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| / Reuters |
The transfer of managerial control of LG Group, one of South Korea's largest family-run conglomerates, from the late chief to his heir could result in roughly 1 trillion won ($924 million) worth of inheritance-related tax being paid, market watchers said Sunday.
Observers said that the electronics- and chemical-centered business group long ago opted for a holding company arrangement with a simplified ownership structure. This makes the transfer of power from late Group Chairman Koo Bon-moo to Koo Kwang-mo, the tycoon's adopted son, relatively straightforward.
They said that within LG Corp., which acts as the holding firm, the deceased tycoon held an 11.28 percent stake, making him the No. 1 shareholder, followed by the 7.72 percent stake controlled by his younger brother Koo Bon-joon, who has been effectively running the company in recent years as a caretaker.
The likely successor, before the chairman's death, had 6.24 percent stake in the company. He was very recently named to the company's board, in what is widely seen as a hasty move to lay the groundwork for the transfer power to the next generation.
The chairman underwent several surgeries in 2017 and this year and was recently admitted to Seoul National University Hospital after his health took a turn for the worse. He had not been able to oversee the everyday running of LG's diverse operations and firmly told family members that he would not accept treatment that would prolong his life.
"If the chairman left his shares to his 40-year-old son, who holds a managing director position at present, Bon-joon will be the largest shareholder and have the power to run the entire conglomerate," a corporate insider said,
Under the country's inheritance tax rules, a person's wealth is judged to be the monthly average for the two months before and after death.
"Taking such things into account, with the current individual share price for the holding company being 96,000 won and the late chairman having owned some 19.46 million shares, the value of these holdings at present stands at 1.87 trillion won," the source said. "Because any inheritance exceeding 3 billion won is subject to 50 percent inheritance tax, the total that needs to be paid to authorities will reach some 900 billion won, although there may be more that needs to be paid if there are other assets involved."
Many said that Kwang-mo and LG will have to resort to paying his taxes in installments since he does not have such lump sums at his disposal.
Because LG Corp. is a listed company, providing shares as payment is not allowed.
The chairman's son, meanwhile, joined the finance division of LG Electronics Co. in 2006 and from this year has headed the information display business, a potential growth driver for the conglomerate. (Yonhap)
