Business Mergers and Acquisitions Act: Amendments to the Business Mergers and Acquisitions Act were promulgated on 8 July 2015, and will take effect on 8 January 2016 (Part 2).

[2015/09/16]

III. Shareholder protection measures and information disclosure:
1. The amended Act explicitly provides that when a public company undertakes an M&A transaction, the fairness and reasonableness of the M&A plan and transaction should be reviewed by an audit committee or special committee, and that the committee’s findings should reported to the board of directors and/or a shareholders’ meeting.

2. Except for those forms of M&A transaction that the Act explicitly provides need not be notified to shareholders, a public company that takes part in an M&A transaction must communicate to shareholders the matters required to be recorded in the M&A documents, the results of the audit committee’s or special committee’s review, and an independent expert opinion. This information may be communicated by public announcement on a website designated by the competent authority for securities affairs (the Financial Supervisory Commission), and by making the same information available for shareholders to consult at the company’s premises and at the venue of its shareholders’ meeting.

3. The amended Act expressly provides that a person or entity that acquires more than 10% of the total issued shares of a public company for the purposes of M&A activity must report such acquisition to the Financial Supervisory Commission within 10 days.

4. The amended Act expressly provides that where shareholders object to an M&A transaction and request that the company buy back their shares, if the company reaches an agreement with the dissenting shareholders, it should make payment for the repurchased shares within 90 days after the date of the shareholder resolution approving the M&A transaction. If no agreement is reached within 60 days after the shareholder resolution, then within a further 30 days the company should apply to the court for a ruling to determine the buyback price, designating all shareholders with whom the company has not reached agreement as counterparties, and should pay to those shareholders the price that the company considers fair. If any dissenting shareholder with whom no agreement has been reached has not been designated as a counterparty, or has not received such payment, within the above periods, or the company withdraws its application to the court or such application is dismissed by the court, the company shall be deemed to have accepted the buyback price requested by the shareholder.

IV. Enhanced protection of workers’ rights: The amended Act expressly provides that if during an M&A procedure workers have agreed to remain in employment after the M&A transaction, but before the transaction record date a worker decides for personal reasons not to stay on, then the pre-merger employer must terminate the worker’s employment contract according to law and must pay labor pension payments or severance pay.