Korean Samsung's heir borrows $3 billion loan to pay inheritance tax | Deposit | Korean Samsung
Bloomberg News reported on the 26th that as of last month, the family of former South Korean Samsung Group president Lee Kun hee has borrowed approximately $3 billion to pay a huge inheritance tax. These loans are pledged by equity.
Li Jianxi passed away on October 25, 2020 due to illness at the age of 78. After the death of Li Jianxi, the total amount of inheritance tax that his heirs should pay exceeds 12 trillion Korean won. Li Jianxi's family includes his widow Hong Luoxi, son Li Zairong, daughter Li Fuzhen, and Li Xuxian.
In October last year, Li Zairong, then Vice President of Samsung Electronics and the actual person in charge of Samsung Group, was appointed as the President of Samsung Electronics.
According to Yonhap News Agency, Li Jianxi's family paid approximately 2 trillion Korean won on the day of his inheritance tax declaration on April 30, 2021, and plans to pay the remaining approximately 10 trillion Korean won in five installments over the next five years. On the same day, the family of Li Jianxi announced a plan to give back 60% of his estate to society.
Professor Park Sang jin from the Graduate School of Public Administration at Seoul University said that a loan is the best way for Lee Kin hee's family to pay inheritance tax. "They will not monetize their stocks because it will affect their control over the company," he said.
Lee Chang hwan, CEO of South Korean "Alliance Partner" Capital Management Company, said that imposing a huge inheritance tax on families behind listed companies would create a conflict of interest with shareholders. For example, in order to pay less inheritance tax, families may be unwilling to let the company's stock price rise.
In addition, given the inherent risk of additional margin for equity pledge loans, if the stock price of companies under the wealthy family falls, family members will be forced to sell stocks to increase margin.
Coincidentally, the family of Kim Jong woo, the founder of South Korean online game production company Naxxon, also faces a huge inheritance tax. Last month, they chose to transfer some of Naxxon's equity to the South Korean government as part of the inheritance tax. The South Korean Ministry of Planning and Finance is currently the second largest shareholder of this company.