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(LEAD) Regulator mulls easing curbs on large biz groups

All News 15:27 August 10, 2022

(ATTN: ADDS more details throughout)

SEOUL, Aug. 10 (Yonhap) -- South Korea's antitrust watchdog said Wednesday it plans to relax rules on large business groups under its tight supervision in line with the government's drive to ease corporate regulations.

Under a revised enforcement ordinance to the Fair Trade Act, the government plans to reduce the scope of "relatives" whose information chiefs of conglomerates are required to report to the watchdog, according to the Fair Trade Commission (FTC).

Every year, large business groups with assets of 5 trillion won (US$3.8 billion) or more are required to publicly file details on inter-affiliate transactions, their ownership structure and key information on non-affiliates.

To this end, heads of large business groups should report to the FTC shareholding status or other details of specially related people, including their spouses and relatives.

But chiefs of large business groups have said as the range of relatives designated under the FTC's regulations is too wide, it is burdensome to collect and report their information.

The regulator said if the new rule is implemented, the number of conglomerate chiefs' relatives will likely drop by half, while the number of affiliates of large business groups under its supervision will almost remain intact.

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

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

Instead, the FTC has decided to put under stricter supervision conglomerate chiefs' spouses who are in a de facto marital relation and have legally recognized children.

As such spouses are not currently classified as specially related people, they can evade the regulator's scrutiny even if they are major shareholders of affiliates controlled by chiefs of large business groups.

The FTC also plans to allow small companies and startups invested in by conglomerates to become their affiliates after a grace period of seven to 10 years.

The move is aimed at spurring investment in small companies and startups. If placed under conglomerates' wing, they are required to be governed by stricter regulations and forgo tax benefits and other financial support.

President Yoon Suk-yeol has vowed to ease regulations on the corporate sector in a bid to encourage investment and create more jobs.

Meanwhile, the FTC had sought to revise the ordinance in a way that allows the regulator to designate foreign nationals as chiefs of large business groups.

But the plan was withheld due to objections from the trade, foreign and other ministries, as they voiced concerns about possible trade frictions with the United States.

Last year, the regulator classified retail giant Coupang as one of the large business groups subject to tougher filing regulations.

But it did not name Coupang founder Kim Bom-suk, a U.S. citizen, as the head of a conglomerate, saying there is a lack of precedent and difficulties in the case of seeking criminal punishment.

Critics said the FTC's decision has given Coupang unfair favors, insisting that foreigners should be under supervision if they effectively take control of large companies here.


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