Samsung and Kyobo Corporation Tax of 5000 Billion Won is a Devil Drive

The plan to list life insurance companies stocks, which had been prolonged for 15 years, has failed again.

The government decided not to prolong a time limit which is drawing close to the end of this year for an exemption from corporation tax over the revaluation margin of Samsung Life and Kyobo Life.

The aftermath of this failure is expected to be significant. The bondholder of Samsung Motors started legal actions against Samsung over the changing to money of Samsung Life stocks, which were given for the use of preserving liabilities of Samsung Motors by Lee Gun-hee, president of Samsung.

The Financial Supervisory Commission, which was confident of arranging a plan to list these stocks by the end of August, has been criticized as being unfaithful and decreasing the harmonizing function.

From starting the discussion of listing life insurance companies to failure: “The legal base to list the distributed gains is because the life insurance company is legally a joint-stock company, and life insurance companies have no intentions of driving the list stock, so it is decided that we should not present the government’s opinion,” Yoon Young-ro the policy bureau director of Financial Supervisory Commission said on October 17.

“Kyobo and Samsung Life admitted the reservation of 662 billion won and 887 billion won after an asset revaluation in 1989 and in 1990 is the contractors’ share, but they showed different opinions about the distribution size and process and could not reach a mutual agreement,” Na Dong-min the chairman of the listing consulting committee said.

The People’s Solidarity for Participatory Democracy, speaking for contractors, insisted Samsung Life should distribute at least 15% of stock when it is listed to contractors because the reservation fund occupied 30% of capital fund in 1990. On the other hand, two life insurance companies contradicted that they can not bear an amount of several thousand billion won.

The debate of listing a life insurance company was started in 1987 as the Government legislated a law about raising capital markets for floating up the stock market.

It is floated on the surface as Lee took 3.5 million shares out as the preservation of the liabilities of Samsung Motors to bondholders in 2000 followed.

The government tried a listing plan again after 2000 but failed also.

The aftermath of the failure of the listing of life insurance companies plan is expected to be great: Ministry of Finance and Economy tendered a strong measure not to prolong a payment limit of corporation tax for life insurance companies after the presentation of the Financial Supervisory Commission on the same day.

Samsung Life and Kyobo Life should pay back corporation taxes of 3,030 billion won and 2,140 billion won respectively by the end of this year, so cash pressure upon them is expected.

“It is unfair not to prolong the corporation tax payment as it could not be listed since a listing plan has not been arranged,” Samsung Life reported. They will institute a suit.

The bondholder of Samsung Motors is going to open a bondholder council by next week and resolve a plan for legal action, claiming a loss preservation against Samsung. As the listing plan has failed, selling Kyobo Life stock of Daewoo International is expected to fall through.

witness@donga.com