Cial Holdings has been penalized by the Fair Trade Commission for holding an excessive amount of stocks in non-affiliated companies during its transition to a general holding company.
On July 29, the Fair Trade Commission announced that it would impose a fine of 79 million won on Cial Holdings for holding non-affiliated stocks exceeding 15% of the total value of its subsidiaries. Cial Holdings has subsidiaries including Chosun Refractories, which produces special bricks, and the golf course Hwaseong CC.
According to the Fair Trade Act, holding companies are prohibited from owning more than 5% of the total shares of non-affiliated domestic companies. However, an exception is made if the total value of non-affiliated stocks is less than 15% of the total value of subsidiary stocks, to encourage investment.
When Cial Holdings transitioned to a general holding company in November 2023, it held stocks in 14 non-affiliated companies, including Cobalt, exceeding the 5% limit. The proportion of non-affiliated stocks also surpassed 15%, leading to a two-year grace period.
However, in December 2023, Cial Holdings acquired shares in Cryptictures (14.29% of total issuance) and then purchased additional shares in Cobalt (15.16%) in August 2024, violating the restrictions. Although the company sold some non-affiliated stocks in September 2024 to comply with the limits, it exceeded the threshold again in November 2024 by acquiring more non-affiliated stocks, only to resolve the violation in January of the following year due to a decline in stock value.
The Fair Trade Commission noted that Cial Holdings repeatedly violated regulations during the grace period and that the duration of the violations was significant. Consequently, it imposed a total fine of 79 million won, including 26 million won for the Cryptictures case and 53 million won for the Cobalt case.
A Fair Trade Commission official stated, "This action is significant as it detects and penalizes actions that undermine the purpose of the holding company system, which aims to establish a simple, transparent, and sound ownership structure, thereby raising awareness of compliance with regulations. We will continue to monitor legal violations by holding companies and others."
On July 29, the Fair Trade Commission announced that it would impose a fine of 79 million won on Cial Holdings for holding non-affiliated stocks exceeding 15% of the total value of its subsidiaries. Cial Holdings has subsidiaries including Chosun Refractories, which produces special bricks, and the golf course Hwaseong CC.
According to the Fair Trade Act, holding companies are prohibited from owning more than 5% of the total shares of non-affiliated domestic companies. However, an exception is made if the total value of non-affiliated stocks is less than 15% of the total value of subsidiary stocks, to encourage investment.
When Cial Holdings transitioned to a general holding company in November 2023, it held stocks in 14 non-affiliated companies, including Cobalt, exceeding the 5% limit. The proportion of non-affiliated stocks also surpassed 15%, leading to a two-year grace period.
However, in December 2023, Cial Holdings acquired shares in Cryptictures (14.29% of total issuance) and then purchased additional shares in Cobalt (15.16%) in August 2024, violating the restrictions. Although the company sold some non-affiliated stocks in September 2024 to comply with the limits, it exceeded the threshold again in November 2024 by acquiring more non-affiliated stocks, only to resolve the violation in January of the following year due to a decline in stock value.
The Fair Trade Commission noted that Cial Holdings repeatedly violated regulations during the grace period and that the duration of the violations was significant. Consequently, it imposed a total fine of 79 million won, including 26 million won for the Cryptictures case and 53 million won for the Cobalt case.
A Fair Trade Commission official stated, "This action is significant as it detects and penalizes actions that undermine the purpose of the holding company system, which aims to establish a simple, transparent, and sound ownership structure, thereby raising awareness of compliance with regulations. We will continue to monitor legal violations by holding companies and others."
* This article has been translated by AI.
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