Change of Representative Owner in Major Companies... Fair Trade Commission to Designate Identical Person for Large Business Groups on the 30th

About 10 Corporate Groups Including Hyundai Motor and Hyosung Apply for 'Same Person Change'
Ranking of 2nd and 3rd Largest Conglomerates 'Hyundai Motor' and 'SK' May Change

[Sejong=Asia Economy Reporter Moon Chaeseok] The Fair Trade Commission (FTC) will designate and announce the same person (head) representing conglomerates with total assets of 5 trillion won or more on the 30th.

According to the government on the 11th, the FTC, which closed the submission of data for designating conglomerates on the 9th, is deliberating on who to designate as the same person for each group. This year, the heads of Hyundai Motor (Chung Euisun) and Hyosung (Cho Hyunjoon) will change, and there is also interest in whether the faces of LS and Daelim groups will change. The FTC has tentatively concluded to change the same persons of Hyundai Motor (Chung Mongkoo → Chung Euisun) and Hyosung (Cho Seokrae → Cho Hyunjoon).

The same person is responsible for the data submitted to the FTC, including company status, shareholder and executive composition, and ownership status of stocks by related parties. If false data submission is detected, the same person representing the company may be prosecuted. KCC Chairman Chung Mongjin was reported to the prosecution in February for omitting companies owned under borrowed names and personal companies of maternal relatives from the FTC report data.

According to government sources, about 10 conglomerates, including Hyundai Motor and Hyosung, have applied to the FTC to change their heads. Notably, LS and Daelim are groups where management succession has become visible, so new same persons may emerge. The current same person of LS Group is Koo Jahong, chairman of LS Nikko Copper, but the group chairman position is held by his cousin Koo Ja-yeol. Chairman Koo Ja-yeol is also the largest shareholder of LS.

In Daelim Group, the same person is honorary chairman Lee Jun-yong, but 52.3% of Daelim (formerly Daelim Corporation) shares are held by his son, Chairman Lee Hae-wook. In Hyundai Heavy Industries Group, the same person is Chung Mongjun, chairman of the Asan Foundation, and management succession is underway to his son Chung Ki-sun, vice president of Hyundai Heavy Industries.

In Kolon Group, with former chairman Lee Woong-yeol stepping down, there is interest in whether his eldest son, Vice President Lee Gyu-ho, will become the head.

The FTC has taken a conservative stance, changing the head only when the same person dies or cannot indirectly control the company due to illness, as in Samsung and Lotte. Although the chairmen of Daelim and Hyosung changed in 2019 and 2017 respectively, the FTC has not changed the same persons of these groups so far. This is because even if the chairman position is passed to the son and the predecessor steps down, the current same person can indirectly exercise management rights and act as a 'retired king.'

However, since the FTC has concluded to change the same persons of Hyundai Motor and Hyosung by examining 'who actually controls the group,' it is highly likely that generational changes of heads will gradually occur in other groups as well.

The business ranking is solidified as 'Samsung, Hyundai Motor, SK, LG,' but there is interest in whether the rankings of Hyundai Motor, ranked second, and SK, ranked third, will be reversed due to mergers and acquisitions (M&A) in the semiconductor sector. As of last year, Hyundai Motor's total assets were 234.7 trillion won, and SK's were 225.5 trillion won, with Hyundai Motor having 9.2 trillion won more.

Also, Coupang's total assets have exceeded 5 trillion won, so it will be included in the disclosure target conglomerates (large business groups) starting this year. After inclusion, it will be obligated to disclose large-scale internal transactions and important matters of unlisted companies. Conversely, Korea Investment Financial, which operates Korea Investment & Securities, will be excluded from the large business groups starting next year. This is a measure following the FTC's plan to amend the enforcement decree within this year to generally exclude private equity fund (PEF) specialized groups from the designation of disclosure target conglomerates.