The value of the founders stake, as of today, is 31.2 billion won
Up to 65% in addition to inheritance tax surcharge
Excessive inheritance tax and case of selling management rights
“There is no problem with new drug development, management centered on the general manager” This article was pre-released as a premium content for Farm E Daily at 08:00 on March 16, 2022.
[E-Daily Reporter Kim Yu-rim] As former CEO Lee Byung-geon, the listed leader, resigned and even the founder passed away, SCM Life Sciences was in a situation where there was no new drug development commander. Anchor investor Korea Investment Partners faced the biggest crisis since its inception as the bad news overlapped with the disposal of all stakes. The company dismissed it, saying, “The sale of Hantupas stake is due to the expiration of the fund, and there will be no setbacks in the development of new drugs because the CEO is absent.”
Ki-ryeong Song, the largest shareholder, is about to be appointed as non-executive director of SCM Life Sciences at the regular general shareholders meeting in March.
According to the electronic disclosure system of the Financial Supervisory Service on the 15th, the position of CEO of SCM Life Sciences is still vacant since the death of the late CEO Song Soon-wook on the 10th. Until a new appointment, Managing Director Hyung-Nam Oh will act on behalf of the CEO. The largest shareholder was also changed from the late CEO Song and one other person to Song Ki-ryeong.
Ki-ryeong Song is the spouse of the late CEO Song, and plans to go through the inheritance process for the 18.06% stake. Song Ki-ryeong is the only person who has no contact with new drug development among the directors newly appointed at the 8th regular general meeting of shareholders on the 28th. She majored in composition at Seoul National University College of Music, and will be appointed as non-executive director of guitar for a term of three years.
The part that shareholders are most anxious about is the possibility of a stake sale issue due to the payment of inheritance tax. As of todays share price, CEO Songs stake is worth 31.2 billion won. According to the current inheritance tax regulations, the largest shareholder is subject to an effective tax rate of up to 65% in addition to the maximum tax rate of 50%, plus a premium for the shares of the largest shareholder. It is intended to prevent the inheritance of wealth, but it is an inheritance tax rate that can only be borne by small and medium-sized KOSDAQ companies.
It is common to see small and medium-sized KOSDAQ companies selling their management rights because they cannot afford the excessive inheritance tax. For example, Unidus, the largest contraceptive device manufacturer in Korea, sold 3 million shares owned by former CEO Kim Seong-hoon to the Biogenetics Investment Association for 20 billion won in 2017. The reason why CEO Kim had to give up his founder and the company his father had run was the burden of inheritance tax. Upon the death of his father, Chairman Kim Duk-seong, he inherited a stake in his management rights, and the inheritance tax was 5 billion won.
An SCM Life Science official said, “If you look at other large companies, they are paying inheritance tax through secured loans. There is no need to pay inheritance tax by selling shares. We plan to proceed in a way that allows the founders shares to be iThe value of the founders stake, as of today, is 31.2 billion won
Up to 65% in addition to inheritance tax surcharge
Excessive inheritance tax and case of selling management rights
“There is no problem with new drug development, management centered on the general manager” This article was pre-released as a premium content for Farm E Daily at 08:00 on March 16, 2022.
[E-Daily Reporter Kim Yu-rim] As former CEO Lee Byung-geon, the listed leader, resigned and even the founder passed away, SCM Life Sciences was in a situation where there was no new drug development commander. Anchor investor Korea Investment Partners faced the biggest crisis since its inception as the bad news overlapped with the disposal of all stakes. The company dismissed it, saying, “The sale of Hantupas stake is due to the expiration of the fund, and there will be no setbacks in the development of new drugs because the CEO is absent.”
Ki-ryeong Song, the largest shareholder, is about to be appointed as non-executive director of SCM Life Sciences at the regular general shareholders meeting in March.
According to the electronic disclosure system of the Financial Supervisory Service on the 15th, the position of CEO of SCM Life Sciences is still vacant since the death of the late CEO Song Soon-wook on the 10th. Until a new appointment, Managing Director Hyung-Nam Oh will act on behalf of the CEO. The largest shareholder was also changed from the late CEO Song and one other person to Song Ki-ryeong.
