Ultra large IB business to have met ‘major shareholders eligibility’
Kim Dong-wook & Kim Min-soo | east@ | 2017-08-11 11:17:42
The financial officials have allotted Samsung Securities` ultra-large IB examination as Lee Jae-yong, vice chairman of Samsung Electronics, is under trial. As a result, the ongoing massive IB business has been in crisis because of the fostering of `Goldman Sachs` in Korea. Especially, as the financial authorities are increasingly questioning the eligibility issue of large shareholders in a large-scale IB audit, securities companies preparing for the IB business along with Samsung Securities will meet a large reef of `major shareholder eligibility screening`.
According to industry sources on August 10, the Financial Supervisory Service informed Samsung Securities on August 9 that it will suspend the examination of the issuance of large-scale issuance bills related to the trial result of Lee Jae-yong. Ultimately, Samsung Securities` ultra-large IB audit will be suspended until the end of the month, once Lee Jae-yong is sentenced to one-year terms. As a result of the court`s preliminary hearing, if the vice chairman is sentenced to a medium-sized sentence, Samsung Securities will be classified as ineligible in the super-large IB examination and lose business opportunities.
Samsung Securities, which has completed the expansion of its KRW 4 trillion capital structure and has been reorganizing its super-large IB business structure due to the financial authorities` sudden resumption of examination, is embarrassed.
Samsung Securities believed that the parent company, Samsung Life Insurance, had received an institutional warning due to the issue of suicide insurance premiums. However, it was expected that it would not be a problem for the issuance of notes by the exception of the capital market law. However, a red light was turned on to obtain the issuance draft as the trial of the vice chairman emerged as a variable, which is the core task of the super large IB.
A representative from Samsung Securities said, "The financial authorities are very embarrassed as they extend the scope of eligibility audit to major shareholders and reflect them in the evaluation."
In response, the financial authorities explained that they were in line with the ‘Financial Institutions Corporate Governance Act.’ According to the relevant law, the authorities include that the scope of the major shareholder`s eligibility examination includes not only major shareholders but also major shareholders of the company.
Although the Financial Services Agency on the face of the Financial Supervisory Service suspended the examination on the grounds of Lee Jae-yong`s trial, it is accepted the issue as a positive response to the issue of major shareholder eligibility.
In the business sector, it is the reaction that the reviewing authority has extended the scope of the examination too much as it has been suspended for examination of the qualification of a person who is not a major shareholder of the relevant securities company. In fact, the majority shareholder of Samsung Securities is Samsung Life with a 29.44% stake. Samsung Life`s largest shareholder is Chairman Lee Kun-hee, which holds a 20.76% stake. Lee Jae-yong occupies only 0.06% of Samsung Life Insurance`s stake.
The securities companies that applied for business rights are also watching the situation considering that the screening authorities will apply the high-level screening standards for major shareholder eligibility as Samsung Securities` large-scale IB penetration is braking.
Earlier, Mirae Asset Daewoo, NH Investment & Securities, KB Securities, Samsung Securities and Korea Investment & Securities filed a petition with the Financial Services Commission (FSC).
Korea Investment & Securities is another issue where the majority shareholder eligibility matters. Korea Investment & Securities has been pointed out that the corruption of Cornerstone Equity Partners, a private equity fund founded by the largest shareholder, Korea Financial Group, in 2015 will be a stumbling block.
Meanwhile, the financial authorities explained that the suspension of the examination of Samsung Securities is not intended to exceed the period of 3 months, which is the period required for the approval of new business, but is not for enhancing the examination of eligibility.
A FSS expert stated, "In case of a serious situation such as a trial in the process of new business review, the clause to suspend the examination is based on the related laws. According to the result of the trial, the company will go into the process."
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According to industry sources on August 10, the Financial Supervisory Service informed Samsung Securities on August 9 that it will suspend the examination of the issuance of large-scale issuance bills related to the trial result of Lee Jae-yong. Ultimately, Samsung Securities` ultra-large IB audit will be suspended until the end of the month, once Lee Jae-yong is sentenced to one-year terms. As a result of the court`s preliminary hearing, if the vice chairman is sentenced to a medium-sized sentence, Samsung Securities will be classified as ineligible in the super-large IB examination and lose business opportunities.
Samsung Securities, which has completed the expansion of its KRW 4 trillion capital structure and has been reorganizing its super-large IB business structure due to the financial authorities` sudden resumption of examination, is embarrassed.
Samsung Securities believed that the parent company, Samsung Life Insurance, had received an institutional warning due to the issue of suicide insurance premiums. However, it was expected that it would not be a problem for the issuance of notes by the exception of the capital market law. However, a red light was turned on to obtain the issuance draft as the trial of the vice chairman emerged as a variable, which is the core task of the super large IB.
A representative from Samsung Securities said, "The financial authorities are very embarrassed as they extend the scope of eligibility audit to major shareholders and reflect them in the evaluation."
In response, the financial authorities explained that they were in line with the ‘Financial Institutions Corporate Governance Act.’ According to the relevant law, the authorities include that the scope of the major shareholder`s eligibility examination includes not only major shareholders but also major shareholders of the company.
Although the Financial Services Agency on the face of the Financial Supervisory Service suspended the examination on the grounds of Lee Jae-yong`s trial, it is accepted the issue as a positive response to the issue of major shareholder eligibility.
In the business sector, it is the reaction that the reviewing authority has extended the scope of the examination too much as it has been suspended for examination of the qualification of a person who is not a major shareholder of the relevant securities company. In fact, the majority shareholder of Samsung Securities is Samsung Life with a 29.44% stake. Samsung Life`s largest shareholder is Chairman Lee Kun-hee, which holds a 20.76% stake. Lee Jae-yong occupies only 0.06% of Samsung Life Insurance`s stake.
The securities companies that applied for business rights are also watching the situation considering that the screening authorities will apply the high-level screening standards for major shareholder eligibility as Samsung Securities` large-scale IB penetration is braking.
Earlier, Mirae Asset Daewoo, NH Investment & Securities, KB Securities, Samsung Securities and Korea Investment & Securities filed a petition with the Financial Services Commission (FSC).
Korea Investment & Securities is another issue where the majority shareholder eligibility matters. Korea Investment & Securities has been pointed out that the corruption of Cornerstone Equity Partners, a private equity fund founded by the largest shareholder, Korea Financial Group, in 2015 will be a stumbling block.
Meanwhile, the financial authorities explained that the suspension of the examination of Samsung Securities is not intended to exceed the period of 3 months, which is the period required for the approval of new business, but is not for enhancing the examination of eligibility.
A FSS expert stated, "In case of a serious situation such as a trial in the process of new business review, the clause to suspend the examination is based on the related laws. According to the result of the trial, the company will go into the process."