The Financial Services Commission (FSC) proposed amendments to the Enforcement Decree of the Financial Investment Services and Capital Markets Act (FSCMA) and the Regulation on Issuance and Disclosure of Securities to introduce fair-value pricing for M&A transactions and strengthen related procedures under the revised FSCMA, which will take effect on December 9, 2026. The proposal will be open for public comments from September 16 to October 6, 2026.
Background
Under the revised FSCMA, when a listed company enters into a merger, a spin-off or split and merger, an acquisition or transfer of a significant business or asset, and a comprehensive share exchange or transfer (each, a “Subject M&A Transaction”), it must calculate the transaction value based on a fair value calculated by comprehensively taking into account the share price, asset value, earnings value, etc.
The revised FSCMA also requires the board of directors of a listed company to prepare and disclose the written opinion for the purpose and expected effect of a Subject M&A Transaction, and the appropriateness of the merger price. The company must undergo an evaluation by an external appraiser regarding matters such as the value of a Subject M&A Transaction, the appropriateness of conditions of the transaction. For M&A transactions between affiliated companies, a listed company must disclose any conflicts of interest or specific relationships between its related parties (under Article 9(1) of the Monopoly Regulation and Fair Trade Act) and the counterparty to the affiliate M&A transaction.
Accordingly, the FSC plans to amend the relevant regulations under the revised FSCMA as follows: (i) remove the detailed calculation method prescribed in the Enforcement Decree for the Subject M&A transaction value and the purchase price for dissenting shareholders’ appraisal rights (“the Appraisal Rights”); (ii) add items to be included in the board’s opinion and external evaluations; and (iii) strengthen procedures for determining the purchase price for the Appraisal Rights.
Proposed Amendments
Remove the detailed calculation method
Under the revised FSCMA, merger values and the purchase price for the Appraisal Rights will be determined by taking into account various factors, including share price, asset value, and earnings value. Accordingly, the detailed calculation method prescribed in the Enforcement Decree of the FSCMA will be removed.
This change will allow companies to move away from uniform calculation methods and consider a broader range of valuation factors based on the characteristics of each transaction.
Add items to be included the board’s opinion and external evaluations
Measures taken by a listed company to ensure the fairness of an M&A transaction, such as establishing a special committee, must be included in the board’s written opinion. The opinion must then be disclosed in the main body of the securities registration statement and its attachments, as well as in the attachment to the material event report.
External evaluations will cover not only the appropriateness of merger values and transaction terms, but also the appropriateness of the valuation method used, the reasonableness of key assumptions, and any difficulties encountered in the valuation process. These details will also be disclosed in the securities registration statement and its attachments, as well as in the attachment to the material event report, providing shareholders and investors with more comprehensive information about the transaction.
The purpose of these changes is not simply to increase the amount of disclosed information, but to provide high-quality information that enables shareholders to understand and assess the procedures followed and judgements made in carrying out a transaction.
For M&A transactions between affiliated companies, into the securities registration statement, a listed company must disclose any investments, debt guarantees, concurrent executive positions, or changes in shareholdings between its related parties and the counterparty to the transaction. This disclosure will help shareholders and investors better assess potential conflicts of interest and deter transaction terms that favor specific shareholders.
Strengthen procedures for determining the purchase price for the Appraisal Rights
When a listed company and its shareholders fail to agree on the purchase price for the Appraisal Rights, the price is currently determined using the calculation method prescribed in the Enforcement Decree. Under the revised rules, the price will instead be determined by taking into account various factors, including share price, asset value, earning value. An external appraiser will assess the appropriateness of the price, and the assessment will be disclosed in the securities registration statement and its attachments. Accordingly, when shareholders exercise the Appraisal Rights, these amendments will provide the environment which enables to reasonably assess the share price that they hold, which will guarantee a fair chance of their investment recovery.
Further Schedule
The proposed amendments to the Enforcement Decree of FSCMA and the Regulation on Issuance and Disclosure of Securities will take effect on December 9, 2026, following the necessary procedures.
* Plese refer to the attached PDF for details.