South Korean financial regulators have warned that a potential U.S. IPO for SK Hynix subsidiary Solidigm could violate the country’s rules against dual listings. [3, 4, 5] At a parliamentary hearing on October 19, Financial Supervisory Service (FSS) Governor Lee Chan-jin said the FSS and the Financial Services Commission view the potential listing as a breach of regulations meant to protect parent-company shareholders from value dilution. [6, 7, 10]
The warning has cast uncertainty over the high-value IPO. Authorities are awaiting a legal interpretation to determine whether they have jurisdiction to intervene in the U.S.-based subsidiary’s potential listing. [3, 5, 7] Recently tightened rules generally require a company to obtain minority shareholders’ consent before listing a subsidiary. [6, 8]
SK Hynix shares fell 2% after the news. The company reiterated that it has made no final decision about an IPO. [4, 12]