On-market purchases over three days, July 15-17
Stake rises to 95.19%, meeting voluntary delisting requirement
Company pledged to buy shares at same price as second tender offer
Shinsung Tongsang, which operates clothing brands such as TOPTEN10 and ANDZ, appears to be accelerating its voluntary delisting process. Critics have raised concerns about the lack of investor protection measures for minority shareholders.
According to the Financial Supervisory Service's electronic disclosure system on July 18, Ganaan, the largest shareholder of Shinsung Tongsang, purchased an additional 910,000 shares on the market over three days from July 15 to July 17. As a result, Ganaan's stake increased from 53.11% to 53.75%. With the largest shareholder's stake rising, the combined stake held by Chairman Yum Tae-soon and his family reached 95.19%, securing the 95% of total issued shares required for voluntary delisting. The remaining stake held by minority shareholders stands at 4.81%.
Chairman Yum carried out a second public tender offer over 31 days until July 9, using family companies Ganaan and Asian Fashion to lead the effort. He offered a purchase price of 4,100 won per share, about 78% higher than the first tender offer, in an attempt to acquire more shares. However, the total stake secured was 94.55%, falling short of the delisting requirement by 0.45%.
Industry observers expected that, given Chairman Yum's strong commitment to voluntary delisting, he would meet the requirements through on-market purchases. In fact, just one week after Shinsung Tongsang disclosed the results of the second tender offer on July 11, the company announced its decision to delist. On July 17 at 10:30 a.m., the day Ganaan met the delisting requirement, Chairman Yum convened a board meeting to handle the following agenda items: ▲ convening an extraordinary general meeting of shareholders to approve the delisting, and ▲ setting a record date to determine eligible shareholders.
According to the schedule disclosed by Shinsung Tongsang, August 1 will be the record date for determining eligible shareholders for the extraordinary general meeting. On August 11, the company will publish the notice of the shareholders' meeting, and on August 26, the extraordinary general meeting will be held. In the case of voluntary delisting, a special resolution is required: at least one-third of all issued shares must be present, and at least two-thirds of attending shareholders must approve. After the shareholders' meeting, the company plans to submit the delisting application to the Korea Exchange on the same day. The Korea Exchange will conduct a review process lasting from two weeks to one month before making a decision.
Shinsung Tongsang's push for a rapid voluntary delisting comes after the promulgation of amendments to the Commercial Act that significantly expand shareholder rights. The so-called "3% rule," which limits the combined voting rights of related parties to 3% when appointing or dismissing audit committee members, will be fully implemented next year, increasing the company's regulatory burden. Shinsung Tongsang stated, "We are applying for voluntary delisting following the completion of the public and on-market purchases," and added, "There are currently no concrete measures finalized for the protection of minority shareholders, as the company will handle their shares at its discretion, but we will review and disclose any decisions in the future."
It is expected that for the remaining 4% of minority shareholders, the company will purchase their shares during the six-month over-the-counter purchase period granted after delisting. According to Korea Exchange listing rules, companies seeking voluntary delisting must not only conduct a public tender offer but also promise to provide minority shareholders with the opportunity to sell their shares to the largest shareholder after delisting, as part of investor protection. The Korea Exchange considers minority shareholder protection a key factor in the delisting review process. A Korea Exchange official explained, "During the delisting review, we will assess whether the listed company has faithfully implemented procedures to protect minority shareholders."
Previously, Shinsung Tongsang had stated its intention in connection with the second public tender offer and future plans: "Minority shareholders will be able to sell their shares at the same price as the public tender offer during the six-month over-the-counter purchase period granted after delisting."
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