Inquiring about legal counsel. What reporting procedures are needed during M&A?

Hello. This is an M&A attorney from Daeryun Law Firm (LLC).

You asked about M&A-related legal counsel and reporting procedures.

Under Article 11 of the Monopoly Regulation and Fair Trade Act (Fair Trade Act), companies of a certain size or larger that pursue M&A must mandatorily report business combinations to the Fair Trade Commission.

The criteria for reporting are as follows.

▶ Reporting company: Assets or sales of 300 billion won or more in the previous fiscal year

▶ Counterparty company: Assets or sales of 30 billion won or more in the previous fiscal year

This standard applies if either the buyer or seller meets the criteria.

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

In this case, judgment is made by combining the assets or sales of both companies and their affiliates.

Reporting obligations are also imposed according to various types.

- When acquiring 20% or more (15% or more for listed companies) of the total issued shares of the counterparty company and becoming the largest shareholder

- When companies undergo new establishment merger, absorption merger, or division merger

- When acquiring all or an important part of the counterparty company's business

In these cases, reporting to the Fair Trade Commission is also required.

For business combination reporting, if it is subject to prior approval, the transaction cannot proceed until approval is received.

Even if subject to post-reporting, if the Fair Trade Commission does not approve, the transaction may become void.

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

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