S. Korea unveils plans to adopt `poison pill` against hostile takeover

SEOUL, Nov. 9 (Yonhap) -- South Korea has drafted amendments to its commercial
law to introduce a "poison pill" system, seeking to protect domestic companies
from hostile takeover bids, the Justice Ministry said Monday.
The poison pill system, also called a shareholder rights plan, 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 ministry Monday held a public hearing in consultation with related ministries
and business circles to fine-tune specific details about the revision before
presenting it to the National Assembly for approval, ministry officials said.
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.
"There has been imbalance between hostile M&A attacks and defense, as South Korea
lifted the limitations on hostile M&A bids after (the 1997-98 Asian) financial
crisis without securing related (defensive) measures," the ministry said in a
statement.
ejkim@yna.co.kr
(END)