The Democratic Party of Korea on the 10th discussed handling an amendment to the Financial Investment Services and Capital Markets Act centered on introducing a mandatory tender offer system, but it failed to reach a conclusion because of internal disagreements.
That afternoon, the Democratic Party held a general meeting of its lawmakers to discuss bills to be handled during the regular session. Oh Ki-hyeong, Chairperson of the K-Capital Market Special Committee, briefed members on measures to normalize the capital market, including amendments to the Financial Investment Services and Capital Markets Act known as the so-called "stock-price suppression prevention act." Lawmakers split over the proposal, and the meeting ended without a conclusion, according to accounts.
Kim Sung-hoe, the Democratic Party Spokesperson for the floor, told reporters after the meeting, "On the Financial Investment Services and Capital Markets Act, we heard a wide range of views and discussed them," adding, "We will handle the inheritance and gift tax law during the regular session, and on the capital markets law we are building consensus, with a stance to try to process it as quickly as possible."
The amendment to the Financial Investment Services and Capital Markets Act that contains the mandatory tender offer system reflects an agreement reached at a joint meeting on livelihood policy in September that included the ruling and opposition parties' policy committees. It would require anyone who acquires at least 25% of a listed company and becomes the largest shareholder to launch a tender offer for 50%+1 share or more of the outstanding shares.
If an acquirer buys 30% of the largest shareholder's stake, the acquirer would have to purchase an additional 20%+1 share or more. As the control premium burden rises in this process, the funds needed for an acquisition would grow sharply, raising concerns that only large global capital—rather than domestic private equity funds with relatively less firepower—could enter Korea's mergers and acquisitions (M&A) market.
The amendment to the Financial Investment Services and Capital Markets Act passed the National Policy Committee on Sept. 17 and is pending in The National Assembly's Legislation and Judiciary Committee.
The Democratic Party says it will continue talks with the opposition since the bill was agreed to by both parties. Kim, the floor Spokesperson, said, "Although the ruling and opposition policy committees have already agreed, we are well aware of the concerns raised by market participants," adding, "We decided to continue consultations with the opposition, including on whether to revise the bill."
On whether to keep the original draft of the mandatory tender offer system, he said, "Because it is a bill prepared through ruling–opposition consultations, we will review its contents through negotiations."
The Democratic Party will hold another general meeting of lawmakers to continue the discussion. Kim, the floor spokesperson, said, "Today's single round of talks did not settle everything," adding, "We plan to report on the matter and discuss it further at next week's general meeting of lawmakers."