Antitrust watchdog says Samsung free of cross-shareholding structure

SEOUL (The Korea Herald/ANN) – South Korea’s largest companies including Samsung have improved transparency in their corporate governance by cutting the links of cross-shareholding structures often blamed for strengthening control of the founders’ descendants over the conglomerates, the antitrust watchdog said last Friday.

last Friday, the Fair Trade Commission announced 15 companies – out of the nation’s largest 60 firms – that have voluntarily made efforts in either improving ownership structure or corporate governance, or easing cross-shareholdings.

The 15 companies are Samsung, LG, Hyundai, SK, Lotte, GS, Hanwha, Hyundai Heavy Industries, LS, Daelim, Hyundai Department Store, Hyosung, TK Corp, SM and HDC.

The top regulator viewed Samsung, the nation’s largest conglomerate, as having completely resolved issues with its cross-shareholding structure this year by removing the remaining seven links.

In April this year, Samsung SDI sold off its stake in Samsung C&T, removing three links. In September, Samsung Electro-mechanics sold its stake in Samsung C&T, addressing the four remaining links.

Alongside the group’s efforts to deal with its complex ownership structure, the FTC also positively viewed its moves to improve corporate governance.

In March, Samsung Electronics and Samsung C&T formed “a committee to recommend outside directors”, which comprised all outside directors. It is designed to strengthen the independence and rights of the outside directors.

The two firms also decided to separate the positions of chairman of the board of directors and CEO, with the aim of holding each other in check and having a balanced structure.

In March, President Lee Sang-hoon was appointed as chairman of the board of directors, replacing Kwon Oh-hyun, who was formerly CEO as well as chairman of the board of directors of Samsung Electronics.

The FTC also positively viewed efforts made by other top conglomerates.

South Korean auto giant Hyundai Motor Group has made efforts for improving corporate governance, even though it is still working on a governance reform plan, the FTC said.

In March, Hyundai Glovis appointed one outside director, who was recommended from its shareholders as part of its efforts to increase the protection of shareholders rights. The largest shareholder of Hyundai Glovis is Hyundai Motor Vice Chairman Chung Eui-sun.