PBR 0.8bill push: will it change how major shareholders manage share prices?
The Democratic Party of Korea’s proposed revision to the Inheritance and Gift Tax Act, the so-called “PBR 0.8law,” could reduce the incentive for major shareholders to artificially depress share prices and, conversely, increase the incentive to push them up, a Hanwha Investment & Securities report said. The report added that the effect would continue during the installment-payment period.
If the Democratic Party of Korea’s proposed “PBR 0.8law” (a revision to the Inheritance and Gift Tax Act) is enacted, major shareholders may see their incentives for share-price management change, Hanwha Investment & Securities researcher Eom Su-jin said in a report published on the month 7 day 10.
The report described the bill’s core as setting a PBR benchmark. It pointed out that if the bill is implemented, the practice of keeping share prices low to reduce inheritance and gift taxes could weaken among listed-company major shareholders.
The report also forecast that the installment-payment period, a system in which increased tax amounts are paid over several years, will affect major shareholders’ behavior. It said that if installment payment is allowed, major shareholders may continue to have an incentive to manage share prices while the tax burden persists for years.
The report said this phenomenon could trigger a "domino effect" at some companies. Specifically, it mentioned the possibility that major shareholders may change their behavior in a direction that stabilizes or lifts the share price.
The report focused on the scenario in which the bill passes and the practical effects surrounding it. It noted that the actual scope of impact could vary depending on the National Assembly review schedule for the bill and the contents of the final version.
That is the gist of a Hana Securities report. If it differs from the company's announcement or the outcome of National Assembly deliberations, related disclosures and the final version of the bill should be checked.
Sources: 연합인포맥스
Bullstory synthesized this report from the linked sources. AI may have assisted the writing process. Check the original reports for factual confirmation.