Lee Chan-jin, governor of the Financial Supervisory Service, said on the 19th that SK hynix's plan to list its U.S. subsidiary Solidigm on the Nasdaq "runs afoul of parent-subsidiary listing rules, in our assessment," and pledged to take action, including conveying the regulator's concerns to SK hynix.
Lee made the remarks at a parliamentary audit of government agencies held by the National Assembly's National Policy Committee. Rep. Park Sung-hoon of the People Power Party said SK hynix had given the U.S. Securities and Exchange Commission a detailed account of how the subsidiary's listing could weigh on the parent company's share price, but had offered no such explanation to domestic shareholders. "We are continuing to monitor the Solidigm issue," Lee replied. "Both the Financial Services Commission and the FSS see aspects of this that run afoul of parent-subsidiary listing rules."
Solidigm was launched in 2021 when SK hynix acquired Intel's NAND flash and solid-state drive business. As the company has moved toward a U.S. listing, critics have argued the move could hurt the interests of existing shareholders in parent company SK hynix. In listing documents filed with the SEC in June, SK hynix itself noted that a subsidiary listing could weigh on its share price.
Financial regulators maintain rules that bar parent-subsidiary listings in principle to protect shareholders, allowing them only in exceptional cases. When a listing takes place on an overseas exchange, however, it is difficult to impose restrictions through the domestic exchange's listing review, leaving it unclear whether the rules apply.
"As for whether Solidigm would be subject to a domestic securities registration requirement, the Financial Services Commission is waiting to obtain a legal interpretation," Lee said. "We will review this closely and take whatever steps are appropriate to the fullest extent possible." He added, "If there is a suitable way to convey our concerns to SK hynix, we will pursue it."
Park said the Solidigm listing was "a textbook case of Korea's chronic parent-subsidiary listing problem spreading overseas." He added, "Not only are the economic interests of existing shareholders diluted, but there is also the problem of corporate value being discounted twice."
Yoo Dong-soo, chairman of the National Policy Committee, called the matter "a pressing concern for investors and the capital market." He asked that "if the FSS and SK hynix have held any discussions or received any reports regarding the Solidigm listing, the materials be submitted to the National Assembly as well."