How Samsung's 19 Trillion KRW Stock Allocation... Vice Chairman Lee Jae-yong Focuses on Strengthening Control

Late Chairman Lee Kun-hee's Stock Inheritance Scenario
Majority of Samsung Electronics Shares Likely to Go to Vice Chairman Lee
Equal Distribution Possible Due to Inheritance Tax Burden

[Asia Economy Reporter Su-yeon Woo] As the scale of inheritance tax and payment plans for the late Samsung Chairman Lee Kun-hee's estate have been disclosed, the stock inheritance distribution plan, which is the biggest point of interest, has not been revealed, drawing attention from the business community. Various scenarios are being proposed regarding the division of Chairman Lee's shares, which have a huge impact on Samsung Group's governance structure, with the dominant view being that the shares will be divided in a way that strengthens Vice Chairman Lee Jae-yong's control.

According to disclosures by Samsung Group and the Financial Supervisory Service on the 29th, the shares left by Chairman Lee include 4.18% of Samsung Electronics, 20.76% of Samsung Life Insurance, 2.88% of Samsung C&T, and 0.01% of Samsung SDS. The value of these shares amounts to approximately 19 trillion won. Samsung Group has a governance structure that goes from ‘Samsung C&T → Samsung Life Insurance → Samsung Electronics,’ with Vice Chairman Lee, the largest shareholder of Samsung C&T, indirectly controlling Samsung Electronics through C&T and Life Insurance. According to the statutory inheritance ratio, Chairman Lee's spouse, Hong Ra-hee, would receive the largest share at 33%. The three siblings?Vice Chairman Lee Jae-yong, Lee Boo-jin, President of Hotel Shilla, and Lee Seo-hyun, Chairwoman of the Samsung Welfare Foundation?would each inherit 22%.

Photo by Yonhap News

However, the business community expects that the stock inheritance will be carried out in a way that strengthens Vice Chairman Lee's control rather than following the statutory inheritance ratio. One plan being discussed is that Vice Chairman Lee would inherit most of the Samsung Electronics shares, while President Lee and Chairwoman Lee would divide the shares of affiliates such as Samsung Life Insurance and Samsung C&T.

Another option is for Vice Chairman Lee to inherit all of the Samsung Electronics and Life Insurance shares held by Chairman Lee. In return, President Lee and Chairwoman Lee would inherit the remaining shares of Samsung C&T, Samsung SDS, as well as cash and real estate. However, the limitation of these two plans is the heavy inheritance tax burden on Vice Chairman Lee. Therefore, there is also an opinion that Vice Chairman Lee may sell some shares of affiliates such as Samsung Life Insurance to raise the large inheritance tax.

The final scenario is for the other heirs to evenly divide the shares to reduce Vice Chairman Lee's inheritance tax burden. Currently, Samsung Electronics is controlled by the corporations Samsung Life Insurance and Samsung C&T, so even if the family divides Chairman Lee's shares, there would be little change in the governance structure. Some speculate that the shares will be divided in similar proportions and that Hong Ra-hee will transfer her Samsung Electronics shares to Vice Chairman Lee to support him.

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