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On the 17th, members of the Political Affairs Committee of the National Assembly and members of the Democratic Party are holding a press conference calling for the resignation of the Political Affairs Committee, Representative Yoon Chang-hyun, the power of the people, in the Communications Hall of the National Assembly in Yeouido, Seoul. 2020.9.17 / News1 © News1 With the death of Samsung Electronics Chairman Lee Kun-hee, interest in the change in the governance structure of the Samsung Group is drawing the attention of the business community to the amendment to the so-called ‘Samsung Life Act’.
Samsung’s Life Insurance Law refers to the ‘Insurance Companies Law Partial Amendment Law’ (hereinafter, the Insurance Companies Law Amendment), initiated by the Park Yong- Democratic Party lawmakers. jin and Lee Yong-woo from the National Assembly Political Affairs Committee in June.
The amendment to the Insurance Business Law, initiated by lawmakers Park Yong-jin and Lee Yong-woo, respectively, changes the method of valuing equity interests in subsidiaries of insurance companies to ‘market price’ instead of ‘acquisition cost’ when the total amount of subsidiary stocks and bonds owned by insurance companies is reduced to less than 3% of total assets That’s the main point. In this case, Samsung Life Insurance and Samsung Fire Insurance are the only insurance companies that are subject to the ‘3% rule’, which is why they are called the ‘Samsung Life Insurance Act’.
The only company subject to the bill is Samsung Group, and the shares to be phased out when the bill is approved are expected to exceed 20 trillion won, resulting in a massive impact on the domestic stock market. This will inevitably lead to a major reorganization of the governance structure of the Samsung Group, leading to ‘Lee Jae-yong, Vice President of Samsung Electronics → Samsung C&T → Samsung Life Insurance → Samsung Electronics’. As of the end of June, Samsung Life’s stake in Samsung Electronics is 8.51% and the valuation is 26.8 trillion won. This is 9.2% of Samsung Life’s total assets (291.3 trillion won). Samsung Fire & Marine owns a 1.49% stake in Samsung Electronics.
If Samsung’s financial affiliates are changed based on market price rather than acquisition cost due to the passage of the insurance industry law amendment, Samsung Life Insurance will have to dispose of approximately 25 trillion won and Samsung Fire & Marine Insurance approximately 2.5 trillion won of Samsung Electronics stock.
This is the reason why there is concern that the overall governance structure of the Samsung Group could be affected if a stake of approximately 28 trillion won in Samsung Electronics, the number one market capitalization company, is released to the market. To maintain the current structure of ‘Vice President Lee → Samsung C&T → Samsung Life → Samsung Electronics’, Samsung Life shares of Samsung Electronics must be bought by Vice President Lee or other affiliates, which is a challenge that Samsung has not been able to solve. during years.
Samsung Group will most likely choose a step-by-step treatment for 5-7 years if the sale of Samsung Electronics shares held by Samsung Life Insurance is unavoidable due to the revision of the Insurance Industry Act. However, even this problem is also a problem where the sale of profits to exiles decreases due to the split sale. You have to go through extensive consultation with the authorities about
If Samsung C&T, whose vice president Lee is the largest shareholder (17.48%), buys a stake in life, it will have to increase the size of the product’s assets or reduce the stake in subsidiaries such as Samsung Electronics so that it is not converted by strength in a holding company. This is because, according to the Fair Trade Law in force, if the value of the stake in a subsidiary held as the largest shareholder exceeds 50% of the company’s total assets, it is forcibly converted into a partnership. portfolio.
The amendment to the insurance industry law that shakes Samsung’s governance structure is currently pending in the political committee of the National Assembly. In the last XX National Assembly the same bill was abolished in opposition to the opposition party, but the situation in the XXI National Assembly has changed. If the 174-seat ‘super ruling party’ is vigorously promoted, the chance of passing the bill is high.
On this day, when the state administration audit is completed, the discussion is expected to begin in earnest from the next meeting of the Political Affairs Committee.
The biggest problem is whether or not Bill 1 of the Political Affairs Committee is approved. This is because the law 1 subcommittee is a practice of unanimous treatment, so if there is opposition from the opposition party, it is difficult to handle the ruling party alone. Representative Yoon Chang-hyun, who belongs to the bill’s first subcommittee, is known to actively oppose the Samsung Life Insurance Act. Representative Yoon, a former outside director of Samsung C&T, became embroiled in a conflict of interest controversy by voting in favor of the merger between Samsung C&T and Cheil Industries. Consequently, the Democratic Party members of the Political Affairs Committee called for the resignation, saying: “It is quite inappropriate to deal with Samsung-related bills as a member of the Political Affairs Committee and the Subcommittee on Legislation Review in terms of disputes of interests of public officials “.
However, the Democratic Party is also cautious. The policy is to carefully examine the size of the impact this bill will have on the economy. Representative Kim Byeong-wook, Democratic Party Secretary of the Political Affairs Committee, said in a conversation with News 1: “Because it is a very complex and influential bill, we will examine it carefully.”
Financial authorities did not comment on the bill and ordered Samsung’s voluntary improvement efforts at a fundamental level. Eun Seong-su, chairman of the Financial Services Commission, who attended the National Assembly Political Affairs Committee on July 29, when Representative Park Yong-jin emphasized the need to pass the insurance law amendment: “ I know there is such a problem (different acquisition cost and market price, etc.). He pointed out the problem “and responded,” I kept reminding myself that voluntary improvement efforts are desirable. ”
Meanwhile, Rep. Park, who initiated the bill, said in an interview on KBS radio that day: “It is already prohibited to own more than 3% of the affiliates’ shares, but Samsung has already outgrown it (as calculated by acquisition cost rather than market price) I have to have over a trillion won. ” He added, “The Samsung Life Insurance Act, which I have initiated, does not sell 26 trillion won quickly, but it will be sold in installments for five years, and if more time is needed, I will give it two more years.”
(Seoul = News 1)
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