Tuna Company in Lending Business? Dongwon Industries Faces Three-Month Suspension

Dongwon Industries Caught for Failing to Report Registration Changes
Lending Business Targeted at Refrigerated Logistics Companies

Dongwon Industries is set to face sanctions from local governments for violations of the Lending Business Act. This follows the discovery of two violations during on-site inspections of lending companies conducted by local governments in the second half of this year: failure to report changes in registration information and omission of required information in lending contracts.

According to local governments and industry sources on November 28, Dongwon Industries recently received a preliminary notice from the relevant local authority. The sanctions include a fine of 8 million won and a three-month suspension of part of its lending business operations. If Dongwon Industries accepts the preliminary notice as is, it can voluntarily pay the fine at a 20% reduced rate. The business suspension will take effect for three months from the date the final decision is confirmed, after the period for submitting opinions has passed.

Dongwon Industries Booth at the 2025 Busan International Seafood Expo. Provided by Dongwon Industries.

The first violation was failing to report changes in registration information as required by the Lending Business Act. Article 12 of the Act mandates that any changes in shareholders, shareholding ratios, or executives must be reported to the relevant local government within 15 days. However, Dongwon Industries was found to have failed to report a change in shareholders within the required period. This violation is subject to a fine under the law, and the actual sanction was imposed in the form of a fine.

The company also omitted the "handwritten entry" required in lending contracts. Article 9 of the Lending Business Act and its enforcement regulations require that, to ensure transparency in lending contracts and protect consumers, key items such as the loan amount, interest rate, and repayment date must be handwritten by the borrower in the contract. During the local government's on-site inspection, it was discovered that some of Dongwon Industries' contracts lacked this handwritten information.

A local government official stated, "During this year's on-site inspections, most lending companies were found to have similar violations, such as missing handwritten entries or inadequate storage of original documents," adding, "Many of these cases occur due to a lack of understanding of the law."

Dongwon Industries added lending to its business objectives in its articles of incorporation in 2009 and began the business to provide internal financial functions, as many of its business partners in the refrigerated logistics sector require credit or collateral loans for facility construction or operating funds. Unlike so-called "private lending" targeting general consumers, Dongwon Industries mainly engages in business-to-business (B2B) lending with its partners. The interest rates offered by Dongwon Industries to these partners range from 6% to 10%, which is lower than the legal maximum rate of 20%.

This sanction resulted from the local government's regular on-site inspections. Every year, local governments conduct surveys and document checks on lending businesses above a certain size. This year's inspection reportedly focused on basic compliance items such as handwritten entries and the storage of original contracts, which are often overlooked as a matter of routine.

Dongwon Industries is currently considering whether to submit mitigating circumstances within the opinion submission period. If the company does not file a separate objection after receiving the sanction notice, the fine will be finalized and the business suspension will be enforced from the date of the final notice. A representative from Dongwon Industries stated, "We are preparing explanatory materials," adding, "We will thoroughly review the facts and faithfully follow the necessary procedures."

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