The Underground Emperor: Starting from Running Away with Sister-in-law - Page 646
Cross-shareholdings...
As the name suggests, it is a form of circular shareholding between parent and subsidiary companies of a chaebol group, and it is also a method currently used by most of the old and large chaebol groups in South Korea.
The reason for using this method...
The incentives come from two aspects!
on the one hand...
It originated from the Asian financial crisis in 1997!
on the other hand...
It stems from the inheritance tax in South Korea that is a heavy burden for chaebol families!
In 1997, many countries in Asia experienced a great economic depression, and South Korea was one of the countries hardest hit by this financial crisis!
Because the South Korean government's response strategy is inappropriate...
This caused the people in the country to live in poverty and the monetary system was on the verge of total collapse.
As a last resort...
The South Korean government had no choice but to seek help from the outside world.
This is the move...
This gave foreign capital an opportunity to rush into South Korea unscrupulously and reap a large amount of high-quality assets in South Korea!
Take Shunyang Group for example...
During that storm, nearly half of the shares were acquired by the tycoons on Wall Street in the United States.
but...
The South Korean government at that time was not hopelessly stupid.
Although the country took the initiative to open its doors to allow foreign capital to enter without scruples, it also formulated some restrictive measures.
One of the most important is...
During that period, foreign capital that aggressively acquired high-quality assets in South Korea could only obtain preferred shares, not common shares, and could not trade or dispose of them at will.
in other words...
That is, they can only enjoy the dividend rights of high-quality assets, but have no voting rights, management rights and decision-making rights!
This regulation...
This ensures the autonomy of domestic enterprises to the greatest extent possible!
The South Korean government is also not idle...
Also taking advantage of that extraordinary period, under the loud slogan of protecting domestic assets as much as possible, the government used national funds to acquire shares in some chaebol companies.
That is to say...
Currently, the equity of South Korea’s old chaebol groups has been forcibly divided into three parts!
One belongs to those foreign capital tycoons, most of whom are those people on Wall Street; one belongs to South Korea’s own national funds, such as social security funds; and the last one belongs to the business families that once founded these chaebol groups!
A prosperous chaebol group was split into three parts...
This also led to a sharp reduction in the group shares held by the founders of those chaebol groups.
Like the previous chairman of Shunyang Group, Chen Yangzhe.
After 1997, he only owned percent of Shunyang Group's shares.
certainly...
Putting aside those foreign capital tycoons who only have the right to dividends, the shares held by Chen Yangzhe are enough to ensure that he has absolute control over Shunyang Group!
At that time, Shunyang Group...
The overall shareholding structure is still a tree structure, that is, the parent company Shunyang Commodities is the foundation, holding shares in a large number of its subsidiaries.
Chen Yangzhe holds shares in Shunyang Commodities in his personal name.
at this time...
In fact, some founders of chaebol companies, including Chen Yangzhe, have begun to prepare for danger in times of peace, thinking about how to preserve control of the group for themselves and their descendants!
After 2000...
Chen Yangzhe, who suddenly felt unwell, had to face the problem of choosing who would take over Shunyang Group!
And at this time...
Another huge mountain stood in front of him!
That's inheritance tax!
A tax of up to 50% of the total inheritance amount is a burden that no chaebol family can afford!
If you pay the money honestly...
That basically means our own group and enterprise are almost finished!
Or...
Even if the group or enterprise is large enough to survive, it is certainly unlikely that the family will continue to control the group after paying the inheritance tax.
What to do about this?
There is a way!
The special method of "cross-holding" came into being!
Chen Yangzhe's showmanship has begun...
on the one hand...
He seized the opportunity and, while he was still strong enough, began to use some means to gradually transfer some of his assets, including equity, to his relatives through various subtle operations.
Some are in the form of dividends, some are in the form of gifts, and some are in the form of open market transactions...
certainly...
This portion of equity cannot be too much!
Once there are more, it will involve some other problems!
on the other hand...
He started to manipulate cross-shareholding matters!
In simple terms...
The parent company is A, which holds most of the shares of subsidiary B. B in turn holds most of the shares of C, which in turn holds most of the shares of D. D is an emerging enterprise, which has exchanged part of the shares of parent company A through a series of operations.
In the process...
Chen Yangzhe will arrange for his children and relatives to join the companies and hold controlling stakes in these companies respectively!
During this period, it will also secretly acquire Companies Wu and Xu, and Companies Wu and Xu will be jointly funded by the parent company and several other subsidiaries!
After operating for a period of time...
The parent company will directly withdraw its investment, allowing the other subsidiaries to achieve absolute control over the two companies, Wu and Xu, and then conduct equity swaps with the parent company after raising the market value again...
And so on, constantly perform micro-manipulation...
......
Chapter 559 Inside Story
In a series of dazzling operations...
Eventually, the parent company’s equity ratio will become extremely complicated. After leaving aside foreign capital and domestic national funds, the remaining equity ratio may even involve dozens of small businesses!
Although Chen Yangzhe still holds the management rights of the group...
However, his personal equity ratio in the parent company has been reduced from the original 28% to 5%!
certainly...
At this time, he still owns the management rights of the entire Shunyang Group!
Because he also holds part of the shares in other subsidiaries, and other subsidiaries also hold controlling stakes in the parent company respectively, and the parent company then holds controlling stakes in other subsidiaries, thus achieving a perfect closed loop!
At this point, it has actually reached the extreme compression.
He couldn't possibly say that he would convert all his personal holdings into subsidiary holdings, as that would clearly be problematic.
On the surface...
He must maintain a portion of his personal equity in the parent company, just to show off to some people.
certainly...
There must be a focus in the process of cross-holding!
For example, the second-generation chairman Chen Yongji, before he succeeded as chairman, he was assigned the position of president of Shun Yang Steel.
His personal shareholding in Shunyang Steel reached 35%, and after a complicated operation, the original Shunyang Steel already owned 2% of Shunyang Commodities' shares.
At the same time, Chen Yongji also owns a portion of the shares in several other unknown subsidiaries.
Interestingly...
Shortly before Chen Yangzhe passed away...
Due to various problems, several subsidiaries controlled by him were merged into several subsidiaries held by Chen Yongji within a short period of time.
And so on...
The Chen family members completed the smooth handover of Shunyang Group through this normal business behavior.
As a result, Chen Yongji directly or indirectly controlled 14% of Shunyang Commodities' shares, thus standing out and gaining the operating rights of the entire Shunyang Group.
It's complicated...
But in summary...
In the will left by Chen Yangzhe after his death, only 7% of the shares of the entire Shunyang Group and his personal property such as cash, antiques, jewelry, and real estate worth 3 trillion won could be distributed normally.