South Korea’s antitrust watchdog said Monday that an increasing number of companies occupy a regulatory blind spot that shields the owner families. Owners increased their shares through indirect investment from public corporations and overseas affiliates this year, it said.

The Fair Trade Commission said it analyzed the stock ownership of the 64 largest groups and their 2,292 affiliates.

Among the groups, the equity held by owner families amounted to 3.6 percent, down 0.3 percentage point from last year.

The FTC said, “The owner family’s controlling the entire business group has continued with less than 4 percent stake by utilizing affiliates.”

The authorities also said, “The system needs to be improved as the number of firms in the regulatory blind spot has increased, and a possibility of indirectly expanding the control of owner family also rose through public corporations and overseas affiliates.”

The number of companies in the regulatory blind spot increased from 376 to 388. The companies in the blind spot are listed firms with 20 to 30 percent of their equity held by owner families, or subsidiaries with more than 50 percent held by companies in which the owner family holds stakes greater than 30 percent.

As of this year, the number of companies subject to antitrust regulations stood at 210, down nine from last year. The antitrust regulations apply to listed firms with more than 30 percent of their equity held by owner families or unlisted firms in which the owner families hold more than 20 percent.

The companies with the largest number of units in the blind spot are Hyosung (32); Hoban Construction (19); GS, Taeyoung and Netmarble (18 each); and Shinsegae and Harim (17 each).

The FTC said the number of cases where owner families have used public corporations, overseas affiliates and financial insurance companies to indirectly strengthen their control has also increased from last year.

Fifty-one domestic affiliates, compared with 47 last year, have 54 overseas affiliates as investors while 128 affiliates, compared with 124 last year, have 68 public corporations as investors. Also, 242 affiliates hold investments from 103 financial and insurance companies, the commission said.

By Shin Ji-hye (shinjh@heraldcorp.com)