[EDITORIALS]Please, protect our companiesTwelve affiliates of six business groups, including SK and KT, were slapped yesterday with voting right restrictions, equity sales bans and fines by the Fair Trade Commission. The companies were penalized for having broken regulations stipulating that conglomerates can hold no more than 25 percent of shares in affiliates.
One cannot argue against the commission for having penalized the firms thus. Fair Trade Commission officials must follow the standards set down in law and abide by the law in dealing with violations of said standards.
However, it is difficult to understand how the president can censure companies for not investing enough while at the same time, another branch of government penalizes them for having invested over their limit. This is not to say we should turn a blind eye to companies that invest illegally or violate regulations. But it is a shame that the law stands in the way of companies making investments.
The business world has persistently requested the abolition of the Fair Trade Act’s provisions restricting conglomerate’s shares in their affiliates. However, the recently-revised Fair Trade Act still holds these provisions. In fact, the new law puts more restrictions on the voting rights of the conglomerate’s financial units in their subsidiaries than was previously the case. The governing party, while putting off urgent welfare issues and budget proposal reviews, passed the Fair Trade Act revision with unusual haste. It takes effect next April.
There is still a chance to revive the will of companies to invest. Businesses might not be able to do anything about the law, but they can ask to have their voices represented in its implementation. They could ask for the standard of deviation in the restriction on the percentage of shares to be flexibly enforced, or request the expansion of exception clauses.
Kang Chul-kyu, the commission’s chairman, has proposed allowing businesses to participate more actively in deciding implementation.
As things are, measures by government to protect management are urgently needed. Business is claiming that restrictions on their financial units’ voting rights poses a grave threat to management. The commission refutes this.
We would like to know what the commission proposes to do if threats to a completely disarmed management do, in fact, eventuate?