Introduction of 'Fair Value' in Mergers... Capital Markets Act Amendment Passes Standing Committee

On May 14, a revision to the Capital Markets Act, which requires the introduction of a "fair merger price" that comprehensively considers asset value and other factors in addition to stock price in the case of mergers of listed companies, passed a standing committee of the National Assembly.

The Political Affairs Committee of the National Assembly held a full meeting on this day and approved a partial amendment to the "Act on Capital Markets and Financial Investment Business (Capital Markets Act)" that includes these provisions. The key point is that, in cases of mergers and acquisitions (M&A) between affiliates, a separate merger price must be calculated by factoring in asset value, stock value, and income value. The amendment also makes it mandatory to prepare and disclose a board of directors' opinion statement during the merger process, and strengthens external evaluation procedures.

On the 14th, a full meeting of the Political Affairs Committee is being held at the National Assembly. May 14, 2026. Photo by Kim Hyunmin

Under the current Capital Markets Act, companies are required to determine the merger price based on the stock price when pursuing a merger. As a result, the law has been criticized for failing to properly reflect the intrinsic value of the business. In particular, there have been repeated criticisms that some controlling shareholders abuse this system to set the merger price in their favor, shifting the burden onto minority shareholders.

The revision is expected to be referred to the plenary session after review by the Legislation and Judiciary Committee. It also stipulates that the same fair merger price standard will apply when shareholders who oppose the merger request the company to purchase their shares.

Kim Hyunjung, a member of the Political Affairs Committee from the Democratic Party of Korea, stated, "This institutional improvement marks significant progress in correcting the structure of merger price calculations that have long disadvantaged minority shareholders," adding, "As the bill has passed the Political Affairs Committee, I will take responsibility to ensure it passes the plenary session and is implemented in the capital market."

At the meeting, which was the last full meeting of the first half of the year, other bills were also passed, including a revision to the Personal Information Protection Act that allows lawfully collected personal information to be used for artificial intelligence (AI) technology development, and a partial revision to the Insurance Business Act that prohibits individuals who have violated laws related to insurance fraud or the Act on Regulation of Similar Reception of Funds from soliciting insurance.

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