Democratic Party legislator Kim Won-i plans to propose an amendment allowing grandson companies of holding companies to hold 50% stakes in great-grandson companies for government-certified advanced technology firms, according to political sources on the 14th. The proposal aims to address rising semiconductor fabrication costs that limit individual companies' ability to fund large-scale investments through traditional methods alone. Under current Fair Trade Act regulations, grandson companies of holding companies must maintain 100% ownership of subsidiary stakes, preventing the use of external capital for investment projects.
Amendment Reduces Ownership Requirement to 50% for Non-Capital Region Projects
Kim Won-i, former ruling party secretary of the National Assembly's Committee on Trade, Industry, Energy, SMEs and Startups, will propose amendments to the Special Measures Act on Competitiveness Strengthening and Protection of National Advanced Strategic Industries. The bill allows grandson companies to hold 50% rather than 100% of great-grandson company shares for firms certified as advanced technology companies by the Ministry of Trade, Industry and Energy. Great-grandson companies must locate their main offices in non-capital regions outside Seoul, Gyeonggi Province, and Incheon.
SK Hynix Gains Path to External Investment for Semiconductor Cluster SPC
If the bill passes, SK Hynix — a grandson company of holding company SK Inc. — could include external investors when establishing a special purpose company (SPC) for the southwestern semiconductor cluster development. Kim Won-i stated that "fab construction costs have increased sharply compared to the past, and individual companies face limits in handling large-scale investment volumes using only traditional financing methods." He explained the amendment seeks to "diversify capital procurement methods and encourage active investment through improvements to the investment system, including granting special investment exceptions for grandson companies of general holding companies in the semiconductor sector, where large-scale investment is essential."
Government and Party Target September Regular Session for Bill Processing
The government and party aim to process the bill during the regular National Assembly session beginning in September.
FAQ
What ownership requirement does the proposed amendment change for holding company subsidiaries?
The amendment allows grandson companies of holding companies to hold 50% stakes in great-grandson companies for government-certified advanced technology firms, down from the current 100% requirement under the Fair Trade Act. Great-grandson companies must locate headquarters in non-capital regions outside Seoul, Gyeonggi Province, and Incheon.
How does the proposed rule change affect SK Hynix's semiconductor cluster plans?
If passed, SK Hynix — a grandson company of SK Inc. — could include external investors when creating a special purpose company (SPC) for the southwestern semiconductor cluster. Current regulations requiring 100% subsidiary ownership prevent the use of external capital for such investment projects.
