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Defense Ministry Postpones Briefing on National Military Academy Plans On July 6, the Defense Ministry unexpectedly postponed a briefing on the integration of the Army, Navy, and Air Force academies.The ministry had planned to hold the briefing at 10:30 a.m. at its headquarters in Yongsan, Seoul, to announce the basic plan for establishing the National Military Academy. However, it notified reporters about the delay approximately an hour and a half before the scheduled start.Minister Ahn Gyu-baek, who was set to lead the briefing, was called to attend a 'Mega Project Public-Private Joint Review Meeting' at the Blue House at 10 a.m. on the same day.Sources indicate that the Blue House made a last-minute request for Ahn's attendance at the meeting.The Defense Ministry is expected to reschedule the briefing on the National Military Academy after Ahn accompanies President Lee Jae-myung to the NATO summit in Ankara, Turkey, on July 7-8.During the summit, NATO plans to host a separate working dinner for defense ministers from member and partner countries.According to NATO's website, Ahn and the defense ministers from the so-called 'IP4' countries—South Korea, Japan, Australia, and New Zealand—have also been invited to this event.The Defense Ministry is pursuing a reform plan to establish the National Military Academy, which aims to enhance joint operations in modern warfare by integrating the selection of cadets from the Army, Navy, and Air Force.The proposal includes common training for first and second-year cadets, followed by specialized military training in their respective branches for third and fourth-year cadets.However, there are growing concerns about social backlash, prompting calls for the government to transparently explain the proposed integration of military academies.The ministry has commissioned the Korea Institute for Defense Analysis (KIDA) to conduct research on the integration and reform methods, but it has yet to release specific findings.During a regular briefing, Defense Ministry spokesperson Jeong Bit-na stated regarding the KIDA research results, "We will announce the basic plan soon and will hold public hearings and policy briefings to disclose detailed research findings and gather opinions."* This article has been translated by AI. 2026-07-06 13:20:00 -
South Korea's parliament opens under opposition boycott SEOUL, July 06 (AJP) - Ruling-majority National Assembly of South Korea on Monday opened for extraordinary session under the boycott of the main opposition People Power Party. The session was called after 161 Democratic Party lawmakers, led by acting party leader and floor leader Han Byeong-do, submitted a formal request for the extraordinary session on July 3. The National Assembly duly announced the opening of the session in accordance with the request. People Power Party lawmakers boycotted the proceedings, protesting what they called the Democratic Party's unilateral takeover of the legislature's committee structure. The Democratic Party went ahead and appointed chairs for 11 standing committees, including the powerful Legislation and Judiciary Committee, without opposition participation. People Power has vowed to withhold cooperation from National Assembly operations going forward. The session opened under the shadow of a deepening partisan standoff, with the second half of the legislative term effectively beginning as a one-party assembly. 2026-07-06 13:09:27 -
Business shutdown at record pace as Korea's self-employed squeeze deepens SEOUL, July 06 (AJP) -South Korea saw nearly 84 business closures for every 100 new business registrations last year, the highest ratio in 12 years, reflecting a sharp slowdown in entrepreneurship amid a prolonged economic downturn. A record 317,406 businesses that had operated for five years or more shut down last year, accounting for 32.5 percent of all closures. More than half cited sluggish business conditions as the reason for closing, the highest share since 2009 in the aftermath of the global financial crisis. The number of active food service businesses fell 1.9 percent from a year earlier to 798,969 at the end of 2025, dropping below the 800,000 mark, according to National Tax Service data released Monday. New openings in the sector fell 13.6 percent to 130,114, the steepest decline since comparable data began in 2011. Closures totaled 142,557, exceeding new openings and leaving the sector with a net decline of 12,443 businesses, five times larger than the previous year’s decrease of 2,491. The decline was concentrated among restaurants that had survived for years. A total of 41,659 restaurants that had operated for at least five years shut down last year, the largest number since comparable data began in 2007. Restaurants with more than 20 years of operation also posted a record 2,797 closures, up 61 percent from 2021. Across all industries, the number of active businesses stood at 10.32 million at the end of last year, up 1.7 percent from a year earlier, the slowest growth since comparable data began in 2005. New businesses fell 4.1 percent to 1.17 million, extending