신주인수선택권의 바람직한 운용방안

Abstract

In March 2010, the Korean Government submitted to the National Assembly a bill to amend the Commercial Code (“Draft Amendment”), which,if passed, would allow Korean companies to issue call options for new shares as an anti-takeover measure (“Korean poison pill”). The bill is still pending. In light of the current position of the Commercial Code, which does not allow the issuance of warrants for new shares on a stand-alone basis, the introduction of a Korean poison pill would be a very significant change to Korean corporate law. This article identified the potential issues which may arise in applying the provisions in the Draft Amendment and proposed solutions to such issues. (1) The basic structure of the Korean poison pill was reviewed. It is not clear whether the Draft Amendment contemplates the granting of a poison pill before or after a potential acquirer emerges. However, the Draft Amendment provides that a poison pill may be granted only if it is necessary to maintain or increase the value of the company and further the interests of its shareholders in general (“Corporate Value Requirement”). In order to provide predictability to investors, including potential acquirers, and satisfy the Corporate Value Requirement, it would be desirable to grant the poison pill only after a shareholder acquires a substantial amount of shares (e.g., 5%) or takes an action which leads to the board of directors of the company to reasonably believe that the shareholder is attempting to interfere with, or take over, the management of the company. Once a poison pill is so granted, the board of directors needs to review whether to allow the shareholders to exercise the poison pill or cancel it at the time the acquirer acquires shares in excess of certain threshold provided in the company's articles of incorporation. (2) Various issues may arise at the time of the adoption of the poison pill plan in the articles of incorporation of the company. This article made proposals on the issues such as the threshold shareholding ratio which would trigger the exercise of the poison pill, the scope of related parties whose shareholding should be aggregated, and the types of securities of which should be treated as equivalent to holding shares. Adequate information needs to be provided to shareholders before they decide whether to adopt the poison pill plan. This article also proposed that a poison pill plan have a sunset clause so that the plan will be effective only for a limited time period. (3) To justify the granting of a poison pill, it is procedurally desirable for it to be approved by a committee consisting solely or mostly of outside directors. Substantively, it should satisfy the Corporate Value Requirement. The Corporate Value Requirement is so abstract that there may be a split of opinion. Court precedents and theoretical discussions in the U.S. and in Japan would serve as helpful references to this issue. (4) The Draft Amendment provides for the repurchase as well as cancellation of a poison pill. This article argued that the company’s repurchase of a poison pill (e.g., by issuing new shares to the poison pill holders other than the acquirer and making payment to the acquirer) would raise a number of legal problems and proposed that in order to remove a poison pill, the company should cancel it entirely for no consideration.