From Next Year, Logistics and IT Service Internal Transactions Exceeding 5 Billion KRW Must Disclose Sales and Purchase Status
Fair Trade Commission Revises Corporate Group Status Disclosure Regulations... Effective May 1, 2021
[Sejong=Asia Economy Reporter Joo Sang-don] Starting next year, business groups subject to disclosure with logistics and IT service transaction amounts exceeding 5 billion KRW between affiliated companies must disclose the sales and purchase status of such transactions.
On the 31st, the Fair Trade Commission announced that it has amended the "Regulations on Disclosure of Important Matters of Companies Belonging to Business Groups Subject to Disclosure" and will implement the changes from May 1st next year.
An official from the Fair Trade Commission explained the purpose of the amendment, saying, "Until now, internal transactions of goods and services between affiliated companies were disclosed only once a year as a total amount, and the status of internal transactions by industry was not disclosed, making it difficult for information users to grasp specific transaction details. In particular, the logistics and IT service sectors showed a significantly high proportion of internal transactions within business groups according to surveys and research reports, raising concerns that companies themselves need to make efforts to enhance the transparency and accountability of these transactions."
Accordingly, the Fair Trade Commission requires that if the annual transaction amount of logistics and IT services between affiliated companies accounts for 5% or more of sales or purchases, or is 5 billion KRW or more (200 billion KRW or more for listed companies), the sales and purchase status must be disclosed once a year. If the internal transaction amount of logistics and IT services this year meets or exceeds this standard, it must be disclosed next year.
Additionally, when disclosing the annual transaction amount of goods and services, the quarterly transaction amounts must also be specified.
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No Tae-geun, head of the Disclosure Inspection Division at the Fair Trade Commission, said, "This is expected to serve as an opportunity for business groups to further strengthen the accountability and transparency of transactions in sectors with a high proportion of internal transactions such as logistics and IT services." He added, "After collecting opinions from business groups, specific standards such as the scope of logistics and IT service industries subject to disclosure will be reflected in the manual, and the revised contents will be thoroughly guided and promoted through disclosure explanation sessions."
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