their decline for a fifth consecutive year and marking the lowest level since 2014. Closures declined 3.2 percent to 975,681 after exceeding 1 million for the first time in 2024, but the ratio of closures to new openings rose to 83.5 percent, the highest since 2013. Separate industrial data showed a similar gap between the broader service-sector recovery and conditions facing restaurants. Accommodation and food service output rose 0.9 percent on-year in the first five months of 2026, compared with a 4.2 percent increase in overall service output, according to KOSIS and industrial activity data. Within the sector, accommodation output rose 2.7 percent, while restaurants and bars increased just 0.6 percent. Self-employed borrowers’ loans from financial institutions stood at 1,095.5 trillion won at the end of the first quarter, the largest amount since related data began in 2012, according to Bank of Korea data submitted to Rep. Park Sung-hoon. Overdue loans reached 22.3 trillion won, up 2 trillion won from the end of 2025 and also the largest on record, while the delinquency rate rose to 2.04 percent, the highest since the second quarter of 2015. Korea Credit Data said total loans held by individual business owners stood at 732.2 trillion won in the first quarter, up 3 trillion won from the previous quarter, while delinquent loans rose 12.6 percent to 14.6 trillion won. Of the 3.608 million individual business owners with loans, 501,000, or 13.9 percent, were classified as closed businesses, according to KCD. KCD also said average sales per individual business establishment rose 1.89 percent from a year earlier to 42.58 million won in the first quarter, while average costs increased 3.36 percent to 32.59 million won. Profit, measured as sales minus costs, fell 2.63 percent to 9.99 million won, and the operating margin declined 1.09 percentage points to 23.5 percent. The Bank of Korea said in its June Financial Stability Report that loans to self-employed borrowers accounted for 28.5 percent of all financial-sector loans at the end of the first quarter. The central bank said risks in the self-employed sector were concentrated among small-scale businesses, face-to-face service operators, real estate-related borrowers, older self-employed borrowers and vulnerable borrowers. 2026-07-06 13:04:28 -
China Dominates Global Ship Orders in First Half of 2026, South Korea Lags Global ship orders in the first half of 2026 were dominated by China. While South Korean shipbuilders focused on selective orders for high-value vessels such as liquefied natural gas (LNG) carriers, their market share remained at 19%, compared to China's 72%. According to Clarkson Research, a UK-based maritime analysis firm, the total global ship orders from January to June reached 42.95 million CGT (1,481 vessels), marking a 66% increase from 25.90 million CGT (1,101 vessels) during the same period last year. China secured 31 million CGT (1,131 vessels), accounting for 72% of the total, which is a 113% increase compared to the same period last year. South Korea, on the other hand, received 7.97 million CGT (195 vessels), achieving a 19% market share, with orders increasing by 60% year-on-year. In June alone, global orders totaled 5.25 million CGT (200 vessels), a 9% decrease from May's 5.76 million CGT, but a 3% increase from 5.09 million CGT in June of the previous year. During this period, China secured 4.45 million CGT (171 vessels), achieving a monthly market share of 85%, while South Korea accounted for 500,000 CGT (13 vessels) with a 9% share. However, the average order size per vessel was higher for South Korea at 38,000 CGT compared to China's 26,000 CGT. Industry analysts attribute this to South Korea's strategy of focusing on selective orders for high-value vessels like LNG carriers. As of the end of June, the global order backlog stood at 206.59 million CGT, an increase of 2.14 million CGT from the previous month. By country, China recorded 134.03 million CGT (65%), while South Korea had 38.81 million CGT (19%). Compared to the same period last year, China increased by 30.20 million CGT, while South Korea saw an increase of 3.69 million CGT. Ship prices also continued to rise. As of the end of June, the Clarkson Newbuilding Price Index was at 185.15, up 0.14 points from the previous month (185.01). This figure is approximately 33% higher than in June 2021 (138.79). By vessel type, newbuilding prices were recorded at $248.5 million for LNG carriers, $130.5 million for very large crude carriers (VLCCs), and $261.5 million for ultra-large container ships in the 22,000 to 24,000 TEU range.* This article has been translated by AI. 2026-07-06 13:04:00 -
