History
Korea added corporate divisions to its Commercial Act in 1998, right after the Asian financial crisis, to ease restructuring. Physical split-offs then became common for holding-company conversions and raising capital for new ventures. The turning point came in 2020 when LG Chem split off its battery business as LG Energy Solution, which listed in 2022; parent shareholders protested that the crown jewel had been taken from them, fuelling a national debate over 'split listings.'
Versus a spin-off
In a personal split (인적분할), similar to a US spin-off, new shares go to existing shareholders pro rata. In a physical split-off the parent keeps them all, so shareholders own the unit only indirectly. If the subsidiary later lists or takes outside money through a rights offering, the parent often trades at a holding-company discount.
Shareholder protection
In September 2022 the Financial Services Commission gave dissenting shareholders appraisal rights and required the exchange to review parent-shareholder protection when a split-off subsidiary lists within five years. Investors should watch listing plans and the parent's P/B ratio after an announcement.
FAQ
- Do split-offs make the parent's shares fall?
- Not always, but they often have when a core business leaves or a subsidiary listing is expected.
- How do appraisal rights work?
- Notify opposition before the shareholders' meeting, then demand the company buy your shares within the set period afterward.
Sources reviewed: 2026-10-26
References
- 상법 제530조의2–제530조의12 (회사의 분할).
- 금융위원회. (2022). 물적분할 자회사 상장 관련 일반주주 권익 제고 방안 (보도자료, 2022.9.5).
- Schipper, K., & Smith, A. (1983). Effects of recontracting on shareholder wealth: The case of voluntary spin-offs. Journal of Financial Economics, 12(4), 437–467.