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According to Yonhap News,
(SEOUL = Yonhap News) The Ministry of Trade, Industry & Energy said on Jan. 9 that a revised Foreign Investment Promotion Act that eases the share ownership regulation for a sub-sub-subsidiary established between a Korean holding company and a foreign company will be promulgated on January 10.
The revised act will be effective from March 11.
It will allow a sub-subsidiary of a holding company to enter into a joint venture with a foreign company and establish a sub-sub-subsidiary if it owns 50 percent of the shares. A sub-subsidiary was required to have full ownership of its sub-sub-subsidiary under the current Fair Trade Act.
The companies, however, are required to receive approval from the Foreign Investment Committee and meet the requirements of the Korea Fair Trade Commission.
The revised act is expected to allow SK Global Chemical and GS Caltex to speed up their paraxylene plant construction projects in Ulsan and Yeosu, which involve a joint venture with Japanese firms.
In order to prevent concentrations of economic power in the hands of some large conglomerates, MOTIE also announced a revised enforcement ordinance that sets out specific requirements by the Korea Fair Trade Commission on January 10.
The ordinance requires the business of a sub-sub-subsidiary to be closely related to that of a sub-subsidiary company. It aims to prevent large conglomerates from recklessly diversifying their businesses by establishing companies that are not related to the businesses of the large conglomerates.
It also requires that the sub-subsidiary company shall be appropriate and fall under the category of joint investment under the Fair Trade Act.
“We tried to reflect concerns that the promotion act will lead to concentrations of economic power in the hands of large conglomerates when we revised the ordinance,” said a MOTIE official.
The revised ordinance will take effect after it undergoes an assessment by the Regulatory Reform Committee, the Ministry of Government Legislation and a vice-minister-level cabinet meeting.
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Source: Yonhap News (Jan. 9, 2014)
** This article was translated from the Korean.