Are there any precautions when conducting a split-merger?

Split-merger is a high-difficulty decision-making process where legal, financial, and tax interests are intertwined simultaneously in the process of restructuring corporate structures, so it should first be noted that proceeding without comprehensive review in advance can lead to serious legal disputes or business losses.

In particular, since split-merger is a restructuring method that presupposes strict procedures under commercial law, if statutory procedures such as board resolutions, shareholders' meeting approval, disclosure, and registration are not accurately observed, its effectiveness may be subject to dispute.

Also, in the split-merger process, the valuation of the dividing company and the surviving/newly established company becomes a key issue, and if this evaluation lacks objectivity and reasonableness, there is a high possibility of issues of fairness among shareholders or lawsuits.

In addition, since split-merger directly affects not only major shareholders but also minority shareholders, sufficient shareholder protection mechanisms such as guaranteeing the right to demand share purchases must be prepared, and creditor protection procedures such as the creditor objection system must be thoroughly implemented to prevent creditors from suffering disadvantages in claim recovery due to split-merger.

In addition, since split-merger involves various tax issues such as corporate tax and acquisition tax, proceeding without prior tax review can result in unexpected tax burdens, so systematic planning through expert assistance is essential.

From these perspectives, split-merger should be carefully proceeded based on comprehensive review encompassing law, finance, and taxation rather than fragmented judgment.

For detailed matters related to split-merger, please confirm through consultation with a corporate M&A attorney.

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