Aug. 14 (Bloomberg) -- Hyundai Motor Co. Vice Chairman Chung Eui Sun reduced his stake in an advertising affiliate, raising cash as the government steps up scrutiny of South Korea’s family-run conglomerates.
Chung, 43, sold a 30 percent stake in Innocean Worldwide Inc. for 300 billion won ($290 million) on Aug. 7, according to a regulatory filing today, which didn’t say who the buyer was. The only son and heir-apparent to Hyundai Motor Group’s Chairman Chung Mong Koo, 76, retains a 10 percent holding in the company after the sale.
South Korea’s chaebol, as the corporate dynasties are known in the country, are facing increasing pressure from President Park Geun Hye’s administration and investors to unravel cross shareholdings and improve corporate governance. The younger Chung faces a potential inheritance tax bill exceeding 3.5 trillion won should he take over the business, according to the Center for Good Corporate Governance.
“The decision to sell probably came from a need for cash or to reduce pressure from the government regulations,” Chae Yi Bai, a researcher at the center, said by phone today. “It’s too early to say how Chung will exactly make use of the cash he made through the recent share sale. But we can say that they have moved another key piece in the big succession plan.”
Hyundai Motor declined to comment further on the sale.
The Chung family will still retain control over Innocean, with sister Chung Sung Yi holding 40 percent and the Hyundai Motor Chung Mong-Koo Foundation owning 10 percent as of today, according to the filing.
President Park has banned the creation of new cross shareholdings as part of legislation to improve corporate governance and protect minority shareholders. The government is also offering tax incentives aimed at encouraging the chaebol to unwind cross shareholdings.
The Hyundai Motor Group is South Korea’s largest chaebol after the Samsung Group.
To contact the reporter on this story: Rose Kim in Seoul at firstname.lastname@example.org
To contact the editors responsible for this story: Young-Sam Cho at email@example.com Chua Kong Ho