Financial authorities have approved the first exception since the implementation of the dual listing guidelines. Attention is now focused on which companies will be next to undergo dual listing reviews.
According to the financial investment industry on July 21, the Korea Exchange approved the preliminary listing review for Deoksan High Metal's subsidiary Deoksan Nepcoas and Dasan Networks' subsidiary DTS on July 20. These two companies are the first to be recognized for meeting the general shareholder protection procedures and operational independence criteria outlined in the dual listing guidelines announced by the Financial Services Commission on July 6.
Both companies met the guideline's shareholder consent requirement of the '3% rule.' This rule allows the maximum shareholder and related parties' voting rights to be recognized only up to 3%, and requires a majority approval from voting shareholders along with at least one-fourth of the total voting rights in favor. Deoksan High Metal secured a 72.8% approval rate based on the total number of voting shares at its extraordinary general meeting on May 29. Among the shares that voted, 92.7% were in favor. Dasan Networks also passed the DTS listing proposal with a special resolution at its extraordinary general meeting on June 19, achieving a 46.5% approval rate based on the total number of voting shares and 90.3% among the shares that voted.
Not only did they obtain shareholder consent, but they also made efforts to demonstrate shareholder rights protection and independence as required by the guidelines. Before pursuing the listing, Deoksan High Metal conducted a shareholder impact assessment at the parent company's board meeting and reviewed the operational independence of the subsidiary and potential infringement on general shareholder rights. Additionally, they proposed a shareholder return policy that includes a 5% distribution of 150,000 shares as a stock dividend to parent company shareholders and a commitment to maintain a consolidated dividend payout ratio of over 10% for the next five years.
While the first companies have passed the strengthened dual listing review, it is expected that further large IPOs will not emerge in the near future. The new review criteria, which emphasize shareholder consent and proof of independence, have led large corporate affiliates to reconsider their listing schedules or approach the timing of their listings with caution.
Initially, companies like CJ Olive Young and SK Enmove were considered potential exceptions for dual listings, but they have since withdrawn their preliminary review applications. If these companies decide to pursue listing again, they will need to restart the due diligence process from the beginning and may have to select new underwriters based on their listing strategies, making it unlikely for reviews to resume in the short term.
Currently, Sono International, a major IPO candidate that has applied for preliminary review, is unlikely to be included in the dual listing review. The financial authorities have stated that when a subsidiary is already listed before the parent company, the risk of diminishing the subsidiary's corporate value is relatively low, and thus the dual listing review criteria will not apply. Sono International has publicly traded subsidiaries, Trinity Airlines (41.95% stake) and T'way Holdings (46.26%), but operates under a structure where the unlisted parent company is seeking to go public.
Market speculation suggests that there may be subsequent cases among companies pursuing KOSDAQ listings. One notable candidate is Mobius, which is seeking a technology-based special listing. SJG Sejong, a KOSPI-listed company, holds a 25.59% stake as the largest shareholder, raising the possibility of applying the new dual listing guidelines.
Mobius is viewed as having both positive factors and variables in terms of the review criteria. In terms of operational independence, Mobius focuses on autonomous mobile robots (AMR) and logistics automation solutions, which differ significantly from SJG Sejong's core business of automotive exhaust parts, indicating minimal business overlap. This is considered a favorable factor under the operational and management independence review criteria set by financial authorities.
However, management independence and the necessity of listing may become key issues during the review process. The guidelines require a comprehensive assessment of not only shareholding ratios but also the actual control relationships and economic identity. Ongoing financial ties, such as loans or guarantees from the parent company, could impact the independence assessment. Additionally, how convincingly Mobius presents its need for independent R&D investment and funding for business expansion, as well as its plans for protecting general shareholders, will be crucial evaluation factors.
Mobius maintains that the largest shareholder's stake is not absolute and that it operates an independent management system, distinguishing it from typical dual listing cases. However, given that financial authorities have emphasized the importance of actual control relationships and shareholder rights protection over formal shareholding ratios in this guideline, the industry believes Mobius could become one of the representative cases where the new criteria are applied, following Deoksan Nepcoas and DTS.
* This article has been translated by AI.
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