A Guide to M&A Processes in South Korea – Merger Filing

Like many other countries, South Korea has its own merger notification & competition review regimes.  This means if your M&A deal involving a Korean company or business meets the merger notification thresholds prescribed in the rules of the Korean competition authority, you need to make a merger filing. And your transaction becomes subject to the authority’s competition review.  Thus, it is imperative that the dealmakers should be fully advised on the Korean merger filing rules for the applicability and for any potential risks.

Contents [hide]

• 1 Korean M&A Regulatory Law and Agency
• 2 Types of Merger
• 3 Small Sized Companies Are Not Required to Make a Filing
  • 3.1 Corporate Sizes Test: 300/30 Billion KRW
  • 3.2 Domestic Sales Test: When a Foreign Party Involved
• 4 Timing of Filing: Pre-Merger or Post-Merger?
• 5 Penalty 
• 6 Competition Review
• 7 Corrective Measures
• 8 KFTC’s Internal Rules and Guidelines on Merger Regulation
• 9 Conclusion
  • 9.1 Related

Korean M&A Regulatory Law and Agency

In Korea, the Monopoly Regulation and Fair Trade Act (MRFTA) regulates the M&A and other similar transactions.  The MRFTA appoints the Korea Fair Trade Commission (KFTC) as the regulatory agency that is in charge of receiving the pre-merger notification and carrying out the competition review.

Types of Merger

Currently, there are 5 types of merger which trigger a merger filing obligation toward the KFTC.

1. Share Acquisition
   
   
   • Acquisition of 20%  (15 % if the target company is publicly listed) or more of the total issued and outstanding voting shares of  the target company; or
   • Becoming the largest shareholder of the target company with the acquisition of any share by a company holding 20% (15 % if the target company is publicly listed) or more of the total issued and outstanding voting shares
     
     
2. Interlocking Directorate
   
   
3. Merger
   
   
4. Business or Assets Transfer
   
   • Acquisition of all business at issue; or
   • Acquisition of a portion of the business, provided that, the business purchase price should be either 5 billion won or more or 10% or more the total assets of the transferring company’s financial statement at the end of the most recent fiscal year.
     
     
5. Formation of a New Company (a Joint Venture)
   
   Participating in the formation of a new company and becoming the largest investor thereof.

If you need more, please visit here. https://askkorealaw.com/2020/05/02/korea-merger-acquisition-filing/