South Korea proposes broader merger reviews and disclosures

The South Korean Financial Services Commission has issued Notice No. 2026-618 proposing amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act. The legislative notice, published on 16 September, would change merger valuation, external evaluation and related-party disclosure requirements; comments are due by 6 October 2026.

The draft covers mergers, divisions, split mergers, significant business or asset transfers, and comprehensive share exchanges or transfers. It implements amendments to the Capital Markets Act and remains a proposal rather than a final decree.

A broader external review

The draft would delete detailed decree-level methods for calculating merger consideration and purchase prices for appraisal rights. The relevant amounts would instead be calculated by considering stock price, asset value and earnings value together under the amended statutory framework.

External evaluation would cover more than the consideration amount. The specified matters include the appropriateness of the consideration, including any money or other property delivered as consideration, the fairness of transaction terms such as the merger ratio, and the appropriateness of the valuation method selected.

The draft also identifies cases excluded from external evaluation, including mergers without new capital. Where negotiations between a corporation and shareholders over an appraisal-right purchase price fail, an external evaluation institution would assess the price’s appropriateness and the result would be disclosed.

The notice does not set out the final scope of any exclusion beyond the listed cases or establish when the amended requirements would take effect.

Board opinions and affiliate disclosures

A company pursuing a covered transaction would have to describe in its board opinion any measures used to support transaction fairness. The examples include establishing a special committee, obtaining external advice and strengthening communication with shareholders.

For affiliate transactions involving a listed company, the draft would require more specific disclosure of interests between the listed company’s related persons and the counterparty. The disclosure would cover the status of related persons and transactions such as investments and debt guarantees.

The draft would delete the separate decree provision requiring an auditor or audit committee to select the external evaluation institution for affiliate transactions. The notice says that the selection requirement has been elevated from the decree into the Capital Markets Act.

The changes would distribute additional documentation and review requirements among boards, external evaluators and listed companies pursuing affiliate transactions. The notice does not resolve how the amended provisions will operate after enactment or specify a commencement date.

The consultation period runs from 16 September to 6 October 2026. Institutions, organisations and individuals may submit comments through the Integrated Legislative Notice Center or to the Financial Services Commission’s Fair Market Division by 6 October. The close of the consultation is the next identified procedural event; cabinet consideration, promulgation and the effective date remain unresolved in the official notice.