The government presented a plan to revamp the capital market, including regulation of dual listings and disclosure of low price-to-book (PBR) companies.

President Lee Jae-myung (이재명) on March 18 announced tough measures at a meeting on capital market stability and normalisation to address the chronic undervaluation of domestic stocks known as the "Korea discount."

One key measure is tighter regulation of dual listings. The government proposed stricter screening at the exchange listing review stage under a "principle ban, exceptions allowed" approach, and said reviews would cover not only physical and spin-off splits but also acquired and newly established subsidiaries if there is effective control.

Whether to allow an exception will be determined through a comprehensive review of listing necessity, shareholder communication, protection of minority shareholders and operational and management independence, among other factors.

Uniform standards circulating in the market in connection with dual listings, such as a "principle ban on listing a subsidiary when the parent holds 30 percent or more," were not specified in the attached materials for this measure.

Instead, the government will broadly consider as review targets companies in a vertical control relationship that qualify as subsidiaries under the External Audit Act or affiliates under the Fair Trade Act. It plans to finalise detailed standards after gathering opinions in the second quarter of 2026.

The parent company's board will also face stronger responsibilities. The government will impose an obligation for the parent board to conduct an impact assessment and disclosure from the perspective of minority shareholders if it pursues a dual listing of a subsidiary, and it will seek system improvements so this can also apply when listing on overseas exchanges.

The timing for revisions to Korea Exchange listing rules and listing and disclosure rules, as well as preparation of an amendment to the Capital Markets Act, was set for June 2026.

Oversight will also be tightened for companies that leave low share prices in place for long periods. The government will pursue a plan to continuously publish a list of low PBR companies on the Korea Exchange's KRX Value-Up website, using as an illustrative standard the bottom 20 percent in PBR for two consecutive half-years within the same industry, and to display a "low PBR" tag in the stock name.

It plans to encourage voluntary improvement by exempting companies for a certain period from list publication and tag display if they disclose a corporate value enhancement plan that includes a diagnosis of their PBR status, goal-setting and an execution plan.

The government will also adjust protections for minority shareholders during corporate restructuring such as mergers and splits. It is pursuing mandatory external valuation and calculation of a fair price that comprehensively reflects not only share prices but also asset value and earnings value in cases of mergers, splits, major asset and business transfers, and comprehensive share exchanges and transfers.

An official at the Financial Services Commission said the principle ban on dual listings, disclosure of low PBR companies and reforms of the KOSDAQ market are institutional improvements to restore market trust and protect minority shareholders. The official said the measures will be pushed forward without disruption through opinion gathering and follow-up legislation.