Ex-Chairman's Wife Hong Gifts Remaining Samsung Shares to Lee Jae-yong

Samsung Electronics Chairman Lee Jae-yong, Leeum Museum of Art Honorary Director Hong Ra-hee (center), and Samsung C&T President Lee Seo-hyun are watching the commissioning ceremony for naval officer candidates held at the Naval Academy in Jinhae-gu, Changwon, South Gyeongsang Province on November 28 last year. (Yonhap) Leeum Museum of Art Honorary Director and the late former Chairman Lee Kun-hee's wife Hong Ra-hee will gift Samsung Electronics shares worth 2.6 trillion won (about $1.93 billion) to her son, Samsung Electronics Chairman Lee Jae-yong. Samsung Electronics announced through a public disclosure on Oct. 13 that Honorary Director Hong will gift 11,158,000 shares of Samsung Electronics to Chairman Lee. Based on the closing price of Samsung Electronics on October 13, the scale of the gift is approximately 2.6 trillion won. The gift contract was signed on Oct. 12, and the actual scheduled date of the gift is on Nov. 12. With this transaction, the Samsung Electronics stake held by Chairman Lee will rise by 0.17 percentage points, from 1.58% to 1.75%. Honorary Director Hong’s stake will decrease from 0.99% to 0.82%. Previously, Chairman Lee purchased 7,667,100 common shares of Samsung Electronics from Honorary Director Hong over the counter at 250,500 won per share, totaling 1.9206 trillion won. With this gift, all Samsung Electronics shares that Honorary Director Hong inherited from the late Samsung Group Chairman Lee Kun-hee will be disposed of. Honorary Director Hong inherited 83,091,066 common shares of Samsung Electronics in April 2021, increasing her held shares to 137,244,666 shares. Thereafter, to raise funds for the payment of the inheritance tax, she has been disposing of shares starting with the disposal of 19,941,860 shares through a block deal (after-hours block trading) in March 2022, followed by sales in 2024, in October last year, and in the first half of this year. Adding the volume of this sale and gift to these, the total disposed shares amount to 83,091,066 shares, which exactly matches the scale of the inherited shares. The Samsung family paid 12 trillion won in inheritance tax in installments over six occasions from 2021 to this year, and finalized the payment procedure in April. The business community views this as a sequential process in which Honorary Director Hong repays the stock collateral loans she received while raising funds for the inheritance tax, and sorts out the remaining inherited stake by transferring it to Chairman Lee Jae-yong. Honorary Director Hong also gifted her entire stake in Samsung C&T (1,808,557 shares) to Chairman Lee in January. The scale and payment method of the gift tax are also of interest. The gift tax on listed stocks is calculated based on the average stock price over a total of four months, two months before and after the date of the gift on November 12. The stock price of Samsung Electronics has come down from 259,500 won on Sept. 11 to 233,500 won based on the closing price on Oct. 13. For the gift tax, a maximum tax rate of 50% is applied when the tax base exceeds 3 billion won.