Is There a Rise in Unregistered Chaebol Executives in S. Korea?
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Synopsis
The surge in unregistered family executives within South Korea's chaebols raises alarms about accountability. As the Fair Trade Commission reports increasing numbers, the implications for corporate governance and shareholder interests are profound. This situation demands attention from both regulators and the public.
Key Takeaways
- 18.2% of chaebol affiliates have owner-family members on boards.
- The number of unregistered executives is on the rise.
- Recent legal reforms aim to enhance directors' responsibilities.
- Concerns persist about accountability and authority gaps.
- FTC is closely monitoring the situation.
Seoul, Nov 19 (NationPress) The escalating number of family members acting as unregistered executives within family-owned conglomerates, known as chaebol, has sparked worries regarding a widening rift between authority and accountability, according to the antitrust authority on Wednesday.
Since 2010, the Fair Trade Commission (FTC) has been assessing and publishing annual reports concerning the ownership and governance frameworks of designated corporate groups as part of its market oversight efforts aimed at fostering improvements in management practices, as reported by Yonhap news agency.
The latest report revealed that of the 77 conglomerate groups, 18.2% of their 518 affiliates had a member of the owner family formally appointed to the company's board of directors in 2025, according to the FTC.
This year, the total number of owner-family directors reached 704, representing 7% of all registered board members, an increase from 5.6% in 2021, the FTC noted.
The proportion of family members serving as unregistered executives has also seen a continuous rise, officials stated.
Among the 77 groups, 7% of affiliates, equating to 198 companies, employed owner-family members as unregistered executives, an increase from 5.9% the previous year.
Notably, the rise was especially significant among public companies, where the percentage of firms with unregistered owner-family executives surged by 6.3 percentage points year-on-year to 29.4%.
“Unregistered executives can exert considerable management influence; however, unlike registered directors, they are largely exempt from legal obligations and liabilities,” commented Eum Jan-di, an FTC official.
The official pointed out that the recently amended Commercial Act has enhanced directors' fiduciary duties, mandating them to safeguard the interests of all shareholders equally.
“If the trend of owner-family members serving as unregistered executives continues, the efficacy of the revised law could be compromised,” she added.
The FTC has committed to closely scrutinizing whether owner-family members exploit regulatory loopholes to abuse their authority.
Point of View
It is essential to recognize the implications of rising unregistered executives in chaebols. This trend poses significant risks to corporate governance and accountability, raising questions about the effectiveness of regulatory reforms. The nation must remain vigilant in ensuring that these developments do not undermine the interests of shareholders and overall market integrity.
NationPress
19/11/2025
Frequently Asked Questions
What are chaebols?
Chaebols are large family-owned business conglomerates in South Korea, often involved in multiple industries.
Why are unregistered executives a concern?
Unregistered executives can influence management significantly without the legal duties and liabilities that registered directors bear, raising accountability issues.
What actions is the FTC taking?
The Fair Trade Commission is monitoring the situation closely to ensure that owner-family members do not exploit regulatory gaps.
