• SK FSC held seminar on measures to protect general investors in case of change in management rights by stock transfer; introduced mandatory tender offer system.
• This system obligates a company to acquire a certain percentage of stocks through a tender offer when acquiring stocks sufficient to secure control of a listed company.

Mandatory Tender Offer

• Introduction of a mandatory tender offer system has advantages such as protecting general investors, but has concerns on the contraction of the corporate M&A / takeover market.
• Accounting for this, the system was designed to provide protection for general shareholders and minimize the possibility of hindering M&As that create synergies.
• General shareholders of the target firm are guaranteed sufficient opportunities to sell their stakes to the acquirer at a price that reflects the management rights premium.
• In addition, in the case of becoming the largest shareholder holding 25% of shares or above the tender offer obligation is imposed on the remaining shareholders.

Concerns

• There have been concerns about the possibility of M&A contraction due to excessive acquisition price, if the entire shareholding held by general shareholders is purchased.
• As such, a tender offer obligation is imposed on a certain portion of the remaining stake after securing a stake in a change in management control (50% + 1 share).
• Considering the possibility of infringement on the rights and interests of general shareholders, SK FSC can apply exceptions if there are credible and practical reasons.

Future Plans

• SK FSC will supervise the system so that it can settle well in the market early, and in case of violation, take appropriate measures according to the severity of the violation.
• As the system is introduced, SK FSC will grant a grace period of at least 1 year after amendments are passed in the capital markets act, for market participants to adapt.
• It is expected that the amendments will prevent predatory takeovers in advance.