Photo = Korea Exchange

 

 

[Alpha Biz= Kim Sang Jin] The South Korean government will effectively ban dual listings—long cited as a key factor behind the persistent undervaluation of local equities—by significantly tightening listing review standards.

The Financial Services Commission and Korea Exchange announced the new framework at a seminar held on April 16 in Seoul, outlining stricter criteria that will, in principle, prohibit dual listings except in exceptional cases.

Under the revised rules, not only spin-offs through physical or human division but also listings via acquisitions or newly established subsidiaries will be classified as dual listings if effective control is maintained by the parent company.

The exchange plans to introduce clearer qualitative screening criteria, focusing on three key areas: operational independence, management independence, and investor protection. Subsidiaries that fail to meet any of these standards will not be eligible for listing.

Operational independence will assess whether a subsidiary’s core business is not reliant on its parent, while management independence will evaluate decision-making autonomy and governance structure. Investor protection will focus on shareholder communication and safeguards for minority investors.

The move builds on policy direction previously discussed at a capital market meeting chaired by Lee Jae-myung, aiming to curb what regulators describe as asymmetric practices where controlling shareholders benefit disproportionately from dual listings.

FSC Chairman Kim Byoung-hwan emphasized that while dual listings have historically been used to expand business segments while maintaining control, the new framework will distinguish between unfair practices that concentrate benefits among a few and cases that create value for all shareholders.

The revised listing and disclosure rules are expected to be finalized by June.

 

 

 

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