Fair Trade Commission Raises Threshold for 'Split-off Listings'... Mandatory Subsidiary Stake to Increase from 30% to 50% for New Listings

Reducing Incentives for Duplicate Listings within Holding Company Structures...
Pursuing Amendments to the Fair Trade Act
Comprehensive Overhaul of Penalty Standards for Unfair Internal Transactions and Private Benefit Extraction

The Fair Trade Commission will significantly raise the regulatory threshold for 'duplicate listings (split-off listings)' within large business group (chaebol) holding company structures. The mandatory shareholding requirement for holding companies' listed subsidiaries or second-tier subsidiaries seeking new stock market listings will be raised from the current 30% to 50%. In addition, the Fair Trade Commission will overhaul the standards for imposing penalties on unfair internal transactions, such as owner family’s private benefit extraction and inter-affiliate favor trading, as well as establish a new legal basis for punishing illegal practices, thereby strengthening the effectiveness of regulations on large business groups across the board.

Joo Byungki, Chairman of the Fair Trade Commission, speaking at the launch ceremony of the 2030 Advisory Group. Fair Trade Commission. Photo by Yonhap News.

Key Subsidiary 'Split-off Listings' Curbed... 50% Stake Now Required

Chairman Joo Byungki of the Fair Trade Commission reported these measures during a policy briefing to the National Assembly's Political Affairs Committee on July 28, 2026. The plan aims to reduce the incentive for duplicate listings within holding company structures, thereby blocking both the erosion of minority shareholder value caused by the split-off listing of core subsidiaries and the expansion of de facto control through expedient means.

Under the current Fair Trade Act, mandatory shareholding ratios for new listings of subsidiaries and second-tier subsidiaries within holding company structures are differentiated: 30% for listed firms and 50% for unlisted firms. As a result, large corporations have continued to face criticism for damaging parent company shareholder value and expanding controlling shareholders’ dominance by spinning off lucrative business divisions and then listing them with only a 30% stake retained—a practice viewed as a duplicate listing.

To address this issue, the Fair Trade Commission plans to revise the law so that when subsidiaries or second-tier subsidiaries of holding companies pursue a 'new listing', the mandatory shareholding requirement will be set at 50%—regardless of whether the firm is listed or unlisted. This would make it more difficult for holding companies or parent companies to push forward with listings after paid-in capital increases or physical spin-offs. The aim is to structurally restrict the 'split-off listings' that have been criticized in the market.

Stricter Regulation of Unfair Internal Transactions and Private Benefit Extraction… Clarifying Penalties for Individuals and Introducing Sanctions for Illegal Acts

Together with its measures to curb duplicate listings, the Fair Trade Commission will step up its monitoring and enforcement of rule violations by large business groups. First, the Enforcement Decree of the Fair Trade Act will be revised to enable the imposition of penalties proportional to wrongful profit on individuals—such as controlling families—who benefit from unfair internal transactions, including favor trading between affiliates or indirect financial support. By applying a precise penalty rate based on the scale (amount) of the transaction, the goal is to thoroughly claw back illicit profits obtained through private benefit extraction. There will also be focused monitoring of unfair internal transactions in key sectors closely related to the lives of ordinary people, such as finance, food, and healthcare.

Guardrails will also be introduced to block expedient methods that attempt to circumvent private benefit extraction regulations. The law will be amended to exclude treasury shares in calculating shareholding ratios subject to such regulations, thereby preventing controlling families’ 'illusion' of friendly shareholding ratios. In addition, clear legal grounds (through revision of the Fair Trade Act) will be established to sanction circumvention of group regulations through indirect illegal conduct, such as prohibited mutual or circular shareholding and inter-affiliate debt guarantees. Penalty standards for repeated omissions or false submissions of required designation data will also be clarified by revising relevant guidelines.

Chairman Joo stated, "We will enhance the effectiveness of large business group regulations so that major corporations can focus on innovation," adding, "At the same time, we will thoroughly monitor rule-violating practices such as unfair internal transactions and private benefit extraction, and strengthen the effectiveness of chaebol policies by reducing incentives for duplicate listings within holding company structures."

This content was produced with the assistance of AI translation services.