Regulators unveil strict guidelines for 'split listing'
Financial Services Commission Chairman Lee Eog-weon speaks during a meeting at Korea Development Bank's headquarters in Seoul, Wednesday. Yonhap
The Financial Services Commission (FSC) and the Korea Exchange on Monday unveiled strict guidelines for "split listing" by conglomerates, in a bid to bolster the fiduciary duty of listed firms and interests of ordinary shareholders.
Split listing, also referred to as duplicate listing, occurs when a core business division is spun off and listed separately, and has long been cited as one of the major reasons behind relatively low values for local stocks.
Financial regulators have said it would seek to ban the practice of split listing "in principle," while making efforts to revise relevant rules and enhance shareholder protection.
Under the new guidelines, the voting right of the biggest shareholder of a parent company will be limited at three percent under the Commercial Act if the parent company's affiliate is listed.
Also, the guidelines require a parent company's board to review the impact of split listing on its shareholders.
Regulators also require a parent company to draw up measures to ensure shareholder protection, the FSC and the bourse operator said.