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Article 6
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When determining whether a relationship of subordination or control with an affiliate exists, a public company shall consider substantive as well as legal relationships.
In any of the following circumstances, a public company shall prepare a consolidated business report and consolidated financial statements of the affiliates; however, this requirement shall not apply where there are relevant materials and evidence proving that no relationship of control or subordination exists.
- The company obtains a majority of directorships of another company;
- Its appointee is engaged as general manager of another company;
- It wields operational power over another company pursuant to a joint venture contract;
- Its financing of another company amounts to one-third or more of that company's total assets;
- Its endorsements and guarantees on behalf of another company amount to one-third or more of that company's total assets.
A public company determined to have a relationship of subordination under any subparagraph of the preceding paragraph shall prepare an affiliation report; however, this requirement shall not apply where there are relevant materials and evidence proving that no relationship of control or subordination exists. A public company determining, as proven by relevant materials or evidence pursuant to the preceding two paragraphs, that no relationship of control or subordination exists [with a certain company] shall disclose the name of such company and the reasons for such determination in its consolidated business report of affiliates or its affiliation report.
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