"'American' Coupang's Kim Beom-seok Also as Owner"… Fair Trade Commission Codifies Owner Criteria for the First Time in 37 Years

Fair Trade Commission Formalizes Criteria for Identifying Same Person (Head of Group) for the First Time Since Introduction of the Fair Trade Act

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The Fair Trade Commission (FTC) has established explicit regulations to determine the "same person" (the head of a large conglomerate). Since the concept of the same person was introduced in the Fair Trade Act in 1986, the criteria have only been applied in practice, and this is the first time they have been formalized. The FTC explained that, given the emergence of various forms of governance structures, the determination of the same person will focus on substantial influence based on the newly codified regulations.

The FTC announced that it has prepared a draft of the "Guidelines on Criteria and Procedures for Determining the Same Person" and will hold an administrative notice period from June 30 to July 20. The draft establishes five criteria for determining the same person, which serve as a reference point for corporate group policies, and formalizes the procedures for confirming the same person that have been practically operated since 2021. It also introduces a new objection procedure for corporate groups regarding the results of the same person confirmation.

The FTC set five criteria for determining the same person: ▲ the largest shareholder of the top-tier company in the corporate group ▲ the highest-ranking executive of the corporate group ▲ the person exercising dominant influence over the management of the corporate group ▲ the person recognized as the representative both inside and outside the corporate group ▲ the person designated as the same person according to the succession policy of the corporate group. Once designated as the same person of a large corporation, various matters such as stock transaction details of relatives, including the biological mother of children born outside of marriage, must be reported, and failure to do so results in penalties. The FTC explained that it designates the same person by comprehensively considering these five criteria.

Han Ki-jung, Chairman of the Fair Trade Commission, stated, "With the emergence of various governance structures and the increasing complexity and diversity of variables related to the designation of the same person, it has become necessary to consider the five criteria in a balanced manner." He added, "Among the five criteria, we will primarily focus on the substantive criterion of 'the person exercising dominant influence' and comprehensively review the codified standards to determine the same person."

In particular, when determining the largest shareholder of the top-tier company in the corporate group, if the largest shareholder is not a natural person but an affiliate company or institutional investor, indirect shares owned through domestic and overseas affiliates are also aggregated along with direct shares in the top-tier company to identify the natural person who meets the criteria. Additionally, the criterion of "the person exercising dominant influence over the management of the corporate group" is met by those who continuously exercise dominant influence over major decisions and business execution, such as appointing or dismissing executives, organizational changes, and new business investments.

The FTC explained that based on these regulations, Kim Beom-seok, Chairman of the Board of Coupang, who has so far avoided designation as the same person, can be considered the same person. Chairman Han said, "In the case of Coupang, the first criterion (largest shareholder of the top-tier company), the third criterion (person exercising dominant influence over management), and the fourth criterion (person recognized as the representative inside and outside the corporate group) are all met," adding, "We believe that Kim Beom-seok, as a natural person, has the substance to be regarded as the same person." Although the same criteria were applied during the determination process in May, resulting in the same conclusion, Kim Beom-seok was not designated as the same person considering usual frictions and other issues.

The FTC stated, "Since the concept of the same person was introduced in the Fair Trade Act in 1986, it is significant that explicit regulations on the criteria and procedures for determining the same person, which have been operated only in practice for about 37 years, have been established for the first time." It added, "Through this draft, transparency and objectivity in determining the same person will be enhanced, increasing predictability for those subject to compliance."

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