Founder Families Control Business Groups with a Mere 3.6% Stake

The founder families of Korea’s major business groups have a 3.6 percent stake in group affiliates on average.

The Korea Fair Trade Commission released data on the shareholding status of 64 business groups on Aug. 31. The 64 groups, which has 2,292 affiliated companies, were subject to mandatory public disclosure as of May 1 this year and both their internal shareholding ratio and their founder families’ shareholding ratio edged down last year.

Specifically, the 64 groups include 55 run by owners and the 55 groups’ internal shareholding ratio fell to 57 percent from 57.5 percent recorded by 51 such groups in the previous year. The families’ shareholding ratio fell 0.3 percentage point to 3.6 percent, which is divided into 1.7 percent of owners and 1.9 percent of their relatives. The shareholding ratio of subsidiaries fell 0.2 percentage point to 50.7 percent.

The 55 groups had a total of 2,114 subsidiaries, consisting of 419 where the owner families had stakes and 1,695 without owner family stakes. Those families’ average subsidiary ownership was 10.4 percent.

Owners had stakes in 235 subsidiaries and the average ownership was 10 percent. Their sons and daughters posted an average of 4.9 percent in 184 subsidiaries and their relatives recorded an average of 4.9 percent in 251 subsidiaries.

A total of 210 out of the 2,114 subsidiaries of the 55 groups were subject to regulations on private benefit taking. The regulations, which were applied to 47 groups’ 219 subsidiaries in the previous year, target every listed company in which an owner family’s stake is 30 percent or more and every unlisted company in which the ratio is 20 percent or more. Last year, the regulatory blind spot was found in 388 companies of 51 groups. The numbers rose from 376 and 48, respectively.