Foreigners now eligible to become chiefs of conglomerates

Coupang's delivery truck parked at a parking lot in Seoul on Feb. 15 [YONHAP]

Foreigners will be eligible to be named as corporate chiefs of major conglomerates in Korea with the latest revision in the Fair Trade Act explicitly addressing the previous legal gap in antitrust regulation.

This means that a set of stricter regulations applied to owners of large business groups — such as Samsung companies or Hyundai Motor Group — will be extended to foreign nationals as well.

However, New York-listed Coupang, which has been at the center of the discussions surrounding the latest revision, is not likely to be affected by the updated rules thanks to an exceptive clause, raising complaints of unfair treatment toward domestic companies.

The Fair Trade Commission (FTC) on Tuesday said that a revision of the Presidential Decree under the Monopoly Regulation and Fair Trade Act was approved during a Cabinet meeting that day.

Under the Fair Trade Act, a large business group is defined as a group of companies controlled by “the same person,” a term that can refer to both an individual and a legal entity. The antitrust regulator designates who, or what, is the controlling party of a certain business group. If the controlling party is an individual, they will be subject to stricter rules about corporate practices and anticompetitive activities.

Prior to the latest revision, there were no stated guidelines or clauses about whether a foreign national could be designated as a chief.

Such a regulative vacuum led to ecommerce giant Coupang’s founder and CEO Bom Kim, who holds U.S. citizenship, being exempted from the designation. Instead, Coupang designated itself as a controlling party.

However, despite the updated regulation, Kim is not expected to be named as the controlling party of Coupang due to a newly added exception clause.

The clause requires four conditions: the composition of a group defined as a conglomerate shall not change regardless of whether the chief is a natural or legal person; the individual who holds control over the group shall not have invested in any Korea-based subsidiaries except for a holding company; the individual’s family members shall not be involved in the business; and the individual and their family members shall not have any financial relationships with the group’s companies.

Coupang currently meets all four criteria, one of few large companies in Korea to do so. In light of this, the company will continue being its own controlling party.

The revision “will make the upcoming large company group listing for this year more objective, reasonable and predictable,” the FTC said.

The updated rule will take effect after the president approves and declares the revised decree.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]