South Korea is considering allowing poison pills to drive away prospective takeover bids for South Korea’s companies.
The justice ministry said it was holding a public hearing on Monday to discuss the introduction of a “poison pill” clause in commercial laws, which would give shareholders the right to quickly buy new shares at a discount when they face an unsolicited takeover bid.
The Federation of Korean Industries, a business lobby group, has urged the government to introduce defensive measures, saying South Korean companies are coming under increasing pressure from corporate raiders. But some shareholder rights groups have said that the latest measures could be a backward step in efforts to improve corporate governance.
The growing pressure comes from the fact that in recent years, foreign investors have come to the emerging market, whose companies used to be run by families, chaebols, as well as the state.