Ham Young-jun, Chairman of Ottogi, Sells Part of His Shares in Affiliates at a 'High Price'

[Asia Economy Reporter Jang Hyowon] Ham Young-jun, chairman of Ottogi, sold part of his shares to an affiliate at a price higher than the market price. Since the transferred shares are cross-held shares, they no longer have voting rights, so there is expected to be little change in Chairman Ham's control.

[Graphic·Analysis] = Im Hee-jin

According to the Financial Supervisory Service's electronic disclosure on the 5th, Ham Young-jun, chairman of Ottogi, sold 73,000 shares (1.99%) of Ottogi, which he held, to Ottogi affiliate Ottogi Ramyeon Holdings through an off-hours trading method on the 28th of last month. Chairman Ham's shareholding ratio in Ottogi decreased from 25.73% to 23.74%.

The selling price per share was 526,660 KRW, totaling 38.4 billion KRW. The reason for the share sale was to pay inheritance tax. Chairman Ham Young-jun has been paying approximately 150 billion KRW in inheritance tax over five years since 2017 for the shares inherited from the late Ham Tae-ho, honorary chairman of Ottogi. This is the final inheritance tax payment.

Ottogi Ramyeon Holdings, which purchased Chairman Ham's shares, is a company primarily engaged in the manufacturing and sales of ramen, cooking oil, and premixes. Last year, the existing Ottogi Ramyeon underwent a physical division, resulting in the structure Ottogi Ramyeon Holdings → Ottogi Ramyeon. Currently, based on consolidated standards, the largest shareholder is Ottogi (37.7%), and the second-largest shareholder is Chairman Ham Young-jun (24.7%).

The price per share of Ottogi shares sold by Chairman Ham to Ottogi Ramyeon Holdings, 526,660 KRW, is 17.2% higher than Ottogi's closing price of 449,500 KRW on the sale date, the 28th of last month. If the sale had been made at the closing price, Chairman Ham would have secured 32.8 billion KRW, which is 5.6 billion KRW less than the current amount.

Ottogi explained that Chairman Ham's Ottogi shares were sold at a price higher than the closing price in accordance with the law. According to Article 89 of the Corporate Tax Act, when a "de facto transfer of management rights is involved," shares can be traded at up to 20% above the closing price. A de facto transfer of management rights occurs when "the shareholding ratio changes by more than 1% in transactions between major shareholders, etc."

Since the shares sold by Chairman Ham exceed 1%, it was interpreted as involving a de facto transfer of management rights. Previously, on March 25 of last year, Chairman Ham also transferred 58,200 Ottogi shares (1.58%) to Ottogi Ramyeon Holdings through off-hours trading. At that time, the selling price was 685,200 KRW per share, which was 20% higher than the closing price.

However, it is analyzed that Chairman Ham's control over Ottogi will not change significantly. Ottogi Ramyeon Holdings will hold 6.82% of Ottogi shares after this transaction. Currently, the largest shareholder of Ottogi Ramyeon Holdings is Ottogi. Ottogi and Ottogi Ramyeon Holdings are affiliates, and the Ottogi shares held by Ottogi Ramyeon Holdings are cross-held shares.

Cross-held shares do not have voting rights. Ottogi Ramyeon Holdings purchased Ottogi shares from Chairman Ham by paying a management premium for shares without voting rights.

Even if Ottogi merges with Ottogi Ramyeon Holdings in the future, it is analyzed that the voting rights of the Ottogi shares held will not be restored. If the two companies merge, the Ottogi shares held by Ottogi Ramyeon Holdings will become treasury shares of Ottogi.

Regarding this, an Ottogi official stated, "The Ottogi shares held by Ottogi Ramyeon Holdings are included in cross-held shares and have no voting rights," but added, "Since the share price of Chairman Ham was set according to the Corporate Tax Act and the Inheritance and Gift Tax Act, there is no problem."

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