As the financial authorities sharply tighten regulations on duplicate listings, investors are turning their attention to the listing of Boston Dynamics, the U.S. Robotics subsidiary of Hyundai Motor Group.
As a U.S. entity, Boston Dynamics is highly likely to list on a local exchange and is not subject to domestic review. However, the authorities said the scope of duplicate-listing regulations will apply equally not only to domestic listings but also when listing overseas, and when listing a subsidiary abroad, the parent company's board must fulfill its duty to protect shareholders. The intent is to fundamentally block controversy over split listings, at home and abroad.
Experts cite the Robotics growth potential of Boston Dynamics as the key driver that has recently lifted Hyundai Motor Group's share price. Ultimately, during the U.S. listing process, a key point to watch is what card the parent company will play to defend against dilution of ordinary shareholders' equity value, which will determine the future direction of the stock.
According to duplicate-listing guidelines released by the Financial Services Commission on the 6th, Hyundai Motor Group (the parent company) will likely need substantial consent from ordinary shareholders when listing Boston Dynamics in the United States. Although Boston Dynamics is a U.S. entity and, if listed on a U.S. exchange, can avoid review by the Korea Exchange (KRX), the parent company's five shareholder-protection duties still apply.
As a U.S. entity with a potential U.S. market listing, Boston Dynamics would be reviewed by a U.S. exchange. However, because it is effectively controlled by Hyundai Motor Group, the Hyundai Motor board must objectively assess the impact of the subsidiary's listing on the parent company's shareholders and prepare a shareholder-impact report. The report should include changes in corporate value and stock price effects, equity changes, and expected dividend income.
Based on this, the board must prepare concrete and feasible measures to protect ordinary shareholders, such as cash dividends using proceeds from the sale of existing shares, cancellation of treasury shares, in-kind dividends of subsidiary shares, and a commitment to ban additional duplicate listings.
Afterward, the company must sufficiently communicate these details with shareholders and obtain the consent of ordinary shareholders through a shareholders meeting, among other means. The company must inform investors of every step through disclosures.
If these procedures are not carried out, the company may face sanctions under listing rules, including a penalty of up to 1 billion won and a one-trading-day suspension. Repeated violations of disclosure obligations could also constitute grounds for a substantive delisting review.
In addition, to push ahead with a U.S. listing of Boston Dynamics, a regulation requiring the submission of a securities registration statement to the Financial Supervisory Service also applies. Under the Regulation on Issuance and Disclosure of Securities, if a foreign entity holding 20% or more equity issues new shares overseas, it must submit a securities registration statement to the Financial Supervisory Service in consideration of the impact on domestic investors.
Currently, Boston Dynamics equity is held by HMG Global at 56.5% (Hyundai Motor 49.5%, Kia 30.5%, Hyundai Mobis 20%), Hyundai Glovis 11.25%, Hyundai Motor Group Chair Chung Eui-sun 22.6%, and SoftBank 9.65%. The Financial Supervisory Service (FSS) plans to conduct a microscope review of whether the parent company's board has fulfilled its shareholder-protection duties as stated in any securities registration statement to be filed.
Of course, these measures alone are unlikely to block the U.S. listing of Boston Dynamics itself. The Financial Services Commission also said the guidelines are not intended to prevent subsidiary listings. The authorities said the guidelines are a device to prevent situations in which parent company shareholders are harmed by duplicate listings, whether domestic or overseas, and to ensure companies meet their responsibilities to shareholders.
Ko Young-ho, head of the capital markets division at the Financial Services Commission, said, "If the company fulfills its duties, it can proceed with the subsidiary listing through due process."