Hyosung to Operate with Two Holding Companies... Cho Hyun-joon and Cho Hyun-sang Proceed with Affiliate Separation Process

Eldest Son Cho Hyun-joon CEO of Hyosung Corporation
Leading T&C, Heavy Industries, Chemicals, etc.
Third Son Cho Hyun-sang CEO of HS Hyosung
Overseeing Advanced Materials, Toyota, and other subsidiaries
Strengthening management rights through joint shareholding reorganization

Hyosung Group, ranked 33rd in the business world, has finalized its transition to a ‘two holding company’ system. Chairman Cho Hyun-joon and Vice Chairman Cho Hyun-sang will each take charge of a holding company, effectively initiating the process of affiliate separation for Hyosung.

Hyosung Co., Ltd. held an extraordinary general meeting of shareholders on the 14th at the Hyosung Building in Mapo-gu, Seoul, where the proposal for a company split was passed by a special resolution of the shareholders. Accordingly, as resolved by the board of directors in February, the company will be reorganized into two holding companies?newly established HS Hyosung and the existing holding company Hyosung Co., Ltd.?effective July 1 of this year. This marks six years since the transition to a holding company system in 2018. The re-listing of HS Hyosung is scheduled for July 29. The split ratio is based on net asset book value, with Hyosung Co., Ltd. at 0.82 and HS Hyosung at 0.18.

Chairman Hyun-Joon Cho (left) and Vice Chairman Hyun-Sang Cho of Hyosung
[Photo by Hyosung]

Kim Kyu-young, Vice Chairman and CEO of Hyosung Co., Ltd., who chaired the general meeting, stated, "The holding company split will enable each affiliate to strengthen expertise and respond quickly to market changes through a streamlined decision-making system, while enhancing brand image. The newly established holding company HS Hyosung will grow into a global top-tier company through various new businesses such as mobility and eco-friendly materials, as well as mergers and acquisitions (M&A)."

Eldest son Chairman Cho Hyun-joon will serve as CEO of Hyosung Co., Ltd., leading T&C, Heavy Industries, Chemicals, T&S, and ITX. Third son Vice Chairman Cho Hyun-sang will be CEO of HS Hyosung, overseeing Advanced Materials, Information Systems, Toyota, Gwangju Ilbo, Hyosung Holdings USA, and the Vietnam logistics corporation.

One of the expected benefits of the split cited by Hyosung is ‘strengthening management control through affiliate separation.’ Park Jong-do, Senior Researcher at Korea Ratings, said, "From the moment the human split was decided, the integration between the group under Hyosung Co., Ltd. and the group under the newly established Hyosung holding company began to weaken. The affiliate separation process will accelerate after the split."

Hyosung Group Corporate Governance Before and After the Split

With affiliate separation, Chairman Cho Hyun-joon and Vice Chairman Cho Hyun-sang will also need to reorganize their jointly held affiliate shares. Under the Fair Trade Act, large business groups must reduce cross-shareholdings to below 3% among listed companies to proceed with ‘family affiliate separation.’

The two currently jointly hold shares in Hyosung Chemical, Heavy Industries, and T&S. Vice Chairman Cho Hyun-sang currently holds more than 3% in Hyosung Chemical (6.16%) and the unlisted company Hyosung T&S (14.13%). Regarding Hyosung Heavy Industries, he has consecutively sold shares from April to last month, reducing his stake from 4.88% to 0.65%.

Regarding holding company shares, a share swap plan has been suggested. Chairman Cho would transfer approximately 33% of HS Hyosung shares he holds to Vice Chairman Cho, and Vice Chairman Cho would transfer his shares in Hyosung Co., Ltd. to Chairman Cho. As of last month, Chairman Cho is the largest shareholder of Hyosung Co., Ltd. with 33.03%, and Vice Chairman Cho is the second-largest shareholder with 22.05%.

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