A mandatory tender offer system that would let minority shareholders sell their stakes at the same price as controlling shareholders during changes of corporate control has cleared a National Assembly standing committee.
The National Assembly's National Policy Committee held a full session on the 17th and passed an amendment to the Capital Markets Act introducing the mandatory tender offer requirement. The vote followed an agreement between the policy committees of the Democratic Party of Korea and the People Power Party at a joint meeting on livelihood policy on the 15th.
The amendment applies the mandatory tender offer requirement to cases such as acquiring 25% or more of a listed company's shares and becoming its largest shareholder. In such cases, the acquirer must launch a tender offer for at least 50% plus one share of the outstanding stock. The measure aims to guarantee minority shareholders the chance to sell their shares at the same price as controlling shareholders during changes of control, addressing a practice in which controlling shareholders have taken the entire control premium for themselves.
Some, however, have raised concerns about side effects from the system. Cho Jung-hoon, a lawmaker from the People Power Party, abstained from the vote, saying that "defending management control will require more capital than it does now" and that "only global funds of enormous scale, rather than relatively small domestic private equity funds, will be able to take part in mergers and acquisitions in Korea."
