Management rights and tax savings all at once… Integration of OCI and Hanmi Pharmaceuticals ‘Act of God’ Some say that the integration of OCI Group and Hanmi Pharmaceutical Group is a ‘act of God’. This is because it can strengthen current management rights and reduce the burden of inheritance tax for future succession. In Korea, the inheritance tax rate is high, so if management rights are passed on through inheritance alone, it is difficult to survive beyond the second or third generation.
According to the business world on the 21st, OCI Group and Hanmi Pharmaceutical Group are pursuing group integration. The key is for OCI Group’s holding company, OCI Holdings, to acquire a 27.0% stake in Hanmi Science (Hanmi Pharmaceutical Group’s holding company), and for major shareholders of Hanmi Science, including President Lim Joo-hyun, to acquire a 10.4% stake in OCI Holdings through in-kind investment and acquisition of new stock issuance. Once the stake acquisition is completed, OCI Group and Hanmi Pharmaceutical Group will be integrated into one corporate group. The role of the integrated holding company will be taken over by OCI Holdings (name change in the future).
With this integration, the management rights of OCI Holdings Chairman Lee Woo-hyun and Hanmi Science President Lim Joo-hyun will be strengthened. Currently, Chairman Lee Woo-hyun is only the third largest shareholder of OCI Holdings (6.55% stake). The first and second largest shareholders are his uncle, Unid Chairman Lee Hwa-young (7.41%) and SGC Energy Chairman Lee Bok-young (7.37%). Hanmi Science’s major shareholders are Chairman Song Young-sook (12.56%), followed by President Lim Jong-yoon (12.12%), President Lim Joo-hyun (7.29%), and President Lim Jong-hoon (7.20%). After the group integration, President Lim Joo-hyun and Chairman Lee Woo-hyun’s shares in the integrated holding company will be 8.62% and 5.87%, respectively. If you combine your shares, you can act as the largest shareholder with 14.49%.
The fact that inheritance tax can be reduced when passing management rights to the next generation is also envied by the business community. The highest inheritance tax rate in Korea is 50%. When stocks are inherited from the largest shareholder, a surcharge is applied and the tax rate rises to 60%. If the group integration is successful, the largest shareholder of OCI Holdings will be Hanmi Science, and the largest shareholder of Hanmi Science will be OCI Holdings. Since each company is the largest shareholder of each company, no surcharge is applied when the individual shares of the CEO family are inherited to the next generation.
Until now, the families of major domestic companies have liquidated their company shares in order to pay large inheritance taxes. Samsung family members Hong Ra-hee, former director of Leeum Samsung Museum of Art, Hotel Shilla President Lee Boo-jin, and Samsung Welfare Foundation Chairman Lee Seo-hyun sold a total of 29,829,183 shares of Samsung Electronics (KS:) common stock (worth KRW 2.1691 trillion) on the 11th. The Samsung family must pay a total of 12 trillion won in inheritance tax incurred when the late Lee Kun-hee, former chairman of Samsung Electronics, passed away. The surviving family members of the late Kim Jeong-ju, founder of the Nexon Group, could not overcome the burden of inheritance tax and handed over 29.29% of the shares (851,968 shares, worth 4.7 trillion won) of the holding company NXC to the government.
Some companies gave up on succession of management rights due to the burden of inheritance tax. Wooriro Optical Communication (now Wooriro), which was number one in the domestic optical communication device sector, handed over management rights to investment advisory firm Infion in 2013. This is because the surviving family members of the late Chairman Kim Kuk-woong (founder), who passed away in the same year, failed to raise funds for inheritance tax. Three Seven, a nail clipper manufacturer, and Lock & Lock, an airtight container manufacturer, also gave up management rights as the ruling family was unable to bear the burden of inheritance tax.
2024-01-20 21:16:37
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