Lee was named as the executive chairman of the company.
The third generation of the founding family will now run the company.
Mr Lee was pardoned by the president in August.
He was sentenced to prison for a second time.
The company said that the board cited the current uncertain global business environment and the pressing need for stronger accountability and business stability in approving the recommendation.
The role Mr Lee has held has been formally announced. His father was hospitalized and he took over. He passed away in the year 2020.
The 54-year-old has been vice chairman of the crown jewel of South Korea's biggest business conglomerate for the past four years.
Mr Lee was freed from a South Korean prison on parole in August of last year.
He was sentenced to just over half a year in prison after being found guilty.
His release was made in the interest of the nation, according to the statement.
There are differing opinions on the parole of Vice-Chairman Jay Y Lee. It said that the views of the people who are against are correct.
After considering the effects of the Pandemic on South Korea's economy and global markets, the justice ministry decided to release Mr Lee.
He was pardoned by the new president.
Mr Lee was found guilty of various crimes and was sentenced to six years in prison.
The country's former President, Park Guen-hye, was sentenced to prison for corruption.
The company was founded by Mr Lee's grandfather and he has been in charge of the company for the last three years.
As a result of soaring inflation, rising interest rates and a gloomy economic outlook, demand for its products is falling.
On Thursday, the world's top maker of memory chips and phones reported a drop in profits.
As the global economic downturn hits the market for electronic devices, it warned that uncertainties around the world are likely to damper demand.
There is a chip factory in Singapore.
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