President Lee Targets KOSDAQ-Listed Company... Will the "Stock Price Suppression Prevention Act" Gain Momentum?

Akyung Highlights Intops' EB Issuance Controversy

"Isn't This Stock Price Manipulation?" President Lee Publicly Questions on X

After Three Rounds of Commercial Act Amendments,

Second Phase of Capital Market Reform on the Horizon

"Isn't this stock price manipulation?" With President Lee Jaemyung raising public concerns about alleged "stock price suppression" by a listed company ahead of a press conference outlining his second year in office, discussions on improving related systems have reignited. Over the past year, the Lee administration has driven up KOSPI valuations through three rounds of amendments to the Commercial Act. Now, there is growing speculation that the administration will launch the "second phase of capital market reform" by pushing forward the "Stock Price Suppression Prevention Act" (amendment to the Inheritance and Gift Tax Act).

Yonhap News

On the morning of June 8, President Lee shared an article from this outlet on his X account (formerly Twitter), which raised suspicions that KOSDAQ-listed Intops engaged in stock price suppression through exchangeable bonds (EB), writing, "Isn't this stock price manipulation?"

The article reported that Intops issued EB worth 13 billion won last year, which included a call option structure that restricted stock price rises. Analysts viewed this as a de facto stock price suppression mechanism, as it could incentivize securing profits through short selling if the stock price exceeds a certain level. This was revealed at a time when the government was urging companies to retire treasury shares to boost domestic market value; instead, the company allegedly used treasury shares to suppress its own stock price. It was also confirmed that, during this process, a company related to the owner’s second-generation family began acquiring shares.

Both political and market circles interpret President Lee’s remarks as not merely criticism of an individual company, but as a strong expression of his commitment to follow-up capital market reforms. By reiterating his concerns—previously raised during his presidential campaign—about stock price manipulation, short selling disruptions, and illegal succession practices, he signaled a focused push for institutional reform to block such misconduct in the future.

As a result, momentum is expected to grow for the so-called "two laws to improve low PBR (price-to-book ratio)"—the Stock Price Suppression Prevention Act and the Stock Price Normalization Act. The core of the Stock Price Suppression Prevention Act is to apply the valuation method for unlisted companies (asset and income value assessment) instead of the "stock price" when calculating inheritance and gift taxes for listed companies with a PBR below 0.8. Under the current system, the lower the stock price, the less inheritance tax the major shareholder pays, which has been criticized as an incentive for reluctance to boost share prices.

Improvements to the short selling system are also expected. In a press conference in March, President Lee identified short selling as the next issue to tackle, stating, "We need to find what’s lacking, fix it, or introduce new systems as necessary."

The market is also paying attention to the fact that President Lee directly mentioned a KOSDAQ-listed company case on this day. In contrast to the sharp rise in KOSPI over the past year, KOSDAQ has shown sluggish performance. Since many low-PBR companies are concentrated in KOSDAQ, there is speculation that the government will soon roll out additional policies to invigorate the KOSDAQ market. An industry official commented, "With the government's and the ruling party's reform momentum further strengthened by the recent local election victory, follow-up legislation such as the Stock Price Suppression Prevention Act and further capital market reforms are expected to gain traction."

This content was produced with the assistance of AI translation services.