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Samsung Electronics decides to go for split-up for new governance

| Dec 01, 2016 05:30 AM EST

User holds Samsung Galaxy S6 edge+.

Samsung Electronics declared that it took a decision to split the company into two units in line with the company's plans to author new governance committee of independent board members.

The decision to this effect will be taken after conducting a thorough review of the corporate structure, says the South Korean firm. It proposes to take at least six months to complete the task.

The company also reported that it plans to hike dividends and repurchase shares at the end of January 2017.

The Week reported that this note of change comes in the wake of the exploding battery breakdown of Galaxy Note 7 which was recalled in October, just two months later of its launch. In fact, this wiped off nearly $20 billion (£16.3bn) of the company in two days alone.

"Samsung Electronics decided to hold a board meeting on November 29," a high-ranking representative of the business world who is familiar with Samsung says.

"The will clarify their position that we will consider a split-up, a core item on corporate governance restructuring."

During the board meeting, a roadmap of mid-to-long-term will be presented. It is not yet known whether the presentation will talk about specific details like timing and proportion of split-up. It is expected that in the course of time, the company plans to take its smooth route.

Samsung registered director, Lee Jae-yong will succeed in the succession of management rights and accelerate the restructuring of the governance structure through a split-up of the company.

Business Korea reported that Samsung Vice Chairman Lee, will strengthen the control of the Samsung Group after split-up. The vice president presently owns a stake of 0.59 percent in the company.

If Samsung Chairman, Lee Kun-hee's shares, especially related persons, affiliates and related affiliates are added, vice chairman equities stand at 18.2 percent. The dispute over the managerial right to the company can happen at any time as foreign shareholders' equities exceed 50 percent.

In case if the company splits itself up, the company will be divided into an investment company (holding company) and a business company. Further, Vice president Lee is allowed to increase own stake in the holding company through in-kind investment. This gives the business company shares of the business company to the holding company to in turn receive new shares of the holding company.

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