LG그룹 지주회사체제의 성립과정과 의의

The Holding Company as a New Corporate Governance: The Case of LG Group of Companies

This paper explores the ways and directions in which LG group of companies transformed into the holding company system. LG group was the first among Korean chaebols, or family-owned business conglomerates, that has successfully adopted the holding company system as a new corporate governance. This epoch-making project was not easy to implement and took some four years to complete. A first holding company, called LGCI, was followed by a second, called LGEI. Then, LGCI merged LGEI, expanding into a third holding company, called LG. LG was later divided into two holding companies, LG and GS Holdings, the latter of which soon became independent to create a separate group, GS, of companies. This paper examines this complex and long-lasting process in terms of changes in ownership, control, subsidiaries and management organization in the major five(LG Chemicals, LG Electronics, LGCI, LGEI, LG) and other related member companies. Ownership has been increasingly handed over to a limited number of Koo Bon-Moo family members. Accordingly, control came to be more powerfully exerted by Koo Bon-Moo, who is now the head of the holding company, LG. A large number of subsidiaries of former LG group have gradually decreased because many of them became independent to join two new groups of companies, LS and GS, both of which were owned and controlled by members of the Koo families. The remaining subsidiaries have been gradually annexed to the holding companies - LGCI, LGEI and, finally, LG. As far as management organization is concerned, both LG Chemicals and LG Electronics, the two core subsidiaries, have maintained well-developed large-scale managerial hierarchies, while the holding companies had simple organizations consisting of a small number of staff.