Conglomerate owners, families boost stakes in affiliates

SEOUL, July 28 (Yonhap) -- The portion of shares of South Korean family-owned conglomerates owned by group heads and their families inched up in 2011, the country's corporate watchdog said Thursday. A survey by the Fair Trade Commission showed that stock ownership by the heads of 38 conglomerates and their families accounted for 4.47 percent of those businesses as of April of this year, up 0.07 percentage point from a year earlier. The conglomerates surveyed have assets of 5 trillion won (US$4.74 billion) or more. "Internal" ownership, which includes shareholdings by owners, their families, subsidiaries and executive members, stood at 54.2 percent, the report showed. That was also up from 50.5 percent surveyed in 2010. Of the 1,364 subsidiaries held by those business groups, owners and their families held 100 percent stakes in 62 firms, while they had no share ownership in 949 firms, the report showed. SK Group had one of the lowest portions of shares held by owners and their families members with 0.79 percent, followed by Samsung, the country's largest business group, with 0.99 percent, the report showed. The corresponding ratios, however, were much higher for construction firm Booyoung and the nation's leading polysilicon maker OCI with 40.23 percent and 21.63 percent, respectively, according to the report. Those groups are currently affected by the country's equity investment law that bans subsidiaries of conglomerates with assets of 5 trillion won or more from making cross-investments to prevent distortion of governance structures. Stock ownership structure of conglomerates has been frequently blamed for allowing a handful of people with small stakes in companies to control the decision-making process of their whole subsidiaries.