South Korea corporate-governance reform and dual-listing rules: South Korea makes post-split-off listings conditional on parent-shareholder approval

Overview

This policy update examines South Korea's tightened rules for parent-subsidiary dual listings, especially listings following a corporate split-off. Morgan Stanley views the rules as a significant restart of the corporate-governance reform agenda in 2H26, with shareholder approval becoming a decisive constraint on proposed transactions.

Core views

The Financial Services Commission approved final guidelines on parent-subsidiary dual listings on July 31, effective August 3. The central change is that a subsidiary listing after a split-off is prohibited in principle unless the parent company's shareholders approve it. Morgan Stanley characterizes this as the first major corporate-governance reform initiative for 2H26 after the policy agenda had been on the back burner for several months. The approval process creates a high hurdle for post-split-off listings. Shareholder approval is mandatory for these transactions, while it is only recommended for other forms of dual listing. The vote is subject to the 3% rule, under which voting rights above a 3% ownership threshold are capped at 3%. Approval must secure both a majority of voting rights represented at the meeting and at least one-quarter of total voting rights. Morgan Stanley therefore argues that companies will find it difficult to pass dual-listing proposals and will need to make a strong case to shareholders. The guidelines also strengthen procedural safeguards. A board special committee reviewing a proposed dual listing must comprise more than two-thirds independent directors, and electronic voting is mandatory for shareholder approvals. Morgan Stanley's implication is that companies will need more effective ongoing shareholder management, while strong investor-relations functions should command a premium. The report places the rule change within a broader Korean reform pipeline. Morgan Stanley identifies real-estate policy and tax reforms, the implementation of deferred Commercial Act rules, and Capital Markets Act revisions as the next items on the policy docket. It also points to financials, high-yield stocks and select holding companies as reform-linked areas that could participate in the market's broadening-out theme.

Analysis framework

The report interprets the FSC's final guidelines by comparing the treatment of post-split-off listings with other dual listings, then explains the voting threshold and governance safeguards that make approval more difficult. It connects the rules to corporate behavior, shareholder engagement, and the wider 2H26 reform agenda.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Financials

  Identified as a reform-linked sector that could participate in the broadening-out theme.

  Strengths

  Potential linkage to the reform theme.

• High-yield stocks

  Identified as a reform-linked area within the broadening-out theme.

  Strengths

  Potential linkage to the reform theme.

• Select holding companies

  Identified as a reform-linked area within the broadening-out theme.

  Strengths

  Potential linkage to the reform theme.

Key data

• FSC guideline approvalJuly 31, 2026Final guidelines on parent-subsidiary dual listings were approved on this date.
• Effective dateAugust 3, 2026The new dual-listing guidelines took effect.
• Voting-rights cap3%Voting rights above the 3% threshold are capped at 3% for the relevant approval vote.
• Approval thresholdMajority of represented voting rights and at least one-quarter of total voting rightsBoth conditions are required for shareholder approval of a post-split-off listing.
• Special-committee independenceMore than two-thirds independent directorsRequired for the board special committee reviewing a proposed dual listing.

Impact & implications

Morgan Stanley expects the rules to make split-off-related dual listings substantially more difficult to complete, increasing the value of credible shareholder engagement and investor relations. The report frames the change as part of a broader reform sequence relevant to financials, high-yield stocks and select holding companies.

What to watch

• Further real-estate policy and tax reforms.
• The implementation of deferred Commercial Act rules.
• Potential revisions to the Capital Markets Act.