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Law revision may force Hyundai family to further cut stakes

[THE INVESTOR] The minor opposition People’s Party is seeking to tighten regulations on large companies with revised fair trade and tax laws.  

On July 7, People’s Party’s policy chief Rep. Kim Song-sik said the party will seek revisions in the Monopoly Regulation and Fair Trade Act to bring more affiliates of large conglomerates under the clause aimed at discouraging favorable treatment of affiliates. 

Hyundai Motor vice chairman Chung Eui-sun presents the Genesis G90 at an event in Seoul. / The Investor
Hyundai Motor vice chairman Chung Eui-sun presents the Genesis G90 at an event in Seoul. / The Investor

At present, listed affiliates of conglomerates must are subject to related clauses if members of the founding family own 30 percent or more stake. For unlisted companies, the cutoff is 20 percent. 

Kim’s proposal would lower the cutoff to 20 percent for both listed and unlisted companies. 

After the previous clauses took effect, Hyundai Motor Group chairman Chung Mong-koo and vice chairman Chung Eui-sun had sold some of their stakes in Glovis to reduce their combined stakes to 29.99 percent.  

In order to avoid tighter regulations in affiliate dealings, the Hyundai family may have to sell off more shares to lower their stakes to below 20 percent should the revision go through.

“Deviant behavior by some of chaebol companies is making economic polarization worse, and taking away opportunity from ordinary people,” Kim said. Chaebol refers to large family-controlled conglomerates.

In addition, the minor opposition party will push to have the Inheritance Tax and Gift Tax Act and the Commercial Act to apply tougher regulations on large companies.

By Choi He-suk (cheesuk@heraldcorp.com)
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