Exclusive
Former Hoban Group Chairman Kim Sang-yul faces inheritance lawsuit from siblings over mother's estate

[비즈한국] It has been confirmed through BizHankook’s reporting that the siblings of Kim Sang-yul, former Chairman and current head of Hoban Group, have recently filed a lawsuit against Hoban Construction and the former chairman demanding the return of their legal reserve of inheritance (legitimation portion). The suit seeks the return of the legal reserve for shares in Hoban Construction and real estate properties previously held by the former chairman's mother, who passed away last year. The ownership of the stocks and real estate in question was transferred to Hoban Construction and the former chairman, respectively, one to two months before the mother's death.

According to legal circles, the former chairman's older brother, A, and younger sister, B, filed a lawsuit for the return of their legal reserve against the former chairman and Hoban Construction last month. The objective is to recover the legal reserve of inheritance for stocks and real estate held during her lifetime by their mother, the late Baek Chae-nam, who passed away in February last year. Previously, the younger brother, C, also filed a similar lawsuit against the former chairman and Hoban Construction in May of last year.

The legal reserve of inheritance refers to a portion of the inherited property that is legally protected and cannot be taken away from a legal heir, even by a testator's will or gift. Under the Civil Act, lineal descendants and spouses are guaranteed one-half of their statutory share, while lineal ascendants are guaranteed one-third. If an heir's legal reserve is insufficient due to a testamentary gift or a donation made by the deceased within one year prior to the commencement of the inheritance, the heir may request the return of property from the recipient of such gift or donation.

Former Chairman Kim Sang-yul is the second of six children born to the late mother, Baek Chae-nam, and the late father, Kim Gap-hwan. He is preceded by his eldest brother, A, and followed by his third younger brother, C, a fourth younger sister, a fifth younger sister, B, and a sixth younger brother. His mother, Ms. Baek, passed away last February at a hospital in Buk-gu, Gwangju. As lineal descendants, the siblings of Kim Sang-yul became co-heirs, each holding a one-sixth stake in Ms. Baek's estate.

The property at the center of the legal reserve dispute is the Hoban Construction stock held by the late Baek Chae-nam. About a month before her death in January last year, Ms. Baek donated all 182,000 shares of Hoban Construction she held to the company. As of the end of December 2023, Hoban Construction valued the donated shares at 21.977 billion KRW, based on an appraisal value of 120,752 KRW per share. The siblings who filed the suit have demanded that Hoban Construction transfer 15,166 shares, equivalent to their legal reserve (one-twelfth) of the shares donated by Ms. Baek.

Another point of contention is a detached house in Gwangju that Ms. Baek had owned. Two months before her death, in December 2023, former Chairman Kim Sang-yul purchased the house, registered in his mother's name, located in Sotae-dong, Dong-gu, Gwangju, for 370 million KRW. The siblings who filed the suit claim that 282 million KRW was issued as a cashier's check from Ms. Baek's account, where the sale proceeds were deposited, on the day before she died, and that the former chairman used these funds. They are demanding that the former chairman, who effectively received the real estate as a gift from Ms. Baek, also pay the legal reserve portion for the property, estimated at approximately 20 million KRW.

Former Chairman Kim Sang-yul is the founder of Hoban Group. Since establishing Hoban in 1989 and entering the construction industry, he expanded the business primarily through public housing site development, growing it into the 34th largest conglomerate in Korea (with 16 trillion KRW in assets as of last year). He expanded into finance by establishing Hyundai Finance and broadened the group’s business scope into manufacturing, leisure, retail, and media through aggressive mergers and acquisitions. As the head of the group, the former chairman and his son, CEO Kim Dae-heon, hold 10.5% and 54.7% stakes in Hoban Construction, the group’s holding company, respectively. The former chairman stepped down as group chairman in 2021 and currently serves as the chairman of the Hoban Scholarship Foundation and the chairman of the Seoul Shinmun.