Shareholders Opposing Physical Division of Listed Companies to Be Granted Stock Purchase Rights

Financial Services Commission Approves Enforcement Decree of the Act on Capital Markets and Financial Investment Businesses at Cabinet Meeting

[Asia Economy Reporter Minji Lee] The Financial Services Commission announced on the 20th that the amendment to the "Enforcement Decree of the Capital Markets and Financial Investment Business Act," which includes follow-up measures to enhance shareholder rights related to the listing of subsidiaries through physical division, was approved at the Cabinet meeting.

According to the amendment to the enforcement decree, the Financial Services Commission plans to introduce a stock purchase claim right for shareholders opposing physical division. Previously, the Commission institutionalized measures such as strengthened disclosure and listing examination to protect shareholder rights.

Specifically, when the board of directors of a listed company resolves a physical division, dissenting shareholders will be granted the right to request the purchase of their shares. When exercising the stock purchase claim right of a listed company, the purchase price will be determined through negotiation between the shareholder and the company. If no agreement is reached, a weighted average of past stock prices will be calculated and the market price will be applied. If there is still no agreement, the purchase price can be determined by a court request.

Furthermore, since physical division itself becomes difficult if a majority of common shareholders oppose it or if it causes a decline in corporate value, listed companies can only proceed with physical division after preparing shareholder protection measures and persuading common shareholders.

Disclosure requirements have also been strengthened. Since October 18, companies pursuing physical division have been disclosing restructuring plans such as the purpose of the physical division, expected effects, shareholder protection measures, and management plans through a "Major Matters Report." Through this, common shareholders and investors receive sufficient information related to the division and can use it for decision-making regarding shareholder meetings, exercising stock purchase claim rights, and investments.

Examinations related to the listing of subsidiaries through physical division have also become stricter. Since September 28, when a subsidiary created by physical division seeks to be listed, the efforts of the parent company to protect common shareholders have also been subject to review. Additionally, if a company chooses to distribute subsidiary shares in kind to parent company shareholders as a shareholder protection measure, the system has been revised to ensure that parent company shareholders are not restricted in disposing of subsidiary shares.

The Financial Services Commission stated, "To resolve the insufficient protection of common shareholders, which was one of the causes of the capital market discount this year, we have prepared and promoted various institutional improvement measures," and added, "While encouraging the establishment of the systems announced this year, we plan to discover and promote new policy tasks to continuously enhance the rights and interests of common shareholders."

This content was produced with the assistance of AI translation services.