The Korean National Assembly passed the amended Monopoly Regulation and Fair Trade Act (MRFTA) of South Korea on March 3 2009. One result of this amendment, among others, is that the deadline to file a pre-closing business combination report with the Korean Fair Trade Commission (KFTC) has been abolished.
Under the current version of the MRFTA, assuming the satisfaction of other requirements for the reporting obligation, a party to a business combination (if it is a "large company" with total assets or turnover amounting to KRW 2 trillion or more) must make the pre-closing notification within 30 days of entering into the relevant agreement. However, the 30-day deadline for pre-closing notification has been abolished under the revised MRFTA and accordingly, large companies may report the business combination at any time after the execution of the relevant agreements but before the closing date.
The purpose of the revision is to remove unnecessary regulations on business activities in the private sector, and to allow large companies to decide the timing for the filing, in line with the standard of many other jurisdictions.
As the KFTC's review period for a notified business combination is still 30 days from the date of filing and the parties may not consummate the business combination during this period (which may be extended for an additional 90 days if the KFTC deems it necessary, and may be even longer if the KFTC orders filing of supplementary documents as the period spent for such supplementation is not included when calculating the review period), parties to a business combination subject to the pre-closing reporting obligation need to consider the period remaining until the closing date for the business combination when choosing the filing date.
The amended provision of the MRFTA which abolishes the 30-day deadline to file the pre-closing report of business combination will become effective three months after the public announcement of the amendment. Business combinations taking place prior to the implementation of the amended MRFTA will be subject to the existing provisions.
Keum-Seok Oh, Seong-Un Yun
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