"Discrimination Regulations on Large Corporations Increase by 47% in 2 Years... Impact of Three Corporate Regulation Laws"

[Asia Economy Reporter Jeong Hyunjin] The number of 'discriminatory regulations against large corporations' that apply differently depending on the size of the company has exceeded 270, marking a 47% increase compared to two years ago, according to a recent survey. It is analyzed that the number of regulations applied to large corporations significantly increased following the enactment and revision of the three corporate regulation laws last year.

On the 22nd, the Federation of Korean Industries (FKI) surveyed the current laws and found that as of May this year, there are 275 regulations across 48 laws that discriminate against large corporations. This represents a 46.3% (87 regulations) increase compared to 188 regulations as of August 2019. The law with the most newly established regulations is the Financial Conglomerates Supervision Act, accounting for 47.1% (41 regulations) of the new regulations. This was followed by the Fair Trade Act with 36 regulations, the Venture Investment Act with 4, and the Commercial Act with 3.

The FKI pointed out that the major new discriminatory regulations against large corporations since August 2019 include the introduction of separate appointment of audit committee members under the Commercial Act, expansion of the scope of regulations on internal transactions under the Fair Trade Act, restrictions on voting rights for circular shareholdings in newly designated large corporate groups, and the establishment of supervision for financial conglomerates with financial assets exceeding 5 trillion won under the Financial Conglomerates Supervision Act. Other examples include the prohibition of venture investors from investing in mutually invested restricted corporate groups under the Venture Investment Act and the mandatory employment of safety and health managers under the Industrial Safety and Health Act.

(Data provided by the Federation of Korean Industries)

The FKI analyzed that as companies grow and are designated as large corporate groups, the number of applicable regulations increases significantly. If designated as a publicly disclosed corporate group with total assets exceeding 5 trillion won, 67 regulations apply, and if designated as a mutually invested restricted corporate group with total assets exceeding 10 trillion won, an additional 58 regulations may apply.

In particular, regulations applicable to large corporate groups account for 125 out of the total 275 regulations, representing 45.5% of all discriminatory regulations. Among the 87 newly established regulations since August 2019, 65 (74.7%) target large corporate groups, indicating that discrimination against large corporate groups has become more severe, the FKI pointed out.

The law with the largest share of discriminatory regulations against large corporations is the Fair Trade Act, accounting for 25.5% (70 regulations) of the total 275 regulations. This is followed by the Financial Holding Companies Act with 41 regulations (14.9%), the Financial Conglomerates Supervision Act with 41 (14.9%), the Commercial Act with 22 (8.0%), the Capital Market Act with 16 (5.8%), and the Industrial Safety and Health Act with 11 (4.0%).

By type, ownership and governance regulations are the most numerous with 125 (45.5%). These include regulations related to financial and banking holding companies under the Financial Holding Companies Act, separate appointment of audit committee members, and voting rights restrictions for major shareholders under the Commercial Act. This is followed by business regulations with 44 (16.0%), disclosure regulations with 32 (11.6%), and employment regulations with 30 (10.9%).