Menu
Samsung ownership structure criticised as unsustainable

Samsung ownership structure criticised as unsustainable

The structure has enabled the family of Samsung heir Jay Y. Lee to retain control of the companies in the conglomerate

Samsung Group chief, Jay Y. Lee, is surrounded by media as he arrives at the Seoul Central District Court in Seoul, South Korea, January 18, 2017. REUTERS/Kim Hong-Ji/File Photo

Samsung Group chief, Jay Y. Lee, is surrounded by media as he arrives at the Seoul Central District Court in Seoul, South Korea, January 18, 2017. REUTERS/Kim Hong-Ji/File Photo

South Korea's biggest conglomerate Samsung Group has come under fresh criticism about its ownership structure, with the country's antitrust chief saying it was unsustainable.

Korea Fair Trade Commission chief Kim Sang-jo took aim at the group's circular shareholdings between companies such as Samsung C&T, Samsung Life Insurance, and Samsung Electronics.

The structure has enabled the family of Samsung heir Jay Y. Lee to retain control of the companies in the conglomerate, especially crown jewel Samsung Electronics, with minimum investments, critics have said.

"The clear fact is, the current ownership and control structure of Samsung Group, which goes from Vice Chairman Jay Y. Lee to Samsung C&T to Samsung Life Insurance to Samsung Electronics, is not sustainable," Kim told reporters on the sidelines of a meeting with business leaders.

Samsung Group's complex ownership structure has come for criticism earlier too, most notably from US activist hedge fund Elliott Management, which proposed as a solution in 2016 that Samsung Electronics split itself into two.

Samsung Electronics rejected that proposal but accepted part of the fund's proposals by announcing plans to cancel its existing treasury shares worth over US$35 billion by 2018.

Fair Trade Commission's Kim said he urges Jay Y. Lee to make a decision concerning the ownership structure, adding that Samsung Electronics Vice Chairman Yoon Boo-keun, who attended the meeting, had told him it will be considered.

A Samsung Electronics spokesman did not have an immediate comment.

Others have also questioned the group's ownership structure recently.

The country's top financial regulator said on Wednesday that Samsung Life Insurance must consider ways to lessen the risk of having too much of its assets concentrated in one place, including selling some or all of Samsung Life's stake in Samsung Electronics.

"Lessening the risk of concentrated assets is key to securing financial stability, which is what we are interested in," said Choi Jong-ku, Chairman of the Financial Services Commission.

"If there are any concerns about retaining management control (of Samsung Electronics) we are saying, look for ways to keep it while lessening the risk."

Samsung Life Insurance is at the heart of a cross-shareholding structure in which it owns about eight per cent of Samsung Electronics, which has a market value of about US$340 billion, according to Thomson Reuters data.

(Reporting by Heekyong Yang and Yuna Park; Additional reporting and writing by Joyce Lee; Editing by Muralikumar Anantharaman)


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags samsungJay Y. Lee

Featured

Slideshows

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA

Reseller News has honoured the leading female front runners of the New Zealand ICT industry at the 2019 Women in ICT Awards (WIICTA) in Auckland. The awards recognised standout individuals across six categories, spanning Entrepreneur, Rising Star, Shining Star, Community, Technical and Achievement. Photos by Gino Demeer.

Leading female front runners of the Kiwi ICT industry honoured at 2019 WIICTA
Reseller News kicks off awards season in 2019 with Judges' Lunch

Reseller News kicks off awards season in 2019 with Judges' Lunch

The 2019 Reseller News Innovation Awards has kicked off with the Judges Lunch in Auckland with 70 judges in the voting panel. The awards will reflect the changing dynamics of the channel, recognising excellence across customer value and innovation - spanning start-ups, partners, distributors and vendors. Photos by Christine Wong.

Reseller News kicks off awards season in 2019 with Judges' Lunch
Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomes industry figures for 2019 Hall of Fame lunch

Reseller News welcomed 2018 inductees - Chris Simpson, Kendra Ross and Phill Patton - to the third running of the Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed the changing landscape of the technology industry in New Zealand, while outlining ways to attract a new breed of players to the ecosystem. Photos by Gino Demeer.

Reseller News welcomes industry figures for 2019 Hall of Fame lunch
Show Comments