Duksan NeoCorus and DTS received preliminary listing approval from the Korea Exchange KOSDAQ market listing committee on the 20th, becoming the first subsidiaries permitted to pursue dual listings under new exception rules. The approvals followed the Financial Supervisory Service and Korea Exchange's announcement on the 6th of detailed criteria allowing dual listings in exceptional cases. Duksan NeoCorus, a defense and aerospace parts developer under Duksan Hi-Metal, and DTS, a general-purpose machinery manufacturer under Dasan Networks, can now proceed with public offering procedures including submitting securities registration statements to the Financial Supervisory Service. Both parent companies secured shareholder consent through extraordinary meetings using the '3% rule' mechanism — Duksan Hi-Metal on May 29 and Dasan Networks on the 19th of last month. The framework marks a shift from South Korea's principle of prohibiting dual listings while permitting exceptions under specific conditions.
Financial Supervisory Service Establishes 3% Rule and Board Duties for Dual Listings
The Financial Supervisory Service requires parent companies seeking dual-listing exceptions to obtain shareholder consent through the '3% rule' method applied to audit committee member appointments under commercial law. Under this mechanism, the combined voting rights of the largest shareholder and specially related parties are capped at 3%, with approval requiring majority consent of attending shares and consent from at least ¼ of total voting rights.
The Financial Supervisory Service imposed five duties on parent company boards of directors based on shareholder fiduciary obligations under commercial law. These duties include evaluating the impact of dual listing on shareholders and establishing shareholder protection measures. Parent company boards must communicate with shareholders based on impact assessments and protection plans, and explicitly confirm shareholder consent through shareholders' meetings when necessary. Boards must conduct approval/disapproval resolutions and notify subsidiaries of results, with mandatory disclosure of duty fulfillment at each stage. To ensure fair duty performance, parent companies must establish an 'independent special committee' to conduct preliminary deliberation and resolution procedures during duty fulfillment.
Duksan Hi-Metal disclosed on May 13 that its board of directors deliberated on the parent company shareholder impact assessment regarding the subsidiary's KOSDAQ market listing. The board stated in its opinion that after internal discussion, it determined the listing "satisfies all business independence and management independence requirements under dual-listing review standards and does not cause negative effects in terms of protecting the rights of the parent company's general shareholders and investor protection."
Duksan Hi-Metal and Dasan Networks Secure Shareholder Approval
Duksan Hi-Metal held an extraordinary shareholders' meeting on May 29 and passed the agenda for subsidiary Duksan NeoCorus's listing approval. The approval rate based on total issued shares with voting rights reached 72.8%, while the approval rate based on shares that exercised voting rights reached 92.7%. The company became the first parent company to hold a shareholders' meeting and obtain general shareholder consent for subsidiary listing after discussions on dual listing intensified.
Dasan Networks passed the DTS listing agenda through special resolution at an extraordinary shareholders' meeting on the 19th of last month. The approval rate based on total issued shares with voting rights was 46.5%, while 90.3% of shares that exercised voting rights approved.
The Korea Exchange also approved the preliminary listing review for Global Technology, a semiconductor manufacturing company, on the same day.
FAQ
What is the 3% rule mechanism for dual-listing approval?
The 3% rule caps the combined voting rights of the largest shareholder and specially related parties at 3%, requiring majority consent of attending shares and consent from at least ¼ of total voting rights for dual-listing approval.
What approval rates did Duksan Hi-Metal achieve at its May 29 shareholders' meeting?
Duksan Hi-Metal achieved 72.8% approval based on total issued shares with voting rights and 92.7% approval based on shares that exercised voting rights at the extraordinary shareholders' meeting held on May 29.
