The Korea Corporate Governance Forum stated on the 23rd that an explanation at the Samsung Group level is needed regarding the recent spin-off of Samsung Biologics.
Samsung Biologics has decided to retain only its contract development and manufacturing organization (CDMO) division within the company, while separating its subsidiary Bioepis, which is responsible for biosimilars and new drug development, by placing it under the holding company Bioepis Holdings. Samsung Biologics explained that this decision was made in consideration of potential conflicts of interest between the two businesses.
The Governance Forum said that while it understands the explanation regarding concerns over conflicts of interest, it has been busy speculating, considering various scenarios, and verifying what the spin-off means for the overall governance restructuring of the Samsung Group, as well as what advantages or disadvantages it may bring to other group companies such as Chairman Lee Jae-yong, Samsung C&T, and Samsung Electronics.
The Forum added, "Samsung Biologics' response was that this is not a group-level decision," but also analyzed, "This decision is a significant one, as it involves a company split that requires a special resolution at the shareholders' meeting, and as the newly established Epys Holdings is relisted, it will naturally result in the listing of Epys, its wholly owned subsidiary."
The Governance Forum pointed out, "It is unreasonable to believe that this decision was made without prior consultation with Samsung C&T, which holds a 43% stake and is the de facto holding company of the Samsung Group, and with Samsung Electronics, which holds a 31% stake and is the largest shareholder." The Forum added, "At the very least, the interests of each affiliate within the group must have been reviewed."
The Forum maintains that such group-level decision-making should be disclosed transparently, but emphasized that there is currently no legal basis in Korea requiring such disclosures.
The Forum explained, "If it is publicly disclosed that the holding company or the top-tier company, which is actually responsible for the final decision, made the decision, it is difficult to provide a legal basis for such authority. Therefore, under the principles of commercial law, each affiliate can only disclose that it made its own decision. However, in reality, the directors of each affiliate, who bear the legal responsibility, have no opportunity to consider the interests of their own general shareholders."
The Forum further emphasized, "To fundamentally resolve this issue, it is necessary to accurately reflect the existing reality in the law," and added, "It would be desirable to resume social discussions on the enactment of group-wide corporate law, such as Germany's Konzernrecht, which had been suspended for some time, including discussions on aligning the decision-making entity with responsibility within corporate groups."
The Forum stated, "It is necessary to clearly identify the entity making 'group-level decisions' and to transparently disclose group decision-making," and added, "In that process, legislation is needed to establish methods for protecting general shareholders or creditors who have interests at the individual company level, and to assign clear responsibility to the relevant entity."
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