Seoul: South Korea's financial regulator announced plans to ban "split listing" by conglomerates and create a two-tier system for the KOSDAQ market. The Financial Services Commission (FSC) aims to halt the practice of duplicate listings, where a core business division is spun off and listed separately. This practice has been criticized for negatively affecting shareholder value and contributing to the "Korea Discount."
According to Yonhap News Agency, the FSC intends to prohibit these long-standing listing practices to enhance the market value of companies. The regulator's decision follows controversy surrounding LG Energy Solution's market debut in 2022. The company was spun off from LG Chem to capitalize on the electric vehicle industry, resulting in a prolonged slump for its parent company.
The FSC also plans to encourage listed companies with low price-to-book ratios to increase their value through measures such as naming-and-shaming. Additionally, the regulator will reorganize the KOSDAQ market into a two-tier system, comprising a premium market for established heavyweights and a standard market for emerging players.
The FSC further stated its intention to develop a new stock index for premium market players and introduce related exchange-traded funds. These changes aim to bolster the market structure and improve overall shareholder value.