South Korea sets investment rules for prepaid funeral companies, with a review committee above 100 billion won

A revised guideline from the Korea Fair Trade Commission, in force from Friday, adds a new section on how funeral service companies and other prepaid installment sellers should invest the money customers pay in advance.

Firms must balance safety, liquidity and return so that money remains for future services and cancellation refunds. Before investing heavily in high-risk assets such as derivatives, crypto assets or leveraged products, or before guaranteeing the debts of controlling shareholders or trading with them on unusual terms, they are expected to review the size, terms and recoverability of the deal. One example in the text is buying 2 million shares of an affiliate at 5,000 won each when the market price is 3,500 won.

Every firm needs written investment rules and an annual plan reported to its board. Firms with 100 billion won or more in prepayments must also run an investment review committee, which has to hear from the bank or mutual aid association that guarantees repayment, and from outside accounting or finance experts, before it weighs related-party deals or high-risk investments. The commission said the aim is voluntary compliance.