Hello, this is Kwang-Sik Kim, attorney at Cheongchul Law Firm.

On September 17, 2026, the plenary session of the National Assembly's National Policy Committee passed an amendment bill to the Financial Investment Services and Capital Markets Act (자본시장법) whose centerpiece is the introduction of a 'mandatory tender offer' regime, which guarantees general minority shareholders the opportunity to sell their shares on the same terms when control of a listed company is acquired. The regime was first introduced in 1997 through the former Securities and Exchange Act (구 증권거래법), but was abolished just one year after taking effect, in 1998, immediately after the foreign exchange crisis, in order to promote M&A and corporate restructuring. If this amendment bill is ultimately enacted, the regime will be revived roughly 28 years after its abolition.

The core of the bill is to designate cases such as acquiring 25% or more of a listed company's shares and thereby becoming its largest shareholder as subject to a mandatory tender offer, and to compel the acquirer to also purchase a certain minimum volume of general shareholders' shares. For acquirers, including private equity funds (PEFs), the previous deal structure, in which securing the largest shareholder's stake was sufficient, will fundamentally change into one in which the sell-side volume of the remaining minority shareholders must also be absorbed. However, review by the National Assembly's Legislation and Judiciary Committee and a plenary vote still remain, so the final outcome bears watching a little longer.

Today I will outline the purpose and key contents of this regime, the sanctions for violations, its impact on M&A practice for PEFs and companies, and what should be prepared starting now.

[Question]

I heard that the 'mandatory tender offer' regime, which requires an acquirer of a listed company to also buy general shareholders' shares, has passed the National Assembly. What exactly does it provide, and how will M&A transactions change going forward?

[Answer]

1. Today's News — Revival After 28 Years, Passage by the National Policy Committee

The mandatory tender offer regime is by no means a new concept. It was first introduced in 1997 under the former Securities and Exchange Act (구 증권거래법), which required anyone coming to hold 25% or more of a listed company's shares to conduct a tender offer until their holdings reached 50%+1 share or more. However, it was abolished a little over a year after taking effect, in 1998, right after the foreign exchange crisis, on the policy judgment that stimulating M&A and restructuring was urgent. Reintroduction was discussed several times thereafter, but never reached actual legislation.

Then, at a joint livelihood-policy meeting on September 15, 2026, the policy committees of the ruling and opposition parties agreed to reintroduce the regime; the National Policy Committee's Legislative Review Subcommittee No. 1 adopted a committee substitute bill the same day; and on September 17 the bill passed the National Policy Committee's plenary session. This is an extension of a series of institutional reforms strengthening general shareholder protection, including the recent Commercial Act (상법) amendment extending directors' duty of loyalty to shareholders, tightened fair-value determination for restructuring transactions such as mergers, and regulation of duplicate listings of parent and subsidiary companies. However, Legislation and Judiciary Committee review and a plenary vote still remain, so further deliberation and time will be needed before the regime finally takes effect.

▶ Card News Summary The mandatory tender offer regime, introduced in 1997 and abolished in 1998, is poised for revival after 28 years. The Capital Markets Act amendment bill passed the National Policy Committee plenary session on September 17, 2026, with Legislation and Judiciary Committee review and a plenary vote still remaining.

2. What Is the Mandatory Tender Offer Regime, and Why Is It Being Reintroduced

The mandatory tender offer regime compels an acquirer, when control of a listed company is transferred by way of a share transfer, to make a tender offer to the remaining shareholders for at least a certain number of shares. Shares that carry control typically trade above market price with a 'control premium' attached. Previously, the largest shareholder alone captured this premium, while general minority shareholders were often left bearing only the risk of a management change and had to dispose of their shares in the market at a lower price. The purpose of the regime is to guarantee minority shareholders the opportunity to sell on the same terms, so that they can share in this control premium.

In fact, it has repeatedly been pointed out in Korea that general shareholders have not been given sufficient opportunity to sell, because acquirers purchased only the largest shareholder's stake or, even when conducting a tender offer, capped the target volume through so-called 'partial tender offers.' The introduction of this regime can be seen as a policy decision to fundamentally resolve the adverse effects of partial tender offers and to have all shareholders share equitably in the risks and benefits of a change of control.

▶ Card News Summary The mandatory tender offer regime requires an acquirer to also purchase at least a certain volume of the remaining shareholders' shares, so that minority shareholders can share in the control premium. It is intended to resolve the adverse effects of partial tender offers.

3. Key Contents of the Bill — Triggering Requirements and Tender Offer Volume

The bill designates cases such as acquiring 25% or more of a listed company's shares and thereby becoming its largest shareholder as subject to a mandatory tender offer. In other words, the trigger is not merely an increase in shareholding but an 'acquisition of 25% or more accompanied by an acquisition of control.' As for the volume that must be tendered for, the direction under discussion is for the statute to set a floor of '50%+1 share or more' while delegating the specific ratio to a Presidential Decree (Enforcement Decree). This can be seen as leaving room to flexibly adjust the specific volume according to market conditions or industry characteristics.