Vietnam's Cafe Music Licensing Fees Spark Online Debate Debate over music licensing fees for cafes and restaurants in Vietnam has resurfaced. The contention arises from the interpretation that even if a business pays for a music streaming subscription, playing music for customers requires a separate license. The differences between South Korea's area-based fee structure and Vietnam's maximum fee have sparked varied reactions online. According to local media, including VnExpress, Vietnam's intellectual property law mandates that cafes and restaurants obtain permission from copyright holders or their representative organizations and pay fees when using music for commercial purposes. Purchasing CDs, records, or USBs, or subscribing to music services like Spotify, Apple Music, or YouTube Music only secures rights for personal enjoyment. As a result, playing music in a commercial setting is treated separately. Many music streaming platforms also restrict their services to personal and non-commercial use in their terms of service. Playing music in cafes, restaurants, shops, gyms, and at business-related events is not included in the allowances of standard subscription services. ◆ Vietnam Bases Fees on Area and Location Vietnam calculates music copyright fees primarily based on the area of the business. Under current regulations, the annual fee is determined by multiplying a base salary by an adjustment coefficient, which is applied progressively based on the actual operating area. There are also regional differences; Hanoi and Ho Chi Minh City apply a 100% rate, while lower-tier cities receive discounts ranging from 20% to 90%. The annual cap for copyright fees is set at eight times the base salary, approximately 2,024,000 dong (about $118). The media also highlighted South Korea's approach, which, like Vietnam, bases music usage fees for cafes and restaurants on the licensed operating area. According to the Korea Copyright Commission's rate table, establishments between 50 and 100 square meters must pay 4,000 won (about 81,800 dong) per month. The highest tier applies to businesses over 1,000 square meters, with a monthly fee of 20,000 won (about 410,000 dong). Rural areas benefit from lower rates, and establishments under 50 square meters are exempt from fees. ◆ Different Calculation Methods in the U.S., U.K., Singapore, and Thailand In contrast, many other countries do not determine fees solely based on area. In the United States, multiple performance rights organizations, such as ASCAP, BMI, and SESAC, require business owners to obtain licenses from various entities. ASCAP primarily bases annual fees for restaurants and cafes playing background music on maximum occupancy. The U.K. operates under a single licensing system called TheMusicLicence, where the basic fee is determined by the size of the establishment, and the number of internal speakers can affect additional charges. For venues under 400 square meters, the basic fee is set at £195.4 per year, with larger speaker systems or professional audio equipment requiring separate verification. Singapore bases its fees on the actual number of seats. For venues using only background music, the first 40 seats incur an annual fee of 8.23 Singapore dollars (about $6), the next 40 seats are charged at 4.70 Singapore dollars, and from 81 seats onward, the fee is 2.35 Singapore dollars. Additional charges apply based on the size of screens installed, with a minimum annual fee of 275 Singapore dollars. In Thailand, various entities collect music copyright fees. Among them, MPC Music charges annual fees based on the number of seats in restaurants, bars, pubs, and lounges. Establishments with fewer than 20 seats start at 18,000 baht (about $530), while those with over 201 seats can pay up to 85,500 baht. ◆ Mixed Reactions from Online Users Online reactions to the issue have been mixed. One user expressed frustration, asking, "Is the highest fee for a 1,000-square-meter establishment in Vietnam really five times more expensive than in South Korea?" This comment compared Vietnam's annual cap to South Korea's fees for establishments over 1,000 square meters. Some users downplayed the necessity of music in cafes. Another commenter noted, "People these days go to cafes more for conversation or work rather than to listen to music," suggesting that they sometimes request less music. He argued that the absence of music would not significantly impact cafe operations. Conversely, some voices acknowledged the need for compensation for creators. One user stated, "If music genuinely aids business, it is reasonable to compensate the creators," adding that transparency and convenience in the payment process are essential for gaining public support. Questions about the operational aspects of the system also arose. Another user inquired, "How would it be handled if a customer brings their speaker and plays their playlist?" They pointed out that in such cases, the customer is not conducting business, nor is the establishment playing music. The debate over music copyright fees in cafes and restaurants extends beyond simply whether to pay fees; it raises questions about how to distinguish between personal listening rights and commercial performance rights. While South Korea and Vietnam share a commonality in area-based calculations, there are clear differences in the amounts charged and the criteria for exceptions.* This article has been translated by AI. 2026-07-06 12:32:00 -
