Corporations that had faced controversy over duplicate listings are consecutively postponing or withdrawing initial public offering (IPO) schedules. As criticism mounts, movements to halt these actions are beginning in the National Assembly and the Korea Exchange. Duplicate listings, where a parent company and its subsidiary of the same group are listed separately on the stock market, are cited as a main culprit exacerbating the 'Korea Discount' (undervaluation of Korean stocks).
According to the financial investment industry on the 17th, Battery Solutions, a subsidiary of KPS (formerly known as KPS Pharma), has decided to abandon its plan to go public within this year. Battery Solutions notified investors that it had been collecting opinions on the application for preliminary listing review up until the previous day and stated, 'As a result of the collection, there was opposition from shareholders, so we have decided not to proceed with the preliminary listing application this time.'
On the same day, KoMiCo also announced it would resolve the duplicate listing issue of its subsidiary MiCo Ceramics. The company has considered that significant shareholder backlash and concerns over duplicate listings are placing substantial pressure on its stock price. Until early this year, the company was in the process of preparing for the listing of MiCo Ceramics, but as concerns over duplicate listings have increased, opinions are gathering toward resolving this issue. (Related article☞[Exclusive] KoMiCo 'We will resolve concerns regarding duplicate listing of valuable subsidiary MiCo Ceramics.')
SK Innovation's subsidiary SK Enmove has suspended its application for a preliminary listing review following the exchange's position statement. The Korea Exchange instructed SK Enmove to prepare a reasonable investor protection plan to prevent shareholder damage to SK Innovation from the listing of SK Enmove before the listing application. There have been indications that SK Innovation's value will inevitably decline due to holding company discounts if SK Enmove is listed. A representative of SK Innovation noted, 'This is a matter that is typically discussed at the listing review stage, and the exchange and underwriters are currently in discussions.'
Corporations that had been criticized for duplicate listings are successively withdrawing or postponing their IPOs, which is interpreted as these corporations and the Korea Exchange being cautious ahead of the presidential election. Previously, the Korea Exchange had also not approved the listing of Genosco, a subsidiary of Oscotec.
The amendment to the Commercial Act, which primarily aims to protect the rights of general shareholders from restrictions on duplicate listings, had passed through the National Assembly. However, the acting prime minister Han Duck-soo exercised veto authority, requiring a vote in the National Assembly again. The Democratic Party of Korea plans to attempt a re-vote on the amendment in the National Assembly plenary session today.
An industry official said, 'From the corporations' perspective, there may be concerns that if the amendment to the Commercial Act passes, there could be a proliferation of shareholder lawsuits that disrupt mergers, large-scale investments, etc.' However, they added, 'Given that the major opposition party, the Democratic Party of Korea, is strongly pushing for it again, they likely had no choice but to temporarily shelve their listing plans.'