KPI Corporation, a general holding company, has been found to have violated the Fair Trade Act by holding shares in a financial company for approximately 18 months. Although the company is no longer classified as a holding company, regulatory authorities have decided to impose corrective measures and a fine for past violations.
On October 25, the Fair Trade Commission announced that it would impose a corrective order and a fine of 31 million won on KPI Corporation for violating the restrictions on holding company activities under the Fair Trade Act.
According to Article 18, Paragraph 2, Item 5 of the Fair Trade Act, general holding companies are prohibited from owning shares in domestic companies engaged in financial and insurance businesses. This regulation aims to prevent the concentration of economic power resulting from industrial capital owning financial capital and to ensure transparency in the holding company system.
However, KPI Corporation owned 333,333 shares of SparkLabs Partners, a financial company, from July 5, 2023, to December 31, 2024, while it was classified as a general holding company. This represented a 6.67% stake, held for about 18 months. SparkLabs Partners is categorized under other financial investment businesses in the Korean Standard Industrial Classification, making it a financial company subject to restrictions on stock ownership by holding companies.
Founded in 2005, KPI Corporation engages in the import and export of chemical substances and products. It transitioned to a general holding company in December 2013 but is currently not classified as one under the Fair Trade Act. This is because it converted to a holding company before the asset requirement was raised from 100 billion won to 500 billion won in 2017.
As of the end of 2024, KPI Corporation's total assets were approximately 454.5 billion won, and it could have been granted a grace period until June 2027. However, by the end of 2024, the proportion of subsidiary stock value to total assets fell below 50%, leading to its exclusion from holding company status.
The Fair Trade Commission imposed sanctions for the legal violations that occurred during the period when KPI Corporation was classified as a holding company, regardless of its current status. While this does not imply that it currently holds shares in financial companies, the commission issued a prohibition order to prevent similar actions if the company transitions back to holding company status in the future.
The Fair Trade Commission stated, "It is significant that we held the company accountable for violations that occurred while it was classified as a holding company, even though it has since exited that status. There is a need to maintain transparency in ownership structures through regulations that restrict general holding companies from owning shares in financial and insurance companies."
* This article has been translated by AI.
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