Kim Han-tae, the largest shareholder of the telecommunications corporation Telcoware, is conducting a public buyback of 25.24% of all outstanding shares at 13,000 won per share until the 10th of this month for voluntary delisting. If the buyback concludes as planned, Kim's equity, including related parties, will reach 55.89%.
Telcoware, with 44.11% of its own shares, can be delisted based solely on the 56% equity held by Kim. According to current delisting regulations, KOSPI-listed companies must hold over 95% equity, while KOSDAQ companies must maintain more than 90%, excluding their own shares.
On the 4th, following the confirmation of Lee Jae-myung's administration, there are prospects that 'strategic delistings' by companies with high proportions of their own shares, like Telcoware, may increase under the new government. This is partly due to Lee's capital market pledge regarding the 'mandatory disposal of own shares.'
Lee noted in a YouTube broadcast on the 28th of last month that there are instances where the company's money, specifically shareholder money, is used to purchase its own shares through illegal means and then sold to white knights for the private benefit of minority controlling shareholders, stating, 'Considering this, I will try to establish a system as soon as possible.'
In the securities industry, there are discussions about the possibility of 'strategic delistings' focusing on companies with high proportions of their own shares. This is because if all own shares are disposed of, the major shareholder's equity rate would drop sharply, making it difficult to defend management rights and making them potential targets for activist funds. Conversely, having a high proportion of own shares means that the company is in a structure that can more easily pursue delisting with less equity.
Companies with a high proportion of their own shares will inevitably face deterioration in management rights when disposing of them. Since late last year, the 'Own Shares Report' disclosure has been made mandatory, and capital market regulations have been strengthened. In addition, shareholder activism has become more active in recent years. This is why some view Telcoware's voluntary delisting as a strategic decision to preemptively mitigate such risks.
In fact, following the implementation of the government's value-up program last year, the scale of own share disposals has approached 21 trillion won as of the end of May this year. This exceeds last year's total disposal amount of 13.9 trillion won in just five months.
According to DAISHIN SECURITIES, if the mandatory disposal of own shares policy is implemented, corporations with equity rates of more than 70% held by major shareholders and related parties, where the major shareholder's equity is below 40%, corporations with own share proportions exceeding the major shareholder's equity, and corporations with own shares exceeding 50%, are more likely to become targets for activist funds or opt for voluntary delisting.
Among domestic listed corporations, including Telcoware, Bookook Securities, Shinyoung Securities, ILSUNG IS, Chokwang Leather, and Infovine are analyzed to meet these criteria. Notably, Shinyoung Securities (52.6%) and Infovine (51.5%) exceed 50% in proportion of their own shares.
In Japan, there is a growing trend of strategic delistings. Since the 2000s, activist investment activities have intensified, and since 2023, the government has demanded dividend increases and own share disposals from companies with a price-to-book ratio (PBR) of less than 1. As a result, the number of management buyouts (MBOs) in the Japanese stock market last year was 37, marking the highest level since such records began. An MBO refers to the management of a corporation buying shares from shareholders. In Japan, MBOs typically aim for delisting.
Experts believe that as the mandatory disposal policy becomes more concrete, the relative influence of not only the ownership of own shares but also the equity of controlling shareholders will become important. Lee Kyeong-yeon, a researcher at DAISHIN SECURITIES, stated, 'Investors should comprehensively assess not only the proportion of own shares held but also the relationship with the equity rates of major shareholders and related parties.'