As more large business groups quickly shift to a holding-company structure, their investment structures have generally become simpler, but the possibility of circumvention through indirect investments via overseas affiliates and the risk of private benefit-taking through affiliates outside the structure still appear to be in a blind spot for oversight.
On the 23rd, the Fair Trade Commission released the results of its "2025 holding company ownership, investment status, and revenue structure analysis." The analysis covered 43 business groups with controlling owners that have transitioned to a holding-company structure among the groups subject to disclosure. As of the end of Sep., 45 of the 92 disclosure-subject business groups had shifted to a holding-company structure, more than five times the number in 2016 (8) over 10 years.
The average investment layer of the transitioned groups was 3.4 stages, lower than the 4.6-stage average for general disclosure groups. The Korea Fair Trade Commission (FTC) assessed that conduct restrictions such as limits on investment layers and bans on horizontal and radial investments have helped maintain a simple and transparent investment structure under the holding-company system.
However, the use of overseas affiliates for circumvention structures, where regulations do not directly apply, was still flagged as a problem. There were 32 instances in which a holding company indirectly invested in a domestic affiliate via an overseas affiliate, and 76 instances in which an overseas affiliate directly invested in a domestic affiliate. By group, Lotte Group had the most at 16, followed by SK Group with 9. The Korea Fair Trade Commission (FTC) noted that while not illegal, these structures could potentially circumvent investment regulations and require close scrutiny.
Concerns about private benefit-taking through affiliates outside the holding-company structure also persisted. Among affiliates belonging to the 43 transitioned groups, 384 companies were outside the holding-company structure, and 232 of them (60.4%) were classified as subject to private benefit-taking regulations. The Korea Fair Trade Commission (FTC) pointed out that some affiliates outside the structure even hold equity in the holding company, creating a "roof-on-roof" form in which another layer of control sits atop the holding company.
The revenue structure has solidified around dividends. Among the sales of the representative holding companies in the transitioned groups, the share of dividend revenue averaged 51.5%. Among non-dividend revenue, trademark royalties were the largest at 1.404 trillion won. By group, LG Group posted the most at 354.5 billion won, followed by SK Group (309.7 billion won), CJ Group (134.7 billion won), Lotte Group (127.7 billion won), and GS Group (102.0 billion won). By sales share, CJ Group had the highest ratio of trademark royalties at 54.8%.
A Korea Fair Trade Commission (FTC) official said, "We will continue to disclose and review ownership, investment, and revenue structures so that the holding-company system functions as a tool to improve governance," adding, "We plan to take a hard look at circumvention through indirect investments using overseas affiliates and private benefit-taking through affiliates outside the structure."