The Financial Services Commission and Korea Exchange issued dual-listing guidelines on the 8th requiring parent company shareholder approval for spin-off subsidiary initial public offerings. The guidelines introduce a mandatory shareholder vote for listed parent companies seeking to list subsidiaries created through spin-offs, with approval requiring both a majority of attending shareholders and consent from at least 25% of total outstanding shares. The regulations aim to strengthen investor protection by preventing parent company valuation discounts caused by subsidiary listings, with the rules expected to take effect within July following a notice period and Financial Supervisory Services Committee and FSC meetings.
According to the financial investment industry on the 8th, the dual-listing guidelines will undergo a notice period and reviews by the Securities and Futures Commission and FSC regular meetings before taking effect, potentially within July. The regulations mandate that listed parent companies obtain shareholder approval before listing subsidiaries created through spin-offs, regardless of when the spin-off occurred. The approval threshold requires consent from a majority of shares represented at the shareholder meeting, with affirmative votes also reaching at least 25% of total outstanding shares.
HD Hyundai Robotics Faces Shareholder Approval Requirement for IPO
HD Hyundai Robotics represents a primary case affected by the new guidelines. The company was established through a spin-off from HD Hyundai in 2020 and is currently reviewing a stock market listing. HD Hyundai has 79 million outstanding shares, with Chairman Chung Mong-joon of the Asan Social Welfare Foundation and affiliated parties holding 29.37 million shares (37.2%).
Under the 3% voting cap rule, Chung and affiliated parties can exercise voting rights on only approximately 2.37 million shares, with the remaining 27 million shares excluded from total outstanding share calculations. For HD Hyundai to proceed with the HD Hyundai Robotics listing, the company must convene a shareholder meeting and obtain majority approval from attending shareholders, with affirmative votes also exceeding 12.99 million shares (16.5% of the adjusted 51.99 million share base after excluding the 27 million shares subject to the cap).
FSC Introduces 3% Voting Cap Rule for Controlling Shareholders
The guidelines apply a 3% rule limiting voting rights for any single shareholder, including controlling shareholders and their affiliates, to 3% of total shares in the approval vote. Shares exceeding 3% are excluded from the calculation of total outstanding shares for approval threshold purposes. Ko Young-ho, director of the FSC Capital Markets Division, stated during the guidelines briefing that "dual listings without shareholder protection will disappear going forward" and that "companies visiting shareholders to explain agenda items is also part of shareholder communication efforts."
Other group affiliates face similar requirements for spin-off subsidiary listings. SK Plasma was spun off from SK Chemical in 2015 and became a subsidiary of listed SK Discovery in 2017. LS EV Korea was spun off from LS Cable in 2017. While LS Cable is unlisted, its parent company LS is listed, and subsidiaries where a listed company's subsidiary holds more than 50% ownership also fall under the dual-listing guidelines.
CJ Olive Young and SK Ecoplant Subject to Recommended Shareholder Consent
The FSC and Korea Exchange recommended that parent companies obtain shareholder consent when pursuing listings for general subsidiaries acquired through investment or acquisition, rather than spin-offs. Subsidiaries with revenue, operating profit, and assets below 10% of the parent company qualify as "low-weight subsidiaries" and may receive exemptions from shareholder consent requirements, though high expected enterprise value can disqualify them from exemption.
If a parent company obtains shareholder consent for a general subsidiary listing, the Korea Exchange considers the parent company to have fulfilled investor protection efforts during the dual-listing special review process. Without shareholder consent, the exchange conducts more stringent special reviews examining factors such as the subsidiary's capital raising needs and alternative options, potentially making listing approval more difficult.
Companies currently reviewing listings include CJ Olive Young, a CJ subsidiary, and SK Ecoplant, an SK subsidiary. Both CJ and SK are listed companies, with CJ Olive Young recording consolidated revenue of 5.8 trillion won in 2025, exceeding 10% of CJ's 45 trillion won revenue during the same period. LS Essex Solutions, which withdrew its domestic listing plan this year, also faces similar considerations, as its parent company Superior Essex is a U.S.-listed company acquired by LS Group in 2008.
Hanwha Energy Exempted from Dual-Listing Restrictions
The FSC and Korea Exchange defined dual listing as "a listed parent company separately listing a subsidiary" in the guidelines. Regarding unlisted parent companies with listed subsidiaries, the authorities stated that "concerns about subsidiary discounts from the listing itself are not significant, so they are excluded from dual listing" restrictions.
Hanwha Energy represents a prominent case under this exemption. Vice Chairman Kim Dong-kwan of Hanwha Group holds 50% of Hanwha Energy as the largest shareholder, with Hanwha Energy holding 22.15% of listed Hanwha as its largest shareholder. The FSC and Korea Exchange determined that the possibility of an unlisted parent company's IPO negatively impacting a listed subsidiary's stock price is minimal.
Sono International, which recently applied for KOSPI preliminary listing review, also received relief under this framework. Sono International has Honorary Chairman Park Chun-hee of Sono Trinity Group (33.24%) as its largest shareholder and maintains multiple listed subsidiaries including Sono Square, Trinity Air (formerly T'way Air), and T'way Holdings.
FAQ
What shareholder approval does HD Hyundai need for HD Hyundai Robotics IPO?
HD Hyundai must obtain majority approval from shareholders attending the meeting, with affirmative votes also exceeding 12.99 million shares (16.5% of adjusted outstanding shares after applying the 3% voting cap rule that excludes 27 million shares held by the controlling shareholder group from the total share count).
Why is Hanwha Energy exempted from dual-listing restrictions?
The Financial Services Commission and Korea Exchange exempted unlisted parent companies with listed subsidiaries from dual-listing restrictions, stating that concerns about subsidiary discounts from the parent's listing are not significant, allowing Hanwha Energy to proceed with IPO plans without triggering dual-listing review requirements.
