By revising the enforcement ordinance of the Financial Holding Companies Act, lenders will be more easily able to exclude debt-ridden firms under their receiverships from their subsidiaries in the process of converting debt into equity.
|(The Financial Services Commission)|
Under the current regulations, in order to exclude the firm as a subsidiary, it must file a report with the FSC and earn its approval by proving that the acquisition is aimed to alleviate debt, not to own the firm.
By revising the regulation, lenders will not need the documentation and approval from the FSC during ongoing or pending debt restructuring, or for two years after the rescue plan has ended. In other words, lenders may take over more than 30 percent of the firm by simply notifying the FSC.
The deadline for the practice is subject to change after lenders are granted an additional period from the regulator.
By Son Ji-hyoung (email@example.com)