Revision talk within Democratic Party centers on '50%+1 share' threshold

Some argue general shareholders deserve full 100% buyout protection

Democratic Party hopes PPP will join further discussions to find middle ground

PPP says renegotiating an agreed bill would set a bad precedent

People Power Party members of the National Assembly's Political Affairs Committee walk out in protest after a motion to summon witnesses related to the introduction of single-stock leveraged ETFs fails, at a plenary session of the committee. [Yonhap]
People Power Party members of the National Assembly's Political Affairs Committee walk out in protest after a motion to summon witnesses related to the introduction of single-stock leveraged ETFs fails, at a plenary session of the committee. [Yonhap]

The Democratic Party of Korea is exploring the possibility of revising a mandatory tender offer bill through further inter-party discussions as market concerns over the legislation mount — but the People Power Party is pushing back, arguing it would be inappropriate to reopen a bill the two sides painstakingly agreed on in the National Assembly's Political Affairs Committee before it goes to a full floor vote.

Voices within the Democratic Party have floated the idea of holding additional cross-party discussions to draft a revised bill, citing negative market sentiment toward the mandatory tender offer regime. However, because the bill was already agreed upon jointly in the Political Affairs Committee, the Democratic Party is not in a position to pursue revisions unilaterally. The party is quietly hoping the PPP will agree to reopen talks so both sides can find a compromise together.

The mandatory tender offer regime would require anyone acquiring a controlling stake in a listed company to purchase shares from general shareholders at the same price paid to the largest shareholder. Under the bill agreed to by both parties, an acquirer who obtains 25 percent or more of shares to become the largest shareholder would be required to secure up to 50 percent of total shares plus one additional share.

Some have argued the buyout threshold should be expanded to 100 percent rather than 50 percent plus one share. The concern is that in companies where the largest shareholder holds a high stake, an acquirer could buy out that controlling shareholder and then purchase only a fraction of the remaining shares held by general shareholders — limiting those shareholders' opportunity to sell at the same price.

The PPP is treading carefully on the question of reopening negotiations. One lawmaker on the Political Affairs Committee told The Herald Business by phone, "This is a bill we agreed on after much deliberation — I don't think it makes sense to come back now and say we need to discuss it again." The remarks reflected a broader view within the party that revising an already-agreed bill simply because the Democratic Party has shifted its position would be unacceptable.

Another PPP lawmaker on the committee also signaled opposition to further inter-party discussions. "It's a bill that both parties agreed on and passed through committee," the lawmaker said in a phone interview. "Given that the Democratic Party is pushing through all these bills, it may be hard to go along with this. Do we really need to accommodate their position? They're pushing legislation too aggressively — this needs to be weighed as a political judgment call."

The Democratic Party, by contrast, sees a jointly drafted revision as a potential breakthrough for getting the bill passed. One Democratic Party lawmaker on the Political Affairs Committee said the PPP was likely feeling pressure too as public sentiment in the stock market soured. "If we sit down together and come up with a revised bill, isn't there a chance it could pass?" the lawmaker said, expressing cautious optimism. The lawmaker added that if the PPP agreed to discussions, "we would be fully on board."


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