The court said he was guilty of offering bribes to the former president and her close friend Choi Soon-sil to facilitate a smooth handover of power at Samsung, which is a publicly traded company.
Foreign investors who collectively hold more than 50 percent stake in the world's largest smartphone manufacturer may demand the company's board of directors be replaced as Vice Chairman Lee Jae-yong on Friday was sentenced to five years in prison for bribery, embezzlement and other charges, an industry insider said.
"When a public servant conspires with a non-public servant to receive bribes and the non-public servant, who is an accomplice, takes the bribes, it is the same as the public servant taking it", the judge Kim Jin-dong said, referring to the Park-Choi relationship.
Lee was also found guilty of perjury and other offences. Lee has been accused of offering bribes of 38 million Dollars for various departments after the death of his father.
Lee who denied any wrongdoing in the case is the vice chairman of Samsung Electronics and son of the Samsung group head Lee Kun-hee. The panel's judgement was that the over 8 billion won (about United States $7.1 million) given under the pretext of "confidential" support for the two causes was because the two parties had an implicit understanding that Vice Chairman Lee would succeed Samsung Group Chairman Lee Keun-hee, who was ill at the time, as the head of operations at Samsung.
Although Samsung Electronics is not a US company, the scope of the law was extended in 2008, which opened the possibility it could include the South Korean firm, experts said. The court's finding was that "the president's level of involvement in using the foundations in the pursuit of personal gain was active and significantly high".
Under Korean law, Lee can be kept in detention a maximum of four months while a court considers his appeal.
The ruling in Lee's case can be appealed twice.
The closely-watched verdict is the latest convulsion in a political scandal that prompted millions of South Koreans to protest last fall, culminating in the ouster and arrest of Park as well as the arrests of Choi and Lee. Lee has two sisters, but neither has been heavily involved in Samsung Electronics, which is widely regarded as the center of the Samsung empire.
Thus far, Samsung's revenue equal about one fifth of the country's GDP, and some sources fear the imprisonment of a notable commercial figure may cause ripple effects through the country.
Samsung Electronics Chief Executive Kwon Oh-hyun asked employees to rally around the company.
Samsung Group headquarters in southern Seoul. Among those 10 giants, the leaders of six have been convicted of white-collar crimes, with many being pardoned or having had their sentences commuted.