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Internal trading by large holding companies still remains high: regulator

All News 15:45 December 21, 2021

SEOUL, Dec. 21 (Yonhap) -- Transactions among affiliates of South Korea's large holding companies fell this year from a year ago, but such trading remained higher than that of large business groups that do not have such governance structures, the antitrust regulator said Tuesday.

A total of 27 large holding companies saw 13.7 percent of their sales be generated from inter-affiliate transactions this year, down from 15.3 percent the previous year, according to data by the Fair Trade Commission (FTC).

But the proportion was still higher than an average of 10.38 percent for 32 large business groups that do not have holding company structures.

The number of affiliates that are controlled by group chiefs and their family members, and not placed under the holding company structure, reached 225 this year, the FTC said.

The regulator said the latest data underscored the need to strengthen its supervision over large holding companies for possible unfair inter-affiliate transactions.

In South Korea, holding companies with assets of more than 500 billion won (US$419 million) are placed under the corporate watchdog's supervision.

The government has encouraged family-run conglomerates, called chaebol in South Korea, to convert themselves into holding companies to resolve their cobweb-like governance structure.

Most conglomerates have adopted holding company structures, but the scheme is also being used as a tool to strengthen the grip of founding families over affiliated firms, rather than to improve the transparency of management.

This image, provided by Yonhap News TV, shows the Korea Fair Trade Commission in the central administrative city of Sejong. (PHOTO NOT FOR SALE) (Yonhap)


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