The Inheritance Tax Bill That Chose Hanmi's Largest Shareholder

Divide ₩540 billion by ₩1 trillion. You get 54%, and that is roughly what Korea's inheritance tax took from the block of stock the founder of Hanmi Pharmaceutical left his family in August 2020, payable in cash across six instalments over five years, from an asset whose entire function was to never be sold.¹

Six years later, the largest shareholder of Hanmi Science is not a member of the family. It is Shin Dong-kuk, chairman of a machine-parts company called Hanyang Precision, who as of July 2026 holds 35.1% of the group's holding company.⁶

Nobody raided anything. There was no hostile bid, no tender offer, and no moment at which anyone outside the family voted to take the company away from it. There was a payment calendar. The state assessed the control block at a premium because it was a control block, declined to accept the control block as payment, and set the dates. Everything since is downstream of that.

The reason this case is worth a founder's afternoon is that the mechanism is completely legible. Most control losses arrive dressed as something else, usually a financing. This one arrived as a tax return.

Korea's inheritance tax runs from 10% to a top marginal rate of 50% on a taxable base above ₩3 billion, under Article 26 of the Inheritance Tax and Gift Tax Act.¹⁵ Where the deceased was a controlling shareholder, a valuation premium is added to those shares. When the government proposed scrapping that premium in 2024, its own policy briefing put it at 20% and said it lifts the effective burden to roughly 60%.²⁴

Article 71 of the same Act lets an heir pay by annual instalment rather than in one payment, on security, and the statutory cap has since been extended to ten years.¹⁸ Hanmi's inheritance opened in 2020, and reporting describes the family paying across six instalments over five years.¹

Here is the founder's actual position. Lim Sung-ki died in August 2020 holding 23,076,985 Hanmi Science shares, 34.29% of the company. Of those shares, 30% went to his widow, Song Young-sook, and 15% each to his three children, Lim Jong-yoon, Lim Ju-hyun and Lim Jong-hoon. The stock passing to the family was estimated at roughly ₩1 trillion at the date of death, and the assessment came to roughly ₩540 billion: about ₩220 billion for Song and about ₩100 billion for each child.¹

Do the arithmetic in shares rather than won, because shares are what a control fight is denominated in. ₩540 billion against a ₩1 trillion block is 54% of the block. The block was 34.29% of Hanmi Science, so the tax was worth roughly 18% of the entire company, and each of the six instalments was worth roughly 3% of it. Those are calculations on the reported figures, not a filed number.

Now the part that makes the calendar binding. Under current Korean rules, unlisted shares, real property and art can be surrendered to the tax authority in kind. Listed shares cannot, and the stated reasoning is that listed shares are easy to sell, so the holder should sell them and pay cash. The government was reported in December 2025 to be reviewing whether to allow listed stock as payment in kind.¹⁶

That reasoning is airtight and slightly insulting. Listed shares are easy to sell, which is exactly why the family did not want to sell them, which is exactly the thing being taxed.

Hanmi is a pyramid, which is what Korean founders build because Korean law will not let them build anything else. Hanmi Science holds 5,306,121 shares of Hanmi Pharmaceutical, 41.42% of it, as reported in an April 2026 filing.¹⁹ The founder held 34.29% of Hanmi Science. Control of one of Korea's most consequential drug developers ran through roughly a third of a holding company.

That third was the only meaningful asset, and it could not be divided the way founders in other jurisdictions divide theirs. Article 369 of the Commercial Act provides that each share carries one vote, and Korean company law treats this as mandatory, so it cannot be overridden in the articles. Multiple-voting stock exists in Korea only under the venture business statute, only for unlisted venture companies, and it converts to ordinary shares three years after listing.¹⁷²⁰

Stand a US founder in this position and the problem is solvable. Sell Class A, keep Class B, pay the tax, retain the votes. That is a Control Wedge, and it is usually discussed as a governance defect that institutional investors campaign against. In Seoul it would have been a payment method.

