122 companies to be subject to internal dealings regulation

The regulation on internal trading can be avoided if a company’s internal trading with group affiliates does not exceed 12 percent of its annual revenue or if the difference between contract price and market price is 7 percent or lower. The Fair Trade Commission has announced Tuesday that it will notify legislation of the amended enforcement ordinance of the Fair Trade Act.

According to the amendment, the affiliates of conglomerates restricted from cross-shareholdings with a total assets amount of 5 trillion won (4.66 billion U.S. dollars) or over are regulated by the law from Feb. next year only when the owner family of a conglomerate owns over 30 percent of the shares for listed companies and over 20 percent for unlisted companies. About 208 companies including Samsung Everland and Hyundai Glovis will be subject to the revised law.

However, the authorities decided to leave a "safe zone" to allow some deals within a certain amount not to be regulated by this law by accepting the opinions that the regulation may contract legitimate internal dealings as well. Accordingly, companies with internal dealings whose total contract amount is less than 12 percent of annual revenue and below 20 billion won (18.64 million dollars) will not be subject to the regulations.

The Fair Trade Commission said that 86 companies were exempt from the regulation according to this criterion. For individual deals, the difference between contract price and market price has to be less than 7 percent and the contract amount must not exceed 20 billion won (18.64 million dollars) to be exempt from the regulation. An official from the commission said, “Even the 86 companies already exempt from the regulation based on the criterion of total dealing amount will also be regulated if the difference between contract price and market price is over 7 percent.”