The Korea Fair Trade Commission said on the 29th that it imposed a penalty surcharge of 79 million won on CR Holdings for owning more than 5% equity in domestic corporations that are not affiliates.
The Korea Fair Trade Commission (FTC) found that CR Holdings violated Article 18, Paragraph 2, Subparagraph 3 of the Monopoly Regulation and Fair Trade Act. It prohibits a holding company from owning shares in a domestic company that is not an affiliate in excess of 5% of the total number of the company's issued shares.
This is intended to prevent the expansion of control into non-affiliate companies and to focus on managing subsidiaries. However, to promote investment, if a holding company owns more than 5% of the shares of a domestic non-affiliate company, the regulation does not apply to holding companies for which the total value of non-affiliate company shares, including those, is less than 15% of the total value of subsidiary shares.
In Nov. 2023, when it converted into a general holding company under the Fair Trade Act, CR Holdings owned shares in 14 domestic non-affiliate companies, including Cobalt, in excess of 5% of each company's total issued shares. As a result, the total value of domestic non-affiliate company shares exceeded 15% of the total value of subsidiary shares, and a grace period was granted to resolve this within two years from the date of conversion to a holding company.
However, during the grace period granted to resolve the existing legal violation, CR Holdings acquired shares in the domestic non-affiliate company Crefictures and acquired shares in the domestic non-affiliate company Cobalt, thereby owning more than 5% of the total number of issued shares and violating the law.
Then, in Sep. 2024, by disposing of shares in 10 domestic non-affiliate companies including Crefictures, the total value of domestic non-affiliate company shares owned fell to less than 15% (5.16%) of the total value of subsidiary shares, resolving the violation.
However, after the violation was resolved, CR Holdings again acquired some shares of other domestic non-affiliate companies, and as of Nov. 2024, the total value of domestic non-affiliate company shares exceeded 15% (17.75%) of the total value of subsidiary shares, resulting in another violation.
In Jan. last year, as the value of shares in domestic non-affiliate companies held by CR Holdings declined, the total value of domestic non-affiliate company shares decreased to less than 15% (14.8%) of the value of subsidiary shares, resolving the violation.
The Korea Fair Trade Commission (FTC) decided to impose a corrective order and a penalty surcharge of 7,900 won, taking into account that CR Holdings repeatedly committed additional violations during the grace period granted to resolve the violation at the time of conversion to a holding company and that it is difficult to view the violation period as short.