Samsung shareholders meeting
Electronics giant delays holding company plan
Samsung Electronics will take more time for the firm to convert to a holding company, the company said Friday, calling the move “tough” due to possible risks.
The Seoul-based handset giant said at a shareholders’ meeting that its plan to finalize the transition by May has potential problems in areas such as taxation.
“Negative effects exist in our plan to become a holding company, so it looks tough for us to push ahead with it at the moment,” Samsung Electronics Vice Chairman Kwon Oh-hyun told investors. Kwon, also serving as chairman of the board of directors, did not elaborate.
“The business restructuring is a very critical decision-making process both for Samsung and its shareholders,” he said. Kwon said the company is still reviewing legal steps in detail and pledged to tell shareholders the results soon.
The company made the plan public in late November as part of its updated shareholder return policy. Samsung believes the transition to a holding firm will help it win more investor confidence, as it is expected to improve the transparency of the firm’s present ownership structure.
But the plan faces a major obstacle with Samsung Group’s heir apparent Lee Jae-yong behind bars since mid-February for the firm’s alleged part in the nation’s worst political scandal involving former President Park Geun-hye and her longtime confidant Choi Soon-sil.
Lee is suspected of committing multiple offenses — including bribery and embezzlement — as the firm had allegedly offered 40 billion won ($35.6 million) to the Mir and K-Sports foundations controlled by Choi in exchange for special favors. Amid the snowballing political scandal, Park was ousted from the presidency earlier this month.
At the shareholders’ meeting, the company said it would finish establishing what it calls the “governance committee” by the end of next month as part of efforts to improve its management structure.
“The committee will consist of all non-executive directors,” Kwon said.
“We have so far tried to employ foreign external directors having experience as global company chiefs.”
But internal and external uncertainty has put a brake on the plan to some extent, he added. “We will, however, continue to look for qualified directors,” Kwon said.
However, the ongoing leadership vacuum and the delayed corporate restructuring will have limited impact on the firm’s profitability, according to experts.
“The firm’s new shareholder policies — including quarterly dividends and its buyback plan — are expected to raise the firm’s valuation,” Kim Dong-won, a KB Securities analyst, said.
The delayed transition plan also will not have a massive influence on the firm’s stock value, as the company’s business outlook is upbeat because of the continuing boom in the semiconductor industry and high expectations for its coming flagship Galaxy S8 smartphone. Samsung Electronics closed at 2.075 million won, down 0.72 percent, Friday.