The head of Korea's antitrust watchdog voiced reservations Thursday against toughening regulations on holding companies, saying such a move should be "cautiously" approached.
Ahead of the Dec. 19 presidential election, "economic democratization" has become a campaign buzzword, with the focus on reforming large-scale business groups or family-run chaebol. In a related move, some candidates are pushing to tighten regulations on holding companies to improve overall management transparency or ease their business influence.
"The regulation issue related to holding companies should be approached very cautiously," Fair Trade Commission chairman Kim Dong-soo told a meeting with business leaders in central Seoul.
"At a time when we have to encourage large business groups to adopt the holding company structure, toughening requirements could rather prompt even those already using the system to bolt out," he added.
A holding company refers to a firm that usually does not produce goods or services but its purpose is to own shares of other companies.
Korea eased regulations in 2007, making it easier for firms to become holding companies. Some say that the holding company system can help streamline corporate governance but others argue it could allow a small amount of capital to wield a huge influence over other companies.
Kim also reaffirmed his opposition to toughening regulations on the cross shareholding practice and imposing a ceiling on equity investment by conglomerates, separate issues that presidential candidates and lawmakers are also closely watching in line with their chaebol reform drive. (Yonhap)