A state-run think tank on Monday called for fresh measures to prohibit what it calls new and dubious ways to set up cross-shareholding arrangements by large conglomerates, also urging efforts to unwind existing schemes.

In a policy report, the Korea Development Institute noted that cross shareholding among subsidiaries of large companies with more than 5 trillion won ($4.28 billion) in total assets have been prohibited July 2014 when the related law went into effect.

The report, however, claimed many of the country's 61 conglomerates were continuing to set up cross-shareholding arrangements partly by involving other independent and friendly companies.

For instance, a company may invest 5 billion won in a subsidiary of another "friendly" firm in exchange for the partner company investing the same amount of money into one of its own subsidiaries. The company then gains additional influence over its own subsidiary, as well as the subsidiary of the partner company without having to actually invest any money.

Such an arrangement, the report said, is not subject to any restriction under the current law but could seriously undermine the interest of small shareholders by creating "fictitious capital."

"The current law that only prohibits cross shareholdings (among subsidiaries of the same firm) may not be enough to realize the policy goal of preventing an excessive gap between ownership and control," it said.

Just one day before the report was released the Fair Trade Commission ordered Samsung SDI Co., an affiliate of the country's largest conglomerate Samsung Group, to sell part of the stake it currently holds in Samsung C&T Corp. It noted that Samsung C&T's recent merger with another Samsung affiliate, Cheil Industries Inc., has effectively strengthened cross-shareholding ties within the conglomerate.

The report said such problems may continue to rise as the 2014 revision to the antitrust law has failed to require the dissolution of existing cross shareholdings. (Yonhap)