Fair Trade Commission: "Foreigners Can Also Be Designated as Identical Persons"... Will Kim Beom-seok, Chairman of Coupang, Become a 'Head of a Group'?

Implementation of 'Guidelines on Criteria and Procedures for Identifying the Same Person' in January Next Year

The Fair Trade Commission (FTC) has established criteria for designating the "same person" that encompass both domestic and foreign nationals. Attention is focused on whether Kim Beom-seok, chairman of Coupang, who has avoided being designated as the same person due to his U.S. nationality, can now be designated as such. However, the FTC stated that it is difficult to confirm whether Chairman Kim will be designated as the same person, as there are numerous factual matters to verify under the newly established exception criteria.

On the 27th, the FTC prepared an amendment to the Enforcement Decree of the Monopoly Regulation and Fair Trade Act, which sets the standards for determining the same person when designating corporate groups. The "Guidelines on Criteria and Verification Procedures for Determining the Same Person," which establish the standards for this determination, will also be implemented starting January next year.

The core of the amendment is the establishment of criteria for designating the same person that apply equally to foreigners as well as domestic nationals. The concept of the same person has been used since the introduction of the large business group system in 1986. It serves as the basis for designating the heads of corporate groups and determining the scope and targets of regulation. However, there have been concerns about the lack of clear criteria for designating the same person for foreigners, leading to unpredictability in cases where the same person holds foreign nationality.

The FTC defined 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 ▲ a person exercising dominant influence over the management of the corporate group ▲ a person representing the corporate group both internally and externally ▲ a person designated as the same person of the corporate group according to succession policies. The FTC decided to comprehensively consider these criteria and determine the same person as a natural person if these are met.

However, new exception conditions were also established. The main point is that if there is no difference in the scope of the corporate group and the investment, management, and financial transaction relationships between special related parties and affiliates are severed, a corporation may be regarded as the same person. The FTC explained that the key indicator of management participation by special related parties will be whether they "serve as executives."

Coupang continues its rapid growth, recording record-breaking performance in the second quarter of this year. The photo shows Coupang headquarters in Songpa-gu, Seoul. Photo by Jinhyung Kang aymsdream@

Han Ki-jung, chairman of the Fair Trade Commission, said, "Even holding just one share of issued stock can be considered as not meeting the exception conditions." He added, "In addition to investment relationships, debt guarantees and financial loans are related to private interest exploitation, so they have been established as exceptional conditions." The requirements for severance of management participation, investment, and financial transactions must all be met to satisfy the exception conditions.

The FTC refrained from commenting on whether Kim Beom-seok, chairman and largest shareholder of Coupang Inc., meets the criteria for determining the same person. Currently, the FTC classifies Coupang as a "large business group without a head." Although founder Kim exerts influence as the largest shareholder, he has avoided designation as the same person due to his U.S. nationality. Chairman Han added, "There are several factual matters that need to be newly verified under the newly established exception conditions, so it is difficult to predict whether Kim will be designated as the same person in the case of Coupang."

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