As part of the financial authorities’ latest move to bolster monitoring of conglomerates, major firms with financial arms will be legally required to receive board approval for intracompany transactions over 5 billion won ($4.4 million), from June 30, the Financial Services Commission said Monday.

South Korean firms, not classified as banking groups, with over 5 trillion won in financial assets and more than two financial units -- mostly insurers and brokerages -- are subjected to the “monitoring” bill proposed by the government. The bill is slated to be legislated and implemented by the 21st National Assembly by June 30 and a total of six firms currently meet the standards: Samsung, Hyundai Motor, Hanwha, Mirae Asset, Kyobo and DB.

The respective board members of their key financial units will make key decisions in handling such transactions, the FSC explained in their updated details of the bill.

According to the FSC, the bill aims to enhance the firms’ risk and fiscal soundness management capabilities. The law quintessentially allows the FSC to receive regular reports on the fiscal soundness of the financial units of each firms and intervene when they are deemed to be “insufficient.”

Market watchers have been divided over the bill, with critics saying that it is an “excessive regulation,” and others pointing out that such conglomerates have lacked the level of monitoring that local banking groups have been receiving.

The bill, however, does not subject Naver and Kakao, despite the exponential growth of their fintech businesses in recent years.

By Jung Min-kyung (mkjung@heraldcorp.com)