South Korea’s Taekwang Group on Tuesday unveiled plans to improve overall management structure that will significantly reduce the number of affiliates held by the owner family to wane criticism against intra-group trading that favors affiliates owned by family members.

Booknlife, a voucher issuing company under Taekwang Group, said in a regulatory filing on Tuesday that it will merge with the investment entity spinning off from Tsis Inc., the conglomerate’s information technology (IT) solutions company, as of April 1, and also with Shoppingnt Inc., a mobile shopping mall operator managed by the conglomerate.

Booknlife is owned 51 percent by former Taekwang Group Chairman Lee Ho-jin and 49 percent by his son Lee Hyun-joon. The company will eventually become the holding company of the group, sources said.

Former Taekwang Group Chairman Lee plans to give 100 billion won ($93 million) worth of shares in Tsis’s operating unit to a third party, excluding specially related individuals. The method of asset donation will be decided after legal consideration in the first half of next year.

According to Taekwang Group, the share donation by the former chairman will help resolve controversy over suspected intra-group trading favoring family-owned affiliates including Tsis where Lee is the largest shareholder. Taekwang Group’s move to reform overall management structure is part of a move to take action after warning was given the Fair Trade Commission over intra-group transactions.

Tsis, a computer programming and system integration management company that provides IT services to Taekwang Group units, was under fire for being involved in unfair intra-group transactions with other affiliates.

Taekwang Group, meanwhile, has been putting out efforts to simplify overall investment structure since last year to respond to growing demand for corporate governance reform. The elder Lee sold off his shares in Sekwang Fashion Co. to Taekwang Industrial Co. in December, last year, and also donated all of his shares in wine retailer Mervin Co. worth 5.5 billion won to Taekwang Tourist Development Co. in July. Design company Esteem was also sold off to Tsis.

Once Lee gives up his shares in Tsis, Taekwang Group will manage 22 affiliates, down from 26. Only one unit - Booknlife - will be owned by the owner family, down from the current 7 that includes Sekwang Fashion, Mervin, and Esteem, the group said.

By Hwang Soon-min and Lee Eun-joo

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]