Financial Services Commission to Ease Regulations and Support Restructuring to Promote Corporate M&A

The Financial Services Commission will improve unreasonable regulations and strengthen support for corporate restructuring to revitalize corporate M&A.

On the 8th, according to the Financial Services Commission, it announced the 'Corporate M&A Support Plan' and plans to promote ?Improvement of corporate M&A regulations ?Strengthening support for corporate restructuring through M&A ?Strategic M&A support in response to industrial restructuring demand ?Enhancement of the global consistency of the M&A system. This plan was prepared by comprehensively reflecting discussions held at expert roundtables, policy seminars, and the Capital Subcommittee meetings of the Financial Development Deliberation Committee.

Corporate M&A has the effect of increasing productivity across the economy and also helps economic recovery. However, the recent M&A market has been experiencing difficulties, such as a significant contraction in scale. Although there are macroeconomic deterioration factors, ultimately, there is a growing voice that structural problems must be examined and improved to foster the development of the domestic M&A market.

The FSC analyzed, "The corporate M&A system is stipulated in several laws, making revolutionary regulatory improvements difficult, and the role of the capital market to support corporate restructuring is still insufficient," adding, "There is also a lack of strategic approaches to new industrial structure markets."

To improve M&A regulations, the FSC plans to revise unreasonable regulations in the corporate management rights market, such as tender offers, mergers, and IB's corporate credit extensions. For tender offers, to alleviate the burden of securing funds in advance, loan commitments from reliable financial institutions and LPs' capital commitment agreements will be recognized as proof of fund securing for tender offers. Additionally, in cases of spin-offs or spin-off mergers, the conversion processing procedures for CBs and BWs will be simplified, and the Korea Securities Depository, as the electronic registrar, will directly receive investor information from securities firms to electronically process the conversion of the relevant securities. Furthermore, the capacity for M&A refinancing loans by comprehensive financial investment business operators (CIFBOs) will be expanded.

Support for corporate restructuring through M&A will also be strengthened. Reflecting opinions that the mandatory tender offer system, introduced and promoted since December last year, may impose constraints on corporate M&A, the timing of mandatory tender offers will be allowed to be deferred when the target falls under mandatory tender offer requirements. Moreover, in cases where the necessity is recognized for policy purposes such as corporate restructuring, the application of mandatory tender offers will be exempted to support smooth restructuring. In addition, an additional 1 trillion won will be raised for the Corporate Structural Innovation Fund to provide liquidity related to M&A.

In response to industrial restructuring demand, strategic support for M&A will be provided. The FSC will support M&A of excellent overseas companies in national strategic industry sectors and actively back overseas technology company acquisitions and overseas expansion by providing investment and loan programs, advice, and consulting to secure domestic companies' technological competitiveness, mitigate supply chain risks, and establish footholds in overseas markets.

Finally, efforts will be made to enhance the global consistency of the M&A system to protect investors. Merger disclosures will be strengthened, and flexibility in the method of selecting merger prices will be increased based on the regulation of external evaluation agencies. Currently, there are criticisms that the rigid legal method of calculating merger prices makes it difficult to reflect the true corporate value; therefore, autonomy in the method of calculating merger prices will be promoted for mergers between non-affiliated companies. Additionally, simplified mergers will be included in the review for reverse takeovers, and when determining reverse takeover status, corporate valuation will be considered, thereby providing stronger protection for general investors regarding reverse takeovers.

An FSC official said, "In collaboration with the Ministry of Justice, we plan to discover and separately announce additional policy tasks related to corporate M&A support in the second half of this year."

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