Seoul: The Financial Services Commission (FSC) and the Korea Exchange have introduced strict guidelines on "split listing" by conglomerates to strengthen the fiduciary duty of listed firms and safeguard the interests of ordinary shareholders.

According to Yonhap News Agency, split listing, also known as duplicate listing, involves spinning off a core business division and listing it separately. This practice has been identified as a contributing factor to the relatively low valuations of local stocks. Financial regulators announced plans to prohibit split listing "in principle," while revising relevant regulations to enhance shareholder protection.

The new guidelines stipulate that the voting rights of the largest shareholder in a parent company will be capped at three percent under the Commercial Act if an affiliate of the parent company is listed. Additionally, the guidelines mandate that the board of a parent company must assess the impact of split listing on its shareholders.

The FSC and the bourse operator have also outlined requirements for parent companies to develop measures ensuring shareholder protection.