Seoul’s Yeouido financial district. Yonhap News
As the government pushes forward with a regulatory overhaul centered on a “principle of prohibiting dual listings,” seven out of 10 chief executives at South Korea’s major securities firms said reasonable exception clauses are needed to ensure smooth corporate fundraising.
In a survey conducted by The Seoul Economic Daily on Tuesday, seven out of 10 CEOs at top securities firms said sufficient exceptions should apply to the government’s proposed dual listing rules. One of them effectively opposed the regulation, saying, “A structure is needed that preserves the fundraising function of dual listings while protecting shareholder rights.”
The CEO of Securities Firm A said, “The focus should be on capital efficiency rather than a simple ban.” The comment reflects concerns that since initial public offerings (IPOs) are a key capital-raising tool for Korean companies, blocking liquidity through dual listing restrictions could disrupt corporate activity. The CEO of Securities Firm B also noted, “The key issue is how to design the details of the regulation while taking market shock into account.”
Under the dual listing reform plan announced last month by the Financial Services Commission (FSC) and the Korea Exchange (KRX), three types of cases are subject to review. These include listings of companies newly established through a physical spin-off by a listed firm, re-listings of companies spun off via an equity spin-off for the purpose of converting to a holding company structure, and listings of companies acquired by a listed firm. In effect, virtually all unlisted subsidiaries of listed companies fall under dual listing regulation. Financial authorities plan to allow dual listings on an exceptional basis only when all three screening criteria — business independence, management independence, and investor protection — are met.
The problem is that the requirements for applying exceptions to dual listings have not been specified in any concrete way, significantly increasing IPO-related uncertainty for companies. Firms that transitioned to a holding company structure or pursued mergers and acquisitions (M&A) in line with past government policies could now face unexpected burdens.
In particular, the venture capital (VC) industry has voiced strong concerns that dual listings naturally occur as venture companies grow their size through M&A, and blanket prohibition could lead to market contraction. The CEO of Securities Firm C said, “Excessive regulation without alternative exit options risks hampering corporate growth,” adding, “Reasonable guidelines are needed.”
Meanwhile, the two CEOs who viewed the dual listing regulation positively offered opinions such as, “It is positive in terms of preventing share dilution, and benefits for existing shareholders should be considered when dual listings occur,” and “The principle of prohibition should be maintained, but sufficient consent from existing shareholders should be required when raising capital through dual listings.”