Conglomerates tightening grip over affiliates via non-profit foundations: FTC
[THE INVESTOR] South Korea‘s corporate watchdog said on July 1 that the country’s family-controlled business groups are strengthening their control over affiliates through non-profit foundations they control.
In December last year, the Fair Trade Commission (FTC) started an investigation into such organizations after foundations and organizations came under fire for their roles in expanding business group owners‘ control over various companies.
According to the FTC, 51 conglomerates subject to a slew of strict regulations had set up 165 foundations with average assets of 123 billion won (US$110 million) by the end of 2016.
Fair Trade Commission
The corporate watchdog said that group founding family members, heads of affiliated companies and related parties took board seats at 138 foundations.
Sixty-six non-profit organizations, or 40 percent, hold stocks in 119 companies affiliated with the conglomerates, accounting for 74 percent of stocks held by such organizations as assets.
In a meeting with chiefs of the country’s top five conglomerates in November last year, FTC Chairman Kim Sang-jo said the corporate watchdog would look at non-profit foundations run by large conglomerates.
Meanwhile, the government is moving to revise relevant laws to ban these organizations from wielding voting rights in group affiliates.
By Park Ga-young and newswires (firstname.lastname@example.org)