Announcement of director code of conduct guidelines during corporate reorganization... Regulatory changes leading to disclosure corrections

The guidelines areIf there is a conflict of interest between directors, controlling shareholders, management and the company, or between controlling shareholders and general shareholders, measures to ensure fairness must be taken and this must be fully explained to shareholders.do.

The key is not simply to proceed with the transaction, but to be able to prove that the process and results are objectively fair.

For this purpose, the following measures are highlighted:

First, composition of an independent special committeeno see. It is required to form a committee centered on outside directors who are independent from the controlling shareholders and to grant substantive review authority from the early stages of the transaction.

If the board reaches a different conclusion, the reasons must be clearly recorded.

Second, independent review by external expertsno see. A multi-layered review structure is needed, including reviewing the legality and fairness of the transaction through legal advice and analyzing valuation and market conditions through financial advice.

Third, providing sufficient information to shareholdersno see. Beyond formal disclosure, the background of the transaction, the alternative review process, whether there is a conflict of interest, and measures to ensure fairness must be explained at a level that shareholders can understand.

Since a merger between affiliates is structured so that the same controlling shareholder influences both companies, there is a possibility that the merger price will be set in favor of a specific shareholder.

Accordingly, an independent special committee must be formed for each company to separately review the necessity, timing, conditions, and structure of the merger, and objectivity must be secured through the evaluation of external experts and multiple consultations on the merger price.

In addition, during the disclosure, the necessity of the merger, the impact on shareholder value, the basis for calculating the merger value, the structure of interests, and changes in governance structure after the merger must be specifically stated.

Closed corporate transactions conducted through tender offers and stock exchanges are subject to more stringent standards in that there is a high possibility of information asymmetry and pressure on general shareholders.

In this case, opinions on the tender offer must be reviewed through a special committee and the fairness of the price must be verified through an external expert.

In particular, when tender offers and stock exchanges occur sequentially, it is important to ensure fairness between prices, and a structure that provides autonomous selection opportunities to general shareholders is required.

Looking at recent cases of correction requests from financial supervisory authorities, we can see that compliance with guidelines serves as a key review factor for disclosure.

In particular, the following points were required to be intensively supplemented:

Regarding the special committee, the timing of establishment, composition, authority, discussion content, external consultation results, final opinion, and whether or not it is reflected by the board of directors must be described in detail.

External experts had to be explained in detail, including the reason for selection, independence, work performed, review results, valuation methodology, and basis for applying discount rates, as well as actual analysis content.

In addition, in terms of providing information to shareholders, it was required to explain the alternative review process, conflict of interest structure, general shareholder protection plan, and communication plan.

This is an example showing that disclosure serves as a means of proving the fairness and rationality of decision-making.

Daeryun, the 9th largest law firm in Korea (based on 25 years of value-added tax reporting to the National Tax Service), supports strategy establishment from the early stages by comprehensively analyzing conflicts of interest, ensuring fairness, and disclosure risks that may arise during the corporate reorganization process.I'm doing it.

In particular, we provide practical legal advice throughout the entire process, from forming a special committee, designing an external expert advisory structure, preparing public disclosure documents, and responding to financial supervisory authorities.

In addition, we carefully review issues for each transaction type, such as mergers, divisions, and delistings, design procedures to prove directors' fulfillment of their fiduciary duties, and present preemptive response strategies that take into account the possibility of future disputes.

If you want to reduce legal risks related to corporate reorganization and make stable decisions, it is advisable to seek assistance from a lawyer with relevant experience.do.