Ki-ryeong Song is the spouse of the late CEO Song, and plans to go through the inheritance process for the 18.06% stake. Song Ki-ryeong is the only person who has no contact with new drug development among the directors newly appointed at the 8th regular general meeting of shareholders on the 28th. She majored in composition at Seoul National University College of Music, and will be appointed as non-executive director of guitar for a term of three years.
The part that shareholders are most anxious about is the possibility of a stake sale issue due to the payment of inheritance tax. As of todays share price, CEO Songs stake is worth 31.2 billion won. According to the current inheritance tax regulations, the largest shareholder is subject to an effective tax rate of up to 65% in addition to the maximum tax rate of 50%, plus a premium for the shares of the largest shareholder. It is intended to prevent the inheritance of wealth, but it is an inheritance tax rate that can only be borne by small and medium-sized KOSDAQ companies.
It is common to see small and medium-sized KOSDAQ companies selling their management rights because they cannot afford the excessive inheritance tax. For example, Unidus, the largest contraceptive device manufacturer in Korea, sold 3 million shares owned by former CEO Kim Seong-hoon to the Biogenetics Investment Association for 20 billion won in 2017. The reason why CEO Kim had to give up his founder and the company his father had run was the burden of inheritance tax. Upon the death of his father, Chairman Kim Duk-seong, he inherited a stake in his management rights, and the inheritance tax was 5 billion won.
An SCM Life Science official said, “If you look at other large companies, they are paying inheritance tax through secured loans. There is no need to pay inheritance tax by selling shares. We plan to proceed in a way that allows the founders shares to be inherited without selling,” he said.
Analysts say that the sale of shares in Korea Investment Partners, an anchor investor, along with the resignation of former CEO Lee Byung-gun, is also acting as a negative factor. Korea Investment Partners is the largest bio-investment venture capital in Korea. If it is determined that the company has growth potential, it continues its long-term investment by extending the maturity based on the consent of fund beneficiaries. However, the stake, which reached 12.49% at the time of listing, gradually decreased, and after former CEO Lee resigned, all 5.25% were disposed of.
Former CEO Lee was directly recruited by Korea Investment Partners in 2018, just before SCM Life Sciences went public. He led leading domestic pharmaceutical companies such as Green Cross and Chong Kun Dang, and spearheaded SCM Life Sciences new drug development to mergers and acquisitions strategy. Former CEO Lee suddenly resigned in November last year, with more than two years remaining. After that, he was appointed as Chairman of GI Innovation.
An SCM Life Science official said, “The disposal of shares in Korea Investment Partners has nothing to do with CEO Lee Byung-guns resignation. This was done when the fund expired, and it is not a special issue.” He continued, “In the past, it was managed with central governance led by CEO Lee Byung-gun, but as he retired at the end of last year, the division was already centered around the head of the division. We are awaiting the results of clinical trials through second-generation stem cell R&D.”nherited without selling,” he said.
Analysts say that the sale of shares in Korea Investment Partners, an anchor investor, along with the resignation of former CEO Lee Byung-gun, is also acting as a negative factor. Korea Investment Partners is the largest bio-investment venture capital in Korea. If it is determined that the company has growth potential, it continues its long-term investment by extending the maturity based on the consent of fund beneficiaries. However, the stake, which reached 12.49% at the time of listing, gradually decreased, and after former CEO Lee resigned, all 5.25% were disposed of.
Former CEO Lee was directly recruited by Korea Investment Partners in 2018, just before SCM Life Sciences went public. He led leading domestic pharmaceutical companies such as Green Cross and Chong Kun Dang, and spearheaded SCM Life Sciences new drug development to mergers and acquisitions strategy. Former CEO Lee suddenly resigned in November last year, with more than two years remaining. After that, he was appointed as Chairman of GI Innovation.
An SCM Life Science official said, “The disposal of shares in Korea Investment Partners has nothing to do with CEO Lee Byung-guns resignation. This was done when the fund expired, and it is not a special issue.” He continued, “In the past, it was managed with central governance led by CEO Lee Byung-gun, but as he retired at the end of last year, the division was already centered around the head of the division. We are awaiting the results of clinical trials through second-generation stem cell R&D.”
