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Internal strife at Boryung Holdings over building sale… Injunction for accounting document access dismissed

[비즈한국] It has been confirmed that the younger sisters of Boryung Group Chairman Kim Eun-sun have recently had their court injunction application dismissed after seeking access to the accounting documents of Boryung Holdings, the holding company of Boryung Group. Boryung Holdings sold its headquarters, the Boryung Building in Jongno-gu, Seoul, for 131.5 billion won last June. Chairman Kim's younger sisters, who are shareholders of Boryung Holdings, filed the injunction in August, claiming they wanted to scrutinize the legality of the sale process and the determination of the sale price.

On the 2nd, the 51st Civil Division of the Seoul Central District Court dismissed the 'request for access and copying of accounting books, etc.' filed against Boryung Holdings by Kim Eun-young and Medience Chairman Kim Eun-jung, the younger sisters of Boryung Chairman Kim Eun-sun. The court stated, "Based solely on the submitted materials, it is difficult to see that the petitioners have sufficiently demonstrated a high degree of necessity and the right to seek emergency access and copying of these documents through an injunction," adding, "The petitioners' injunction application is not accepted, and the application for indirect enforcement, which is premised on the acceptance of the former, is also not accepted."

Boryung Holdings is the holding company of Boryung Group. It oversees key business entities, including the pharmaceutical company Boryung. The largest shareholder of Boryung Holdings is Chairman Kim Eun-sun, a second-generation founder, who held a 44.93% stake as of the end of June. The remaining shares are held by Chairman Kim's son, Boryung CEO and President Kim Jung-kyun (24.01%), and her younger sisters, Kim Eun-young (9.98%) and Medience Vice Chairman Kim Eun-jung (9.98%). Boryung Group's honorary chairman, Kim Seung-ho, has four daughters: Boryung Chairman Kim Eun-sun, Kim Eun-hee, Kim Eun-young, and Medience Chairman Kim Eun-jung.

The dispute began with the sale of the Boryung Holdings building. In June of last year, Boryung Holdings sold the Boryung Building, located in Jongno-gu, Seoul, to Korea Real Estate Investment & Trust034830 (K-One No. 26 Jongno Office Real Estate Investment Company). The sale price was 131.5 billion won. The transaction was a sale-and-leaseback arrangement, and it is known that Boryung Holdings plans to lease more than half of the total area for seven years after the sale. The Boryung Building, which spans 7 basement levels and 18 floors above ground (with a total floor area of 30,000 square meters), was completed in December 1993 and has been used as the headquarters for Boryung Holdings and its affiliates.

Kim Eun-young and Chairman Kim Eun-jung filed the injunction in August to verify the legality of the sale process and price calculation for the Boryung Building. The intention is to review documents related to the sale and hold the management legally responsible if any illegalities are found. The documents requested for access and copying include: documents exchanged with the buyer to conclude the transaction, internal approval documents prepared for deciding the buyer, disposal method, and disposal price, and evaluation reports from accounting firms or appraisal firms used to determine the disposal price.

Under the Commercial Act, a shareholder holding 3% or more of a corporation's issued shares may request access to the company's accounting books and documents by submitting a written request stating the reasons. To exercise rights recognized under the Commercial Act, such as the right to demand the dismissal of directors, the right to enjoin illegal acts, or the right to file derivative suits, shareholders must possess accurate knowledge and appropriate information regarding the company's operations and property status. However, since it is difficult to obtain sufficient information solely through the review of financial statements, the law grants shareholders the right to access and copy accounting books and documents that form the basis of the financial statements.

The request filed by Kim Eun-young and Chairman Kim Eun-jung for access and copying of Boryung Holdings' accounting books was dismissed in court. Boryung Holdings claimed that it had provided both individuals with all documents exchanged with the buyer, including the Boryung Building sales contract and its attachments. The court determined that shareholders must prove the existence of documents to request access and copying for anything beyond those provided in court, and that this proof was insufficient. Other documents were deemed internal reports or decision-making papers, which do not qualify as documents subject to legal access and copying requests.