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Seoul unveils proposed changes to chaebol conglomerate rules

Seoul

SOUTH Korea's anti-trust watchdog has proposed new rules for family-run conglomerates to make it harder for such businesses to muscle through their agendas at the expense of minority shareholders.

The proposed amendments to existing regulations would require a newly created holding company to own at least 30 per cent in an entity it wants to treat as a listed subsidiary and at least 50 per cent for an unlisted unit, according to a draft the Fair Trade Commission (FTC) released in Seoul.

The current minimums are 20 per cent for listed and 40 per cent for unlisted.

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The steps are expected to be proposed to the National Assembly in November and are in line with campaign promises made by President Moon Jae-in to reform chaebols, companies that account for more than 50 per cent of total market value on the benchmark Kospi index.

The draft amendments to the Monopoly Regulations and Fair Trade Act, first enacted in 1980, reflect changes in the country's economic environment, the regulator said in a statement.

"Conglomerates will find it harder to make changes like mergers or spin-offs among affiliates without support from the market and shareholders," FTC chairman Kim Sang Jo said in a briefing last Friday. BLOOMBERG