물적분할에 관한 연구

Abstract

Corporate divisions can be categorized into “spin-offs” and “Physical Divisions.” In this regard, physical divisions were introduced to the Korean Commercial Law in 1998, influenced by the foreign exchange crisis in 1997. Essentially, in a physical division, the existing corporation holds a 100% ownership stake in the new corporation, which is established by segregating a specific department from the parent corporation. Recently, there has been an increase in the number of cases in which affiliates of large conglomerates split off their core business units to float them on the stock market, leading to rights-related infringement issues for minority shareholders. In response to such issues, the government has introduced the following three protective measures: enhanced public disclosure, stockholder appraisal rights, and enhanced listing examinations. The following are considered risky elements in a physical division. First, if the existing corporation conducts an initial public offering (IPO) after the physical division, the parent corporation retains indirect ownership of the new corporation, resulting in its natural exemption from major decision-making concerning the new entity. Second, if the new corporation conducts an IPO, the market value of the subsidiary corporation may reflect a discounted market value of the subsidiary stock, which could lead to a depreciation of the split firm. However, the concept of ‘indirect ownership’ does not exist in the current legal framework or common practice. Therefore, a subsidiary established after a physical division cannot be considered to be under the ‘indirect ownership’ of minority shareholders from the parent corporation. Accordingly, there should be no confusion resulting from the use of incorrect terminology. Furthermore, in modern corporations, both controlling and minority shareholders are commonly referred to as “shareholders.” However, significant differences in stockholder rights exist based on whether the shareholder holds management control in the corporation. As for the shareholder’s rights, mostly controlling shareholders monopolize these rights, making it unrealistic for controlling and minority shareholders to share these rights in an exactly proportional manner. In reality, controlling shareholders own the corporation and experience additional benefits stemming from their ownership, whereas minority shareholders cannot claim ownership of the corporation. In terms of shareholder rights, minority shareholders only possess the right to sell their stocks. Since stock trading can potentially harm minority shareholders, this right can be viewed as a limited right only. Consequently, the physical division system even takes away this limited right from minority shareholders, leading to problems. Fundamentally, the physical division system contains illegal elements. It disqualifies minority shareholders from their shareholder’s rights, transferring these rights to the corporation’s ownership. Additionally, the corporation’s intent is often replaced by the controlling shareholder’s intent, leading to controlling shareholders benefiting greatly from subsequent IPOs stemming from this potentially illegal physical division system. The “listing after physical division” is a major factor contributing to the low evaluations of Korean corporations and the Korean stock market, which in turn leads to investor indifference in the Korean stock market. In this regard, while the governmental protective measures in place may be considered relatively advanced compared with those of other governments, they are still limited as they primarily serve to minimize potential harm to minority shareholders rather than guaranteeing their future profits. Therefore, the most desirable solution to address these issues is to prohibit any form of illegal physical divisions.