Fair Trade Commission sanctions Daemyung Construction and two other companies for violating 'prohibition of stock ownership among affiliates'

Corrective Measures and Total Fines Imposed Amounting to 103 Million KRW

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission announced on the 16th that it has decided on sanctions against three companies?Daemyung Construction, Dongwon Roex, and Landfill Management?for violating the Fair Trade Act, which prohibits the grandchild companies of general holding companies from owning shares of domestic affiliates.

The Fair Trade Act prohibits grandchild companies of general holding companies from owning shares of domestic affiliates unless they own 100% of the shares issued by the domestic affiliate.

However, Daemyung Construction, a grandchild company of the holding company Daemyung Holdings, owned 80% of the shares of Sejong Vallion from December 4, 2017, to June 24, 2019. Dongwon Roex, a grandchild company of the holding company Dongwon Enterprises, owned 89.99% of the shares of Dongwon Roex Gwangyang from February 1, 2019, to February 20, 2019. Landfill Management, a grandchild company of the holding company EMC Holdings, owned 70% of the shares of YSTech from December 20, 2017, to October 9, 2018, thereby violating the restrictions on grandchild companies’ activities.

Accordingly, the Fair Trade Commission imposed future conduct prohibition orders and fines of 60 million KRW and 43 million KRW on Daemyung Construction and Dongwon Roex, respectively. In the case of Landfill Management, considering that the holding company EMC Holdings was excluded from the scope of holding company regulations on October 10, 2018, and that corrective orders would have no practical effect, a warning was issued.

A Fair Trade Commission official stated, "We will continue monitoring the activities of holding companies, subsidiaries, and grandchild companies to ensure that institutional measures within holding companies, designed to enhance transparency of ownership and control structures and strengthen management accountability, operate smoothly."

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