BS Industrial, a subsidiary of the BS Group, is facing regulatory action for allegedly providing undue support by selling shares of a project financing company (PFV) at below-market prices to a company controlled by the founder's heir.
The Fair Trade Commission (FTC) announced on September 30 that it has submitted a report to the commission regarding the alleged unfair support practices involving BS Industrial and Korea D&I, and has sent notifications to the parties involved.
According to the FTC, BS Industrial sold shares of two PFVs established for public land development projects in Busan's Eco Delta City and Uijeongbu's Gosan C1 and C3 blocks to Korea D&I on June 3, 2020. PFVs are set up to finance large-scale development projects and are liquidated after distributing profits to shareholders.
During this process, BS Industrial sold the PFV shares to Korea D&I, which is controlled by the same heir, at a price lower than the face value of 5,000 won per share. FTC Director Choi, head of the Corporate Group Monitoring Bureau, stated, "Given the expected profits from the sales, we assessed the fair market price accordingly," adding that the sale price was 50-60% below the face value.
The FTC believes that BS Industrial sold the shares despite anticipating significant profits from the development project. Korea D&I acquired the PFV shares just four months after its establishment and could have received approximately 37 billion won in dividend income from those shares.
The FTC estimates the amount of undue support at around 7 billion won and considers the violation to be serious, indicating that penalties such as fines may be necessary. Director Choi noted, "We calculated the difference between the fair market price of the two PFV shares and the actual transaction price, and since the fines will be based on the support amount, we cannot confirm the specific penalty amount yet."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.