Until the quick service receipt… FTC dropped document bombs on large companies

Photo = Getty Image Bank

In the future, major conglomerates are required to regularly disclose transaction details related to logistics and system integration (SI). The Fair Trade Commission categorized logistics and SI as a business that frequently’drives the work’, and in effect controls internal transactions. It is pointed out that the government is pressing companies on the grounds of investors’ right to know.

'To the quick service receipt'...  FTC drops'paper bomb' on large companies

According to related industries on the 28th, the FTC held a briefing session at the end of January on the reorganization of the manual for large-scale corporate group disclosures for major conglomerates. The key is to regularly disclose sales and purchases, and the proportion of internal transactions generated from transactions in SI and logistics business from May next year. It means that it will determine whether to drive the workforce based on the publicly available data.

Companies are taking it as a pressure to reduce the share of internal transactions. A senior executive from the four major groups said, “It is highly likely to emphasize the proportion of internal transactions without considering corporate conditions.” Some point out that it is not appropriate for the FTC to stipulate the type of industry that is responsible for driving the job. An official from an economic group pointed out that “logistics and SI are the core of the company’s supply chain,” and that “the current law also recognizes’SI transactions requiring security’ as exceptions to discouragement.”

Practitioners argue that it is impossible to extract accurate data. First of all, it is unclear how far the industry will be. In the SI field, communication services and data center maintenance transactions are considered to be the’grey zone’ that is difficult to classify. The same goes for logistics. Transactions made through company-wide logistics service contracts can be traced, but courier transactions and quick services that employees use on a daily basis are not easy to categorize as well as to grasp the current status.

Read Also:  Price of the DOLLAR today Sunday June 28, 2020; exchange rate

There is also growing criticism that the FTC actually threw a’paper bomb’. A public announcement practitioner at a large company pointed out, “To keep the FTC manual, you have to take a quick service receipt,” and pointed out that “there is a situation where we have to manually classify thousands to tens of thousands of transactions a year.

Illustration = Reporter Chu Deok-young choo@hankyung.com

Illustration = Reporter Chu Deok-young [email protected]

The Fair Trade Commission demands a new disclosure every year as if it were a military flag “You have to search through tens of thousands of data”

May is a’night shift month’ for Mo Kim, who is in charge of public announcements at a large company A. This is because the annual and quarterly disclosure data required by the Fair Trade Commission must be submitted together. As new items are added every year, more and more jobs are trending. Manager Kim said, “The newly established disclosure items are not classified in the ERP (Enterprise Resource Management) system, too.”

○The burden of disclosure increases every year

According to related industries on the 28th, the FTC revises the manual to disclose the status of large-scale business groups every year and increases the number of disclosure items. In 2014, a new item was created for’Circular Investment Status and Changes between Affiliates’. It was an order to display all of the equity ratio, number of shares, and book value so that companies belonging to the corporate group can see at a glance the current status of circular investment. Changes in the circular equity ring should be disclosed on a quarterly basis, not annually.

Read Also:  Additional money for "out of the oil"

In 2016,’the status of internal transactions of affiliates with a high stake in special parties’ was added. In 2017, items such as’Status of affiliates outside the holding company system’,’Status of exercising voting rights on affiliates’ stocks of financial and insurance companies’, and’Trademark usage transactions between affiliates’ were newly established. The number of disclosure items increased last year as well. An additional announcement was made to’advisory services and different rental transactions between the holding company and the subsidiary, grandchild, and great-grandchildren’.

There are a lot of new items this year. There are only nine newly created or revised items, including’logistics and SI (system integration) related transaction details’. This is the background of major corporations complaining about the burden of disclosure due to their mobility. An official from an economic group said, “It’s like throwing a’paper bomb’ at a company,” and said, “There are considerable dissatisfaction that the disclosure of the status of business groups is being used as a means of’collecting the army.”

○ Fines for negligence and penalties

It is also controversial that the FTC requested that the’logistics and SI transaction details’ be disclosed. In 2019, the FTC also requested that major companies submit data on SI and logistics transactions, the share of internal transactions, and whether or not to make competitive bidding, etc. The justification was the same. The reason for the need for a thorough investigation was put forth because there are many cases in which’working out’ is carried out through logistics and SI affiliates.

At the time, the investigation was done. It is explained that it was not easy to compare between companies because the scope of logistics and SI transactions varies from company to company. An official from an economic group explained, “The FTC is well aware that it is not easy to separate only logistics and SI transactions,” and said, “Even so, forcing disclosure means reducing the weight of internal transactions in some way.”

Read Also:  Al Omrane resists the crisis

The FTC held a briefing session on the 18th as complaints from companies grew, and announced that it would postpone the application of some items such as’logistics and SI transaction details’ from May this year to May next year. It was a grace period, but companies complained of difficulties saying nothing has changed. An official from a large company pointed out that “It is administrative convenience to look at all transactions,” and that “you can fully utilize the purpose of the disclosure system by disclosing transactions that exceed a certain amount.”

A large business group refers to a group company with a total of 5 trillion won or more in assets of affiliates. As of the end of October last year, 64 business groups and 2325 companies were classified as large-scale business groups, and company information must be disclosed regularly. If the disclosure is not made, a fine of up to 10 million won is incurred, and up to 5 million won if some omission or false information is disclosed.

Fines are imposed on a per item basis. If 10 items are not disclosed, a fine of 100 million won is required. Last year, a large company was fined 300 million won. Businesses complain that’bad crime’ is more scary than fines. It is explained that if it is marked as a’infidelity publicly disclosed company’, it is subject to a special investigation by the Fair Trade Commission, so it has no choice but to accept it as a cry and eat mustard.

Reporter Song Hyung-seok/ Ji-hoon Lee [email protected]

Share on facebook
Share on pinterest
Share on twitter
Share on linkedin
Share on email


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.