I would like to inquire about legal advisory. What reporting procedures are needed during an M&A?

Hello. This is an M&A attorney at Daeryun Law LLC.

M&A related legal advisory and reporting procedures are what you have asked about.

Under the Monopoly Regulation and Fair Trade Act (the Fair Trade Act), if a company of a certain size or larger pursues an M&A, it must mandatorily file a business combination report with the Fair Trade Commission.

The criteria for the subject of reporting are as follows.

▶ Reporting company : assets or sales in the immediately preceding business year of 300 billion won or more

▶ Counterparty company : assets or sales in the immediately preceding business year of 30 billion won or more

This criterion applies if either the buyer or the seller meets the criterion.

For example, even if a company with sales of 30 billion won or more acquires a company with 300 billion won or more, a reporting obligation arises.

In this case, the assets or sales of both companies and their affiliates are all combined for the determination.

In addition, a reporting obligation is imposed according to various types.

· Where you acquire 20% or more of the total issued shares of the counterparty company (15% or more for a listed company) and become the largest shareholder

· Where companies undertake a consolidation, a merger by absorption, or a divisional merger

· Where you take over all or an important part of the counterparty company's business

In such cases too, a report to the Fair Trade Commission is required.

As for a business combination report, where it is subject to prior approval, you cannot proceed with the transaction until approval is obtained.

Even if it is subject to a post-facto report, if the Fair Trade Commission does not approve it, the relevant transaction may become void.

Therefore, depending on the transaction method and the size of the target company, a prior review of whether a business combination report is required is necessary.

We recommend that you receive legal advisory from an M&A attorney to prevent legal risks in advance.