The number of holding companies in South Korea increased over the past year as the government encouraged businesses to enhance their transparency in corporate governance, the country’s antitrust watchdog said Thursday.

As of September, the number of holding companies stood at 115, up from the previous year’s 105, according to a report by the Fair Trade Commission. For large conglomerates, the number increased from 28 to 30 over the same period.

A holding company refers to a firm that usually does not produce goods or services, but its purpose is to own shares of other companies.

The government is encouraging businesses to turn into holding companies, saying that it can help streamline corporate governance, but others argue it could allow a small amount of capital to wield a huge influence over other companies.

Their average assets came to about 2 trillion won ($1.8 billion), while their average debt ratio stood at 42.5 percent, far below the 200 percent ceiling imposed by law. Four holding companies exceeded the legal limit, the report showed.

The report comes as a debate among major presidential candidates is underway over whether to tighten regulations on holding companies as part of reform efforts on large conglomerates.

Last week, FTC Chairman Kim Dong-soo told business leaders that the issue related to holding companies should be approached “very cautiously,” expressing reservations against moves to tighten related regulations.

The report assessed that the holding company system seems to be taking its root in accordance with its objective to enhance transparency in corporate governance and ownership structure. (Yonhap News)