SK Shieldus to Implement OT Security Solutions at EcoPro Factory SK Shieldus announced on July 6 that it will implement an integrated control system (OT/ICS) intrusion response platform at EcoPro, a secondary battery manufacturer. This initiative aims to enhance security measures across EcoPro's production processes, from anomaly detection to analysis and response. As part of its proactive approach to strengthening security, EcoPro has been upgrading its infrastructure and integrated security monitoring systems at its domestic and international plants. Recently, the company has expanded its security measures to include production equipment. In the secondary battery industry, rapid identification of threats is crucial for maintaining production stability. However, existing operational technology environments often feature dispersed security systems, making integrated responses challenging. Additionally, the closed network nature of these systems limits the application of IT security measures. The market's reliance on foreign single-vendor solutions also increases the burden on small and medium-sized enterprises. To address these challenges, SK Shieldus plans to pilot its integrated OT/ICS intrusion response platform at EcoPro's Pohang factory. This platform is designed to protect the entire industrial environment by integrating functions such as authentication and access management, threat detection, and response, in collaboration with partners like Maninsoft, Amgin, and Sensiton, as part of the Korea Internet & Security Agency's '2026 Integrated Security Model Development Pilot Project.' According to the company, the platform employs a non-intrusive method that allows security measures to be implemented without changes to equipment or networks, along with a Human-in-the-Loop (HITL) structure that involves experts in final decision-making after detection. This approach ensures both operational stability and response accuracy. The modular structure also enhances flexibility, allowing for gradual implementation and expansion based on the size and environment of the enterprise. Kim Byeong-mu, Vice President of Cybersecurity at SK Shieldus, stated, "It is essential to integrate and manage the dispersed security systems across the OT environment into a single platform to enhance visibility and response speed in operational settings. Through this pilot, we aim to validate an integrated response model optimized for the field environment and strengthen the overall cyber resilience of the industry." The importance of OT/ICS security is growing alongside the digital transformation of industrial sites. Historically, industrial control systems in factories, power plants, and water treatment facilities operated on closed networks. However, the recent proliferation of smart factories, remote monitoring, and cloud adoption has increased intersections with IT networks, raising concerns that existing IT security threats could migrate to production equipment and control networks. Moreover, OT/ICS breaches can lead to physical damages, including production halts, equipment malfunctions, and safety incidents, rather than just information leaks. Given their connection to national infrastructure in manufacturing, energy, transportation, and water treatment, there is an increasing need for integrated security systems that encompass anomaly detection, root cause analysis, incident response, and recovery. SK Shieldus has accumulated extensive experience in establishing and operating OT security across various manufacturing sectors, including semiconductors, batteries, and chemicals. Building on this foundation, the company is enhancing its response framework to cover the entire cycle from consulting to implementation, operation, and monitoring.* This article has been translated by AI. 2026-07-06 12:24:00 -
KT CEO Park Yoon-young Announces 18 Trillion Won Investment in Telecom and AI Over Next Three Years "KT aims to be an AI Transformation (AX) Platform Company that helps customers grow and enhance their competitiveness in the AI era," said Park Yoon-young, CEO of KT, during a press conference on July 6 at the Pullman Ambassador Seoul East. Park emphasized that strengthening the core of telecommunications is essential for KT to evolve into an AX Platform Company, stating, "Just as KT has connected people and data, we will now connect people with AI and AI with AI." To achieve this, KT plans to invest approximately 18 trillion won over the next three years to enhance cybersecurity and network competitiveness while expanding its AI infrastructure. The company also aims to develop new businesses in the AI era, including a Token Factory and stablecoin initiatives. KT has identified the Token Factory and stablecoin business as future growth drivers. Park noted, "As the AI industry grows explosively, a new economic unit called tokens has emerged. With the shift from flat-rate to usage-based AI services, it is crucial for companies to determine the most efficient models and how to use tokens rationally." He highlighted the 'Token Gateway' as a core component of the Token Factory. "No one does billing better than telecom companies," Park stated, explaining that KT's extensive billing capabilities, combined with the Token Gateway and AI Data Center (AIDC), could create new business models. The