S. Korea decides to ease investment rules for conglomerates

The South Korean government decided Tuesday to move to ease the country's equity investment ceiling for large conglomerates as part of efforts to stimulate the economy.

The cabinet members, meeting at the central government complex, agreed to submit a draft amendment on the country's fair trade law to the National Assembly, raising the current 25 percent investment cap to 40 percent of the net worth of conglomerates affected by the equity investment ceiling rules Also in the new plan, only key companies with assets exceeding 2 trillion won (US$2.12 billion) that belong to a business group whose total worth surpasses 10 trillion won would face investment limits. Currently all companies that are part of groups worth more than 6 trillion won are affected by the rule.

The changes mean 24 companies belonging to Samsung, the Hyundai-Kia Automotive Group, SK, Lotte, Hanwha, Doosan, and Kumho Asiana will be affected by equity investment ceiling rules. The old rules affected more than 340 companies.

In addition, the plan seeks to make it easier for conglomerates to become holding companies by lowering the minimum stakes that must be owned by the majority shareholder from 30 percent of issued shares for listed companies to 20 percent.

The government plans to submit the draft to the National Assembly soon. However, an expected breakup of the ruling Uri Party clouds prospects of whether or not the bill could be passed.

Earlier in the day, 23 lawmakers bolted from the Uri Party to create a new party amid growing pessimism over its unpopularity ahead of December's presidential election.

Seoul, Feb. 6 (Yonhap News)