President Lee on Mandatory Tender Offer Rule: "Concerns and Practical Dilemmas Intersect... Must Find Balance"

▲ President Lee Jae-myung

Regarding the mandatory tender offer system currently being discussed in the National Assembly, President Lee Jae-myung said today (October 28), "Now is the time for wisdom from all walks of life on the mandatory purchase ratio and ways to practically harmonize the interests of controlling shareholders and minority shareholders."

President Lee wrote on X (formerly Twitter) on the same day, "Regarding the detailed legislative proposal for the mandatory tender offer system, considerable concerns and practical dilemmas are intersecting inside and outside the market over the specific purchase ratio and method."

The mandatory tender offer system requires an acquirer to make a public tender offer for a certain percentage or more of shares from general shareholders when managerial control of a listed company changes hands, giving minority shareholders an opportunity to share in the management control premium.

The ruling and opposition parties agreed to introduce this system by amending the Capital Markets Act during this year's regular session of the National Assembly.

However, domestic and foreign asset management firms are opposing the bill currently under discussion, arguing that while it requires the acquirer to buy "50% plus one share," it is structured to first purchase the entire stake of the controlling shareholder, thus failing to guarantee equal selling opportunities for general shareholders.

In response, President Lee pointed out, "Some argue that selling rights should be guaranteed by proportionally allocating shares fairly even to minority shareholders, but in that case, the controlling shareholder handing over management rights cannot sell their entire stake and must dispose of the remaining shares at market price," adding, "This could reduce the controlling shareholder's incentive to sell, potentially shrinking corporate restructuring or sound mergers and acquisitions (M&A)."

He also explained, "On the other hand, mandating a 100% buyout creates a dilemma where the financial burden on the acquiring party becomes excessively heavy, significantly lowering the transaction success rate," adding, "While the principle of shareholder equality is important, if excessive regulation dampens corporate restructuring and the vitality of the capital market, it will not benefit minority shareholders in the long run either."

In addition, he noted, "There is also a compromise proposal suggesting that to facilitate M&A, a mandatory buyout of 50% plus one share be required, but after acquiring the controlling shareholder's full stake, minority shareholders can claim purchases proportionally for only the remaining portion."

He then emphasized careful discussion, asking, "What do you consider a reasonable balance that substantially protects the rights of minority shareholders without losing the momentum of the M&A market?"

Prior to this, President Lee shared a post on X by Kim Kyeong-ja, senior presidential secretary for social affairs, introducing the "Work-Life Balance +4.5 Project," which provides subsidies when working hours are reduced through labor-management agreements.

To this, he added, "The history of labor progress is a history of reducing working hours," urging, "A reduction in working hours driven by productivity improvements also increases jobs. I hope you make good use of the four-day workweek without wage cuts."

He also cited a media column by Minister of Trade, Industry and Energy Kim Jeong-gwan regarding public procurement of artificial intelligence (AI) robots, describing it as a "hybrid policy between loans and fiscal support."

President Lee explained that in high-tech industries, government procurement of prototypes can be more effective than traditional loans or free grants because it also boosts companies' track records of sales, but civil servants generally tend to opt for budget support.

As for the reason, he pointed out, "It is because of irresponsible criticism," adding, "Even knowing that forward procurement is necessary for industrial development, people criticize them through audits, media reports, and investigations, asking why they purchased such incomplete products."

Regarding this, he also criticized, "In the era of hybrid policies, mudslinging-style coverage blocks national development."

He continued, "However, the people's sovereign government intends to brave such risks and pursue forward procurement," stating, "Because the development of the nation and high-tech industries is more important than personal threats to individual public officials, we have decided to bear the irresponsible mudslinging."

He then wrote, "We need the help of the people and the 'President's Friends.'"

President Lee has recently referred to supporters who "respond reasonably and with dignity to falsehoods and slander" as "President's Friends" on X and other platforms, appealing for support on multiple occasions.

Additionally, President Lee wrote, "At a farmers' forum, I heard a heartbreaking plea saying, 'The chestnuts grown with our sweat are left to rot without even being harvested,'" appealing, "Fellow citizens, please help save our chestnut farmers."

Including these, President Lee posted 10 messages on X starting from the previous night, directly voicing his opinions on various issues such as reform theories, comprehensive farmland inspections, and public-sector jobs.

Recently, President Lee has taken to directly persuading the public by posting multiple messages whenever issues targeted by the opposition arise, such as live broadcasts of cabinet meetings and the attendance of the head of the Major Crimes Investigation Agency at cabinet meetings.

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