A bill requiring mandatory tender offers for acquiring a significant stake in publicly traded companies has passed the National Assembly's Political Affairs Committee with bipartisan support.
On September 17, the committee held a full meeting and approved the 'Partial Amendment to the Capital Markets and Financial Investment Act' as a committee alternative.
The bill aims to introduce a 'mandatory tender offer system' that obligates acquiring companies to make public offers when they seek to acquire a certain percentage of shares during mergers and acquisitions (M&A). This is intended to ensure that minority shareholders have the opportunity to sell their shares at a price that reflects a 'management premium' when control of the company changes hands.
Earlier, the policy committees of the Democratic Party and the People Power Party reached an agreement on the proposed amendment during a joint meeting on September 15.
The approved amendment stipulates that a mandatory tender offer is required when the largest shareholder holds more than 25% of the total issued shares or when an existing largest shareholder with over 25% acquires additional shares. In such cases, the acquirer must publicly offer to buy shares from minority shareholders that exceed the current holdings, up to 50%+1 share.
Financial Services Commission Chairman Lee Ok-won expressed optimism after the bill's approval, stating, "By sharing the management premium, which has traditionally benefited only controlling shareholders, with minority shareholders, we expect to contribute to the realization of shareholder equality."
However, lawmakers Jo Jung-hoon of the People Power Party, Park Hong-bae of the Democratic Party, and Han Chang-min of the Social Democratic Party abstained from the vote.
Jo expressed concerns that the implementation of the system could require excessive capital to defend management rights, potentially limiting domestic M&A activity to only large global capital. Meanwhile, Han argued that it would be preferable to require the acquirer to purchase all remaining shares through a tender offer, stating, "If set at 50%+1 share, the existing controlling shareholder would still enjoy the management premium, making it difficult for all minority shareholders to share in that benefit."
The capital markets law amendment that passed the committee will now undergo review by the Legislation and Judiciary Committee before being presented to the full assembly.
On September 17, the committee held a full meeting and approved the 'Partial Amendment to the Capital Markets and Financial Investment Act' as a committee alternative.
The bill aims to introduce a 'mandatory tender offer system' that obligates acquiring companies to make public offers when they seek to acquire a certain percentage of shares during mergers and acquisitions (M&A). This is intended to ensure that minority shareholders have the opportunity to sell their shares at a price that reflects a 'management premium' when control of the company changes hands.
Earlier, the policy committees of the Democratic Party and the People Power Party reached an agreement on the proposed amendment during a joint meeting on September 15.
The approved amendment stipulates that a mandatory tender offer is required when the largest shareholder holds more than 25% of the total issued shares or when an existing largest shareholder with over 25% acquires additional shares. In such cases, the acquirer must publicly offer to buy shares from minority shareholders that exceed the current holdings, up to 50%+1 share.
Financial Services Commission Chairman Lee Ok-won expressed optimism after the bill's approval, stating, "By sharing the management premium, which has traditionally benefited only controlling shareholders, with minority shareholders, we expect to contribute to the realization of shareholder equality."
However, lawmakers Jo Jung-hoon of the People Power Party, Park Hong-bae of the Democratic Party, and Han Chang-min of the Social Democratic Party abstained from the vote.
Jo expressed concerns that the implementation of the system could require excessive capital to defend management rights, potentially limiting domestic M&A activity to only large global capital. Meanwhile, Han argued that it would be preferable to require the acquirer to purchase all remaining shares through a tender offer, stating, "If set at 50%+1 share, the existing controlling shareholder would still enjoy the management premium, making it difficult for all minority shareholders to share in that benefit."
The capital markets law amendment that passed the committee will now undergo review by the Legislation and Judiciary Committee before being presented to the full assembly.
* This article has been translated by AI.
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