South Korea's large business groups, which are subject to an equity investment ceiling, are able to make additional equity investments of more than 20 trillion won, the country's corporate watchdog said Tuesday.
According to the Fair Trade Commission (FTC), the 14 conglomerates subject to the regulations were found to be capable of making an additional 20.49 trillion won (US$21.88 billion) in equity investments as of the end of April this year, compared with 7 trillion won in 2004 and 10 trillion won in 2005.
About 87.5 percent of 463 companies affiliated with the groups, or 405 companies, were able to increase their equity investments in sister companies and other companies, according to the antitrust agency.
In the current regulations, companies belonging to the 14 largest business groups with assets exceeding 6 trillion won are prohibited from purchasing stakes in their affiliates or other companies in excess of 25 percent of their net worth.
The companies made a total of 32.7 trillion won in equity investments as of the end of April, up 10.7 percent from a year ago, it said.
The FTC attributed the increase in equity investments to the Samsung and Lotte groups as being classified as the ones subject to the regulations.
By group, Samsung Group, the country's leading business group, was able to make an additional 10.1 trillion won in equity investments, followed by Hyundai Automotive Group with 3.89 trillion won, Lotte Group with 2.63 trillion won, SK Group with 1.99 trillion won and GS with 412 billion won.
The regulations have been in place since the 1990s to prevent the country's conglomerates from making indiscriminate investments that could weaken their core business and hinder fair competition in the market.
But the business community has argued that the restrictions make it harder for them to enter new areas with high growth potential and claim the rules are unfair because they do not restrict foreign companies.
The government proposed softening the restrictions earlier this month, but the business community is demanding the scheme be scrapped.
Seoul, Nov. 21 (Yonhap News)
Business groups capable of additional 20 tln won equity investment |
