As the government and financial regulators move to overhaul rules that would in principle ban dual listings of parent and subsidiary companies, industry participants warned that blanket regulations could dampen venture mergers and acquisitions and new-business investment.
At a forum titled "Issues and Improvement Directions for Dual Listings" held at the National Assembly Library in Yeongdeungpo-gu, Seoul, on Wednesday, participants called for flexible regulations on dual listings. Korea Exchange (KRX) plans to release guidelines on dual listings in the near future.
Kim Chun, head of the policy division at the Korea Listed Companies Association, said the government's "ban in principle" stance "came as quite a shock to companies." He added, "We need to look at the background of why dual listings have been permitted so far, along with their advantages and disadvantages." Kim stressed the need to first clarify where the focus of the issue should lie — whether at the point of corporate spin-off, at the time of listing, or on the ongoing conflicts of interest after listing. Analysts also argued that reforms should span the entire process, rather than simply blocking simultaneous listings of parent and subsidiary companies.
The venture capital industry also raised concerns. Ahn Sang-jun, vice chairman of the Korea Venture Capital Association, emphasized that "cases where listed companies acquire new or future businesses and place them as subsidiaries are an entirely different matter from spin-off listings." He explained that while it takes a long time for startups to go public independently, acquisitions by listed companies and subsequent fundraising can significantly accelerate growth and capital procurement. "For future industries such as artificial intelligence, rapid investment and fundraising are essential. If these are blocked wholesale under dual-listing regulations, it could lead to a contraction of the venture M&A market," Ahn said.
The industry paid particular attention to exit markets. If the capital-raising structure — in which listed companies acquire promising startups, outside investors participate in follow-on funding, and investment returns are realized through subsidiary IPOs — is blocked, the virtuous cycle of capital across Korea's venture ecosystem could slow. With Korea's venture M&A market already small compared with other major global markets, participants noted that narrowing exit strategies through dual-listing regulations could discourage investment in growth industries altogether.
In response to these concerns, financial authorities said they would devise measures to protect shareholders while minimizing the side effects of dual listings. Ko Young-ho, a director at the Financial Services Commission (FSC), said, "The scope of dual listings will be assessed based on the parent-subsidiary control relationships that investors understand as a single economic entity on consolidated financial statements." He added, "However, not all dual listings are inherently bad. We will conduct comprehensive reviews considering the necessity of listing, communication with shareholders, shareholder protection efforts, operational independence of the business, and management independence."