The fines imposed when corporate groups subject to disclosure (large corporate groups) violate their disclosure obligations are expected to become more severe.
The Fair Trade Commission announced on the 7th that it has prepared amendments to 'Standards for imposition of fines for cases of violation of obligation to disclose important matters by companies belonging to business groups subject to disclosure' and 'Standards for imposition of fines for cases of violation of board of directors' resolution and disclosure obligations for large-scale internal transactions, etc.' and announced that it will issue an administrative notice from the 8th to the 28th.
This amendment focuses on strengthening sanctions in relation to repeated violations of disclosure obligations.
The amendment includes provisions to increase the fine by 10% for one repeated violation of the disclosure obligation, 30% for two repeated violations, and 50% for three or more repeated violations.
The current fine is increased by 10% for violations of the disclosure obligation 4 to 6 times in the past 5 years, including the year of inspection, and 20% for violations 7 or more times.
It was pointed out that aggravation is possible only if there are four or more violations, and the maximum aggravation rate is only 20%, so the effectiveness of sanctions is low.
In fact, more than 50 companies were found to have violated the disclosure obligation more than twice between 2021 and 2025, and the Fair Trade Commission has determined that the existing fine notice has limitations in deterring violations of the disclosure obligation.
Standards for unnecessary tax reductions will also be revised.
First, the Fair Trade Commission plans to remove the criteria for reduction based on the number of days of delayed disclosure.
According to the current fine notice, the fine is reduced by 20% for 30 days or less and 75% for 3 days or less, depending on the number of days of delay in public notice.
However, this reduction regulation had a problem with the regulation of aggravating it according to the number of days of delay when calculating the basic fine amount.
For example, if a large internal transaction is announced with a delay of 30 days, the basic amount is added by 100,000 won per day for 29 days, but it is reduced by 20%, which has the effect of offsetting much of the weight due to the number of days of delay.
The Fair Trade Commission also plans to remove the 20% reduction rule for first violations.
According to the current fine notice, if it is a first violation or there is no history of violation in the past 5 years, the penalty is reduced by 20%, but it has been pointed out that the penalty is excessively reduced by up to 70% as it overlaps with the 50% reduction regulation for violations immediately after designation of a new business group subject to public notice.
In addition, the Fair Trade Commission is also deleting the regulation that limits the basic amount of fines for small companies to not exceed 1% of the capital or total capital, whichever is greater.
According to the current fine notice, the financial status of the violating company is taken into consideration at the final fine determination stage. The purpose is to resolve the issue of overlapping reductions as there is one.
The Fair Trade Commission expected that this revision would strengthen the market surveillance function by encouraging companies to comply with their disclosure obligations and effectively suppress the unfair concentration of economic power.
Opinions related to administrative notice may be submitted to the Fair Trade Commission by fax (044-200-5224) or e-mail ([email protected]).
