FSC Respects Tender Offer Compromise Proposed by National Assembly's Political Affairs Committee
Discussions Focus on Application When Acquiring 25% or More of Listed Company Shares to Become Controlling Shareholder
Opinions Diverge Between '50%+1 Share' Standard and Buying All Shares
Balancing Protection of General Shareholders with Corporate Acquisition Burdens
The Financial Services Commission (FSC) announced its stance to respect the 50%+1 share standard discussed in the National Assembly regarding the mandatory tender offer system, which grants general shareholders an opportunity to sell their shares when a listed company's management control changes. Byun Je-ho, Director General for Capital Markets at the FSC, stated on the 1st that the re-introduction of the system itself is a major change and expressed respect for the results of the discussions by the National Assembly's Political Affairs Committee.
The Capital Markets Act amendment pending in the National Assembly includes a provision requiring anyone who acquires 25% or more of a listed company's shares to become the controlling shareholder to purchase up to 50%+1 share of the issued stock, including previously acquired shares. This system aims to give general shareholders an opportunity to share in the control premium during the sale of management control. As bill deliberations are still ongoing, it cannot be concluded as finalized enforcement regulations.
During a public presentation in March, the FSC stated that while delegating the mandatory tender offer volume to the Presidential Decree, it proposed setting the legal minimum at 50%+1 share or more, noting at the time that specific regulatory levels had not been finalized. Director General Byun mentioned that both arguments—those advocating for the purchase of all shares and those concerned about burdens on the M&A market—have validity, and suggested continuing discussions on improvements after monitoring the impact of the system's operation.
The design must be carefully calibrated to protect the rights and interests of general investors, including young people, while preventing corporate acquisitions and restructuring from being excessively stifled. The National Assembly needs to transparently discuss purchase volumes, prices, and exception requirements, and jointly review actual transactions and shareholder protection effects after implementation.