[Edaily Reporter kyoungeun kim ] Parent company shareholder approval will be mandatory when listing a subsidiary formed through a spin-off. Even in the case of listing a general subsidiary—not one formed through a spin-off—the parent company’s board of directors must establish measures to protect shareholders, regardless of whether the listing takes place on a domestic or international exchange.

On the 6th, the Financial Services Commission (FSC) and the Korea Exchange (KRX) announced a draft of the “Guidelines on Dual Listings” containing these provisions and began soliciting public comments. Following a public comment period that runs through the 14th, the guidelines are expected to take effect around the end of July after being approved at regular meetings of the Securities and Futures Commission and the Financial Services Commission.
The key point of these guidelines is that the requirement for shareholder consent for dual listings will be applied differently depending on the type of subsidiary. Shareholder consent is mandatory for subsidiaries formed through a spin-off. For general subsidiaries, a strict individual review will be conducted in the absence of consent, while subsidiaries with a low weighting (where revenue, operating profit, and assets are all less than 10% of the parent company’s figures) may be exempt. Reflecting the principle of shareholder equality, the criteria for shareholder consent adopt the 3% rule (restricting voting rights exceeding 3%, with shares held by related parties aggregated for the largest shareholder) rather than the majority of minority shareholders (MoM) method.
The parent company’s board of directors is subject to five major obligations: △ conducting a shareholder impact assessment; △ devising shareholder protection measures; △ confirming shareholder communication or consent; △ passing a board resolution for or against the plan and notifying the subsidiary; and △ disclosing compliance progress in stages. Violations are subject to a maximum fine of 1 billion won and a one-day trading suspension.
With these guidelines, the threshold for so-called “split listings” through asset spin-offs has effectively been raised to the point of being virtually impassable. While asset spin-off listings had sharply declined following the cases of LGCHEM,LTD(051910)and LG Energy Solution(373220), companies such as HD HYUNDAI MARINE SOLUTION CO., LTD(443060)on the KOSPI and TMC on the KOSDAQ were listed in 2024 despite controversies over “split listings.” With the addition of the requirement for shareholder consent as an extra hurdle, it is now widely assessed that listings using similar methods have become virtually impossible.
Market attention is now focused on the potential impact on major initial public offerings (IPOs). Prominent examples include HD HYUNDAI(267250)Robotics, which was spun off from HD HYUNDAI(267250)in May 2020, and HyundaiMotor Group’s Boston Dynamics (BD), which is pursuing a Nasdaq listing. In particular, regarding BD’s Nasdaq listing, since these guidelines apply equally to dual listings on overseas exchanges, the boards of directors of all four parent companies— HyundaiMotor(005380), KIA CORPORATION(000270), HyundaiMobis(012330), and HYUNDAIGLOVIS Co.,LTD(086280) —must fulfill the five mandatory obligations.