Women of LG family take on legal battle over inheritance

Industry

Published: 13 Mar. 2023, 18:56

Women of LG family take on legal battle over inheritance

Kim Young-sik, the widow of the late LG Chairman Koo Bon-moo, during a cosmetics expo in 2013. Kim and her two daughters recenlty filed a lawsuit against LG Chairman Koo Gwang-mo over the inheritance. [COSMETICS & BEAUTY EXPO OSONG KOREA]

Women family members of LG, one of the most prominent chaebols in Korea, are taking on a legal battle to claim a bigger share of inheritance, four years after the assets were divided.

As LG has been sticking to the Confucian rule which sees first-born sons take over family affairs and the majority of inheritance, more so than other chaebols such as Samsung, the latest lawsuit may shake up the company’s long-standing patriarchal tradition.

The adoptive mother and sisters of LG Chairman Koo Kwang-mo recently filed inheritance litigation against the 45-year-old company head.

The plaintiffs are Kim Young-sik, the widow of the late chairman Koo Bon-moo, and their two daughters — Koo Yeon-kyung and Koo Yeon-soo.

Koo Yeon-kyung, the eldest daughter of the family, is currently leading the LG Welfare Foundation, a charity organization.

Such legal dispute is unprecedented in LG’s 76-year history.

Incumbent Chairman Koo Kwang-mo took leadership four years ago as the fourth generation of his family to lead the company. Koo, who was born as a nephew of the late-LG patriarch, was adopted as the only son of Koo Bon-moo in 2004.

Koo first received a legal letter from the three plaintiffs in July last year, demanding the inherited assets be redistributed in accordance with inheritance law, according to the JoongAng Ilbo.

The current law stipulates that inheritance should be divided equally among children, while the surviving spouse should inherit assets 1.5 times larger compared to the amount inherited by each child, if the deceased person dies without leaving a will.

The family members are reportedly arguing that they only recently found out that there is no will, according to local media outlets. LG is countering that they already knew about the absence of a will and that the inheritance ruling is a result of a settlement decided upon by the four family members.

Following the death of Koo Bon-moo in 2019, Koo Kwang-mo inherited an 8.67 percent stake or 720 billion won ($552 million) worth of LG shares.

Koo Yeon-kyung inherited a 2.01 percent stake and Koo Yeon-soo 0.51 percent. The widow was given no shares.

If the plaintiffs win the case, Koo Kwang-mo’s share will shrink from his current 15.95 percent to 9.71 percent, while Kim will claim 7.96 percent, the older daughter 3.42 percent and the younger daughter 2.72 percent.

The key issue in the legal case will be whether the agreement on inheritance shares was reached legitimately.

Unlike Samsung, where late Chairman Lee Kun-hee’s daughters have been taking on relatively active leadership roles in the conglomerate, the women in the LG family rarely take on such roles.

On Monday, LG's share price hit a 52-week high of 92,600 won on the Kospi bourse before closing at 88,300 won, up 2.79 percent, as investors speculated that the inheritance battle may lead to a possible dispute over management rights.

The latest lawsuit follows a similar legal case concerning BYC, an underwear maker.

The owner family of BYC was embroiled in a legal dispute in December, as the mother of Chairman Han Seok-beom filed inheritance litigation against her son over 100-billion-won of inheritance.

BY CHOI EUN-KYUNG, KO SUK-HYUN AND SHIN HA-NEE [shin.hanee@joongang.co.kr]