Korean Fair Trade Commission Report Attacks Conglomerate Ownership Structure
The Korean Fair Trade Commission has noted that the heads of leading family-run conglomerates continue to control their empires with less than 2 percent ownership stakes. The government commission calls the situation a "severely distorted ownership structure."
The Fair Trade Commission said in a recent announcement that each chairperson of the country's 36 chaebol with assets in excess of $1.91 billion owned only an average 1.95 percent of the total shares. In addition family members held 2.66 percent.
This was supplanted by 41.71 percent control exercised by the owner's family through a complicated arrangement of cross-shareholdings of affiliates. An additional 2.76 percent of stocks were held by company executives, nonprofit organizations and treasury shares that are "friendly" to the chairpersons and their kin.
I find it amazing that the report said chaebol owners and their families did not own a single share in 469 companies out of 781 affiliates listed as part of the big 36, but controlled them indirectly through affiliates.
This distortion, which translates to so-called owners having no direct stake in 60.05 percent of their affiliates, goes up to 64.84 percent for the country's top 13 business groups with total assets exceeding 5 trillion won.
Among 347 companies counted as part of the top 13 conglomerates, owners and their families own no shares in 225 firms. The owners' stakes drop to 1.48 percent, with the combined holdings of extended family members only reaching 3.41 percent of all stocks issued.
What stands out under the present system, in which a handful of people control large enterprises with very little actual holdings. For example, Samsung Group Chairman Lee Kun-hee owns a 0.44-percent stake in the conglomerate, LG Group Chairman Koo Bon-moo holds 0.83 percent, Hyundai Motors Chairman Chung Mong-koo owns 2.85 percent, SK Group Chairman Chey Tae-won retains 0.73 percent and Hanjin Group Chairman Cho Yang-ho was found to own 2.92 percent.
The Fair Trade Commission said in a recent announcement that each chairperson of the country's 36 chaebol with assets in excess of $1.91 billion owned only an average 1.95 percent of the total shares. In addition family members held 2.66 percent.
This was supplanted by 41.71 percent control exercised by the owner's family through a complicated arrangement of cross-shareholdings of affiliates. An additional 2.76 percent of stocks were held by company executives, nonprofit organizations and treasury shares that are "friendly" to the chairpersons and their kin.
I find it amazing that the report said chaebol owners and their families did not own a single share in 469 companies out of 781 affiliates listed as part of the big 36, but controlled them indirectly through affiliates.
This distortion, which translates to so-called owners having no direct stake in 60.05 percent of their affiliates, goes up to 64.84 percent for the country's top 13 business groups with total assets exceeding 5 trillion won.
Among 347 companies counted as part of the top 13 conglomerates, owners and their families own no shares in 225 firms. The owners' stakes drop to 1.48 percent, with the combined holdings of extended family members only reaching 3.41 percent of all stocks issued.
What stands out under the present system, in which a handful of people control large enterprises with very little actual holdings. For example, Samsung Group Chairman Lee Kun-hee owns a 0.44-percent stake in the conglomerate, LG Group Chairman Koo Bon-moo holds 0.83 percent, Hyundai Motors Chairman Chung Mong-koo owns 2.85 percent, SK Group Chairman Chey Tae-won retains 0.73 percent and Hanjin Group Chairman Cho Yang-ho was found to own 2.92 percent.
Comments
Post a Comment