If this structure is confirmed as is, an acquirer will no longer be able to secure control merely by purchasing the largest shareholder's stake (often around 30%), and will instead have to secure at least a majority (50%+1 share) by adding the shares tendered by the remaining shareholders. This means the number of shares an acquirer must buy, and the resulting acquisition financing burden, could nearly double.

▶ Card News Summary The bill makes cases where an acquirer becomes the largest shareholder by acquiring 25% or more of a listed company subject to the regime, and the direction is to set a statutory floor of '50%+1 share or more' for the tender offer volume while delegating the specific ratio to a Presidential Decree.

4. Sanctions for Violations — Scope of Criminal Penalties and Disposal Orders

Where the mandatory tender offer obligation is not fulfilled, the bill contains a criminal penalty provision of imprisonment of up to five years or a fine of up to KRW 200 million. Administrative sanctions, such as restricting voting rights or ordering the disposal of shares acquired in violation, were also discussed. In the early stage of discussions, a disposal order covering all acquired shares was considered, but the scope is reportedly being narrowed in the final version to 'shares acquired in excess of 25%.'

Some have criticized this as weakening the intensity of sanctions, but it appears to be a compromise reflecting the concern that an overly broad disposal order could be an excessive sanction that shakes the funds already invested by the acquirer and control itself. Nevertheless, since criminal penalties and disposal orders coexist in this structure, an acquirer that fails to closely examine in advance whether the mandatory tender offer requirements apply could be exposed to considerable legal risk.

▶ Card News Summary Violations may be punished by imprisonment of up to five years or a fine of up to KRW 200 million, and the scope of disposal orders is under discussion in the direction of being narrowed from the entire stake to 'shares acquired in excess of 25%.'

5. Impact on PEF and M&A Practice

If this regime takes effect, fundamental changes are expected in the M&A deal structures of acquirers, including PEFs. Until now, a change of control could be achieved with relatively little capital by acquiring only the largest shareholder's stake (for example, around 30%), but going forward a majority must be secured by adding the shares tendered by the remaining shareholders, so the required acquisition funds will increase substantially. For PEFs in particular that structure leveraged buyouts (LBOs) using acquisition financing, this leads to the need to redesign the scale of funds to be raised and the resulting interest cost and leverage structure as a whole.

In addition, as the tender offer procedure itself is added, the time to closing and procedural costs are expected to increase. Amid a continuing series of intensifying hostile M&A and control disputes, such as the recent Korea Zinc–Young Poong dispute, the introduction of the mandatory tender offer regime will raise the threshold for acquisition attempts, while conversely changing the calculus of control defense for existing largest shareholders. Ultimately, precisely simulating whether a mandatory tender offer applies and the scale of required funds from the earliest stage of an M&A transaction is expected to become essential.

▶ Card News Summary The acquisition financing burden will increase substantially, acquisition financing structures will need to be redesigned, and the tender offer procedure will lengthen deal timelines and costs. Whether a mandatory tender offer applies should be simulated from the earliest stage of an M&A.

6. What Companies and Investors Should Prepare Starting Now

Although Legislation and Judiciary Committee review and a plenary vote still remain, the likelihood of enactment has risen considerably, given that the ruling and opposition parties have already agreed on the key contents and the bill has passed the National Policy Committee's plenary session. Companies or PEFs planning an M&A should check in advance whether the targeted shareholding exceeds 25% and involves acquiring largest-shareholder status, and thus whether a mandatory tender offer could be triggered, and should conservatively recalculate the required funds. In particular, for transactions using acquisition financing, the financing plan should account not only for the funds to acquire the largest shareholder's stake but also for the shares tendered in the tender offer.

Existing largest shareholders and listed companies should also consider, when reviewing future scenarios for a sale of control or dilution of shareholdings, how the mandatory tender offer rules affect the sale structure and pricing leverage. Details such as the specific volume thresholds and exemptions to be delegated to the Enforcement Decree will be finalized further in the legislative process, so it is important to design deal structures while continuing to monitor developments in the relevant legislation.

▶ Card News Summary Companies and PEFs planning an M&A should check whether the structure involves becoming the largest shareholder through an acquisition of 25% or more and recalculate their acquisition financing plans, and should keep monitoring legislative developments on the detailed criteria to be delegated to the Enforcement Decree.

The revival of the mandatory tender offer regime is an extension of the recent trend of capital markets and Commercial Act amendments strengthening general shareholder protection, and at the same time a change that fundamentally alters the acquisition financing burden and deal structures of the M&A market. With Legislation and Judiciary Committee review and a plenary vote still remaining, there is time before final confirmation, so companies and investors alike should monitor legislative developments and prepare their response strategies in advance.

Cheongchul Law Firm provides a broad range of legal advice in the capital markets and M&A field, from structuring and advising on listed-company M&A transactions, reviewing whether a mandatory tender offer applies and advising on tender offer procedures, and structuring acquisition financing and LBOs for PEFs, to advising on control disputes and defense strategies. If you are planning an M&A transaction or need a review relating to mandatory tender offers, please feel free to contact us at any time.