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Eased rules for jaebeol balanced by disclosures
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April 17, 2007
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Beginning in July, the Fair Trade Commission will hold large conglomerates to higher disclosure standards regarding their cross-affiliate investments, in exchange for loosening limits on such investments.
When a company belonging to a business group with assets of 2 trillion won ($2.1 billion) or more wants to trade goods or services with an affiliate that is at least 50 percent owned by someone from the group founder’s family, commonly called jaebeol, the company will have to obtain the approval of its board of directors and announce the trade at the Seoul stock market, the antitrust agency said yesterday.
The regulation is intended to prevent top conglomerates from focusing their trades on and giving privileges to their affiliates, the antitrust agency explained. The new obligation will take effect in July at the same time that the investment cap on top conglomerates will be loosened.
Now, every affiliate of a business group with assets of 10 trillion won or more is banned from investing more than 40 percent of its assets in other companies. The ceiling was raised from 25 percent of net assets last year.
The investment restriction will be loosened further in July, as the investment cap will be applied to only big affiliates with minimum assets of 2 trillion won. Then, only 27 large affiliates in seven major business groups, including Samsung Electronics Co. in the Samsung Group, will remain subject to the restriction. Now, 264 affiliates in 11 business groups are subject to the investment cap.
By Moon So-young Staff Writer [symoon@joongang.co.kr] |
