South Korea Requires Shareholder Approval for Spin-Off IPOs, Strengthens Board Oversight on July 6

According to the Financial Services Commission and Korea Exchange on July 6, spin-off subsidiaries of listed companies must obtain parent company shareholder approval to pursue IPO amid stricter rules on cross-listing. Under the new guidelines, shareholder consent requires approval from more than half of voting shares cast and at least 25% of total issued shares. Shareholders holding over 3% have their excess shares excluded from voting calculations. The parent board must conduct shareholder impact assessments, develop protection measures, and disclose procedures. These requirements apply equally to overseas listings. Violation of disclosure obligations may result in fines or unfair disclosure designations; failure to comply with procedural duties may incur listing contract penalties of up to 1 billion won and trading suspension.
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