Kim Bom-suk, Founder and CEO of Coupang Inc. (Yonhap)
The de facto controlling individual of South Korean e-commerce giant Coupang Inc. has been changed to its Founder Kim Bom-suk from the corporate entity.
Kim, a U.S. citizen, had avoided being designated as the so-called “same person,” or an individual who effectively controls a conglomerate, since Coupang was named a public disclosure-target business group in 2021, as he met exception criteria such as having no family members participating in management and posing no risk of private interest appropriation.
However, he has now been designated as the same person after it was recognized that his brother Kim Yoo-suk is involved in management.
Given that most heads of large Korean conglomerates are already subject to same-person regulations, this designation is not particularly surprising. It can also be interpreted as applying the law without exceptions, resolving previous concerns about reverse discrimination.
Nevertheless, the designation leaves an uneasy aftertaste due to inherent limitations in the system itself. There are also concerns that dissatisfaction in the United States – where investigations by the Korean government into alleged information leaks involving U.S.-listed Coupang have already been perceived as discriminatory against an American company – could intensify further following this designation.
The same-person system is a regulatory framework in which the government designates the controlling entity of a corporate group to prevent private interest-seeking or unfair transactions by its head.
The designation is based on a qualitative standard – a person who effectively controls business operations. Once designated, the individual is subject to broad disclosure and reporting obligations involving relatives within four degrees of kinship and in-laws within three degrees. The problem is that the Fair Trade Act already prohibits providing undue benefits to related parties, leading to ongoing criticism that the same-person regulation constitutes double regulation.
Also, if a related party of the designated individual omits or falsifies disclosure data, the designated individual is punished, which conflicts with the principle of liability. The system is also out of step with modern corporate governance, which emphasizes board-centered management.
Although the same-person system, introduced in 1986, has played a role in curbing the concentration of economic power and preventing conglomerates from expanding control through expedient means, it has now become outdated.
Over the past 40 years, the scale of economy has grown significantly, and corporate transparency has improved. Clinging to an isolated regulation that exists nowhere else in the world and hampers businesses is old-fashioned.
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