company is also preparing to enter the stablecoin market. Park mentioned that KT Group possesses the necessary capabilities for issuance, settlement, and customer ecosystem management, stating, "We are currently conducting proof of concept (PoC) internally and will prepare the business in line with legislative developments." KT will also make significant investments to strengthen its core telecommunications business. The company plans to invest about 12 trillion won in cybersecurity, information technology (IT), and network sectors over the next three years. Of this amount, approximately 4 trillion won will be allocated to cybersecurity and IT to establish a zero-trust security framework and integrate security operations governance. KT's Strategy Office head, Heo Tae-jun, noted, "Investments will begin in the second half of this year, with about half of the total investment expected to be executed next year." The company will separate the roles of Chief Information Security Officer (CISO) and Chief Privacy Officer (CPO) and double its cybersecurity workforce. Lee Sun-joo, head of KT's Talent Management, announced plans to hire around 140 employees in September and to establish a collaborative program with Seoul National University to cultivate security personnel in the long term. In the network sector, KT plans to invest approximately 8 trillion won to secure future network technologies, including 6G, satellites, and data center interconnections (DCI), to enhance customer experience. In the satellite business, KT SAT will take the lead. Park stated, "A recent announcement regarding the national low-orbit satellite project indicates that KT SAT must play a significant role in control and operation," emphasizing that KT SAT is the best company in South Korea for satellite management and operations. KT will also expand its investment in AI infrastructure, planning to invest about 5 trillion won to establish a total of 1 gigawatt (GW) of AIDC. Park stated, "Our investments will be driven by actual demand rather than scale competition," adding that KT's strength lies in its operational experience, which enhances efficiency. KT plans to differentiate its AIDC expansion between metropolitan and non-metropolitan areas. Kim Bong-kyun, head of KT's Enterprise Division, explained, "In the metropolitan area, we will aggressively expand once development issues such as power supply are resolved, while in non-metropolitan areas, we will first secure tenant demand before investing." He added, "For AIDC to operate effectively, connectivity is key," emphasizing that the connection between international traffic and data centers, as well as wired and wireless networks, is KT's greatest differentiator. Regarding the potential merger with KT Cloud, Park stated that it is currently under review. To address the growing global AI traffic, KT plans to invest about 1 trillion won in submarine cables, aiming to increase its international submarine cable capacity from approximately 38 terabits per second (Tbps) to over 128 Tbps. Park noted, "As AIDC expands, we expect international data traffic to increase significantly," and mentioned that due to the high investment costs, KT will seek to collaborate with global tech giants to expand capacity. In its business-to-business (B2B) sector, KT will expand AI services focusing on finance, public, manufacturing, and healthcare sectors. The company plans to provide agentic AI to the financial sector and develop sovereign AI-based services for the public sector. In manufacturing and healthcare, KT aims to participate in projects such as the Physical AI demonstration project led by the Ministry of Science and ICT. In the business-to-consumer (B2C) sector, KT will introduce hyper-personalized services that allow customers to design their own plans and benefits. The company plans to analyze usage patterns to recommend tailored services and digitize the entire process from subscription to customer support. KT will continue its collaboration with Microsoft, which was initiated under former CEO Kim Young-seob. Park stated, "We are collaborating well in terms of customer understanding and optimization by exchanging KT Cloud resources centered around Azure." The company will also continue to pursue partnerships with global AI firms, including Palantir, and expand collaborations with domestic AI companies such as Upstage, Rebellion, and Saltlux. Additionally, Park mentioned that the media business restructuring related to the merger of Tving and Wavve is currently under review. 2026-07-06 12:24:00 -
