Fines Waived for Minor Violations of Disclosure Obligations by Large Business Groups

2024.07.30. The Fair Economy — The Fair Trade Commission announced that an amendment to the enforcement decree of the Monopoly Regulation and Fair Trade Act (Fair Trade Act) passed a Cabinet meeting on the 30th.

According to the Fair Trade Commission, the Cabinet's passage of the amendment is a follow-up measure to the revision of the Monopoly Regulation and Fair Trade Act related to the disclosure system for large business groups. It includes measures such as establishing reasonable criteria for waiving fines for minor violations of disclosure obligations and streamlining duplicated disclosure items.

The Fair Trade Commission has been pursuing systematic and comprehensive improvements to the disclosure system as a whole—including the scope, frequency, and items of disclosure—in order to reasonably ease the disclosure burden on information providers and enhance the usefulness of the system for information users, while maintaining the system's core function of enabling voluntary market monitoring of large business groups.

Reviewing the main contents of this amendment to the enforcement decree and notices regarding the major business group disclosure system, criteria were established to exempt administrative fines in cases of minor disclosure violations that are promptly self-corrected.

Specifically, administrative fines may be exempted in cases such as: violations occurring within 30 days from the designation or inclusion date of a new business group and self-corrected within 10 business days; violations due to minor negligence or errors and self-corrected within 10 business days; and other cases where the possibility of misunderstanding disclosure content is rare due to force majeure or unavoidable circumstances. However, administrative fines are not exempted for violators who have delinquent fines.

In addition, considering the need to improve the accuracy of disclosure content, provide sufficient time to thoroughly review disclosure content in advance even when holidays are concentrated, and minimize holiday work as part of social and cultural changes, the concept of business days was introduced to set disclosure deadlines for items with short deadlines of 10 days or less.

The disclosure period for listed companies under the board resolution and disclosure rules for large-scale internal transactions was changed from the current one day to three business days.

Furthermore, as part of organizing overlapping disclosure items, the item on executive status and changes in non-listed company disclosures was removed from subordinate regulations such as the enforcement decree and related notices, following its deletion from the Fair Trade Act.

The amendment to the Fair Trade Act enforcement decree, which passed the Cabinet meeting, is scheduled to take effect on August 7 after presidential approval and promulgation.

The FTC stated, "Through this amendment to the Fair Trade Act enforcement decree and notices, we expect to provide incentives for prompt self-correction of disclosure items with minor issues and low market impact, thereby minimizing the circulation of incorrect information and enhancing the immediacy and accuracy of the disclosure system to further strengthen its market monitoring function."