Conglomerate Owners Expand Unregistered Executive Positions

Rising Concerns Over Non-Registered Executives in Conglomerate Affiliates

Recent data has revealed a growing trend of conglomerate owners and their families serving as non-registered executives in affiliated companies. This development has raised concerns about potential misuse of power and the risk of private interest appropriation through favorable transactions.

On May 19, the Korea Fair Trade Commission (KFTC) released its '2025 Analysis of the Governance Structure of Publicly Disclosed Business Groups' report. The findings highlight an increasing number of cases where conglomerate owners and their families hold positions without being officially registered as executives. The survey focused on 2,994 affiliate companies under 86 groups, excluding five newly designated groups and the National Agricultural Cooperative Federation, which was established under a special law. The analysis covered 92 publicly disclosed business groups.

The KFTC analyzed the involvement of conglomerate owners’ families in management within 2,844 companies under 77 publicly disclosed groups with owners. According to the report, 198 companies (7.0%) had conglomerate owners and their families serving as non-registered executives, representing a 1.1 percentage point increase from the previous year. Notably, the proportion of listed companies where such individuals held these roles rose by 6.3 percentage points to 29.4%.

A non-registered executive is defined as someone who is not registered in the corporate registry and does not participate in board activities. Unlike registered executives, who are appointed through shareholder resolutions and registered in the corporate registry, non-registered executives perform substantive company tasks using titles like chairman, president, or executive director. However, they avoid legal responsibility for exercising management rights.

The highest proportion of companies with non-registered executives was found in HiteJinro, at 58.3% (7 out of 12 companies). Other notable groups include DN, KG, Geumho Petroleum & Chemicals, and Celltrion. For instance, in HiteJinro, conglomerate owner Park Moon-deok, chairman, and his eldest son Park Tae-young, president, serve as non-registered executives in several affiliates. On average, each conglomerate owner held non-registered executive positions in 1.6 companies, while second- and third-generation owners averaged 1.7 companies each.

Over half (54.4%) of the companies where conglomerate owners and their families served as non-registered executives were subject to private interest appropriation regulations. A source from the KFTC stated, “Non-registered executives can exert substantive influence over management but, unlike registered executives, are relatively free from legal responsibilities and obligations under the Commercial Act, which can lead to a disconnect between authority and responsibility.”

Park Joo-geun, representative of Leaders Index, added, “As revisions to the Commercial Act have strengthened accountability for registered executives, business owners have increasingly sought to avoid such responsibilities. However, to enhance the maturity of the capital market, companies must adopt a board-centered management structure. There is a need to consider providing incentives, such as tax benefits or dividends, when substantive managers participate in the board.”

The KFTC source noted, “While the presence of non-registered executives does not necessarily indicate illegal activity, groups with a higher proportion of companies where conglomerate owners and their families serve as non-registered executives may have a higher likelihood of private interest appropriation.” They added, “We will closely monitor whether these individuals, including non-registered executives, abuse their authority.”