The financial regulator said Monday it will toughen rules on public disclosure over merger deals, in a move to better protect investors.
Under the move, companies will be required to publicly disclose details of discussion at a board’s meeting in connection with merger deals, according to the Financial Services Commission (FSC).
The proposed revision will be put on public notice for mandatory 40 days until April 15 and will be implemented in the third quarter of the year if enacted, the FSC said.
“Ordinary shareholders are unable to know the details of a merger since the related discussions of the board of directors are currently not disclosed,” it said in a press release.
“To address such a problem, the proposed revision requires public disclosure of the purpose and expected outcome, the price and the cost of a proposed merger, along with a statement of the board that includes reasons for opposition to the deal should there be any board member opposing the deal,” it added.
Companies will also be requir
ed to hire different agencies to determine and evaluate the appropriate price of a merger as they are currently allowed to have the same agency determine the price of a proposed merger and evaluate its own price at the same time.
It will stipulate specific rules for evaluating agencies, such as conflict of interest, for the first time.
“As there are great concerns for fairness in case of a merger between affiliated firms, the revision will require the decision by an auditing committee or consent of the auditor when selecting an external evaluating agency,” the financial regulator said.
Source: Yonhap News Agency