The KFTC has adopted various regulations to address the issues of concentration of economic power to business groups. In particular, the KFTC established the Bureau of Business group to effectively deal with concentration of economic power, creating five divisions (Business group Policy Division, Holding Company Division, Disclosure Inspection Division, Internal Transaction Surveillance Division, and Unfair Support Surveillance Division) thereunder to tighten regulation on business group. Jipyong’s Antitrust & Competition Group renders legal service on full spectrum related to business group, such as designation/disclosure of large-scale business groups, including the designation of new business groups subject to disclosure (disclosure on current status, board of directors resolution and prior disclosure on large-scale internal transactions, disclosure of important matters for unlisted companies), recognition of independent management, transfer and exclusion of affiliates, reporting and conversion of holding companies, and restriction on mutual investment and debt guarantee.
Provision of funds, assets, labor, goods, and services to other companies including affiliates can be deemed as unfair support in favor of the other (unfair internal transactions). To prevent unfair internal transaction, comparison with usual prices and demonstration of unjustness of allegation are required, and it may cause controversies in the future along with the tightening regulations of internal transaction. Since internal transactions between affiliates are not illegal, a close examination through regular monitoring and management system is required before commencing transaction in order to avoid investigation or sanction by the regulatory authorities for unfair internal transactions (unfair support activities). Jipyong’s Antitrust & Competition Group has provided comprehensive advice on internal transactions based on extensive experience in the course of inspection and response to the KFTC and litigation. We endeavor to pre-emptively respond to tightened KFTC regulation on internal transaction.
Key Practice Areas Close
- Preparation for and response to the new designation of large business groups
- Consultation on the disclosure of large business groups
- Consultation on the establishment and conversion of a holding company
- Application for independent management of relatives and executives
- Representation in filing of a report of inclusion in, or exclusion from, affiliates
- Advice on restriction on cross shareholding and debt guarantees
- Advice on internal investigations and examination of inside trading (e.g., unfairly assisting a related party, unfairly providing benefit to a related party, etc.)
- Responding to the KFTC’s decisions on internal transactions
- Representation in administrative litigation (Cancellation of disposition of fines and corrective orders) related to internal transactions
Experience Close
- Represented Corporate Group ‘S’ in defending against the KFTC’s investigation on the regulation on corporate groups subject to limitations on cross shareholding
- Advised IMM Investment Corp. on the exclusion from the designation of corporate groups subject to disclosure
- Advised STIC Investment Inc. on the non-designation of corporate groups subject to disclosure in accordance with governance restructuring
- Represented a CEO of a company in a criminal case related to his failure to file documents designated to be filed by conglomerate and won an acquittal (affirmed by the Supreme Court)
- Responded to the restrictions on the alleged private profit-taking behaviors by SK group and the SK Group family members.
- Represented Hanwha Group in connection with restrictions on insider trading
- Represented an affiliate to SPC Group in connection with prosecutors’ investigation and administrative proceedings related to alleged unfair support to the affiliate
- Represented Eugene Group in connection with the designation of the Group as a conglomerate subject to corporate disclosure
- Represented Daou Kiwoom Group in connection with the designation of the Group as a conglomerate subject to corporate disclosure
- Represented NH Nonghyup Financial Group Inc. in a case related to a false report of the holding company’s current status of holding of stocks (secured a disposition of “warning” without a sanction for the case including criminal prosecution)
- Represented NH Nonghyup Financial Group Inc. in a criminal case related to a false report of the holding company’s current status of holding of stocks (secured a non-prosecution decision from the prosecutors)
- Represented Hanil Holdings Co., Ltd. in connection with the group’s conversion to the holding company system pursuant to the Fair Trade Law
- Advised “N” and “M” Groups on addition to and exclusion from affiliates
- Advised on “H” and “K” companies’ conversion into holding company
- Inspection on internal transactions of the “S”, “E” and “K” groups and conducted lawsuits
