Samsung Electronics Chair Lee Jae-yong was acquitted by South Korea’s Supreme Court on Thursday, ending a five-year legal battle over charges related to a 2015 merger between Samsung affiliates that prosecutors alleged was designed to cement his control over the country’s largest conglomerate.

The final ruling, which cannot be appealed, clears Lee of all charges, including stock manipulation, breach of trust, and accounting fraud.

The Supreme Court dismissed the prosecution’s appeal and upheld lower court acquittals for Lee and 13 other former Samsung officials, including executives from the group’s disbanded Future Strategy Office.

The judges found no errors in the appellate court’s not-guilty verdict, stating there was no “misunderstanding of legal principles regarding the Capital Market Act and External Audit Act, or a violation of rules on free evaluation of evidence.”

The case centred on the 2015 merger of Cheil Industries and Samsung C&T, which prosecutors argued was orchestrated to allow Lee to inherit control of Samsung Group at a favourable cost.

The merger involved exchanging three Samsung C&T shares for each Cheil Industries share, a ratio that prosecutors claimed was achieved through stock price manipulation that inflated Cheil’s value while depreciating Samsung C&T.

Lee, who was Samsung Electronics vice chair at the time, held a 23.2% stake in Cheil but no direct ownership in Samsung C&T.

The merger terms made him the largest shareholder of the newly combined Samsung C&T, effectively the holding company for Samsung Group, facilitating his succession from his father Lee Kun-hee as head of the family-controlled business empire.

Prosecutors also alleged Lee was involved in fraudulent accounting practices at Samsung Biologics, a Cheil subsidiary, involving more than 4 trillion won ($2.88 billion) to boost Cheil’s worth ahead of the merger.

Both district and appellate courts rejected these arguments, with the district court acquitting Lee of all 19 original counts in February 2024, followed by the appellate court upholding acquittals on 23 total counts earlier this year.

Samsung’s legal team released a statement expressing gratitude to the Supreme Court for its “wise judgement after five years of thorough review,” confirming that the Samsung C&T merger and Samsung Biologics’ accounting treatment were legitimate business practices.

The acquittal removes significant legal uncertainty for Lee as he confronts operational challenges at Samsung, including disappointing earnings and competitive pressures in the artificial intelligence chip sector.

The company projected second-quarter operating profit of around 4.6 trillion won ($3.33 billion), representing a 55.9% decline from the previous year, attributed to sluggish chip businesses and supply delays of AI-critical high bandwidth memory.

Since his earlier acquittal at the appellate level, Samsung has pursued aggressive expansion through major acquisitions.

In May, Harman International agreed to acquire US-based Masimo’s audio business for $350 million, while Samsung signed a 1.5 billion euro ($1.74 billion) deal to acquire German HVAC company FlaktGroup, marking its largest takeover in approximately eight years.

The company also announced plans to acquire US healthcare firm Xealth.

Business organisations welcomed the court decision, viewing it as removing management uncertainty that could benefit both Samsung and the broader Korean economy.

“At a time of fierce global competition in high-tech industries, we expect this decision to not only remove management risk for the company, but also generate positive ripple effects across the Korean economy,” said Kang Seok-koo, head of research at the Korea Chamber of Commerce and Industry.

Lee Sang-ho from the Federation of Korean Industries added that the verdict would enable Samsung to focus on “technological innovation and securing global competitiveness,” while the Korea Enterprises Federation expressed hope for “more proactive investments and technological innovation” under Lee’s leadership.

The legal resolution positions Lee to pursue bold investments in high-technology sectors as Samsung works to regain momentum against rivals, particularly in the critical AI chip market, where the company faces intense competition from Taiwan Semiconductor Manufacturing Company and other global players.