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Newsletter | May 2014, Issue 2
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CORPORATE |
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M&A Promotion Plan Announced by Government |
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On March 6, 2014, the Ministry of Strategy and Finance announced its M&A Promotion Plan to revitalize the local M&A market that has contracted significantly since the global financial crisis. The specifics of the plan include: |
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Removing restrictions, such as voting right restrictions and strict disclosure obligations, placed on private equity funds under the Monopoly Regulation and Fair Trade Act when their assets exceed KRW 5 trillion. |
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Allowing private equity-backed companies to be listed on the stock exchange. |
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Increasing the allocation of M&A support fund for small and medium-sized enterprises within the Growth Ladder Fund to up to KRW 1 trillion within 3 years. |
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Creating a KRW 1 trillion private equity fund with financial institutions, credit banks and pension funds for stabilizing financially troubled companies. |
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Loosening restrictions on calculating merger value by allowing merger premiums to be taken into account. |
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Deferring any capital gains tax from stock swaps during company reorganizations until the complete disposal of such stocks. |
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Introducing various M&A acquisition structures including reverse triangular merger, triangulation and triangular stock exchange, and improving the M&A process by allowing simplified business transfer. |
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The full implementation of the M&A Promotion Plan will require amendments to the Monopoly Regulation and Fair Trade Act, the Korean Commercial Code and various other regulations and ordinances. Such legislative developments should be closely monitored and assessed for potential impact to your organization. |
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