Korea Employers Federation General Assembly D-1, Return of 4 Major Groups Imminent... Samsung Likely to Hold Board Meeting to Decide

All Four Major Groups Must Declare 'Withdrawal from Hankyungyeon' or
Automatic Transfer of Membership List After Absorption into Hankyunghyeop
Unlikely to Announce "Withdrawal" a Day Before the General Meeting

The Federation of Korean Industries (FKI) will make a fresh start as the Korea Economic Association (KEA) on the 22nd. On the day before the FKI's extraordinary general meeting, the four major groups (Samsung, SK, Hyundai Motor, LG) are expected to complete their board reports and preparations to join KEA.

Samsung's five affiliates (Samsung Electronics, Samsung SDI, Samsung Life Insurance, Samsung Fire & Marine Insurance, Samsung Securities), members of the Korea Economic Research Institute (KERI) under FKI, will hold an extraordinary board meeting on the same day to report on matters related to FKI membership. Since Samsung's independent legal oversight and advisory body, the Compliance Committee, did not recommend 'withdrawing from KERI and opposing rejoining FKI,' the only hurdle is passing the board meeting before the FKI extraordinary general meeting. SK Group is also reported to have completed reporting on the issue of rejoining FKI to the boards of its related affiliates.

Since the four major groups are already members of KERI, joining FKI is a matter of reporting rather than board resolution. If the boards of the 16 affiliates belonging to KERI under the four major groups do not declare withdrawal from KERI before the FKI extraordinary general meeting, the membership list will be transferred to KEA. FKI has already changed its name to KEA and proceeded with the absorption and integration of KERI.

Yeouido Federation of Korean Industries Building in Seoul. [Photo by Federation of Korean Industries]

It is also unlikely that Samsung's five affiliates, SK (SK Inc., SK Innovation, SK Telecom, SK Networks), Hyundai Motor (Hyundai Motor, Kia, Hyundai Construction, Hyundai Mobis, Hyundai Steel), and LG (LG Corp., LG Electronics) affiliates will declare "withdrawal from KERI" ahead of the FKI extraordinary general meeting scheduled for the 22nd. An FKI official stated, "If the affiliates of the four major groups do not declare withdrawal from KERI before the general meeting, the agenda to transfer the membership list is expected to be approved at the FKI extraordinary general meeting."

The business community views that with FKI's fresh start as KEA, the four major groups remaining as KERI members have no choice but to naturally become KEA members. The atmosphere has formed that the return of the four major groups to FKI is virtually confirmed, as Samsung's Compliance Committee held two unscheduled extraordinary meetings on the 18th and did not separately recommend opposing rejoining FKI. However, Lee Chan-hee, chairman of Samsung's Compliance Committee, stated that "whether to join is ultimately a decision for the related affiliates' boards and management," with the premise of immediate withdrawal if collusion between politics and business occurs.

Even if the four major groups join KEA, there is a view that active participation immediately may be difficult. In particular, in decision-making processes related to 'financial matters' such as fund contributions and membership fee payments, the four major groups are expected to undergo thorough verification through board and internal control body (in Samsung's case, the Compliance Committee) approval procedures. They are cautious about indiscriminately spending money on FKI projects and becoming embroiled in controversies over collusion between politics and business. Before the four major groups withdrew in 2015, FKI membership fees were about 50 billion KRW, with more than half paid by the four major groups. At that time, Samsung paid about 10 billion KRW, and SK, Hyundai Motor, and LG each paid about 5 billion KRW.

Meanwhile, at the extraordinary general meeting, FKI plans to pass agendas including the institutional change to KEA, the absorption and integration of KERI, and the appointment of Ryu Jin, chairman of the Poongsan Group, as the 39th chairman.

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