April 19, 2024

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[THE INVESTOR] Korea’s antitrust watchdog Fair Trade Commission has ordered “large companies” to report transactions with their overseas affiliates, industry sources said on May 30.

Large companies indicate those with assets of 5 trillion won (US$4.62 billion) or more that are subject to restrictions on financial and inter-affiliate transactions, as well as mandatory disclosures. 

The latest measure was interpreted as the watchdog’s attempt to more closely watch over larger industrial groups based on the assumption that the chaebol could use overseas subsidiaries to avoid regulations applied only to domestic affiliates.

Companies protested the move, saying it is an arbitrary interpretation of the law. “It seems to be a preemptive measure,” said an industry source on the condition of anonymity. “I doubt whether it is desirable to enforce disclosure rules on foreign corporations established under foreign laws.”

Until the end of last year, the FTC had annually investigated nine companies to check their disclosure compliance. Starting from this year it will check each designated large company. Penalties will be levied on firms found violating the laws.

By Park Ga-young (gypark@heraldcorp.com)