An incumbent Assemblyman “Soochan Chai” submitted a bill of the Fair Trade Law for prohibition of circular equity investment to the National Assembly to make a improvement of corporate governance and ownership structure on October 2004.
The Korea Fair Trade Commission made also a plan to revise the Fair Trade Law for prohibition of cycle investment on October 23, 2006.
The carriage of the revised version of the law bears so many problems not only in formality but also in contents. To make matters worse, it will be unconstitutional.
Therefor, this article will review the legal theory on the bill of the Fair Trade Law for prohibition of cycle investment from “The Fair Trade Committee” and incumbent Assemblyman “Soochan Chai”.
This kind of investment control is attributable, in part, to the companies themselves which have accumulated wealth through unfair manners such as improper relationship with politics, unclear corporate governance, labor abuse, unfair transactions, and tax evasion. However, if the very fundamental objective of enterprises of making profits is ignored, companies have no reason to concentrate on its management. It is high time to form environments where companies can work hard with no worries.
Ultimately, the prohibition of cycle investment and restriction of cross-affiliate holdings cannot help contracting investment from enterprises, and enterprises with no investment are nothing but dead ones.
Therefore, the prohibition of cycle investment is the major culprit of enhancing pains that people suffer from.