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Bank Shareholding Regulations

Control

The regulations regarding control of bank shareholdings are complex. While “control” is not explicitly defined, certain shareholders require approval from the Financial Supervisory Commission (FSC) to maintain or increase their shareholdings.

• Shareholder Approval: The Banking Act requires approval from the FSC for shareholders with shares in excess of the shareholding limit.
• Major Shareholders: Major shareholders who are bank management persons require separate approval.

Foreign Acquirers

Foreign acquirers are generally welcomed by regulatory authorities, but they must meet specific requirements and undergo a rigorous evaluation process. The stockholding limit that applies to foreign corporations varies depending on whether the corporation is financial or non-financial in nature.

• Risk Assessment: Factors such as:
  • Risk of harming the soundness of the bank
  • Asset size and financial condition
  • Credit extended from the bank
  • Possibility of contributing to efficiency
  • Soundness of the banking industry are considered when evaluating foreign acquirers.
• Different Stockholding Limits: A different stockholding limit applies to a foreign corporation that is a non-financial principal.

Filing Requirements

Shareholders who acquire or increase their shareholdings in a bank must file reports with the FSC. These reports must contain detailed information about the shareholder’s holdings and any changes to their partners or shareholders.

• Reporting Requirements: The same person must report to the FSC on matters necessary to confirm the status of shareholding in a bank or change in shareholding ratio.
  • Report contents:
    • Information about the person’s shareholding
    • Changes in partners (for private equity funds)
    • Changes in shareholders or partners (for special purpose companies)

Regulatory Process

While there is no separate approval required for becoming a major shareholder, the FSC requires approval for shareholders with shares in excess of the shareholding limit. The regulatory process for foreign acquirers is similar to that for domestic persons, but with different stockholding limits and additional factors considered.

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