| (1) | When a stock-listed corporation seeks to merge with another corporation, it shall adopt the merger value calculated in accordance with any of the following methods. In such cases, when a stock-listed corporation is unable to calculate a price under subparagraph 1 or the main sentence of subparagraph 2 (a), the price referred to in subparagraph 2 (b) shall apply: <Amended by Presidential Decree No. 21898, Dec. 21, 2009; Presidential Decree No. 23924, Jun. 29, 2012; Presidential Decree No. 24636, Jun. 21, 2013; Presidential Decree No. 24697, Aug. 27, 2013; Presidential Decree No. 25843, Dec. 9, 2014> |
| 1. | In cases of a merger between stock-listed corporations, the value (hereafter referred to as "standard market price" in this Article) obtained by discounting or adding to 30 percent (10 percent in cases of a merger between affiliated companies) of the average of the following closing prices (referring to the closing prices accrued in the securities market; hereafter the same shall apply in this paragraph), counted from the day preceding the earlier of the date the board of directors makes a resolution for the merger and the date of concluding the merger contract. In such cases, the average closing price in (a) (b) shall be calculated by the weighted average of the closing prices by trading volume: |
| (a) | Average closing price for the latest one month: Provided, That when any ex-dividend or ex-right exists during the period for calculation and the period from the date such ex-dividend or ex-right occurs to the initial date of calculation is at least seven days, the average closing price during such period; |
| (b) | Average closing price for the latest one week; |
| (c) | The most recent closing price; |
| 2. | In cases of a merger between a stock-listed corporation (excluding corporation listed on the KONEX market; hereafter the same shall apply in this subparagraph and paragraph (4)) and an unlisted stock corporation, the price according to each of the following standards: |
| (a) | In cases of a stock-listed corporation, the price referred to in subparagraph 1: Provided, That when the price referred to in subparagraph 1 falls short of the value of assets, the price may be the value of assets; |
| (b) | In cases of an unlisted stock corporation, the weighted arithmetic average of the asset value and earnings value. |
| (2) | Where the merger value is calculated at a price referred to in paragraph (1) 2 (b), the comparison with the value of corporations engaged in similar category of business calculated in the methods prescribed and publicly notified by the Financial Service Commission (hereafter referred to as "relative value" in this paragraph) shall be publicly announced, and the asset value, earnings value, and the method of calculating their weighted average under each item of paragraph (1) 2 and the methods of announcing the relative value shall be prescribed and publicly notified by the Financial Services Commission. <Amended by Presidential Decree No. 24697, Aug. 27, 2013> |
| (3) | Notwithstanding the provisions of paragraph (1), where a stock-listed special-purpose acquisition company which is a stock-listed corporation intends to merge with another corporation for the purpose of protecting investors and ensuring sound orderly trading by fulfilling the requirements prescribed and publicly notified by the Financial Services Commission, and thereby the new corporation formed by merger intends to become a stock-listed corporation, the merged value may be computed on the following base prices: <Added by Presidential Decree No. 23924, Jun. 29, 2012; Presidential Decree No. 24697, Aug. 27, 2013> |
| 1. | In cases of a stock-listed special-purpose acquisition company: The price calculated under paragraph (1) 1; |
| 2. | In cases of another corporation which merges with a special-purpose acquisition company: The price classified as follows: |
| (a) | Where another corporation is a stock-listed corporation: The price calculated under paragraph (1) 1: Provided, That where it is unable to calculate such price, the latter part, other than the subparagraphs of paragraph (1), shall be applied mutatis mutandis; |
| (b) | Where another company is an unlisted stock corporation: A price determined in consultation with a special-purpose acquisition company. |
| (4) | When a stock-listed corporation becomes a stock-listed corporation through merger with an unlisted stock corporation, it shall meet all the following requirements: <Amended by Presidential Decree No. 22197, Jun. 11, 2010; Presidential Decree No. 23924, Jun. 29, 2012> |
| 1. | Deleted; <by Presidential Decree No. 24697, Aug. 27, 2013> |
| 2. | The unlisted stock corporation shall meet all the following requirements when it has larger amounts in at least two values, among the total amount of assets, capital reserve, and amount of sales, than the stock-listed corporation, based on the financial statements of the business year preceding the business year which includes the date a stock-listed corporation which becomes a party to the merger submitted a report on material facts pursuant to Article 161 (1) of the Act: |
| (a) | Requirements for finance, etc. specified in Listing Regulations of securities under Article 390 of the Act (hereafter referred to as "Listing Regulations" in this subparagraph); |
| (b) | Requirements specified in Listing Regulations for auditor's opinion, pending litigation, and other matters necessary for a fair merger. |
| (5) | Paragraph (4) shall apply mutatis mutandis where a corporation whose stocks are listed on a specific securities market, becomes a corporation listed on the specific securities market or a corporation listed on any other securities market as a result of effecting a merger with a corporation whose stocks are listed on any other securities market. In such cases, "stock-listed corporation" shall be construed as "corporation listed on the same securities market despite the merger"; and "unlisted stock corporation" shall be construed as "corporation to be listed on another securities market after the merger". <Amended by Presidential Decree No. 23924, Jun. 29, 2012; Presidential Decree No. 24697, Aug. 27, 2013> |
| (6) | Deleted. <by Presidential Decree No. 24697, Aug. 27, 2013> |
