South Korea Financial Services Commission proposes Financial Holding Companies Act amendments to raise fintech investment limit to 15 percent

South Korea’s Financial Services Commission published a preliminary legislative notice proposing amendments to the Financial Holding Companies Act and its Enforcement Decree to loosen key investment, ownership and operational constraints on financial holding companies. The package includes a higher permissible equity stake in fintech firms, additional flexibility for fintech subsidiaries’ group structures, streamlined intra-group work consignment procedures, and expanded scope for private equity fund operations, alongside certain non-legislative interpretive changes that will take effect immediately. Under the proposal, the maximum stake a financial holding company can take in a fintech business would rise to 15 percent, compared with the current general limit of 5 percent unless the investee is at least 50 percent owned by the holding company or is its subsidiary. Fintech subsidiaries of a financial holding company would be allowed to own a relevant financial company providing investment advisory or discretionary investment services, easing current restrictions on second-tier subsidiaries. The reforms would also replace pre-approval requirements for group-wide work consignment between subsidiaries with simplified reporting procedures, and allow grandchild subsidiaries to set up and operate institution-only private equity funds as general partners, while clarifying that subsidiaries acting as general partners for such funds are exempt from the shareholding duty. Public comments will be accepted for 42 days from April 14 to May 26, after which the amendments will proceed through legislative review and approval stages before submission to the National Assembly.