Hyundai Motor Group Leadership Change, Final Puzzle of Governance Restructuring

Carefully Monitoring the Fair Trade Commission's Decision

Chung Eui-sun, Chairman of Hyundai Motor Company. (File photo)

[Asia Economy, Joo Sang-don (Sejong), Lee Ki-min] The Hyundai Motor Group, which is actively advancing the third-generation management under Chairman Chung Eui-sun, is facing the change of the controlling shareholder (same person) as the last obstacle in its corporate governance restructuring. The Fair Trade Commission (FTC) has yet to make a decision on whether to change the controlling shareholder. There are conflicting opinions: some argue that changing the controlling shareholder is justified since Chairman Chung is leading key issues of Hyundai Motor Group, while others contend that since Honorary Chairman Chung Mong-koo, the largest individual shareholder and current controlling shareholder, is still alive, the possibility of his involvement in management cannot be completely ruled out.

According to related industry sources on the 19th, the FTC has not made a decision on Hyundai Motor Group’s request earlier this month to change the controlling shareholder from Honorary Chairman Chung to Chairman Chung. The FTC announces the designation status of large business groups with assets exceeding 5 trillion won every May 1, and at that time, the controlling shareholder is also disclosed. Depending on who the controlling shareholder is, the scope of the business group is determined by considering relatives within six degrees of kinship, relatives within four degrees by marriage, or companies in which executives hold shares. This serves as the starting point for various large business group regulations such as restrictions on internal transactions, prohibition of new circular shareholdings, and limitations on debt guarantees.

The FTC’s hesitation in making a decision stems from internal conflicts between views that the change is possible and those that it is not. In particular, stricter standards are applied when changing the controlling shareholder while the existing controlling shareholder is still alive. Even though Samsung Group Chairman Lee Kun-hee had stepped down from the front line due to illness several years ago and Vice Chairman Lee Jae-yong had been managing the group, the FTC only changed the controlling shareholder to Lee Jae-yong in 2018 after confirming a medical opinion stating that Chairman Lee Kun-hee could not conduct normal management activities.

Hyundai Motor Group is closely monitoring the FTC’s decision and waiting. The group applied for the controlling shareholder change last October after Chairman Chung took office to solidify his leadership.

This content was produced with the assistance of AI translation services.