Domestic and international asset management firms are urging the National Assembly to postpone the processing of the mandatory tender offer system currently under consideration. They argue that allowing controlling shareholders to first purchase their entire stake in the over-the-counter market could disadvantage common shareholders, who may only be able to sell a portion of their shares or miss the opportunity to sell altogether.
According to the financial investment industry on September 29, asset management firms issued a joint statement calling for further discussion on the proposed mandatory tender offer system, which passed the Legislative and Judiciary Committee on September 28, following its approval by the National Assembly's Political Affairs Committee on September 17.
While the firms support the introduction of the mandatory tender offer system, they are concerned about the provision that allows acquirers to first buy controlling shareholders' stakes in a 'preemptive purchase' before making a public offer for the remaining shares needed to reach '50% plus one share.'
For instance, if a controlling shareholder owns 40% of a company, the acquirer can first buy that 40% in the over-the-counter market and then only needs to purchase an additional 10% plus one share from common shareholders. This structure means that even if all common shareholders participate in the public offering, they may only be able to sell a fraction of their holdings. If the controlling shareholder already holds a majority, there may be no shares left for common shareholders to purchase in the public offering.
The asset managers emphasized that the key issue is not whether the public offering ratio should be set at 50% or 100%, but whether equal selling opportunities are guaranteed for both controlling and common shareholders.
As an alternative, they proposed a 'proportional public offering' method that would allow controlling shareholders to participate in the public offering, applying the same price and proportional distribution principles to all shareholders. This would enable both controlling and common shareholders to sell their stakes at the same ratio while maintaining the total number of shares and acquisition funds the acquirer is purchasing.
The asset managers also cited examples from major countries. Japan requires a public offering when acquiring a certain level of shares, limiting preemptive purchases, while the UK, EU, Hong Kong, and Singapore, even if allowing preemptive purchases, mandate that offers be made for all remaining shares to protect common shareholders.
They stated, "It is not enough to ensure the same price; we must also guarantee the opportunity to sell at the same ratio," urging the postponement of the National Assembly's processing on October 1 and calling for a review of the system through open discussions involving common shareholders, institutional investors, companies, and M&A experts.
The joint statement included participation from Life Asset Management, Rainmaker Asset Management, Must Asset Management, Value Partners Asset Management, VIP Asset Management, Blash Asset Management, Seulgi Asset Management, Shin Young Asset Management, Align Partners Asset Management, Cha Partners Asset Management, Kansas Asset Management, Cam Investment Advisory, Quad Asset Management, Tiger Asset Management, Timefolio Asset Management, Petra Asset Management, and international firms MY.ALPHA Management and Oasis Management.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.