LG Electronics has agreed to take three seats on the five-member board of directors for its $1 billion joint venture with Canadian auto parts company Magna International.

The launch of the joint venture, which is tentatively named LG Magna e-Powertrain and will be based in Incheon, South Korea, was announced on December 23. The South Korean company, an affiliate of conglomerate LG Group, will split off part of its electric vehicle components business to set up the joint venture, with LG Electronics and Magna holding 51% and 49% stakes respectively.

A chief executive officer (CEO) will be appointed from among the senior leadership at LG Electronics, while the chief operating officer (COO) will come from Magna.

“The board of directors will have five members, which will consist of three choices by LG Electronics and two members appointed by Magna,” said an official at LG Electronics.

Both the CEO and COO will sit on the board. LG Electronics CEO Kwon Bong-seok and CFO Bae doo-yong have been named as possible candidates for the remaining two seats allotted to the firm, which will probably include the joint venture’s head of finance.

That was the case for LG Energy Solution, a subsidiary launched earlier this month by chemical company LG Chem when it split off its electric vehicle battery business. LG Chem CEO Shin Hak-cheol and Ha Bum-jong, head of finance at LG Corp, the holding company of the conglomerate, are among inside directors for LG Energy Solution, along with Kim Jong-hyun and Lee Chang-sil, the CEO and CFO of the company respectively.

It is said no discussions have taken place over appointments of outside directors. Under South Korean commercial law privately-held firms are not mandated to have outside directors. LG Electronics and Magna have no plan to list the venture on the stock market.

The joint venture deal is aimed at grabbing a bigger share of the fast-growing electric vehicle components market.

“The market for e-motors, inverters and electric drive systems is expected to have significant growth between now and 2030, and the JV will target this fast-growing global market with a world-class portfolio,” LG Electronics and Magna stated in a joint release.

The transaction is expected to be completed in July next year, pending the approval of LG Electronics’ shareholders. (Reporting by Choong-hee Won)

Source: LG Electronics