Internal Transaction Disclosure Threshold Relaxed from 5 Billion to 10 Billion Won... "Corporate Group Burden Will Decrease"

Fair Trade Commission Raises Threshold for Large Internal Transactions Requiring Board Resolution and Disclosure
Disclosure Threshold Raised from Current 5 Billion KRW to 10 Billion KRW
Transactions Under 500 Million KRW Excluded from Disclosure Obligations

Starting next year, the disclosure threshold for internal transactions within large corporations will increase from the current 5 billion KRW to 10 billion KRW. Small-scale internal transactions under 500 million KRW will be excluded from disclosure requirements. This is expected to reduce the disclosure burden on large corporations for major internal transactions.

On the 23rd, the Korea Fair Trade Commission (KFTC) announced that the partial amendment to the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, which includes these changes, passed the Cabinet meeting on the same day, and will be promulgated after presidential approval, taking effect from January 1 next year. The amendment to the enforcement decree was promoted as part of the KFTC’s comprehensive improvement plan for the large business group disclosure system announced in January.

Specifically, when domestic companies belonging to a disclosure-subject business group trade goods or services (hereinafter referred to as ‘internal transactions’) with other companies within the same business group, the threshold amount for board resolution and disclosure of large-scale internal transactions has been raised from 5 billion KRW to 10 billion KRW. Small-scale internal transactions under 500 million KRW are excluded from disclosure requirements.

The KFTC explained that the disclosure burden on companies for large-scale internal transactions has been eased. It also noted that this change addresses previous limitations where the system failed to adequately reflect changes such as economic growth and the expansion of business group sizes, which hindered the provision of meaningful market information. The KFTC emphasized, “Even with the increased disclosure threshold for large-scale internal transactions, internal transaction information will continue to be disclosed at the same level through other existing disclosure systems, thereby maintaining the market’s self-monitoring effect through disclosure.” Currently, the KFTC operates three disclosure systems: the board resolution and disclosure system for large-scale internal transactions, the business group status disclosure system, and the important matters disclosure system for unlisted companies.

The KFTC stated, “Based on the internal transaction information disclosed complementarily through these three disclosure systems, we will continuously conduct regular and ongoing compliance checks and closely monitor unfair internal transaction practices that hinder fair market competition or cause illicit wealth transfers.”

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