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Is Ownership Of Samsung Set To Change Following Death?

Questions are now being asked as to what will happen to Samsung following the death of Group Chairman Lee Kun-hee, the founder of the South Korean powerhouse.

According to analysts there will be changes but they are not expected to not be extensive at the moment, as Lee Jae-yong who owns 17.08 percent of Samsung C&T, holds 5.01 percent of shares in Samsung Electronics has control.

Samsung C&T also holds 19.34 percent of shares in Samsung Life, which holds 8.51 percent of shares in the electronics unit.

Essentially, he already has control over the group.

The Korean Herald claim that group could find ways to transfer at least some of the deceased’s financial assets to his son, Lee Jae-yong, which would further support the family’s grip on South Korea’s largest conglomerate, according to market watchers.

Last week his son was in Vietnam looking at new manufacturing opportunities.

Under the current corporate structure, Lee Jae-yong is exercising management rights at Samsung Electronics through his stocks in Samsung Construction & Trading and Samsung Life.

Some expect that Lee Jae-yong could dispose of his stocks in Samsung Life and acquire his father’s stocks in Samsung Electronics and Samsung C&T, as local lawmakers prepare bills to tackle Samsung Life.

The Democratic Party of Korea here is seeking to pass reform bills that would prevent insurance firms from investing more than 3 percent of their total assets.

If the legislation passes, Samsung Life would be obliged to sell its stocks in Samsung Electronics. Samsung Life would need to dispose of around 20 trillion won in stocks.

Samsung Group could need to make extensive changes to its governance structure without Samsung Life.

It is a matter of time whether Lee Jae-yong would want to further strengthen his control over the conglomerate by acquiring more of the stocks held by Lee Kun-hee in Samsung Life — in which the son holds a stake of only 0.06 percent — or other firms related to the governance structure.

Lee Kun-hee was the largest shareholder of Samsung Life, with 20.76 percent. He also held 4.18 percent of common stocks and 0.08 percent of preferred stocks in Samsung Electronics. His shares in Samsung C&T and Samsung SDS accounted for 2.88 percent and 0.01 percent of the total, respectively.

The value of Lee Kun-hee’s stocks in Samsung Group was recently assessed at A$10 Billion.

For Lee Jae-yong to inherit the stocks, he would have to pay approximately $1.9 Billion in taxes under Korea’s inheritance tax laws. To inherit 4.18 percent of stocks in Samsung Electronics alone, the tax bill is estimated at 1 trillion won.

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