SOUTH KOREA LAW AND PRACTICE Contributed by: Tehyok Daniel Yi, Gun Kim, Kyu Hyun Kim, Sun Hee Kim, Yong Whan Choi, Yong Min Lee, Jung Woo Lee and Hyeon Jeong, Yulchon LLC
(b) the target is engaged in substantial business activities within the Korean market (commonly referred to as “small-scale business combina - tions”). Timing of the Filing Merger filings are generally required within 30 days after closing (post-closing filing). However, pre-closing filing is mandatory in the following situations. • Where one party to the transaction qualifies as a large-scale company, with total assets or sales, including those of its affiliates, exceeding the KRW2 trillion threshold. • Where the transactions at issue are deemed as small-scale business combinations. In case of pre-closing filing, filings must be submit - ted prior to closing, and clearance must be obtained before the transaction is finalised. In practice, foreign investment transactions often involve acquirers that qualify as large-scale companies and are therefore subject to mandatory pre-closing filing requirements. However, post-closing filing may be allowed in cases where share acquisitions occur through unforeseeable mechanisms, such as public tender offers, competitive trading in the securities market, enforcement of collateral rights and the like. Exemptions From Merger Filing Obligations The MRFTA provides explicit exemptions from merger filing requirements in the following cases. • Statutory mergers or business transfers between a parent company and a subsidiary where the parent holds at least 50% of the subsidiary’s shares. • Share acquisitions or the establishment of JVs involving venture capital firms, investment compa - nies or start-ups established under relevant Korean laws. • The joint establishment of a private equity fund (PEF) under the Capital Markets and Financial Investment Business Act. • Interlocking directorships involving less than one- third of the total board members.
• Inter-affiliate mergers involving a target (on a standalone basis) with total assets or worldwide revenue of less than KRW30 billion. In addition, while not explicitly stipulated, the follow - ing scenarios are interpreted under the MRFTA as not triggering a filing obligation. • In share acquisitions, the shareholding percent - age is calculated at the corporate group level. Therefore, when a target’s shares are transferred between affiliates, it is not considered a new acqui - sition, and no filing is required. • When all parties participating in the establishment of a new company are affiliates, the transaction is not deemed a business combination, and no filing obligation arises. In the case of the formation of a JV, factors such as whether the JV is full function, has autonomy, or oper - ates within Korea do not impact the filing obligation. Even if the JV is established abroad and operates exclusively outside Korea, a filing obligation arises if the parent companies meet the filing thresholds under In Korea, merger filings can only be submitted after the transaction documents have been executed. However, parties may apply for a provisional merger review from the KFTC before execution of transaction documents. In addition, parties may also ask for pre- filing consultation to initiate formal discussion with the KFTC ahead of submitting a formal merger notification or an application of provisional merger review. The review period officially begins once the filing is submitted. While the standard review period is 30 calendar days, the KFTC may extend it by up to 90 additional calendar days, for a total of 120 days. If the KFTC issues a request for information (RFI) during the review, the clock stops until the requested informa - tion is fully provided, often resulting in a longer overall review timeframe in practice. 6.2 Criteria for Antitrust/Competition Review The MRFTA prohibits mergers and acquisitions that substantially restrict competition in the relevant mar - Korean law. Timeframe
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