The conglomerate has been under pressure to resolve its complex structure and improve governance after a public feud between founding family members that began in 2015 and has pitted Lotte Group Chairman Shin Dong-bin against elder brother Shin Dong-joo.
The company highlighted that Shin Dong-joo sold the bulk of his shares in four major Lotte subsidiaries - Lotte Shopping, Lotte Chilsung Beverage, Lotte Foods and Lotte Confectionery - following a group stockholders' vote on August 29 that will convert Lotte into a holding company structure.
He also dismissed the idea that his stake sales mean that he is giving up on trying to obtain management control of the company. The chairman is the younger brother of Shin Dong-joo.
According to the meeting results, all four subsidiaries will be divided into operating and holdings entities.
A Lotte Group scion has made a decision to sell a large portion of his stakes to main affiliates of the South Korean group as an expression of his disapproval to the retail giant's plan of establishing a holding company. It will return to the stock market on October 30.
Shareholders of the four companies that are against the measure can decide to exercise appraisal rights before October 18.
Shin Dong-joo said that Lotte Shopping's losses and failing business in China would wrongfully jeopardize shareholder value for those small investors of the other three subsidiaries by making them share the retail arm's risks.
Shin stated that the offloading was his way of saying his objection towards the group's decision of setting up a holding business, since he believed that the splits and mergers would not benefit individual shareholders.
Shin Dong-joo is now engaged in legal procedures to take command of Lotte after his younger brother managed to secure control of the group two years ago.
The four affiliates criticized the elder Shin through an official statement for creating frustration in the market and confusion among shareholders based on "wrongful claims", arguing that the restructuring was designed to clear out Lotte's complicated cross-shareholding structure.
Analysts expect Shin Dong-bin to become the largest shareholder since he will be acquiring 10 to 20 percent of shares in the holding company, while the combined shares that he and his parties will be receiving would reach almost 50 percent.