"Brother Kim Yu-seok was deemed to have exerted influence... Bom Kim must disclose overseas affiliates he holds" [Bom Kim designated as Coupang chief]

On the 29th, the Korea Fair Trade Commission (KFTC) changed Coupang's same person designation from the corporate entity Coupang, Inc. to Bom Kim, the chairman of Coupang, Inc., in his personal capacity. As the reason for the change, the KFTC said it had confirmed signs that Kim Yu-seok, the vice president and a relative of Kim, had been substantially involved in Coupang's management. The commission said the decision was made in line with the requirements in the enforcement decree and its same person designation guidelines.
The following is a Q&A with Choi Jang-gwan, director of the KFTC's Business Group Monitoring Bureau.
— Why was Coupang's same person designation changed from a corporation to Bom Kim, an individual?
▲ Coupang's same person was designated in accordance with the requirements in the enforcement decree and the designation guidelines. A corporate same person must not have relatives making equity investments in affiliates, providing debt guarantees, lending funds, or taking part in management, but we judged that those requirements would be difficult to meet. We determined that Kim Yu-seok had substantially participated in management and exercised influence, so the designation was changed to an individual.
— What led you to judge Kim Yu-seok's actions as management participation?
▲ We looked not at formal titles or compensation, but at whether he was actually involved in management, whether his role was comparable to that of a registered executive, and whether he had substantial influence. Kim Yu-seok is in a top-tier grade that allows participation in major decision-making, and in some affiliates he was confirmed to hold a higher grade than the CEO. We also reviewed internal materials showing that he effectively exercised influence in core business areas such as logistics and delivery.
— Why did the same person determination differ between last year and this year?
▲ Large business groups are designated based on the basic materials submitted by companies, and responsibility is imposed later if false information is submitted or problems are found. A report related to Kim Yu-seok's management participation was filed, and additional verification revealed matters that had not been identified before.
— What is your position on Coupang's claim that the decision violates the United States–Korea Free Trade Agreement (KORUS FTA) and amounts to dual regulation of a U.S.-listed company?
▲ Because the designation was made under the enforcement decree and the same person designation guidelines, we do not see it as an issue that should be challenged in the United States. Coupang's same person designation is a decision based on legal standards. The disclosure rules of the United States Securities and Exchange Commission (SEC) are intended to protect investors, while the KFTC's system is designed to prevent excessive concentration of economic power. Since their purposes are different, we do not view this as dual regulation.
— What changes when the same person is changed to Bom Kim?
▲ The biggest change is the disclosure of overseas affiliates. Kim must disclose the status of overseas affiliates in which he holds 20 percent or more. In addition, if an overseas affiliate directly or indirectly holds shares in a domestic affiliate, the shareholding status of the same person in that overseas affiliate must also be disclosed.
hippo@fnnews.com Kim Chan-mi Reporter