FedEx "342 Discriminatory Regulations Against Large Corporations... Half Related to Ownership and Governance"

3 out of 10 Are Old Regulations Over 20 Years Old
'Peter Pan Syndrome' of Big Corporations Giving Up, Worst in OECD

Among the 'large enterprise discriminatory regulations' that are applied differently according to company size, half were found to be related to ownership and governance structures such as board composition. Three out of ten discriminatory regulations were outdated regulations that have been in place for over 20 years. It was also found that the 'Peter Pan syndrome,' where small and medium-sized enterprises (SMEs) are reluctant to grow into large enterprises due to regulations, is at the highest level among OECD member countries.

The National Assembly plenary session on the 12th. [Image source=Yonhap News]

The Federation of Korean Industries (FKI) announced on the 14th that as of this month, there are 61 laws and 342 regulations related to large enterprise discriminatory regulations. By law, the Fair Trade Act had the most with 67 regulations (19.6%), followed by the Financial Holding Companies Act with 53 (15.5%), the Financial Complex Group Act with 39 (11.4%), and the Commercial Act with 22 (6.4%).

The Fair Trade Act includes prohibitions on mutual and circular shareholding for business groups with total assets exceeding 10 trillion won, behavioral regulations on holding companies with total assets over 500 billion won, and prohibitions on financial company ownership. The Financial Holding Companies Act contains the principle of separation between financial capital and industrial capital (geumsan separation), restrictions on acquiring shares in financial holding companies with total assets over 500 billion won, and regulations on shareholding ratios of subsidiaries and grandchild companies. The Commercial Act includes regulations such as the separate appointment of audit committee members for listed companies with total assets exceeding 2 trillion won.

By content, ownership and governance regulations were the most numerous with 171 (50%). These include regulations on financial and banking holding companies under the Financial Holding Companies Act, separate appointment of audit committee members under the Commercial Act, and restrictions on major shareholder voting rights. Entry and business regulations such as prohibitions on business acquisitions and shareholding restrictions numbered 69 (20.2%), followed by disclosure regulations with 38 (11.1%) and employment regulations with 35 (10.2%).

Outdated regulations that have been in place for over 20 years accounted for 103, or 30.1% of the total. Regulations between 10 and 20 years old numbered 86 (25.1%), and those less than 10 years old were 153 (44.7%). Examples of outdated regulations over 20 years old include the External Audit Act (introduced in 1980) and the Elderly Employment Act (1991).

The problem is that the Peter Pan syndrome has spread among SMEs. A survey of the proportion of large enterprises among 34 OECD member countries ranked Korea 33rd with 0.09%. Under the SME Act, if total assets exceed 500 billion won, an additional 126 regulations can be applied. If under 500 billion won, 57 regulations apply. This means that the number of regulations to be managed increases by 3.2 times once a company becomes a 500 billion won or larger enterprise.

Regulations increase further when becoming a large business group. If included in a disclosure target business group with total assets over 5 trillion won, 65 additional regulations apply; if designated as a mutual investment restricted business group with total assets over 10 trillion won, 68 more regulations may be applied. Regulations applicable to large business groups total 133, accounting for 38.9% of all regulations. Choo Kwang-ho, head of the Economic and Industrial Headquarters at FKI, stated, "It is necessary to review improvements starting with outdated large enterprise discriminatory regulations so that Korean companies can grow into global companies."

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