For the Lim family, votes and economics left the building together. Every won of tax paid out of that block cost the family voting power at exactly the same rate, and there was no instrument available to slow the exchange rate down.

In January 2024, Song Young-sook and her daughter Lim Ju-hyun proposed integrating Hanmi with OCI Group, explicitly to raise the inheritance tax money. Song agreed to sell 6.702 million Hanmi Science shares to OCI Holdings for roughly ₩250 billion.¹³ Her two sons opposed it. At the March 2024 annual meeting, the mother and daughter's proposals were rejected and the sons' proposals passed with substantial support from minority shareholders. The brothers took the board and the OCI transaction collapsed.³

Read that meeting carefully, because it is the single most repeatable mistake in the whole sequence. The OCI deal solved the tax and reassigned control in one transaction, and the people who stood to lose control were asked to approve the package as a whole. They did what anyone does when handed a bundle containing one thing they need and one thing they will not accept, which is vote against the bundle.

The tax did not go away. By late 2024 the family had paid roughly two thirds of the ₩540 billion, with around ₩170 billion still outstanding, financed substantially by pledging shares against loans at reported interest rates of about 4.5% to 6%.² A share pledge is described in every jurisdiction as financing. What it is, functionally, is a standing instruction to somebody else's risk department to sell your control block if the price falls far enough, filed under a heading that does not mention control.

Shin Dong-kuk was ten years younger than the founder, from the same village in Gimpo, and a graduate of the same high school. They met through hometown associations and ran a scholarship foundation together. His formal involvement with the company began in 2000, and in 2010 he put about ₩42 billion into 12.5% of Hanmi Science.¹⁴

His purchases since are the entire story of who controls Hanmi.

In the March 2024 proxy contest he backed the brothers against the mother and daughter.³ On July 3, 2024 he bought 4,444,187 shares, about 6.5%, from Song and Lim Ju-hyun for ₩164.4 billion, and signed a voting agreement with the people he had just been voting against.³⁴ KED Global quoted his explanation: "I made the deal to help (the family) solve the inheritance tax issues and protect Hanmi Pharmaceutical Co."⁴ Song stepped down as chair five days later.⁴

On February 13, 2026 he bought a further 4.41 million shares, 6.45%, at ₩48,469 per share for about ₩213.7 billion, funded by borrowing against his Hanyang Precision holding. That took him from 23.38% to 29.83%.⁵ On July 7, 2026 he contracted to buy 3,604,799 shares, 5.27%, at ₩47,920 for ₩172.7 billion, from Hong Ji-yun and six others. Hong Ji-yun is the wife of the eldest son, Lim Jong-yoon.⁶¹¹ That took his personal holding to 28.15%, and 35.1% with Hanyang Precision.⁶

Three transactions, 18.22 percentage points. Set that beside the arithmetic from the first section, where the tax came to roughly 18% of Hanmi Science. Those are not the same transaction and the family also borrowed heavily and attempted the OCI sale, so the two figures are a resemblance rather than an identity. They are close enough to sit and look at for a minute.

Shin's sentence is true. He did help with the inheritance tax. It is also a complete and accurate description of acquiring a company, and both readings survived because nobody was ever required to choose between them.

In December 2024 the coalition was papered: Shin, Song, Lim Ju-hyun, and the private equity firm La Defense Partners through its Killington vehicle. The reported terms include a joint exercise of voting rights, prior consultation and a right of first refusal before any member sells, and a penalty of around ₩60 billion for breach.¹²

Then it did what alliances made of paper do. On June 5, 2025 the Hanmi Science board approved a senior care development at Banpo involving a Catholic university hospital, with Shin's support. Four days later he reversed, saying the hospital's participation was not confirmed. In September 2025 Song, Lim Ju-hyun and Killington sued him for the ₩60 billion penalty, arguing the reversal breached the joint voting clause. Shin's position is that his approval had been conditional and that he exercised ordinary management judgement once the condition failed. The trial closed on June 25, 2026, and a first-instance verdict is expected on October 1, 2026.¹² Shin has separately obtained a court-approved provisional attachment of about ₩10 billion against Lim Ju-hyun's shares.¹³

