By Wooyoung Lee (December 12, 2025, 06:16 GMT | Insight) — South Korea is embarking on a significant corporate governance reform aimed at enhancing investment in artificial intelligence (AI). The government plans to amend a long-standing requirement mandating that “grandchild” subsidiaries of holding companies must own 100 percent of their own subsidiaries, referred to as “great-grandchildren.” This threshold will be lowered to 50 percent, a move intended to alleviate capital burdens and encourage more flexible business structures. The reform is positioned as part of a broader strategy to attract both local and foreign investment in the rapidly evolving AI sector.
The proposed changes are expected to fundamentally reshape the landscape of corporate governance in South Korea, which has historically been characterized by tightly controlled ownership structures. By easing the restrictions on subsidiary ownership, the government aims to facilitate the formation of new businesses that can respond more agilely to the fast-paced developments in AI technology. This restructuring is crucial as South Korea seeks to solidify its position as a leader in AI innovation.
In recent years, South Korea has made substantial investments in AI, focusing on sectors such as healthcare, manufacturing, and smart cities. The government’s push for regulatory reform is aligned with its goal of positioning the nation as a global hub for AI development. Analysts suggest that by modifying these corporate governance rules, South Korea could attract greater investment from international tech giants and venture capitalists.
According to industry experts, the planned reforms could enhance the competitiveness of South Korean companies operating in the AI field. As these firms gain more flexibility in their ownership structures, they may be better equipped to adapt to market demands and technological advancements. The change is seen as a necessary step to overcome bureaucratic hurdles that have previously stifled innovation.
The government’s initiative comes amid a global surge in AI investments, with major players like Microsoft and Nvidia ramping up their AI capabilities. South Korea’s reforms could potentially position its companies to compete more effectively against these global giants. Moreover, the move reflects a growing recognition of the importance of agility and adaptability in an era defined by rapid technological change.
While the proposed changes have garnered support from many business leaders, they are not without critics. Some stakeholders express concerns that loosening ownership rules could lead to a concentration of power within a few corporations, undermining the competitive landscape. In response, the government has assured that it will implement measures to maintain a level playing field, ensuring that smaller enterprises also benefit from the reforms.
The timeline for the implementation of these changes remains to be clarified, but the South Korean government has indicated a sense of urgency in rolling out the proposed reforms. As the country navigates this transformative period, the focus will be on creating an environment that not only fosters innovation but also ensures fair competition across the board.
In the broader context, these changes could influence corporate governance practices in other countries, particularly as Asia increasingly becomes a focal point for AI development. As nations like South Korea strive to create favorable conditions for technology investment, the results of these reforms may serve as a blueprint for similar initiatives globally.
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