South Korea’s LX Group, which spun off from LG Group last year, has been officially recognized by state authority independent overseeing 12 subsidiaries led by LX Holding.

The Fair Trade Commission on Thursday endorsed the breakdown in the LG Group.

LX Group filed for a separation of 12 family units from LG Group on May 3 after it was spun off under a new holding entity LX Holdings with Koo Bon-joon at its helm last year.

LG Group is represented by Koo Kwang-mo, Koo Bon-joon’s nephew, and thus the two are different entities under the Fair Trade Law.

The FTC approved the filing as it met requirements such as LG Group having a less than 3 percent stake in listed LX subsidiaries and a less than 10 percent stake in unlisted subsidiaries. Likewise, LX Group’s stake in listed and unlisted LG subsidiaries is less than 3 percent and 10 percent, respectively.

The two companies were also found to have no shared executives, cross-debts, or illegal activities binding them.

LG Group and LX Group plan to decrease internal transactions among their subsidiaries. The proportion of internal trading among LG subsidiaries LX Pantos and LX Semicon are each 58.6 percent and 24.2 percent.

LG Electronics and LG Chem will hold competitive biddings for maritime shipping to provide small and mid-size companies the chance to win lucrative contracts while LX Pantos and LX Semicon will expand external transactions and sales in overseas markets, and make a foray into new business areas.

LG will also set up an internal transactions committee consisting of at least three directors with at least two-thirds being external directors to regulate transactions with LX affiliates.

LX will set up an ESG committee mainly consisting of external directors that will have a similar function to the LG’s internal transactions committee.

The FTC will be evaluating whether the requirements for the separation are being met and will closely monitor any unfair internal transactions between the separated family units. If requirements are not kept during those three years, the FTC may revoke the approval.

Shares of LG Group rose 1.32 percent to 76,600 won ($58.87) while shares of LX Holdings were off 1.55 percent at 8,900 won on Thursday afternoon.

By Susan Lee

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]