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3.
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Special Review Standards for Split Listing
In addition to general listing standards, the following additional special review standards apply. If any of these criteria are not satisfied, the listing may be denied.
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(1)
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Operating Independence
The review will examine whether the subsidiary's major products and services, markets, customers, and business models are similar to those of the parent company. It will also assess whether the subsidiary has independent capabilities for product development and commercialization, and whether its principal business activities are dependent on the parent company. Notably, if 50% or more of the subsidiary's sales or purchases arise from transactions with the parent company, operating independence is presumed lacking. However, exceptions may be granted where vertical integration is unavoidable due to industry structure, or where clear operating efficiencies—such as cost reductions or supply stability—are achieved through intra-group transactions.
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(2)
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Management Independence
The review will evaluate whether the subsidiary's corporate governance and decision-making structures are independent from the parent company. Principal factors include: (i) whether the parent company's controlling shareholder, officers, or employees concurrently serve on the subsidiary's board of directors, audit committee, or management team; (ii) whether the subsidiary has its own independent personnel and management control systems; and (iii) whether the subsidiary's own board of directors substantively deliberate and make key decisions on major management matters (e.g., production, sales, investment, and financing).
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(3)
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Protection of Parent Company Investors
Provided the parent company's board of directors has fulfilled its five key obligations and adopted an affirmative resolution, the review examines whether shareholder protection measures commensurate with the need to protect public shareholders have been implemented. The most critical consideration is whether the parent company has obtained valid shareholder consent. The validity of shareholder consent may be determined using a standard similar to the "3% rule" under the KCC for electing audit committee members—an approval requires a majority of voting rights present and by at least one-fourth of the total issued shares, with individual shareholder's voting rights capped at 3% (even if that shareholder owns more than 3% of outstanding shares).
The required level of shareholder consent varies by subsidiary type:
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i)
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Physical split-up subsidiaries: Shareholder consent is mandatory, and in the absence of shareholder consent, the shareholder protection requirement is deemed unsatisfied.
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ii)
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General subsidiaries: Obtaining shareholder consent creates a presumption that the protection requirement is satisfied. Without consent, the subsidiary is subject to a rigorous case-by-case review based on factors such as financing needs, industry-specific characteristics, the background and duration of the parent-subsidiary relationship, and the subsidiary's relative significance to the parent.
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iii)
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Non-material subsidiaries: For a subsidiary with each of its revenue, operating profit and assets accounting for less than 10% of the parent company's (except for those otherwise recognized as material subsidiaries), the protection requirement is presumed satisfied without shareholder consent if the board has performed the five key obligations and adopted an affirmative resolution. However, if a non-material subsidiary was established through a physical split-up, shareholder consent remains mandatory.
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