Fair Trade Commission to Prioritize Review of Same-Person Scope and Criteria... Research Project to Begin Next Month

'Coupang Same Person' Designation Controversy… Institutional Limitations on Foreign Owner Regulation
Experts: "Supervision of Private Interest Appropriation Needed Considering Shareholding and Influence"

Kim Beom-seok, Chairman of the Board of Directors at Coupang (Photo)

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission (FTC) has decided to prioritize establishing clear standards for the definition and requirements of the "same person" designation. While clarifying the criteria for foreigners, it is also expected to adjust the scope and standards of related parties (spouses, blood relatives within six degrees, and relatives within four degrees).

An FTC official said on the 30th, "We plan to start a research project next month to develop improvement measures for the same person designation system," adding, "We will review the definition and requirements of the same person, the scope of related parties, and procedures for confirming and changing the same person."

The FTC designated Coupang as a publicly disclosed business group and Coupang Inc. as the same person in its announcement of the '2021 Designation Results of Publicly Disclosed Business Groups' the day before. The reason the FTC decided to review the definition of the same person first is that this is the core of the controversy that arose during the designation process of Coupang's owner. The FTC explained that the reasons for not designating Chairman Kim as the owner were △ there is no precedent for designating a foreign owner and △ there are institutional limitations in regulating foreign same persons. Ultimately, it became clear that under the current system and legal framework, there is no basis or effectiveness in designating Chairman Kim as the owner.

Professor Lee Hwang of Korea University Law School said, "Although the definition and requirements of the same person are extremely sensitive and variable, making legal regulation difficult, the absence of a legal definition of the concept is problematic," adding, "Because the criteria for determining the same person have not been legally clear, there have been concerns that the FTC arbitrarily designates the same person, so it is necessary to resolve these concerns and provide predictability to companies." He continued, "The Monopoly Regulation and Fair Trade Act can define the same person as 'a person who substantially controls the business group' and specify shareholding relationships, management influence, and actual participation in subordinate regulations. Currently, related parties are defined based on blood relations, but considering the shareholding relationship and management influence with the company, it is possible to review managing and supervising those who have the potential for private interest appropriation."

There is also a strong voice that the institutional reform target should not be limited to the same person designation system but expanded to the entire large business group designation system. Professor Joo Jin-yeol of Pusan National University Law School said, "South Korea is the only country that regulates large business groups based on asset size," adding, "This could ultimately hinder corporate growth, so it is time to discuss the criteria for designating large business groups."

Professor Lee also believes that the number of mutual investment restricted business groups, which are subject to additional regulations such as prohibition of mutual and circular shareholding, prohibition of debt guarantees, and voting rights restrictions on financial and insurance companies, among publicly disclosed business groups, should be drastically reduced. He said, "Although the mutual investment restricted business groups will change to those with assets exceeding 0.5% of GDP starting the year after GDP surpasses 2,000 trillion won, even applying this standard, the number is too high," adding, "It should be drastically reduced to around 5 to 10 groups according to economic concentration and the FTC's capacity for management and supervision."

In fact, among the 71 publicly disclosed business groups in 2021, the top 30 groups accounted for 87.1% (1,895.91 trillion won) of the total assets (2,176.102 trillion won), and the top 10 groups accounted for 68.3% (1,485.809 trillion won).

This content was produced with the assistance of AI translation services.