Controlling Corporate Group with "3.5% Stake by the Family Head"... Lee Jae-yong Increases Samsung Group Shareholding Through Inheritance

Fair Trade Commission, '2021 Publicly Announced Business Groups Stock Ownership Status'

[Sejong=Asia Economy Reporter Joo Sang-don] It has been revealed that the controlling family holds an average of 3.5% of shares to dominate corporate groups. Samsung Electronics Vice Chairman Lee Jae-yong's shareholding ratio over the entire group increased as he inherited shares from his late father, Lee Kun-hee, Chairman of Samsung Group.

On the 1st, the Fair Trade Commission announced the "2021 Stock Ownership Status of Publicly Disclosed Corporate Groups," which contains these details.

Among the 71 corporate groups designated as publicly disclosed corporate groups as of May 1 this year, the average internal shareholding ratio of the 60 groups with controlling families was 58.0%, up 1.0 percentage point from last year (57.0%).

The controlling families directly held an average of 3.5% of shares and mainly controlled the corporate groups through affiliated companies (51.7%) and treasury stocks (2.4%). The controlling persons belong to 59 groups and hold shares in 261 affiliated companies, with an average shareholding ratio of 8.6% in those companies.

Among corporate groups, Samsung, ranked first in total assets, saw significant changes in major affiliates' shareholding ratios after Chairman Lee Kun-hee passed away in October last year. Shares of Samsung Electronics, Samsung C&T, Samsung Life Insurance, and others held by the late chairman were inherited by his family. Vice Chairman Lee Jae-yong's shareholding ratio in Samsung C&T increased from 17.33% last year to 17.97% this year, and his shareholding ratio in Samsung Electronics rose from 0.62% to 1.44%. His shareholding ratio in Samsung Life Insurance increased from 0.06% to 10.44%, making him the largest individual shareholder.

The second generation of controlling families holds an average of 5.5% shares in 182 affiliated companies belonging to 44 groups, including three companies in IT-focused groups such as Kakao and Nexon. Groups with high second-generation shareholding ratios include Hankook Tire (30.7%), Bando Holdings (12.1%), DB (10.8%), Dongwon (9.8%), and Joongheung Construction (7.8%).

Companies subject to the private interest appropriation regulation, where controlling families hold 30% or more shares (20% or more for unlisted companies), number 265 companies in 57 groups (out of 2,421 companies in 60 groups with controlling families), accounting for 10.9%, an increase of 55 companies from last year (210 companies in 50 groups).

The average shareholding ratio of controlling families in companies subject to private interest appropriation regulation was 58.2%, up 1.6 percentage points from last year (56.6%). The top three groups with many companies subject to this regulation are SM (16 companies), Hyosung (15 companies), and Joongang (14 companies).

A Fair Trade Commission official said, "The structure where controlling families dominate the entire corporate group by holding less than 4% of shares and utilizing investments in affiliated companies continues. While the possibility of controlling families expanding their control through loopholes still exists, the need for monitoring newly designated groups and IT-focused groups is also high."

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