The South Korea Financial Services Commission and the Korea Exchange have proposed new rules and guidelines for split listings, where a listed parent company seeks to float a controlled or subsidiary company. The package is designed to address shareholder harm by requiring the parent company, not just the subsidiary, to assess whether the listing is appropriate and whether it disadvantages the parent’s shareholders before the Korea Exchange conducts its final review. The proposal would apply when an unlisted company under a listed parent’s control seeks an exchange listing, including certain affiliated and second-tier subsidiary structures that meet specified ownership thresholds. It would impose five duties on the parent board: assess the impact on shareholders, prepare protection measures, communicate with shareholders and seek clear consent where necessary, keep a formal voting record and notify the subsidiary, and disclose each stage of the process. An independent special committee would have to conduct preliminary screening, deliberation and approval, and the same duties would also apply when a listed parent seeks to list a subsidiary on an overseas exchange. Exemptions would be narrow and depend on the subsidiary being genuinely independent in operations and management, while shareholder protection would be tested strictly. Shareholder consent is recommended in principle and would be mandatory for listings of split-off subsidiaries, with the Commercial Act’s 3 percent voting cap applying when consent is obtained. For other split listings, consent would satisfy the shareholder protection requirement, while cases without consent would face stricter scrutiny. A limited accommodation is provided for subsidiaries whose sales, operating profit and assets are each less than 10 percent of the parent’s, where faithful compliance with the board duties and board approval would be treated as sufficient. The proposed Korea Exchange rule changes and guidelines are open for comment from July 7 to July 14 and will then go through the approval process before taking effect.
South Korea Financial Services Commission2026-07-06
South Korea Financial Services Commission and Korea Exchange propose split listing rules with new parent board duties and tighter shareholder protection tests
The South Korea Financial Services Commission and the Korea Exchange have proposed new split listing rules that would make parent companies directly responsible for assessing shareholder harm before a subsidiary can list. The framework adds five board duties, requires an independent special committee and tightens exemption and shareholder consent standards, including mandatory consent for split-off subsidiary listings. The proposal is open for comment from July 7 to July 14.