Kyusung Lee Attorney at Law

By Kyusung Lee, Attorney at Law

If you’re a foreign investor, fund, or strategic buyer eyeing a controlling stake in a Korean listed company, there’s a regulatory shift worth tracking closely: Korea’s Financial Services Commission (FSC) has designated the mandatory tender offer system as a priority legislative item for the second half of 2026. After years of on-and-off debate, this rule looks closer to becoming law than at any point in the past decade — and it could materially change how control transactions in Korean listed companies are structured, priced, and financed.

What Is a Mandatory Tender Offer, and Why Should You Care?

Under current Korean law, an acquirer can take control of a listed company simply by buying a controlling stake from the largest shareholder — often at a significant premium — without any obligation to offer the same terms to minority shareholders. That control premium stays entirely with the seller, while public shareholders are left holding shares in a company whose ownership just changed hands, typically without any exit opportunity.

A mandatory tender offer rule would change that. If an acquirer crosses a certain ownership threshold — currently proposed at 25% of voting shares — in a way that constitutes a change of control, the acquirer would be required to extend a tender offer to the remaining shareholders, giving them the opportunity to sell their shares and share in the control premium.

This isn’t a new concept for Korea. A similar rule existed under the former Securities and Exchange Act starting in 1997, but it was repealed in 1998 in the aftermath of the Asian financial crisis, when Korea prioritized facilitating M&A and corporate restructuring. The FSC revived the idea in December 2022, and a corresponding amendment to the Financial Investment Services and Capital Markets Act (FSCMA) was introduced in 2023 — but it died when the 21st National Assembly’s term expired without passage.

Why This Is Gaining Momentum Again

The renewed push isn’t happening in isolation. It follows a broader wave of Korean corporate governance reform aimed at protecting minority shareholders: amendments to the Commercial Act codifying directors’ fiduciary duties to shareholders, and tighter fair-value standards for mergers and other restructuring transactions. A joint symposium hosted by the Korea Capital Market Institute and the Korea Securities Association on June 17, 2026 brought together regulators, academics, and industry practitioners to discuss the rule’s necessity and design.

Notably, a version of this proposal — sharing control premiums with minority shareholders through mandatory tender offers — even appeared as a campaign pledge during the 21st presidential election. With the FSC now formally committing to prioritize this legislation in the second half of 2026, the likelihood of enactment looks meaningfully higher than in previous rounds.

Multiple Bills, One Direction

Since 2024, at least eight separate FSCMA amendment bills addressing mandatory tender offers have been introduced in the 22nd National Assembly. They differ in the details — the precise trigger threshold, whether target companies must be acquired in full or only up to 50%+1 share, how the tender price is calculated, and what exemptions apply — but they share the same underlying policy goal: giving ordinary shareholders a fair chance to exit and share in the control premium when a listed company changes hands.

Four Issues Worth Watching Closely

For clients evaluating a potential control transaction in a Korean listed company, here is where I would focus attention.

1. Trigger Threshold

Most bills set the threshold at 25% of voting shares — stricter than the 30% or one-third thresholds common in other major jurisdictions. Given that this figure has appeared consistently since the FSC’s original 2022 proposal, it is likely to survive into the final legislation. Some bills also aim to close a loophole by treating the exercise of conversion rights on convertible bonds or bonds with warrants — not just direct share purchases — as a triggering event.

2. Scope of the Tender Offer

This is arguably the most consequential open question. Some proposals adopt a “50%+1 share” model, requiring the acquirer to purchase enough additional shares to reach majority control — a compromise designed to avoid discouraging M&A activity by capping acquisition cost. Others go further, requiring the acquirer to offer to purchase all remaining shares. Where this line gets drawn will significantly affect deal economics and financing requirements.

3. Tender Price

The pricing mechanism will determine how much of the control premium minority shareholders actually receive — generally based on the highest price paid in prior purchases within a defined lookback period. Deal structures involving contingent consideration, non-cash consideration, or separate non-compete payments will need particular attention, since these mechanisms are sometimes used to shift value outside the tender price calculation.

4. Exemptions

Restructuring transactions, rehabilitation proceedings, and debt recovery situations are being considered for exemption, since they present lower risk of harming minority shareholder interests. Whether these exemptions are written directly into the statute or left to be defined by presidential decree varies significantly across the pending bills — and is worth monitoring as implementing regulations take shape.

What This Means for Your Next Deal in Korea

If you’re structuring an acquisition of a controlling stake in a KOSPI- or KOSDAQ-listed company — whether as a strategic buyer, private equity investor, or as part of a going-private transaction — it is worth building mandatory tender offer risk into your deal planning now, even before the legislation is finalized. That means factoring in potential additional acquisition costs, reassessing financing plans and deal timelines, and building appropriate conditions into your closing mechanics.

This is especially relevant for mezzanine investments in listed companies, going-private transactions, and hostile M&A situations, where a mandatory tender offer rule could have an outsized impact on deal feasibility.

Final Thoughts

The question is no longer whether Korea will adopt a mandatory tender offer regime, but when and in what form. I advise foreign investors, funds, and corporates on corporate governance, M&A, and capital markets matters in Korea, and I am tracking this legislative process closely. If you’re evaluating a control transaction involving a Korean listed company, I’d be glad to walk through how these proposed rules could affect your deal structure and timeline.

About the Author

Education	B.A. in Economics, Brown University · J.D., Yonsei University Law School
Experience	Samsung C&T Corporation, Legal Team (International Contracts) · Bank of America Merrill Lynch, Equity Research
Credentials	Member, Korean Bar Association · CAMS (Certified Anti-Money Laundering Specialist)
Practice Areas	International Contracts · Startup Law · Foreign Investment · Corporate Law · Commercial Disputes · Corporate Governance · Shareholder Activism

Kyusung Lee, Attorney at Law Corporate Governance · Shareholder Activism · M&A · Foreign Investment Advisory Tel  02-6264-7604    Email  kyusungii@gmail.com Website  http://www.kyusunglee.com    Naver Blog  blog.naver.com/hotchkiss777

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