the base price of 18,605 won. The court judged that net asset value per share is only one of several evaluation indicators, and since the price paid by the largest shareholder when acquiring management rights reflected a management premium, it is difficult to view the issuance price as significantly unfairly calculated. This pricing structure contrasts with the frequent discount issuances in third-party allocations, according to the financial investment industry.
Seoul Southern District Court Upholds Third-Party Allocation Method
The court ruled that the necessity of fundraising, choice of means, timing and scale determination are matters of board management judgment that should be respected. The court included in its judgment grounds that shareholder allocation carries the risk of failing to secure timely capital due to forfeited shares. The court also noted that fairness enhancement measures requested by minority shareholders are not mandatory requirements under relevant laws.
New Shares to Be Listed on the 20th with One-Year Lock-Up
The new shares issued through this capital increase are scheduled to be listed on the 20th. The shares will be subject to mandatory custody by Korea Securities Depository for one year from the deposit date, restricting trading. The company plans to use the entire proceeds for equity capital strengthening for new business entry and promoting new businesses such as OTC derivatives. A Hanyang Securities official stated, "We respect the court's decision" and "This capital increase was decided for capital strengthening purposes such as promoting new businesses."
FAQ
What did Seoul Southern District Court rule on Hanyang Securities' capital increase on May 8?
Seoul Southern District Court rejected minority shareholders' injunction request on May 8, allowing Hanyang Securities to proceed with its 50 billion won third-party allocation capital increase to KCGI No. 2 Private Investment Partnership.
What is the share price and premium for Hanyang Securities' new stock issuance?
Hanyang Securities set the new share issuance price at 21,000 won per share, which represents a 12.9% premium over the base price of 18,605 won, with a total of 2,380,952 shares to be issued.
