1.

Removal of Prescribed Calculation Methods for Transaction Value and Appraisal Price of M&A Transactions

Following the amendments to the FSCMA, the "valuation of M&A Transactions" and the "appraisal price for dissenting shareholders' stock purchase rights" will now be determined based on fair value, which comprehensively considers market price, asset value (net assets divided by the total number of issued shares), and earnings value (future earnings value reasonably estimated by applying valuation models such as the discounted cash flow (DCF) model or dividend discount model (DDM)). The detailed calculation methods previously prescribed under the Enforcement Decree of the FSCMA will accordingly be abandoned.

Previously, the Enforcement Decree prescribed detailed calculation methods as follows:

Valuation of M&A Transactions – Calculated as the arithmetic mean of the closing prices over the past one month, one week, and most recent day, based on the day preceding the earlier of the contract date or the date of board resolution (allowing a discount or premium within a 10% range) (Article 176-5 (1) of the Enforcement Decree of the FSCMA).
 
Appraisal Price for Dissenting Shareholders’ Stock Purchase Rights – Calculated as the arithmetic mean of the closing prices over the past two months, one month, and one week, based on the day preceding the date of board resolution (Article 176-7 (3) of the Enforcement Decree of the FSCMA).
 

2.

Additional Disclosure Items and Methods for Board of Directors’ Statement of Opinion

Under the amended FSCMA, when resolving on an M&A Transaction, the board of directors must prepare and disclose a statement of opinion regarding the purpose, expected effects, and fairness of the transaction value of the M&A Transaction. The proposed amendment to the Enforcement Decree further requires that if any measures were taken to ensure the fairness of the transaction (e.g., establishing a special committee), the details of such measures be disclosed in the Board of Directors’ Statement of Opinion. The Board of Directors’ Statement of Opinion is to be disclosed both in the body and as attachment to the Securities Registration Statement, and also as attachment to the Report on Major Corporate Events (Article 176-5 (6) 5 of the Enforcement Decree of the FSCMA; Article 5-13-3 of the Regulation on Issuance and Disclosure).
 

3.

Expansion of External Appraisal Review and Disclosure

The proposed amendment to the Enforcement Decree expands on the scope of appraisal items subject to external appraisal institution review beyond the existing scope of fairness of transaction value and its terms and conditions to terms including:

(i)    The appropriateness of the valuation method used;
(ii)    The reasonableness of the key assumptions underlying the valuation; and
(iii)     Any difficulties encountered in the appraisal process.

The details of the external appraisal must also be disclosed in the body and as attachment to the Securities Registration Statement and as attachment to the Report on Major Corporate Events (Article 176-5 (8) of the Enforcement Decree of the FSCMA; Article 5-13 of the Regulation on Issuance and Disclosure).

The requirement aims at facilitating the provision of high-quality information to shareholders for their verification and review of the procedures and determinations through which the M&A Transaction was pursued.
 

4.

Disclosure for Specification of Interest in Mergers Between Affiliates

Under the amended FSCMA, in the event of an M&A Transaction between a listed company and an affiliate, the interest relationship between the specially related parties, including family, relatives, parent companies, and affiliates of the company and the counterparty of the transaction, as defined under Article 9 (1) of the Monopoly Regulation and Fair Trade Law (“FTL”), must be disclosed.

The proposed amendment of the Enforcement Decree requires specific items, including investments, debt guarantees, concurrent holding of executive offices, and details of shareholding changes between the specially related parties and the counterparty corporation, to be disclosed in the body of the Securities Registration Statement (Article 176-5 (18) of the Enforcement Decree of the FSCMA; Article 5-16 of the Regulation on Issuance and Disclosure).

The requirement aims at allowing shareholders and investors to more clearly grasp the interest relationships among transaction parties, in proactively preventing transaction terms from biasing toward specific shareholders.
 

5.

Refinement of Procedures for Determining Appraisal Prices for Stock Purchase Rights

Previously, if consultations between a listed company and its shareholders regarding the appraisal price for stock purchase rights failed, price was calculated and presented mechanically based on a prescribed formula under the relevant regulations. However, under the amended FSCMA, the proposed price must now consider market price, asset value, and earnings value. The proposed amendment to the Enforcement Decree accordingly mandates that fairness of appraisal price be evaluated by an external appraisal institution, and that details be disclosed in the body and as attachment to the Securities Registration Statement (Article 176-7 (3) of the Enforcement Decree of the FSCMA).
 

6.

Approval Schedule

Following the public comment period, the proposed amendments to the Enforcement Decree of the FSCMA and the Regulation on Issuance and Disclosure will undergo regulatory review, including resolutions by the Securities and Futures Commission (“SFC”) and the FSC, review by the Ministry of Government Legislation, and resolutions by the Vice Ministers’ Meeting and the Cabinet Meeting, and are scheduled to take effect on December 9, 2026, aligned with the enforcement date of the amended FSCMA (the approval of the amendment to the Regulation on Issuance and Disclosure will only proceed up to the FSC resolution).