Regulatory Review of Asset Managers' Voting Practices Shows Improvement The Financial Supervisory Service (FSS) reported improvements in the voting practices of domestic asset management companies, noting increases in both voting participation and dissent rates. However, it highlighted the need for further enhancements, particularly among small and mid-sized firms, due to ongoing issues with formal disclosures and internal management systems. On July 6, the FSS revealed that it had reviewed the voting records of 285 public and private asset management firms from April of last year to March of this year, covering a total of 46,827 proposals. The voting participation rate reached 91.8%, with dissent at 8.2%. This marks a steady increase from 79.6% in 2024 and 91.6% in 2025, while dissent rates rose from 5.2% to 8.2% over the same period. Among the proposals, 38,602 (82.4%) were approved, 3,848 (8.2%) were opposed, and 4,377 (9.4%) were either not voted on or neutral. Dissenting votes were primarily concentrated in areas such as executive compensation (1,006 cases, 11.7%), amendments to articles of incorporation (1,200 cases, 9.2%), and the appointment and dismissal of directors and auditors (1,163 cases, 7.2%). Seventy firms (25%) provided detailed reasons for their voting decisions and adhered to disclosure standards, an increase from 41 firms the previous year. However, 50 firms (17.5%) abstained from voting on all proposals, and 82 firms (29.0%) voted in favor of all proposals, although these numbers have decreased compared to last year. The FSS also assessed the shareholder rights exercise systems of public asset management firms. Larger firms have strengthened their voting procedures through dedicated teams, decision-making bodies, and performance evaluations (KPIs), while smaller firms were found to lack adequate infrastructure. The FSS recognized Samsung Asset Management, NH Amundi Asset Management, and VIP Asset Management as exemplary cases this year. Samsung Asset Management established a dedicated team, implemented KPIs, and enhanced its decision-making processes. NH Amundi Asset Management separated its voting committee and trustee responsibility committee, integrating shareholder activities into performance evaluations. Despite being a smaller firm, VIP Asset Management was praised for actively operating a dedicated team and engaging in shareholder letters and management discussions. Conversely, Shinhan Asset Management, Woori Asset Management, and Samsung Active Asset Management were identified as needing improvements. Shinhan Asset Management repeatedly used the same wording for reasons supporting director appointments and lacked a separate decision-making body and KPI system. Woori Asset Management had the highest rate of repeated voting reasons at 73.4% among large public asset managers, and its dedicated team and detailed guideline disclosures were found lacking. Samsung Active Asset Management also had a high rate of repeated voting reasons at 77.3%. The FSS noted that most deficiencies were found among small private asset management firms and plans to enhance guidance on voting practices and disclosures for these firms in the future. Additionally, a meeting with CEOs of asset management firms is scheduled for July 13 to foster consensus on fulfilling fiduciary duties and exercising shareholder rights diligently. In July and August, the FSS will hold briefings for public and private asset management firms to share inspection criteria and examples of best and poor practices.* This article has been translated by AI. 2026-07-06 12:08:00 -
Myungnyun-dang Accused of Providing Low-Interest Loans to Affiliated Firms Myungnyun-dang is facing scrutiny from regulatory authorities for allegedly providing over 21.7 billion won (approximately $17 million) in economic benefits by lending money at low interest rates to 14 affiliated loan companies it established. Myungnyun-dang reportedly secured policy funds from the Korea Development Bank and lent up to 10 billion won to each of these newly formed loan companies. The loan companies then used these funds to lend to franchise owners. The Fair Trade Commission (FTC) announced on July 6 that it has sent an investigation report regarding Myungnyun-dang and the 14 affiliated loan companies to the parties involved and submitted it to the commission for review. The investigation report includes findings of illegal activities and recommendations for sanctions based on the FTC's inquiry. The sending of the report marks the beginning of the FTC's formal sanction review process. According to FTC investigators, Myungnyun-dang established the 14 loan companies sequentially from 2021 to 2024. From December 2021 to April 2024, the companies are accused of lending money at significantly lower rates than the market average. At that time, the loan companies were in their early stages and faced difficulties in securing independent funding. Myungnyun-dang provided them with loans at an annual interest rate of 4.6%. FTC investigators believe that the loan companies gained approximately 21.7 billion won in economic benefits by paying less interest than they would have under normal circumstances. This allowed the newly established affiliates, which struggled to secure funding independently, to significantly reduce their financial costs by borrowing from the parent company at low rates. The Fair Trade Act defines the act of providing funds or other benefits to related parties or other companies under significantly favorable conditions as an act of unfair support. Investigators view Myungnyun-dang's funding activities as a 'serious violation' of the prohibition against unfair support under the Fair Trade Act. They have recommended corrective