Hyosung makes major changes to its governance

Hyosung Group said on Sunday it launched a holding company and spun off four companies as of Friday as the conglomerate accelerates its shift to a holding company structure.

Hyosung Corporation was established as the holding company of the 25th-largest conglomerate in Korea, which is celebrating its 51st anniversary this year. Chairman Cho Hyun-joon and President Kim Kyoo-young will assume co-CEO posts at the company, which will be responsible for building business portfolios for growth and increasing the brand values of its subsidiaries.

The four spun-off units are Hyosung TNC, a textile and trading firm; Hyosung Heavy Industries, a shipbuilding and construction company; Hyosung Advanced Materials, an industrial materials unit; and Hyosung Chemical, which is devoted to chemicals. All of the four operations will be run by professional managers instead of members of the family that control the group.

Following the overhaul, the conglomerate now has 38 subsidiaries including the four new ones and 13 trillion won ($12 billion) in assets. New companies will be listed on the stock market July 13.

The five firms under the Hyosung umbrella named 11 group insiders to their boards and 20 outside directors. Cho Hyun-sang, president of Hyosung Corporation and youngest brother of Chairman Cho, was named a director of the holding company.

“The holding company and other new units will focus on transparent management activities, based on their respective expertise,” said Chairman Cho Hyun-joon, who took over the post from his father, Honorary Chairman Cho Suck-rai, in January. “We will step up global competitiveness to improve corporate value as well as shareholder value.”

The group plans to finalize procedures to meet conditions required by the Fair Trade Act for a holding company by adjusting the shareholding structure among the controlling family members and issuing new stock.

A holding company should have at least a 20 percent stake in its listed subsidiaries.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]