A bull statue in front of the headquarters of the Korea Exchange (KRX) (Image courtesy of Yonhap)
SEOUL, Mar. 5 (Korea Bizwire) –The Financial Services Commission (FSC) announced plans to intensify disclosure requirements related to mergers among publicly listed companies.
Under the proposed amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act and the Regulations on Issuance and Disclosure of Securities, listed companies will be mandated to prepare and submit a Board of Directors’ Opinion Statement that includes the board’s viewpoint on merger decisions.
This initiative aims to safeguard the rights of general shareholders and align merger processes with global standards by ensuring transparency and fairness. Previously, the lack of disclosure on board discussions concerning mergers made it difficult for general shareholders to be informed about the proceedings.
The amendment mandates the inclusion of details such as the purpose of the merger, valuation, and exchange ratios in the Board of Directors’ Opinion Statement, along with reasons for any dissenting opinions among directors.
These statements are to be attached to relevant securities reports and significant matter reports, enhancing the accountability of the board and the overall transparency of the merger process.
Furthermore, the amendment introduces behavioral guidelines for external evaluation agencies to ensure their independence, objectivity, and fairness in conducting merger valuations.
It prohibits these agencies from simultaneously performing valuation and assessment tasks, particularly in intra-group mergers, requiring the selection of external evaluators to be approved by the audit committee or consented by the auditor.
The decree also exempts non-affiliated company mergers from the application of specific merger valuation formulas, addressing criticisms that current regulations hinder voluntary negotiations and structural improvements between companies.
The amendment is open for public comment from March 5 until April 15, followed by reviews and approvals through various governmental processes, with implementation expected in the third quarter of this year.
M. H. Lee (mhlee@koreabizwire.com)
