The never-ending family war at Lotte

At yesterday's extraordinary general meeting of shareholders, Lotte Holdings shareholders rejected Shin Dong Joo's plan to oust his younger brother Dong Bin from his leadership position there.

Last month, Dong Joo called a meeting to put him on the board of Lotte Holdings and fire the rest. However, shareholders rejected Shin Dong Joo's proposal. He has proposed a new board of directors for Lotte Holdings, with himself as CEO. Their father, Shin Kyuk Ho, will also join the board as founder.

Dong Joo also proposed allowing Lotte Holdings to pursue an IPO that could value the company at 1.1 trillion yen ($9.7 billion), and redistributing shares among key employees who hold a large stake in Lotte Holdings. He estimated that this group owns 27.8 percent of the shares, the second-largest after Kwang Yoon Sa.

However, a Lotte Group spokesperson also said that these plans do not seem feasible at present. Shin Dong Joo did not accept this result and said he would resubmit the proposal at the shareholders' meeting this June.

Shin Dong Bin - youngest son of Shin Kyuk Ho. Photo: AP

Lotte Group, the fifth largest conglomerate in South Korea, is witnessing a power struggle between Shin Dong Bin and his older brother, Shin Dong Joo. Dong Joo was removed from his position as Vice Chairman of Lotte Holdings by his younger brother in January last year.

In July 2015, Dong Joo tried to oust his younger brother from Lotte Holdings through his father, Lotte founder Shin Kyuk Ho. But the plan was thwarted when Dong Bin called an emergency meeting and convinced the board to agree to fire his father as CEO.

Therefore, Shin Kyuk Ho is currently only the honorary chairman of Lotte Group. Dong Bin is the chairman of Lotte Group (headquartered in Korea) and CEO of the parent company - Lotte Holdings (headquartered in Japan).

In early October 2015, Shin Kyuk Ho and his eldest son decided to sue his youngest son and the board members of Lotte Holdings to cancel the decision to fire him in July. A few days later, Shin Dong Bin was removed from the board of directors by his brother Kwang Yoon Sa (headquartered in Japan) - the largest shareholder of Lotte Holdings. Kwang Yoon Sa is the key to controlling Lotte Group, due to holding shares in many affiliated companies.

Although Lotte operates in Japan, the majority of its revenue comes from South Korea, where it has more than 80 affiliates operating in a wide range of sectors, from shopping malls to theme parks to hotels. Lotte Holdings is particularly important, as it holds stakes in many key companies and plays a role in coordinating the group’s strategies.

According to VNE