Shareholding Restriction Limit Raised from Five to Six Trillion Won

The government and Uri Party have decided on raising the application standard for the restriction on the total amount of shareholdings of other companies from 5.0 trillion won to 6.0 trillion won.

The graduation provision in the shareholding limit restriction for groups with a debt-to-equity ratio under 100 percent will be abolished this upcoming April as expected, but a one-year grace period will be given to groups which were released from that condition.

Accordingly, Samsung, Lotte and Korea Electric Power Corporation will not be under the regulation until March, 2006.

The government and Uri Party held a meeting in the National Assembly’s VIP dining hall with Chairman Kang Chul-kyu of the Fair Trade Commission (FTC), Chief Vice-chairman Kang Bong-kyun of the policy committee, and Chairman Lee Kye-ahn of the third policy coordinating committee attending, and decided on the above revised enforcement decree of the Fair Trade Act.

The FTC has persisted in keeping the application standard for the shareholding limit restriction to 5.0 trillion won in assets, but presented a revised bill raising the limit to 6.0 trillion won and providing a one-year grace period to groups subjected to the restriction from the abolishment of the debt-to-equity ratio graduation.

After the meeting, Chairman Lee Kye-ahn said, “We have decided on increasing the figure by one trillion won, in which we will still keep to the basic principle of the shareholding limit restriction. We have reflected the change in the economic scale for the past two to three years.”

The finance field showed responses that the ruling government’s decision in alleviating the standard is still somewhat insufficient in pushing conglomerates to expand investments.