Samsung Electronics executive chairman Lee Jae-yong, also known as JY Lee, was acquitted of stock manipulation and accounting fraud by a South Korean court on Monday over a controversial merger of two company affiliates back in 2015.

The Seoul Central District Court ruled that prosecutors failed to prove that the merger of two of Samsung's affiliates, Samsung C&T and Cheil Industries, back in 2015, was unlawful.

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Prosecutors had claimed that the merger caused damage to shareholders and was done primarily to increase Lee's control over the conglomerate, while the chairman's lawyers argued there was no fraud involved and the merger was done to increase the value of both companies and part of normal business activity.

In a statement, Lee's lawyers said the ruling "clearly confirms" that the merger was lawfully done and thanked the court.

The legal victory is significant for the Samsung Executive Chairman -- the top boss of the entire Samsung conglomerate -- who was considered to be held back from taking a more active role in management due to the case. Samsung recorded one of its worst earnings performances in over a decade last year due to the global recession that dented demand for consumer electronics and computer chips.

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However, the ruling is from the district court and prosecutors can still appeal the decision and take the case to the appeals court, then later up to the Supreme Court.

Lee was already jailed back in for graft in 2017 and subsequently freed in 2021 from a legally separate case over a bribery scandal involving former South Korean President Park Geun-hye, who herself was jailed with an aide for taking bribes from large businesses.

Other 13 executives who were also indicted along with the Samsung executive chairman in the stock manipulation case were acquitted. Among the executives was former Samsung Electronics CEO Choi Gee-sung, who is considered to be one of the main figures behind Samsung's success in smartphones and chips today.

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Lee became the de factor leader of Samsung in 2014 when his father Lee Kun-hee suffered a heart attack and was hospitalized. After the senior Lee passed away in 2020, the current Samsung boss was named officially as the executive chairman of Samsung in 2022. JY Lee is the grandson of Samsung founder Lee Byung-chull, who founded the company in 1938.

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