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South Korea to Implement New Dual Listing Rules August 3rd
🇰🇷 South Korea /Economy & Trade

South Korea to Implement New Dual Listing Rules August 3rd

From Dong-A Ilbo · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

News Official statement New plan
  • South Korea's financial authorities will implement new rules on August 3rd to allow exceptions for dual listings, moving from a principle of prohibition.
  • The revised regulations, approved by the Financial Services Commission, require shareholder approval for dual listings, particularly for parent companies listing subsidiaries.
  • A '3% rule' for voting rights will be applied to spin-offs, and the FSC aims to enhance minority shareholder protection and corporate accountability.

South Korea's financial authorities are set to implement revised regulations on August 3rd, shifting from a principle of prohibiting dual listings to allowing exceptions under specific conditions. The Financial Services Commission (FSC) announced the approval of amendments to the Korea Exchange's listing and disclosure rules, which will govern these changes.

The core of the revised system, initially announced on July 6th, mandates shareholder approval when a parent company lists its subsidiary. For companies undergoing a spin-off and subsequent dual listing, shareholder consent will be required under the '3% rule,' which limits voting rights to 3% for shareholders holding more than that threshold.

The FSC aims to enhance minority shareholder protection and corporate accountability.

— FSC (implied)The stated purpose behind the revised dual listing regulations.

During the public consultation period, industry groups proposed exempting shareholder approval for spin-offs after a significant period. However, the investment sector advocated for mandatory shareholder consent in all dual listings that could significantly impact parent companies. The FSC maintained its stance on mandatory shareholder approval for parent-subsidiary dual listings to protect general shareholders and promote responsible spin-offs.

The FSC also decided to retain the '3% rule' as the standard for shareholder approval in spin-off cases, citing concerns that alternative methods like a 'Majority of Minority' vote could dilute the objective of protecting general shareholders. The commission noted that while 'Majority of Minority' has no precedent in Korea, the '3% rule' offers a more established way to secure the representation of general shareholders' interests. Additionally, requirements for special committees within parent company boards have been strengthened, mandating independent directors to form at least two-thirds of the committee, including the chairperson.

The '3% rule' is maintained as it offers a more established way to secure the representation of general shareholders' interests.

— FSC (implied)The rationale for keeping the '3% rule' for shareholder approval in spin-off cases.
DistantNews Editorial

Originally published by Dong-A Ilbo in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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