The head of South Korea's antitrust watchdog says a U.S. activist hedge fund’s demand on Hyundai Motor Group’s corporate governance restructuring is unreasonable. 

During a meeting with reporters before his speech at a local business meeting in Seoul on Thursday, Fair Trade Commission Chairman Kim Sang-jo made the warning against Elliott Management’s call on the South Korean automaker to adopt a holding company strategy. 

Kim said if Hyundai follows the demand, it could violate the Fair Trade Act that separates industrial and financial capital. 

In recent "Accelerate Hyundai Proposals," the hedge fund said Hyundai should combine Hyundai Mobis with Hyundai Motor to create a holding company to improve the ownership structure. Under the proposals, financial affiliates of Hyundai, such as Hyundai Card and Hyundai Capital, will be put under the control of the holding firm. 

It also demanded a clear policy for dividend payouts and the cancellation of treasury shares in Hyundai Motor and Hyundai Mobis.