Hanwha Group Chairman Kim Seoug-youn has decided to distribute an 11.32 percent stake in Hanwha Corporation, half of what he currently holds, between his three sons to complete the conglomerate’s succession plan, Hanwha said Monday.

According to Korea’s seventh-largest conglomerate by total assets, Kim transferred his 4.86 percent stake to Vice Chairman Kim Dong-kwan, his eldest son who heads the strategic unit of Hanwha Aerospace. The remaining 6.46 percent was split evenly between Hanwha Life President Kim Dong-won, the second-eldest, and Hanwha Galleria Vice President Kim Dong-sun, the youngest.

After the share transfer, Chairman Kim holds an 11.33 percent stake in Hanwha Corp., the group’s de-facto holdings firm. The eldest son possesses a 9.77 percent stake, while the other two sons hold a 5.37 percent stake each. As the three sons hold a 100 percent stake in Hanwha Energy, which holds a 22.16 percent stake in Hanwha Corp., they combine for a 42.67 percent stake in the holding unit to complete the conglomerate’s leadership succession.

Hanwha said that Chairman Kim would retain his top leadership role at the conglomerate after the stock transaction, continuing to oversee the group’s businesses and support its global expansion based on his expertise and worldwide networks.

According to Hanwha, the total amount of the gift tax due by the three Kim brothers is estimated at 221.8 billion won ($150.8 million) based on the stock's average closing price between March 4 and March 31.

The final taxing standard will be assessed based on the average price of the stock from two months before and after April 30 per insider trading disclosure regulations for publicly listed companies.

Hanwha underlined that it eliminates the possibility of claims that the share transfer was made when the stock price was low or that the stock price was intentionally manipulated.

The conglomerate added that the succession blueprint was irrelevant to Hanwha Aerospace’s decision to raise 3.6 trillion won through a rights offering announced on March 20. It reemphasized the group’s decision to raise capital for Hanwha Aerospace to proactively carry out investments and preemptively cope with the increasing competition among global defense leaders.

Earlier in the day, the Korean Corporate Governance Forum said Hanwha’s paid-in capital increase attempt hurt retail investors in terms of predictability and fairness and harmed the trust of Korea and Korean companies in the global financial sector.

The Financial Supervisory Service on Thursday last week ordered Hanwha Aerospace to submit a revised plan, as it deemed the company’s original filing to lack information required for investors to make reasonable investment decisions.

Hanwha Aerospace must submit the revised filing within the next three months. If not, the filing will be regarded as withdrawn.

The stock price of Hanwha Aerospace closed at 627,000 won per share Monday, down about 13 percent from the closing price of 722,000 won on the day of the company's announcement of the paid-in capital increase plan, March 20. The stock price of Hanwha Corp. finished the day at 40,950 won per share, down approximately 16 percent during the same period.

By Kan Hyeong-woo (hwkan@heraldcorp.com)