In recent years, the system has come under fire from critics and South Korean officials who say it stifles competition and undermines corporate governance. Elliott's proposal to combine some businesses with the new holding company would let the Lee family preserve its sway and boost transparency and accountability. "Converting Samsung Electronics into a holding company is an indispensable factor in the power transfer to the third generation of the owner family," said Park Ju Gun, president of corporate watchdog CEOSCORE in Seoul. "The founding family will be able to secure stable management control over the group, which is the final goal of this whole process." Elliott popped its proposal last month, when the company was mired in a massive recall of the fire-prone Note 7 smartphone and moving to elevate heir apparent Jay Y. Lee to a more pivotal role. Under the plan, Samsung would split into holding and operating companies, with the former likely to own about a 20% stake in the latter.