Even the term of the agreement is unclear from outside. Reporting in June 2026 described roughly a year remaining. Reporting in August 2026 referred to a 2029 expiry.⁷¹³

Press coverage calls this a family alliance. The document calls it liquidated damages. Everyone at that table now knows precisely what it costs to change their mind, which is a form of trust, but not the form anybody described in the announcement.

On February 23, 2026, Hanmi Pharmaceutical's chief executive Park Jae-hyun publicly accused Shin of improperly blocking executive authority, including seeking direct access to confidential technology transfer contracts.⁸ Park resigned on March 13.⁹ The replacement was Hwang Sang-yeon, a private equity executive, the first outside chief executive in the company's 53-year history.⁹

An outsider running a 53-year-old founder company is a governance improvement in almost any telling, and this one may well be. It is worth being precise about how it arrived. Professional management became possible here because no internal appointment could any longer be made without being read as a vote, and the least contested candidate was the one with no surname in the fight. The reform is real. So is the reason, and the reason is not that anybody redesigned the board.

On June 27, 2026, Lim Jong-yoon sold 718,750 shares at ₩48,800, about ₩35.1 billion, to Shin. His wife and their three children sold the remainder into Shin's July block. His personal holding in Hanmi Science went to zero.¹¹

Two days later his younger brother went the other way. On June 29, Lim Jong-hoon contracted to sell 1,709,788 shares, 2.50%, at ₩48,000 for about ₩82.07 billion, to the Now IB 22 Fund, a buyer reported as friendly to his mother's side. His stake fell from 5.09% to 2.59%. The stated purpose included securing cash for inheritance tax. He said publicly that he would carry on his father's principle of serving the nation through pharmaceuticals alongside his mother and sister.¹⁰

By August 2026 the register read roughly 41% friendly to the Song side against Shin's 35.1%, with a cousins' bloc of about 2.7% sitting where a casting vote sits.¹³

The two brothers are now filed under different headings in every account of this fight. One defected, one came home. Both sold. The distinction between them is which buyer they chose, and the tax authority's schedule was indifferent to that question in a way the family never could be.

Every block described above moved off-market, at a negotiated price, between named parties. That is not a Hanmi peculiarity. It is what the rules make convenient.

Korea's mandatory tender offer trigger, in Article 133(3) of the Financial Investment Services and Capital Markets Act with its enforcement decree, bites when a buyer acquires shares off-market from ten or more counterparties within a six-month window such that the buyer and related parties reach 5% or more.²¹ The threshold counts sellers. A control block is generally owned by a small number of named people, which means the test that would force a public bid is rarely in the path of the transaction that actually moves control. Nothing in the public record says anyone at Hanmi structured a trade around that count. The mechanism holds without it.

The broader rule that would give minority holders a price, a mandatory bid obligation at around a 25% acquisition threshold, remained a set of bills before the National Assembly as of mid-2026, with the financial regulator formalising its plan in a report to the legislature on July 29, 2026.²²

So minority holders of Hanmi Science watched control change hands three times, at prices agreed in private among the people signing, and received the disclosure each time. A tender offer obliges a control buyer to make the same offer to everyone. A negotiated block obliges nobody to do anything, which is why control travels that way in every market that lets it.

Convert the tax to dated cash calls and compute coverage. Not a rate, not a percentage of net worth. A table with one row per payment date, the amount, and the cash you will actually have that month. For Hanmi that table read roughly ₩90 billion per row against a company that pays dividends, six rows deep, and the answer was visible from the first row.

Then work through the following, in this order, because each one closes off the answers to the last.

