Blue House Panel Suggests Easing Rules on Firms

Responding to requests from the business community, the Regulatory Reform Committee said Wednesday it has decided to ease several restrictions on Korea's conglomerates.

The government said it would accept the suggestions made by the Blue House committee and start revising the related laws gradually.

One change would abolish a rule that forces the top 30 business groups to treat a corporation formed with a foreign firm as their subsidiary when the majority of the new firm's board is Korean.

Assuming the revision is made, the new rule would apply as long as the Korean and foreign investors elect at least the same number of directors.

The government will also offer subsidiaries of the top 30 conglomerates some relief in the area of affiliate cross-guarantees, which fair trade law prohibits.

Seoul recently rejected requests from business that subsidiaries under debt restructuring plans be exempted from this regulation, imposed on the top 30 groups, because the subsidiaries' managements are still intact.

Instead of forcing them to eliminate the debt guarantees, the government will just encourage them to reduce the assurances. If these firms fail to reduce their cross-guarantees, fines will not be imposed. Also, under the revisions, when a company goes under a debt restructuring program, it must set up debt repayment schedules with creditors but its management retains their posts.

The committee said it would loosen the rules that require large business groups to post transactions with their financial affiliates involving short-term financial products as soon as they occur. If the change is made, the firms would be allowed to post the transactions at the end of every quarter.

The government said it will finalize the deregulation plans Thursday, and will demand that corporations improve transparency and responsibility in management in exchange for the regulatory relief.

by Song Sang-hoon