Korea Exchange Develops Measures to Improve SPAC Merger Procedures... Allows Merger Listing by SPAC Extinction Method

[Asia Economy Reporter Gong Byung-sun] The Korea Exchange announced on the 26th that it will establish improvement measures for the SPAC merger process, including allowing merger listings by the SPAC extinction method.

The current system only permits mergers by the SPAC continuation method. The SPAC continuation method means that during the merger, the SPAC's corporate entity continues to exist while the unlisted company's corporate entity is extinguished and absorbed into the SPAC. The opposite method, SPAC extinction, was not allowed.

However, there have been criticisms that the current system causes unnecessary excessive work and business disruptions because the corporate entity and business history of the unlisted company pursuing the merger are extinguished. In fact, the workload increased during the process of changing and re-registering the existing corporate entity registered with government offices, clients, partners, and financial institutions to the SPAC corporate entity. In some supply businesses, participation in bids was suspended during the corporate change procedure period.

Accordingly, the Exchange decided to allow mergers by the SPAC extinction method. In the future, during the merger, the unlisted company conducting business will become the surviving corporation, inheriting the existing corporate entity and business history as is, and the SPAC will be extinguished. Meanwhile, the SPAC continuation method will not be abolished. The merging company can choose between the SPAC extinction method and the SPAC continuation method. All related systems concerning listing review for the merging company and investor protection such as disclosures of the post-merger corporation will continue to operate as before.

An official from the Exchange said, “The listing system improvement plan will be implemented when the tax improvement legislation announced last July is completed,” and added, “We also plan to implement the ‘Comprehensive Revision of the KOSDAQ Market Listing Regulations,’ which reorganizes the regulation structure and completely rewrites the regulation expressions to make it easier for stakeholders to understand.”

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