The number of cases where the heads of conglomerates and their families work as unregistered executives in affiliates is increasing. Concerns are being raised that this could heighten the possibility of 'unjust enrichment,' as they can pursue transactions under favorable conditions while avoiding managerial responsibilities.
According to the '2024 public disclosure corporate group governance analysis' released by the Fair Trade Commission on the 19th, out of 2,899 affiliates of 80 major corporate groups surveyed, families of the heads worked as unregistered executives in 163 companies (5.9%). This marks an increase of 0.7 percentage points from the previous year.
More than half (54.1%) of the companies where the head's family members serve as unregistered executives were subject to regulations against unjust enrichment. Unjust enrichment refers to the act of conglomerate affiliates conducting transactions or providing business opportunities under favorable terms with companies owned by special related parties, thereby conferring undue benefits.
In particular, HiteJinro showed the highest level, with the head's family serving as unregistered executives in 7 out of 11 affiliates, reaching a ratio of 63.6%. Following this, Kumho Petrochemical, Jungheung Construction, Celltrion, and DB were listed among the top.
As instances of the head's family members acting only in authority while avoiding responsibilities as unregistered executives increase, the lack of checks and balances within the board of directors has been pointed out as a problem. The original approval rate of board proposals for 344 listed companies among the 80 major corporate groups reached 99.4%, drawing criticism that they merely serve as a 'rubber stamp' for management decisions.
In contrast, companies where the head's family participates as registered executives totaled 468 (17.0%), showing an increase from the previous year. The groups with the highest ratio of family members serving as registered executives were Celltrion, Booyoung, and Nongshim, whereas DL, Mirae Asset, and E-Land had no family members registered as executives in their affiliates.
A Fair Trade Commission official noted, “It is positive to see the head's family taking responsibility in management as registered executives,” but also remarked, “We will closely monitor the possibility of activities as unregistered executives leading to unjust enrichment.”
The introduction of systems such as the electronic voting system to protect minority shareholders has steadily expanded. The percentage of listed companies adopting the electronic voting system increased to 86.3% compared to the previous year, but only one instance actually exercised voting rights through it. A Fair Trade Commission official noted, “The system should be supplemented to strengthen internal checks in the board and ensure that the protection mechanisms for minority shareholders function effectively.”