Gov`t to introduce `poison pill` to thwart hostile takeover bids

By Kim Eun-jung
SEOUL, Oct. 22 (Yonhap) -- The South Korean government plans to revise commercial
law to introduce the so-called "poison pill" system, seeking to protect domestic
companies from hostile takeover bids, the Justice Ministry said Thursday.
The poison pill system allows companies facing a hostile takeover to increase
shares among friendly forces by issuing new shares to existing stockholders at
below-market prices. The system has been already adopted in advanced countries
like the U.S., Japan and France.
The Justice Ministry is currently in discussions with related ministries over the
addition of a poison pill clause in the revision of the Commercial Code, ministry
officials said, noting it will be soon submitted to the National Assembly for
approval.
The revision will set strict conditions so that the defensive measure is not
abused by large shareholders seeking to protect their management control, they
added.
"Unlike other countries, the law will state the terms (of using a poison pill).
We are also preparing measures that prevent shareholders from exercising the
defensive measure," an official at the ministry said.
ejkim@yna.co.kr
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