Posted May. 21, 2009 07:17,
Joint liability guarantors for bank loans to companies, including the self-employed, will be limited to those who wield substantial influence on corporate management or share corporate interests such as the largest and controlling shareholders from October.
This change is expected to prevent those who act as guarantors for friends or relatives from falling into debt.
The Financial Supervisory Service and the Korea Federation of Banks said in a joint statement yesterday, To prevent damage stemming from joint liability on guarantees, the government in July last year scrapped the joint liability on guarantee for loans to individual households. For the same purpose, we will significantly limit the scope of joint liability guarantors starting in October.
Starting with the limit, the financial watchdog will gradually remove the joint liability guarantee system.
Spouses unable to repay debts and relatives and third parties unrelated to corporate management have been allowed to share liability for debts. With banks requiring joint liability, many guarantors have fallen in debt.