Coupang Founder Designation: Deciding to Break with Global Standards

Fair Trade Commission Redesignates Coupang’s Same Person from the Corporation to Chairman Kim Beom-seok, a U.S. Citizen / A Galapagos-Style Regulation Found Only in Korea, Based on the Assumption That a Single Natural Person Effectively Controls an Entire Business Group / Fully Redesign It Around “Substantive Control,” Not Formal Status, to Ensure Governance Transparency and Protect Ordinary Shareholders

On April 29, the Fair Trade Commission redesignated Coupang’s same person from the corporation to Chairman Kim Beom-seok personally. This was the first such change in five years since Coupang was first designated as a business group subject to disclosure in 2021, and it is also the first case in which a natural person of U.S. nationality has been designated as the “controlling owner” of a large Korean business group.

This decision starkly reveals how out of step the same person system, introduced in 1986, is with the corporate environment and global capital markets of 2026. Even though the times have changed, this system has remained in place without fundamental reform, and the time has come to fundamentally reconsider whether it is reasonable at all.

The same person system rests on the assumption that a single natural person effectively controls an entire business group. It is true that many major Korean business groups still retain the characteristics of family control. But as global institutional investors increase their holdings, outside directors gain greater authority, board-centered management becomes more entrenched, and activist funds expand their influence, complex governance structures that cannot be reduced to the decision-making of one individual natural person are also rapidly increasing. Applying the simplistic 1980s-style model of a single controller uniformly to all business groups is no longer consistent with reality.

In addition, the same person designation system creates incentives to avoid designation, thereby entrenching abnormal governance structures such as intentional ownership dispersion, artificial separation of affiliates, and nominal distancing by family members. Instead of improving governance structures efficiently in ways the market demands, restructuring for the purpose of regulatory avoidance becomes the rational choice. In that sense, the regulation itself ends up encouraging a retreat in governance.

This redesignation of Coupang’s same person clearly shows how the same person system operates when it encounters global capital structures. The FTC’s key rationale for designating Chairman Kim Beom-seok as the natural-person same person was the “substantive participation in management” of Kim’s younger brother, Vice President Kim Yu-seok. Vice President Kim is not an executive under the Monopoly Regulation and Fair Trade Act and holds no equity in Korean affiliates, but the FTC nonetheless recognized his “participation in management” on the grounds that he ranks at the highest level within Coupang as a vice president, receives treatment comparable to that of a registered executive in terms of compensation and secretarial support, chaired hundreds of meetings related to logistics and delivery, and convened subsidiary CEOs to review performance.

Here, the system’s internal contradiction comes into view. Coupang Inc. owns the Korean Coupang corporation 100%, and the Korean Coupang corporation in turn owns its subsidiaries and sub-subsidiaries 100%, making the governance structure simple and transparent. Because Chairman Kim and his relatives hold no equity in Korean affiliates, the usual channels for self-dealing are themselves blocked. Chairman Kim was designated as the same person as a result of an arbitrary interpretation of his relatives’ “de facto influence.” In other words, although the same person system was originally designed to regulate equity relationships, it is in practice being operated in a way that sweeps in even related parties with no ownership stake.

Of course, one cannot entirely deny the possibility of indirect value transfers through compensation-setting or personnel authority. But this is already an area checked by the U.S. capital market’s SEC related-party disclosure rules, insider trading regulations, and the board’s fiduciary duty framework. It is not clear what new risk Korea’s same person system is identifying by superimposing a separate standard on top of those mechanisms.

This can be read as a case in which the two structural flaws of the same person system—the limits of the single-controller assumption and the possibility of arbitrary application—erupted simultaneously at the stage of a foreign company. The simpler the governance structure, the more ambiguous the grounds for application become, and as the abstract standard of “participation in management” is invoked, legal clarity is undermined.

Even if the objective is legitimate, if the means are not effective, the system merely generates costs. The enormous disclosure, legal, and compliance costs borne by large business groups ultimately erode shareholder value and consumer welfare. The same person system is a Galapagos-style regulation that exists only in Korea. The United States pursues governance transparency and protection of ordinary shareholders through SEC Schedule 13D disclosures for holders of more than 5% equity, the EU through beneficial ownership registries, and Japan through its major shareholder reporting system. Korea alone takes the exceptional approach of uniformly grouping related parties around a natural person and designating them administratively.

In an era of professional management systems and global capital markets, it is self-evident that a system built on the industrial structure of the 1980s cannot properly serve its function. As the Coupang case shows, stopgap measures limited to piecemeal adjustments cannot overcome its fundamental limitations.

The direction of the solution is clear. The same person system should be abolished, and the goals of governance transparency and protection of ordinary shareholders should be transferred to the normal channels of corporate law, capital markets law, and disclosure regimes. If it is to be maintained, it must be completely redesigned around “substantive control,” not formal status. As long as modern corporations are judged by outdated standards, a leap forward for Korea’s capital market will remain elusive.

Philip Chung, Researcher, Center for Free Enterprise (CFE)

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Original title: 쿠팡 총수 지정, 글로벌 스탠더드와 '헤어질 결심'

Author: Philip Chung

Date: 2026-05-06

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=1&idx=28882