South Korea's Supreme Court on Thursday overturned a three-year sentence handed down to the head of major business group Hanwha for embezzlement.

The top court also referred the case back to the High Court and said it should review its verdict -- effectively restarting the appeals process.

The apex bench ruled that the appellate court had improperly judged some of the charges.

Hanwha Group Chairman Kim Seung-Youn was initially convicted on various fraud charges by a district court in August last year.

The court found he had arranged for group subsidiaries illegally to support his own private companies by providing them with financial guarantees and illicit funds between 2004 and 2006.

The move caused losses worth 288 billion won ($268 million) to the subsidiaries.

The court handed down a four-year jail term -- seen as an unusually tough sentence in a country normally lenient to offending tycoons.

The Seoul High Court had reduced the 61-year-old's sentence to three years on appeal in April.