Lee Myunghee Donates Entire Stake
Final Task for Group Separation: Adjusting SSG.com Shares
SSG.com Stake Must Be Reduced Below 10%
On April 30, Lee Myunghee, Chairwoman of Shinsegae Group, announced that she would donate her entire stake in Shinsegae to her daughter, Chung Yookyung, Chairman of Shinsegae.
According to the Financial Supervisory Service's electronic disclosure system on the same day, Chairwoman Lee Myunghee plans to transfer her 10.21% stake in Shinsegae (984,518 shares) to Chairman Chung Yookyung by way of donation on May 30. Once the donation is completed, Chairman Chung's stake in Shinsegae will increase from 18.95% to 29.16% (2,812,039 shares).
The gift tax is expected to be calculated in detail two months after the date of the donation. According to the Inheritance and Gift Tax Act, the valuation of the shares is determined based on the average closing price over the two months before and after the donation date. It would be advantageous for Chairman Chung if the share price does not rise significantly, as this would lower the tax burden.
With this donation, the separation of management between Chung Yongjin, Chairman of Shinsegae Group, and Chung Yookyung, Chairman of Shinsegae, is entering its final stage. Previously, Chairwoman Lee sold her entire stake in Emart to Chairman Chung Yongjin through an after-hours block trade rather than a donation. Chairman Chung Yongjin purchased 2,787,582 shares of Emart common stock (10%) previously held by Lee at 76,800 won per share, for a total of 214.1 billion won.
By disposing of all her Emart shares, Chairwoman Lee has partially resolved the mutual investment restriction requirement (3% for listed companies, 10% for unlisted companies) for independent management by relatives under the Fair Trade Act.
The remaining task for complete business group separation is the adjustment of SSG.com shareholdings. SSG.com is an e-commerce affiliate jointly invested in by Shinsegae and Emart. To meet the independent management criteria for relatives, either Shinsegae or Emart must reduce its stake in SSG.com to below 10%. Given that Emart is strengthening its e-commerce business, including fresh food delivery, through SSG.com, it is more likely that Shinsegae will reduce its stake. Currently, Emart holds a 45.6% stake in SSG.com, while Shinsegae owns 24.4%.
A Shinsegae representative stated, "This is to solidify independent management and responsible management in each sector," adding, "After the adjustment of SSG.com shares, an application for independent management by relatives may be submitted to the Fair Trade Commission."
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