The world's biggest smartphone maker Samsung, assailed by a shambolic recall and embroiled in South Korea's wide-ranging corruption scandal, on Friday backed away from a planned corporate restructuring. Following the embarrassing recall of the Galaxy Note 7 smartphone and under pressure from activist shareholders to improve corporate governance, Samsung Electronics said last year that it was considering splitting the company in two.
Its vice-chairman Lee Jae-Yong, heir to the parent Samsung group, has since been arrested and indicted for bribery, along with four other senior executives, in connection with the graft scandal that saw ex-president Park Geun-Hye impeached.
But at the Samsung Electronics annual general meeting in Seoul, board chairman Kwon Oh-Hyun said the firm had reviewed legal and tax issues around proposed division into a holding company and an operating unit, and identified "some negative effects".
He did not elaborate, but told shareholders: "At this moment, it seems difficult to carry it out."
Shares in Samsung Electronics - the group's flagship subsidiary - closed 0.72 percent down, having hit record highs this year on expectations of higher profits.
Samsung SDS plunged 8.47 percent and Samsung C&T was down 7.27 percent. Various Samsung units have cross-shareholdings in other parts of the group, a byzantine structure that enables the Lee family to control the business empire, which has revenues equivalent to a fifth of South Korea's GDP.
A promised new governance committee, made up of independent outside directors, will still be set up by the end of April, Kwon said.
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