FSC Tells Former Chairman to Sell Stake in Goryo Savings Bank
The governance structure of Taekwang Group is being shaken as the Financial Services Commission (FSC) told former Taekwang Group chairman Lee Ho-jin, who is the largest shareholder in Goryo Savings Bank with a shareholding of 30.5 percent, to sell his shares.
The FSC told him in December last year to reduce his stake to less than 10 percent by selling Goryo Savings Bank shares. This is because he has been sentenced to three years in prison for embezzlement and cannot be a major shareholder for that reason.
The former chairman filed for an injunction and filed a suit. The injunction application has been rejected and the litigation is ongoing. If he loses the case and sells the shares, his nephew Lee Won-joon will become the largest shareholder with a shareholding of 23.2 percent.
The FSC did not tell the former chairman to sell his shares in Heungkuk Life Insurance and Heungkuk Securities, where his shareholdings are 56.8 percent and 68.75 percent, respectively. However, the Korea Fair Trade Commission recently accused him of subsidiary-based profiteering and shareholder document forgery and his major shareholder eligibility may be called into question down the road in both Heungkuk Life Insurance and Heungkuk Securities.
If he is no longer the largest shareholder in the life insurance company, the governance structure of the financial arm of Taekwang Group will face significant risks. This is because the former chairman is indirectly controlling financial subsidiaries such as Heungkuk Fire & Marine Insurance and Yegaram Savings Bank via the life insurance company.