[Anchor]

Joining us for Tuesday's Friendly Economy is reporter Han Jiyeon. Han, I hear the requirements for initial public offerings (IPOs) are becoming stricter?

[Reporter]

Yes, from now on, if a subsidiary created through a physical division intends to pursue a dual listing, it must obtain approval from the parent company's shareholders.

A "dual listing" refers to a situation where, for example, Company A spins off a business unit to create a subsidiary, Company B, and then lists Company B on the stock market.

Critics have long argued that this practice dilutes the value of the parent company as assets are carved out into the subsidiary, thereby infringing on the rights and interests of minority shareholders.

The rate of dual listings in Korea is around 11 percent, significantly higher than the 0.05 percent in the United States or 4 percent in Japan. This has been cited as one of the reasons for the "Korea Discount," where the Korean stock market is consistently undervalued.

Therefore, shareholder consent is now mandatory for the dual listing of a physically spun-off subsidiary.

The approval criteria follow the "3% rule."

Under this rule, the voting rights of the largest shareholder and their specially related parties are capped at 3 percent, and approval must be obtained from a majority of the shareholders present, as well as at least one-quarter of all shareholders.

The board of directors is also required to assess the impact of the dual listing on shareholders in advance and prepare protective measures, such as cash dividends.

Failure to comply can result in penalties, including a fine of up to 1 billion won and a one-day suspension of trading.

HD Hyundai Robotics is being mentioned as a representative case that could be affected by these regulations.

As a physically spun-off subsidiary in which HD Hyundai holds nearly an 82 percent stake, it is highly likely to be subject to this new system.

[Anchor]

Are there any exceptions to these regulations?

[Reporter]

If the spin-off is not a physical division, shareholder consent is not mandatory, though it is recommended.

However, without such consent, the review process for shareholder protection becomes more stringent.

If a subsidiary accounts for less than 10 percent of the parent company's revenue, operating profit, and asset size, it is classified as a "low-weight company," allowing it to list as long as the board fulfills its duty to protect shareholders, even without their explicit consent.

Conversely, in cases like CJ Olive Young—which is not a physical spin-off but has a high parent company stake of around 66 percent and a significant portion of the parent's corporate value—it would be difficult to qualify for such exceptions. Therefore, it might be more advantageous for the listing process to obtain shareholder approval.

Authorities have also strengthened review criteria to make listing difficult if a subsidiary is overly dependent on the parent company's business or if the parent company effectively controls the subsidiary's major management decisions.

However, for high-tech industries like semiconductors or batteries that require independent capital procurement, such needs may also be considered during the review process.

This amendment will undergo a notice period until the 14th of this month before being finalized. If a company you have invested in announces plans to list a subsidiary, it would be wise to monitor whether they are following these procedures according to the new standards.

[Anchor]

And finally, let's talk about bonds.

[Reporter]

Even with low-risk assets like government bonds, you can still incur losses if you sell them before maturity.

The Financial Supervisory Service (FSS) has advised investors to exercise caution, noting that related complaints are being filed consistently.

Bond prices move in the opposite direction of market interest rates.

When market interest rates rise, bond prices fall.

Therefore, even bonds known for being safe, such as government bonds, can result in losses if sold before maturity, depending on the interest rates at that time.

In particular, the longer the maturity of the bond, the more volatile its price is in response to interest rate changes.

For this reason, elderly investors or retirees for whom preserving principal is crucial must keep this in mind when investing in long-term bonds.

Many people are confused about the difference between the base rate and market interest rates.

What determines bond prices is not the Bank of Korea's base rate, but the market interest rate formed in the actual market.

While they usually move in the same direction, this is not always the case. The FSS advises that investors should be cautious about investing in long-term bonds based on the expectation that interest rates will fall in a few years.

Additionally, when buying bonds over-the-counter (OTC), there is a market benchmark price called the "fair valuation yield." Securities firms may sometimes sell bonds at a slightly higher price than this to reflect costs such as labor.

This might look like an immediate valuation loss, but it is a result of transaction costs being reflected in the price.

Before purchasing OTC bonds, it is recommended to check if the same bond is traded on the exchange to compare prices and fees.

However, you should also keep in mind that if trading volume on the exchange is low, it may be difficult to execute a trade when you want to.