Woongjin group, which acquired the funeral mutual aid company Preed Life, recently submitted a written pledge to the Fair Trade Commission to restrict shareholder dividends. The move is seen as a preemptive step to block potential problems, given past cases in which assets were siphoned off through excessive dividends after acquiring a mutual aid firm.
According to the industry on the 5th, the Korea Fair Trade Commission (FTC) recently received a "damage prevention plan commitment" from Woongjin group saying it would cap Woongjin Preed Life's payout ratio at within 100% of net profit. This sets an upper limit on the amount of dividends that Woongjin, the holding company, can receive from its subsidiary Preed Life.
The FTC obtained the commitment due to concerns over the structure of Woongjin's acquisition of Preed Life. Because the acquisition price is large relative to Woongjin's equity, the pledge aims to prevent harm to mutual aid consumers in the event of excessive dividends.
In addition, Woongjin also promised to strengthen management transparency by establishing an internal transaction review committee to monitor fund movements among affiliates.
Earlier, on Jun. 6, the FTC approved Woongjin's business combination filing related to the acquisition of Preed Life.