Duksan Hi-Metal and Dasan Networks obtained shareholder approval for subsidiary listings at extraordinary general meetings held on May 29 and the 19th of last month, respectively, ahead of regulatory guideline announcements on duplicate listings. Duksan Hi-Metal passed the Duksan Nepes listing proposal with 78% attendance and 92% approval, while Dasan Networks approved the DTS subsidiary listing with 90.3% voting approval. The companies emphasized that their subsidiaries are independently acquired entities rather than spin-offs, requiring separate funding for business expansion, a rationale used to address shareholder value dilution concerns in the Korean stocks market context where duplicate listings face regulatory scrutiny.
Duksan Hi-Metal Secures 92% Approval for Duksan Nepes Listing
Duksan Hi-Metal held an extraordinary general meeting on May 29 and passed the proposal related to pursuing the listing of Duksan Nepes. The attendance rate based on total shareholding was 78%, and the approval rate based on attending shareholders was 92%. Even on a minority shareholder basis excluding the largest shareholder, the company secured 50.3% attendance and 73% approval. These figures meet all shareholder consent standards discussed in the market, including Majority of the Minority (MoM), the 3% rule, and special resolution methods.
The company emphasized during the shareholder persuasion process that Duksan Nepes is not a spin-off entity through physical division but an independent corporation acquired in 2021. Duksan Nepes is a navigation solution company in the defense and aerospace sectors, distinct from Duksan Hi-Metal's semiconductor packaging materials business. The company explained that after listing, Duksan Nepes will have independent fundraising capabilities to secure growth capital needed for expanding defense and aerospace operations.
Duksan Hi-Metal presented shareholder return measures, stating it will implement in-kind dividends by directly distributing subsidiary shares to minority shareholders if the Duksan Nepes listing is approved, alongside medium- to long-term cash dividend policies and investor relations activities. Prior to the extraordinary general meeting, the company encouraged shareholder participation through electronic voting and KakaoTalk electronic notices.
Dasan Networks Passes DTS Subsidiary Listing Proposal
Dasan Networks passed the proposal to pursue the listing of subsidiary DTS at an extraordinary general meeting held on the 19th of last month. The proposal was approved with 46.5% approval based on total issued shares and 90.3% approval based on voting shares. The special resolution requirements for general meetings—more than two-thirds of attending shareholders and more than one-third of total issued shares—were satisfied.
Dasan Networks prominently presented that the DTS listing differs from "split listings" that separate core business units. DTS is an air-cooled heat exchanger manufacturing company that Dasan Networks acquired in the past and grew through long-term investment and management improvements. From last year through this year, the company held five official meetings with parent company shareholders, and Chairman Nam Min-woo directly participated in non-deal roadshows (NDR) to expand touchpoints with shareholders.
Companies Emphasize Business Independence and Funding Needs
Both cases emphasized that the subsidiaries were not created through physical division and that the businesses or revenues of parent and subsidiary companies are not directly intertwined. An IPO industry official stated that the logic used in shareholder persuasion was that if subsidiaries require separate capital injections for growth, having the parent company bear all costs could lead to shareholder value dilution.
Jeong Seok-ho, CEO of Korea Corporate Governance Service, stated that the cases demonstrate that sufficient dialogue and persuasion with parent company shareholders are most important to resolve market concerns about duplicate listings. He added that companies must provide sufficient information so shareholders can understand the necessity and expected effects of subsidiary listings, and present measures that can lead to enhancing parent company shareholder value after listing.
Daeshin Securities Serves as Lead Underwriter for Both Cases
Both cases involved Daeshin Securities as the lead underwriter, drawing market attention. In an environment where subsidiary IPO review has become more stringent, this can be viewed as a case where the underwriter responded practically to changed review processes, including shareholder consent procedures and business independence explanations.
However, securing minority shareholder consent does not guarantee approval in listing reviews. As financial authorities maintain a principle of prohibiting duplicate listings, how exchanges will evaluate minority shareholder consent, business independence, and shareholder protection measures is expected to become clearer after guideline disclosure.
FAQ
What approval rates did Duksan Hi-Metal achieve for its subsidiary listing on May 29?
Duksan Hi-Metal achieved 78% attendance based on total shareholding and 92% approval based on attending shareholders at its extraordinary general meeting on May 29. On a minority shareholder basis excluding the largest shareholder, the company secured 50.3% attendance and 73% approval for the Duksan Nepes listing proposal.
How did Dasan Networks justify its DTS subsidiary listing to shareholders?
Dasan Networks emphasized that DTS is not a "split listing" separating core business units, but rather an air-cooled heat exchanger manufacturing company that the parent acquired in the past and grew through long-term investment and management improvements. The company held five official meetings with parent company shareholders from last year through this year, and Chairman Nam Min-woo directly participated in non-deal roadshows to expand shareholder engagement.
Why do companies argue that subsidiary listings benefit parent company shareholders?
Companies argued that subsidiaries require separate capital for growth, and having the parent company bear all expansion costs could lead to shareholder value dilution. By enabling subsidiaries to secure independent funding through listings, parent companies can avoid diverting resources while maintaining ownership stakes that may appreciate, potentially enhancing overall shareholder value.