| (7) | Where a stock-listed corporation merges with another corporation under Article 165-4 (2) of the Act, it shall be assessed by an external assessment institution for the fairness of the merger value according to the following category: <Amended by Presidential Decree No. 24697, Aug. 27, 2013; Presidential Decree No. 25843, Dec. 9, 2014> |
| 1. | Where a stock-listed corporation (excluding special-purpose acquisition companies; hereafter the same shall apply in this subparagraph and subparagraph 2) merges with a stock-listed corporation and falls under any of the following cases: |
| (a) | Where the stock-listed corporation calculates the merger value under paragraph (1) 1 at a value that is obtained by discounting or adding more than 10 percent of the standard market price; |
| (b) | Where the stock-listed corporation adopts the merger value calculated pursuant to paragraph (1) 2 (b); |
| (c) | Where the stock-listed corporation merges with a stock-listed corporation and becomes an unlisted stock corporation: Provided, That cases where a company adopts the merger value calculated pursuant to paragraph (1) 1 or where no new stocks are issued while the company holding the total number of issued stocks of another company merges with the relevant other companies shall be excluded therefrom. |
| 2. | Where a stock-listed corporation merges with an unlisted stock corporation and falls under any of the following cases: |
| (a) | Where the stock-listed corporation applies the merger value calculated pursuant to paragraph (1) 2 (b); |
| (b) | Where the merger is conducted pursuant to paragraph (4): Provided, That cases where no new stocks are issued while a company that holds the total number of issued stocks of another company merges with the relevant other companies shall be excluded therefrom; |
| (c) | Where the stock-listed corporation (excluding corporations whose stocks are listed on the KONEX) merges with an unlisted stock corporation and becomes an unlisted stock corporation: Provided, That cases where all the parties to the merger adopt the merger value calculated pursuant to paragraph (1) 1 or cases where no new stocks are issued while a company that holds the total number of issued stocks of another company merges with the relevant other companies shall be excluded therefrom; |
| 3. | Where a special-purpose acquisition company merges with another stock-listed corporation and the relevant stock-listed corporation adopts the merger value calculated pursuant to paragraph (1) 2 (b). |
| (8) | An external assessment institution shall be any of the following persons: <Amended by Presidential Decree No. 23924, Jun. 29, 2012; Presidential Decree No. 24636, Jun. 21, 2013; Presidential Decree No. 24697, Aug. 27, 2013> |
| 1. | Any person who obtained authorization for a business falling under Articles 68 (2) 1 and 2; |
| 2. | Any credit rating agency; |
| (9) | No external assessment institution referred to in paragraph (8) (hereinafter referred to as "external assessment institution") falling under any of the following subparagraphs shall perform its assessment business pursuant to Article 165-4 (2) of the Act during the relevant period: Provided, That in cases falling under subparagraph 4, the organization shall not perform only the assessment business for the relevant specific company: <Amended by Presidential Decree No. 23924, Jun. 29, 2012; Presidential Decree No. 24636, Jun. 21, 2013; Presidential Decree No. 24697, Aug. 27, 2013> |
| 1. | When a person falling under paragraph (8) 1 is issued a measure to be restricted from participating in underwriting business of stocks by the Financial Services Commission, such restriction period; |
| 2. | When a person falling under paragraph (8) 2 is issued a measure to be suspended from engaging in credit rating business with respect to his/her credit rating business by the Financial Services Commission, such suspension period; |
| 4. | When a person falling under paragraph (8) 3 is issued a measure to restrict audit business for a specific company in accordance with the Act on External Audit of Stock Companies, such restriction period. |
| (10) | Where an external assessment institution has a special relationship prescribed and publicly notified by the Financial Services Commission with a company subject to assessment by the external assessment institution, the organization shall not conduct an assessment on the merger. <Amended by Presidential Decree No. 23924, Jun. 29, 2012; Presidential Decree No. 24636, Jun. 21, 2013> |
| (11) | "As prescribed by Presidential Decree" in Article 165-4 (3) of the Act means any of the following cases: <Amended by Presidential Decree No. 24697, Aug. 27, 2013> |
| 1. | Where an external assessment institution violates paragraph (9) or (10); |
| 2. | Where any executive officer or employee of an external assessment institution divulges any confidential information learned in connection with the assessment or misappropriates it; |
| 3. | Where any executive officer or employee of an external assessment institution is directly or indirectly granted proprietary gains in contravention of the guidelines prescribed and publicly notified by the Financial Services Commission in connection with the assessment related to a merger, etc.; |
| 4. | Other cases where it is likely to undermine the protection of investors and the fairness and independency of the assessment of an external assessment institution, which are prescribed and publicly notified by the Financial Services Commission. |
| (12) | The Financial Services Commission may impose a restriction on all or part of the affairs of assessment of an external assessment institution pursuant to Article 165-4 (3) of the Act, fixing a period of up to one year. <Added by Presidential Decree No. 24697, Aug. 27, 2013> |
| (13) | With respect to the merger under the provisions of Acts, none of paragraphs (1) through (5) and (7) through (12) shall apply: Provided, That where a corporation which becomes a party to the merger is an affiliated company and the merger value is not calculated pursuant to paragraph (1) 1, the fairness of the merger value shall be assessed by an external assessment institution. <Amended by Presidential Decree No. 23924, Jun. 29, 2012; Presidential Decree No. 24636, Jun. 21, 2013; Presidential Decree No. 24697, Aug. 27, 2013> |
[This Article Added by Presidential Decree No. 21291, Feb. 3, 2009]