Posted on 31 Dec 2015
Shares in Hyundai Steel tumbled as much as 6% in morning trade on Wednesday on news of the regulator’s decision.
South Korea’s Fair Trade Commission curbs cross-shareholdings involving affiliates of conglomerates, a common practice which has helped controlling families wield enormous influence despite holding tiny stakes in group companies.
The “circular shareholding” structure has been criticised for undermining corporate governance at South Korea's family-owned conglomerates, which form the backbone of Asia’s fourth-biggest economy.
Samsung Group, the country’s top conglomerate, had said that its battery-making arm Samsung SDI would sell US$622mil worth of shares in sister firm Samsung C&T Corp to comply with the regulations.
Hyundai Motor and Kia Motors must reduce their holdings by Dec 31 in Hyundai Steel, which increased after the steel producer’s merger with another steelmaking affiliate, Hyundai Hysco, on July 1, the Fair Trade Commission said.
