LH Organizational Restructuring: 'Housing Welfare + Development Vertical Separation' Holding Company Likely

Residential Welfare Sector in Parent Corporation... Land and Housing Development Sector in Subsidiary Corporation
"Establishing Dual Controls for Government Oversight by Sector and Development Sector Control"

[Asia Economy Reporter Kangwook Cho] The conversion of Korea Land and Housing Corporation (LH) into a holding company is becoming highly likely. The restructuring plan involves vertically separating the housing welfare division as the parent company and the land and housing development division as subsidiaries.

On the 20th, the Ministry of Land, Infrastructure and Transport held the second public hearing at the National Assembly to discuss the LH organizational restructuring plan and stated that this restructuring plan is the most rational.

Previously, the government proposed three options regarding the LH organizational restructuring.

The first option is to have two organizations: the land division and the housing + housing welfare division. The second option is to horizontally separate the housing welfare division and the housing + land division.

The third option is a holding company system where the housing welfare division becomes the parent company and the housing + land division becomes the subsidiary. At the public hearing, the Ministry of Land, Infrastructure and Transport proposed that "the organizational restructuring of vertical separation with the housing welfare division as the parent company and the development division as the subsidiary is rational."

The Ministry explained that by designating the housing welfare and development divisions as public institutions, each division can be subject to government control, while establishing a dual control mechanism where the housing welfare division controls the development division. Additionally, the Ministry added, "Under clear legal grounds, it is stipulated that development profits are distributed to the housing welfare division, allowing the housing welfare division to recover development profits and secure stable investment funds for housing welfare."

Furthermore, the Ministry explained that reorganizing the structure in this way would enable special legislation regarding national and local taxes and minimize tax burdens by applying consolidated corporate tax filing.

Meanwhile, based on the second public hearing following the first held on the 28th of last month, the government plans to finalize the plan by the end of this month through consultations with the National Assembly.

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