KFTC Controversy Grows Over Beomseok Kim as Controlling Person... Coupang Calls It "Discriminatory"

Coupang Cites Four Exemption Criteria in Official Statement

100% Ownership Structure... "No Risk of Private Interest Diversion"

Double Regulation for U.S.-Headquartered Public Company

Discriminatory Measure Compared to Other Foreign Companies

"Chairman Kim’s Brother Holds No Domestic Shares... Not a Registered Executive"

As the Korea Fair Trade Commission (KFTC) is expected to announce the results of its designation of publicly disclosed business groups as early as next week, attention is focused on whether Beomseok Kim, founder and Chairman of Coupang Inc., will be designated as "the same person" (de facto group owner), a demand that is growing among civil society organizations. Coupang, for its part, contends that it fully meets all the criteria for designation as set out in the government’s enforcement decree, and is opposing civil society groups’ calls for Chairman Kim to be designated as "the same person."

Beomseok Kim, Chairman of Coupang Inc. Photo by Coupang

According to government ministries and related industries on April 23, the KFTC plans to announce soon the results of its designation of publicly disclosed business groups and their controlling persons, a process it conducts every year before May 1 under the Fair Trade Act. Since Labor Day (May 1) has been designated as a public holiday starting this year, it is highly likely the results will be released earlier, around the end of this month.

Whether Chairman Kim will be designated as the controlling person is the most pressing issue this year. The “same person” designation identifies the de facto controller of a large business group. Since 2021, Kim has been excluded from this designation due to his U.S. citizenship and the fact that his relatives are not involved in Coupang’s management. Currently, the controlling person for Coupang is the Coupang corporate entity.

"The De Facto Controller Should Be Designated as the Same Person"

After the 2023 revision of the Fair Trade Act’s enforcement decree and the establishment of the “Guidelines on Criteria and Procedures for Determining the Same Person,” the KFTC has been enforcing these rules since 2024. Under the Fair Trade Act, for a corporation to be designated as the same person instead of an individual, all of the following criteria must be met: ▲ The scope of the business group must be the same whether the same person is designated as an individual or as a corporation; ▲ The individual must not directly invest in any domestic affiliates, with the exception of the top-tier company; ▲ Relatives must not invest in or serve as executives in domestic affiliates, or otherwise participate in management; ▲ There must be no loans or debt guarantees between the individual (and their relatives) and domestic affiliates.

The Economic Justice Practice Citizens’ Coalition (Gyeongsilyeon) Chaebol Reform Committee issued a statement in the morning, arguing that the KFTC had previously stated Kim is "the same person who de facto controls Coupang, serving as CEO and Chairman of the Board of Coupang Inc., and as an internal director of Coupang Korea." Based on this, the committee insisted, "This time, he must be designated as the same person."

Gyeongsilyeon stated, "It is hard to deny that Chairman Kim, as Coupang’s founder and ultimate decision-maker, exercises decisive influence over management, investment, and governance strategies." The group added, "The KFTC has so far postponed the designation, citing Kim’s control via overseas entities and his nationality, but it should no longer rely on formalistic interpretations and instead base its judgment on substantial control and economic influence."

Allegations that Kim’s younger brother, Yuseok Kim, is an unregistered executive at Coupang Inc. and involved in domestic operations have also fueled calls for Kim’s designation as the controlling person. During a parliamentary hearing at the end of last year regarding Coupang’s major data leak incident, it was revealed that Executive Vice President Kim received a total of 3 billion won in 2024, including his salary and the value of restricted stock units (RSUs). In response, KFTC Chairman Joo Byungki stated, "In the past, we judged that there was no participation in management, thus meeting the exemption, but we will investigate again this time."

A Coupang center in Seoul. Photo by Yonhap News Agency

Coupang: "All Government Exemption Criteria Met, Designation Would Be Discriminatory"

Coupang immediately issued a statement refuting Gyeongsilyeon’s claims, stating, "We meet all four exemption criteria the government uses to determine the same person," adding, "We deeply regret Gyeongsilyeon’s call for designation."

Specifically, Coupang explained that its governance structure is such that the Korean corporation owns 100% of its subsidiaries and sub-subsidiaries, and that neither Chairman Kim nor any of his relatives hold or own any shares in Coupang’s Korean affiliates. This, they argued, is different from other domestic conglomerates where owner families and relatives invest in affiliates or indirectly own companies through small stakes.

Next, Coupang argued that designating Chairman Kim as the controlling person would amount to double regulation for a publicly listed company headquartered in the United States. Since Coupang Inc., a U.S. listed company, fulfills all disclosure obligations required by the U.S. Securities and Exchange Commission (SEC), designating a controlling person would subject Coupang Inc. to dual disclosure and regulatory requirements from both the U.S. and Korean governments.

Under SEC Regulation S-K (Item 404), U.S.-listed companies are required to disclose all transactions exceeding $120,000 in which related parties have a material financial interest. Related parties include directors, officers, director nominees, or anyone who owns more than 5% of voting shares, as well as immediate family, including parents, in-laws, and siblings-in-law. Coupang stated, "If Chairman Kim is designated as the controlling person, major U.S. company CEOs who serve on the Coupang Inc. board would also be categorized as ‘related persons,’ and companies in which they hold shares or exercise control would, illogically, be considered Coupang affiliates."

Coupang also highlighted the case of S-Oil, where the controlling person was designated as a corporation rather than an individual, arguing that designating a controlling person for Coupang would be a discriminatory measure inconsistent with the principle of fairness applied to other foreign-invested companies. This, they argued, could violate the Most-Favored Nation obligation (Article 11.4) and investor protection obligation (Article 11.5) of the Korea-U.S. Free Trade Agreement (FTA), potentially hindering investment stability for investors and creating a barrier to long-term foreign capital inflows due to fairness issues concerning foreign companies.

Additionally, Coupang emphasized that the Chairman’s younger brother, despite allegations of management involvement, does not own any shares in Coupang’s domestic affiliates and is not classified as an executive (CEO, director, auditor, manager, etc.) under the Fair Trade Act. Coupang stated, "(Chairman Kim’s younger brother) is seconded from Coupang Inc. and is responsible for improving global logistics efficiency as part of his work," adding, "Like other employees of similar rank, he merely holds some listed shares of Coupang Inc."

Coupang asserted, "The same person designation system is intended to prevent abnormal corporate ownership and control by Korean conglomerate owners and their relatives through minority equity investments and to guard against the risk of private interests being diverted. The governance structure of Coupang Inc., which is subject to U.S. government regulation, is unrelated to such risks," adding, "If this system is applied for the first time ever to a foreign company CEO listed in the U.S., it will only produce negative side effects with no practical impact."

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