Gov't, ruling party agree to mandate public disclosure of unsolicited takeover bids
A working-level policy consultation between the government and the Democratic Party of Korea's Special Committee on K-Capital Market is under way at the National Assembly in Seoul, Tuesday. Yonhap
The government and the ruling Democratic Party of Korea (DPK) agreed Tuesday to introduce the so-called bear hug system by the end of this year to revitalize the nation's capital market, requiring prospective corporate acquirers to publicly disclose details of unsolicited takeover offers.
Rep. Oh Gi-hyoung, chair of the ruling party's Special Committee on K-Capital Market, told reporters that his committee will speed up efforts to amend the Capital Market Act to introduce the bear hug system within the year. He made the remarks after a working-level DPK-government policy consultation meeting held at the National Assembly.
A bear hug is a takeover offer made publicly by a prospective acquirer to pressure the target company's board to consider the offer and state its position.
"The aim is to require the disclosure of information regarding the purchase and enable market participants to make informed decisions based on that information to facilitate transactions," Oh said, adding he will persuade people both within and outside the party to pass the relevant bill by year's end.
Oh also stressed that the party committee plans to proceed as scheduled with the Korea Exchange's "naming and shaming" scheme, which calls for publicly identifying companies with low price-to-book ratio (PBR) to encourage them to voluntarily enhance their corporate value.
He said the list of low PBR companies is scheduled to be disclosed for the first time on Nov. 2.
"Compared to other countries, Korea has a very large number of companies with low PBRs. With approximately 60 to 70 percent of all companies having a PBR below 1, we must continue our efforts to address this phenomenon," Oh said.