Samsung Group Cuts 4 Cross-shareholding Loops through Corporate Governance Reorganization

Studies have shown that the Samsung Group, which is accelerates its third-generation succession process, has dismantled four cross-shareholding loops by restructuring its corporate governance.

According to a report titled “The 2015 Large Business Groups’ Current Status of Holding of Stocks” revealed by the Korea Fair Trade Commission on June 30, the number of cross-shareholding loops in the 11 large business groups decreased from 484 to 459 as of April 1, after the new policy that prohibits cross-shareholding was enacted in July last year. Simply speaking, cross-shareholding is a measure for conglomerate groups to increase subsidiaries and control them.

Currently undergoing restructuring, Hyundai Group reduced the greatest number of cross-shareholding loops. By disposing of its 47.67 percent stake in Hyundai Logistics held by Hyundai Merchant Marine, the group cut nine loops. As KT got out of two of its loops and Kumho Asiana and Halla Group one each as of April 16, there are only four large business groups with cross-shareholding loops remaining.

Samsung Group, which is improving its corporate governance structure, decreased the number from 14 to 10. By floating Cheil Industries, which is in the center of cross-shareholding, on the stock market last year, the group sold off a 5 percent stake held by Samsung Card, and some of the cross-shareholding loops with its financial subsidiaries disappeared. 

Hanjin, which changed its system to a holding company, ended seven out of its eight cross-shareholding loops. The group needs to do away with the remaining one by the end of July.

Meanwhile, Lotte Group reduced the figure by only one, even though it has 419 out of the total 459 cross-shareholding loops, accounting for 90.6 percent.