Lee Jae-myung asks public: what's the right balance for mandatory tender offer rule?

President Lee Jae-myung on Wednesday invited public debate on the proposed mandatory tender offer rule, asking what the "most reasonable balance" would be between genuinely protecting minority shareholders and preserving the momentum of the mergers and acquisitions market.

Lee posed the question directly on X, formerly Twitter: "What would be a balanced solution for introducing the mandatory tender offer rule?"

He noted that discussion of the rule — designed to protect ordinary shareholders in corporate M&A transactions — has been growing, but said "considerable concern and practical dilemmas are crossing paths both inside and outside the market" over the specific acquisition ratios and methods to be written into legislation.

Lee then laid out the key issues being raised in the market. One camp, he said, argues that acquirers should be required to purchase "50 percent plus one share," including the controlling shareholder's stake, with the right to sell distributed proportionally among all shareholders including minority holders. The problem with that approach, he said, is that a controlling shareholder transferring management rights would be unable to sell their entire stake at once and would have to offload the remainder at market price. "That naturally reduces the controlling shareholder's incentive to sell, which is why concerns are being raised that corporate restructuring and healthy M&A activity could be chilled," he said.

At the same time, Lee said a full 100 percent buyout requirement creates its own dilemma: the financial burden on the acquiring party becomes so heavy that deal completion rates drop sharply.

He added that while the principle of shareholder equality is important, "if excessive regulation ends up suppressing corporate restructuring and the vitality of the capital markets, it may not ultimately benefit minority shareholders either."

Lee also introduced a compromise proposal under discussion: require the acquirer to purchase 50 percent plus one share, but allow the controlling shareholder's entire stake to be acquired first, with minority shareholders then able to submit pro-rata sell requests for the remaining portion.

"We are at a point where the wisdom of all sectors is needed — on how far to set the mandatory acquisition ratio and how to genuinely reconcile the interests of controlling and minority shareholders," Lee said. "What do you think is the most reasonable balance that would protect minority shareholders' rights in a meaningful way while not losing the dynamism of the M&A market? I would like to hear your views."