Hyundai Group, which gave up its management rights of Hyundai Merchant Marine (HMM) in the course of restructuring, was excluded from the list of major business groups subject to the limitations on cross-shareholding. It is the first time to be excluded from the list in 29 years after it ranked top in terms of asset size in 1987.
The Fair Trade Commission (FTC) announced on October 20 that it approved Hyundai Group’s request to exclude HMM from its affiliates. It said Hyundai will not be able to wield influence over HMM as the stake in HMM owned by the head has reduced from 23.1 percent to 1 percent in the process of capital reduction and creditors have secured the largest share of 39.9 percent through a debt-for-equity swap.
Accordingly, Hyundai Group, which used to have 21 affiliates and total assets of 12.8 trillion won (US$11.34 billion), now have only 12 affiliates and total assets of 2.56 trillion won (US$2.27 billion). It means the group will not be subject to the limitations on cross-shareholding any more.
The FTC releases a newly updated list of large business groups banned from having cross-investments among affiliates every April. However, when a company sees the amount of assets drop sharply to under 7 trillion won (US$6.2 billion) like Hyundai, the antitrust agency allows it to be excluded from the list immediately.
The FTC designates business groups with over 10 trillion won (US$8.86 billion) in total assets as large business groups subject to cross-shareholding restrictions.
When designated as large business groups, businesses face prior regulations, such as a ban on cross-shareholding and mutual loan guarantees and limitations of voting rights on stakes held by financial subsidiaries, and ex post regulations, including restrictions on founder’s families defrauding private interest and duty of publication.