[비즈한국] SD Biosensor137310 grew rapidly during the pandemic by manufacturing COVID-19 self-test kits, posting 1.4 trillion won in net profit. The group is controlled by owner Chairman Cho Young-sik (63). Chairman Cho exerts powerful control by holding a majority stake in the company both directly and indirectly. Both the holding company, Bionote377740, and the core subsidiary, SD Biosensor, share a similar governance structure, with Chairman Cho’s private firm, SDB Investment, sitting behind them.
At the end of last year, Chairman Cho Young-sik transferred a portion of his Bionote stake to his eldest daughter, Cho Hye-im, an executive director at SD Biosensor. This led to analysis that the succession process might have begun, as a gap emerged between the stakes held by Executive Director Cho and her younger brother, Bionote Director Cho Yong-gi. However, control of the group still remains with Chairman Cho. Attention is focused on how Chairman Cho will prepare for the succession.
SD Biosensor’s governance structure follows the path of Chairman Cho Young-sik (44.79%) → Bionote (36.49%) → SD Biosensor. In addition to Chairman Cho holding a 26.19% stake in SD Biosensor, his private company, SDB Investment, holds 15.79% of Bionote and 2.56% of SD Biosensor. In other words, Chairman Cho exerts exclusive control by directly and indirectly holding well over a majority stake in both Bionote and SD Biosensor.
While the control held by the Chairman’s two children is still significantly lacking compared to their father, the daughter currently holds a larger stake than the son. Until July of last year, both eldest daughter Executive Director Cho Hye-im (37) and son Director Cho Yong-gi (35) held an identical 1.57% stake in Bionote. However, in August of last year, Executive Director Cho purchased 0.12% (130,000 shares) on the open market, and in December, she received a gift of 4.9% (5 million shares) of her father’s holdings. The value of the gifted shares reached approximately 22.2 billion won based on that day's closing price. As a result, Executive Director Cho now holds a stake more than 5% higher than her younger brother.
Furthermore, as Executive Director Cho was appointed as a new director of Bionote last April, she now holds director positions at both SD Biosensor and Bionote. Unlike her younger brother, who holds no stake in SD Biosensor, Executive Director Cho also owns 0.01% of SD Biosensor. Consequently, analysts suggest that the weight of succession may be tilting toward the eldest daughter, Executive Director Cho Hye-im.
Currently, the value of the shares held by Chairman Cho is approximately 188 billion won for Bionote (44.79%, 4.57 million shares) and 300 billion won for SD Biosensor (26.19%, 32.59 million shares). In this situation, if he transfers his shares to his daughter, the highest tax rate of 50% would be applied as the tax base exceeds 3 billion won, and with the inclusion of the management premium, the effective tax rate reaches around 60%. Industry experts forecast that it may be burdensome to pass on the shares immediately, as Executive Director Cho would have to pay approximately 300 billion won in taxes.
Meanwhile, it was belatedly confirmed that the SD Biosensor building in Cheongdam-dong, Gangnam-gu, Seoul, owned by Chairman Cho Young-sik’s private company SDB Investment, was provided as tax collateral for the Chairman’s two children. According to the real estate registry, in June of last year, Executive Director Cho Hye-im and Director Cho Yong-gi signed tax collateral agreements worth 20 billion won in total—10 billion won each—providing the building to the National Tax Service as collateral. Given that the taxpayers are the Gangnam District Tax Office and the Dong-Hwaseong District Tax Office, it is presumed that they provided the company building as collateral because they could not immediately pay 10 billion won in national taxes (capital gains tax, gift tax, property tax, etc.). It seems highly likely that the two siblings have inherited in-kind assets worth over 20 billion won each from their father, Chairman Cho.
Bizhankook contacted Bionote multiple times regarding the succession and the tax collateral agreements, but we were ultimately unable to reach them.