Switch to Holding Company

Samsung Electronics will present a plan to transit itself into a holding company around in May, if early.
Samsung Electronics will present a plan to transit itself into a holding company around in May, if early.

 

Samsung Electronics will present a plan to transit itself into a holding company around in May, if early, in spite of the detention and trial of vice chairman Lee Jae-yong. Such a move is interpreted as an intension to fill in the leadership vacuum as quickly as possible, which has been left due to the absence of the control towers of the group’s de facto head and the Future Strategy Office. Along with the transition plan, a large amount of the personnel realignment of top executives and reorganization is expected to be completed, which has been put off so far.

Lee Sang-hoon, chief financial officer at Samsung Electronics, said at a press conference, "We will review it without delay and announce it as scheduled because we made a promise to shareholders regardless of the group-related issues," when he was asked about the company's process of reviewing the transition to a holding company structure. He added that the company is considering a conference call for the announcement since it is realistically hard to hold a shareholders meeting by gathering all the shareholders around the world.

Samsung announced on November 29 last year that it was reviewing how to optimize the structure of the company, including possible switch to a holding company structure, adding the review would take six months at minimum. Accordingly, Samsung Electronics would unveil results of the review at the end of May if early.

The November announcement by the South Korea’s electronics giant came after U.S. hedge fund Elliott Management urged the company to split itself into a holding company and an operating company to boost shareholder returns.

Vice chairman Lee, who has denied any wrongdoings, was indicted earlier this month over various charges, including paying bribes worth 43 billion won (US$37 million) to Choi Soon-sil, the longtime friend of ousted former President Park Geun-hye.

The bribes were allegedly paid to Choi to help Samsung move ahead with a succession plan, including a controversial merger of its two affiliates, Samsung C&T and Cheil Industries, in 2015, according to the prosecutors

 

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