The chiefs of the financial arms of major conglomerates -- including Samsung, Hyundai and Hanwha groups -- will face eligibility screenings as the government recently toughened regulations on managing financial companies, officials said Sunday.

Under the nation’s revised corporate governance law, major shareholders of nonbanking financial entities, such as credit card, insurance and securities firms, are subject to periodic review by the Financial Services Commission on whether they are eligible to run the financial firms. 


The screening was originally only for banks and mutual savings banks, but its scope expanded as concerns on the stability of financial firms have risen following the bankruptcy of Dongyang Group, which damaged around 40,000 small investors by inappropriately selling commercial papers and corporate bonds in 2013.

Under the revised law, when controlling shareholders of financial entities violate finance-related laws, their voting rights will be restricted up to five years.

According to conglomerate tracker Chaebul.com, the heads of 64 financial firms including Samsung Life Insurance, Hanwha Life Insurance, Hyundai Capital Services and Mirae Asset Daewoo will face the eligibility screening.

Attention is being paid to whether business tycoons including Samsung Group chairman Lee Kun-hee and Hyundai Motor Group chairman Chung Mong-koo will face the FSC review.

As for the Samsung Group, the heads of eight financial affiliates including Samsung Fire & Marine Insurance, Samsung Life Insurance, Samsung Fire & Marine Insurance and Samsung Card will go through the eligibility review.
There is a high possibility that Samsung chairman Lee might also be subject to the review, as he is the largest shareholder of Samsung Life Insurance with a 20 percent share.

As for Hyundai Motor Group, the heads of five financial entities including Hyundai Capital Services, Hyundai Card and HMC Investment Securities will be subject to the eligibility screening.

Its group chairman Chung Mong-koo will also face the screening, as Hyundai Card’s largest shareholder is Hyundai Mobis, whose controlling shareholder is Kia Motors. Kia Motors’ biggest shareholder is Hyundai Motor.

Hanwha Group’s chairman Kim Seung-youn will also be subject to the review because he is the controlling shareholder of Hanwha Life Insurance, with a 22.7 percent share.

Financial companies are required to submit the names of their largest shareholders to the Financial Supervisory Service in February next year and the FSS is set to provide the results in May.

By Shin Ji-hye (shinjh@heraldcorp.com)