KFTC Sanctions HL Holdings for Violating "Separation of Banking and Commerce," Holding Financial Company Shares for Over 9 Years

Held 1.03% Stake in Korea Business Finance

Stake Inherited in Past Succession Process... Violation Resolved Through Sale

HL Holdings has been sanctioned by the Korea Fair Trade Commission (KFTC) for violating the “separation of banking and commerce” principle, which prohibits general holding companies from owning shares in financial companies.

On the 13th, the KFTC announced its decision to impose a corrective order on HL Holdings and a fine of 9 million won for violating the restrictions on holding company activities.

According to the KFTC, when HL Holdings converted to a general holding company in September 2014, it owned 60,000 shares (equivalent to a 1.03% stake) of Korea Business Finance Co., Ltd., which operates in the financial sector. Under the current Monopoly Regulation and Fair Trade Act, general holding companies are required to dispose of shares in financial or insurance companies within a two-year grace period from the date of conversion. However, HL Holdings failed to comply and continued to hold the shares for approximately nine years.

Korea Business Finance Co., Ltd. was established in 1995 through joint investment by the Federation of Korean Industries and the Korea Federation of SMEs as a company specializing in financial support for small and medium-sized enterprises. HL Group (formerly Halla Group) inherited the stake through companies such as Mando Machinery.

The KFTC determined the fine amount at 9 million won, taking into account that HL Holdings immediately sold all the shares upon recognizing the violation, thereby remedying the situation, and that the low ownership stake meant the company did not exercise actual control.

The KFTC stated, “This action identifies conduct that undermined the purpose of the holding company system, which is to create a simple and transparent ownership and control structure,” adding, “We plan to continue closely monitoring and strictly sanctioning violations of restrictions on the activities of holding companies.”

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