Megaspecial Zone Act, Review of Easing Equity Regulations for Holding Company Great-Grandchild Companies
The Megaspecial Zone Act eases equity regulations on holding company grandchild companies, widening the path for investment The scope of application may vary depending on special zone criteria, so the detailed plan is drawing attention
The government and the ruling party are reviewing a plan to include a special provision in the tentatively named “Mega Special Zone Act” that would relax the requirement for holding companies’ subsidiaries to hold shares in their greatgrandchildren companies. Under the current Fair Trade Act, a subsidiary company is required to hold 100% of the shares in its greatgrandchildren company, but there is discussion about lowering this to 50% or more.
This review plan follows the same direction as the level of special provisions in the National HighTech Strategic Industries Act, which the relevant ministries agreed on last year. While the government acknowledges the need to support investment in hightech industries, it is drawing a line against further easing that would shake the basic principles of the holding company system.
However, if the same special provision is included in the Mega Special Zone Act, the companies eligible for its application could expand. The actual scope of relaxation is expected to vary depending on how the criteria for designating special zones, the target industries, and the investment requirements are designed.