1. Find out what your jurisdiction accepts as payment. Korea takes unlisted shares and refuses listed ones.¹⁶ The United States runs the opposite instinct through IRC section 6166: where a closely held business interest exceeds 35% of the adjusted gross estate, the executor can elect up to ten annual instalments with the first deferred as much as five years, and a reduced 2% interest rate applies to a portion of the deferred tax, with acceleration if 50% or more of the interest is disposed of.²³ Hanmi's family had five years and no in-kind option. A US family in the same position has up to fourteen and a subsidised rate. Same problem, different clock, different owner at the end.

2. Find out whether votes can be separated from economics where you are. If dual class is available, the estate can be funded by selling economics. If it is not, as in Korea for listed companies, every won raised from the block is votes gone.¹⁷

3. Name the buyer of last resort now, and price the option now. You will have one. The only question is whether you pick them while you still have the leverage of not needing them yet. A pre-negotiated purchase right with a valuation method, a cap, and a standstill costs a legal bill today. The alternative is negotiating from a payment deadline.

4. Never bundle the tax solution with the control transfer. The OCI transaction failed because it did both and asked one vote to approve both.³ Split them into separate transactions with separate approvals, and find out early which half your family will actually not agree to.

5. Read the shareholder agreement as a schedule, not a sentiment. Term, penalty, right of first refusal, definition of breach, and what happens to the bloc on expiry. The penalty figure is the honest valuation of the coalition. At Hanmi it is ₩60 billion and it is now in front of a judge.¹²

6. Diary the loan maturities against the tax dates. Pledged shares at 4.5% to 6% against a dividend yield that does not cover the interest is a position that has to be refinanced repeatedly, and each refinancing is an opportunity for somebody with cash to become important.²

Nothing above is tax or legal advice for your estate, and the Korean rules described here are the Korean rules. Payment in kind, instalment terms, valuation premiums, pledge enforcement and the remedies available under a shareholder agreement all move when you cross a border, and several of them are actively in flux in Seoul right now. Take the questions to counsel in the country whose revenue service will actually send the bill.

No, and that is the interesting part. Every share he acquired came by agreement, at a negotiated price, from a willing seller. The word "hostile" describes a transaction in which the target's owners do not want to sell. At Hanmi, four separate members of the founding family sold, at different times, to different buyers, for the same reason. Hostility was never required, and the takeover defence literature is largely useless here, because there was nothing to defend against except a due date.

A trust changes who holds the shares and can change the timing and the taxable event. It does not, by itself, create cash. The binding constraint at Hanmi was that a large tax liability had to be settled in currency by people whose wealth was a single illiquid holding that the state would not accept in payment.¹⁶ Any structure that leaves that constraint intact leaves the outcome intact. So make every adviser answer one question about every proposed vehicle: which asset pays the tax, on which date. Most succession vehicles are extremely good at answering a different question, which is who ends up owning what once the tax has somehow been dealt with.

Nobody outside the room knows for certain, including the reporters covering it, who have described the remaining term as both roughly a year and as running to 2029.⁷¹³ That is the general lesson rather than a Korean quirk. A voting bloc assembled by contract has an end date, and on that date the register reasserts itself. At Hanmi the register currently shows one shareholder at 35.1% and a coalition of several at around 41%, which is a stable arrangement only for as long as the several keep agreeing.⁶¹³

The verdict on the ₩60 billion penalty claim is expected on October 1, 2026, and it will settle a contractual question that matters a great deal to four parties.¹² It will not change who owns Hanmi Science, because that was decided by transfers signed in 2024 and 2026 by people who needed money on specific dates and had one asset.

If you hold a concentrated position in a company you intend to leave to somebody, the estate plan is the second document. The first is a single page listing every date on which your estate will owe cash, the amount, and the name of the person who will have that amount available. That person is your successor. You can negotiate with them now, while the only thing you lack is a reason to hurry, or your heirs can negotiate with them later, on a schedule set by a government that has already told them what it will and will not accept.