Kolmar vice chairman faces uphill court battle against father

From left are Kolmar Holdings Chairman Yoon Dong-han, Kolmar Holdings Vice Chairman Yoon Sang-hyun and Kolmar BNH CEO Yoon Yea-won / Courtesy of Kolmar Holdings

Kolmar Holdings Vice Chairman Yoon Sang-hyun, the eldest son of founder and chairman Yoon Dong-han, is facing an uphill court battle against his father after a court ruled that the son could not sell the shares his father gifted him, according to industry officials and legal sources, Thursday.

The family feud deepens a controversy surrounding the cosmetics manufacturer’s management transparency and governance, which has long prioritized the private interests of the owner family at the expense of minor shareholders.

At stake are downgrades in the firm's environmental, social and governance (ESG) ratings and subsequent lower corporate value, compounded further by questions about the independence of its board.

On June 27, Seoul Central District Court found in favor of Yoon Dong-han, who filed an injunction to have his son Yoon Sang-hyun's share sales withheld.

The chairman, who founded Kolmar Korea in 1990, filed a lawsuit against his son on May 30, seeking the return of 2.3 million shares in the holding company that he had gifted to his son in 2019.

The 2.3 million shares have since doubled to 4.6 million, aided by capital increase.

The vice chairman is embroiled in a power struggle against his father and his older sister, Yoon Yea-won, CEO of Kolmar BNH, a health food subsidiary of the holding firm.

In December 2019 the chairman gifted a 28.18 stake in Kolmar Holdings to the two. The vice chairman has since taken over management of the holding firm, while his older sister became CEO of Kolmar BNH.

The feud began in April when the vice chairman demanded that he and a former CJ CheilJedang executive be appointed as inside directors at Kolmar BNH, saying the move was justified by the poor business performance of the subsidiary.

The company CEO refused, prompting her younger brother to file a suit to convene an extraordinary shareholders’ meeting to change the makeup of the board. In response, she sought the help of the chairman to file suit against the son’s move, claiming that her younger brother violated a management pact.

The pact dictates that the vice chairman assist the CEO in management of Kolmar BNH.

The vice chairman claims the pact is a private family arrangement, a contract between the three family members and not a corporate entity, and therefore he is not bound by the specifics of the pact, he said.

Whether the family feud will develop into a full-blown shareholder battle remains to be seen.

The U.S.-based activist fund Dalton Investments has been backing the vice chairman. The fund increased its stakes in the firm to 5.69 percent in March, up from 5.01 percent, declaring active participation in management as its investment purpose.

The vice chair and the fund have a joint stake of over 37 percent, dwarfing the chairman and CEO’s combined stake of 16.21 percent.

However, if the court rules for the chairman in the suit, their combined stake will rise to over 29 percent, overtaking the son and the fund’s combined stakes, which will decline to 24.62 percent.

When contacted by The Korea Times, Kolmar Holdings PR officials were unavailable.