Yoon Chang-hyun, People Power Party Lawmaker Seminar
"Dilution of Single Owner Control Due to Business Succession"
"Growth of Big Tech Companies Like Naver Regardless of Family Relations"
[Asia Economy Reporter Lee Ji-eun] At a National Assembly seminar, a claim was made that the designation system for the same person, a core part of the corporate group designation system, should be revised to fit the times. It is necessary to narrow the scope of persons related to the same person, considering the rapidly changing environment surrounding companies.
On the 9th, Yoon Chang-hyun, a member of the People Power Party, held a corporate policy seminar at the National Assembly Members' Office Building under the theme "30 Years of the Corporate Group Designation System under the Fair Trade Act: Is It Okay as It Is?"
The corporate group designation system was introduced through an amendment to the Fair Trade Act in 1986 to prevent the concentration of economic power in large corporations. Every year, large corporate groups with assets exceeding 5 trillion won are designated, and the head of the group is designated as the same person of the corporate group and regulated accordingly.
Seminar participants pointed out that after 35 years since its introduction, the effectiveness is declining as the control of a single head is diluted and big tech companies unrelated to family relations are emerging one after another.
Kim Ji-hong, a lawyer at Jipyung Law Firm, pointed out, "It is excessive to impose the obligation to submit designation materials on the same person and to shift the duties that state agencies should perform onto the heads of large corporations, even imposing criminal penalties." He also argued that the scope of persons related to the same person should be narrowed. He said, "The current kinship regulations are based on relationships at the time of the 1986 regulation introduction," adding, "However, due to changes in family and kinship relations, sixth-degree blood relatives and fourth-degree relatives by marriage are no longer subjects of control, nor even economic interests." He also noted that as corporate succession extends beyond generations, the control of a single head is diluted, and corporate groups such as Naver, Kakao, and Coupang, which show governance structures unrelated to kinship, have also emerged.
Ji In-yeop, a professor of economics at Dongguk University, said, "The number of large corporate groups has more than doubled from 32 in 1987 to 76 in 2022, and platform-type corporate groups have emerged, but the system fails to provide concrete guidelines in this rapidly changing environment," urging for system improvement.
Yoon Chang-hyun, who hosted the seminar, also criticized the corporate group designation system, saying it "could turn into excessive regulation that hinders growth." Regarding the effectiveness of the same person designation system, he said, "When Naver was first designated as a large corporate group in 2017, founder Lee Hae-jin's stake was only 4%, but the Fair Trade Commission forcibly designated the same person. However, since Chairman Kim is a foreign national, it seems that even next year's same person designation will fail."
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