An Institute Says Same-Person Rule Is Outdated, Excessive on Family Reporting
Coupang Chairman Kim Bom-suk poses for a photo outside the New York Stock Exchange in March 2021.
With the Fair Trade Commission reviewing whether to change the same person (head of a business group) of Coupang from the current corporate entity to a natural person, Chairman Kim Bom-suk of Coupang Inc., criticism has been raised that the current system is “a product of the 1980s and 1990s era, which does not fit today’s corporate ecosystem.”
The Center for Free Enterprise stated this through a commentary on April 27, saying, “The outdated regulation on the same person is one of the top priorities for rationalization.”
The Center for Free Enterprise pointed out, “The method of designating the same person solidifies a pre-modern governance system and imposes excessive legal and administrative responsibilities on individuals regardless of their actual controlling power,” adding, “The fact that the scope of relatives fails to reflect the reality of nuclear families and dispersed shareholding, thereby including relatives without actual influence as subjects of regulation, is also a problem that infringes upon the managerial autonomy of companies.”
It continued, “The current structure, where the standards for shareholding ratios and controlling power are unclear, and which forces the same person to submit extensive information on relatives and affiliated companies while stipulating criminal punishment for omissions, is excessive and lacks legal justification,” and added, “In particular, designating a specific individual as the same person due to their foreign nationality could cause an issue of equity with domestic companies.”
The Center for Free Enterprise argued, “The regulation designating a natural person as the same person should be abolished, and the scope of a business group should be established centering on core companies such as a holding company or the top corporate entity of the group.”
It also demanded the resolution of equity and proportionality issues in regulations, such as excluding relatives without actual economic interests from the subjects of regulation, recognizing only companies where actual controlling power is confirmed as affiliated companies, limiting reporting to possessed data so as not to demand excessive data submission, and mitigating penalties to administrative penalties such as administrative fines in case of violating the submission obligation.
If designated as the same person by the Fair Trade Commission, the scope of relatives and affiliated companies is finalized, and various regulations such as the prohibition of circular shareholding and the prohibition of funneling work are applied, causing the founder to bear significant legal responsibilities.
According to Coupang, its governance structure has the United States listed corporation Coupang Inc. at the very top, and Chairman Kim and his relatives do not hold shares in domestic affiliated companies or participate in management, and the company is faithfully fulfilling the disclosure obligations of the United States securities authorities. Accordingly, the counterargument is that the Fair Trade Commission’s designation of the same person is a ‘discriminatory measure.’
The Fair Trade Commission is reviewing whether to change the same person of Coupang and the scope of its business group by the statutory deadline on May 1.
The Center for Free Enterprise is an economic research institute with conservative, economic liberal, and neoliberal characteristics, and is a non-profit incorporated foundation established by the late former Chairman Chey Jong-hyon, the second chairman of SK Group.
Jung Suk-yee
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