The Korean Fair Trade Commission is set to look into financial sheets of conglomerates’ holding companies to figure out whether they are being misused for the benefit of their owner families.

The FTC said Thursday it requested financial sheets from 62 holding companies, whose assets are more than 500 billion won ($461 million), in order to figure out their revenue structure.

A holding company is a company that owns other companies’ outstanding stock without creating its own revenue. It was originally designed to improve management efficiency through transparent and responsible management of affiliates.

However, the holding companies -- where owner families’ stakes are concentrated -- continued to face criticism as they are accused of being misused for the benefit of the owner families and as a means to tighten their grip on power. 

The holding companies subject to the FTC’s investigation include SK, LG, CJ and GS. Samsung and Hyundai Motors were excluded as they do not have a holding company. Lotte was also not included as its holding firm was set up in October and it is too early to look into.

The FTC plans to receive financial information from the holding companies until April and map out a plan to improve the holding company system by August of this year.

The latest investigation came as a follow-up measure after FTC chief Kim Sang-so said in November the antitrust watchdog would look into the profit structure of holding companies.

“Although their main source of income should be dividends from their affiliates, other revenues, such as commission to use trademark rights, consulting fees and property rental income, account for a large portion (of the total income),” Kim had said.

LG received 245.7 billion won from its affiliates on the pretext of trademark rights in 2016, the biggest amount among other holding firms, according to the government data. SK followed with 203.5 billion won. CJ, Hanwha and GS were also in the top five list.

Out of the 277 affiliates paying commission to use trademark rights, 186 firms did not make public the amount they paid to their holding firms.

Meanwhile, Reps. Park Chan-tae and Park Yong-jin from the ruling Democratic Party proposed a revision of fair trade laws to further restrict owner families from making profits by taking advantage of holding companies.

By Shin Ji-hye (shinjh@heraldcorp.com)