The Case for Market for Corporate Control in Korea

50 Pages Posted: 5 Aug 2009

See all articles by Hwa-Jin Kim

Hwa-Jin Kim

Seoul National University School of Law; University of Michigan Law School

Date Written: June 30, 2009

Abstract

This Article offers an assessment of the preliminary evidence that the market for corporate control functions as a disciplinary mechanism for poor corporate governance in Korea. It analyzes SK Corporation’s fight against Sovereign Asset Management, contest for control over the Hyundai Group, KT&G’s fight against Carl Icahn, and LG Group and Carlyle’s proxy contest against Hanaro Telecom, together with relevant laws and regulations. These high-profile cases dramatically exemplified the role of takeovers in the improvement of the corporate governance of Korean companies, and brought about active policy discussions in respect of the market for corporate control and takeover defenses. This Article will also provide a quick overview over the provisions in draft new Korean Commercial Code related to the market for corporate control and takeover defenses, including squeeze-out, poison pills, and dual-class commons. This Article argues that as the increasing exposure of control to the market could eliminate the inefficient controlling shareholder system in Korea, the new Korean Commercial Code should strike a balance between the active market for corporate control and effective takeover defensive tactics for the benefit of all shareholders and the value of the company.

Keywords: corporate governance, takeover, market for corporate control, proxy contest, controlling shareholder, Commercial Code, tender offer

JEL Classification: G30, G34, G38, K22

Suggested Citation

Kim, Hwa-Jin, The Case for Market for Corporate Control in Korea (June 30, 2009). Journal of Korean Law, Vol. 8, No. 2, 2009. Available at SSRN: https://ssrn.com/abstract=1427151

Hwa-Jin Kim (Contact Author)

Seoul National University School of Law ( email )

San 56-1 Kwanak-gu, Shilim-dong
Seoul
Korea

University of Michigan Law School ( email )

625 South State Street
Ann Arbor, MI 48109-1215
United States

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