Foreigners Also Designated as Heads of Large Business Groups
Exemptions Apply When Conditions Are Met
Large Business Groups to Be Designated Soon This Year
The Fair Trade Commission has established grounds to designate foreigners as the same person (head) of large business groups. However, even if the individual is a foreigner, a corporation can be designated as the head if certain exceptional conditions are met.
The Fair Trade Commission announced that the amendment to the Enforcement Decree of the Monopoly Regulation and Fair Trade Act (Fair Trade Act), which sets the criteria for determining the same person when designating large business groups, passed the Cabinet meeting on the 7th. The same person refers to the individual (natural person) or corporation that substantially controls a specific business group, and based on this same person, the scope of the business group and the application of large business regulations are determined.
The amendment codifies the criteria for determining the same person that can be generally applied to all subjects without nationality discrimination. If there is no difference in the scope of the business group and if the participation in management, investment, and financial transactions of special related parties such as relatives are severed, an exception is made to allow a corporation to be designated as the head regardless of nationality, even if there is a natural person controlling the business group.
In other words, whether the same person is regarded as a natural person or a corporation, in the case of a business group with the same scope of domestic affiliates, the conditions are: ▲ the natural person controlling the business group does not invest in domestic affiliates other than the top company ▲ the relatives of the natural person do not invest in affiliates ▲ the relatives of the natural person do not participate in management such as serving as executives ▲ there are no debt guarantees or financial transactions between the natural person, relatives, and domestic affiliates.
If a business group designated with a domestic company, nonprofit corporation, or organization as the same person fails to meet these conditions, grounds have also been established to change the designation back to a natural person as the same person.
The amendment to the Enforcement Decree of the Fair Trade Act, which passed the Cabinet meeting on this day, will be promulgated after the President's approval and will take effect immediately.
This amendment will also be reflected in this year's designation of large business groups. The Fair Trade Commission stated, "The criteria for designating the same person according to this amendment to the Enforcement Decree will be applied to the upcoming designation of large business groups this year, and it is expected to enhance the objectivity, rationality, and predictability of the designation of large business groups."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
