Deregulation for Business Groups Anticipated
The Korea Fair Trade Commission reported to President Yoon Suk-yeol that it would discuss how to improve rules and regulations applied to conglomerates.
The discussion is likely to cover separation between industrial capital and financial capital. According to the current law, a general holding company cannot own financial and insurance company shares and a financial holding company cannot own non-financial company shares. Although details are yet to be determined, non-financial holding companies’ corporate venture capital ownership is expected to expand.
Preparations for foreign owner designation will continue, which is closely related to Coupang and Lotte in particular. According to the commission, conglomerate owners’ spouses and descendents include foreigners and dual citizens in at least 10 South Korean conglomerates. Once a foreigner is designated as a conglomerate head, his or her spouse and relatives must disclose their shareholdings along with their transactions with subsidiaries.
The commission is also considering adjusting the scope of conglomerates subject to the duty of public disclosure, which has been more than five trillion won in assets since 2009. The threshold has never changed since then, failing to reflect the growth of the economy and enterprises since that year. As a result, the number of business groups subject to the duty increased from 48 to 76 from 2009 to 2022. The commission is likely to make an adjustment to reduce the number.