The Fair Trade Commission said on the 23rd it will revise the Fair Trade Act to require holding companies to own 50% equity in listed subsidiaries and second-tier subsidiaries. The current mandatory equity ratio of 30% would be raised.
Fair Trade Commission Chairperson Ju Biung-ghi announced this policy direction at a briefing with the press corps on the 21st. Ju said it is "to curb duplicate listings of a holding company's subsidiaries and second-tier subsidiaries."
President Lee Jae-myung has pointed to duplicate listings by corporations as a key reason for the undervaluation of the Korean stock market since the presidential campaign and has criticized the practice. Lee also said during a visit to the Korea Exchange (KRX) in Jun., "They do things like physical partitioning or mergers and acquisitions, and a stock I own that was clearly a solid blue chip suddenly becomes just a shell."
If the mandatory equity ratio for listed subsidiaries and second-tier subsidiaries of holding companies rises, the expense burden of equity purchases increases for holding companies when they pursue listings of affiliates.