In June 2016, the Korean Fair Trade Commission
("KFTC") announced its proposed amendment to the
Enforcement Decree of the Monopoly Regulation and Fair Trade Act
("MRFTA," and such proposed amendment, the
"Proposal"). The Vice Minister and the State Council have
reviewed the Proposal.
Mainly, the Proposal seeks to narrow the scope of an
"Enterprise Group subject to Limitations on Mutual
During September 2016, the KFTC is seeking comments from the
public, interested stakeholders, and other relevant government
authorities. In October 2016, the KFTC will submit the Proposal as
an agenda item for the National Assembly.
Key Highlights of the Proposal:
Scope of "Enterprise Group subject to imitations on
Mutual Investment" Narrowed
Under the current regime, an enterprise group with consolidated
assets of KRW 5 trillion or more is regarded as being subject to
the Limitations on Mutual Investment.
In an effort to reflect the relevant economic circumstances
(changes), including the growth in the Gross National Product
("GNP"), the Proposal seeks to adopt an adjustment
(increase) to the asset size threshold to KRW 10 trillion.
Likewise, under the existing exemption, an enterprise group with
consolidated assets not exceeding KRW 7 trillion will be excluded
from the scope (as compared to those with less than KRW 3.5
In addition, the Proposal would exclude a public enterprise
Such an enterprise group has been under regulation in terms of
capital contribution requirements, disclosure requirements, as well
as mid-and long-term financial management requirements (e.g., via
the Act on the Management of Public Institutions, and the Local
Public Enterprises Act).
Deadlines Adjusted / Extended
The current regime requires the KFTC to complete its designation
of enterprises subject to Limitations on Mutual Investment by April
1 of each year (or April 15, if necessary).
In Korea, as most enterprises hold a general meeting of
shareholders in late March, the Proposal seeks to take into account
practical difficulties in preparing relevant materials for KFTC
Accordingly, the designation deadline is to be adjusted to May 1
of each year (or May 15, if necessary).
Also, the Proposal extends the deadline to file details of
equity ownership and debt guarantee status for a company newly
designated as an enterprise subject to Limitations on Mutual
Investment from the end of April to the end of May.
Asset Requirement for a Holding Company
The Proposal would increase from the current KRW 100 billion
holding company asset requirement to KRW 500 billion to bring it in
line with the above threshold adjustments.
Regular Threshold Review (New Requirement)
In order to timely incorporate changing dynamics in the business
environment, the Proposal seeks to adopt a provision requiring a
review of the above thresholds every three years, including the
holding company asset requirement.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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