Thanks to our friends at Yulchon LLC in Seoul, we’ve learned about some changes to the M&A laws in Korea, which will take effect this month (February, 2016). They include the following developments:
- Reverse triangle mergers are now permitted.
- Triangular mergers can be used for spun-off businesses.
- The small-scale stock swap exemption to shareholder approvals that are otherwise required in acquisitions is increased to 10% of total issued shares and 10% of net assets; a simple board resolution will suffice.
- A “simplified business transfer” system is introduced, reducing instances when a general shareholder meeting would be required.
- Dissenting shareholder rights are improved in two ways – (1) Non-voting shareholders gained a right of appraisal, and (2) corporations are required to pay consideration for acquired shares within two months of expiration of the dissenting shareholders’ appraisal rights period.
- If a subsidiary acquires parent company shares in a triangular merger or reverse triangular merger, it is given six months after payment of consideration to dispose of such stake to avoid criminal penalties.
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