"Need to Discuss Excluding Controlling Shareholders' Voting Rights in Dual Listings"

Nam Gilnam, Senior Research Fellow at the Korea Capital Market Institute

Presents Various Shareholder Consent Options for Dual Listings

Nam Gilnam, Senior Research Fellow at the Korea Capital Market Institute, presented various opinions on the methods of shareholder consent in dual listing at the seminar titled 'Collecting Opinions for the Improvement of the Dual Listing System,' held on the morning of the 20th at the Korea Exchange in Yeouido, Seoul. Photo by Changhwan Lee

There was a suggestion that, in order to protect minority shareholders in cases of dual listings, the so-called Majority of Minority (MoM) rule—which excludes controlling shareholders’ voting rights—should be considered.

Nam Gilnam, Senior Research Fellow at the Korea Capital Market Institute, presented various opinions regarding shareholder consent methods for dual listings as a speaker at the seminar held on the morning of May 20, 2026, at the Korea Exchange in Yeouido, Seoul.

Nam stated, “Regulations on dual (or new) listings exist to prevent the dilution of parent company shareholders’ value,” adding, “There needs to be an institutional mechanism that allows dual listings if there is consent from parent company shareholders.” He further emphasized, “Ensuring procedural legitimacy to protect the interests of parent company shareholders is important. It is necessary to design a system that meets global standards, balancing corporate management autonomy with the effectiveness of minority shareholder protection.”

Nam proposed three possible methods for obtaining shareholder consent in cases of dual listings. The first option is a special resolution at a general shareholders’ meeting, requiring approval from at least two-thirds of the shares present and at least one-third of the total issued shares. Nam explained, “The special resolution at a general meeting is a proven system with legal stability that has been in operation for over 50 years. Its advantage is that, due to the abundance of accumulated case law over a long period, the criteria for judgment in disputes are clear.”

However, he added, “In the case of the first option, if a controlling shareholder owns one-third or more of the shares, approval can be achieved solely by the controlling shareholder, so their influence remains, and there are concerns that the actual protective effect for general shareholders may be limited.”

The second option is a regular resolution applying the 3% rule, which limits the voting rights of the largest shareholder to 3%. Nam explained, “A regular resolution applying the 3% rule minimizes the influence of the largest shareholder and enables decisions centered on the will of minority shareholders.” However, he also pointed out, “Structurally, it is possible to fall short of the quorum requirement, and there is also a possibility that the regulation could be evaded through the dispersion of the major shareholder’s friendly shares.”

The third option is the Majority of Minority (MoM) method, which completely excludes the voting rights of controlling shareholders and requires approval by a majority of the ordinary (minority) shareholders. Nam stated, “The third option is the strongest measure to protect general shareholders, as it entirely blocks the influence of controlling shareholders. This mechanism has already been adopted as a minority shareholder protection device in major capital markets such as the United States, the United Kingdom, and Hong Kong.”

However, he also noted, “Excluding controlling shareholders could weaken financial competitiveness, and there are concerns about the possibility of rejection due to insufficient cohesion among ordinary shareholders and the burden of excessive costs.”

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