I am curious about the conditions for establishing a financial holding company.

According to Article 8 of the Financial Holding Company Act, a financial holding company must obtain authorization from the Financial Services Commission when established and can be established in one of two ways: new establishment or conversion.

The new establishment type is a method in which a non-financial company creates a new financial holding company to control its subsidiaries.

On the other hand, the conversion type is when an existing financial company converts to a holding company structure by spinning off shares of its subsidiaries or through share exchange methods.

To obtain authorization, the following requirements must be met.

Capital requirements:
Under the Financial Holding Company Act, in principle, a certain level of paid-in capital must be in place, which means a financial foundation that can stably control and manage subsidiaries.
→ This is not just funds for establishment, but the size of equity capital required to maintain soundness even after acquiring subsidiaries and securing shares.

Main purpose requirements:
The main purpose must be ownership and management of subsidiary shares, and the company must not engage in non-financial business.
→ In other words, a holding company is not a company that directly conducts business, but must be a structure that focuses on the control and management functions of subsidiaries.

Governance structure requirements:
It must have a transparent governance structure that does not impair fair competition and financial soundness.
→ Major shareholder qualifications, executive qualifications, internal control and risk management systems are also reviewed in the authorization screening process.

In addition, the Financial Holding Company Act sets certain limits on the scope of subsidiaries that a financial holding company can have other than financial companies, and violations of these restrictions may result in sanctions such as administrative fines or revocation of authorization.

The establishment of a financial holding company is not a simple organizational change but a structural transformation following the core of the financial regulatory system, so it is very important to fully understand and prepare for the application requirements and procedures of the Financial Holding Company Act.

If you are considering establishment, we recommend obtaining the help of a financial specialist attorney and thoroughly preparing from the authorization application stage.