measures, the imposition of fines, and the prosecution of Myungnyun-dang and related individuals. However, the contents of the investigation report reflect the investigators' judgment and do not represent the FTC's final conclusion. The final determination of legal violations and the level of sanctions will be made after a review by the full committee. Myungnyun-dang can submit written opinions and request access to evidence after receiving the investigation report. They will also have the opportunity to present their views during the FTC's review process. An FTC official stated, "We ensure that the rights of the accused are fully protected through procedures such as the submission of written opinions, requests for evidence access, and opportunities for presenting opinions during the review. We plan to make a final judgment through the full committee's review and will continue to monitor any unfair low-interest funding to affiliated companies."* This article has been translated by AI. 2026-07-06 12:08:00 -
Financial Authorities Move to Curb Dual Listings That Undermine Shareholder Rights Financial authorities are taking steps to prohibit dual listings that undermine the rights of common shareholders in parent companies. Moving forward, parent company boards will be required to implement procedures to protect shareholders, particularly requiring shareholder consent for listings of subsidiaries created through physical division. On July 7, the Financial Services Commission (FSC) and the Korea Exchange announced they would begin soliciting opinions on proposed amendments to the Korea Exchange regulations and guidelines regarding dual listings, which include a principle of prohibition with exceptions. The consultation period will last until July 14, after which the proposals will be finalized following approval from the Securities and Futures Commission and the FSC. This initiative is a follow-up to the 'Capital Market Improvement Plan' announced in March. The FSC has noted that dual listings have been pursued in practice despite concerns over infringement of common shareholder rights, particularly in comparison to international norms. As of the end of last year, the ratio of market capitalization held by listed companies in relation to total market capitalization was 11.2% in South Korea, significantly higher than in the United States (0.05%), Japan (4.0%), China (2.4%), and Taiwan (2.7%). The new standards will apply when a parent company, already listed, seeks to list a non-listed subsidiary that it effectively controls. This includes subsidiaries defined under the External Audit Act and those in a vertical control relationship under the Fair Trade Act. The parent company board will be subject to five key obligations that clarify the duty of loyalty to shareholders under corporate law. They must assess the impact of dual listings on shareholders, develop protective measures such as stock dividends or share buybacks, communicate with shareholders, and confirm shareholder consent when necessary. The board must also notify the subsidiary of the results following a vote, and the process must be disclosed in stages. If shareholder consent is not obtained, the reasons must also be disclosed. These procedures will also apply to subsidiaries listed on foreign exchanges. Listing reviews will be strengthened, with the exchange conducting special reviews for dual listings in addition to standard listing assessments. The independence of the subsidiary's operations and the parent company's efforts to protect investors will be evaluated separately. If a subsidiary is overly dependent on the parent company for operations or if major management decisions are effectively made by the parent, it may not meet the independence criteria. Shareholder consent is generally recommended, but subsidiaries created through physical division must obtain it. For general subsidiaries, obtaining consent will be presumed to meet the requirements for shareholder protection, while those that do not obtain consent will undergo individual assessments to determine the level of investor protection. The criteria for shareholder consent will apply the '3% rule' used for appointing audit committee members under corporate law. Major shareholders cannot exercise voting rights exceeding 3%, and consent must be obtained from a majority of attending voting rights and at least one-fourth of total voting rights. Conversely, subsidiaries with revenues, operating profits, and assets all less than 10% of the parent company will generally be exempt from requiring shareholder consent. However, if all three indicators are below 10% but the subsidiary is recognized as significant based on expected corporate value, it will be excluded from the exemption. The FSC stated, "The entities best positioned to assess whether the rights of common shareholders in the parent company are being infringed are the parent company's board and its shareholders. Therefore, we designed the system so that they first evaluate the appropriateness of dual listings, and the exchange respects this in the final review."* This article has been translated by AI. 2026-07-06 12:08:00